Globalisation is the process through which the economies of different countries become increasingly interconnected and interdependent through the exchange of goods, services, investments, technology and information across national borders.
In simple words, globalisation means that countries are becoming more connected with one another through trade, business, production and investment.
Example of Globalisation: A Smartphone
A smartphone sold in India may have its processor designed in the USA, components manufactured in South Korea and Japan, and final assembly carried out in China. It is then exported and sold in India and many other countries.
This is an example of globalisation because the production and sale of a single product involve several countries, connecting their economies through technology, production and international trade.
Factors That Have Enabled Globalisation
Globalisation has developed because of changes in technology and government economic policies. According to the NCERT approach, the two major factors that have enabled globalisation are rapid improvement in technology and liberalisation of trade and investment.
1. Rapid Improvement in Technology
Rapid improvement in technology is one of the most important factors that has enabled globalisation. Developments in transportation, communication and information technology have made it easier, faster and less expensive for countries to connect with one another.
In the past, transporting goods over long distances took considerable time, while communicating with people in other countries was slow and costly. Technological advancements have reduced many of these difficulties.
A. Improvement in Transportation
Modern transportation facilities, such as container ships, aeroplanes, railways and improved road networks, have made the movement of goods and people across countries faster and more efficient.
For example, an Indian company can manufacture garments in India and transport large quantities to customers in Europe using modern cargo ships. This enables the company to sell its products in international markets.
B. Improvement in Communication Technology
The development of computers, mobile phones, the internet, email and video conferencing has made international communication much faster and easier.
For example, an Indian software company can receive orders from a company in the USA, communicate with its employees online, complete the software project in India and deliver it digitally to the American client.
Thus, businesses can work with customers and partners in other countries without needing to travel there.
C. Improvement in Production Technology
Modern production technology enables companies to organise different stages of production in different countries.
For example, a smartphone may have its components manufactured in several countries, be assembled in another country and then be sold worldwide. Improved technology and communication allow the company to coordinate these activities efficiently.
How does technological improvement enable globalisation?
- It makes transportation faster and more economical.
- It enables instant communication across national borders.
- It allows different stages of production to take place in different countries.
- It facilitates international trade in goods and services.
- It helps multinational companies coordinate their activities worldwide.
Therefore, rapid improvement in technology has made international production, trade and communication easier, encouraging globalisation.
2. Liberalisation of Trade and Investment
Liberalisation of trade and investment is another major factor that has enabled globalisation.
Liberalisation means removing or reducing government restrictions on foreign trade and investment. It allows businesses to import and export goods more easily and enables foreign companies to invest in other countries.
A. Meaning of Trade Liberalisation
Trade liberalisation refers to reducing restrictions imposed by the government on imports and exports.
Governments may impose restrictions such as:
- High import duties or tariffs.
- Quotas limiting the quantity of imported goods.
- Import licences and other trade regulations.
When these restrictions are reduced, foreign goods can enter domestic markets more easily, and domestic producers can access international markets more freely.
Example: If the government reduces the import duty on electronic goods, foreign electronic products may become less expensive in India. Consumers may have more choices, and domestic producers may face greater competition.
B. Meaning of Investment Liberalisation
Investment liberalisation refers to reducing restrictions on investment by foreign companies in a country.
When restrictions are reduced, multinational companies may find it easier to establish factories, offices or other business operations in India.
For example, a foreign automobile company may establish a factory in India, employ Indian workers, purchase components from Indian suppliers and sell vehicles in domestic and international markets.
Such investment can connect Indian production with global markets.
C. Why did India introduce Liberalisation?
After independence, India followed policies that placed several restrictions on imports and foreign investment to protect domestic industries from international competition.
However, in the early 1990s, India introduced major economic reforms. Several restrictions on foreign trade and investment were reduced.
These reforms made it easier for foreign companies to invest in India and for Indian businesses to participate in international markets.
How does liberalisation enable globalisation?
- It reduces barriers to international trade.
- It makes imports and exports easier.
- It creates opportunities for foreign investment.
- It enables multinational companies to expand their operations.
- It connects domestic producers and consumers with international markets.
- It increases competition between domestic and foreign producers.
Therefore, liberalisation has helped countries become more closely connected through trade and investment.
Quick Revision Table
| Factor | How It Enables Globalisation |
| Rapid improvement in transportation | Makes the movement of goods faster and more economical |
| Improvement in communication technology | Enables rapid communication across countries |
| Improvement in production technology | Allows production to be organised across different countries |
| Liberalisation of trade | Reduces restrictions on imports and exports |
| Liberalisation of investment | Makes foreign investment easier |
| Overall effect | Increases economic integration and interdependence among countries |
Conclusion: Rapid improvement in technology has made it easier for countries to connect, while liberalisation of trade and investment has reduced restrictions on these connections. Together, these factors have played a major role in promoting globalisation.