CBSE Class 10 · Globalisation and the Indian Economy

What is Globalisation? Class 10 Meaning and Role of MNCs

Updated 14 October 2026 · Fact-checked

Globalisation is the process of rapid integration or interconnection between countries. It results from greater foreign investment and greater foreign trade, which integrate production and markets across countries. MNCs play a major role. Countries are linked through movements of goods, services, investments, technology and people, though movement of people has grown little because of restrictions.

Notice how MNCs link countries through flows of goods, services, investment and technology, while movement of people stays limited.

Illustration drawn for QuestionBuddy.

Understand What is Globalisation?

Board scope for 2026-27. In this chapter, only the sections 'What is Globalisation?' and 'Factors that have Enabled Globalisation' (technology; liberalisation of foreign trade and investment policy) are board-assessed. Production across countries, interlinking production, foreign trade and integration of markets, the WTO and fair globalisation are for the internal project. This page covers the first board section.

What has been happening. In the past two to three decades, more and more MNCs (multinational corporations) have been looking for locations around the world that would be cheap for their production. Foreign investment by MNCs in these countries has been rising, and foreign trade between countries has been rising rapidly. A large part of foreign trade is itself controlled by MNCs.

NCERT's example: Ford Motors' car plant in India produces cars for Indian markets, exports cars to other developing countries, and exports car components for its many factories around the world. Most MNCs' activities involve substantial trade in goods and services.

Definition. The result of greater foreign investment and greater foreign trade has been greater integration of production and markets across countries. Globalisation is this process of rapid integration or interconnection between countries.

Role of MNCs. MNCs are playing a major role in globalisation: through them, more and more goods and services, investments and technology move between countries, and most regions of the world are in closer contact than a few decades ago.

Ways in which countries are linked.
1. Movement of goods.
2. Movement of services.
3. Movement of investments.
4. Movement of technology.
5. Movement of people: people move between countries for better income, better jobs or better education. But in the past few decades there has not been much increase in this movement because of various restrictions.

Effect on competition. By connecting countries, globalisation results in greater competition among producers (NCERT's own exercise answer), since producers in different countries now compete in the same markets. NCERT's cartoon of small traders of readymade garments facing stiff competition from MNC brands and imports illustrates this.

Link to the next topics. Why did globalisation speed up now? Two factors: technology (transport and information and communication technology) and liberalisation of foreign trade and investment policy.

What is Globalisation?: key facts

Globalisation (definition): Process of rapid integration or interconnection between countries; Result of greater foreign investment and foreign trade.
Integration: Greater foreign investment + greater foreign trade -> integration of production and markets across countries
Role of MNCs: Seek cheap production locations; invest abroad; control a large part of foreign trade; move goods, services, investment and technology; Ford Motors example.
Five links: Goods, services, investments, technology, people; People's movement restricted.
Effect: Greater competition among producers across countries
Board scope: Board: What is Globalisation; Factors (technology, liberalisation). Internal: production across countries, integration of markets, WTO, fair globalisation; 2026-27 syllabus.

How to answer What is Globalisation? questions

Economics in 2026-27 has 1-, 3- and 5-mark questions. For this topic expect the definition, the role of MNCs, ways countries are linked and the effect on competition.

1Define globalisation in NCERT's words: rapid integration or interconnection between countries.
2Explain the cause: greater foreign investment and greater foreign trade integrating production and markets.
3Describe MNCs' role with the Ford example.
4List the five ways countries are linked and note restrictions on people's movement.
5Keep within board scope: do not answer board questions using WTO or fair globalisation material.

What is Globalisation? in real life

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

An MNC links countries

Suppose an imaginary car company has a factory in India that sells cars in India, ships cars to some African countries, and sends engine parts to its plants in three other countries.

Explain how this imagined company shows the meaning of globalisation.

Try it first, then show the solutionSolution

It invests in India: foreign investment.
It exports cars and parts: foreign trade, much of it controlled by MNCs.
Production in several countries is linked: integration of production.
Markets in many countries are connected: integration of markets.

Answer: The company invests in India (foreign investment) and trades cars and components across countries (foreign trade). Its plants in different countries depend on each other, integrating production, and its cars reach several markets, integrating markets. This rapid integration and interconnection between countries, driven by MNCs, is what NCERT calls globalisation, as in its Ford Motors example.

Memory hook: Invest here, trade there, connect everywhere.

Tricks to remember What is Globalisation?

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

I + T = I
Investment plus Trade equals Integration.
Use it when: Definition of globalisation.
G-S-I-T-P
Goods, Services, Investments, Technology, People: five links.
Use it when: Ways countries are linked.
People move least
Of the five links, people move the least because of restrictions.
Use it when: MCQs.

