globalization in india

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GLOBALIZATION IN INDIA

By- Sumit Kumar

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GlobalizationExpansion of economic activities across the

political boundaries of nation statesIncreasing economic openness and growing

economic interdependence between countries Opening up of markets to foreign players

and vice versa

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Globalization According to IMF globalization stands for ‘the

growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology’.

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• Trade – goods and services.– You can buy a TV from China, car from Japan, clothes from

Indonesia or Italy.– You can hire someone from India to write software or answer

your telephone• Capital – money, investment

– You can put your savings into a bank in Zurich.– You can buy stock in SONY, a Japanese company

• People – immigrants, refugees, tourists– Immigrants come to Calgary from Asia, Africa, S. America,

Europe– You can easily travel to Europe, Asia, S. America

• Communication– You can easily call or email people around the world

• Culture (art, music, cuisine)– You can hear music from Brazil, South Africa, India– Nearby restaurants: Chinese, Thai, Ethiopian, Indian

• Ideas

What kinds of things cross international borders?

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DRIVERS OF GLOBALISATION

1. International trade (lower trade barriers and more competition)

2. Financial flows (FDI, Technology transfer/licensing, portfolio management, debt)

3. Communications (traditional media and internet)

4. Technological advances in transportation, electronics, bioengineering and related fields.

5. Population mobility, especially labour.

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Driving Forces1. Improvements in information technology

2. Trade liberalization

3. capital flows

4. Cheap travel

5. Less rigorous immigration policies

6. Marketing

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Market driversPer capita income converging among industrialised nations

Convergence of lifestyles and tastesOrganisations beginning to behave as

global customersIncreasing travel creating global

consumersGrowth of global and regional channelsEstablishment of world brandsPush to develop global advertising

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Cost drivers

Continuing push for economies of scaleAccelerating technological innovationAdvances in transportationEmergence of newly industrialised

countries with productive capability and low labour costs.

Increasing cost of product development relative to market life

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Government driversReduction of tariff barriersReduction of non-tariff barriersCreation of blocsDecline in role of governments as

producers and customersPrivatisation in previously state-

dominated economiesShift to open market economies from

closed communist systems in eastern Europe

Increasing participation of China and India in the global economy

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Competitive driversContinuing increases in the level of world

tradeIncreased ownership of corporations by

foreign acquirorsRise of new competitors intent upon

becoming global competitorsGrowth of global networks making countries

interdependent in particular industriesMore companies becoming globally centred

rather than nationally centredIncreased formation of global strategic

alliances

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Other driversRevolution in information and

communication

Globalisation of financial markets

Improvements in business travel

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Increases economic prosperity and opportunity

Higher degrees of political and economic freedom in the form of democracy

Improved standard of living – reduction in poverty

Improved gender relations

Increased life-span

Pros of Globalization

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Cons of GlobalizationIncreased environmental damage

increased poverty, inequality, injustice

erosion of traditional culture

Corporations are motivated by profit and have little concern for people

economic globalization developments feed into ethnic, religious, and factional tensions that lead to wars and help breed terrorism

Terrorists now globally interconnected and empowered with knowledge, create a whole new category of warfare based, in part, on the disruption of the interconnections which are both created

by and necessary for globalization

Corporations shape political policy of countries e.g. over fishing

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IMPLICATION AND IMPACT OF GLOBALIZATIONBenefits1. Foreign capital if properly utilized can

provide substantial benefit to the economic development of a nation e.g. China

2. Productivity will increase where countries are producing products where they have comparative advantage. Living standards will also increase

3. Increase competitiveness make companies more cost and quality conscious

4. Inflation is less likely to have damaging impact

5. Increased consumer choice.6. Export jobs often pay more than other

jobs

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ESSENTIAL CONDITIONS FOR GLOBALIZATION

1. Business freedom2. Facilities3. Government support4. Resources5. Competitiveness6. Orientation

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IMPLICATION AND IMPACT OF GLOBALIZATION

Adverse Effects1. Global dominance of MNEs2. Countries indiscriminate attitude toward foreign

investment3. Large number of takeovers of national firms by

foreign firms4. Replacement of traditional and indigenous products

by modern products.5. Sometimes liberalization is adopted to serve the

best interest of a section of people not the masses6. Domestic firms are playing with big MNEs without

enough protection thus without a level playing field

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IMPLICATION AND IMPACT OF GLOBALIZATION

Adverse Effects7. MNEs dump obsolete technology to the developing

world.8. The developing countries as a whole are being in a

disadvantageous position by the international trading system.

9. Millions of people from developed world have lost their job due to the shift of the production in low cost location

10. The job loss, less pay, fear of loosing jobs are common in both manufacturing and service sector.

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GlobalizationGood news

Bad news Wider markets for trade Larger private capital inflows Better access to technology Availability of a wider variety

of goods

Reduction in sovereignty Increase in competition may lead to some firms closing down Risk of being left behind Payoffs are larger, but so are the penalties for policyin action

or errors

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India Foreign Exchange Reserves

Foreign Exchange Reserves in India increased to 14760.70 INR Billion in June of 2013 from 14228.40 INR Billion in May of 2013.

