Globalization — Meaning, Features and Impact

Globalization refers to the process of integrating a country's national economy with the world economy, through the freer flow of trade in goods and services, investment, technology, and information across national borders. Where liberalization is mainly about reducing internal government restrictions on domestic private business, and privatization is about the ownership and management of enterprises, globalization is specifically about the growing interconnection between a country's economy and economies elsewhere in the world.

Several features characterise globalization as it has affected India since 1991. World trade in goods and services has grown substantially, with countries increasingly buying and selling across borders as tariffs and other trade restrictions have come down. Foreign Direct Investment (FDI) — investment by a foreign company or investor to set up or acquire a controlling interest in a business in another country — has grown as a channel through which capital, technology, and management expertise move internationally. Multinational corporations (MNCs) — companies that own or control production or service facilities in more than one country — have expanded their operations across many more countries, including India, both by setting up their own facilities and by entering into joint ventures and other partnerships with Indian firms. Alongside the flow of trade and investment, there has been a marked increase in the cross-border flow of technology and information, aided greatly by advances in communication and information technology, which has made it far easier for firms in different countries to coordinate production, share knowledge, and serve customers across borders.

Globalization has brought genuine positive impact to Indian business. It has given Indian firms access to much larger global markets in which to sell their goods and services, rather than being confined to the domestic market alone. It has brought access to foreign capital and to modern technology that might otherwise have taken far longer to develop domestically. Exposure to global competition and global best practices has pushed many Indian firms to improve the quality, efficiency, and overall competitiveness of what they produce, and Indian consumers have benefited from a wider range of goods and services, often of improved quality, as global brands and global supply chains have become more accessible within India. …