Indian Economy

Gross National product is a measure of national income and output, and is used to estimate the welfare of an economy by totaling the value of goods and services produced in an economy. GNP, along with GDP are the primary measures of national income and output. The key difference between the two is that GDP is the total output of a region, eg. America, and GNP is the total output of all nationals of a region, eg. Americans.

Globalization is the integration of national economies into the international economy through measures such as: trade, foreign direct investment, capital flows, migration, and the spread of technology, so that the people of the world are unified into a single society and function together.

This is also referred to as the ‘flattening of the globe’. As globalization combines economic, technological, sociocultural and political forces, it will continue to affect the world along different dimension, such as: industrial, financial, economic, political, cultural and social.

GATT, or the General Agreement on Tariffs and Trade was a treaty, and not an organization. It was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO).

The GATT's main objective was the reduction of barriers to international trade, to be achieved through the reduction of tariff barriers, restrictions and subsidies on trade through a series of agreements. The history of the GATT includes three phases. During the last phase in early 1990s, the World Trade Organization was established, and took over the functions of the GATT.

Free trade is aimed at reducing the barriers in an effort to facilitate the trade of goods and services that are not deterred by government-imposed restrictions. The trade of goods and services could happen between or within countries. Government-imposed restrictions increase costs to goods and services, producers, businesses, and customers. The restrictions may include tariffs such as taxes and tariffs, as well as non-tariff barriers, such as regulatory legislation and quotas.

Foreign direct investment, or FDI, is investment made to enterprises operating outside of the economy of the investor. The FDI relationship consists of a parent enterprise and a foreign affiliate which together form an MNC - multinational corporation. In order to qualify as FDI the investment must afford the parent enterprise control over its foreign affiliate.