Objective Type Questions

Question. In which year, the Indian government decided to remove barriers on foreign trade and foreign investment ?
(a) In 1976
(b) In 1981
(c) In 1987
(d) In 1991
Answer : (d) In 1991 

Question. An MNC promotes global integration of economy through free flow, across the borders, of–
(a) capital
(b) technology
(c) goods
(d) All of the above
Answer : (d) All of the above 

Question. Which of the following is not a factor responsible for globalization ?
(a) Growth of MNCs
(b) Decolonisation
(c) Development of telecommunication and means of transportation
(d) Growth of technology
Answer : (b) Decolonisation 

Question. More and more MNCs are investing in China because –
(a) it provides the advantage of being a cheep manufacturing location
(b) it is the most populous country of the world
(c) it is the largest market of the world
(d) it is the world’s largest economy
Answer : (a) it provides the advantage of being a cheep manufacturing location 

Question. When and where did the Ford Motors set up their large plant in India ?
(a) In 1975 at Chennai
(b) In 1985 at Chennai
(c) In 1995 at Chennai
(d) In 2005 at Chennai
Answer : (c) In 1995 at Chennai 

Question. Removing barriers or restrictions set by the government is known as –
(a) Privatisation
(b) Liberalisation
(c) Globalisation
(b) Industrialisation
Answer : (b) Liberalisation 

Question. What is foreign investment ?
(a) Investment made by the foreign governments
(b) Investment made by the foreign banks
(c) Investment made by the MNCs
(d) Investment made by the IMF and World Bank
Answer : (c) Investment made by the MNCs 

Very Short Answer Type Questions

Question. Why do MNCs set up their offices and factories in those regions where they get cheap labour and other resources ?
Answer : To minimise the cost of production and maximise profit earning, MNCs set up their offices and factories in region where they get cheap labour and other resources.

Question. The MNC’s of a country sets up a production jointly with the local company of other country. State any one benefit of this joint production to the local company.
Answer : Benefits of Joint Production: (i) MNC can provide money for additional investment. (ii) MNC might bring latest technology for production.

Question. MNC is the company that owns or control _______.
Answer : Production in more than one nation.

Question. Removing trade barriers and tax restriction set up by the government is called as _________ .
Answer : liberalisation.

Question. Complete the following table :
Answer :
(A)– To liberalise international trade
(B)– 164 Countries.

Question. Name some of the Indian multinationals.
Answer : Videocon (Electronics), Tata Motors (automobiles), Infosys (IT), Ranbaxy (medicines), Asian Paints (paints), Sundaram Fasteners (nuts and bolts) etc.

Question. What is the basic function of foreign trade?  OR State the basic functions of foreign trade. 2015
Answer : Basic function of foreign trade is to connect the market of different countries.

Question. Which countries are location-wise useful for their closeness to the markets in the US and Europe?
Answer : China, Mexico and Eastern Europe.

Question. Define globalisation.
Answer : Globalisation can be defined as the integration between countries through foreign trade and foreign investments by Multinational Corporations (MNCs).

Question. Which are the sectors in which MNCs have shown interest to invest in ?
Answer : MNCs have been interested in industries such as mobile phones, automobiles, electronics, soft drinks, fast food or services such as banking etc.

Short Answer Type Questions

Question. What was the reasons for putting barriers to foreign trade and foreign investment by the Indian government ? Why did it wish to remove these barriers ?
Answer : At the time of independence, India received her industrial structure in very shattered and backward form. So in order to give it an environment for growth, the Indian government put barriers to foreign trade and foreign investment to protect the producers within the country from foreign competition. Industries were just coming up in the 1950s and 1960s, and competition from imports at that stage would not have allowed these industries to grow up. But around 1991, the Indian government had realised that in order to improve the functioning of the Indian economy, the time had come for Indian producers to compete with producers around the globe. It felt that competition would improve the performance of producers within the country since they would have to improve their quality.

Question. What is a MNC ?
Answer : An MNC is a company that owns or controls production in more than one nation. MNCs set up their offices and factories for production in regions where they can get cheap labour and other resources. This is done so that the cost of production becomes low and the MNCs can earn greater profits.

Question. How do local producers get benefitted from MNCs ?
Answer : Many of the times, MNCs set up production facility in any country jointly with some of the local companies of that country. The benefit to the local company of such joint production is two-fold. First, MNCs can provide money for additional investments, like buying new machines for faster production. Second, MNCs might bring with them the latest technology for production etc.

Question. How would flexibility in labour laws help companies ? 
Answer : Companies now a days are facing intense competition. This competition is compelling them to provide the consumers more value for their money. This may happen when they reduce their cost. Salary and wages are the significant part of their cost. Hiring people for flexible time durations will help the companies to manage their hiring costs because in the busy period they may hire more labour while in lean period they may reduce manpower, thus reducing their operational costs. Without flexibility in labour laws, companies will not be able to hire and remove people easily which may hamper their production.

