Question

Difference between internal and external trade.

Answer 1

Difference between internal and external trade :

$\begin{array}{ccc}\text{Basis of difference}& \text{Internal trade}& \text{External trade}\\ \text{1. Meaning}& \text{Internal trade refers to buying and sellers}& \text{External trade refers to buying and selling}\\ & \text{of goods within the geographical limits of a}& \text{of goods beyond the geographical limits of a}\\ & \text{country.}& \text{country.}\\ \text{2. Countries}& \text{Only one country is involved.}& \text{Minimum two countries are involved.}\\ \text{involved}& & \\ \text{3. Risk}& \text{Less degree of risk is involved.}& \text{Minimum degree of risk is involved.}\\ \text{4. Currency used}& \text{Payments are made and received in home}& \text{Payments are made and received in foriegn}\\ & \text{currency only.}& \text{currency only.}\\ \text{5. Procedure}& \text{No long procedure or formalities to be}& \text{Long procedure and many formalities to be}\\ \text{involved}& \text{completed before starting.}& \text{completed before starting.}\\ \text{6. Mode of}& \text{Payments are made by cash or cheque.}& \text{Payments are made through bill of exchange or}\\ \text{payment}& & \text{through banks.}\\ \text{7. Legal rules and}& \text{National laws, rules and regulations are}& Internationalrulesandregulationsare\\ \text{regulations}& \text{applicable.}& \text{applicable.}\\ \text{8. Mode of transport}& \text{It uses road,railway as mode of transport.}& \text{It uses sea transport and air transport.}\end{array}$