International trade is the exchange of capital, goods, and services acrossinternational borders or territories.

[1] In most countries, such trade represents a significant share of gross domestic product (GDP). International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture

Q) Distinguish between International & Domestic Trade? Distinction between internal and international tradeDistinction between internal and international trade in general involves transaction formutual benefit For this reason both the trading parties will have equal interest. Trade is a case of geographic specific area. An area specialises in an activity and tradetakes place. Trade needs optimising activity. Profits are measured by minimising cost andincreasing vo lume of trade. International trade has certain distinguishing factors ascompared with ordinary trade.1. International trade is the trade between two countries which are geographicallyand politically different. This gives rise to a conflict of interests in terms of benefit.2. International trade has more restriction than internal trade. The world hastransforme d from free trade to protection.3. Under protection a country prevents trade to safeguard the interest of domesticindustry.4. The factors of production are perfectly mobile within a country and immobilewithin countries. This feature helps in retaining cost advantage in production. Differentcountries have different currencies. With this the problems of equating value andconver sion of currencies arises. International liquidity is a major problem. Yet there isno mechanism to facilitate international payments. In 1930 IMF floated specialisedinstruments called Special Dra wing Rights (SDR) as a common medium forinternational transaction. Due to disparities in economic development, SDR failed toprovide adequate international liquidity.Presently the world is divided into trading blocks and associations. The internationaltrade is highly segmented international trade leads specialised institutions for promotinginternational co-operation, trade international payments and developmentassistance. Q) What is FDI ? Foreign capital which enters the country in the form of equity capital is termed asForeign Direct investment (FDI).It involves no interest payment, but only a share in the profit to the extent of sharesowned by foreigners. In India equity participation by foreigners is permisible upto 51%

of the capital of a project, with higher limits of investment in selected areas, such astechnology, upgradation & exports.Foreign direct investment (FDI) is a measure of foreign ownership of productive assets,such as factories, mines and land. Increasing foreign investment can be used as onemeasure of growing economic globalization. Maps below show net inflows of foreigndirect investment as a percentage of gross domestic product (GDP). The largest flows of foreign investment occur between the industrialized countries (North America, NorthWest Europe and Japan). But flows to non-industrialized countries are increasing. The foreign direct investor may acquire 10% or more of the voting power of an enterprisein an economy through any of the following methods: * By incorporating a wholly owned [subsidiary] or [company] * By acquiring shares in an associated enterprise * Through a [[merger]] or an [Takeover| acquisition] of an unrelated enterprise * Participating in an equity [[joint venture]] with another investor or enterprise *Foreign direct investment incentives may take the following forms:{Fact|date=June2009} * Low [corporate tax]and [income tax] rates * Tax Holidays * Other types of tax concessions * Preferential [tariffs] * Special economic zones * Investment financial subsidies * [soft loan] or loan [guarantees] * Free land or land subsidies * Relocation & expatriation subsidies * Job training & employment subsidies * [[infrastructure]] subsidies * R&D support * Derogation from regulations (usually for very large projects) The Foreign Exchange Management Bill (FEMA) was introduced by Govt. of India inparliament on August 4, 1998. The Bills aims to consolidate and amend the lawrelating to Foreign