Question. How globalisation has affected the lives of the people? Explain with any three examples.
Answer :  Impact of Globalisation –
(i) Globalisation and greater competition among producers has been of advantage to consumers.
(ii) Greater choice before consumers.
(iii) Availability of standard quality products at lower price.
(iv) Improvement in living standard.
(v) Foreign investments have increased in many areas like cell phones, auto mobiles, electronics, soft drinks etc.
(vi) New job have been created.

Question. ‘‘Barriers on foreign trade and foreign investment were removed to a large extent in India since 1991.’’ Justify the statement.
Answer : Removal of barriers on foreign trade and foreign investment :
(i) Barriers on foreign trade and foreign investment were partially removed.
(ii) Goods could be imported and exported easily.
(iii) Foreign companies could setup factories and offices here.
(iv) Indian producers got opportunities to compete with producers around the globe.

Question. Analyse any three impacts of globalization in India. 
OR
Critically examine the impacts of globalization in India. 
Answer : Impacts of Globalisation in India:
(i) Stiff competition for local producers and manufacturers.
(ii) No job security.
(iii) Workers are denied their fair share of benefit.
(iv) Long working hours and low wages to the workers.
(v) Expansion of unorganized sector.
(vi) New opportunities for IT sector.
(vii) Increase in investment and foreign trade.

Question. How has Globalisation created new opportunities for companies providing services in India? Explain.
Answer : (i) Globalisation has created new opportunities for companies providing services particularly those involving IT.
(ii) The Indian company producing a magazine for the London based company and call centres are some examples.
(iii) Besides, a host of services such as data entry, accounting, administrative tasks and engineering are now being done cheaply in India and are exported to the developed countries. 

Question. Where do MNCs setup their production units? Explain. 
Answer : (i) MNCs setup production units at such a place where they can produce their goods at a minimum cost.
(ii) The place where markets are closer.
(iii) The place where skilled and unskilled labour are available at low cost.
(iv) Other factors of production are assured.
(v) Government policies are favourable.

Question. “Foreign trade is an important component of globalization”.Explain any three points in this regard.
Answer : (i) Foreign trade implies the exchange of goods and services across the countries.
(ii) It helps to expand the size of the market for producers.
(iii) Producers and consumers can get commodities produced in any part of the world.
(iv) It works to integrate markets in different countries.

Question. Differentiate between foreign trade and foreign investment.
Answer : Foreign Trade: The process of buying and selling goods and services between two or more than two countries is known as foreign trade.
Foreign Investment: Foreign investment involves capital flows from one country to another, granting extensive ownership stakes in domestic companies and assets.

Question. “A wide ranging choice of goods are available in the Indian markets.” Support the statement with examples in context of Globalisation. (Board Term -II,
Answer : A wide ranging choice of goods :
(i) We have a wide variety of goods and services before us in the market.
(ii) The latest models of the digital cameras, mobile phones and televisions made by leading manufacturers of the world are available in the market.
(iii) Every season, new models of automobiles can be seen on Indian roads.
(iv) Today Indians are buying cars produced by nearly all the top companies in the world.
(v) A similar explosion of brands can be seen for many other goods.

Question. Explain with three examples how top Indian companies have been benefited from Globalisation.
Answer : Several top Indian companies have been able to benefit from Globalisation :
(i) They have invested in newer technology and production methods and raised their production standards.
(ii) Some have gained from successful collaborations with foreign companies.
(iii) Globalisation has enabled some large Indian companies to emerge as multinational themselves. For example, Tata Motors and Infosys.

Question. Why did ‘Ford Motors Company’ want to develop Ford India as a component supplying base for its other plants across the globe? Explain.
Answer : Ford Motors want to develop Ford India as a component supplying base for its other plants across the globe :
(i) A number of local manufacturers are supplying components to its Chennai plant and the MNC feel that it can supply components to other plants across the globe.
(ii) Cost of labour and material is very low in India.
(iii) The components can be easily supplied to other MNC car manufacturers in India and China.

Question. What is Globalisation? Explain.
Answer : (i) Globalisation is the process of rapid integration or interconnection between countries through foreign trade and foreign investments by Multinational Corporations (MNCs).
(ii) More and more goods and services, investments and technology are moving between countries.
(iii) Globalisation is the integration between countries through foreign trade and foreign investments by Multinational Companies (MNCs). 

Question. Enumerate any three features of Multinational Corporations.
Answer : Multinational Corporations (MNCs) are the companies that own or control the production of their goods in more than one country.
The main features of MNCs are :
(i) They setup their factories and offices in more than one country.
(ii) They setup their units where the cost of production is low and higher profits can be earned.
(iii) They set up their units where they can get cheap labour and other resources.

