Understanding Economic Development · NCERT 2026–27
3 / 5Learning sections
Previous Year Questions (2014–2026)
Topic-wise CBSE Past Year Questions with year tags and detailed solutions. Weightage: 8–10 marks | Most Repeated: MNCs · WTO · Impact on India · Fair Globalisation.
Part A — Multiple Choice Questions (1 Mark)
2023, 2022, 2020
Q1. Globalisation means:
Answer: (B) Integration between countries through trade and foreign investment by MNCs Explanation: Globalisation is the process of rapid integration or interconnection between countries, primarily driven by foreign trade and MNC investment across borders.
2023, 2022, 2021
Q2. Which has been the MOST important factor enabling globalisation?
Answer: (B) Improvement in technology — especially IT and communication Explanation: Rapid improvements in transport technology and IT (internet, telecommunications) have dramatically reduced costs and time of moving goods, services, and information globally.
2022, 2020
Q3. Reduction in transportation costs has helped globalisation because:
Answer: (B) It made delivery of goods across continents faster and cheaper Explanation: Lower transport costs (containerisation, air freight) allowed MNCs to spread production globally and deliver goods quickly across continents.
2021, 2019
Q4. Which of the following is NOT a feature of globalisation?
Answer: (C) Restriction on foreign investment Explanation: Globalisation promotes the free flow of goods, services, capital, and technology. Restricting foreign investment is the opposite of what globalisation entails.
2023
Q5. “Liberalisation” in the context of globalisation means:
Answer: (B) Removal of trade barriers to allow free movement of goods and services Explanation: Liberalisation refers to the removal or reduction of trade barriers — such as tariffs, import quotas, and licensing requirements — enabling goods and services to move more freely between countries.
Part B — Assertion-Reason Questions (1 Mark)
2023, 2022
A-R Q1.
Assertion (A): Improvement in technology has been the biggest driving force of globalisation. Reason (R): Technology has reduced transport and communication costs and has revolutionised information sharing.
Answer: (A) Both A and R are true, and R is the correct explanation of A Explanation: Technology — particularly in transport and IT — has directly enabled globalisation by dramatically lowering costs and enabling near-instant communication globally. R correctly explains A.
2022
A-R Q2.
Assertion (A): The internet and telecommunications have enabled service sector globalisation. Reason (R): Services like call centres, data entry, and software development can now be delivered remotely across borders.
Answer: (A) Both A and R are true, and R is the correct explanation of A Explanation: The internet has enabled Indian service companies to handle global clients — call centres serve US and UK customers while software is developed in India for global firms. R directly explains A.
Part D — Very Short Answer (2 Marks)
2022, 2020
VSA Q1. What do you mean by globalisation? State any one enabling factor of globalisation.
Answer: Globalisation is the process of rapid integration or interconnection of countries through trade, investment (by MNCs), and the flow of goods, services, capital, and technology across national borders.
One enabling factor:Improvement in technology — especially in transport (containerisation, faster ships, air freight) and information & communication technology (internet, mobile phones) — has dramatically lowered the costs of moving goods and exchanging information globally.
2021, 2019
VSA Q2. How has rapid improvement in technology stimulated the globalisation process? Give two points.
Answer:
Lower transport costs: Technological improvements in transport (containerisation, faster shipping, air freight) have dramatically reduced the cost and time of moving goods across continents.
Information revolution: The internet and telecommunications enable instant sharing of information, remote service delivery (call centres, software), and coordinated global production by MNCs at minimal cost.
Part A — Multiple Choice Questions (1 Mark)
2023, 2022, 2021, 2020, 2019
Q1. MNC stands for:
Answer: (B) Multinational Corporation Explanation: A Multinational Corporation (MNC) is a company that owns or controls production in more than one nation. It is the most frequently tested term in this chapter.
2022, 2020
Q2. Why do MNCs set up offices and factories in other countries?
