INTRODUCTION:Globalization provides a variety of economicopportunities as well as threats. More so, it seems to be biased and hasunequal considerations on countries. Above all developing economies arehold-out for benefiting from globalization due to their economic status. Withrapid growth of Cross-country capital flows the domestic systems areincreasingly exposed to shocks emanating from abroad.
The cross-borderfinancial flows heighten the risk of financial crisis in many developingeconomies as they tend to be more volatile than domestic flows (Earnest, 2004).The exposure of developing economies to external shocks of global financialintegration raises capital fight and inflows. This affects exchange rate andinterest rates has posed new challenges on macroeconomic management of theeconomy. The unequal exchange led to the development of dependency relationshipwhere third world countries have their economies conditioned by the growth andexpansion of another economy (Suleiman, 2004). India, as an example, experienceddependent economy which is considered among the factors responsible foreconomic slow growth rate.
Globalization imposed a dependent capitalist socialsystem and western values in the forms of industrialism, market principle andinstitutions on India. There has been disappointing performance in terms ofGDP growth and overall development of Indian economy. As a result there is noimprovement in the reduction of poverty. In the last decades there has been alot of challenge in the global economy.
While attempting to optimise theopportunity engineered by globalization the problem of managing the threats andtension it poses, for developing countries like India is also mounting. Ratherthan strengthening the economy, globalization seeks to retrench it, thus Indiaenters the global market at a competitive disadvantage as a largelymono-product economy with weak currency, shrinking indigenous industrial space,mounting debt profile, corruption-infested political and economic climate. Thisunacceptable posturing imposes a systematic dispossession and exploitation ofinitiatives and resources and also the misuse and squandering of the economicsurplus by the regional and local power elites.Obviously, liberalization of trade has certainly posedserious challenges on industrial development of these developing economies.
Increased competition in a single developed market will put away developingeconomies far from fetching benefits of the global market, because they cannotcompete with developed nation. Developing economies cannot protect their industries;hence multinational corporations dominate their soil thereby ripping thebenefits supposed to be ripped by developing countries. To a large extent,developing economies would be dined of their chances to benefits from tradecomparative advantage due to mass production which lessen the cost per unit. Further,absolute advantages will no doubt be shared among the developed economies. Globalizationfoster global governance of global economy by developed economies andinternational institutions in the so called grouping of G-7, G-10, G-15 andG-22 where international economic issues are most often discussed by thegroupings without due consultation of developing economies or theirrepresentatives. This has posited the superiority complex and/orre-introduction of colonialism. Exotic brand of politics favouring developedeconomies are being nurtured.Characters, ideas, values and norms of citizens of thedeveloping economies are intelligently and logically being controlled,regulated through the power of world media and communication gadgets to enablethe developed countries in propagating their mission which will place them atthe advantage position from the economic integration.
In general the initiatorsof globalization must consider themselves first in terms of benefit accruable,consequently, the rationale why globalization is considered to be biased, hencetailored towards providing benefits to the developed nations at the detrimentof other participants (developing economies) to the so-called globalization.In a nutshell, globalization seems to be initiated toserve as conduit for transmitting modern colonialism by the power of technologyacross the world. Alternatively, it is considered as a mechanism to efficientlyinfluence rapid development in the developed countries and partially providesopportunities to the developing countries with bearable hardships at anydifferent stage to break through. Therefore, broad objective of this presentstudy is to examine the relationship between globalization and economic growthof India. GLOBALIZATIONAND INDIAN ECONOMY: Globalizationhas not only become an important matter of discussion among economist but alsoamong the journalists and politicians of every stripe.
It has affected everysphere of life. National cultures, national economies and national borders arebecoming increasingly fluid. Development of networks and infrastructures hassurfaced to smooth the progress of the interactions, and institutions haveemerged to regulate them. Such developments are rarely uniform and typicallydisplay clear patterns of irregularity. Mainelements of globalization includes; free movement of goods and services, flowof capital, movement of labour and the transfer of technology across nationaland international boundaries. These movements have brought the developedeconomies closer together and made them more strongly integrated. Manytransition and developing countries through liberalization and increasedopenness to trade have benefited from the process.
Moreover, globalization ismuch more than simply the growth, expansion of international trade and themovements of factors of production. Thereis no doubt that globalization has subsidized the degree of effective autonomyfor national governments in current situation. While taking the decisionspertaining to the growth, stability and social equity governments areconsidering not only the domestic factors but also the global factors which caninfluence such decisions. At present, it is more costly to keep itself isolatedfrom the rest of the world.
Irrespective of the fact that the government’sdegree of autonomy has gone done quite considerably, we cannot deny itsfundamental role to help the country to adjust into the process ofglobalization. Thecontemporary wave of globalization has been driven by the new set of factors,such as, deregulation of financial services, emergence of modern transportationand communication technologies, collapse of Eastern Bloc and demonstration ofthe success stories of the East Asian economies. One of the main features ofthis golden age of globalization is the development of an onwards worldwidecapitalism. It becomes more active and secure up the third generation oftechnological change to build up global production network. They were enticedby the profit and exploited the vulnerabilities in the Third world countries.Competitive deregulation of financial markets and development of informationtechnology has influenced the recent wave of globalization.
The rapidintegration of financial markets and the emergence of several new instrumentsof financial flows and financial management also propelled this process. Globalizationand organizations with global business have turned into reality. Aspects ofglobalization brought opportunities along with challenges for all kinds ofbusiness organizations. Employees are being scattered internationally, meansthe knowledge engine is working all through, yet biological, geographical andlinguistic restrictions are preventing real-time accessibilities (AmericanProductivity and Quality Centre, 1996). Demands are all for greater modes ofinteraction, co-ordination, sharing and learning from one another within organizationswhich are existed internationally.
