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Archive for the ‘Globalisation’ Category

In this globalized world, Globalisation often comes up for discussions and while many speak eulogising globalisation, as many put the entire blame on it for all the ills prevalent across the world. Golbalisation per se is not something worth blaming and as Amartya Sen in his much acclaimed ‘Argumentative Indian, establishes with facts globalisation was very much here and it is not at all a new phenomenon. Trade, travels by great travellers of yore like Huen Tsang, Fahian, Vasco Da Gama to name a few, flourished across various countries since centuries. As we are witnessing today academic pursuits as well as cultural contacts were in vogue in those days. Hence blaming globalisation blindly has no meaning otherwise absolutely meaningless. Unfortunately it has turned out to be a fashion among a lot to cast aspersions on globalisation and they are not to be blamed for it, as they have their own reasons in subjecting it to scathing criticism. Even those who keep soft corner in their minds towards it, of late the negative points far outweigh plus points a stark unfortunate reality.

Many a bad influence affect all countries from across Western countries like sexual anarchy, a permissive society, the inflow of immoral tendencies, selfish, greed, ulteriror motives of the industrial and business communities by flashing obscene advertisements through visual, print media, internet, bad cultural influences, all being aped across the spectrum in India and other such developing and least developed countries. The inundating bad influences especially affect our children and youth alike and all these influences assimilated and practised by a world of cut-throat competition for amassing wealth and way-ward dealings like drug-trafficking, immoral trafficking and child abuse. Nowadays our contemporary film sector is ne of the examples barring a minority of films, obscenity rules roost in majority of films, the purpose behind producing such films remain the greed for more and more wealth and gratification of sorts. Many actors, male and female alike compete with one another to plunge into the tinsel world and thus hog the lime-light and also for piling up crores and crores of money. In their race to grab opportunities they stoop to such low levels like shedding their self-respect and ethical values. Globalisation in fact plays a prominent role bringing the situation to such a pass.

Due to these bad influences, the plus sides are widely neglected like youth and businessmen getting ample opportunities for pursuing higher-studies, to pursue more jobs with attractive career prospects and also for starting new business ventures by the trade and business community. Lakhs benefitted simultaneously benefitting their mother countries through remittances from abroad. The boom period lasted for decades benefitting many nations and many job, business and trade aspirants.

Ever since the unfortunate Global Economic Meltdown in America in 2008 and its repercussions across Europe, even the Asian nations like India inspite of being a regulated economy badly affected, the boom period had to bid good-bye subsequently forcing US and European nations thinking on the lines of protectionist tendencies. Many rendered jobless in fact including educated, employed youth of US and the Indian diaspora. Till then enjoying brilliant career prospects and earning lucrative salaries these Indian youth in droves left to their motherland jobless. A few upon getting depressed bid goodbye to their lives together with their families. The sudden shock on the economy naturally shocked many and those ones who lavishly enjoyed lives till then couldn’t come face to face with the stark reality.

After Barack Obama ascended the throne in 2008, he unleashed a stimulus package of US 9 bn, a meagre sum compared to the magnitude of the disaster and naturally it could only partially benefit the nation.

Many remained homeless, jobless and on witnessing their lot, he mulled restricting the outsourcing of jobs to India by raising tax rates of those businessmen outsourcing jobs to India. In addition to that he raised the H1B and L1 visa fee hikes sharply affecting a lot of Indians very badly. Any reduction of tax-rates on outsourcing of jobs and any reduction of raised visa fees are not even a distant possibility even on the ocassion of Obama’s ongoing visit to India.

Similar is the case in Britain, where immigration rules have been tightened raising the visa fees for students and skilled employees. That nation also seems to be moving on the path of Protectionism, another threat to Indian students and skilled workers.

Venkita Raman Ramakrishnan, Nobel Laureate in Chemistry in 2009, India’s pride, reportedly has come down on tightening of immigration rules where he is immersed in research in the Laboratory of Molecular Biology (LMB) at Cambridge. He went on with his observation that if the immigration rules that he witnesses today were in force at the moment of his hope of flying to Britain he would never have even imagined about landing in Britain to follow his research.

Britain’s new immigration rules according to Venkita Raman Ramakrishnan are bound to affect badly the Indian students intending to pursue higher academic studies in Britain and which would ultimately affect not only those students but the entire world in the coming days ultimately stagnating the progress of academic pursuits and employment.

As austerity measures across European countries become rampant protectionist tendencies are expected to rise alarmingly and at present there seems to be no way out.

