Question

Differentiate between internal trade and external trade.

Answer 1

Differences between Internal Trade and External Trade are:

$\begin{array}{cccc}& \text{Basis of difference}& \text{Internal Trade}& \text{External Trade}\\ 1.& \text{Nationality of buyers and sellers}& \text{Both buyers and sellers are}& \text{Both buyers and sellers belong}\\ & & \text{from the same country. Hence,}& \text{to different countries. Hence, it}\\ & & \text{it is easier to interact with each}& \text{is difficult to interact with each}\\ & & \text{other and enter into a business}& \text{other and enter into business}\\ & & \text{transaction.}& \text{transaction because of differences}\\ & & & \text{in their respective languages,}\\ & & & \text{attitudes and social customs.}\\ 2.& \text{Mobility of factors of production}& \text{The factors of production like}& \text{Many legal restrictions along with}\\ & & \text{capital, labour, law materials can}& \text{the differences in socio-cultural}\\ & & \text{move freely within the country}& \text{environments, geographic}\\ & & \text{without any restrictions.}& \text{influenes and economic}\\ & & & \text{conditions restrict the movement}\\ & & & \text{of factors of production like}\\ & & & \text{labour, capital, raw materials}\\ & & & \text{across countries.}\\ 3.& \text{Political system and risk}& \text{It has to face the political system}& \text{It is subjected to the political}\\ & & \text{and risk of only one country.}& \text{system and risk of different}\\ & & & \text{countries.}\\ 4.& \text{Currency used in business}& \text{The currency of the home country}& \text{The currency used in business}\\ & \text{transactions}& \text{is used in business transactions}& \text{transactions is that of more than}\\ & & & \text{one country.}\\ 5.& \text{Nationality of other stakeholders}& \text{In this trade, the various}& \text{In this trade, the various}\\ & & \text{stakeholder like the employees,}& \text{stakeholders like empolyees,}\\ & & \text{middlemen, and so on belong to the}& \text{middlemen and so on belong to}\\ & & \text{same country.}& \text{different countries.}\end{array}$