Globalisation and the Indian Economy Class 10 Notes

What Globalisation and the Indian Economy is about

Weightage: Economics carries 20 of the 80 theory marks; this chapter shares them with Development, Sectors of the Indian Economy and Money and Credit. Only part of this chapter is in the board exam: Board exam covers only "What is Globalisation?" and "Factors that have enabled Globalisation".Source: CBSE Social Science syllabus 2026-27, Economics

In real board papers: asked in 21 of the 21 board papers we hold (2023 to 2026), on average 4.2 marks per paper. See the questions

Key concepts

Meaning of globalisation

NCERT section What is Globalisation?

Over the last two to three decades, more and more MNCs have been searching the world for places where they can produce cheaply. Because of this, foreign investment by MNCs in these countries has kept rising. At the same time, foreign trade between countries has been growing quickly.

When investment and trade both rise, two things happen together. Factories in different countries start to depend on each other, and buyers in one country can choose goods made in another. So both the production and the markets of different countries get tied together.

Globalisation means countries are becoming closely linked because more money is invested across borders and more goods and services are traded, so factories and markets in different countries depend on each other. Two ideas matter here. It is a process: it is still going on, not a one-time event. It is fast: countries are getting linked more quickly than before. In the exam, never stop at a one-line definition. Show the chain: more foreign investment plus more foreign trade links production and markets, and that linking is globalisation.

Worked example

Explain the meaning of globalisation. How is it linked to foreign trade and foreign investment? (3 marks)

Try it first, then show the solutionSolution

1. Globalisation means countries getting closely and quickly linked with one another. (1 mark)
2. MNCs look for cheap production locations around the world, so foreign investment by MNCs in other countries has been rising. (1 mark)
3. Foreign trade between countries has also risen fast; more investment and more trade together tie the production and markets of different countries, which is globalisation. (1 mark)

Answer: - Globalisation means countries are getting closely and quickly linked with one another.
- MNCs seek cheap locations for production, so their foreign investment in other countries keeps rising.
- Foreign trade between countries is also rising rapidly.
- Together, more investment and more trade link production and markets across countries. This linking is globalisation.

Role of MNCs in globalisation

NCERT section What is Globalisation?

An MNC is a firm that runs factories or other production units in two or more countries, not only in its home country. You need this idea only as background: the board asks about what MNCs do in the globalisation process.

MNCs drive globalisation in two ways at once. First, they invest in other countries by setting up production there, so they link production across countries. Second, a large part of foreign trade is itself controlled by MNCs, so they also link markets.

The NCERT book uses the car plant of Ford Motors in India to show this. The plant made cars for Indian buyers, and it also exported cars to other developing countries and sent car components to the company's many factories around the world. So one plant was both an investment and a source of trade. Most MNCs work like this: their activities involve a lot of trade in goods and also services. That is why the book says MNCs are playing a major role in globalisation, with more and more goods, services, investments and technology moving between countries.

Worked example

'MNCs are playing a major role in the globalisation process.' Support the statement with the example of the car plant of Ford Motors in India. (3 marks)

Try it first, then show the solutionSolution

1. MNCs invest in other countries in search of cheap locations, so they link production across countries. (1 mark)
2. A large part of foreign trade is controlled by MNCs; the Ford plant in India produced cars for Indian markets and also exported cars to other developing countries. (1 mark)
3. It also exported car components for the company's factories around the world, so one plant linked both production and markets, which is globalisation. (1 mark)

Answer: - MNCs invest in countries where production is cheap, which links production across countries.
- They also control a large part of foreign trade. Ford's plant in India sold cars in Indian markets and exported cars to other developing countries.
- It exported car components to the company's factories worldwide.
- So MNCs integrate both production and markets.

Ways in which countries are connected

NCERT section What is Globalisation?

Globalisation means more things are crossing borders than before. The NCERT book lists the flows that connect countries: goods, services, investments and technology. Because these flows have increased, most regions of the world are in closer contact with each other than they were a few decades ago.

There is one more possible link: the movement of people. People usually shift between countries to earn more, find work or study. But here is the important twist. In the past few decades, movement of people between countries has not increased much, because of various restrictions.

Do not assume that since everything else is moving, people must be too. Remember the logic: the reason people want to move (to earn more, find work or study) is different from the reason they have not moved much (restrictions). In an assertion-reason item on this idea, check each statement separately, then test whether R explains A.