Question. What is Globalization? How can the government ensure fair Globalisation to its people? Give two points.
Answer : Globalisation means unification or integration of the domestic economy with the world economy through trade, capital and technology flow.
Government can ensure fair globalisation to its people in the following ways :
(i) Government needs to care about the labour laws so that workers get their rights and support small producers to improve their performance.
(ii) Government can negotiate with World Trade Organisation (WTO) for fairer rules and can align with developing countries to stand against the domination of developed countries.

Question. Evaluate the role of MNCs in the economic development of a country. 
Answer : Role of MNCs in the economic development:
(i) MNCs place order for production with small producers.
(ii) MNCs are setting up partnerships with local companies.
(iii) They are interlinking the markets all over the world.
(iv) Any other relevant point.

Question. ‘Barriers on foreign trade and foreign investment were removed to a large extent in India since 1991.’ Justify the statement.
OR Why did the Government of India remove trade barriers ? Explain the reasons.
Answer : (i) Due to this, imports and exports could easily flow between different countries.
(ii) It allowed the local producers to compete with products at global level, so that they could improve the quality of their product.
(iii) Global MNCs could setup their production units , they brought latest technology of production into the country.

Long Answer Type Questions

Question. How can globalisation be an integrating force ?
Answer : Globalisation is an integrating force that integrates the economies of the nations. This integration takes place through foreign trade, foreign investment and movement of people. Foreign trade creates an opportunity for the producers to reach beyond the domestic markets. The producers can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world. When the goods travel from one market to another, prices of similar goods in the two markets tend to become equal. Foreign trade thus results in connecting the markets or integration of markets in different countries. Similarly, for the buyers, import of goods produced in another country expands their choice of goods beyond what is domestically produced. So the choice of goods in the markets rises. This has also raised their standard of consumption at par with their counterparts in other countries. Foreign investments through MNCs play a major role in the integration process. More and more goods and services, investments and technology are moving between countries. This has led to the profitability of MNCs getting affected by their performance in other countries. There is one more way in which the countries are getting connected. This is through the movement of people between countries who move from one country to another in search of better income, better jobs or better education. This leads to the sharing of culture between the people.

Question. What policy decisions were taken by the Indian government in 1991 ?
Answer : Starting around 1991, the Indian government had the realisation that in order to improve the functioning of the Indian economy, the time had come for Indian producers to compete with producers around the globe. It felt that competition would improve the performance of producers within the country since they would have to improve their quality. This decision was supported by powerful international organisations like IMF and WTO. Thus, barriers on foreign trade and foreign investment were removed to a large extent. This means that goods could be imported and exported easily and also foreign companies could set up factories and offices here.

Question. Why do developed countries want developing countries to liberalise their trade and investment ? What do you think should the developing countries demand in return ?  Answer : Developed countries want developing countries to liberalise their trade and investment policies because developed countries view developing countries as the ideal source and destination for their purpose. Developed countries want their companies to setup their production facilities in developing countries due to availability of cheap raw material and cheap labour. In the same way, as destination, developed countries want to sell their products in developing countries because in most of the developing countries, the level of income is rising. So developed countries see possibility of higher profit and demand in the developing countries. The developing countries must ask for better reach of their products to the developed countries so that the indigenous industries may also prosper. They may also ask the developed countries for investment in the development of public goods so that the productive capacity of developing countries may also increase.

Question. How do we feel the impact of globalisation on our daily life? Explain with examples.
Answer : Impact of Globalisation –
(i) Globalisation and greater competition among producers has been of advantage to consumers.
(ii) Greater choice before consumers.
(iii) Availability of standard quality products at lower price.
(iv) Improvement in living standard.
(v) Foreign investments have increased in many areas like cell phones, auto mobiles, electronics, soft drinks etc.
(vi) New job have been created.
(vii) Several of the units have shut down rendering many workers jobless.
(viii) Globalization has also created insecurity of job.

Question. How can consumers and producers be benefited from ‘foreign trade’ ? Explain with examples.
Answer : Consumers and producers are benefited from foreign trade :
(i) Foreign trade creates an opportunity for producers to reach beyond the domestic market.
(ii) Producer can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world.
(iii) For buyers import of goods produced in another country is one way of expanding the choice of goods.
(iv) With the opening of trade goods travel from one market to another .
(v) Choice of goods in the market rises.
(vi) Prices of similar goods in the two markets tend to become equal.
(vii) Producers in the two countries closely compete with each other.