Incoming search terms:

• globalisation and protectionism (2)

PROS AND CONS OF GLOBALISATION

                        While developing countries which, in the past, were against globalisation, have wide opened their doors for globalisation, many people in developed countries like USA are angry against globalisation. American jobs and wage levels are severely affected by the influx of cheap imports and shifting of production to low cost overseas locations. According to a Business Week/Harris poll  in early 2000, more than two-thirds of Americans believe that globalisation drags down U S wages. A strong majority of the Americans feel that trade policies have not adequately addressed the concerns of American workers, international labour standards, or the environment. The important pros and cons of globalisation according to the above survey are the following. Productivity grows more quickly when countries produce goods and services in which they have comparative advantage Living standards can go up faster.

Global competition and imports keep a Hd on prices, so inflation is less likely to derail
economic growth. An open economy spurs innovation with fresh ideas from abroad. Export jobs often pay more than other jobs. Unfettered capital flows give the US access to foreign investment and keep interest rates low. The adverse effects of globalisation according to the survey are: Millions of Americans have lost jobs due to imports or production shifts abroad. Most
find new jobs that pay less. Millions of others fear losing their jobs, especially at those companies operating under
competitive pressure. Workers face pay cut demands from employers, which often threaten to export jobs. Service and white collar jobs are increasingly vulnerable to operations moving offshore. U S employees can lose their comparative advantage when companies build advanced
factories in low-wage countries, making them as productive as those at home.

            True, globalisation can benefit the developing countries in several ways. It is, however, apprehended that unregulated globalisation will cause serious problems for developing countries.

            The almost universal acceptance of the market economy and the globalisation driven by private enterprise tend to aggravate most of the harmful effects traditionally attributed to neocolonialism.

            The global dominance of industries by MNCs is on [he increase. Many countries are indiscriminate in liberalising foreign investment. Pepsi, Coke and L’junk foods” are allowed even in countries like China.

            A number of countries allow high foreign stake even in industries where that is not really required. This could affect domestic enterprise of developing countries.

            There has been a large number of cases of takeover of national firms by foreign firms. In some of these cases, the domestic firms are driven to a situation of having to hand over the majority or complete equity to the foreign partners of joint ventures because of the inability of the Indian partners to bring in additional capital or some other incapability.”

            Replacement of traditional and indigenous products by modern products, resulting in the ruin of traditional crafts and industries and the livelihood of people in these sectors have also been happening in several countries.

            There should also be benefits for employment from a liberal financial regime. Removing restrictions on capital flows should attract more FDI, creating more jobs for the poor by integrating them into international systems of production.”24

            It is criticised that developed nations receive most of the FD1, A very small number of the developing countries, which are the relatively developed or large or fast growing in the developing world account for the lion’s share of the FDI flows to this category. What the critics do not appreciate is that, as foreign investment flows are based on economic rational, it is unrealistic to expect the pattern of flow to be different.

            Another criticism is that the liberalisation increases the economic inequality. Even in China, the liberalisation has created many island of affluence. If inequality increases because of the worsening of the living conditions of the poor, it certainly is unjustifiable. But, if the increase in inequality is the result of improving the economic conditions of a section, while there is no economic deterioration of any section, or because of the disproportionate benefits, the question is whether the economic progress of some sections should be curbed so that there will not be a widening of the inequality.

            The liberalisation may increase inequality. Further, several sectors and sections may not directly and immediately benefit from mere liberalisation. There may also be shocks and other adverse effects on the weaker sections. It is, therefore, necessary that there should be real socioeconomic reforms rather than mere liberalisation. Targeted poverty eradication programmes and social safety net are very important.

            The fast growth and overall development resulting from liberalisation could have a major’ impact on poverty. Naisbitt points out that there were an estimated 200 to 270 million Chinese -living in absolute poverty in 1978 (the year in which the liberalisation began) and their number came down to 100 million by 1985.2 Foreign capital has significantly boosted investment and economic growth in China. China has leaped forward on the export front too. Foreign funded enterprises contribute a substantial chunk of the exports from China. Other countries which carry out proper reforms in real earnest should also” be expected to reap such gains in varying degrees. But-, half-hearted and confused measures and implementational problems may create more problems than they solve.

            Although the MNCs, by the virtue of their size and resources, have certain advantages they may also have limitations or disadvantages in certain spheres or aspects of business. Small and medium firms often have some edge over the very large ones in respects of standardised products -or technologies like greater flexibility and adaptability, lower overheads, intimacy with the customers, etc. Lower costs is a great advantage which firms from developing countries enjoy. It may be noted that the major component of growth of several India pharmaceutical firms is the foreign market. They are relying mostly on bulk drugs and generics.