Worked example

Assertion (A): In the past few decades, there has not been much increase in the movement of people between countries.
Reason (R): People shift between countries to earn more, find work or study.
(a) Both A and R are true and R is the correct explanation of A.
(b) Both A and R are true but R is not the correct explanation of A.
(c) A is true but R is false.
(d) A is false but R is true.

Try it first, then show the solutionSolution

1. Check A: the NCERT text says movement of people has not increased much, so A is true.
2. Check R: people do move to earn more, find work or study, so R is true.
3. Test the link: R explains why people want to move, not why movement has stayed low; the actual reason is various restrictions.
4. So R does not explain A. (1 mark)

Answer: Option (b): Both A and R are true but R is not the correct explanation of A. Movement of people has stayed low because of various restrictions.

Technology: improvements in transportation

NCERT section Technology

Rapid improvement in technology is one major factor that has pushed globalisation forward. The first part of this is transport. Over the past fifty years, transport technology has improved a lot, so goods can now be delivered much faster across long distances and at lower cost.

Two examples from the NCERT book:

• Containers: goods are packed in containers that can be loaded intact onto ships, railways, planes and trucks. Since goods are not unpacked and repacked at every stage, port handling costs have fallen hugely, and exports reach markets faster.
• Air transport: its cost has fallen, so airlines now carry much greater volumes of goods.

Why does this matter for globalisation? Trade and investment across countries make sense only if goods can move cheaply and quickly. When moving goods becomes cheap and fast, producers can sell in distant markets and production in one country can be linked to buyers in another. So cheaper, faster transport directly supports integration of markets and production.

Worked example

Explain how improvements in transportation technology have stimulated the process of globalisation. (3 marks)

Try it first, then show the solutionSolution

1. Over the past fifty years, transport technology has improved, making faster delivery of goods over long distances possible at lower costs. (1 mark)
2. Goods are packed in containers loaded intact onto ships, railways, planes and trucks, which has hugely cut port handling costs and increased the speed of exports. (1 mark)
3. The cost of air transport has fallen, so much larger volumes of goods are carried by air; cheap, fast movement of goods helps link markets across countries. (1 mark)

Answer: - Better transport technology allows faster delivery of goods over long distances at lower cost.
- Containers, loaded intact onto ships, trains, planes and trucks, have sharply reduced port handling costs and speeded up exports.
- Air transport has become cheaper, so far more goods travel by air.
- This makes trade between distant countries easy, linking markets.

Technology: information and communication technology (IT)

NCERT section Technology

The NCERT book says developments in information and communication technology have been even more remarkable than those in transport. This covers telecommunications, computers and the Internet.

• Telecommunication facilities such as telegraph, telephone (including mobile phones) and fax let people contact one another across the world, get information instantly and communicate even from remote areas. Satellite communication devices have made this possible.
• Computers are now used in almost every field of activity.
• The Internet lets you obtain and share information on almost anything, and send instant e-mail and voice-mail across the world at negligible cost.

IT has played a major role in spreading the production of services across countries. The book's example: a news magazine for London readers is designed and printed in Delhi. The text comes over the Internet, design instructions come through telecommunication, design is done on computers, printed copies go by air, and payment moves bank to bank through e-banking. Without IT, such work across borders would be very hard, which is why IT is linked so closely with globalisation.

Worked example

Imagine a small design studio in Jaipur is asked to design and print a product catalogue for a shop in another country. Using your understanding of the NCERT chapter, show how technology makes this work possible. Would it be possible without information technology? (3 marks)

Try it first, then show the solutionSolution

1. The text and photographs can be sent through the Internet, and instructions on the design can be given using telecommunication facilities. (1 mark)
2. The designing is done on computers, and payment can be sent instantly from the client's bank to the studio's bank through e-banking. (1 mark)
3. The printed catalogues can be sent by air; without IT, the instant exchange of material, instructions and money would not be possible, so such cross-border production of services would be very difficult. (1 mark)

Answer: - Text and photos travel over the Internet; design instructions come through telecommunication.
- Design is done on computers; payment arrives instantly by e-banking.
- Printed catalogues are sent by air.
- Without IT, quick exchange of files, instructions and payment would be almost impossible, so this service could not easily be produced across countries.

Trade barriers: tax on imports and quotas

NCERT section Liberalisation of foreign trade and foreign investment policy

A trade barrier is a restriction that a government sets up on foreign trade. It is called a barrier because it blocks or slows the free flow of goods.

