Foreign investment will increase?

Globalisation

4 Marks Questions

1. Why do developed countries want developing countries to liberalise their trade investment? What do you think should the developing countries demand in return?
A:  Developed countries want developing countries to liberalise their investment because..
*  They can setup their manufacturing centres with less expense in developing nations.
*   By investing in developing countries, manufacturing costs can be lowered and profits can be increased.
*  The demand of the developing countries should be protection of domestic producers.
*  Restrictions over the subsidies in develop ed countries levying of additional charges on MNC's

2. What is the role of MNC's in the process of globalisation?
A:  In the process of globalisation MNC's play an important role in the following ways.
*  MNC's are spreading their production to other countries where labour and other resources are easily available.
*  In this way they bring foreign investment in these countries.
*  They buy up local companies and then expand production.
*  They set up production jointly with some of the local companies.
*  They use local companies for supplies.
*  They bring new and advanced technology with us.
*  More and more goods and services, investments and technology are moving between countries.
*  MNC's are playing an important role in the process of globalisation.

3. Should more Indian companies emerge as MNC's? How would it benefit the people in the country?
A:  Yes, If more Indian MNC's are set up, this would not only contribute to the Indian economy, but also generate employment in the country.
*  This helps India to emerge as an economic super power.
*  More Indian companies should emerge as MNC's. Thus India would be able to spread its production across the globe and also dominate the international markets.
*  The people of the country would benefit from it.
*  They get quality goods and services at lower prices.

4. Explain the effects of globalisation in India?
A: * The impact of globalisation in India is not uniform.
*  It has benefited rich consumers.
*  Certain services enabled with technology have expanded.
*  Some new jobs are created.
* Some large Indian companies have grown as MNC's.
*  Most of the small producers and workers are not happy with globalisation as their employment and rights are eroded.

2 Marks Questions

1. Write about World Trade Organization.
A: World Trade Ogranisation was set up to promote trade among member countries. It also handle trade disputes. WTO forms rules and regulations, which all members have to adopt for the betterment of trade.

2. Why do governments try to attract more foreign investment?
A: * Foreign investment will increase economic activity.
*  Foreign investment helps in employment generation.
*  This will promote infrastructural facilities.
*  MNC bring latest technology.

3. What do you understand by liberalisation of foreign trade?
A: * Removing barriers or restrictions set by the government is known as liberalisation.
*  Liberalisation of trade with foreign countries, businessmen are allowed to make decisions freely about what they wish to import or export.
*  The government imposes much less restrictions than before and is therefore said to be more liberal.

4. Write about SEZ. Why some people in India opposing SEZ?
A: * To attract foreign investments governments in India establishing SEZs.
*  World class facilities like electricity, transport, storage entertainment etc. were being provided here.
*  The companies established in SEZ's will got 5 years tax exemption.
*  But different sections of people like farmers, forest dwellers, environmentalists were opposing SEZ's.
*  They fear that they loss their land and about environmental problems.

5. The impact of Globalisation is not Uniform. Explain.
A: Industrial and services sector benefited more because of globalisation but agriculture sector has been ignored.
*  Small production units closed.
*  Urbanisation increased.
*  Only skilled professionals get benefited.

6. How would flexibility in labour laws help companies?
A: * Governments allowed flexibility in the labour laws to attract foreign investment.
*  Instead of hiring workers on a regular basis, companies hire workers flexibly.
*  Companies can offer good salaries for worthy labour and terminate unuseful labour.
*  That is for short periods when there is intense pressure of work.
*  Labour laws protect the interests of labour with guaranteed jobs, security in jobs. But rigid labour laws hinder the growth of companies with too many restrictions.

1 Mark Questions

1. What are the three types of movements within international economic exchange?
A: * The flow of trade in goods and services.
* The flow of labour.  
* The flow of capital.

2. What is Arab Spring?
A: Several nations in western Asia and Northern Asia like Tuinisia, Egypt were influenced by each others revolutions and uprooting of dictators. This is called Arab Spring.

3. What is liberalisation?
A: Removing restrictions set up by governments is known as liberalisation.

4. Name the factors that have enabled globalisation?
A: * Technology   
* Liberalisation of foreign trade
* Foreign investment policy

5. What is multi national company?
A: An MNC is a company that owns or controls production in more than one nation.

6. Define privatisation.
A: Privatisation means encouraging private sector and discouraging public sector.

7. What is Brain Drain?
A: The migration of skilled people to other nations in search of better opportunities and employment is known as Brain Drain.

8. What is outsourcing?
A: Outsourcing means going out to a source outside of the company to buy regular services.

9. What is a joint venture?
A: MNC set up production jointly with local companies is a joint venture.

10. Define globalisation.
A: Globalisation is the process by which businesses or other organisations develop international influence. They start operating in an international scale.

Essential Information

MNC - Multi National Company
SEZ - Special Economic Zone
IMF - International Monetary Fund
IDA - International Development Association
WTO - World Trade Organisation
IBRD - International Bank of Reconstruction and Development

1/2  Mark Questions   

1. The current membership of WTO is ...
    A)120       B)100        C)110        D)150

2. Liberalisation in India was started around. .
   A)1951     B)1961      C)1981        D)1991

3. The share of agriculture in GDP in US is ...
    A) 5%       B) 3%         C) 1%        D) 2%

4. Which of the following is not an MNC?
    A) Ford Motors             B) Asian Paints   
    C) Priya Foods             D) Tata Motors

5. The aim of WTO is
    A) Strict trade            B) Providing education
    C) Health care            D) Liberalise international trade

6. The amounts spent by MNC's on land, machinery, etc. is
    A) Foreign Trade     B) Profit  
    C) Trade             D) Foreign Investment

7. Globalisation is a phenomenon which started at the end of which century?
    A) 19th      B) 17th      C) 18th      D) 20th

8. Ranbaxy -
  A) Medicines     B) Nuts     C) IT       D)  Automobiles
Answers
1-D   2-D  3-C  4-C  5-D  6-D  7-D  8-A

Additional Questions

1 Mark

1. What is the purpose of foreign trade?
2. What is investment?
3. Why are the chinese toys popular in the world?
4. What do you mean by trade barrier?

2 Marks

1. Give four reasons to the factors that helped globalisation?
2. The impact of globalisation is not similar on producers and labourers. How?
3. How has competition benefited people in India?

4 Marks

1. Explain about SEZ.
2. In what ways is an MNC is different from other companies?
3. How has liberalisation of trade and investment policies helped the process of globalisation?
4. Distinguish between foreign trade and foreign investment?