Short Answer Questions of the Chapter 'Globalization and the Indian Economy'

Very Short Answer Type Questions 

1. Define a Multinational Corporation (MNC).

Ans. A Multinational Corporation (MNC) is a company that owns or controls production in more than one nation.

2. Define globalization.

Ans. Globalization is the process of rapid integration or interconnection between countries.

3. Due to which reason the latest models of different items are available within our reach?

Ans. Due to globalization, the latest variety of different items is available within our reach.

4. Give one major factor that has stimulated the globalization process.

Ans. Rapid improvement in technology has stimulated the globalization process.

5. How are the MNCs spreading their production across the globe?

Ans. MNCs are spreading their production across the globe by setting up partnerships with local companies, by using the local companies for supplies and by closely competing with local companies or buying them up.

6. What is meant by trade barrier ?

Ans. Tax on imports by the government is called trade barrier. It is called a barrier because some restrictions have been set up.

7. How government can use trade barriers?

Ans. Government can use trade barriers to increase or decrease foreign trade and to decide what kind of goods and how much of each good should come into the country.

8. What do you think can be done so that trade between countries is more fair?

Ans. All countries should remove trade barriers to make for a fair international trade. Developed countries should desist from forcing the developing countries in agreements which they themselves may not obey.

9. Why did government of India put barriers to foreign trade and investment after independence?

Ans. Indian government put barriers to foreign trade and investment because it was considered necessary to protect the producers within the country from foreign competition.

10. What is liberalization?

Ans. Removing barriers or restrictions set by the government is known as liberalization.

11. What is the aim of World Trade Organisation?

Ans. The aim of World Trade Organization is to liberalize international trade.

12. How many countries of the world were members of the World Trade Organization till 2014?

Ans. Till 2014, 160 countries were the members of the World Trade Organization.

13. Who forced the developing countries to remove the trade barriers?

Ans. World Trade Organisation (WTO) forced the developing countries to remove the trade barriers.

14. Give two examples of Indian Companies which have emerged as Multinational Companies.

Ans. Infosys (IT) and Tata motors (automobiles)

15. How has globalization benefited the well-off consumers?

Ans. Globalization benefited the well-off consumers as their is greater choice before these consumers who now enjoy improved quality and lower prices for several products. As a result, these consumers, today, enjoy much higher standards of living than was possible earlier. 

16. What are the benefits of goods or products produced by the MNCs?

Ans. The goods or products produced by the MNCs have a larger number of well-off buyers. In MNCs, new jobs have been created. Also, local companies supplying raw materials etc. to these industries have prospered.   

17. Define investments.
Ans. Money that is spent to buy assets such as land, building, machines and other equipment is called investments.

18. What is foreign investment?
Ans. Investments made by MNCs is called foreign investments.

19. What happens to the sales of the Indians toys when Chinese toys invade the domestic market?
Ans. As a result of the invasion of Chinese toys in the domestic market, the sale of Indian toys fall.

20. Why did the Indian government remove barriers to a large extent on foreign trade and foreign investment?
Ans. Indian Government felt that time has come for Indian producers to compete in international markets.

Short Answer Type Questions (3 Marks)

1. What are the various ways in which countries can be linked?

Ans. The ways in which countries can be linked are:

        (a) Movements of goods between countries.

        (b) Services provided for one country by another such as call centers.

        (c) Foreign investment done by one country in companies of another country.

        (d) Immigration of people into one country from another, for work, study etc.

2. Give any three examples of global products being used by anyone in his daily life.

Ans. The three examples of global products being used by anyone in his daily life are:

        (a) Bournvita Health Drink      (b) Samsung television     (c) Amul cheese  

3. In what ways is a MNC different from other companies?

Ans. A MNC does different operations related to its business at different locations across the globe. Other companies limit their operation to a single country or to a few countries. By doing so, a MNC is able to take advantage of cost benefit and also of easier access to the important markets. This may not be possible for other companies.

4. Why do governments try to attract more foreign investment?

Ans. Governments try to attract more foreign investments due to following reasons.

        (a) It helps in improving the financial position of the people by accelerating growth of the                         economy.

        (b) It creates new job opportunities in the country, directly as well as indirectly in support                         services such as transportation.