The NCERT book uses Chinese toys to explain. Suppose the Indian government puts a tax on imported toys. Importers must pay this tax, so buyers pay a higher price for imported toys. Chinese toys are no longer as cheap, so imports from China automatically fall. Indian toy-makers now face less competition and prosper.

Another barrier is a quota: a limit on the number of goods that can be imported. If only a fixed number of toys can come in, the rest of the demand must be met by domestic producers.

Governments use trade barriers to regulate foreign trade: to increase or decrease it, and to decide what kinds of goods, and how much of each, may come into the country. Understand this well, because liberalisation is simply the removal of such barriers.

Worked example

Suppose the Indian government puts a tax on the import of toys. Explain the effects on buyers, on imports from China and on Indian toy-makers. Why is such a tax called a trade barrier? (3 marks)

Try it first, then show the solutionSolution

1. Importers have to pay the tax, so buyers must pay a higher price for imported toys. (1 mark)
2. Chinese toys are no longer as cheap in Indian markets, so imports from China fall, while Indian toy-makers face less competition and prosper. (1 mark)
3. It is called a trade barrier because it is a restriction set up by the government to regulate foreign trade. (1 mark)

Answer: - Importers pay the tax, so imported toys cost buyers more.
- Chinese toys lose their price advantage, so imports from China fall and Indian toy-makers prosper.
- The tax is a trade barrier because it is a government restriction that regulates how much, and what, comes into the country.

Why India put trade barriers after Independence

NCERT section Liberalisation of foreign trade and foreign investment policy

After Independence, the Indian government put barriers on both foreign trade and foreign investment. To understand why, think about where Indian industry stood then. In the 1950s and 1960s, Indian industries were new and weak. A young industry cannot match established foreign producers on price or quality straight away. If cheap imports had flooded in at that stage, these industries could have been stopped from growing at all.

So the barriers were meant to protect producers within the country from foreign competition. India allowed imports of only essential items such as machinery, fertilisers and petroleum, which it needed for development.

The NCERT book adds a key point that strengthens any answer: all developed countries, in the early stages of their development, also protected their domestic producers in a variety of ways. So India's choice was not unusual. In a 3-mark answer, give the protection reason, the stage of industry in the 1950s and 1960s, and the list of essential imports.

Worked example

Why did the Indian government put barriers on foreign trade and foreign investment after Independence? Explain. (3 marks)

Try it first, then show the solutionSolution

1. The barriers were considered necessary to protect producers within the country from foreign competition. (1 mark)
2. In the 1950s and 1960s Indian industries were new and weak, so cheap imports could have stopped them from growing. (1 mark)
3. So India allowed imports of only essential items such as machinery, fertilisers and petroleum; developed countries too had protected domestic producers in their early stages of development. (1 mark)

Answer: - Barriers protected Indian producers from foreign competition.
- In the 1950s and 1960s, industries were just emerging; cheap imports would have stopped them from growing.
- Hence only essential items like machinery, fertilisers and petroleum were imported.
- Developed countries had also protected their producers in their early stages of development.

Liberalisation of foreign trade and investment from around 1991

NCERT section Liberalisation of foreign trade and foreign investment policy

Starting around 1991, India made far-reaching changes in policy. By then the government believed Indian firms should face world competition, which would push them to raise quality and perform better. Powerful international organisations supported this decision.

So barriers on foreign trade and foreign investment were removed to a large extent. As a result, goods could be imported and exported easily, and foreign companies could set up factories and offices in India.

Liberalisation means removing barriers or restrictions set by the government. With liberalisation of trade, businesses can decide freely what they wish to import or export. The government imposes far fewer restrictions, so it is called more liberal.

How does this connect to globalisation? Globalisation needs both trade and investment to flow across borders. Barriers block those flows; removing them lets trade and foreign investment rise, which integrates India's production and markets with the world. Technology made flows possible; liberalisation made them allowed.