            What is often ignored while discussing the impact of the product patent is that patented drugs account for only about 15 per cent of the India drug market. There are several more products which. would go off patent in the coming years which can also be taken up the India firms. The new patent regime should be expected help the Indian industry by prompting it to give added thrust to R&D and thereby enabling Indian firms also to develop patented products. Positive signs are already there on the horizon.

There are also many evidences of the better technology brought in by the MNCs inducing or provoking Indian firms to absorb “similar technology leading to their enhanced competitiveness and market expansion.

C.Pavithira

M.Phil Scholar

Department of Commerce

Periyar University, Salem-11

Incoming search terms:

• cons of globalisation (2)
• cons and pros of globalisation in india (1)

GLOBALISATION OF WORLD ECONOMY

            The world economy has been emerging as a global or transnational economy. A global or-transnational economy is one which transcends the national borders unhindered by artificial restrictions like Government restrictions on trade and factor movements. Globalisation is a process of development of the world into a single integrated economic unit. The Transnational economy is different from the international economy. The international economy is characterised by the existence of different national economies the economic relations between them being regulated by the national Governments. The transnational economy is a borderless world economy characterised by free flow of trade and factors of production across national borders.

            Drucker in his New Realities observes that in the early or mid seventies — with OPEC and President Nixon’s floating of the dollar — the world economy changed from being international to transnational. According to Drucker, Che transnational economy is characterised by, inter alia, the following features

            1. The transnational economy is shaped mainly by money flows rather than by trade in goods and services. These money flows have their own dynamics. The monetary and  fiscal policies of sovereign Governments increasingly react to events in the international money and capital markets rather than, actively shape them.

            2. In the transnational economy management has emerged as the decisive factor of production and the traditional factors of production, land and labour, have increasingly become secondary. Money and capital markets too have been increasingly becoming transnational and universally obtainable. Drucker, therefore, argues that it is management on which competitive position has to be based.

            3. In the transnational economy the goal is market maximisation and not profit maximisation.

            4. Trade, which increasingly follows investment, is becoming a function of investment.

            5. The decision making power is shifting from the national state to the region (i.e., the regional blocs like the European Community, North American Free Trade Agreement,            etc.)

            6. There is a genuine — and almost autonomous — world economy of money, credit and investment flows. It is organised by information which no longer knows national boundaries.

      7. Finally, there is a growing pervasiveness of the transnational corporations which see the entire world as a single market for production and marketing of goods and services.

            There are, thus, many factors which tend to promote the transnatlonalisation of the world economy. The multilateral trade negotiations under the auspices of GATT/WTO have been liberalising trade and investment.

            A growing proportion of the world output is traded internationally and the faster growth of trade, than the GDP, is bringing about world economic integration. This economic integration is reinforced by the massive cross-border capital flows. The progress of the regional blocs increasingly integrate the regional economies.

C.Pavithira
M.Phil Scholar
Department of Commerce
Periyar University, Salem-11

Globalization:
There is no specific term as to the meaning of Globalization (G11N ). Different dictionaries give different meaning of the word ‘globalization’. However the term globalization is used in many contexts referring to particular industry. In the business and financial context it would mean that the increase of trade around the world, especially by large companies producing and trading goods in many different countries or a Tendency toward a worldwide investment environment, and the integration of national capital markets .
IMF defines globalization as ‘the process through which an increasingly free flow of ideas, people, goods, services, and capital leads to the integration of economies and societies. Major factors in the spread of globalization have been increased trade liberalization and advances in communication technology’ .

Globalization (globalisation) describes an ongoing process by which regional economies, societies, and cultures have become integrated through a globe-spanning network of communication and execution.
In general globalization is the a governmental policy favoring free trade, open borders, the free movement of capital and goods (but not always of people), elimination of tariffs and price controls (including artificial control of currency values), and the privatization of publicly-owned or controlled enterprises
Factors that have contributed to globalization include increasingly sophisticated communications and transportation technologies and services, mass migration and the movement of peoples, a level of economic activity that has outgrown national markets through industrial combinations and commercial groupings that cross national frontiers and international agreements that reduce the cost of doing business in foreign countries. Globalization offers huge potential profits to companies and nations but has been complicated by widely differing expectations, standards of living, cultures and values, and legal systems as well as unexpected global cause-and-effect linkages. See also free trade .

