Difference Between Domestic Trade and International Trade

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Domestic Trade and International Trade Differences

Domestic trade refers to the actions of exchange of goods, both goods and services, between buyers and sellers residing in the same locality, region or nation while International trade is defined as all that economic activity in which people or companies from different countries carry out an exchange of products or services.

Difference Between Domestic Trade and International Trade
Domestic Trade and International Trade

International Economy – This economic activity involves the purchase, sale or exchange of products and services, in different currencies, as well as payment methods. As a consequence of trade liberalization, international exchanges have increased.

Domestic trade is also known as internal trade. It involves the exchange of goods and services within the national boundary.

International trade is also known as foreign trade or external trade and it involves the exchange of goods and servnces among countries.

The two types of trade (Domestic and International) differ in the following ways:

  • While domestic trade takes place within the national boundaries while international trade takes place across national boundaries.
  • Domestic trade involves the use of one currency but intemational trade involves the use of more than one currency and may therefore create foreign exchange problems.
  • There are no trade restrictions such as quota, import licensing etc in domestic trade while international trade is subject to trade restrictions.
  • Domestic trade does not involve balance of payments problems while international trade may involve balance of payments problems.
  • Domestic trade is not a foreign exchange earner, while international trade helps a country to earn foreign exchange which is used to finance imports.
  • Domestic trade is not usually subjected to political manipulations while political manipulations may exist in international trade.
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