Answer: (B) To be close to markets and take advantage of cheap labour and resources Explanation: MNCs locate in developing countries to access cheap labour, raw materials, and growing markets — all of which help maximise profits.
2021, 2019
Q3. MNCs spread their production globally by setting up:
Answer: (C) Factories, offices, or partnerships with local companies Explanation: MNCs use multiple strategies: establishing subsidiaries, forming joint ventures, outsourcing production, or buying out local companies.
2022
Q4. When an MNC buys up local companies, it is called:
Answer: (C) Acquisition Explanation: When an MNC purchases a local company to gain control of its production, market share, and resources, this is called an acquisition.
2023, 2020
Q5. Which is an example of a Multinational Corporation (MNC)?
Answer: (C) Ford Motors Explanation: Ford Motors is an American MNC that manufactures cars in India and many other countries. Indian Railways, SBI, and MTNL are Indian public sector enterprises.
2022, 2021
Q6. The investment made by MNCs in foreign countries is called:
Answer: (B) Foreign Direct Investment (FDI) Explanation: FDI is when an MNC invests money in another country to set up factories, buy companies, or form joint ventures. This creates a lasting business interest in the host country.
Part B — Assertion-Reason Questions (1 Mark)
2023
A-R Q1.
Assertion (A): MNCs prefer to set up production in countries like India and China. Reason (R): These countries offer cheap labour, large markets, and natural resources.
Answer: (A) Both A and R are true, and R is the correct explanation of A Explanation: Developing countries like India and China are preferred by MNCs because of their large, low-cost labour force, abundant natural resources, and huge consumer markets. R directly explains A.
Part D — Very Short Answer (2 Marks)
2023, 2021, 2019
VSA Q1. What is a Multinational Corporation? How does it spread its production globally?
Answer:
A Multinational Corporation (MNC) is a company that owns or controls production in more than one country, with headquarters in one country and operations in multiple others.
How MNCs spread production globally:
Setting up factories and offices in multiple countries.
Forming joint ventures with local companies.
Buying out or acquiring local companies.
Outsourcing production to local contractors who supply to the MNC.
2022, 2020
VSA Q2. Why do MNCs choose to set up production in developing countries like India? Give two reasons.
Answer:
Cheap Labour: Developing countries like India have abundant labour at much lower wages than in developed countries, which significantly reduces production costs for MNCs.
Large Markets: Countries like India have huge and growing consumer populations. MNCs set up locally to be closer to these markets, save on transport costs, and cater to local preferences effectively.
Part E — Short Answer (3 Marks)
2023, 2021, 2019
SA Q1. Explain the various ways through which MNCs spread their operations globally.
Answer: MNCs spread their production globally through the following methods:
Setting up factories/offices: MNCs directly invest in a host country by establishing manufacturing plants or service offices (e.g., Ford's factory in Chennai).
Joint ventures: MNCs form partnerships with local companies, sharing ownership, resources, and profits (e.g., Suzuki-Maruti in India).
Buying out local companies: MNCs acquire successful local firms to gain immediate market access, established brands, and customer bases (acquisitions).
Outsourcing to local producers: MNCs place orders with local manufacturers who produce goods to the MNC's specifications. The finished product carries the MNC's brand (e.g., garment suppliers for global brands).
Part A — Multiple Choice Questions (1 Mark)
2023, 2022, 2021
Q1. “Trade barriers” are used by governments mainly to:
Answer: (B) Restrict imports and protect domestic industries Explanation: Trade barriers — such as import taxes (tariffs) and quotas — are used to limit foreign imports, protect domestic producers from foreign competition, and regulate which goods enter the country.
2022, 2020
Q2. Tax imposed by the government on imported goods is called:
Answer: (C) Tariff / Import Duty Explanation: A tariff (import duty) is a tax charged on goods entering a country from abroad. It raises the price of imported goods, making domestic alternatives relatively cheaper and thus protecting local industries.
