INTRODUCTION: flows (Earnest, 2004). The exposure of developing economies

INTRODUCTION:

Globalization provides a variety of economic
opportunities as well as threats. More so, it seems to be biased and has
unequal considerations on countries. Above all developing economies are
hold-out for benefiting from globalization due to their economic status. With
rapid growth of Cross-country capital flows the domestic systems are
increasingly exposed to shocks emanating from abroad. The cross-border
financial flows heighten the risk of financial crisis in many developing
economies as they tend to be more volatile than domestic flows (Earnest, 2004).
The exposure of developing economies to external shocks of global financial
integration raises capital fight and inflows. This affects exchange rate and
interest rates has posed new challenges on macroeconomic management of the
economy. The unequal exchange led to the development of dependency relationship
where third world countries have their economies conditioned by the growth and
expansion of another economy (Suleiman, 2004). India, as an example, experienced
dependent economy which is considered among the factors responsible for
economic slow growth rate. Globalization imposed a dependent capitalist social
system and western values in the forms of industrialism, market principle and
institutions on India.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

There has been disappointing performance in terms of
GDP growth and overall development of Indian economy. As a result there is no
improvement in the reduction of poverty. In the last decades there has been a
lot of challenge in the global economy. While attempting to optimise the
opportunity engineered by globalization the problem of managing the threats and
tension it poses, for developing countries like India is also mounting. Rather
than strengthening the economy, globalization seeks to retrench it, thus India
enters the global market at a competitive disadvantage as a largely
mono-product economy with weak currency, shrinking indigenous industrial space,
mounting debt profile, corruption-infested political and economic climate. This
unacceptable posturing imposes a systematic dispossession and exploitation of
initiatives and resources and also the misuse and squandering of the economic
surplus by the regional and local power elites.

Obviously, liberalization of trade has certainly posed
serious challenges on industrial development of these developing economies.
Increased competition in a single developed market will put away developing
economies far from fetching benefits of the global market, because they cannot
compete with developed nation. Developing economies cannot protect their industries;
hence multinational corporations dominate their soil thereby ripping the
benefits supposed to be ripped by developing countries. To a large extent,
developing economies would be dined of their chances to benefits from trade
comparative advantage due to mass production which lessen the cost per unit. Further,
absolute advantages will no doubt be shared among the developed economies.

 Globalization
foster global governance of global economy by developed economies and
international institutions in the so called grouping of G-7, G-10, G-15 and
G-22 where international economic issues are most often discussed by the
groupings without due consultation of developing economies or their
representatives. This has posited the superiority complex and/or
re-introduction of colonialism. Exotic brand of politics favouring developed
economies are being nurtured.

Characters, ideas, values and norms of citizens of the
developing economies are intelligently and logically being controlled,
regulated through the power of world media and communication gadgets to enable
the developed countries in propagating their mission which will place them at
the advantage position from the economic integration. In general the initiators
of globalization must consider themselves first in terms of benefit accruable,
consequently, the rationale why globalization is considered to be biased, hence
tailored towards providing benefits to the developed nations at the detriment
of other participants (developing economies) to the so-called globalization.

In a nutshell, globalization seems to be initiated to
serve as conduit for transmitting modern colonialism by the power of technology
across the world. Alternatively, it is considered as a mechanism to efficiently
influence rapid development in the developed countries and partially provides
opportunities to the developing countries with bearable hardships at any
different stage to break through. Therefore, broad objective of this present
study is to examine the relationship between globalization and economic growth
of India.

 

GLOBALIZATION
AND INDIAN ECONOMY:

            Globalization
has not only become an important matter of discussion among economist but also
among the journalists and politicians of every stripe. It has affected every
sphere of life. National cultures, national economies and national borders are
becoming increasingly fluid. Development of networks and infrastructures has
surfaced to smooth the progress of the interactions, and institutions have
emerged to regulate them. Such developments are rarely uniform and typically
display clear patterns of irregularity.