Worked example

How did the liberalisation of foreign trade and foreign investment policy, starting around 1991, help the process of globalisation in India? Explain. (5 marks)

Try it first, then show the solutionSolution

1. Liberalisation means removing barriers or restrictions set by the government on trade and investment. (1 mark)
2. Around 1991, the government believed Indian firms should face world competition, which would push them to improve performance and quality. (1 mark)
3. Barriers on foreign trade and foreign investment were removed to a large extent, so goods could be imported and exported easily. (1 mark)
4. Foreign companies could now set up factories and offices in India, raising foreign investment. (1 mark)
5. Businesses could decide freely what to import or export; rising trade and investment integrated India's production and markets with other countries, promoting globalisation. (1 mark)

Answer: - Liberalisation is the removal of government barriers or restrictions.
- Around 1991, India felt its producers should compete globally, since competition would push them to improve quality and performance. Powerful international organisations supported this.
- Barriers on foreign trade were largely removed, so goods could be imported and exported easily.
- Barriers on foreign investment were eased, so foreign companies could set up factories and offices in India.
- Businesses gained freedom to decide what to import or export, as the government imposed far fewer restrictions.
- More trade and more foreign investment linked India's production and markets with the world. This integration is globalisation, so liberalisation sped it up.

Globalisation and the Indian Economy in real life

Each concept, met in an everyday situation. Read the situation, answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Topics in this chapter

• What is Globalisation?
• Factors that Enabled Globalisation: Technology
• Liberalisation of Foreign Trade and Investment Policy

Globalisation and the Indian Economy: key facts

Globalisation

Countries getting quickly and closely linked through rising trade and investment.

Opening line of any answer on the meaning of globalisation; always follow it with the trade and investment chain.

Cause and effect chain

More foreign investment + more foreign trade → greater integration of production and markets.

Use to explain how globalisation happens in 3- and 5-mark answers.

MNC (background term)

A firm running production units in two or more countries.

Use only as a supporting line when explaining the role of MNCs.

Role of MNCs

MNCs invest abroad and control a large part of foreign trade.

Use with the Ford Motors plant example: sold in India, exported cars and components.

Flows that connect countries

Goods, services, investments, technology and people.

Use in MCQs on how countries are linked.

Movement of people

Not much increase in recent decades because of various restrictions.

Check this exception carefully in MCQs and assertion-reason items.

Transport technology

Past fifty years: faster delivery over long distances at lower cost.

First point in any answer on technology and globalisation.

Containers

Loaded intact on ships, railways, planes, trucks; cut port handling costs, speed up exports.

Best example for transport technology.

Air transport

Cost has fallen, so much greater volumes of goods carried by air.

Second transport example.

Information and communication technology

Telecom (telegraph, telephone, mobile, fax), computers, Internet; helped by satellites.

Use for 'new technology has connected the world' questions.

IT and services

IT spread production of services across countries, e.g. a London magazine designed and printed in Delhi.

Example for how IT links countries; mention Internet, computers, e-banking, air delivery.

Trade barrier

A government restriction on foreign trade, such as a tax on imports or a quota.

Use to define barrier and to answer tariff MCQs.

Effect of import tax

1. 1.Imports costlier
2. 2.imports fall
3. 3.domestic producers prosper.

Use the Chinese toys example in the liberalisation section.

Barriers after Independence

To protect domestic producers; young industries of the 1950s-1960s; only essential imports like machinery, fertilisers, petroleum.

Use for 'why were barriers put' questions.

Around 1991

Far-reaching policy changes; barriers on trade and investment removed to a large extent.

Date to anchor every answer on liberalisation in India.

Liberalisation

Removing barriers or restrictions set by the government.

Definition for MCQs and the first point of liberalisation answers.

How the board asks Globalisation and the Indian Economy

The question patterns to expect, and the method that works for each.

Tricks to remember Globalisation and the Indian Economy

Short memory aids. Say each one aloud once, then use it on a question the same day.

• I + T = G

  Investment + Trade → integration of production and markets → Globalisation.

  Use it when: Write this chain in every answer on the meaning of globalisation so you never give only a one-line definition.

• Good Students Invest Time Patiently

  Goods, Services, Investments, Technology, People. The last one, People, is the slow one: restrictions have kept its growth small.

  Use it when: MCQs and assertion-reason items on the ways countries are connected.

• Box it, fly it, click it

  Box it = containers; fly it = cheaper air transport; click it = telecom, computers, Internet.

  Use it when: Three ready points for any 3-mark question on technology and globalisation.

• Barrier is a brake

  A barrier (tax or quota) is a brake on imports. Liberalisation is taking the foot off the brake.

  Use it when: Quick check in MCQs: if the option adds a restriction, it is a barrier; if it removes one, it is liberalisation.

