Economics Project on Globalisation – CBSE Class 12

INTRODUCTION:

The term globalization is derived from the word globalize, which refers to the emergence of an international network of the economic systems. Since its inception, the concept of globalization has inspired competing for definition and interpretations, with antecedents dating back to the great movements of trade and empire across Asia and the Indian ocean from the 15^th century onwards. Due to the complexity of the concept, research projects, articles, and discussions often remain focused on a single aspect of globalization. Globalization can be located on a continuum with the local, national, and regional. At one end of the continuum lie social and economic relations and networks which are organized on a local on a national basis at the other end lie social and economic relations which crystallize the wider scale of global interactions.

OBJECTIVE

• To know more about the Globalisation and also about its Merits and Demerits.
• To understand about the behand the globalization.
• To analysis the value measures of globalization.
• To know about the positives and negatives of the globalization in the Economy.

NEEDS AND SIGNIFICANCE:

• It helps to know about the interconnection between two or more countries.
• It helps to know more about the transfer of goods and services.
• Globalization makes the whole market into one as it reduces the barriers across the world.
• Globalization helps to access technology as it helps in more production propose in the international market.

HISTORY:

There are both distal and proximate causes, which can be traced to the historical factors affecting globalization. Large-scale globalization began in the 19^th century. Globalization is not a new phenomenon. For centuries individuals have been buying and selling goods to individuals in other lands. Through the years, globalization has continued to spread through the passing of information and communication. International commodity markets, labor markets, and capital markets make up the economy and define economic globalization. Beginning as early as 4000 BCE, people were trading livestock, tools, and other items. In early civilization, in Mesopotamia, a token system was the first form of commodity money.

GLOBALISATION:

Globalization refers to the integration of markets in the global economy, leading to the increased interconnectedness of national economies, or it is the process of rapid integration or interconnection between countries. Markets, where globalization is particularly common, to include financial markets, such as capital market, money and credit market and insurance market, commodity markets, including markets for oil, coffee, tin and gold, and product market, etc. MNC’s that are Multi-National Countries are playing a major role in the process of globalization. More and more goods and services, investments, and technology are moving between countries. This is the integration of economies, industries, markets, culture, and policymaking around the world. Globalization describes a process by which national and regional economies, societies, and cultures have been integrated through the global network of trade, communication, immigration, and transportation. In the more recent past, globalization was often primarily focused on the economic side of the world, such as trade, foreign direct investment, and international capital flow, more recently the team has been expanded to include a broader range of areas and activities such as culture, media, technology, socio-cultural, political and even biological factors, e.g., climate change. Globalization is defined as a system related to increasing interaction, growing economic independence, and widening economic integration is the world economy. It encourages the integration of the economy of the country with the world economy. It is an outcome of a set of various policies that are aimed at transforming the world towards greater interdependence and integration. It involves the creation of networks and activities transcending economic, social, and geographical boundaries. It encourages foreign trade, private and institutional foreign investment. It practically removes all hindrance and restriction of foreign trade.

CHARACTERISTICS OF GLOBALISATION:

Globalization is a process of deeper integration between countries and regions of the world involving:

• Greater trade across the border in goods and services.
• An increase in transfers of capital, including the expansion of foreign direct investment (FDI) by transnational companies (TNCs) and the rising influence of Sovereign Wealth Funds. Fifty-one of the largest economies in the world are corporations.
• The development of global brands that serve markets in lower, middle, and higher-income countries.
• Greater use of outsourcing and offshoring of production. The classic example is the iPhone, which is part of a complex global supply chain. The product was conceived and designed in Silicon Valley in the USA, and the software enhanced by engineers working in India. Most iPhones are assembled in China and Taiwan.
• High levels of labor migration both within and between countries.
• New nations joining the trading system, for example, Russia joined the World Trade Organization (WTO) in 2012. The latest countries to join the WTO are Yemen (2014), Seychelles (2015), Kazakhstan (2015), and Afghanistan (2016).
• A shift in the balance of economic and financial powers from developed to emerging economies and markets – i.e., a change in the center of gravity in the world economy.
• Increasing spending on capital investment, innovation, and infrastructure across a large part of the world.
• Globalization is a process of making the world economy more connected and inter-dependent.
• Many industrializing (emerging) countries are winning a rising share of world trade, and their economies are growing faster than developed nations. Emerging and developing countries now account for more than 57% of global GDP adjusted for purchasing power according to 2015 data published by the IMF. The 28 – nation European Union has a share of global GDP that is the Gross Domestic Products of less than 17%.
• Globalization reform allows free interaction of an economy with the rest of the world

Shares of World Economic Output in 2015

The percentage share of the main industrialized and emerging countries in the global gross domestic product (adjusted for purchasing power) in 2015

Note:

Adjusted for purchasing power means that the $ value of each country’s GDP has been altered to take account of differences in the cost of living in different nations

Using this measure, China in 2015 is now the biggest economy in the world, although China’s per capita national income remains a low fraction of advanced high-income countries.

Our new economic policy contributed to globalization in the following ways:

1. Raising foreign equity participation.
2. Devaluation of Rupee.
3. Convertibility of Rupee.
4. Long Period trade policy.
5. Encouragement to open competition.
6. Modification of custom and Tariffs.

ADVANTAGES OF GLOBALISATION:

• Globalization brings several potential benefits to international producers and national economies, including:
• Providing an incentive for countries to specialize and benefit from the application of the principle of comparative advantage.
• Globalization enables World Wide access to sources of cheap raw materials, and this enables from to have cost comparative in their market and overseas markets.
• In the long term, increased trade is likely to lead to the creation of more employment in all countries that are involved.
• Globalization has been able to establish links is such a way that the happening (advancement) in India can be influenced by events happening miles away from the rest of the world.
• Globalization has been able to turn the world into one whole on creating a boundary-less world as it provides easy asses to the global market.
• We are now exposed to advance technology and can develop indigence production in the international markets.
• Globalization should be seen as an opportunity in the teams of greater asses to global markets and increase the possibility of large industries of developing countries to become an important player in the international arena.

DISADVANTAGES OF GLOBALISATION:

There are also several disadvantages of globalization as the coin had two sides with it:

• Jobs may be lost because of the structural changes arising from globalization. Structural changes may lead to structural unemployment and may also widen the gap between rich and poor within a country.
• Increased trade associated with globalization has increased pollution and helped contributed to Co₂ emission and global warming. Trade growth has also accelerated the depletion of non-renewable resources such as oil.
• Globalization has compromised the welfare and identity of people belonging to poor counties.

NEGATIVE EFFECT