What is Globalisation?: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Definition · 1 mark · MCQBoard level

Globalisation is best described as:
(a) the process of rapid integration or interconnection between countries
(b) a ban on foreign trade
(c) movement of people within a country
(d) production only for the domestic market

Try it first, then show the solutionSolution

NCERT: globalisation is the process of rapid integration or interconnection between countries (1 mark).

Answer: (a) the process of rapid integration or interconnection between countries

Example 2: Role of MNCs (3 marks) · 3 marks · Short answerBoard level

What is the role of MNCs in the globalisation process? (3 marks)

Try it first, then show the solutionSolution

MNCs look for cheap production locations around the world, so their foreign investment has been rising (1 mark).
They control a large part of foreign trade; e.g., Ford Motors in India sells in India, exports cars and exports components to its factories abroad (1 mark).
Through MNCs, more goods, services, investments and technology move between countries, integrating production and markets (1 mark).

Answer: MNCs search for locations where production is cheap, so their foreign investment has been rising. They also control a large share of foreign trade: Ford Motors' Indian plant sells in India, exports cars to developing countries and sends components to its factories abroad. Through MNCs, goods, services, investments and technology move between countries, integrating production and markets.

Example 3: Assertion-reason: movement of people · 1 mark · Assertion-reasonHarder board level

Assertion (A): Movement of people between countries has not increased much in the past few decades.
Reason (R): There are various restrictions on the movement of people between countries.
(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

NCERT attributes the slow growth in movement of people to restrictions (1 mark).

Answer: (a) Both A and R are true, and R is the correct explanation of A.

Example 4: Meaning of globalisation (5 marks) · 5 marks · Long answerHarder board level

Explain the meaning of globalisation and describe the ways in which countries are connected in a globalised world. (5 marks)

Try it first, then show the solutionSolution

In the past two to three decades, MNCs have sought cheap production locations; foreign investment and foreign trade have risen rapidly (1 mark).
The result is greater integration of production and markets; globalisation is the process of rapid integration or interconnection between countries (1 mark).
MNCs play a major role; e.g., Ford Motors in India produces for India, exports cars and components (1 mark).
Countries are linked by movement of goods, services, investments and technology; most regions are in closer contact than before (1 mark).
People also move for better income, jobs or education, but this has not increased much because of restrictions (1 mark).

Answer: Over the past two to three decades, MNCs have looked for cheap production locations worldwide, so foreign investment has risen, and foreign trade between countries has grown rapidly, much of it controlled by MNCs. For example, Ford Motors' Indian plant serves Indian buyers, exports cars to developing countries and supplies components to its factories abroad. Greater investment and trade have integrated production and markets across countries; globalisation is this process of rapid integration or interconnection between countries. Countries are now linked through the movement of goods, services, investments and technology, bringing regions into closer contact. People also move for better income, jobs or education, but this has grown little because of restrictions.

Example 5: Passage: Ford Motors (3 marks) · 3 marks · Short answerHOTS / competency

Read and answer. NCERT notes that the car manufacturing plant of Ford Motors in India not only produces cars for the Indian market but also exports cars to other developing countries and exports car components for its many factories around the world. (a) Which two flows between countries does this example show? (b) How does it illustrate integration of production? (c) Why does NCERT say a large part of foreign trade is controlled by MNCs? (3 marks)

Try it first, then show the solutionSolution

(a) Foreign investment (the plant in India) and foreign trade (exports of cars and components) (1 mark).
(b) Components made in India feed Ford factories in other countries, so production in different countries is linked (1 mark).
(c) MNCs' operations involve substantial trade in goods and services among their own units and markets, so much world trade passes through them (1 mark).

Answer: (a) Foreign investment, in the Indian plant, and foreign trade, in exports of cars and components. (b) Components made in India are used in Ford's factories abroad, so production in several countries is interlinked. (c) Most MNCs' activities involve substantial trade in goods and services between their units and markets in many countries, so a large share of foreign trade is controlled by them.

Example 6: Globalisation and competition (3 marks) · 3 marks · Short answerHOTS / competency

Explain why globalisation leads to greater competition among producers. (3 marks)

Try it first, then show the solutionSolution

Globalisation connects markets in different countries through trade and investment (1 mark).
Producers in different countries now sell in the same markets (1 mark).
So they compete closely; e.g., small readymade garment traders face stiff competition from MNC brands and imports (1 mark).

Answer: Globalisation connects markets across countries through trade and investment, so producers from different countries sell in the same markets. They must therefore compete closely on price and quality. NCERT's picture of small readymade garment traders facing stiff competition from MNC brands and imports shows this.

Where students lose marks in What is Globalisation?