2021, 2019
Q3. Before 1991, India used trade barriers to:
Answer: (B) Protect producers within the country from foreign competition Explanation: Before 1991, India used high tariffs and import licensing to shield its infant industries from cheaper, better-quality foreign competition — a policy known as import substitution or protectionism.
2023, 2021
Q4. When countries remove trade barriers, it is called:
Answer: (B) Liberalisation of trade Explanation: Trade liberalisation refers to the removal or reduction of restrictions (tariffs, quotas, licences) on imports and exports, allowing goods and services to flow freely between countries.
Part B — Assertion-Reason Questions (1 Mark)
2022, 2021
A-R Q1.
Assertion (A): India started removing trade barriers in 1991. Reason (R): The Indian government decided that domestic producers had become strong enough to compete with foreign companies.
Answer: (B) Both A and R are true, but R is NOT the correct explanation of A Explanation: India did begin dismantling trade barriers from 1991. However, the primary reason was a severe balance of payments crisis, IMF/World Bank conditions, and a policy shift — not because domestic producers were ready. R is true but is not the correct explanation of A.
Part D — Very Short Answer (2 Marks)
2022, 2020
VSA Q1. What are trade barriers? Why did India set up trade barriers after Independence?
Answer: Trade Barriers are restrictions placed by governments on the free movement of goods and services across borders. These include import duties (tariffs), quotas, and licensing requirements.
Why India set up trade barriers after Independence:
India's newly established industries were in early stages of development (“infant industries”) and could not compete with cheaper, well-established foreign goods. Trade barriers were used to protect these domestic industries, allowing them to develop and become competitive before being exposed to international competition.
Part E — Short Answer (3 Marks)
2023, 2022, 2021, 2019
SA Q1. “Foreign trade has been a major factor in the integration of markets across countries.” Explain with two examples.
Answer: Foreign trade creates an opportunity for producers to sell their goods beyond their domestic markets and for buyers to choose from goods produced globally. This links markets across countries:
Example 1 — Consumer goods integration: Chinese toys, garments, and electronics are available in Indian markets due to imports, competing directly with Indian-made goods. This connects the Chinese and Indian markets, influencing prices and consumer choice in both countries.
Example 2 — Commodity price linkage: Indian exporters sell handicrafts, textiles, and jewellery in US, UK, and European markets. A fall in global commodity prices (like cotton) quickly affects both producers and consumers across countries, showing direct market integration.
Part A — Multiple Choice Questions (1 Mark)
2023, 2022, 2021, 2020, 2019
Q1. WTO stands for:
Answer: (A) World Trade Organization Explanation: The World Trade Organization (WTO) is an international body that establishes rules for global trade and works towards free and fair trade between member countries. India is a founding member.
2022, 2021
Q2. The main objective of WTO is to:
Answer: (B) Liberalise international trade and establish rules for global trade Explanation: The WTO works to lower trade barriers, resolve trade disputes, and ensure that trade between nations is conducted smoothly, freely, fairly, and predictably.
2022, 2020
Q3. Critics argue that WTO rules are unfair because:
Answer: (B) Developed countries continue to subsidise their agriculture while forcing developing countries to reduce barriers Explanation: Critics argue WTO rules are biased: rich countries (USA, EU) provide massive subsidies to their farmers, making their agricultural exports artificially cheap, while they pressure developing nations to open up their markets.
2021, 2019
Q4. “Unfettered globalisation would not benefit all.” This argument supports:
Answer: (B) Fair globalisation — with rules that protect the interests of all Explanation: Critics of unregulated globalisation argue that it disproportionately benefits large MNCs and developed nations. They advocate for fair globalisation — a form that creates opportunities for all and ensures that benefits are distributed equitably.
Part B — Assertion-Reason Questions (1 Mark)
2023, 2022
A-R Q1.
Assertion (A): Developed countries pressured the WTO to remove trade barriers in developing countries. Reason (R): Developed countries wanted access to the growing markets of developing countries for their own companies.
