GLOBALIZATION (GLOBALIZATIONAND ITS IMPACT)
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The document discusses globalization, defining it as the acceleration of movements and exchanges across the globe, which fosters increased interactions and interdependence among countries. It highlights the impacts of globalization on various sectors in India, including agriculture, industry, and finance, noting both advantages like technological advancement and economic growth, as well as disadvantages such as job losses and increased inequality. Ultimately, it concludes that while globalization has not inherently caused poverty and inequality, disparities exist in how countries benefit from it.
GLOBALIZATION (GLOBALIZATIONAND ITS IMPACT)
- 1. GLOBALIZATION AND ITS IMPACT PR E S E N T E D BY - D H RU V I P O O J A K R I YA
- 2. GLOBALIZATION D E F I N I T I O N
- 3. DEFINITION OF GLOBALIZATION • Globalization means the speedup of movements and exchanges (of human beings, goods, and services, capital, technologies or cultural practices) all over the planet. One of the effects of globalization is that it promotes and increases interactions between different regions and populations around the globe. • The increased interconnectedness and interdependence of peoples and countries. It is generally understood to include two inter-related elements: the opening of international borders to increasingly fast flows of goods, services, finance, people and ideas; and the changes in institutions and policies at national and international levels that facilitate or promote such flows.
- 4. GLOBALIZATION IN ECONOMY The increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, the flow of international capital and the wide and rapid spread of technologies. 4
- 5. HISTORY OF GLOBALIZATION It was particularly after the second half of the 20th century that world trades accelerated in such a dimension and speed that the term “globalization” started to be commonly used. 5
- 6. TYPES OF GLOBALIZATION • Economic globalization • Financial globalization • Cultural globalization • Political globalization • Sociological globalization • Technological globalization • Geographic globalization • Ecological globalization
- 8. IMPACT OF GLOBALIZATION On Agriculture Sector i. Agricultural Sector is the mainstay of the rural Indian economy around which socio-economic privileges and deprivations revolve and any change in its structure is likely to have a corresponding impact on the existing pattern of Social equity. ii. Facing a severe economic crisis, India approached the IMF for a loan, and the IMF granted what is called a ‘structural adjustment’ loan, which is a loan with certain conditions attached which relate to a structural change in the economy. iii. Essentially, the reforms sought to gradually phase out government control of the market (liberalization), privatize public sector organizations (privatization), and reduce export subsidies and import barriers to enable free trade (globalization).
- 9. IMPACT OF GLOBALIZATION on Industrial Sector I. The government of India made changes in its economic policy in 1991 by which it allowed direct foreign investments in the country. II. The benefits of the effects of globalization in the Indian Industry are that many foreign companies set up industries in India, especially in the pharmaceutical, BPO, petroleum, manufacturing, and chemical sectors and this helped to provide employment to many people in the country. III. This helped reduce the level of unemployment and poverty in the country. Also the benefit of the Effects of Globalization on Indian Industry are that the foreign companies brought in highly advanced technology with them and this helped to make the Indian Industry more technologically advanced. IV. The negative Effects of Globalization on Indian Industry are that with the coming of technology the number of labor required decreased and this resulted in many people being removed from their jobs. This happened mainly in the pharmaceutical, chemical, manufacturing, and cement industries.
- 10. IMPACT OF GLOBALIZATION on Financial Sector i. Financial intermediaries have come out of their traditional approach and they are ready to assume more credit risks. As a consequence, many innovations have taken place in the global financial sectors which have its own impact on the domestic sector also. ii. Growth in financial services (comprising banking, insurance, real estate and business services), after dipping to 5.6% in 2003-04 bounced back to 8.7% in 2004-05 and 10.9% in 2005-06. The momentum has been maintained with a growth of 11.1% in 2006-07. Because of Globalization, the financial services industry is in a period of transition. Market shifts, competition, and technological developments are ushering in unprecedented changes in the global financial services industry.
- 11. IMPACT OF GLOBALIZATION on Financial Sector A. THE CHALLENGES OF FINANCIAL SERVICE SECTOR Among the key IT challenges facing the Financial Services Industry to day is: i. Preserving investments in old systems while leveraging new technologies to drive down transactions costs, expand and improve customer service. ii. Integrating enterprise wide disparate systems to gain operation efficiencies iii. Substantially reducing time for deployment of new systems iv. Reducing IT costs and obtaining better ROIs for new investments in the long-term
- 12. STRATEGIES TO BE ADOPTED BY FSS The Government of India has initiated many steps to reform the financial services industry. The Government has already switched over to free pricing of issues from pricing issues by the Controller of Capital Issues. The interest rates have been deregulated The private sector has been permitted to participate in banking and mutual funds and the public sector undertaking are being privatized. The Finance Act, 1992 has brought into effect large scale amendments in the tax structure of long term capital gains. The Finance Act, 1994 has given a further boost by lowering the lock-in period from 3years to 1 year, in order to get the entitlement as a long-term capital asset.
