Meaning, Advantages and Disadvantages of Liberalization (liberalisation)

Content
1. Meaning of liberalisation
2. Advantages of liberalisation
3. Disadvantage of liberalization

Note- Both Liberalisation and Liberalization are correct. Meanwhile, Liberalisation is used in British English and Liberalization in US English.

MEANING:- In simple words, Liberalisation refers to giving freedom to businesses from excessive government control and regulations. This means a private business can make its own decisions regarding Price, Production, Lending, etc according to their need.

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ADVANTAGES OF LIBERALISATION

1. Di-licencing of industries
2. Increase in foreign direct investment
3. Liberalisation of foreign technology
4. Industrial location
5. Faster growth and poverty reduction
6. Increase in employment

1. Di-licensing of industries:- Di-licensing of industries means the government removed the excessive restriction on rules, and licenses of industries. Liberalization removed the lengthy process of obtaining a license. It helps people to open a new business in that industry easily, further, this helps the economy to increase competition and the nation’s performance.

2. Increase in FDI (Foreign direct investment):- Removing this act, also helps businesses to take investment freely and quickly from foreign investors. Which helps to expand the business. In the current situation, foreign investors can invest up to 49% (Depending upon the sector) in the company. As the company’s ownership should remain with the hands-on nation people.

3. Increasing in foreign technology:- This results in effects to increase in the import of foreign technology to use advanced levels of technology so the business can run effectively as well as efficiently. Such as, businesses can manufacture goods cheaply, of better quality, etc.

4. Improves the standard of life:- By removing unwanted rules, the company can set up an industrial location wherever the business can run effectively. As before it takes a huge time to take permission from the government to set up industry in different locations. It is good for local people to get employment, advancement, and a high standard of life.

5. Faster growth & Poverty reduction:- Due to the rise in export and import, also helps the country to grow fast, and Increase employment. which results in a reduction in poverty.

Read More: Advantages and Disadvantages of MNC

Disadvantage of liberalisation

1. Increase Dependence
2. Loss in the domestic unit
3. Unbalanced economy
4. Technology Impact

1. Increase Dependency:- As a result of the increase in foreign trade, the nation gets dependent on other nations’ technology, Raw materials, etc. If anything happened between nations i.e. Trade Ban, it can cause a hunger situation and a huge loss to the business of a dependent Nation. It is because they are totally dependent on other nations.

2. Loss in the domestic unit:- As a result of an increase in foreign trade, the nation goes dependent on raw materials, and technology as it is very cheap from foreign countries like China, etc. It causes a loss to the domestic unit as nobody wants to buy expensive domestic products.

3. Unbalanced Economy:- Liberalisation makes the economy an unbalanced economy as it makes it dependent on other countries if any fluctuation happens in the foreign economy it also makes fluctuation in the economy.

4. Technology Impact: Due to fast or Rapid changes in technology, Many enterprises, and small companies face problems in adapting to changes and in upgrading technology. New technology also makes it difficult for employees to understand.

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DIFFERENCE BETWEEN MNC AND TNC  - MNC AND TNC

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