Answer: (A) Both A and R are true, and R is the correct explanation of A Explanation: Developed nations used their power in the WTO to push for market opening in developing countries. Their motivation was commercial — to access the large consumer markets of countries like India and China. R correctly explains A.
Part D — Very Short Answer (2 Marks)
2022, 2021, 2020
VSA Q1. What is the WTO? Mention its objectives.
Answer:
The World Trade Organization (WTO) is an international body set up to promote free and fair international trade among its member nations.
Objectives:
To establish and enforce rules for international trade.
To reduce and eventually eliminate trade barriers (tariffs, quotas).
To ensure that all member countries follow the same trade rules, preventing discrimination.
To provide a forum for resolving trade disputes between countries.
Part E — Short Answer (3 Marks)
2022, 2021, 2019
SA Q1. What is meant by fair globalisation? Why do many people fear globalisation?
Answer: Fair Globalisation would mean creating opportunities for all — not just large MNCs and rich nations. It requires international rules that protect the interests of developing countries, small producers, and workers; give developing countries a level playing field; and ensure the benefits of globalisation are distributed more equitably.
Why people fear globalisation:
Job losses: Workers in industries exposed to foreign competition fear unemployment as cheaper imports displace local production.
Small producer displacement: Local artisans and small businesses cannot compete with cheaper MNC-produced goods.
Cultural threat: Some fear the dominance of Western culture, eroding local traditions and values.
Exploitation: MNCs may exploit cheap labour and natural resources without adequate returns to host country workers or communities.
Part A — Multiple Choice Questions (1 Mark)
2023, 2022, 2021
Q1. Which industry in India has been most harmed by globalisation?
Answer: (A) Small-scale and cottage industries (e.g., batteries, plastics, toys) Explanation: Small manufacturers of goods like batteries, capacitors, plastics, toys, dairy products, and vegetable oils have faced intense competition from imported goods produced by large MNCs at lower costs, leading to factory closures and job losses.
2022, 2020
Q2. Globalisation has created new opportunities for India primarily in the:
Answer: (B) IT and service sector — call centres, software, etc. Explanation: India's large English-speaking, technically educated workforce has made it a global hub for IT services, BPO, software development, and call centres. Companies like Infosys, Wipro, and TCS serve global clients, generating billions in revenue and thousands of jobs.
2021, 2019
Q3. Competition from MNCs has resulted in which of the following changes for some Indian companies?
Answer: (B) Some improved quality, cut costs, and became globally competitive themselves Explanation: Competition from MNCs has forced many Indian companies to innovate. Some — like Tata Motors, Infosys, and Dr. Reddy's Laboratories — improved quality and efficiency to such a degree that they are now competitive internationally and have themselves become MNCs.
2023
Q4. Globalisation has NOT led to which of the following?
Answer: (C) Equal distribution of benefits among all workers in India Explanation: Globalisation has NOT led to equal distribution of benefits. Skilled workers in IT and large companies have benefited greatly, while unskilled workers, agricultural labourers, and those in small industries have often faced job losses and wage stagnation.
Part B — Assertion-Reason Questions (1 Mark)
2023, 2022
A-R Q1.
Assertion (A): Globalisation has not always resulted in better working conditions for Indian workers. Reason (R): MNCs often look for cheap labour by pressuring local contractors to hire workers at low wages and in poor conditions.
Answer: (A) Both A and R are true, and R is the correct explanation of A Explanation: MNCs chase the cheapest production costs. Local suppliers competing for MNC contracts often cut corners on wages and working conditions to offer lower prices. R correctly explains why A is true.
Part D — Very Short Answer (2 Marks)
2023, 2022, 2021
VSA Q1. How has globalisation affected the Indian economy? (Any two points)
Answer:
Positive — New opportunities: Globalisation has created new jobs and income in the IT sector, BPO, software, and export-oriented industries. Indian companies like Tata and Infosys have become global players.
Negative — Small industry losses: Many small Indian manufacturers (toys, batteries, plastics) have faced severe competition from cheaper Chinese and MNC imports, leading to factory closures and unemployment.