Today, it has become possible that setting up of manufacturing units in the country where the labor is cheap and selling the goods all over the world. There also a growth in the services sector.
Although world globalization is popularly used today , elements of globalization can be found when the companies started to operate in many countries- elements dates back to 17th century where the companies like British East India company (founded in 1600) and Dutch East India company started to operate.
Dutch East India Company (Vereenigde Oostindische Compagnie or VOC in Dutch, literally “United East Indies Company”) which was founded in 1602 was the World’s First Multinational Corporation to be owned by investors through the issuance of stock equity It was also the first MNC to start a stock exchange in Amsterdam in 1602 .
However modern globalization began when great depression in the international trade took place in 1930s and various countries imposed import restrictions for safeguarding their economies. The USA made many proposals for extending international trade & employment. In 1947, 23 countries signed an agreement (GATT- general agreement on tariffs & trade) related to tariffs imposed on trade.
On 1st January 1995, the WTO replaced GATT, which had been in existence since 1947, as the organization overseeing the multilateral trading system. Upon signing the new WTO Agreements, members of GATT became the WTO members.
The World Trade Organization (WTO) which consists of 153 member nations deals with the rules of trade between nations at a global or near-global level. WTO is an organization for liberalizing trade, a forum for governments to negotiate trade agreements, and a place for WTO members to settle trade disputes.
Today’s Globalization is the result of WTO, fair treatment and the non discrimination is the main principals of WTO.

Globalization of Legal Industry:
Globalisation of legal Industry refers to the opening of legal market/industry in the country to the other nations so that they can set up law firm and offer consultancy services, practice law.etc

Globalization of Law:
Todays modern law passed by the countries in relation with the business, Intellectual properties, corporate law, banking, Internet law reflects the laws of many nations. Amendement to the these laws are carried out to accommodate such changes.
Legal education today is shifting from traditional methods of teaching to more innovative approaches. As we see in many country law schools the law subjects are similar to the other countries as to the basics of law, jurisprudence.
There is also an International law which governs the International Treaties, agreements. Intrnational law today is weak in context of enforcement,compared to the domestic law. As the nations are members of United Nations, sanctioning countries in violition with the International Law lies with the Security council.

Globalization of Legal Profession:
The history of legal profession dates back to the ancient Greece and Rome. Earlier the individuals were supposed to plead their own cases, which was soon bypassed by the increasing tendency of individuals to ask a “friend” for assistance. However, around the middle of the fourth century, the Athenians disposed of the perfunctory request for a friend.
In 204 BC , a law enacted by Romans, barred the advocates from taking fees.Later it was abolished by Emperor Claudius, who legalized advocacy as a profession and allowed the Roman advocates to practice openly
Today one needs to complete the law education approved by the Bar council and has to pass the bar exams of particular state and enroll before the sate to practice in the state.
However, the liberalization in the legal profession has made an individual/lawyer to practice law in other country.

1.England and Wales:
There are about 10,000 Barristers and 60,000 of solicitors in England and Wales today. The General Council of the Bar (known as the Bar Council) and other laws govern the barristers in UK and the Law Society of UK governs the Solicitors in UK. Only the Solicitors and Barristers are allowed to practice in the UK.
Practice of law by foreign lawyer:
Even the Foreign Lawyers eligible to be enrolled as the Solicitor of in England and Wales if he get through in the qualified lawyers of transfer Test(QLTT)
The Qualified Lawyers’ Transfer Test (QLTT), England ‘s official transfer exam for foreign attorneys. It is a test in which candidates are expected to demonstrate a basic familiarity with English statutes, cases, practice rules and the principles of common law. QLTT Exams are conducted in many countries annually. The test covers four heads (subject areas): Head 1 – Property, Head 2 – Litigation, Head 3 – Professional conduct and accounts, Head 4 – Principles of common law. There are exemptions to certain countries on this. Generally lawyers from common law countries who have studied their law in English medium needs to sit for professional conduct and accounts ( head 4 ) exam only. However most of the US attorneys need to get through in head 1, 2, and 3 also.

2.Singapore:
As on 2006,there were about 3,476 advocates and solicitors in Singapore. The Law Society of Singapore governs the represents solicitors and maintains and improves standards of conduct and training.
The Legal Profession Act (1967) governs the legal profession in Singapore.
Foreign lawyers are regulated by the Attorney General’s Chambers . The AG’s chamber registers and regulates foreign lawyers. It also formulates laws, rules, guidelines and policies relating to joint law ventures, formal law alliances, representative offices, foreign law firms and foreign lawyers practicing in Singapore and advises on the practical application of the laws governing the legal profession.
Foreign lawyers are required to register individually with the Attorney General’s Chambers in Singapore. Foreign lawyers cannot be sole practitioners and must work as employees, partners or directors in one of the following practice vehicles: As a foreign law firm, A Joint Law Venture (“JLV”),A Formal Law Alliance (“FLA”), As a foreign lawyer in a Singapore law firm.

