Globalization: How It Applies to the Indian Centrally Planned Economy

Topics: Unemployment, Minimum wage, Developed country Pages: 7 (2270 words) Published: April 29, 2012
To begin the essay introduces the globalization process and how it has been applied in the Indian centrally planned economy. The essay will then follow the discussion by analyzing the economic performance and technology efficiency which globalization has generated after the liberation of the Indian market. The second part of the essay will concentrate on the higher competitiveness of undeveloped countries as China, India and Brazil due to the low cost labour which threatens manufactures workers in the United States and rises unemployment rates. Finally the essay will discuss the increase in education demand and requirements in developed and underdeveloped countries and the environmental impact of globalization with the final scope to understand if globalization has increased living standards and competitiveness between markets

According to International Labour Organization (ILO, 2004), globalization not only brings growing interdependence in economic relations through trade, investment, finance and the organization of production globally, but also social and political interaction among organizations and individuals across the world. According to Sholte (2005, p.16)There are five approaches in defining globalization, the second approach views globalisation as liberalization; as a process of removing state imposed restrictions on movements between countries in order to create a borderless world economy. Application of this type of globalization can be found in the abolition of regulatory trade barriers, foreign-exchange restrictions and capital controls as the case of the Indian economy. It is arguable that Globalisation has helped India in creating 300 million middle earners, earning in average $2.000-$4.000 per year and it could reach 40% of the population by 2020 however their income will always remain substantially lower that rich industrialised countries (Brown, 2006,p.29), in nowadays India is of the most fast growing emerging nations and has entered in the G5 together with Brazil, China , Mexico and South Africa. India started to liberalize its economy and welcoming globalization from July 24, 1991 (Bloomberg, 2011), however from the independence to the liberalization period India suffered major crisis events due to the centrally planned economy which caused serious issues in the economic rising inflation at 17% which increased prices and public deficit which became unsustainable (World bank, 2012) the low GDP value of 36 Bn in 1960 reaching its highest in 1990 at 317 Bn and lack of foreign reserves reflect the unhealthy situation of the economic system in India. After the liberalization India devaluated its currency to be indipendent from borrowing abroad (Johri and Miller,2012, p.87). With the new 1991 policy India opened its doors to the global market and started to privatize state owned industries to attract investors (Kesavan, 2003, pp.129-142). Vital fields which were once closed to foreign investors are now open; such as transport, finance, oil exploration and mining which privatized Neyveli Lignite Corp in 1992 selling 4,6% of its shares; telecommunications industries also became privatized such as Videsh Sanchar Nigam Ltd. in 1991 with 15% of its shares sold to foreign investors (World bank, 2000). Atomic energy for strategic reasons are still state owned however the government decided to privatize the energy sector and for the first time in 1998 it began to privatize the electricity industry creating a higher distribution of electricity. After the post reforms years India had a growth rate of 2.1% however through the years according to a recent report from the International Monetary Funds (2012) there is evidence of drastic increase in all the economical aspects, recording a 10.4% growth rate in 2010. Gdp per capita has also increased from $333.99 in 1991 to $1.388 in 2011, International Monetary Funds staff estimate that the total amount of gdp per capita in 2012 will be $1.454...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Globalization and Indian Economy Essay
  • Impact of Globalization on Indian Economy- an Overview Essay
  • Supply and Demand and Centrally Planned Economy Essay
  • Essay on how to apply
  • Essay on globalization
  • The Planned Economy Essay
  • planned economy Essay

Become a StudyMode Member

Sign Up - It's Free