1. Production across the Countries

• Until the mid-twentieth century, production was largely organized within the countries.
• Only raw materials, foodstuffs, and finished goods only used to cross the boundaries.
• Colonies like India used to export foodstuff and import finished goods.
• Trade was the main channel to connect distant countries.
• Later, multinational companies (MNCs) started to emerge in India.
• MNC is a company which owns or controls production in more than one nation.
• MNCs set up Production and Factories in a country in which they get cheap labour and other resources; if the production cost is low, MNCs can earn bigger profits.
• MNCs not only sell finished goods globally but also the goods and services produced globally.
• Production is organized in complex ways, so the process has been divided into small parts and spread out across the globe.
• China provides the advantage of being a cheap manufacturing location. 

India has engineers who can understand the technical aspects of production, it also has English-speaking youth who can work in customer services

• MNCs set up production where it is close to the market, where there are skilled and unskilled labourers available for cheaper cost
• The money that is spent to buy assets such as land, buildings, and other equipment is called an Investment and the investment made by the MNC is called a Foreign Investment
• Investments are made with the hope of earning profits

2. Foreign Trade

• For a long period, foreign trade was the only thing which connected countries.
• In ancient times, trade routes connected India and South Asia to markets both in the East and West and the extensive trade that took place along these routes.
• Foreign Trade creates wider opportunities for the producer to reach beyond the domestic markets
• Producers can sell their products not only in markets located within the country but can also compete with the markets located in the other countries of the world
• Foreign Trade thus results in connecting the markets or integration of markets in different countries. 

3. Globalization

• The result of greater foreign investment and greater foreign trade has been greater integration of production and markets across countries
• Globalization is the process of rapid integration or interconnection between countries
• MNCs are playing a major role in the globalization process, more and more goods and services, investments and technology are moving between countries.
• Besides the movement of goods, services, investments and technology, there is one more way in which the countries are connected. That is through the movement of people between countries.

Factors for the Globalisation

Liberalization of Foreign Trade and Foreign Policies

• Tax on imports is an example of a trade barrier because of the restrictions that have been put on. 
• Government can use trade barriers to reduce or increase foreign trade and to decide what kind of goods and how much of each, should come into the country. 
• The Indian government had put restrictions on Foreign Investment and Foreign Trade. Starting from 1991, some far-reaching policy changes were made in India.
• The government decided that the time had come for Indian Producers to compete with Foreign Producers. 
• Removing barriers or restrictions set by the government is what is known as Liberalisation. 

4. World Trade Organisation (WTO)

It is one such Organisation whose aim is to liberalise international trade. It started the initiative in developed countries; WTO establishes rules and regulations regarding international trade and watches countries follow the rules. 

• The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations.
• It has 164 members and 23 observer governments.
• GATT (General Agreement on Tariffs and Trade) provided the rules for world trade from 1948- to 1994. It was a provisional agreement and organization dealing with trade in goods.
• The WTO created in 1995 marked the biggest reform of international trade since the end of the Second World War. It agreements also cover trade in services and intellectual property.
• The birth of the WTO also created new procedures for the settlement of disputes.

Functions 

• Administering WTO trade agreements
• Conducting a forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Providing technical assistance and training for developing countries
• Cooperation with other international organizations.

Objectives

The WTO has six main objectives:

1. to establish and enforce international trade rules,
2. to provide a forum for negotiating and monitoring further trade liberalization,
3. to resolve trade disputes,
4. to improve decision-making transparency,
5. to collaborate with other major international economic institutions involved in global economic management, and
6. To assist developing countries in fully benefiting from the global trading system.

Structure

• The Ministerial Conference, which must meet at least every two years, is the WTO's highest authority.
• The daily work is handled between Ministerial Conferences by three bodies whose membership is the same; the only difference is the terms of reference under which each body is created.
• The General Council
• The Dispute Settlement Body
• The Trade Policy Review Body
• The General Council is the highest governing body of the United Nations.

5. Impacts of globalization in India

• MNCs have increased their investments in India over the years, which reflects the fact that India is the best place to earn profits.
• Globalization and greater competition among producers both local and foreign producers has been an advantage for consumers, particularly well-off sections in the urban areas.
• Consumers started enjoying quality improved products at a fair price.
• People are enjoying higher living standards now than earlier.
• MNCs invested in the industries such as cellphones, automobiles, electronics, and soft drinks. Jobs have been created in these sectors.
• Local companies started supplying raw materials and these industries also prospered.
• Many top Indian companies have also benefitted from the competition because they have invested in newer technologies and production methods and raised their production standards.
• Globalization made Indian companies emerge as multi-national companies.
• Globalization has created wonderful opportunities for Indian companies in the service sector.
• Hosting services such as data entry.