3. South Africa
There are approximately 13 000 practising attorneys . Law Society of South Africa and regional law societies regulates advocates (barristers) and attorneys (solicitors).
According to section 15(1)(b)(iii) of the Attorneys Act, only the south African LLb holder is allowed to practice in the country. The Act also makes permanent residency or citizenship prerequisite as well as the passing of the South African Attorney’s Admission Examination prerequisite to the admission as attorney in South Africa.
There are certain exceptions to this rule. The Attorneys Act itself relaxes admission requirements with regard to candidates hailing from certain designated countries do not have to serve as candidate attorneys and can be exempted from the need to obtain a South African LLB degree as well as from the need to sit for the South African Attorneys admission examination
Foreign lawyers may establish under home title (e.g. as a Solicitor of England & Wales or as Attorney in USA) and are permitted to practice home and international law. In addition, they can also practice: international finance, project management, and arbitration.
Certain work relating to litigation, appearance in court and conveyancing can only be conducted by South African attorneys. Foreign firms are not permitted to practise local law or to enter into partnerships or fee-sharing

The only thing constant in this world today is ‘CHANGE’. The human race has evolved from a leaf-clad nomad to a highly modern civilization. The major factors, which have contributed to these enormous and apparent changes, are ‘Technology and Globalisation’. This terrestrial ball which we call the globe has shrunken down into an urban village where everyone has the access to the other end at all the times. But still there is a gap between the various sections of the world; the reason: EDUCATION.

We know in the global society today the aspects of rapid change, lifelong learning, flexible routes to learning and the use of technology have a major impact on all the areas of education. And one such area is the ‘Teacher Education’.

As already stated earlier, we are completely under the influence of the growing demands and needs of the newly born and evolved society, so we have to bring about drastic changes in our teacher education programmes. The schools of today not only need a well educated teacher who has loads of content knowledge but also the one who has several other traits of personality which are the need of the hour.

Professional and teacher development has become increasingly important across all sectors of education pertaining to the significant changes in this sector due to the impact of new technologies and the increasing drives of accountability and recognized validity by the society and the government.

In accordance to these changes the teacher educators of today should produce teachers who can confidently and whole heartedly welcome these changes and blend them in their ways and methods of teaching.

It now depends upon the teacher educators how they do so. I feel that no matter how advance the technologies are, one comes back to his/her own culture and society. So we should completely agree to the fact that because it is a growing world we will have to grow along with it as per its requirements but then always stay connected to our own individualities as well.

I would like to quote here a few words by DRUCKER (1993)—

   “Tomorrow’s Educated persons will have to be prepared for

living in a global world. It will be a Westernised world.

But the Educated Persons will also live in an increasingly

tribalized world. They must be ‘citizens of the world’ – in

their vision, their horizon, their information. But they will

have to draw nourishment from their local roots and, in

turn, enrich and nourish their own culture.”

All that I wish to say here is that to make a stand in today’s progressive community we have to make use of the new approaches of teaching which cater more to the student’s needs and use the latest means of technology like the role of ICT etc. But at the same time never forget that  these new globally accepted machines are just the sources to impart our culture and ethics to our children so that in this phase of cosmopolitanism and globalism they stand upright and high with a difference and uniqueness from the rest.

So, I shall like to conclude by saying that in this era of globalisation, the out sourcing of teacher education is a must in order to draw out the maximum results worldover equally.

It is through teacher education only that we shall get all the answers to the curiosities and queries of the future generations because it is the teacher who is to train and shape the potential citizens of tomorrow who in turn shall participate in the global race.

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• globalisation and its impact on teacher education (1)

Forex trading does not exist in a vacuum; instead it’s a worldwide system that relies on tracking supply and demand across the globe. When thinking of forex trading, you have to think of globalisation and the way that this has resulted in regional economies becoming integrated through a network of trade and communication – and therefore allowing the possibility of trading. Forex prices are determined by the supply and demand for currencies, goods and services across the world – and therefore need a world view to be traded on with any degree of success.

Forex trading means evaluating currencies and their behaviours, and the values of currency are driven by capital and trade flow. All movement in the forex market is caused by supply and demand and the simplest economic indicators for evaluating this are capital and trade flows.

When measuring capital flow you need to look at the money that is flowing in and out of an economy for investments purposes, for example looking at how much is being used to buy stocks and bonds or how much is being spent on merging with or acquiring new companies. Due to globalisation, money is constantly crossing borders these days and the amount of money flowing between countries is also increasing. The way that technology has made the world smaller in recent years makes it easier for investors to choose from economies from all over the globe no matter where they are based.

This also means that global investors can have an impact on the currencies they invest in. The flow of capital between one economy and another also affects the currencies of both economies involved in the exchange, therefore showing the symbiotic relationship that can be formed between countries due to globalisation.