Part E — Short Answer (3 Marks)
2023, 2022, 2021
SA Q1. Describe the positive effects of globalisation on the Indian economy.
Answer:
Greater choice for consumers: Globalisation has made available a wide variety of goods (electronics, vehicles, foods) from across the world at competitive prices, improving the standard of living for many Indians.
New job opportunities: The IT/BPO sector boom created millions of high-paying jobs. India became a global hub for software services, call centres, and financial processing.
Indian companies going global: Competition has pushed Indian firms to modernise. Companies like Tata Motors (purchased Jaguar-Land Rover), Infosys, Dr. Reddy's, and Wipro have become globally competitive multinationals themselves.
Higher incomes in certain sectors: Workers in export sectors (textiles, software, diamonds, pharmaceuticals) have seen increased wages and employment due to access to larger global markets.
2023, 2022, 2021, 2020
SA Q2. Describe the negative effects of globalisation on the Indian economy.
Answer:
Threat to small industries: Cheap imports — especially from China — destroyed local markets for toys, batteries, textiles, and electronics, causing factory closures.
Poor working conditions: To attract MNC contracts, local suppliers often hire workers on flexible, low-wage contracts with poor safety standards and long hours — worsening conditions for unskilled workers.
Unequal distribution: The educated urban workforce benefited, while agricultural labourers, unskilled workers, and rural populations have seen few benefits and sometimes faced higher prices.
Cultural impact: The dominance of Western brands, media, and lifestyle has raised concerns about the erosion of local cultures, traditions, and languages.
Part F — Long Answer (5 Marks)
2023, 2022, 2021, 2020, 2019
LA Q1. Describe the impact of globalisation on the Indian economy. How has it affected different sections of society?
Answer:
Globalisation has had mixed effects on the Indian economy — creating new opportunities for some while causing hardship for others.
Positive Effects:
IT and service sector growth: India became a global hub for software, BPO, and IT services. Companies like TCS, Infosys, and Wipro serve global clients, creating millions of high-paying jobs.
Consumer benefits: A wider variety of goods at competitive prices (electronics, vehicles, food) improved living standards for the middle class.
Indian MNCs: Competition pushed Indian companies to modernise — Tata Motors, Dr. Reddy's, Ranbaxy became globally competitive. Some Indian firms now operate internationally themselves.
Investment and exports: FDI inflows brought capital, technology, and management practices to India's manufacturing and service sectors.
Negative Effects:
Small industry decline: Cheap imports — especially from China — destroyed local markets for toys, batteries, textiles, and electronics, causing factory closures.
Workers' conditions: MNCs and their local suppliers often hired workers on flexible, low-wage contracts with poor safety standards to keep costs minimal.
Unequal distribution: The educated urban workforce benefited, while agricultural labourers, small farmers, and unskilled workers gained little or were harmed.
Impact on different groups:
Skilled workers / IT professionals: Greatly benefited — higher wages, global exposure.
Small producers and artisans: Harmed — cannot compete with MNC pricing and scale.
Consumers (middle class): Benefited — more choices, lower prices.
Agricultural labourers: Largely unaffected positively; sometimes harmed by changes in agricultural trade policies.
Conclusion: For fair globalisation, rules must protect the weak while allowing the benefits of open markets to be widely shared.
2022, 2021, 2020
LA Q2. “Globalisation has been beneficial for well-off consumers and for producers with skill, education and wealth.” Critically evaluate this statement.
Answer:
The statement is largely accurate. Globalisation has not benefited everyone equally:
Evidence that it benefits the well-off:
Skilled IT workers, managers, and entrepreneurs in export industries have seen wages rise dramatically.
Middle and upper-class consumers enjoy access to global brands, technology, and services at competitive prices.
Large Indian companies that had capital and skills (Tata, Infosys) expanded globally and became more profitable.
Evidence of unequal/negative impact on the poor:
Unskilled workers in small industries lost jobs to cheaper imports and automation.
