GLOBALISATION AND THE INDIAN ECONOMY
Until the mid-20th century, the majority of production activities were confined within national boundaries. Countries largely exported raw materials and foodstuffs while importing finished goods. The landscape of international production began to change dramatically with the rise of Multinational Corporations (MNCs).
MNCs are companies that control or own production facilities in more than one country. These corporations establish offices and factories in regions where they can exploit advantages like cheap labour, low resource costs, and strategic locations to minimise their production costs.
“MNCs have revolutionised the way production is organised. In today’s world, production is not just centralised in one location but is fragmented into various tasks and spread out globally.” For instance, a smartphone might be designed in the United States, assembled in China using parts sourced from multiple countries, and then sold globally.
1.Cost Savings: By outsourcing various parts of the production process to countries where those tasks can be done most efficiently, MNCs often realise significant cost savings — sometimes up to 50–60%.
2.Market Proximity: Factories in locations close to key markets, like Mexico for the U.S. and Eastern Europe for the EU, enable quicker distribution and reduced shipping costs.