Trade flows can be evaluated by examining the amount of money that is moving in and out of an economy for tangible goods and services such as electronics and vehicles or even professional services. Cross-border trade is a massive part of many economies now. Globalisation means that goods can be exported all around the world and this trade flow between economies can have an effect on currency values. Every time goods are imported money changes hands and impact supply and demand and its supply and demand that drives currency prices.

Globalisation and the free exchange of goods and services across borders and around the world drives the currency fluctuations that underpin forex trading.

This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.

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• forex globalisation (1)

GLOBALIZATION- OPPORTUNITIES AND CHALLENGES

(with impact on Indian Economy)

Introduction

Indian economy had experienced major policy changes in early 1990s. The new economic reform, popularly known as, Liberalization, Privatization and Globalization (LPG model) aimed at making the Indian economy as fastest growing economy and globally competitive. The series of reforms undertaken with respect to industrial sector, trade as well as financial sector aimed at making the economy more efficient.

Globalization has many meanings depending on the context. In context to India, this implies opening up the economy to foreign direct investment by providing facilities to foreign companies to invest in different fields of economic activity in India, removing constraints and obstacles to the entry of MNCs in India, allowing Indian companies to enter into foreign collaborations and also encouraging them to set up joint ventures abroad; carrying out massive import liberalization programs by switching over from quantitative restrictions to tariffs and import duties, therefore globalization has been identified with the policy reforms of 1991 in India.

Impact of Globalization of Indian Economy

At the present, we can say about the tale of two Indias: We have the best of times; we have the worst of times. There is sparkling prosperity, there is stinking poverty. We have dazzling five star hotels side by side with darkened ill-starred hovels. We have everything by globalization, we have nothing by globalization.

Though some economic reforms were introduced by the Rajiv Gandhi government (1985-89), it was the Narasimha Rao Government that gave a definite shape and start to the new economic reforms of globalization in India. Presenting the 1991-92 Budget, Finance Minister Manmohan Singh said: After four decades of planning for industrialization, we have now reached a stage where we should welcome, rather fear, foreign investment. Direct foreign investment would provide access to capital, technology and market.

In the Memorandum of Economic Policies dated August 27, 1991 to the IMF, the Finance Minister submitted in the concluding paragraph: The Government of India believes that the policies set forth in the Memorandum are adequate to achieve the objectives of the program, but will take any additional measures appropriate for this purpose. In addition, the Government will consult with the Fund on the adoption of any measures that may be appropriate in accordance with the policies of the Fund on such consultations.

The Government of India affirmed to implement the economic reforms in consultation with the international bank and in accordance of its policies. Successive coalition governments from 1996 to 2004, led by the Janata Dal and BJP, adopted faithfully the economic policy of liberalization. With Manmohan Singh returned to power as the Prime Minister in 2004, the economic policy initiated by him has become the lodestar of the fiscal outlook of the government.

The Bright Side of Globalization

The rate of growth of the Gross Domestic Product of India has been on the increase from 5.6 per cent during 1980-90 to seven per cent in the 1993-2001 period. In the last four years, the annual growth rate of the GDP was impressive at 7.5% (2003-04), 8.5% (2004-05), 9% (2005-06) and 9.2%(2006-07). Prime Minister Manmohan Singh is confident of having a 10% growth in the GDP in the Eleventh Five Year Plan period.

The foreign exchange reserves (as at the end of the financial year) were $ 39 bn (2000-01), $ 107 bn (2003-04), $ 145 bn (2005-06) and $ 180 bn (in February 2007). It is expected that India will cross the $ 200 bn mark soon.

The cumulative FDI inflows from 1991 to September 2006 were Rs.1, 81,566 crores (US $ 43.29 bn). The sectors attracting highest FDI inflows are electrical equipments including computer software and electronics (18 per cent), service sector (13 per cent), telecommunications (10 per cent), transportation industry (nine per cent), etc. In the inflow of FDI, India has surpassed South Korea to become the fourth largest recipient.

India controls at the present 45% of the global outsourcing market with an estimated income of $ 50 bn.

In respect of market capitalization (which takes into account the market value of a quoted company by multiplying its current share price by the number of shares in issue), India is in the fourth position with $ 894 bn after the US ($ 17,000 bn), Japan ($ 4800 bn) and China ($ 1000bn). India is expected to soon cross the trillion dollar mark.

