What happens when there is a growing integration of economies across the globe? Majorly there have been positive impacts of this global phenomenon - through liberalization, privatization and globalization (LPG). Due to globalization, there has been significant flow of inward foreign direct investment. MNCs are getting a chance to explore various different markets across economies and explore the untapped potential. IMPACT OF GLOBALIZATION
It was in July 1991, when foreign currency reserves had tumbled down to almost $1 billion; inflation was at a soaring high of 17%, highest level of fiscal deficit, and foreign investors loosing confidence in Indian Economy. With all these coupling factors, capital was on the verge of flying out of the country and we were on the brink of become loan defaulters. It was at this time that with so many bottlenecks at bay, a complete overhauling of the economic system was required. Policies and programs changed accordingly. This was the best time for us to realize the importance of globalization. MEASURE OF GLOBALIZATION
Devaluation: The first initiative towards globalization had been taken the moment there was an announcement of devaluating the Indian currency by a hoping 18-19% against all the major global currencies. This was a major initiative in the international foreign exchange arena. The Balance of payment crisis could also be resolved by this measure. Disinvestment: The core elements of globalization are privatization and liberalization. Under the privatization scheme, bulk of the public sector undertakings have been/ and are still being sold to the private sector. Thus the concept of PPP (public private partnership) came up. Allowing Foreign Direct Investment (FDI): Allowing FDI inflows is a major step of globalization. The foreign investment regime has been quite transparent and thus the economy is getting boosted up. Various sectors were opened up for liberalizing the FDI regime.
For successful globalization countries need to chalk out strategies and policies to open up the doors for the inflow of foreign direct investment (FDI). The FDI by the MNCs brings with it flow of foreign capital, inflow of technology’ real capital goods, managerial and technical skills and know-how. Globalization can easily promote exports of the country by exploiting its export potentials in a right way. Globalization can be the engine of growth by facilitating export-led growth strategy of a developing country. ASEAN countries such as Indonesia, Malaysia and Thailand have demonstrated their success of export-led growth strategy supported by the FDI under globalization approach. Globalization can provide sophisticated job opportunities to the qualified and also check ‘brain drain’ in a country. Globalization would provide varieties of products to consumer at a cheaper rate when they are domestically produced rather than imported. This would help in improving the economic welfare of the consumer class. Under globalization, the rising inflow of capital would bring foreign exchange into the country. Consequently, the exchange reserves and balances...