Globalisation and Challenges Before India

Topics: International trade, Economics, Developed country Pages: 13 (4419 words) Published: October 29, 2010

4th Ramanbhai Patel Memorial Lecture on
Excellence in Education


Dr. C. Rangarajan


Economic Advisory Council to the Prime Minister

New Delhi

February 25, 2006



I deem it a great honour to be invited to deliver the 4th Ramanbhai Patel Memorial Lecture on Excellence in Education. Shri Ramanbhai Patel was a true entrepreneur. He came to business from education and set up an indigenous pharmaceutical company, which later became one of the largest manufacturers of drugs and pharmaceuticals. He was deeply interested in the promotion of education and contributed liberally towards this cause. I am indeed happy that the Ahmedabad Management Association has instituted a lecture series to commemorate his memory.

Ahmedabad Management Association is perhaps the most active management association in our country. It has become the forum for a discussion of variety of issues relating to industrial growth and business education. Its programmes and seminars have come to be recognized as being the most useful and well organised. May I take this occasion to congratulate the Ahmedabad Management Association on the excellent work it has been doing. It is a matter of great pleasure for me to be in Ahmedabad and to meet familiar faces.

Globalization has become an expression of common usage. While to some, it represents a brave new world with no barriers, for some others, it spells doom and destruction. It is, therefore, necessary to have a clear understanding of what globalization means and what it stands for, if we have to deal with a phenomenon that is willy-nilly gathering momentum.

Globalization and its Meaning

Broadly speaking, the term ‘globalization’ means integration of economies and societies through cross country flows of information, ideas, technologies, goods, services, capital, finance and people. Cross border integration can have several dimensions – cultural, social, political and economic. In fact, some people fear cultural and social integration even more than economic integration. The fear of “cultural hegemony” haunts many. Limiting ourselves to economic integration, one can see this happen through the three channels of (a) trade in goods and services, (b) movement of capital and (c) flow of finance. Besides, there is also the channel through movement of people.

Historical Development

Globalization has been a historical process with ebbs and flows. During the Pre-World War I period of 1870 to 1914, there was rapid integration of the economies in terms of trade flows, movement of capital and migration of people. The growth of globalization was mainly led by the technological forces in the fields of transport and communication. There were less barriers to flow of trade and people across the geographical boundaries. Indeed there were no passports and visa requirements and very few non-tariff barriers and restrictions on fund flows. The pace of globalization, however, decelerated between the First and the Second World War. The inter-war period witnessed the erection of various barriers to restrict free movement of goods and services. Most economies thought that they could thrive better under high protective walls. After World War II, all the leading countries resolved not to repeat the mistakes they had committed previously by opting for isolation. Although after 1945, there was a drive to increased integration, it took a long time to reach the Pre-World War I level. In terms of percentage of exports and imports to total output, the US could reach the pre-World War level of 11 per cent only around 1970. Most of the developing countries which gained Independence from the colonial rule in the immediate Post-World War II period followed an import substitution industrialization regime. The Soviet bloc countries were also shielded from the...
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