As per the Forbes list for 2007, the number of billionaires of India has risen to 40 (from 36 last year)more than those of Japan (24), China (17), France (14) and Italy (14) this year. A press report was jubilant: This is the richest year for India. The combined wealth of the Indian billionaires marked an increase of 60 per cent from $ 106 bn in 2006 to $ 170 bn in 2007. The 40 Indian billionaires have assets worth about Rs. 7.50lakh crores whereas the cumulative investment in the 91 Public Sector Undertakings by the Central Government of India is Rs. 3.93 lakh crores only.

The Dark Side of Globalization

On the other side of the medal, there is a long list of the worst of the times, the foremost casualty being the agriculture sector. Agriculture has been and still remains the backbone of the Indian economy. It plays a vital role not only in providing food and nutrition to the people, but also in the supply of raw material to industries and to export trade. In 1951, agriculture provided employment to 72% of the population and contributed 59% of the gross domestic product. However, by 2001 the population depending upon agriculture came to 58% whereas the share of agriculture in the GDP went down drastically to 24 per cent and further to 22% in 2006-07. This has resulted in a lowering the per capita income of the farmers and increasing the rural indebtedness.

The agricultural growth of 3.2% observed from 1980 to 1997 decelerated to two per cent subsequently. The Approach to the Eleventh Five Year Plan released in December 2006 stated that the growth rate of agricultural GDP including forestry and fishing is likely to be below two per cent in the Tenth Plan period.

The reasons for the deceleration of the growth of agriculture are given in the Economic Survey 2006-07: Low investment, imbalance in fertilizer use, low seeds replacement rate, a distorted incentive system and lo post-harvest value addition continued to be a drag on the sectors performance. With more than half the population directly depending on this sector, low agricultural growth has serious implications for the inclusiveness of growth.

The number of rural landless families increased from 35 %in 1987 to 45 % in 1999, further to 55% in 2005. The farmers are destined to die of starvation or suicide. Replying to the Short Duration Discussion on Import of Wheat and Agrarian Distress on May 18, 2006, Agriculture Minister Sharad Pawar informed the Rajya Sabha that roughly 1, 00,000 farmers committed suicide during the period 1993-2003 mainly due to indebtedness.

In his interview to The Indian Express on November 15, 2005, Sharad Pawar said: The farming community has been ignored in this country and especially so over the last eight to ten years. The total investment in the agriculture sector is going down. In the last few years, the average budgetary provision from the Indian Government for irrigation is less than 0.35%.

During the post-reform period, India has been shining brilliantly with a growing number of billionaires. Nobody has taken note of the sufferings of the family members of those unfortunate hundred thousand farmers.

Further, the proportion of people depending in India on agriculture is about 60 % whereas the same for the UK is 2 %, USA 2 %and Japan 3 %. The developed countries, having a low proportion of population in agriculture, have readily adopted globalization which favors more the growth of the manufacturing and service sectors.

About the impact of globalization, in particular on the development of India, the ILO Report (2004) stated: In India, there had been winners and losers. The lives of the educated and the rich had been enriched by globalization. The information technology (IT) sector was a particular beneficiary. But the benefits had not yet reached the majority, and new risks had cropped up for the losersthe socially deprived and the rural poor. Significant numbers of non-perennial poor, who had worked hard to escape poverty, were finding their gains reversed. Power was shifting from elected local institutions to unaccountable trans-national bodies. Western perceptions, which dominated the globe media, were not aligned with local perspectives; they encouraged consumerism in the midst of extreme poverty and posed a threat to cultural and linguistic diversity.

Social Services: About the quality of education given to children, the Approach to the Eleventh Five Year Plan stated: A recent study has found that 38 per cent of the children who have completed four years of schooling cannot read a small paragraph with short sentences meant to be read by a student of Class II. About 55 per cent of such children cannot divide a three digit number by a one digit number. These are indicators of serious learning problems which must be addressed. The less said about the achievements in health the

GLOBALISATION OF INDIAN BUSINESS

             India’s economic integration with the rest of the world was very limited because of the restrictive economic policies followed until 1991. Indian firms confined themselves, by and large, to the home market. Foreign investment by Indian firms was very insignificant.

            With the new economic policy ushered in 1991, there has, however, been a change. Globalisation has in fact become a buzz-word with Indian firms now, and many are expanding their overseas business by different strategies.

            This section takes a look at the hurdles to and prospects for globalisation of Indian business and the different globalisation strategies.

Obstacles To Globalisation

            The Indian business suffers from a number of disadvantages in respect of globalisation of business. The important problems are the following.

Government Policy and Procedures: Government policy and procedures in India are among the most complex, confusing and cumbersome in the world. Even after the much publicised liberalisation, they do not present a very conducive situation. One prerequisite for success in globalisation is swift and efficient action. Government policy and the bureaucratic culture in India in this respect are not that encouraging.