• Fence, then gate

  1950s-60s: a fence to protect young industries (only machinery, fertilisers, petroleum came in). Around 1991: the gate opened so Indian producers could compete globally.

  Use it when: Keeps the order and the reasons straight in 5-mark liberalisation answers.

Globalisation and the Indian Economy: board-level solved questions

Ordered from board level to HOTS. Cover the solution, write your own, then compare step by step.

Case-study practice (Section E style)

Read the situation, then answer every part. In the board paper this is a 3-mark question split into 1 + 1 + 1 marks.

Where the marks are

How a typical answer is split into step marks. Show every step: a right final answer alone rarely earns full marks.

Where students lose marks in Globalisation and the Indian Economy

The slips examiners see most often, and what to write instead.

• ✗Mistake: Defining globalisation as only 'the spread of MNCs' or only 'more trade'

  Students remember one striking example and forget that the definition is about linking between countries.

  Wrong working

  Globalisation means foreign companies coming to India and selling their goods.

  Right working

  Globalisation means countries getting quickly and closely linked with one another, because foreign investment and foreign trade have both increased.

  ✓Do this: Learn the idea of 'linking between countries' and add the trade and investment chain.

  Usually costs: Usually 1 mark in a 3-mark answer; more in a 5-mark answer if every point is about MNCs only.

• ✗Mistake: Saying movement of people has grown as fast as goods and investment

  Students assume everything has increased under globalisation.

  Wrong working

  Globalisation has led to rapid movement of goods, services and people between countries.

  Right working

  Goods, services, investments and technology move rapidly between countries, but movement of people has not increased much because of various restrictions.

  ✓Do this: Remember the 'slow P': people are the exception.

  Usually costs: The full 1 mark in an MCQ or assertion-reason item.

• ✗Mistake: Listing technologies without linking them to globalisation

  Students write a list like 'mobile, Internet, computers' and stop.

  Wrong working

  Technology like mobile phones, computers and the Internet has developed a lot.

  Right working

  Containers cut port handling costs and speed up exports, so goods reach distant markets cheaply; the Internet allows instant e-mail and information sharing across the world, so services can be produced in one country for buyers in another.

  ✓Do this: End each point with 'so countries are linked because...'.

  Usually costs: 1 to 2 marks in a 3-mark 'justify' question.

• ✗Mistake: Mixing up barriers and liberalisation

  Both are about government policy on trade, and students reverse them under exam pressure.

  Wrong working

  Liberalisation means putting tax on imports to protect Indian industries.

  Right working

  A tax on imports is a trade barrier. Liberalisation means removing such barriers or restrictions set by the government.

  ✓Do this: Use the 'barrier is a brake' check before writing.

  Usually costs: 1 mark in an MCQ; in a 5-mark answer, the whole answer can go off track.

• ✗Mistake: Leaving out why India put barriers before explaining 1991

  Students jump straight to 1991 and lose the contrast the question wants.

  Wrong working

  In 1991 India removed barriers and globalisation started.

  Right working

  After Independence, barriers protected young industries of the 1950s and 1960s from foreign competition. Around 1991, the government felt producers should compete globally to improve quality, so barriers were largely removed.

  ✓Do this: When a question mentions barriers or protection, give both the 'before' reason and the 'around 1991' reason.

  Usually costs: 1 to 2 marks in a 3- or 5-mark answer.

• ✗Mistake: Choosing option (a) in assertion-reason just because both statements are true

  Students check truth but skip the 'because' test.

  Wrong working

  A: Movement of people has not increased much. R: People move for better jobs. Answer: (a).

  Right working

  Both are true, but R explains why people want to move, not why movement stayed low (restrictions). Answer: (b).

  ✓Do this: Read 'A because R' aloud in your head before choosing (a).

  Usually costs: The full 1 mark.

NCERT exercise guide: Globalisation and the Indian Economy

What each exercise in the NCERT chapter tests, how to approach it, and a question of the same kind solved step by step. Questions here are written in our own words.

Globalisation and the Indian Economy: previous year questions

• Asked in 21 of the 21 board papers we hold (2023 to 2026), on average 4.2 marks per paper; 48 questions in all, counting OR alternatives. In 4 of 4 sample papers.

Counted from the real papers on our previous year papers page, not estimated. Average marks are over every board paper we hold, with an OR pair counted once. Chapter tags are ours.

