Globalization is the rapid integration of countries through foreign trade and foreign investment by multinational cooperation or MNCs.

The money that spend on buying asset such as land, buildings, machines and other resources is called investment. When MNCs made this investment in different countries then it is called foreign investment. The primary cause of foreign investment is to reduce the cost of production. Importing or exporting the products across the native country boundary is called foreign trade. Hence, globalization enables greater integration of production and markets across countries. Globalization created opportunities for people to move across the nation in search of better education, job and income.

Production across countries

Companies crossed the native country boundary in search of raw material, cheap labor and other resources in order to reduce the production cost and earn maximum profits. A MNC is a company that owns or control the production in more than one nation. MNCs produces as well as market goods and services all over the world, for example, CocaCola, Pepsi, Honda, etc. the production process is divided into parts and is spread out across the globe as per resource availability.

Interlinking production across countries

MNCs set up production considering various factors such as closeness to market, skilled and semi skilled labours at low cost, availability of resource such as raw material, machines, attractive government policies. Also, MNCs are interacting with local producers in various locations to spread their production, thus, production in these widely dispersed location is getting interlinked. MNCs set up production jointly with some f the local companies, this gives advantage to local company to have extra fund for buying new resources and can take advantage of new technology for production. But maximum times MNCs buy up the local companies and then expand their production. Large MNCs have variety of ways to determine the price, quality, delivery and labour conditions of local producers, MNCs place order for production of these producers and then sell the product under their own brand names to different markets all over the world.

Factors that have enabled globalization

• Improvement in transportation technology: Railways, waterways, airways, roadways are developed to facilitate faster transport of goods. Containers re still chambers that can store products in efficient way to facilitate the transport. Use of containers enabled to lower the loading time, reduce the handling cost and hence allows faster delivery of goods.
• Improvement in information and communication technology: use of internet to send and receive data instantly, efficiently communicate by email and video call services, online payment through e banking facilities. Mobile services facilitated communication on the go. Satellite to link connection from any parts of the world.





• Liberalisation of foreign trade and foreign investment policy: Removing trade barriers set by government is called liberalisation. Trade barriers are the restrictions laid by government to regulate the foreign trade. With these barriers government decides what kind of goods and how much quantity of each should come into country. Trade barriers are necessary after independence to protect the producers within the foreign competition. At this time government only allowed import of essential items like machines, fertilisers, petroleum. WTO rules have forced the developing countries to remove trade barriers, thus the developing countries have no choice other than accepting liberalisation policy.

World Trade Organisation(WTO)

Aim of this organisation is to liberalise international trade. This organisation says that all countries in the world should liberalise their policies. This organisation establish the rules regarding international trade and sees that these rules are obeyed. Currently 161 countries are members of WTO. India have joined WTO on 1 January 1995.

Impact of Globalisation in India

• Impact of globalisation in India is not uniform
• For consumers: Globalisation enabled greater competition among producers forcing them to produce the quality product at lower price. Consumers today can take advantage of this competition to get a quality product at reasonable price. This lead to higher standards of living. These products are easily available in urban area and not in rural area hence reach of these products is limited, thus, the rural people are not having the same lifestyle as of urban people.
• For MNCs: With globalisation MNCs have prospered a lot. They have increased their investment in India indicating that they are benefitting from the investment. Recognising the opportunities in urban area that MNCs are now interested in industries such as cell phones, automobiles, electronics, soft drinks, fast food and banking services. MNCs can now shift to another country to lower the production cost and gain higher profits. But this shifting creates adverse effects to workers of the companies. They will get cheap qualified labour at low wages. Producers will have choice to outsource the work from different country where there is cheap labor and production cost.
• For Workers: With growing market competition among industries employers prefers to hire the worker as per need. Thus they can fire the worker at any time. Thus there is no job security for the workers. Moreover, worker has to work for long hours to meet the demands. They will have no choice than listening to their employer.Job opportunities are limited and number of workers are far more than the opportunities. Thus producers easily get cheap labour and workers are ready to work at less wages.

Struggle for fair globalisation

• Fair globalisation create equal opportunities for all and thus ensure that benefits of globalisation is shared better.
• Government policies must take care of all peoples in country equally.
• Government should ensure that labor laws are properly implemented and workers get their rights.
• moreover, government should support small producers to improve their performance till they become strong enough to compete.
• Government can use trade barriers and investment barriers to protect small producers.
• Government can negotiate at the WTO for ‘fairer rules’
• Also, Government should fight with other developing countries to reduce the domination of the developed countries.

Keywords: World Trade Organization, MNCs, Multinational Corporations.

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