High Cost: High cost of many vital inputs and other factors like raw materials and intermediates, power, finance infrastructural facilities like port etc., tend to reduce the international competitiveness of the Indian business.

Poor Infrastructure: Infrastructure in India is generally inadequate and inefficient and therefore very costly. This is a serious problem affecting the growth as well as competitiveness.

Obsolescence: The technology employed, mode and style of operations etc., are, in general, obsolete and these seriously, affect the competitiveness.

Resistance to Change: There are several socio-political factors which resist change and this comes in the way of modernisation, rationalisation and efficiency improvement. Technological modernisation is resisted due to fear of unemployment. The extent of excess labour employed by the Indian industry is alarming. Because of this labour productivity is very low and this in some cases more than offsets the advantages of cheap labour.

Poor Quality Image: Due to various reasons, the quality of many Indian products is poor. Even when the quality is good, the poor quality image India has becomes a handicap.

Supply Problems: Due to various reasons like low production capacity, shortages of raw materials and infrastructures like power and port facilities, Indian companies in many instances are not able to accept large orders or to keep up delivery schedules.

Small Size: Because of the small size and the low level of resources, in many cases Indian firms are not able to compete with the giants of other countries. Even the largest of the Indian companies are small compared to the multinational giants.

Lack of Experience: The general lack of experience in managing international business is another important problem.

Limited R & D and Marketing Research: Marketing Research and R & D in other areas are vital inputs for development of international business. However, these are poor in Indian business

            Expenditure on R & D in India is less than one per cent of the GNP while it is two to three percent in most of the developed countries. In 1994-95, India’s per capita R&D expenditure was less than when it was between S100 and 5 for most of the developed nations.

Growing Competition: The competition is growing not only from the firms in the developed” countries but also from the developing country firms. Indeed, the growing competition from the developing country firms is a serious challenge to India’s international business.

Trade Barriers: Although the tariff barriers to trade have been progressively reduced thanks lo the GATT/WTO, the non-tariff barriers have been increasing, particularly in the developed countries. Further, the trading “blocs like the NAFTA, EC etc., could also adversely affect India’s business.

Factors Favouring Globalisation

Although India has several handicaps, there are also a number of favourable factors for globalisation of Indian business.

Human Resources: Apart from the low cost of labour, there are several other aspects of human resources to India’s favour. India has one of the largest pool of scientific and technical manpower. The number of management graduates is also surging. It is widely recognised that given the right environment, Indian scientists and technical personnel can do excellently. Similarly, although the labour productivity in India is generally low, given the right environment it will be good. While several countries are facing labour shortage and may face diminishing labour supply , India presents the opposite picture. Cheap labour has particular attraction for several industries.

Wide Base: India has a very broad resource and industrial base which can support a variety of businesses.

Growing Entrepreneurship: Many of the established industries are planning to go international in a big way. Added to this is the considerable growth of new and dynamic entrepreneurs who could make a significant contribution to the globalisation of Indian business.

Growing Domestic Market: The growing domestic market enables the Indian companies to consolidate their position and to gain more strength to make foray into the foreign market or to expand their foreign business.

Niche Markets: There are many marketing opportunities abroad present in the form of market niches. (A niche is a small segment of a market ignored or not properly served by large players). Such niches are particularly attractive for small companies. Several Indian companies have become very successful by niche marking.

Expanding Markets: The growing population and disposable income and the resultant expanding internal market provides enormous business opportunities.

Transnationalisation of World Economy: Transnationalisation of the world economy, i.e., the integration of the national economies into a single world economy as evinced by the growing interdependence and globalisation of markets is an external factor encouraging globalisation of India business.

NRIs: The large number of non-resident Indians who are resourceful – in terms of capital, skill, experience, exposure, ideas etc., is an asset which can contribute to the globalisation of Indian

business. The contribution of the overseas Chinese to the recent impressive industrial development of China may be noted here.

Economic Liberalisation: The economic liberalisation in India is an encouraging factor of globalisation. The delicensing of industries, removal of restrictions on growth, opening up of industries earlier reserved for the public sector, import liberalisations, liberalisation of policy towards foreign capital and technology etc., could encourage globalisation of Indian business. Further, liberalisation in other countries increases the foreign business opportunities for Indian business.

Competition: The growing competition, both from within the country and abroad, provokes many Indian companies to look, to foreign markets seriously to improve their competitive position and to increase the business. Sometimes companies enter foreign market as a counter – competitive strategy, i.e., m fight the foreign company in its own home market to weaken its competitive strength.

C.Pavithira

M.Phil Scholar

Department of Commerce

Periyar University, Salem-11