8/8/2019 LIBERALISATION (2)
1/24
Liberalization of the economy means to freethe economy from direct or physicalcontrols imposed by the Government.
The various types of controls are as follows:-Industrial licensing system-Price control or financial control on
goods-Import license
-Foreign exchange control-Restrictions on investment by big
business houses
8/8/2019 LIBERALISATION (2)
2/24
Abolition of Industrial Licensing and
Registration.
Freedom for expansion and production to
Industries Freedom to import capital goods
Freedom to import technology
Free determination of Interest rate
8/8/2019 LIBERALISATION (2)
3/24
Improvements in Industries & service sector
Free flow of FDI & MNC.
Improvement in means of communication and
Transport.
DISADVANTAGES OF
LIBERALISAION
Danger in political independence.Underdeveloped countries fail to increase
their exports in comparison to imports
8/8/2019 LIBERALISATION (2)
4/24
Privatization of Industries means openingthe gates of Public Sector to Privatesector
The term privatization is used in twosense
Transferring the ownership of publicsector to private sector
Management and controlling of publicsector by private sector withouttransferring the ownership
8/8/2019 LIBERALISATION (2)
5/24
Disintegration of Socialist Economies
Inefficient public sector
Burden on the Government Inefficient management control
8/8/2019 LIBERALISATION (2)
6/24
To increase the efficiency and competitive
power.
To reduce deficit financing and public deficit
To strengthen industrial management To earn more and more foreign currency
To make optimum use of economic resources
To achieve rapid industrial development
8/8/2019 LIBERALISATION (2)
7/24
There are four important modes of
privatization. They are:
(a) Franchising, (b) Contracting, (c) Leasing,
and (d) Disinvestment.
8/8/2019 LIBERALISATION (2)
8/24
It is the dilution of stake of government to a
level where there is no change in the control to
dilution that results in the transfer of mgt.
Government ownership is diluted beyond 51%. In India, disinvestment of government share of
equity in PSUs is predominant. It started in 1992
immediately after the New Economic Policy.
8/8/2019 LIBERALISATION (2)
9/24
In india , there is not complete disinvestment ,
the government keep a dominant control.
Gov. could only disinvest 1% to 35% shares of
PSUs on an average. The shares of efficient and profit-making
companies are disinvested more than the
potentially sick or sick companies.
more in central PSUs than state PSUs
8/8/2019 LIBERALISATION (2)
10/24
Privatization covers three sets of measures
1. OWNERSHIP MEASURES
Total denationalization
Joint Venture Liquidation
Management buy-out
Cntnd
8/8/2019 LIBERALISATION (2)
11/24
2. ORGANISATIONAL MEASURES Leasing Restructuring( Financial, Basic )
3. OPERATIONAL MEASURESGrant of autonomy to PE s in decision making Provision of incentives to the employees Freedom to acquire certain inputs from the
market.
8/8/2019 LIBERALISATION (2)
12/24
Globalization is the process by which a firmsactivity become worldwide in scope
Doing or planning to expand , the businessglobally
Giving distinction between the domesticmarket & foreign market
Basing product development and productionplanning on the global consideration
Global sourcing of factors of productionGlobal orientation of organizational
structure and management culture
8/8/2019 LIBERALISATION (2)
13/24
1. NEW MARKETS
Growing global markets in services
New financial markets Global Consumer markets with global
brands
Cntnd
8/8/2019 LIBERALISATION (2)
14/24
2. GROUPS
The World Trade Organization
Regional Blocs
More policy Coordination groups-
G-77,G-7, OPEC, OECD
3. NEW RULES AND NORMS
Multilateral agreements in trade new
agendas on environment and socialconditions
8/8/2019 LIBERALISATION (2)
15/24
New multilateral agreements for services
property rights and communication.
4. NEW TOOLS OF COMMUNICATION Internet and electronic communication
Cellular phones
Fax machines
Faster and cheaper transportComputer aided design
8/8/2019 LIBERALISATION (2)
16/24
Human ResourcesWide BaseGrowing EntrepreneurshipGrowing Domestic MarketNiche marketsExpanding MarketsEconomic LiberalizationCompetition
8/8/2019 LIBERALISATION (2)
17/24
Government Policy and ProceduresHigh cost of basic inputs Poor Infrastructure
Resistance to change Poor Quality Image Supply problems Small Size Lack of Experience Limited R&D and marketing researchGrowing Competition Trade barriers
8/8/2019 LIBERALISATION (2)
18/24
1. Technological Advancement In
communication: This made it possible to
know in an instant what is happening in
different parts of the world.
The flow of information,by the Internet, can
enable developing countries to from each
other and from industrial countries.
8/8/2019 LIBERALISATION (2)
19/24
Improvements In Transportation And
Technology: this is reducing the costs ofshipping goods by water, ground and air.
This can facilitate the movements of goods.
Other Factors:Rising educational levels, technological
innovations, and the economic failures of mostcentrally planned economies.
8/8/2019 LIBERALISATION (2)
20/24
The important trends in Globalization are the following:
(a) International Trade:
1.Trade has grown twice as fast as global GDP
in the 1990s and the of developing countries
has risen from 23 to 29 percent.
2. There is a shift in trade, which has created a
new pattern in the international exchange of
goods, services, and ideas.
8/8/2019 LIBERALISATION (2)
21/24
3.Advances in information technology helps to
link firms from developing countries into
global production networks.
4. The tremendous growth of trade in services
and, more recently, of electronic commerce is
also a part of the new trade pattern.
8/8/2019 LIBERALISATION (2)
22/24
b) International Financial Flows:
1.There has been increase in international
capital flows of developing countries. However,
the financial crisis of 1977-99 have put it down.
2. flows are started to rise again. The financial
performance of emerging markets in the 1990smade capital account liberalization an
attractive option for developing countries.
8/8/2019 LIBERALISATION (2)
23/24
3.The East Asian meltdown has enhanced the
attractiveness of long-term capital investment.
4. Countries have started to recognize that
foreign direct investment brings with it not only
capital but also technology, market access and
organizational skills.
8/8/2019 LIBERALISATION (2)
24/24
C) International Migration:1.Along with goods, services, and investment,
people are crossing borders in large numbers.
2.According to World Development Report1999-2000, each tear between 2 million and 3
million people emigrate, with majority of them
going to just 4 countries: the United States,
Germany, Canada and Australia.3. The market for highly skilled workers will
increase
Top Related