Exchange with the objective of facilitating external trade andpayments and for promoting the orderly development and maintenance of ForeignExchange Market in India. It was adopted by parliament in 1999 and is known asForeign Exchange Management Act, 1999. Chapter II of FEMA deals with the regulation &management of Foreign Exchange. Sec. 3 states that except as otherwise provided inthis Act, no person shall in any manner deal in or transfer any foreign exchange orforeign security to any person not being an authorised person. Sec. 4 states that exceptotherwise provided in this Act, no person resident in India shall acquire, hold, own,possess or transfer any foreign exchange, foreign security or any immovable propertysituated outside India. Q) What are TRIPS? Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS),negotiated during the Uruguay Round, introduced intellectual property rules for the firsttime into the multilateral trading system. The Agreement, while recognizing thatintellectual property rights (IPRs) are private rights, establishes minimum standards of protection that each government has to give to the intellectual property right in each of the WTO Member countries. The Member countries are, however, free to provide higherstandards of intellectual property rights protection. The Agreement is based on and supplements, with additional obligations, the Paris,Berne, Rome and Washington conventions in their respective fields. Thus, the Agreementdoes not constitute a fully independent convention, but rather an integrative instrumentwhich provides "Conventionplus" protection for IPRs. The TRIPS Agreement is, by its coverage, the most comprehensive internationalinstrument on IPRs, dealing with all types of IPRs, with the sole exception of breeders'rights. IPRs covered under the TRIPS agreement are: The TRIPS agreement is based on the basic principles of the other WTO Agreements, likenon-discrimination clauses - National Treatment and Most Favoured Nation Treatment,and are intended to promote "technological innovation" and "transfer and dissemination"of technology. It also recognizes the special needs of the least-developed countryMembers in respect of providing maximum flexibility in the domestic implementation of laws and regulations. Q) What is Dumping? It occurs when goods are exported at a price less than their normal value, generallymeaning they are exported for less than they are sold in the domestic market or third-country markets, or at less than production cost Types of Dumping Selling same product at different prices, at home and abroad Selling in the foreign market at price < price in home market Selling in the foreign market at price < fair market valuewhich is often taken to mean < normal average cost Seasonal - when exporter has a bumper crop Cyclical - when exporter has a slump at home Predatory - intended to eliminate competitors Persistent - goes on and on

Q) what is WTO? What is its impact on developing countries? The World Trade Organization (WTO) is the only global international organization dealingwith the rules of trade between nations. At its heart are the WTO agreements, negotiatedand signed by the bulk of the worlds trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conducttheir business.Impact on developing nations:Expansion of world trade. Increase in agricultural exports. Large scale export of textile clothing. Domination of rich and developed countries on WTO. TRIPs and TRIMs. Uruguay round agreements and their impact. Domination of MNCs international Business The below said are the objectives of WTO: Raising standard of living of members of country and income, promoting fullemployment. Better share of growth in a world trade. Settlement of trade disputes among members. Expanding production and trade. Optimum utilization of world resources. Free trade i.e. trade without discrimination. Q) What is intellectual property? Why is it considered as an asset to thecompany? A product of the intellect that has commercial value, including copyrighted property suchas literary or artistic works, and ideational property, such as patents, appellations of origin, business methods, and industrial processes. The Legal Term * Intellectual Property * Defined & Explained ... INTELLECTUAL PROPERTY- Property that can be protected under federal law, including copyrightable works, ideas,discoveries, and inventions. Such property would include novels, sound recordings, a newtype of mousetrap, or a cure for a disease.

Q28. What is a Free Trade Area(FTA): An agreement between two or more countries to remove all tradebarriers between themselves. Each country determines its own barriers and maintains its own externaltariffs on import against non-members. Tariffs and non-tariff barriers include quotas and subsidies oninternational trade in goods and services

Examples of FTA are: The ASEAN Free Trade Agreement(AFTA) and theNorth American Free Trade Areas(NAFTA)Customs Union: An agreement between two or more countries to remove tariffs betweenthemselves and set a common external tariff on imports from non-member countries Each country determines its own barriers and maintains its own externaltariffs on imports against non-members. A customs union has common policies on product regulations andmovement of factors of productions in goods, services, capital and laboramongst members Unlike FTA, members of a customs union have common policies onexternal tariffs against nonmembers.

