Definition: Economic Activities implies all the activities of producing, distributing, trading, consuming, exchanging and supplying, goods and services of value, at any level, in a society, for monetary consideration.
These activities are undertaken with the aim of making money, acquiring wealth, earning a livelihood, and generating income from different sources.
The economic activity in a country, its degree and forecasts thereof can be measured through the Gross Domestic Product (GDP). The level of economic activity in an economy decides whether the economy is growing or shrinking.
Classification of Economic Activities
Economic Activities which are performed on a regular basis are called occupation. These are classified into three main categories:
Employment is the basic occupation, wherein one person renders services (physical, mental or both) to another person, under the contract of employment, in return for remuneration.
The person who provides the services is called as an employee or worker, whereas the one who hires another for the provision of services is termed as an employer. People often chose this occupation, because of consistency in income in the form of salary or wages.
In employment, the worker or employee has to go for work regularly (except on holidays, leaves and Sundays), for definite hours as contracted. Further, employment may or may not require special qualification to do the job or task, as there are jobs which required high education and specialised skill, while others require only basic education.
Business refers to a systematic commercial activity concerning continuous production or purchase of goods and services, for the purpose of selling, transferring, and exchanging in return for money, so as to gain profit. To commence a business, capital is required, which is usually provided by the proprietor himself, raised from the market or borrowed from a bank, in the form of a loan.
It is a regular activity, i.e. to be called a business, the activity must be carried on regularly, on not once in a particular period.
Moreover, the earnings are neither consistent nor assured in business, because in a business there is always an uncertainty regarding the income, as it depends on a number of factors like performance, competition, efficiency, product and services offered, strategies, customer loyalty and market share. Hence, in business, the element of risk is always there.
Companies like Tata, Reliance, Facebook, Microsoft, Google, Apple, LG, Samsung, Hyundai, Mercedes, etc. are some common examples of business. Indeed, people like shopkeepers, bankers, traders, transporters, property dealers, tailors, factory owners, etc. are also businessmen, who are running a business but on a small scale.
Those activities which require delivering specialised personal service, which is of expert nature for adequate consideration, i.e. fee. It is based on professional training and skill, acquired from a recognized university, college or institute and are subject to the professional code of conduct, laid down by the body itself. The persons who are engaged in a profession are termed as professionals.
Services provided by a Doctor, Lawyer, Engineer, Architect, Chartered Accountant, Company Secretary, Fashion Designer, Interior Designer, Writer, Singer, Choreographer, Cinematographer, etc. come under this category.
Professionals can work on their own and make money with the fee for the services provided by them to the clients and are called as professionals in practice. As against, some professionals who work in an organization, as employees, advisors, or consultants.