Main
elements of globalization includes; free movement of goods and services, flow
of capital, movement of labour and the transfer of technology across national
and international boundaries. These movements have brought the developed
economies closer together and made them more strongly integrated. Many
transition and developing countries through liberalization and increased
openness to trade have benefited from the process. Moreover, globalization is
much more than simply the growth, expansion of international trade and the
movements of factors of production.

There
is no doubt that globalization has subsidized the degree of effective autonomy
for national governments in current situation. While taking the decisions
pertaining to the growth, stability and social equity governments are
considering not only the domestic factors but also the global factors which can
influence such decisions. At present, it is more costly to keep itself isolated
from the rest of the world. Irrespective of the fact that the government’s
degree of autonomy has gone done quite considerably, we cannot deny its
fundamental role to help the country to adjust into the process of
globalization.

The
contemporary wave of globalization has been driven by the new set of factors,
such as, deregulation of financial services, emergence of modern transportation
and communication technologies, collapse of Eastern Bloc and demonstration of
the success stories of the East Asian economies. One of the main features of
this golden age of globalization is the development of an onwards worldwide
capitalism. It becomes more active and secure up the third generation of
technological change to build up global production network. They were enticed
by the profit and exploited the vulnerabilities in the Third world countries.
Competitive deregulation of financial markets and development of information
technology has influenced the recent wave of globalization. The rapid
integration of financial markets and the emergence of several new instruments
of financial flows and financial management also propelled this process.

Globalization
and organizations with global business have turned into reality. Aspects of
globalization brought opportunities along with challenges for all kinds of
business organizations. Employees are being scattered internationally, means
the knowledge engine is working all through, yet biological, geographical and
linguistic restrictions are preventing real-time accessibilities (American
Productivity and Quality Centre, 1996). Demands are all for greater modes of
interaction, co-ordination, sharing and learning from one another within organizations
which are existed internationally. Global pre-emption has been noted as
important (Prahalad, 1997), whereby the innovations and modes of continuous
learning for firms are getting necessary or survival in the hyper-competitive
structure of the global mall.

In
accordance to the current global economy there is the space for knowledge
economy, where knowledge turns up to be the costly resource and is the platform
to offer highest modes of returns, added by strategic management for
sustainable kind of competitive advantages. On international basis, many
scholars have accepted the eminence related to knowledge resource (Pillania,
2005). There are the multinational corporations (MNCs) with the knowledge
repositories (Inkpen and Ramaswamy, 2006) with the demand to make best kind of
innovative utilisation of their subsidiaries. There is the instance of great
risk related to the aspect of neglecting knowledge and management of the same
in current scenario.

In
case of countries like those of India, with the space for globalization and
liberalization in the recent past, the provisions are marked as bigger issues.
Here, the platform meant for competition for relevant Indian firms turns up as
global, as there is the purely generated domestic Indian firm facing
competition from different kinds of multinational corporations or imports. In
terms of surviving and growing, Indian firms are developing knowledge assets
with better knowledge assets. They are also realizing the relevance of
knowledge and as such the Indian Government appointed commission for knowledge
for the implication of diversified aspects. Indian President further stresses
over the making India one of the global superpowers in term of knowledge.

Economy
of India experiences major kinds of changes in the policy during the early part
of 1990s, that has got the newer mode of economic reform, relevant popularly
marked as Liberalization, Privatization and Globalization (or the model of
LPG). LPG aims in making Indian economy the fastest growing front and being
competitive on international platform. There are many reforms followed in the
industrial sector, financial and trading sectors of India. The core idea is to
attain efficient economic structure.

Reforms
related to liberalization of Indian economy during July, 1991 dawned a newer
phase for India and its population. 1991 attained economic transition with
excessive impact over the entire economic development in all the major economic
sectors and the counted effects marked in last decade. Further, there is the
advent related to the real integration of Indian economy in reference to
international economy.