Workers in the informal sector face “flexible” work arrangements — no job security, no benefits, low wages.
Small farmers and agricultural workers gained little; some were hurt by cheaper subsidised agricultural imports from developed countries.
Critical assessment: While globalisation has generated significant wealth, the distributional impact has been deeply unequal. The benefits have been concentrated at the top, while costs have fallen on the poorest. This supports the argument for fair globalisation — with safeguards, labour protections, and policy that ensures benefits reach the marginalized.
A just form of globalisation requires both openness to global markets AND strong domestic policies to protect vulnerable workers and small producers.
MCQ. Which of the following is the most significant factor in enabling globalisation?
Answer: (B) Rapid improvement in technology especially in transport and communication Explanation: Technological improvements — containerisation, air freight, the internet, and mobile communications — have been the single most important driver of globalisation by reducing the cost and time of moving goods and sharing information globally.
2026 · Assertion-Reason
Assertion-Reason. Read the following and choose the correct option:
Assertion (A): The WTO is criticised by developing countries for being unfair. Reason (R): Developed countries maintain high subsidies for their own agriculture while insisting developing countries remove trade barriers.
Answer: (A) Both A and R are true, and R is the correct explanation of A Explanation: Developing nations argue the WTO system is unfair because wealthy nations keep their agricultural subsidies intact (which distort global prices), while pressuring poor nations to open up their markets — a classic case of “do as I say, not as I do.”
2026 · VSA
VSA. State any two ways in which globalisation has benefited consumers in India.
Answer:
Greater variety: Consumers now have access to a much wider range of goods from across the world — from electronics and automobiles to food and fashion — that were not previously available.
Lower prices: Increased competition between domestic and foreign producers has driven down prices of many goods (mobile phones, electronics, consumer appliances), making them affordable to a larger section of society.
2026 · SA
SA. “Globalisation has created new opportunities for some people while creating problems for others.” Explain with suitable examples.
Answer: Opportunities created:
IT professionals: India's software engineers and IT workers have gained lucrative global employment opportunities. Companies like TCS and Infosys serve multinational clients worldwide, creating well-paid jobs.
Export-oriented producers: Indian textile, leather goods, and pharmaceutical exporters have found new markets worldwide, expanding production and employment.
Problems created:
Small manufacturers: Producers of toys, batteries, and plastic goods face stiff competition from cheaper Chinese imports, leading to loss of business and jobs.
Informal sector workers: To remain cost-competitive with MNCs, local employers cut wages, reduce benefits, and employ workers on temporary contracts with no job security.
2026 · LA
LA. Explain the role of WTO in globalisation. What are the objections raised against its functioning?
Answer: Role of WTO in Globalisation:
Rule setter: WTO establishes rules for international trade to ensure that trade between nations is conducted smoothly and predictably without arbitrary restrictions.
Liberalisation promoter: WTO pressures member countries to lower tariffs, remove quotas, and ease trade barriers — making international trade freer and markets more integrated globally.
Dispute resolution: WTO provides a formal mechanism for resolving trade disputes between countries, preventing trade wars and maintaining stability in global commerce.
Non-discrimination: WTO principles (like Most Favoured Nation) require that countries treat all trading partners equally, preventing bilateral discrimination.
Objections to WTO functioning:
Unfair rules: WTO rules are said to favour developed countries. While developing nations must lower trade barriers, rich countries maintain agricultural subsidies that make their farm goods artificially cheap.
Loss of sovereignty: WTO rules may force developing countries to open up sectors (like retail, insurance) before their domestic industries are ready to compete.
Benefits flow to rich nations: Critics argue that MNCs from developed countries gain the most from WTO-driven liberalisation, while workers and small producers in developing countries bear the costs.
Environmental and labour concerns: WTO rules prioritise trade over environmental standards and labour rights, allowing exploitation of cheap labour and lax environmental regulations in developing countries.
India and other developing nations have called for reform of WTO to make it truly fair and development-friendly.