What is Trade? Explain different types of Trade.
1] Meaning of Trade Trade means buying and selling of goods or services between two persons or two
business organization or two countries) / Trade broadly classified into two types. They are
1. Domestic Trade: A trade which takes place within the country is known as Domestic Trade or Home
Trade or Intemal Trade ie. It takes place within the geographical boundaries of a nation It can be at local
level, regional level or national level. Hence trade carried on among traders of Delhi, Mumbai etc. is
called home trade.
Home trade can be further sub-divided into two groups. They are
a. Wholesale Trade: It involves buying in large quantities from producers or manufacturers and selling in
lots to retailers for resale to consumers. The wholesaler is a link between manufacturer and retailer)
Wholesaler act as a intermediary between producers and retallers
b. Retail Trade: It involves buying in smaller lots from the wholesalers and selling in very small quantities
to the consumers for personal use. The retailer is the last link in the chain of distribution) He establishes
a link between wholesalers and consumers
2 ]Foreign Trade: Foreign Trade is also known as External Trader or International Trade. The trade that
takes place between nations is international trade) The exchange of goods or services between the
traders of two nationals is International Trade. International Trade involves the exchange of not only
goods but also currencies between nations
The International Trade can be divided into 3 types. They are
a. Import Trade: When purchases are made from another country, goods are said to be imported from
that country to the buyer's country) For example: China has the most modern technology for producing
electronic products cheaply so we import those products to our country
b Export Trade: When goods are sold to a trader in another country, goods are said to be exported to
that country by the seller's country) For example. India is a major exporter of diamonds to another
country
c. Entrepot Trade: (When goods are imported into a country, not for consumption in that country, but
for exporting them to a third country, it is known as "Entrepot Trade"
What is SEZ? Explain their objectives.
Special Economic Zones (SEZ): Special Economic Zone (SEZ) is afgeographical region that has economic
laws that are more liberal than a country's economic laws. The main aim of the SEZ is attracting larger
foreign investments it is intended to make SEZs as engines for economic growth. The SEZ Act was passed
by Parliament in May 2005. A SEZ is a specifically described duty free enclave deemed to be a foreign
territory for the purpose of trade operations
Objectives of SEZ:
a Generation of additional economic activity.
Promotion of exports of goods and services.
Promotion of investment from domestic and foreign sources.
d. Creation of employment opportunities.
e Development of infrastructure facilities
Explain the main advantages of SEZs.
Advantages of SEZ: The following are the advantages of SEZ. They are:
3. Employment Generation: SEZs are considered as highly effective tools for job creation.
2. Economic Development: SEZs act as the engines for economic development.
3. Growth of Labour Intensive Manufacturing Industry: (Establishment of SEZs would lead to fast growth
of labour intensive manufacturing and service industries in the country.)
4. Balanced Regional Development: SEZs are beautifully crafted initiatives for achieving the balanced
regional development.
5. Capacity Building: SEZs are important for stronger capacity building
Export Performance: (SEZs create dynamism in the export performance of a country by eliminating false
resulting…
3. Explain the types of entrepreneurs.
A]Types of entrepreneurs: Clarence Danhof classified entrepreneurs into four types. They are Innovating
entrepreneurs: This type of entrepreneurs introduces new goods, inaugurates new methods of
production, discovers new market and reorganizes the enterprise. It is important to note that such
entrepreneurs can work only when a certain level of development is already achieved, and people look
forward to change and improvement.
B]Imitative entrepreneurs) These entrepreneurs adopt the methods and techniques already successfully
executed by innovating entrepreneurs, Imitative entrepreneurs do not innovate the changes
themselves, they only imitate techniques and technology innovated by others Such types of
entrepreneurs are particularly suitable for the under developed regions for bringing a mushroom drive
of imitation of new combinations of factors of production already available in developed regions
C]Fabian Entrepreneurs: Fabian entrepreneurs are characterized by very great caution and skepticism in
experimenting any change in their enterprises. They imitate only when it becomes perfectly clear that
failure to do so would result in a loss of the relative position in the enterprise.
D] Drone Entrepreneurs: These are characterized by a refusal to adopt opportunities to make changes in
production formulaejeven at the cost of severely reduced returns relative to other like producers. Such
entrepreneurs may even suffer from losses but they are not ready to make changes in their existing
production methods
Distinction between primary and secondary market.
A: Differences between primary and secondary market:
Primary Market (New Issue Market)
There is a sale of securities to investors by new companies or new issues by existing companies
2 Securities are sold by the company to the investor directly or through an intermediary.
3. The flow of funds is from savers to investors
the primary market directly promotes capital formation.
4. Only buying of securities takes place in the
primary market, securities cannot be sold there
1 There is trading of existing shares only
2 Ownership of existing securities is exchange between investors. The company is t involved at all
3. Enhances encashment (liquidity) of share ie, the secondary market indirectly promote capital
formation 1, 4. Both the buying and the selling of securite can take place on the stock exchange