Globalisation & Liberalisation
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GLOBALISATION AND LIFE INSURANCE
Dr. H. Sadhak
Director, Management Development Center Life Insurance Corporation of India
A. Globalisation & Liberalisation
Globalisation, according to Penguin Dictionary of Economics, “Stresses the geographical dispersion of industrial and service activities (for example research and development, sourcing of inputs, production, distribution) and the cross boarder networking of companies (for example through joint ventures and the sharing of assets”. According to Herman E Daly, Globalisation serves the vision of a single, cosmopolitan, integrated global economy. This definition focuses on the cross border movement of goods, services and resources (financial and human) impacting on the domestic and global assets and employment. Globalisation, thus focuses on an integrated economic world in which the economy is a single market characterised by trade and investment flows, cross border economic activities in production, investment financing, movement of capital, technology, labour, internationalisation of consumption, capital, and services. Economic liberalisation is the gateway of globalisation and financial liberation plays the most crucial role in integration of one country’s economy on the global economic network. However, very often the term liberalisation and globalisation are used simultaneously. Important instruments of liberalisation are regulation of financial market to allow foreign capital, foreign investment, to and fro flow of capital etc. reduction of tariff and non-tariff barriers of trade, simplifications of customs measures etc. For successful global integration a country must move to economic liberalization by dismantling entry barriers and Licensing system, reduction in physical restrictions on imports, reduction in control on capital and current account, reforming financial system and opening up financial market to private (domestic and foreign) players, removing controls on foreign capital (FD and portfolio)...