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Indian economy had experienced major policy changes since the 1990s. The new economic reform, popularly known as, Liberalization, Privatization, and Globalization (LPG model) aimed at making the Indian economy as the fastest growing economy and globally competitive. The series of actions undertaken with respect to the industrial sector, trade as well as financial sector aimed at making the economy more efficient. Globalization is a process of increasing contact and trade between the cultures, economies, and governing bodies of countries throughout the world.
This process is fueled by both international trade and information technology and has profound and lasting effects on the autonomy of unique societies, economies, and government. Globalization facilitates the gradual economic integration of many separate national economies into one global economy through free trade, the movement of capital and investments by multinational companies, and the migration of peoples from one nation to another. This process creates increasing interdependence among governments and corporations.
Indian economy was in deep crisis in July 1991, when foreign currency reserves had plummeted to almost $1 billion; Inflation had roared to an annual rate of 17 percent; the fiscal deficit was very high and had become unsustainable; foreign investors and NRIs had lost confidence in Indian Economy. the Capital was flying out of the country and we were living on loans. Major measures initiated as a part of the liberalization and globalization strategy in the early nineties included the following:
Devaluation: The first step towards globalization was taken with the announcement of the devaluation of Indian currency by 18-19 percent against major currencies in the international foreign exchange market. In fact, this measure was taken in order to resolve the BOP crisis
Disinvestment-In order to make the process of globalization smooth, privatization and liberalization policies are moving along as well. Under the privatization scheme, most of the public sector undertakings have been/ are being sold to private sector.
First—a new “technology” (referred to in the broadest sense) was leveraged by a country or a set of countries to boost productivity and output.
Second—one or more countries served as an economic “pole”, which became the global growth engine. Western European countries, the US and China played this role in the first, second and third phase of globalization, respectively, driving 20-25% of world GDP growth, and around 15% of the growth in global trade. This, in turn, fuelled economic activity in other countries, especially the trading partners of the “poles”.
Third—a favorable system of global governance facilitated cross-border financial flows and trade through the enforcement of stable “rules of the game”. Together, these forces have fostered a virtuous cycle of economic growth and greater global integration, ensuring that global economy took precedence over local politics.
However, our research shows that this model of globalization is unlikely to repeat itself. New, emerging technologies are expected to see fundamentally different adoption patterns from those seen in the previous waves. And, governance structures will undergo transformative changes, necessitating compliance with multiple, often conflicting, global rules.
Technology: In the previous phase, global value chains were designed to be cost-optimized and relied on a dominant “technology” of low-cost manufacturing driven by labor cost advantage in emerging economies. In the next phase, these will give way to complex multi-technology value chains that blend digital technology with the earlier low-cost technologies. We will also see greater integration across products and services. Moreover, global platforms (for example, marketplaces like Amazon and Alibaba) are likely to assume increasing importance, as companies rely on these platforms for exchange of goods and services, rather than investing in their own asset-heavy supply chains. Rising adoption of digital technologies and associated services is another potential growth driver for India. While GDP has grown at 6% per year over the last four years, services’ share of GDP during this time frame increased by 3.6%. The IT sector’s share has increased to 9.5%, implying rapid growth in digital technologies and associated services. Export of digitally enabled services has grown by 12% annually over the last 10 years, also pointing to this trend as a key lever that will drive growth.
Governance: The “rules of the game” will become more complex with the emergence of a multi-institutional governance architecture, wherein regional and local regulations will coexist alongside global rules, balancing national political interests with global multilateral economic agendas.
Education Services: Globally the higher education was valued at USD 27 billion during 1990s with countries like US, France, UK etc being the major exporters and countries like China, India, Taiwan being the importers. Some of the following evidence are sufficient enough to back the globalization of the sector. A Higher number of students going abroad for study. Exchange programs among students and researchers. Increased international marketing of academic curriculum. India is both importer & exporter of higher education services.
Markets are full of products having better qualities & latest technologies, and the customer is free to purchase a product of his choice. These innovated products have also increased the living standard of the Indian mass. Globalization has increased the flow of money in India as MNCs set up their establishments in India giving employment to Indian mass. Besides it, they pay huge taxes to the government. Democratic ideas are spreading throughout the world. Globalization has also affected positively the geographically remote areas and thus the regional disparities are curtailed. Conclusion It is claimed that globalization increases the economic prosperity and opportunity of all the countries involved. There is a more efficient use of resources.
All the countries involved in the free trade are at a profit. As a result, there are lower prices, more employment and a better standard of living in these developing nations. It is feared that some developing regions progress at the expense of other developed regions. However, such doubts are futile as globalization is a positive-sum chance in which the skills and technologies enable to increase the living standards throughout the world.
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