        (c) The government gains from additional taxes levied on the profits made from the foreign                       investments.

5. Mention three ways in which MNCs are spreading their production units across the globe.

Ans. The MNCs are spreading their production across the globe by:

(a) setting up partnerships with local companies.

(b) using the local companies for supplies or buying them up.

(c) closely competing with the local companies or buying them up.

6. What factors are kept in mind by the MNCs while setting up their production units?

Ans. Generally, MNCs set up their production units keeping the following factors in mind:

(a) Close proximity to the market.

(b) Availability of skilled and unskilled labour at low cost.

(c) Availability of other factors of production.

7. On account of globalization, what were the three ways by which countries can be connected?

Ans. On account of globalization, the countries can be connected through:

(a) movement of people between the countries in search of better education, better jobs, better incomes etc.

(b) movement of goods and services between the countries by way of exports or imports.

(c) movement of investment and technology between the countries. 

8. What would happen if the government of India puts heavy tax on import of Chinese toys? Explain any three points.

Ans. (a) If the government of India puts heavy tax on import of Chinese toys, their price will go up. They will become relatively expensive.

        (b) As a result, they will lose their market in India, i.e., their demand will fall in India.

        (c) Indian toys will become relatively cheaper. So their demand will increase. Hence, more profit will be earned by the Indian toy makers.

9. Distinguish between foreign trade and foreign investments.

Ans. Trade with different countries is called foreign trade and it includes import and export. Foreign investment is the inflow of capital from another country to our own country. Foreign investment is just limited to the inward flow of capital, whereas foreign trade is about flow of goods (i.e., flow of imports and exports).

10. Mention two ways by which MNCs control production.

Ans. MNCs control production in the following ways.

(a) MNCs control production on the basis of their enormous wealth which may exceed the entire budget of a government of a developing country. This shows their enormous power and influence.

(b) Large MNCs is developed countries place orders for production with small producers. The products are supplied by these small producers to the MNCs which then sell these, under their own brand names, to the customers.

11. Give the benefits enjoyed by a local company in a joint production with a MNC.

Ans. The benefits enjoyed by a local company in joint collaboration with a MNC are:

(a) A MNC  can provide money for additional investments like buying new machines for faster production.

(b) A MNC might bring with them the latest technology for production.

(c) The local companies after setting up production jointly with MNCs, have access to international market.

12. What has been the impact of foreign brand of cars like Ford and Toyota on the Ambassador and Fiat car which dominated the market 1960 onwards?

Ans. Gone are the days when Ambassador and Fiat dominated the Indian market. Today, with globalization, we find a large variety of foreign brands like Ford., Toyota, Hyundai, Renault, BMWs, Chevrolet etc. flooding the Indian market. As a result, the only cars available before globalization, Ambassador and Fiat, has lost their market to the improved and smart foreign models like ford and Toyota.

13. Explain the role played by WTO in liberalizing international trade.

Ans. (a) WTO, which was started at the initiative of the developed countries, establishes rules regarding international trade and ensures that they are obeyed by its members.

(b) Despite of WTO's permission to free trade for all, it has been noticed that the developed countries have unfairly retained trade barriers. On the contrary, WTO rules have forced the developing countries to remove the trade barriers.

(c) But the unfair way of retaining trade barriers by the developed countries depicts its bias in favour of them. But this has led to massive campaigns and representation by people's organisations.

14. What are Special Economic Zones (SEZs)? Write two characteristics of Special Economic Zones (SEZs).

Ans. To attract the foreign investment in India, the government of India has set up industrial zones which are known as Special Economic Zones.

(a)These zones are expected to have world-class facilities such as electricity, water, roads, transport, storage, recreational and educational.

(b) Companies setting up their production units in the SEZs are exempted from the payment of taxes for the initial five years.

(c) Government has also allowed flexibility in the labour laws to attract foreign investment.

15. Have the people played an important role in the struggle for a fair globalization? Give any instance.

Ans. Yes, people's have played an important role in the struggle for a fair globalization. For example'

(a) People's organizations raised their voice against the WTO's softness towards the trade and investment needs of the developed countries.

(b) Massive campaign and representation have been organised by these organizations demanding fair globalization.

(c) A demonstration was held against the WTO in Hong Kong in 2005 for a fair globalization.