(i) The base for New Economic Policy in various countries of the world is Dunkel Draft.
(ii) It was allabout the General Agreements on Trade and Tariff.
(iii) Mr. Arthur Dunkel (1932-2005) submitted a 22,000 page document for the World Trade Organisation (WTO) and followed by many Nations to adopt their respective New Economic Policies.
(iv) India is one among such nations to commit itself to the New Economic Policy in 1991.
(v) The new set of economic reforms is commonly known as the LPG or Liberalisation, Privatisation and Globalisation model.

(i) Corporations got a competitive advantage from lower operating costs, and access to new raw materials and additional markets.
(ii) Multinational corporations (MNCs) can manufacture, buy and sell goods world wide.
(iii) Globalisation has led to a boom in consumer products market.

(i) The Government has started the process of disinvestment in those PSUs which had been running into loss.
(ii) It means that Government has been selling out these industries to private sector.
(iii) So disinvestment is a system of privatising government enterprises.

i) Privatization is the incidence or process of transferring ownership of a business enterprise, agency or public service from the government to the private sector.
ii) Under this policy many Public Sector Units (PSUs) were sold to private sector.
iii) The main reason for privatisation was that PSUs were running in losses due to mismanagement and political interference.
iv) The managers could not work independently and the production capacity remained under-utilized.
v) To increase competition and efficiency privatisation of PSUs was inevitable.

(i) Liberalization refers to laws or rules being liberalised or relaxed, by a government.
(ii) Liberalization means relaxation of various government restrictions in the areas of social and economic policies in order to make economies free to enter in the market and establish their venture in the country.
(iii) Liberalizing trade policy by the government includes removal of tariff,subsidies and other restrictions on the flow of goods and services between countries.
(iv) Liberalization is the result of 'New Industrial Policy' which abolished the "License system" or "Licence Raj".

Advantages of Globalization :
(i) Increase in foreign collaboration: Globalisation increases foreign collaboration through various modes such as joint venture, merger, franchise, turn-key projects, etc.
(ii) Expansion of market: The size and operation of business moves from local to national and from national to international.
(iii) Technological development: Technological advancement paves way for a company to enter foreign market.
(iv) Reduction in brain drain: Brain drain is a situation in which a country loses its most educated and talented workers to other countries through migration.
Disadvantages of Globalization:
(i) Loss of domestic industries: Globalisation causes decline in the demand of domestic products which in turn vanishes the domestic business.
(ii) Increase in inequalities: Globalisation widens the gap between rich and poor. Also developed countries exploit the resources of developing countries.
(iii) Dominance of foreign institutions: Economic power shifts from independent industries to international organisations which is a threat to national sovereignty.

Forms of Globalization
(i) Foreign trade policy: India has signed a number of agreements in order to expand Indian trade worldwide. Some of the agreement includes TRIPS (Trade Related Intellectual Property Rights), GATS (General Agreement on Trade in Service).
(ii) Export promotion: Globalisation promotes export by reducing quotes and tariffs, by eliminating trade restrictions and by simplifying trade procedures.
(iii) Freedom to repatriate: Repatriate means, to send or bring money back to one's own country. Since globalisation has integrated many countries, repatriation has become very easy.
(iv) Reduction in tariffs: Custom duties and tariffs imposed on imports and exports are reduced gradually to make Indian economy attractive to the global investors.
(v) Encouraging open competition: Globalisation brings an end to the difference between domestic and international markets. Domestic companies start their operations in the international level and therefore there is an open competition.

Forms of Privatization:
(i) Contraction (minimisation) of public sectors: The number of industries reserved for public sector was reduced from 17 (as per 1956 policy) to only 8 industries viz, Arms and Ammunition, Atomic Energy, Coal and Lignite, Mineral oils, Mining of ores, Mining of copper, lead, zinc etc., Minerals for atomic energy and Railways.
(ii) Sales of shares of public sectors to the private sector: Indian Govt. started selling shares of PSUs to public and financial institution. Now the private sector will acquire ownership of these PSU's.
(iii) Memorandum of Undersatanding: MOU system was introduced in 1991to raise the productivity and performances of PSUs. It strengthens the relationship between PSUs and administrative departments.
(iv) Disinvestment in PSUs: The Govt has started the process of disinvestment in those PSUs which had been running into loss. It means that Govt. has been selling out these industries to private sector. So disinvestment is a system of privatizing government enterprises.

The government of India has adopted several measures of liberalization. Some of these measures are as under:
(i) Liberalization for industrial licensing: In India, it was mandatory to obtain license before liberalization for setting up certain industries. After liberalisation, all industries except six specific industries were liberalized i.e., free from obtaining license.
(ii) Freedom for expansion and poduction to industries: Earlier government used to fix the maximum limit of production capacity. Now the industries are free to decide their production limits by their own on the basis of the requirement of the markets.
(iii) Increase in the investment limit of the small industries: Investment limit of the small scale industries has been raised to Rs. 1 cr. So these companies can upgrade their machinery and improve their efficiency.
(iv) The first important reform in the external sector was made in the foreign exchange market. This led to an increase in the inflow of foreign exchange.
(v) Liberalization of export and import transactions: By simplifying procedures for imports and exports the government wanted to permit the international flow of goods, services, capital, human resources and technology, without many restrictions.

Advantages :
(i) Increase in foreign investment :
If a country liberalises its trade, it will make the country more attractive for inward investment. Inward investment leads to capital inflows but also helps the economy through diffusion of more technology, management techniques and knowledge.
(ii) Increase the foreign exchange reserve :
Relaxation in the regulations covering foreign investment and foreign exchange has paved way for easy access to foreign capital.
(iii) increase in consumption :
Liberalization increases the number of goods available for consumption within a country due to increase in production.
(iv) Control over price :
The removal of tariff barriers can lead to lower prices for Consumers.This would be particularly is benefit for countries who are importers.
Disadvantages :
(i) Increase in unemployment :
Trade liberalisation often leads to a shift in the balance of an economy. Some industries grow, some decline. Therefore, there may often be structural unemployment from certain industries closing.
(ii) Loss to domestic units :
With fewer entry restrictions, it has been possible for many entrants to make inroads into the country which poses a threat and competition to the existing domestic units.
(iii) Increased dependence on foreign nations :
Trade liberalisation means firms will face greater competition from abroad.When competition is not automatically enhanced, it can lead to domination by big institution that has market controlling powers.
(iv) Unbalanced development :
Trade liberalisation may be damaging for developing economies which cannot compete against free trade.