Foreign Exchange Reserves in India is reported by the Reserve Bank of India. India Foreign Exchange Reserves averaged 4856.84 INR Billion from 1990 until 2013, reaching an all time high of 14760.70 INR Billion in June of 2013 and a record low of 23.86 INR Billion in June of 1991.

In India, Foreign Exchange Reserves are the foreign assets held or controlled by the country central bank. The reserves are made of gold or a specific currency.

They can also be special drawing rights and marketable securities denominated in foreign currencies like treasury bills, government bonds, corporate bonds and equities and foreign currency loans

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FOREIGN EXCHANGE RESERVES

1990-91 - 114.16 2000-01 -1972.042011-12 - 15061.30

In Billion ₨

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India Exports Exports in India increased to 1430 INR Billion in June of

2013 from 1348.08 INR Billion in May of 2013. Exports in India is reported by the Directorate General of

Commerce. India Exports averaged 243.74 INR Billion from 1978 until

2013, reaching an all time high of 1678.36 INR Billion in March of 2013 and a record low of 3.75 INR Billion in May of 1978.

India’s main exports are engineering goods (19 percent of total exports), gems and jewelry (15 percent), chemicals (13 percent), agricultural products (9 percent) and textiles (9 percent).

India is also one of Asia’s largest refined product exporters with petroleum accounting for around 18 percent of total exports. India’s main export partners are United Arab Emirates (12 percent of total exports) and United States (11 percent). Others include: China, Singapore, Hong Kong and Netherlands.

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EXPORT IN INDIA1990-91 - 406.35

2000-01 - 2781.26

2011-12 - 21817.09

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India Imports

Imports in India decreased to 2166 INR Billion in June of 2013 from 2456.19 INR Billion in May of 2013.

Imports in India is reported by the Directorate General of Commerce.

India Imports averaged 364.23 INR Billion from 1978 until 2013, reaching an all time high of 2475.94 INR Billion in January of 2013 and a record low of 4.98 INR Billion in April of 1978.

India is heavily dependent on coal and foreign oil imports for its energy needs.

Other imported products include: machinery, gems, fertilizers and chemicals. India’s main import partners are China (12 percent of total imports), United Arab Emirates, Switzerland, Saudi Arabia, United States, Iraq and Kuwait.

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Import of Goods andServices1990-91 - 486.98

2000-01 - 2975.23

2011-12 - 26434.03

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India GDP

The Gross Domestic Product (GDP) in India was worth 1841.70 billion US dollars in 2012.

The GDP value of India represents 2.97 percent of the world economy.

GDP in India is reported by the The World Bank Group. India GDP averaged 485.65 USD Billion from 1970 until 2012, reaching an all time high of 1872.90 USD Billion in December of 2011 and a record low of 63.50 USD Billion in December of 1970.

The gross domestic product (GDP) measures of national income and output for a given country's economy. The gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time

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GDP IN INDIA1990-91 - 5862.122000-01 - 21686.522011-12 - 88557.97

(Amount in Billion)

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India GDP per capita PPPThe Gross Domestic Product per capita in India

was last recorded at 3649.53 US dollars in 2011, when adjusted by purchasing power parity (PPP).

The GDP per Capita, in India, when adjusted by Purchasing Power Parity is equivalent to 17 percent of the world's average. GDP per capita PPP in India is reported by the World Bank.

India GDP per capita PPP averaged 1446.39 USD from 1980 until 2011, reaching an all time high of 3649.53 USD in December of 2011 and a record low of 419.87 USD in December of 1980. The GDP per capita PPP is obtained by dividing the country’s gross domestic product, adjusted by purchasing power parity, by the total population

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India GDP Growth Rate

The Gross Domestic Product (GDP) in India expanded 1.30 percent in the fourth quarter of 2012 over the previous quarter.

GDP Growth Rate in India is reported by the OECD. India GDP Growth Rate averaged 1.63 Percent from 1996 until 2012, reaching an all time high of 5.80 Percent in December of 2003 and a record low of -1.70 Percent in March of 2009. In India, the growth rate in GDP measures the change in the seasonally adjusted value of the goods and services produced by the Indian economy during the quarter.

India is the world’s tenth largest economy and the second most populous.

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The most important and the fastest growing sector of Indian economy are services. Trade, hotels, transport and communication; financing, insurance, real estate and business services and community, social and personal services account for more than 60 percent of GDP.

Agriculture, forestry and fishing constitute around 12 percent of the output, but employs more than 50 percent of the labor force. Manufacturing accounts for 15 percent of GDP, construction for another 8 percent and mining, quarrying, electricity, gas and water supply for the remaining 5 percent.

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