Difference between Internal and International Trade

Trade is an economic concept that deals with buying and selling of goods. Trade is conducted between two or more parties (individuals or business entities).

Internal trade is the trade that takes place between two parties within the geographical boundaries of a nation. It is also known as domestic trade or home trade.

International trade is the trade where two or more individuals from two different countries are involved or two different countries are involved in the trade. It is also known as foreign trade.

Let us look at some of the points of difference between the internal and international trade.

Internal Trade

International Trade

Definition

Internal trade is trade that involves buying and selling taking place between two parties which are located within the political and geographical boundaries of a country

International trade is referred to as a trade that involves buying and selling of goods between two individuals or businesses located in two different countries or it can be trade between two different countries

Currency exchange

There is no exchange of currency as trade takes place within the boundaries of the nation

Exchange of currency is there between the two countries/individuals/businesses involved in the trade

Trade Restrictions

No trade restrictions for internal trade

International trade has different restrictions as the two countries involved in trade have different policies with regards to trade

Transportation Cost

Transportation cost is less when trade is taking place within the borders of a country

Comparatively higher transportation costs as goods need to be transported across the world

Goods traded

Only those goods and services are traded that are available in the country

Helps countries to trade goods that are produced in surplus or purchase goods that are scarcely available

Foreign reserve

Does not generate any foreign reserve

International trade generates foreign reserves for the two trading countries

This article was all about the topic of Difference between Internal and International Trade, which is an important topic for Commerce students. For more such interesting articles, stay tuned to BYJU’S.

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