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

Mistake: Vague definition
Writing 'the world becoming one'.
Wrong working
Globalisation means the whole world is one country.
Right working
The process of rapid integration or interconnection between countries.
Do this: Use NCERT's words.
Usually costs: 1 mark.
Mistake: Ignoring the cause
Definition without explanation.
Wrong working
Globalisation is integration.
Right working
It results from greater foreign investment and foreign trade.
Do this: Add I + T.
Usually costs: 1 mark.
Mistake: Claiming free movement of people
Assumed from 'global'.
Wrong working
People now move freely between countries.
Right working
Movement of people has not increased much due to restrictions.
Do this: People move least.
Usually costs: 1 mark.
Mistake: Using internal-project content
Old guides mix sections.
Wrong working
Answering a board question with WTO rules.
Right working
Board scope: meaning of globalisation, technology and liberalisation.
Do this: Stay in board sections.
Usually costs: Wasted words.

Exam tips

Learn NCERT's one-line definition word for word in meaning.
Use the Ford Motors example for MNCs' role.
Remember that only 'What is Globalisation?' and 'Factors that have Enabled Globalisation' are board-assessed in 2026-27.
Economics in 2026-27 has 1-, 3- and 5-mark questions.

Practice questions on What is Globalisation?

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

Q1 · 1 mark · MCQBoard level
Globalisation, by connecting countries, results in:
(a) lesser competition among producers
(b) greater competition among producers
(c) no change in competition
(d) the end of foreign trade
Hint
NCERT's own exercise.
Answer
(b) greater competition among producers
Q2 · 3 marks · Short answerBoard level
What are the various ways in which countries can be linked? (3 marks)
Hint
Five movements.
Answer
Countries are linked through the movement of goods, services, investments and technology between them. They can also be linked through the movement of people, who move for better income, jobs or education, though this has not increased much because of restrictions.
Q3 · 1 mark · Assertion-reasonHarder board level
Assertion (A): Globalisation is the result of greater foreign investment and greater foreign trade.
Reason (R): These lead to greater integration of production and markets across countries.
(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
Is R the effect that defines A?
Answer
(a) Both A and R are true, and R is the correct explanation of A.
Q4 · 3 marks · Short answerHOTS / competency
Suppose a student says, 'Globalisation means people moving freely to work in any country.' Correct this view using NCERT. (3 marks)
Hint
What actually increased?
Answer
Globalisation is the rapid integration of countries, mainly through greater foreign investment and foreign trade, with MNCs moving goods, services, investments and technology. Movement of people is one possible link, but NCERT notes it has not increased much in recent decades because of various restrictions. So globalisation is mostly about goods, capital and technology, not free movement of people.
Q5 · 3 marks · Short answerHarder board level
Why have MNCs been setting up production in many countries over the past two to three decades? (3 marks)
Hint
Cheap locations; trade.
Answer
MNCs have been looking for locations around the world that would be cheap for their production. So their foreign investment in such countries has risen. They then trade the output across countries, as Ford's Indian plant exports cars and components, which also raises foreign trade.
Q6 · 5 marks · Long answerHOTS / competency
'Most regions of the world are in closer contact with each other than a few decades back.' Examine the statement with reference to globalisation and the role of MNCs. (5 marks)
Hint
Investment, trade, integration, five links, limits.
Answer
Over the past two to three decades, MNCs have searched the world for cheap production sites, so foreign investment has grown, and foreign trade has risen rapidly, much of it controlled by MNCs. Ford's Indian plant, for instance, sells in India and exports cars and components abroad. This has integrated production and markets across countries, the process NCERT calls globalisation. Through MNCs, goods, services, investments and technology move between countries, bringing regions into closer contact and increasing competition among producers. The contact is uneven, though: movement of people has not increased much because of restrictions. So regions are closer mainly through trade, investment and technology.

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.What is globalisation?Show answer
The process of rapid integration or interconnection between countries.
2.What two things have led to globalisation?Show answer
Greater foreign investment and greater foreign trade.
3.Why do people move between countries?Show answer
For better income, better jobs or better education.
4.Who controls a large part of foreign trade?Show answer
MNCs.
5.Which MNC example does NCERT use?Show answer
Ford Motors' car plant in India.

What is Globalisation?: frequently asked questions

What is globalisation in Class 10 Economics?

The process of rapid integration or interconnection between countries, through greater foreign investment and foreign trade.

What is the role of MNCs in globalisation?

They invest in cheap production locations, control much of foreign trade and move goods, services, investments and technology between countries.

How are countries linked in globalisation?

Through movement of goods, services, investments, technology and, to a limited extent, people.

Which parts of the globalisation chapter are in the 2026-27 board exam?

'What is Globalisation?' and 'Factors that have Enabled Globalisation' (technology and liberalisation); the rest is for the internal project.