- 13. INDIA’S STANCE ON FINANCIAL SERVICE SECTOR What should be India’s attitude in this environment of growing globalization? At the outset it must be mentioned that opting out of globalization is not a viable choice. There are at present 1449 members in the World Trader Organization (WTO). The rest of the countries are waiting to join the WTO. China has recently been admitted as a member. What is need is to evolve an appropriate framework to wrest maximum benefits out of international trade and investment. This framework should include (a) making explicit the list of demands that India would like to make on the multilateral trade system, and (b) steps that India should take to realize the full potential from globalization.
- 15. ADVANTAGES OF GLOBALIZATION • Increased free trade between nations. • Increased liquidity of capital allowing investors in developed nations to invest in developing nations. • Corporations have greater flexibility to operate across borders. • Global mass media ties the world together. • Increased flow of communications allows vital information to be shared between individuals and corporations around the world.
- 16. ADVANTAGES OF GLOBALIZATION • Greater ease and speed of transportation for goods and people. • Reduction of cultural barriers increases the global village effect. • Spread of democratic ideals to developed nations. • Greater interdependence of nation-states. • Reduction of likelihood of war between developed nations. • Increases in environmental protection in developed nations.
- 18. DISADVANTAGES OF GLOBALIZATION • Spread of a materialistic lifestyle and attitude that sees consumption as the path to prosperity. • International bodies like the World Trade Organization infringe on national and individual sovereignty. • Increase in the chances of civil war within developing countries and open war between developing countries as they vie for resources. • Decreases in environmental integrity as polluting corporations take advantage of weak regulatory rules in developing countries.
- 19. DISADVANTAGES OF GLOBALIZATION • Increased flow of skilled and non-skilled jobs from developed to developing nations as corporations seek out the cheapest labor. • Increased likelihood of economic disruptions in one nation effecting all nations. • Corporate influence of nation-states far exceeds that of civil society organizations and average individuals. • Threat that control of world media by a handful of corporations will limit cultural expression. • Greater chance of reactions for globalization being violent to preserve cultural heritage. • Greater risk of diseases being transported unintentionally between nations.
- 20. GLOBALIZATIONIN INDIA C O M PA R I S I O N W I T H O T H E R C O U N T R I E S
- 21. GLOBALIZATION IN INDIA • Developed countries had been trying to pursue developing countries to liberalize the trade and allow more flexibility in business policies to provide equal opportunities to multinational firms in their domestic market. • Indian government did the same and liberalized the trade and investment due to the pressure from World Trade Organization.
- 22. GLOBALIZATION IN INDIA • As a result globalization has brought to India new technologies, new products and also the economic opportunities. • Despite bureaucracy, lack of infrastructure, and an ambiguous policy framework that adversely impact MNCs operating in India, MNCs are looking at India in a big way, and are making huge investments to set up R&D centers in the country. India has made a lead over other growing economies for IT, business processing, and R&D investments.
- 24. IMPACT OF GLOBALIZATION IN INDIA Economic Impact: Greater Number of Jobs More choice to consumers Higher Disposable Incomes Shrinking Agricultural Sector Increasing Health-Care costs Child Labour •
- 25. IMPACT OF GLOBALIZATION IN INDIA • Consider global trade – India’s share of world merchandise exports increased from .05% to .07% over the past 20 years. Over the same period China’s share has tripled to almost 4%. • India’s share of global trade is similar to that of the Philippines an economy 6 times smaller according to IMF estimates. Over the past decade FDI flows into India have averaged around 0.5% of GDP against 5% for China and 5.5% for Brazil. FDI inflows to China now exceed US $ 50 billion annually. It is only US $ 4billion in the case of India.
- 26. IMPACT OF GLOBALIZATION IN INDIA Socio-Cultural Impact on Indian Society Access to education Growth of cities Indian Culture Psychological Impact on Indian Society Development of Bicultural Identity Growth of Self-Selected Culture Consumerism
- 27. CONCLUSION
- 28. CONCLUSION • Globalization is not guilty of causing growing poverty and inequality worldwide. • Overall, there has been declining inequality and poverty in the age of globalization. This breaks a trend that goes back almost two centuries • But far too many countries have become less globalized and grown poorly. • This is the only sense in which globalization causes inequality: some seize opportunities and others do not • The challenge is to help the failures do better.
- 29. THANK YOU!