Question

What is liberalization? Describe any four effects of liberalization on the Indian economy.

Answer 1

Liberalization means the opening of the country for foreign investments and capital.  Trade barriers are often used by countries to protect the domestic industries from the products of a foreign land. Usually, countries resort to imposing Licenses, Import quotas or Voluntary export restraints to protect local markets. However, after liberalization organizations like the WTO attempted to reduce production and consumption distortions created by tariffs. Free trade benefits consumers through increased choice and reduced prices. On the other hand, free flow capital ensures that any country can make investments in the alien land. This only increases the possibility of generating more employment which in turn enhances the revenue generation of the country. Organizations like ASEAN aim to Free flow of goods, services, investment, capitals, and skilled labor. These steps have improved global integration and brought about globalization.

Impact of Liberalization on:

• Producers: Tough competition faced by the producers in the native country by the producers of foreign markets
•  Workers: Job insecurity, denial of a fair share in the benefits brought about by globalization.

Other impacts:

• Increase in foreign trade
• Increase in foreign investment
• exchange of technology between countries. 
• Better means of communication have developed alongside globalization
• Better job opportunities for people gave rise to migration