Page 124 - Understanding Economics for Class 10

(vii) Workers’ jobs are no longer secure, most employers prefer to employ workers ‘flexibly’.
Workers do not get any extra benefit like paid holiday, medical expenses etc and they
do not get their fair share of globalisation.

8. Define the term ‘liberalisation’. Explain the reasons for the Indian Government beginning
Goyal Brothers Prakashan
the policy of liberalisation in 1991.
Ans. removing barriers or restrictions set by the government is known as liberalisation.
In 1991, the government decided that the time had come for Indian producers to compete
with producers around the globe. It felt that competition would improve the performance of
producers within the country since they would have to improve their quality. So, it removed
barriers on foreign trade and foreign investment.

9. Technology has stimulated the globalisation process”. Support the statement with examples.
Ans. rapid improvement in technology has been a major factor that has stimulated the globalisation
process.
(i) For instance, in the past fifty years there have seen several improvements in transportation technology.
This has made much faster delivery of goods across long distances possible at lower costs.
(ii) In recent times, technology in the areas of telecommunications, computers, Internet has
been changing rapidly. Telecommunication facilities are used to contact one another
around the world, to access information instantly, and to communicate from remote areas.
(iii) Computers have now entered almost every field of activity. Through Internet we can
obtain and share information on almost anything we want to know. Internet also allows
us to send instant electronic mail and talk across the world at nominal costs.

10. How are local companies benefited by collaborating with multinational companies? Explain
with examples.
Ans. (i) MNCs at times set up production jointly with local companies. The benefit to the
local company of such joint production is two-fold
(a) First, MNCs provide money for additional investments, like buying new machines
for faster production.
(b) Second, MNCs bring with them the latest technology for production.
(ii) Parakh Foods was a small company earlier. When Cargill Foods, a very large American
MNC, bought this company, it built a large marketing network in various parts of India
where its brand is now well-reputed.
(iii) Also Prakash Foods had four oil-refineries, whose control has now shifted to Cargill.
Cargill is now the largest producer of edible oil in India.

11. Write a short note on WTO.
Ans. WTO stands for World Trade Organisation. Its aim is to liberalise international trade. It was
started at the initiative of the developed countries. It establishes rules regarding international
trade and sees that these rules are obeyed. Though it is supposed to allow free trade for all.
In practice, it is seen that the developed countries have unfairly retained trade barriers as
they still continue to provide protection to their producers. The organisation forces developing
countries to remove trade barriers. This is an unfair practice which must be stopped.

12. Does the US government obey the rules established by WTO regarding international trade?
Explain with an example.
Ans. The US government does not obey the rules established by WTO regarding international
trade. It has unfairly retained trade barriers. For example, farmers in the US receive massive
sums of money from the US government for production and for exports to other countries.

E-110 Economics Class X