Solved board questions from Globalisation and the Indian Economy

Real questions from recent papers. Try each one first, then open our step-by-step solution with marks per step.

Every Globalisation and the Indian Economy question, by year

Practice questions on Globalisation and the Indian Economy

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

1. Q1 · 1 mark · MCQBoard level

   Suppose a government fixes the largest number of imported television sets that may enter the country each year. Which one of the following correctly describes this measure?
   (a) A quota, which is a trade barrier
   (b) A tax on imports, which is a trade barrier
   (c) Liberalisation of foreign trade
   (d) Liberalisation of foreign investment

   Hint

   Does the measure act on the price or on the number of goods? Is a restriction being added or removed?

   Answer

   (a) A quota, which is a trade barrier. It limits the number of goods imported. A tax would act through price, and liberalisation removes restrictions instead of adding them.

2. Q2 · 1 mark · MCQBoard level

   Imagine a country removes most of its taxes and limits on imports and allows foreign companies to set up factories freely. Which outcome is most likely?
   (a) Domestic producers face less competition from abroad.
   (b) Goods can be imported and exported easily and foreign firms can set up factories and offices.
   (c) Only essential items such as machinery and fertilisers can now be imported.
   (d) Imported goods become costlier for buyers.

   Hint

   Removing barriers is liberalisation. Trace what happens when restrictions go.

   Answer

   (b) Goods can be imported and exported easily and foreign firms can set up factories and offices. Options (a), (c) and (d) describe the effects of keeping trade barriers, not removing them.

3. Q3 · 3 marks · Short answerBoard level

   What is liberalisation? Why is a government that liberalises said to be 'more liberal', and when did India take this step? (3 marks)

   Hint

   What is removed, who then decides, and the year.

   Answer

   Liberalisation is the removal of barriers or restrictions set by the government. (1)
   Such a government is called 'more liberal' because it imposes far fewer restrictions, so businesses can decide freely what to import or export. (1)
   In India, barriers on foreign trade and foreign investment were removed to a large extent from around 1991. (1)

4. Q4 · 1 mark · Assertion-reasonBoard level

   Assertion (A): Information and communication technology has helped spread the production of services across countries.
   Reason (R): The cost of air transport has fallen, so much greater volumes of goods are carried by airlines.
   (a) Both A and R are true and R is the correct explanation of A.
   (b) Both A and R are true but R is not the correct explanation of A.
   (c) A is true but R is false.
   (d) A is false but R is true.

   Hint

   Both statements are about technology, but is R about IT and services?

   Answer

   (b) Both A and R are true but R is not the correct explanation of A. R is about transport of goods. A is explained by the Internet, telecommunication, computers and e-banking, which let services be produced in one country for buyers in another.

5. Q5 · 3 marks · Short answerBoard level

   Why did the Indian government decide, around 1991, that Indian producers should compete with producers around the globe? (3 marks)

   Hint

   Link competition to quality, and mention who supported the decision.

   Answer

   • The government came to believe Indian firms should face world competition.
   • Competition would push them to raise their quality and performance.
   • Powerful international organisations backed the decision, so barriers on trade and investment were largely removed.

6. Q6 · 3 marks · Short answerHarder board level

   How have telecommunication facilities and the Internet helped globalisation? (3 marks)

   Hint

   Speed, cost and reach: three points.

   Answer

   • The telephone, mobile phones and fax, helped by satellites, let people contact each other worldwide and communicate even from remote areas.
   • The Internet gives instant access to information, with e-mail and voice-mail at negligible cost.
   • Firms in different countries can share work and payments (e-banking) instantly, so production of services spreads across borders.

7. Q7 · 3 marks · Short answerHarder board level

   Using the example of imported toys, compare a tax on imports with a quota as ways of regulating foreign trade. (3 marks)

   Hint

   One works through price, the other through quantity.

   Answer

   • A tax makes importers pay more, so imported toys cost buyers more and imports fall.
   • A quota fixes the maximum number of toys that can be imported, so imports are capped directly.
   • Both are trade barriers that protect Indian toy-makers: one acts through price, the other through quantity.

8. Q8 · 5 marks · Long answerHarder board level

   'Most regions of the world are in closer contact with each other than a few decades back.' Explain this statement with reference to globalisation. (5 marks)

   Hint

   Cover the meaning, what moves, the role of MNCs, and both enabling factors.

