Factors related Globalisation

FACTORS RELATED TO GLOBALISATION

Let us have a glimpse at different factors that led to globalization:

1. Transportation technology: This has made much faster delivery of goods across long distances possible at lower costs.
2. Information and communication technology: In recent times, technology in the areas of telecommunications, computers, Internet has been changing rapidly. Telecommunication facilities (telegraph, telephone including mobile phones, fax) are used to contact one another around the world, to access information instantly, and to communicate from remote areas. Satellite communication devices have facilitated this. The Internet also allows us to send instant electronic mail (e-mail) and talk (voice-mail) across the world at negligible costs.

TRADE RULES

• Let us recall the example of the import of Chinese toys. Suppose the Indian government puts a tax on the import of toys. This implies that those who wish to import these toys would have to pay tax on this. Because of the tax, buyers will have to pay a higher price on imported toys. Chinese toys will no longer be as cheap in the Indian markets and imports from China will automatically reduce. Indian toy-makers will prosper.
• Tax on imports is an example of a trade barrier. It is called a barrier because some restriction has been set up. Governments can use trade barriers to increase or decrease (regulate) foreign trade and to decide what kinds of goods and how much of each, should come into the country.

• The Indian government, after Independence, had put barriers to foreign trade and foreign investment, which were necessary to protect the budding Indian industries.
• Starting around 1991, the government decided that the time had come for Indian producers to compete with producers around the globe to improve the performance of Indian industries affected by the competition. Thus, barriers to foreign trade and foreign investment were removed largely.
• This meant that goods could be imported and exported easily and foreign companies could set up factories and offices here. Removing barriers or restrictions set by the government is what is known as liberalization. With the liberalization of trade, businesses are allowed to make decisions freely about what they wish to import or export. The government imposes much fewer restrictions than before and is therefore said to be more liberal.