Question. What steps should be taken to make trade more fair between the countries? (Board
Answer : The following steps should be taken :
(i) Before imposing a trade barrier, the interest of the developing countries should be taken care of.
(ii) Rules and regulations should be uniform.
(iii) Ensure that the developed countries do not retain trade barriers unfairly.
(iv) Labour laws should be implemented properly.
(v) Small producers should be supported to improve their performance till they become strong enough to compete. 

Question. How have our markets been transformed? Explain with examples.
OR
In recent years how our markets have been transformed? Explain with examples.
OR
How have our markets been transformed in recent years ? Explain with examples.
Answer : Markets have been transformed in recent years:-
(i) We have a wide choice of goods and services before us.
(ii) The latest models of digital cameras, mobile phones and televisions made by the leading manufacturers of the world are within our reach now.
(iii) Example: every season new models of automobiles can be seen on Indian roads.
(iv) Today, Indians are buying cars produced by nearly all the top companies in the world.
(v) A similar explosion of brands can be seen for many other goods ; from shirts to televisions to processed fruit juices. 

Question. “Globalisation and greater competition among producers has been advantageous to consumers.” Support the statement with examples.
Answer : Globalisation and greater competition among producers has been advantageous to consumers :
(i) Globalisation and greater competition among producers both local and foreign has been advantageous to consumers, particularly to well off sections of urban areas.
(ii) There is greater choice before these consumers who now enjoy improved quality and lower prices for several products.
(iii) People enjoy higher standards of living.
(iv) But the impact of globalisation has not been uniform among producers and workers.
(v) Services of the top Indian companies have been able to benefit from the increased competition.
(vi) They have invested in newer technology and production methods and raised their production standards.
(vii) Wide ranging choice of goods in our markets is a recent phenomenon and has brought changes in lives of people. 

Question. The impact of globalisation has not been uniform.” Demonstrate with the help of illustrations”.
Answer : (i) While globalisation has benefited well off consumers and also producers with skill, education and wealth, many small producers and workers have suffered as a result of the
rising competition.
(ii) Removal of trade barriers and liberalisation policies of the governments to facilitate globalisation have hit the local producers and manufactures hard.
(iii) Globalisation and the pressure of competition have substantially changed the lives of workers. Faced with grow in competition, most employers
these days prefer to employ workers ‘flexibly’. This means that workers’ jobs are no longer secure.
Illustration :
Any one case—either from the text book or beyond it, e.g.,
MNCs and workers, MNC’s and local manufactures/industries, withdrawal of subsidies, etc.

Question. Explain the role of Multinational Corporations in the globalisation process. 
Answer : MNCs play an important role in the globalisation process.
(i) MNCs control production in more than one country.
(ii) They compete with the local producers directly even after being miles apart, thus integrating the markets.
(iii) Their working leads to an exchange of investments and products which leads to the interconnection between diverse countries.
Countries get linked when movement of goods, people, investment and services between different countries takes place. They can be linked as producers or consumers of the same products or one can be a producer and the other consumer. The recent advancement in technology, transport and communication systems has enhanced globalisation.

Question. How do multinational Corporations (MNCs) interlink their production across countries ? Explain with examples.
Answer : Multinational Corporations (MNCs) control their production across countries in various ways :
(i) MNC is a company that owns and control production in more than one nation. MNCs set up offices and factories for production in regions where they can get cheaper labour and other resources. This is done so that the cost of production is low and the MNCs can earn greater profits. (ii) The MNC is not only selling its finished products globally, but more important, the goods and services are produced globally. (iii) The production process is divided into small parts and spread out across the globe. In the above example, China provides the advantage of being a cheap manufacturing location. (iv) The most common route for MNCs investments is to buy up local companies and then to expand production. For example, Cargill Foods, a very large American MNC bought over Indian company Parekh Foods which had their large marketing network in various parts of India and also a good reputation. With this advantage, Cargill has now become the largest producer of edible oil in India. (v) There is another way in which MNCs control production. Large MNCs in developed countries place order for production with small producers of cheaper countries. Garments, footwear, sport items come in this category and MNCs after quality check put their brand name on these items.
(vi) As a result, production in these widely dispersed locations is getting interlinked.

Question. What is liberalisation ? Describe any four effects of liberalisation on the Indian economy.
Ans: The Indian Government has liberalized many barriers in foreign trade and foreign investment due to following reasons : (i) The Indian government took on the basis of perception, membership of WTO, an international organisation. (ii) It was thought that WTO would protect India from the pressures of stronger trading partners as WTO’s rules envisage non-discrimination in the form of national treatment and most favoured nation (MFN) treatment to India’s exports in the market of other WTO members. (iii) It was said that members would not discriminate tariff regimes among various WTO members as also would honour their respective rules, regulations and incentives etc. (iv) However, in implementation, WTO agreements did just contrary to what was envisaged in its rules.