what is globalization |Privatization

impact of globalization

Meaning and Definition of  Globalization 

 Globalization literally means globalization, which means connecting the economy of one country with other economies of the world. One of the new economic policies of the Government of India is the globalization of the economy. The following things are included in globalization-

(a) reducing trade barriers so that goods can be freely exchanged between different countries, (b) creating conditions in which capital can flow freely between different states, (c) creating such an environment that there can be an unhindered flow of technology, and (d) last, but not least from the point of view of the developing countries, to create such an environment in which there can be an unhindered flow of labor in different countries of the world.

Supporters of globalization, especially those from developed countries, limit the definition of globalization to the first three components, namely, free trade flow, free capital flow, and free technology flow. They press for the developing countries to accept this definition of globalization and to discuss globalization within the limits set by them, but many economists of the developing countries think that this definition is incomplete. And if the ultimate goal of the proponents of globalization is to visualize the whole world as a 'universal village', then its fourth component i.e. uninterrupted flow of labor cannot be neglected.

Globalization refers to the desire that different nations should be integrated under the framework of the World Trade Organization. A little introspection makes it clear that this is the modern version of the principle of comparative cost-benefit, which was propounded by eminent economists to allow Great Britain to freely export goods to the less developed countries, which were still colonies at that time. Can get the basis for export-import. It was argued that international specialization would benefit both countries that establish trade relations. The supporters of globalization now want to assure us that as a result of the policies of globalization, developing countries will be able to strengthen their competitiveness and the process of rapid development will start in them.

In the words of Naveen Sir, “Globalization is a process in which interdependence arises between world markets and trade is directed towards exploiting the comparative cost advantage conditions inherent in the world market without being restricted within the boundaries of the country. In the words of Deepak Nayyar, "Globalization can be defined as the expansion of economic activities beyond the political boundaries of a country."

        benefits of globalization

 At present, globalization is being considered a means of efficiency, equality and development, and growth of the world economy. Its main advantages can be the following-

(1) Consumers get the most benefits from globalization. Consumers get good goods at low prices.

(2) There is the best and most efficient use of resources.

 (3) The economic development of the country takes place at a rapid pace.

(4) The competitiveness of the country's industries increases.

 (5) Globalization leads to an increase in foreign involvement in national industry and trade. benefits are received. Indigenous technology improves.

 (6) International trade increases.

(7) National industries develop.

(8) Benefits of foreign technology are received. Indigenous technology improves.

(9) Workers benefit from increased productivity and more employment opportunities

(10) The spirit of international cooperation increases

Whether it is privatization or government control, it is difficult for any government to decide. For a good economic system, it is necessary to have a balance between the two. Which also affects the world's demand and supply. There are many countries which have spoiled their economic status due to lack of proper planning. Mixed economic control is best.

what is privatization💲

Privatization refers to a process under which the control of government institutions is given to the private sector. www.articlecg. com provides you detailed information on this subject. The concept of 'Privatization' has been very important in the highly debated and discussed economic concepts in the world economy in the eighth decade of the twentieth century and thereafter. The philosophy of desirability of reduction in government role in economic activities on the one hand and the ideology of maximum efficiency possible from the private sector, on the other hand, has contributed significantly to motivating the concept of 'Privatization'. Privatization in a narrow sense is such a process by which the economic activities under the ownership and management of the public sector are transferred to private ownership or management and operation. In a broad sense, all efforts to limit the public sector and expand the private sector are used in the notion of privatization.

                 features of privatization👉

 

The main features of privatization can be explained as follows-

 (1) The private sector should be made a complete complementary sector by giving it an important role in development like the public sector.

2 To make unsuccessful public enterprises competitive, profitable, and efficient, partnerships with private entrepreneurs should be established in these areas.

 (3) To encourage private capital formation, private capital investment, etc. in the country.

 (4) Privatization is a new ideology and strategy, which is being implemented globally.

(5) The process of privatization gradually takes a definite shape in a systematic manner.

 (6) Privatization is an instrument of socio-economic change.

 (7) Government dominance is reduced by privatization.

         privatization in India👉

After independence, due to the socialist ideology, the government gave more relative importance to the public sector, but unfortunately, the operation of the public sector units was disappointing over time and they came to be called white elephants in the country. Most of the units incurred heavy losses and budgetary resources were resorted to meet these losses, resulting in a heavy burden on the budgetary resources. Hence privatization in India also originated after 1980. After Rajiv Gandhi took over the reins of the country, the ideology of privatization became very strong, but no party could get strong support regarding privatization. Political parties kept talking about reforms in the sector but were not ready to reform the public sector.

