Ans) Governments can use trade barriers to increase or decrease (regulate) foreign trade and to decide what kinds of goods and how much of each should come into the country.

The Indian government, after independence, had put barriers to foreign trade and foreign investment. This was considered necessary 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 come up. Thus, India allowed imports of only essential items such as machinery, fertilizers, petroleum, etc. Starting around 1991, some far-reaching changes in policy were made in India. The government decided that 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 quality. This decision was supported by powerful international organizations.

Thus, barriers on foreign trade and foreign investment were removed to a large extent. This meant that goods could be imported and exported easily and also foreign companies could set up factories and offices here.

Ans) The factors that encourage the process of globalisation are as follows:-

1. Technology- The past five decades have seen several improvements in transportation technology. This has made much faster delivery of goods across long distances possible at lower costs. Telecommunication facilities such as internet, mobile phones, fax etc. have made the task of communicating with each other all over the world easier. Communication satellites have made a revolutionary change by expanding these facilities, which has led to rapid expansion of globalisation.
2. Competition- Competition has a sepcial importance in the capitalist economic system. In this system, various producer companies use competition with the aim of capturing the market. For this, these companies along with reducing the price takes help of advertisements and various means of publicity.
3. Expansion of the Market- In the last few years there has been an increase in the demand for goods and services due to the increase in the income of the consumers, change in consumer’s attitude, interests and habits etc. The development of technology has led to an improvement in the quality and variety of products. As a result, the production of new items has become possible, due to which the markets have expanded.
4. Expansion of MNCs- The first feature of MNC is that their activities are not limited to any one nation but run in many countries. These companies set up factories for production in countries where they get cheap labour and other means. This reduces the cost of production and increases the competitiveness of the companies. MNCs do not only sell their products globally, but more importantly, they produce goods and services globally.
5. Process of Liberalisation- Until the middle of the twentieth century, production was mainly confined within the boundaries of the nations. Many countries had imposed many types of strict restrictions to protect the goods, produced by them from foreign competition. But in the 1970s and 1990s, many such changes took place which started the process of liberalising foreign trade. After the establishment of World Trade Organization in 1995, almost all the countries of the world reduced their import taxes and opened their national markets to other nations. As a result, the process of globalisation has got impetus.

Ans) Major problems arising out of globalisation are as follows:-

1. Impact on the Lives of Workers: Globalisation has had a huge impact on the lives of workers. Most of the employers prefer flexibiity in employing workers due to increasing competition. This means that the employment of workers is no longer assured.
2. Impact on Small Producers: (See Q. 5. of Short Answer Type Questions).
3. Not All People Benefit: The benefits of globalisation have not been received by all sections of the society. Educated, skilled and properous people have used the new opportunities provided by globalisation. In contrast, many have not received a share in the profits. Thus, it can be said that the weaker and poorer sections of the society are restricted from the benefits of globalisation.
4. Hegemony of Developed Nations: The process of globalisation is being implemented as per the instructions of the World Trade Organisation. But this organisation is dominated by developed nations. These nations support only those policies and programs from which they get benefit. These have not opened their markets for workers. Similarly, no decision has been taken on the subsidy given to agriculture. Therefore it is necessary that the dominance of developed nations should be ended and develop globalisation so that all the nations have benefits.
5. Regional Inequalities: Globalisation has increased regional inequalities, just as developed nations have benefited more than developing nations due to globalisation, in the same way, developed areas within the nation have also benefitted more than backward areas. Thus, the benefits of globalisation have not been received by the people of all regions.

Ans) In recent years, the central and state governments of India have been taking special steps to attract foreign companies for investment.

1. Industrial zones, called special economic zones, are being established. World class facilities in special economic zones-electricity, water, road, transport, storage, entertainment and educational facilities should be provided.
2. Companies, setting up a production unit in a special economic zone do not have to pay any tax for the first five years.
3. To attract foreign investment, government has given permission for flexibility in labour laws.
4. Companies in the organised sector have to comply with certain rules, whose purpose is to protect the rights of the workers. In recent years, the government has allowed companies to deviate from many regulations.
5. Now instead of employing workers on a regular basis, when there is high work pressure, companies hire workers for short period flexibly. This is done to cut down the labour cost of the company.

Ans) MNCs set up, or control, production in other countries through various ways:-

1. Generally, MNCs set up production where it is close to the markets, where there is skilled and unskilled labour available at low costs, and where the availability of other factors of production is assured. In addition, MNCs might look for government policies that look after their interests.
2. MNCs set up factories and offices for production. The money that is spent to buy assets such as land, building, machines and other equipment is called investment. Investments made by MNCs is called foreign investment.
3. At times, MNCs set up production jointly with some of the local companies of these countries. The benefit to the local company of such joint production is two-fold.
4. The most common route for MNC investments is to buy local companies and then to expand production. MNCs with huge wealth can quite easily do so.
5. There is another way is which MNCs control production. Large MNCs in developed countries place orders for production with small producers, garments, footwear, sports items are examples of industries where production is carried out by a large number of small producers around the world. The products are supplied to the MNCs, which then sell these under their own brand names to the customers.

Thus, we see that there are a variety of ways in which the MNCs are spreading their production and interacting with local producers in various countries across the globe.

Ans) Fair globalisation would create opportunities for all, and also ensure that the benefits of globalisation are shared better.

The government can play a major rolein making this possible. Its policies must protectthe interests,not only of the rich and the powerful, but allthe people in the country.

The government can ensure that labour laws are properly implemented and the workers get their rights. It can support small producers to improve their performance till the time they become strong enough to compete. If necessary, the government can use trade and investment barriers. It can negotiateat the WTO for ‘fairer rules’. It can also align with other developing countries the similar interests to fight against the domination of developed countries in the WTO.

In the past few years, massive compaigns and representation by people’s organisation have influenced important decisions relating to trade and investments at the WTO. This has demonstrated that people also can play an important role in the struggle for fair globalisation.

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