Drawbacks Of Unregulated Capitalism

Que:- how have customer benefited by increasing the competition after liberalisation and globalisation?

Ans:-

• Globalisation :- the process of interaction and integration among people, companies, and governments worldwide.  
• Liberalisation:-the removal or loosening of restrictions on something, typically an economic or political system.
• benefits of liberalisation and globalization of Indian economy.:-

1# Shift from Import-Substitution to Export-Led Growth Strategy:

The failure of import substitution strategy of industrial growth to achieve sustained growth forced India and other develop­ing countries to pursue export-led growth strategy

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.

An important argument for trade liberalisation from the viewpoint of the developing countries is that they will gain from it as they have a comparative advantage in abundant, low-cost unskilled labor. 

The strategy of development focused on export promotion requires that other countries, espe­cially developed countries should not prevent the imports to their countries through imposition of tariffs and non-tariff barriers. 

2# Foreign Capital Inflows:-

The globalisation or integration 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 and foreign direct investment (FDI). Portfolio investment will bring valuable foreign exchange currencies in India and free us of balance of payments difficulties. With sufficient foreign exchange reserves, balance of payments constraint on accelerating the growth process will be removed.

3# Globalisation and Transfer of Technology:-

Another benefit flowing from globalisation of the Indian economy is that it acts as a mechanism for the transfer of technology from the developed countries. Due to financial constraints, Indian companies are in a position to invest only a small amount of funds on R & D. Therefore, it is through globalisation of its economy that we will be able to get advanced technology from the developed countries.

The technological up-gradation of the Indian industries will lead to higher productivity and help us to achieve a higher rate of industrial growth. It is worth noting that it is the multinational corporations (MNCs) that are carriers of technology to the developing countries through technological and financial collaboration with domestic enter­prises. Globalisation 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.

4# Increased Market Access:-

An important benefit of globalisation is increased market access. Free trade accompanying globalisation widens the markets for products of industries

The larger the market in which products can be sold, the greater the benefit that will accrue as a result of economies of scale and specialisation. This will lower unit cost of production and increase the competitiveness of manu­factured products. Thus globalisation will ensure greater gain from trade. In addition, the wider market increases the incentives for investing in new innovations as the potential return on investment in them will increase.

5# Faster Economic Growth and Poverty Reduction:-

Above all, it has been argued by some prominent economists such as Jagdish Bhagwati, T.N. Srinivasan, Arvind Panagariya, that globalisation will help in faster rate of reduction in poverty through acceleration of economic growth.

To quote professor Arvind Panagariya, “Countries that have achieved significant poverty reduction are gener­ally those that have grown rapidly and have, in turn, been open to trade. The most obvious example are the Newly Industrialized Economies (NIEs) including Hong Kong, Singapore, Republic of Korea and Taiwan that have entirely eliminated poverty according to the dollar-a-day poverty line. On the other hand, countries such as India that remained autarkic and grew at less than 1.5% in per capita terms until late seventies experienced little reduction in the trend poverty ratio. Both India and China achieved poverty reduction after they began to dismantle autarkic policies and began to grow rap­idly”.

 6# Employment Argument:

An important argument for liberation of trade and capital flows is that it will generate more employment opportunities.