Introduction
Globalization is the integration of the world economy. It has a persistent theme of the past
quarter century. Growth of the economic activity has changed the structure of economics. It also
makes a change in the phase of the political and social organizations of different countries. The
effects of globalization can be measured directly. But the scope and pace can be classified in four
keys goods and services, financial blows, movement of people and communication.
Liberalization of countries in the developing markets provides new opportunities for investors to
increase their profit. Economic liberalization refers that an opening up to the rest of the world
with regarding to the trade, regulations, taxation and other areas that generally affect business in
the country. As a whole concept, we can forecast to which degree a country is liberalized
economically by how easy it is to invest and to do business in the country. All developed
countries have already gone through this liberalization process, whereas emerging countries need
to undergo a series of changes.
Discussion
Import-Export Substitution leads to Strategic Growth:
The fault in import substitution strategy of industrial growth to achieve sustained growth
forced India and other developing countries to pursue export leads the strategic growth
(which is also known as the outward looking strategy of development). It has been argued
that by expanding exports to the other countries and getting required imports from them
based on their respective comparative costs. Developing countries will be able to achieve
faster rate of economic growth.
Foreign Capital Inflows:
The globalization and liberalization of the Indian economy with the world economy is
also beneficial because it would give a boost to foreign capital inflows in the form of
portfolio investment. The Investment in portfolio will bring valuable foreign exchange
currencies in India and free in case of balance of payments difficulties. With sufficient
foreign exchange reserves, balance of payments restrictions on accelerating the growth
process will be removed. The role of foreign direct investment is more important than
portfolio foreign investment as it raises the rate of real investment in the economy and helps
us to achieve a faster rate of economic growth.
Globalization and Transfer of Technology:
Due to financial constraints, Indian companies are in a position to invest only a small
amount of funds on Research and Development. Therefore, it is through globalization of its
economy that we can able to get advanced technologies from the developed countries. The
technological up-gradation of the Indian industries will lead to higher productivity and help
us to achieve a higher industrial growth. It is worth noting that it is the multinational
corporations that are carriers of technology to the developing countries through technological
and financial integration with domestic enterprises. Globalization makes faster diffusion of
new ideas and advanced technologies in the world. This will make possible for the
developing countries like India to catch up the developed countries more quickly.
Increased Market Access:
The market products can be sold, the greater the benefit that will arise as a result in case
of economies of scale and specialization. This will lower unit cost of production and increase
the competitiveness of manufactured products. Thus, globalization will ensure greater profit
from trade. In addition, the wider market increases the incentives for investing in new
implementations and trends as the potential return on investment in them will increase.
Employment Argument:
An important argument for liberation of trade and capital flows is that it creates more
employment opportunities.
First, the growth in exports based on comparative cost advantage and it leads to the creation
of employment opportunities.
Secondly, employment opportunities also increase through following the removal of
restrictions on capital flows.
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