MNCs, globalisation drivers, liberalisation, WTO, and effects on India
Globalisation is the process of rapid integration (interconnection) of countries through greater foreign trade, investment, and movement of people.
When a country is "globalised," its economy is connected with economies of the world — its factories may use raw materials from Africa, export goods to the USA, and be managed by a company headquartered in Japan!
A Multinational Corporation (MNC) is a company that owns or controls production in more than one country.
MNCs set up production wherever it is cheapest and sell wherever it is most profitable. They play a major role in globalisation.
Examples: Ford (cars), Nokia (mobiles), Samsung, Unilever (HUL in India), McDonald's, Starbucks, TCS, Infosys
Consider a shirt bought in the UK from a global brand:
• Cotton grown in India → Spun in Bangladesh → Stitched in Vietnam (because labour is cheapest) → Label designed in France → Sold in UK
This is called a Global Value Chain — production spread across multiple countries, each doing what it does most cheaply.
Before 1991, India had a very controlled ("licence raj") economy. Import barriers were very high, MNCs restricted, foreign investment controlled.
In 1991, facing an economic crisis, India opened up:
• Liberalisation: Reduction of government controls and regulations on business
• Privatisation: Government companies sold to private sector
• Globalisation: Opening of economy to foreign trade and investment
Results: GDP growth accelerated, IT sector boomed, foreign investment came in, consumer goods became affordable. India became one of the world's fastest growing economies.
Winners from globalisation:
• Skilled workers (IT, finance, medicine) — salaries rose dramatically
• Large Indian companies — could access global markets and technology
• Consumers — more choices, better quality at lower prices
• MNCs — expanded into India's huge market
Losers from globalisation:
• Small manufacturers — flooded by cheaper imports (battery makers, toys, electronics)
• Unskilled workers — factories closed when production moved abroad
• Farmers — fluctuating world commodity prices affect livelihoods
Globalisation has not benefited everyone equally. Demands for "fair globalisation":
• Rich countries should also open their markets (especially agriculture) — currently they protect their farmers with huge subsidies while demanding poor countries remove trade barriers
• Workers' rights to be protected even with globalisation (minimum wages, safe conditions)
• Technology transfer to developing countries
• Debt relief for poorest countries