Global pre-emption has been noted asimportant (Prahalad, 1997), whereby the innovations and modes of continuouslearning for firms are getting necessary or survival in the hyper-competitivestructure of the global mall. Inaccordance to the current global economy there is the space for knowledgeeconomy, where knowledge turns up to be the costly resource and is the platformto offer highest modes of returns, added by strategic management forsustainable kind of competitive advantages. On international basis, manyscholars have accepted the eminence related to knowledge resource (Pillania,2005). There are the multinational corporations (MNCs) with the knowledgerepositories (Inkpen and Ramaswamy, 2006) with the demand to make best kind ofinnovative utilisation of their subsidiaries. There is the instance of greatrisk related to the aspect of neglecting knowledge and management of the samein current scenario. Incase of countries like those of India, with the space for globalization andliberalization in the recent past, the provisions are marked as bigger issues.
Here, the platform meant for competition for relevant Indian firms turns up asglobal, as there is the purely generated domestic Indian firm facingcompetition from different kinds of multinational corporations or imports. Interms of surviving and growing, Indian firms are developing knowledge assetswith better knowledge assets. They are also realizing the relevance ofknowledge and as such the Indian Government appointed commission for knowledgefor the implication of diversified aspects.
Indian President further stressesover the making India one of the global superpowers in term of knowledge. Economyof India experiences major kinds of changes in the policy during the early partof 1990s, that has got the newer mode of economic reform, relevant popularlymarked as Liberalization, Privatization and Globalization (or the model ofLPG). LPG aims in making Indian economy the fastest growing front and beingcompetitive on international platform. There are many reforms followed in theindustrial sector, financial and trading sectors of India. The core idea is toattain efficient economic structure. Reformsrelated to liberalization of Indian economy during July, 1991 dawned a newerphase for India and its population.
1991 attained economic transition withexcessive impact over the entire economic development in all the major economicsectors and the counted effects marked in last decade. Further, there is theadvent related to the real integration of Indian economy in reference tointernational economy. Thisparticular era related to reformation ushered remarkable change of Indianmental set up by deviating traditional values since Indian independence of1947.
The noted aspects are like those of socialistic policies andself-reliance in reference to economic development, led by inward-lookingrestrictive governance. This leads to the mode of isolation, with backwardnessand levels of economic inefficiency with similar kinds of problems. In spite ofall potentialities, India still needs time to be attain the fast track inattaining prosperity. Indian economy is restructuring itself with aspirationstowards the elevation from current desolate position on international map. Itis speeding up its economic developments imperatively and is witnessingpositive role of Foreign Direct Investment (or FDI) by following rapid growthin economy in the Southeast countries of Asia and China in particular. Indiahas got an ambitious plan in terms of emulating successes with her neighboursof east and thereby is trying to sell itself as a profitable destination forFDI. Globalizationfollows many diversified meanings as per the relevant context.
Precisedefinition for globalisation is yet to get nailed. Still, for Guy Brainbant,process of globalization is about opening up for wide platform of world trade,advanced ways of communication, internationalization of all the financialmarkets, MNCs being important, population migrations and increased mobility ofgoods, persons, data, capital and ideas, along with diseases, infections andpollution. Globalization refers to economic integration of the whole world byuninhibited financial and trading flows, mutual exchange meant in case ofknowledge and technology.
Further it also is about free movement ininter-country context of labour. For India, there is the opening up of economytowards foreign direct investment through the facilities relevant to foreigncompanies for investing in diversified economic fields in India. It is alsonoted by removing obstacles and constraints towards the entry of MNCs intoIndian demography, allowing respective Indian companies to get into foreigncollaborations and encouraging for joint ventures abroad. It also carry outmassive modes of importing liberalization programs through the mode ofswitching from quantitative restrictions towards the tariffs as well as importduties, and thus being noted as globalization with policy reforms in Indiaduring 1991.
Globalizationcan be described as a process involving international integration as an outcomeof forums, views, products and services, opinions combined with other aspectsof culture. The period between 1870 and 1914 was a symbolic one since therewere trade flows between countries, capital moved from one side to the otherand people largely migrated as well. Because of this, the economies integratedrapidly. Trade barriers also reduced and opened up for better and smoother flowof trade with people travelling more frequently.
In fact, in those times therewere hardly any passports or visa pre-requisites and insignificant non-tariffbarriers or restrictions on flow of funds. Despite this, the scope and spreadof globalization dipped in the period between the 1st and 2nd World War. Thisperiod was dotted with the emergence of several hurdles so as to stop thefluent movement of goods and services. The basic thought process of economieswas that they could flourish even better if they operated behind protectedwalls. Most leading countries decided to take a step back after the 2nd WorldWar. It took considerable time for these countries to arrive at the positionthey were before the 1st World War. With regard to percentage of exports andimports to the total output, America could achieve the pre-1st World War levelof 11per cent around the beginning of the 70s. A major part of the developing countries which freedthemselves from colonial rule immediately after the Second World War choose tofollow an import substitution industrial regime.
Even the Soviet countries fellin line and were away from the global economic integration process. We havecome much ahead from those times. There has been active globalization, especiallyin the past two decade. The Soviet bloc countries that existed previously arenow integrating with the global economy and with much renewed enthusiasm.Developing countries are today re-working their vision of growth and arelooking at an outward oriented policy in this regard. Studies, however,indicate that trade and capital markets have ceased to be any more globalizedthan they were around the end of the last century.
There still are, however,certain concerns regarding the issue of globalization than previously onaccount of the nature and speed of transformation. The colossal impact of newinformation technology on market integration, efficiency as well as industrialorganization are some striking features of the present situation. Integrationof product markets has indeed been left far behind by globalization offinancial markets.