Differences & Similarities between International Trade and Internal Trade
Definition of Internal Trade
Internal trade may be defined as the exchange, buying, and selling of goods and services within a country e.g. trade between a trader in Lagos and another in Kano. Internal trade can also be referred to as home or domestic trade.
Differences between International Trade and Internal Trade
1. Currency differences: International trade involves the use of two or more currencies while in internal trade only one currency is used.
2. The form of trade: International trade involves two or more countries while trade, where only one country is involved, is internal trade.
3. Movement of goods: International trade requires the movement of goods across territorial boundaries while internal trade goods and services are traded within the country.
4. Government control: Governments of different countries place restrictions on international trade while internal trade enjoys free trade because it’s within.
5. Mobility of factors of production: Factors of production like labour and capital are more mobile in international trade.
Similarities between International Trade and Internal Trade
1. Both types of trade use a medium of exchange in assessing the worth of goods and services involved.
2. International Trade and Internal Trade involve the exchange, buying, and selling of goods and services i.e they are both called trade.
3. Both of them arise as a result of the inequitable distribution of natural resources and production costs.
4. The two forms of trade involve cost in the area of transport, insurance, advertising and warehousing known as auxiliaries to trade.
5. Middlemen are involved in the two forms of trade.