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

Criteria for Backwardness

High Population Density Areas in the Gangetic Plains: These areas 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 Exceptionally Low Agricultural Productivity: 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.

Criteria for Backwardness

The

North-East: The problem of this region arises partly from its remoteness from the national market and partly from the sociocultural base. Tribal Areas: These are generally found in two compact blocks, one in the North- Eastern part of the country and the other in Central 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. Ecological Problem Areas: These include desert and hill areas which have a limited scope for economic development.

Why Backwardness of Some Regions?

Seeds for regional imbalances was sown by the

Britishers. They focussed on certain regions and the rest were neglected Physical factors favour some regions and others remain backward Locational advantages attract industries leading to the development 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

Indias Best and Worst States Big States Rank Small States Rank Punjab 1 Goa 1 Kerala 2 Delhi 2 Himachal Pradesh 3 Pondichery 3 Tamil Nadu 4 Mizoram 4 Haryana 5 Sikkim 5 Maharastra 6 Arunachal Pradesh 6 Gujarat 7 Manipur 7 Karnataka 8 Nagaland 8 Uttaranchal 9 Tripura 9 Jammu & Kashmir 10 Meghalaya 10 Andhra Pradesh 11 Rajasthan 12 West Bengal 13 Madhya Pradesh 14 Chattisgarh 15 Assam 16 Uttar Pradesh 17 Orissa 18 Jharkhand 19 Bihar 20

Union Territories Chandigarh Andaman & Nicobar Daman & Diu Lakshadweep Dadra & Naga Haveli

Rank 1 2 3 4 5

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 programmes directed at the development of backward areas; (c) Dispersal of industries; (d) Growth centres; (e) Nucleus plants; and (f) Banking policy.

GLOBALISATION
The IMF defines globalizations as the growing economic interdependence of countries worldwide through increasing volume and variety of cross

border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology.

Stages of Globalization
Ohmae

identifies 6 five different stages in the development of a firm into a global corporation. The first stage is the arms length service activity of essentially domestic company which moves into new markets overseas by linking up with local dealers and distributors. In stage two, the company takes over these activities on its own. In the next stage, the domestic based company begins to carry out its own manufacturing, marketing and sales in the key foreign markets. In stage four, the company moves to a full insider position in these markets, supported by a complete business system including R & D and engineering. In the fifth stage, the company moves toward a genuinely global mode of operation.

Essential Conditions for Globalisation

Business Freedom
Facilities Government Support

Resources
Competitiveness Orientation-

Foreign Market Entry Strategies

Important foreign market entry strategies are the

following. 1. Exporting 2. Licensing / franchising 3. Contract manufacturing 4. Management contract 5. Assembly operations 6. Fully owned manufacturing facilities 7. Joint venturing 8. Countertrade 9. Mergers and acquisitions 10.Strategic alliance 11.Third country location

While Globalisation has Several Benefits, it has a Number of Problems.

Global competition and imports keep a lid on prices, so inflation is less likely to 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 moving offshore. U S employees can lose their comparative advantage when companies build advanced factories in low-wage countries, making them as productive as those at home.

Policy Options
With a view to minimising the damages and maximising the opportunities of globalisation from the macro socioeconomic point of view, the Human Development Report 1997 of the UNDP has 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.

Globalisation of Indian Business

Indias economic integration with the rest of the world

was very limited because of the restrictive economic policies followed until 1991. Indian firms confined themselves, by and large, to the home market. Foreign investment by Indian firms was very insignificant. With the new economic policy ushered in 1991, there has, however, been a change. Globalisation has in fact become a buzz-word with Indian firms now, and many are expanding their overseas business by different strategies.

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

Factors Favouring Globalisation

Human Resources Wide Base Growing Entrepreneurship Growing Domestic Market Niche Markets Expanding Markets Transnationalisation of World Economy NRIs Economic Liberalisation Competition

Questions?

Thank You