Balance of Regional n Globalization

7/27/2019 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

Balance of Regional n Globalization

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