After June 1991, the spirit of privatization developed in India. As a result of liberalization in the New Industrial Policy, 1991, a special place has been given to the aspect of privatization. Thus, privatization is a part of liberalization. Regarding the adoption of privatization in India, it was argued that this would encourage private capital formation, private capital investment, savings capacity etc. in the country and the economic development of the country would remain dynamic.

The idea of ​​privatization is like draining the Ganges upside down in the Indian economy. So far we have been praising the public sector and emphasizing on its expansion. Now we are bent on slowly eliminating the public sector considering it irrelevant all of a sudden. In such a situation, it is natural to have nationwide discussions and debate on the privatization situation. So far its results have been pleasant. Due to this, new enthusiasm and awareness have arisen in the private sector industrialists in the country, due to which more capital has been invested in the country than before.

Why has privatization become a top task list?

(1) Debt crisis is the common explanation that developing countries offer for it.

(2) the newly industrialized nations of Asia; For example, the successful economic performance of Korea, Singapore, Hong Kong, and Taiwan, and Japan has made it even more important. There is a lot of difference in the domestic economy and industrial structure of these nations, yet all these nations adopted the model of privatization.

(3) It is now generally accepted that other models of development have become ineffective. Prominent among these models is the controlled economy model which was adopted by the Soviet Union, Eastern Europe, and China, and its import substitution model which was adopted by Latin America, at present both these models have proved to be outdated and ineffective. Hence it is necessary to eliminate them.

Problems arise due to privatization. out of place.

(1) First of all, we have to create new rules and regulations to implement the programs of the private sector. Chief among these rules are business rules, property rights and, bank bankruptcy rules, in the absence of clear political will and permanent leadership, the private sector program is unlikely to be successful. The current privatization process started at a time when the infrastructure is in crisis. Due to this, it has become a political issue. For example; Due to a lack of consensus in Poland, the privatization bill could not be passed for about 10 months in 1992.

The privatization process was made even more difficult in Eastern European countries such as Romania, because of the lack of infrastructure, which is necessary for the successful operation of the private sector. There was a lack of basic capital market institutions (exchange wing, specialized banking, financial and advisory services). They have a very important role in the modern capitalist system. Therefore, these institutions have to be developed.

Criticisms of Privatization Policy

(1) Privatization policy was adopted due to international pressures- Opposition members in the Parliament have criticized the government's privatization policy because it was adopted under the pressure of foreign forces. According to critics, the public sector still has substantial importance in the Indian economy.

(2) Opposition by labor unions- Labor unions also opposed the privatization policy of the government. They think that due to this there is a fear of spreading unemployment among the workers. When government industries will be owned by private persons, some workers will become unemployed because they are more than required and some workers will be laid off due to changes in technology.

(3) The government has sold only the shares of profit-making industries - the policy of privatization of the government is also criticized on the basis that the government is only selling the shares of those public industries to private persons, which are running in profit. . This will reduce the income of the government in future. What happened was that the government would sell shares of loss-making industries to private individuals so that they would feel less burdened by their losses.

(4) Criticism by private industrialists- The industrialists who are buying shares of government industries also criticize this policy of government. They think that the government is collecting capital from the private sector by selling shares, but the government still has control over these industries.

(5) Apprehension of the general public- The general public is also looking at those industrialists with suspicion, who are buying shares of government industries. The public believes that these industrialists are not at all interested in improving the management and technology of these industries to make them profitable.

 What does privatization mean?

Privatization is the phenomenon or process of transferring ownership of a business, enterprise, agency or public service from the public sector (state or government) to the private sector (businesses operated for private profit) or private non-profit organizations.

 When did privatization start?

 In 1991, for the first time in the industrial policy, it was talked about the beginning of privatization. Shares of 31 public sector undertakings will be sold, but government control will remain in them.

 What are the benefits of privatization?

Lack of government interference - Privatization reduces state involvement and interference in the company's activity…

 Who created privatization?

Although the origin of the term is often attributed to a 1969 book by Peter Drucker, I will show that this attribution is incorrect, and that the term privatization played an evolving role in German economic policy from the 1930s to the 1950s. Played.

 What are the needs of privatization in India?

Objectives of Privatization To improve the operational efficiency of public enterprises. To develop competitive efficiency in industries. Generating resources for deficit budget. For globalization of domestic industries.

 Who started privatization in India?

Accepting the demands for privatization, the Government of India gradually began privatization of government establishments such as PSUs despite stiff resistance from labor unions.

 What is the reason for privatization?

The main reason for privatization was the PSU running in losses due to political interference. The managers of these companies could not work independently, due to which their production capacity was reduced. Public sector undertakings were privatized to increase competition or quality!