   Answer

   • Globalisation means countries getting quickly linked through foreign trade and investment.
   • Goods, services, investments and technology move more and more between countries.
   • MNCs seeking cheap locations raise foreign investment and control much trade. Ford's Indian plant exports cars and components.
   • Cheaper transport, containers and IT make distance less important.
   • Liberalisation from around 1991 removed barriers, so trade and foreign factories grew. (Movement of people has not risen much because of restrictions.)

9. Q9 · 3 marks · Short answerHOTS / competency

   Imagine a country cuts its tax on imported bicycles to zero. Predict the effect on buyers, on local bicycle makers, and on the country's link with the world economy. (3 marks)

   Hint

   This is the reverse of putting a tax on toys.

   Answer

   • Buyers: imported bicycles become cheaper and choice increases.
   • Local makers: they face stronger foreign competition and must improve quality or lose sales.
   • Link with the world: removing the barrier is liberalisation, so trade rises and the country becomes more integrated with other countries.

10. Q10 · 3 marks · Short answerHOTS / competency

    A classmate says, 'Globalisation would have happened just as fast without information technology.' Do you agree? Justify your answer. (3 marks)

    Hint

    Think of the London magazine made in Delhi: could it work without IT?

    Answer

    No, I disagree.

    • IT lets text, instructions and payments cross countries instantly and cheaply, through the Internet, telecom and e-banking.
    • It has played a major role in spreading the production of services, such as a London magazine designed in Delhi.
    • Without it, coordinating work across distant countries would be slow and costly, so globalisation would have been much slower.

11. Q11 · 5 marks · Long answerHOTS / competency

    Imagine a small island country that had high taxes and quotas on imports, slow cargo handling at its port and poor telephone links. It now removes most trade and investment barriers, builds a container port and sets up fast Internet and mobile links. Explain how these changes together would connect it with the world economy. (5 marks)

    Hint

    Sort the changes into technology and liberalisation, then show how each raises trade or investment.

    Answer

    • Removing taxes and quotas is liberalisation: goods can be imported and exported easily and businesses decide freely what to trade.
    • Easing investment barriers lets foreign companies set up factories and offices, so foreign investment rises.
    • A container port cuts handling costs and gets exports to markets faster.
    • Internet and mobile links allow instant information, e-mail and e-banking, so services can be produced for buyers abroad.
    • Technology makes cross-border flows possible and liberalisation allows them. More trade and investment link the island's production and markets with other countries: globalisation.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1. 1.Define globalisation in one line.Show answer

   Countries getting quickly and closely linked with one another through rising foreign trade and foreign investment.

2. 2.Which two rising flows together cause integration of production and markets?Show answer

   Foreign investment (mainly by MNCs) and foreign trade.

3. 3.Which flow between countries has not increased much, and why?Show answer

   Movement of people, because of various restrictions.

4. 4.How have containers helped globalisation?Show answer

   They are loaded intact onto ships, trains, planes and trucks, cutting port handling costs and speeding up exports.

5. 5.Name three parts of information and communication technology.Show answer

   Telecommunications, computers and the Internet (helped by satellite communication devices).

6. 6.What is a trade barrier? Give two examples.Show answer

   A restriction set by the government on foreign trade, such as a tax on imports or a quota.

7. 7.What were the only imports India allowed after Independence?Show answer

   Essential items such as machinery, fertilisers and petroleum.

8. 8.What is liberalisation, and when did it start in India?Show answer

   Removing barriers or restrictions set by the government; it started around 1991.

Quick revision checklist

The night before the exam: can you do each of these without looking?

• ☐Can you write the definition of globalisation and the trade-plus-investment chain in under 40 words?
• ☐Can you explain, with the Ford Motors plant example, how MNCs link both production and markets?
• ☐Can you list the five flows that can connect countries and say which one has grown little and why?
• ☐Can you give two ways transport technology has helped globalisation?
• ☐Can you name the parts of information and communication technology and say what each does?
• ☐Can you retell the London magazine designed in Delhi example in four steps?
• ☐Can you explain the effects of a tax on imported toys on buyers, imports and Indian toy-makers?
• ☐Can you say what a quota is and why it counts as a trade barrier?
• ☐Can you give the reasons for barriers after Independence and for removing them around 1991?
• ☐Can you write a 5-mark answer linking technology and liberalisation to globalisation within 120 words?

Globalisation and the Indian Economy: frequently asked questions