Q33. What is IMF? What are its Objective? International Monetary Fund also called, as IMF in short, is an international financialorganization that was established in order to promote orderly exchange arrangements,international monetary cooperation and exchange stability among various membercountries.This organization also aims to provide fast economic growth to its membercountries besides providing highest employment levels. Temporary financial assistance isalso provided by this organization to its member countries for easing off the balance of payments adjustments. Since its inception, the objectives of IMF have remained thesame but for meeting the ever changing need it has evolved some operations liketechnical assistance, financial assistance and surveillance. The headquarters of thisinternational organization lies at Washington D .C in United States and at present, thereare 185 member countries of this organization.In the past some years, this organizationhas helped member countries in great way by observing the exchange rates to ensurestable global financial systems. The last country to join this prestigious organization is Montenegro, which joined on 18 th January, 2007. It is very important to note here that allthe United Nation member countries participate directly in International Monetary Fund with exception of North Korea, Andorra, Cuba, Monaco, Tuvalu, Liechtenstein, and Nauru. The main objective of International Monetary Fund it to provide financial assistance to allthe member countries that are facing financial problems. All the member states that arefacing problems regarding balance of payments can easily request for loans etc forimproving the situation. This can also be done by making request for the organizationalmanagement of economies at IMF." But in return of getting assistance, the membercountries of International Monetary Fund are also required to launch certain types of reforms that aim at improving the financial strength of member country. The readershould note here that many times, these reforms become quite essential as the membercountries, that

have fixed exchange rate policies, often engage in various types of monetary, fiscal and political practices that are harmful for them. All those countries thathave budget deficits or are suffering from high inflation levels or have strict pricescontrols, are also suffering from balance of payment problem. These reforms are carriedout by means of structural adjustment programs and basic motive of these reforms is tohelp the member countries to come out of crisis permanently, rather than helping themtemporarily with financial assistance. These reforms, however, have been criticized fortheir non-transparent behaviour. Q. What is the need and importance of world bank?World Bank is a term used to describe aninternational financial institutionthat providesleveraged loanstodeveloping countriesforcapital programs. The World Bank has astated goal of reducingpoverty. The World Bank differs from theWorld Bank Group, in that the World Bank comprisesonly two institutions: theInternational Bank for Reconstruction and Development(IBRD)and theInternational Development Association(IDA), whereas the latter incorporatesthese two in addition to three more:International Finance Corporation(IFC),MultilateralInvestment Guarantee Agency(MIGA), andInternational Centre for Settlement of Investment Disputes(ICSID). The World Bank is one of two institutions created at theBretton Woods Conferencein1944. TheInternational Monetary Fund, a related institution is the second. Delegatesfrom many countries attended the Bretton Woods Conference. The most powerfulcountries in attendance were theUnited StatesandUnited Kingdomwhich dominatednegotiations.Although both are based in Washington, the World Bank is by custom headed by anAmerican, while the IMF is led by a European. Key Factors The World Bank sees the five key factors necessary for economic growth and thecreation of an enabling business environment as: 1. Build capacity: Strengthening governments and educating government officials. 2. Infrastructure creation: implementation of legal and judicial systems for theencouragement of business, the protection of individual and property rights andthe honoring of contracts. 3. Development of Financial Systems: the establishment of strong systems capableof supporting endeavors from micro credit to the financing of larger corporateventures. 4. Combating corruption: Support for countries' efforts at eradicating corruption. 5. Research, Consultancy and Training: the World Bank provides platform forresearch on development issues, consultancy and conduct training programs (webbased, on line, tele-/video conferencing and class room based) open for those whoare interested from academia, students, government and non-governmentalorganization (NGO) officers etc. The Bank obtains funding for its operations primarily through the IBRDs sale of AAA-rated bonds in the worlds financial markets. The IBRDs income is generated from itslending activities, with its borrowings leveraging its own paid-in capital, plus theinvestment of its "float". The IDA obtains the majority

of its funds from forty donorcountries who replenish the banks funds every three years, and from loan repayments,which then become available for re-lending. Active AreasThe World Bank is active in the following areas: Agriculture and Rural Development Conflict and Development Development Operations and Activities Economic Policy Education Energy Environment Financial Sector Gender Governance Health, Nutrition and Population Industry Information and Communication Technologies Information, Computing and Telecommunications International Economics and Trade Labor and Social Protections Law and Justice