Download - Balance of Regional n Globalization
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Learning Objectives
Determine criteria for backwardness
Point out the reasons for regional imbalances
Appreciate the extent of regional imbalances
Suggest remedies to remove regional disparities Understand why regional planning has failed and suggest
ways of making it successful
Understand the Globalization
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Criteria for Backwardness
High Populat ion Density A reas in the Gangetic Plains: Theseareas have a high potential for agricultural production but the
potential is not fully exploited with the result agricultural yield
rate tends to be low. There is heavy pressure on land due to
the high density of population. The debt bondage to lands and
moneylenders is quite high.
Areas With Except ional ly Low Agr icu l tura l Product iv i ty:
Mostly found in Central and Western India, these areas
fall in the drought-prone belt. Many of these areas have a high
density of population with limited opportunities for non-agricultural
employment.
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Criteria for Backwardness
The North -East: The problem of this region arises partly from its
remoteness from the national market and partly from the socio-
cultural base.
Tribal A reas: These are generally found in two compact blocks,
one in the North- Eastern part of the country and the other inCentral and Eastern India. In the former case, the problems are
largely locational and social. As regards the latter, small pockets
of modern industry co-exist with backward rural areas with a high
rate of unemployment.
Ecolog ical Problem A reas: These include desert and hill areaswhich have a limited scope for economic development.
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Why Backwardness of Some Regions? Seeds for regional imbalances was sown by the
Britishers. They focussed on certain regions and the restwere neglected
Physical factors favour some regions and others remainbackward
Locational advantages attract industries leading to thedevelopment of regions which enjoy such advances
Decisions makers have been favouring some areas only Sanctions and disbursements by financial institutions are
also responsible for regional imbalances
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Indias Best and Worst States
Big States Rank Small States Rank Union Territories Rank
Punjab 1 Goa 1 Chandigarh 1
Kerala 2 Delhi 2 Andaman & Nicobar 2Himachal Pradesh 3 Pondichery 3 Daman & Diu 3
Tamil Nadu 4 Mizoram 4 Lakshadweep 4
Haryana 5 Sikkim 5 Dadra & Naga Haveli 5
Maharastra 6 Arunachal Pradesh 6
Gujarat 7 Manipur 7
Karnataka 8 Nagaland 8
Uttaranchal 9 Tripura 9Jammu & Kashmir 10 Meghalaya 10
Andhra Pradesh 11
Rajasthan 12
West Bengal 13
Madhya Pradesh 14
Chattisgarh 15Assam 16
Uttar Pradesh 17
Orissa 18
Jharkhand 19
Bihar 20
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Measures to Remove Regional Imbalances(a) Recognition of backwardness as a factor to be
taken into account in the transfer of financial
resources from the Centre to states;
(b) Special area development programmesdirected at the development of backward
areas;
(c) Dispersal of industries;
(d) Growth centres;
(e) Nucleus plants; and
(f) Banking policy.
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The IMF defines globalizations as the growingeconomic interdependence of countries worldwide
through increasing volume and variety of crossborder transactions in goods and services and ofinternational capital flows, and also through themore rapid and widespread diffusion oftechnology.
GLOBALISATION
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Stages ofGlobalization
Ohmae identifies 6 five different stages in thedevelopment of a firm into a globalcorporation.Thefirststage is the arms length service activity of essentiallydomestic company which moves into new markets
overseasby linking up with local dealers and distributors.In stage two, the company takes over these activities on itsown. In the next stage, the domestic based companybegins to carry out its own manufacturing, marketing andsales in the key foreign markets. In stage four, thecompany moves to afullinsider position in these markets,
supported byacompletebusiness system including R & Dand engineering.
In the fifthstage,thecompanymovestowarda genuinelyglobal mode of operation.
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Essential Conditions for Globalisation
Business Freedom
Facilities
Government Support Resources
Competitiveness
Orientation-
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Foreign Market Entry Strategies
Important foreign market entry strategies are thefollowing.
1. Exporting2. Licensing / franchising3. Contract manufacturing4. Management contract5. Assembly operations6. Fully owned manufacturing facilities7. Joint venturing8. Countertrade9. Mergers and acquisitions10.Strategic alliance11.Third country location
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While Globalisation has Several Benefits, ithas a Numberof Problems.
Global competition and imports keep a lid on prices, so inflation is less likelyto derail economic growth.
An open economy spurs innovation with fresh ideas from abroad. Export jobs often pay more than other jobs. Unfettered capital flows give the US access to foreign investment and keep
interest rates low.
The adverse effects of globalisation according to the survey are: Millions of Americans have lost jobs due to imports or production shifts
abroad. Most find new jobs that pay less. Millions of others fear losing their jobs, especially at those companies
operating under competitive pressure. Workers face pay cut demands from employers, which often threaten to
export jobs.
Service and white collar jobs are increasingly vulnerable to operations movingoffshore. U S employees can lose their comparative advantage when companies build
advanced factories in low-wage countries, making them as productive asthose at home.
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Policy Options
With a view to minimising the damages andmaximising the opportunities of globalisationfrom the macro socioeconomic point of view, theHuman Development Report1997 of the UNDPhas made to following policy suggestions.
1. Manage trade and capital flows more carefully.2. Invest in poor people.3. Foster small enterprises.
4.Properly manage new technology.5.Reduce poverty and introduce safety nets.6.Influence governance.
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Globalisation of Indian Business
Indias economic integration with therestofthe worldwas very limited because of the restrictive economicpolicies followed until 1991. Indian firms confined
themselves, by andlarge,tothehomemarket.Foreigninvestment by Indian firms was very insignificant.
With the new economic policy ushered in 1991, therehas, however, been a change.Globalisation has in factbecome a buzz-word with Indian firms now, and manyare expanding their overseas business by differentstrategies.
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Obstacles to Globalisation
Government Policy and Procedures High Cost Poor Infrastructure Obsolescence Resistance to Change Poor Quality Image Supply Problems Small Size
Lack of Experience Limited R & D and Marketing Research Growing Competition Trade Barriers
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Factors Favouring Globalisation
Human Resources
Wide Base
Growing Entrepreneurship
Growing Domestic Market
Niche Markets
Expanding Markets
Transnationalisation of World Economy
NRIs
Economic Liberalisation
Competition
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Questions?
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Thank You