This
particular era related to reformation ushered remarkable change of Indian
mental set up by deviating traditional values since Indian independence of
1947. The noted aspects are like those of socialistic policies and
self-reliance in reference to economic development, led by inward-looking
restrictive governance. This leads to the mode of isolation, with backwardness
and levels of economic inefficiency with similar kinds of problems. In spite of
all potentialities, India still needs time to be attain the fast track in
attaining prosperity. Indian economy is restructuring itself with aspirations
towards the elevation from current desolate position on international map. It
is speeding up its economic developments imperatively and is witnessing
positive role of Foreign Direct Investment (or FDI) by following rapid growth
in economy in the Southeast countries of Asia and China in particular. India
has got an ambitious plan in terms of emulating successes with her neighbours
of east and thereby is trying to sell itself as a profitable destination for
FDI.

Globalization
follows many diversified meanings as per the relevant context. Precise
definition for globalisation is yet to get nailed. Still, for Guy Brainbant,
process of globalization is about opening up for wide platform of world trade,
advanced ways of communication, internationalization of all the financial
markets, MNCs being important, population migrations and increased mobility of
goods, persons, data, capital and ideas, along with diseases, infections and
pollution. Globalization refers to economic integration of the whole world by
uninhibited financial and trading flows, mutual exchange meant in case of
knowledge and technology. Further it also is about free movement in
inter-country context of labour. For India, there is the opening up of economy
towards foreign direct investment through the facilities relevant to foreign
companies for investing in diversified economic fields in India. It is also
noted by removing obstacles and constraints towards the entry of MNCs into
Indian demography, allowing respective Indian companies to get into foreign
collaborations and encouraging for joint ventures abroad. It also carry out
massive modes of importing liberalization programs through the mode of
switching from quantitative restrictions towards the tariffs as well as import
duties, and thus being noted as globalization with policy reforms in India
during 1991.

Globalization
can be described as a process involving international integration as an outcome
of forums, views, products and services, opinions combined with other aspects
of culture. The period between 1870 and 1914 was a symbolic one since there
were trade flows between countries, capital moved from one side to the other
and people largely migrated as well. Because of this, the economies integrated
rapidly. Trade barriers also reduced and opened up for better and smoother flow
of trade with people travelling more frequently. In fact, in those times there
were hardly any passports or visa pre-requisites and insignificant non-tariff
barriers or restrictions on flow of funds. Despite this, the scope and spread
of globalization dipped in the period between the 1st and 2nd World War. This
period was dotted with the emergence of several hurdles so as to stop the
fluent movement of goods and services. The basic thought process of economies
was that they could flourish even better if they operated behind protected
walls. Most leading countries decided to take a step back after the 2nd World
War. It took considerable time for these countries to arrive at the position
they were before the 1st World War. With regard to percentage of exports and
imports to the total output, America could achieve the pre-1st World War level
of 11per cent around the beginning of the 70s.

A major part of the developing countries which freed
themselves from colonial rule immediately after the Second World War choose to
follow an import substitution industrial regime. Even the Soviet countries fell
in line and were away from the global economic integration process. We have
come much ahead from those times. There has been active globalization, especially
in the past two decade. The Soviet bloc countries that existed previously are
now integrating with the global economy and with much renewed enthusiasm.
Developing countries are today re-working their vision of growth and are
looking at an outward oriented policy in this regard. Studies, however,
indicate that trade and capital markets have ceased to be any more globalized
than they were around the end of the last century. There still are, however,
certain concerns regarding the issue of globalization than previously on
account of the nature and speed of transformation. The colossal impact of new
information technology on market integration, efficiency as well as industrial
organization are some striking features of the present situation. Integration
of product markets has indeed been left far behind by globalization of
financial markets. 

x

Hi!
I'm Jamie!

Would you like to get a custom essay? How about receiving a customized one?

Check it out