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Differences between Domestic trade and International trade?

What is international trade?

Trade that takes place in two and more countries is known as international trade.  No country is perfect from the economic side. No man can produce his/her essential goods alone. Besides, no country alone can produce essential goods. Many countries can get better facilities because of the differences in geographical location, weather, rainy, natural resources, etc.

For example, Canada can produce wheat in a penalty manner and Bangladesh can produce jute in a good manner. So, they can exchange these items between themselves. In this way, international trade occurs between countries.

What is domestic trade?

Trade that occurs inside a country is called domestic trade. Domestic trade takes place in many divisions of a country. In short, trade that occurs inside the geographical area of the country traditionally known as domestic trade. All region in a country does not equally produce all goods.  But all people in all regions have equal rights to use their essential goods. For that reason, the trading system is essential for exchanging goods between each other. One region produces one good and exchange with other regions inside a country is typically known as domestic trade.


Differences between Domestic trade and International trade?

  1. Field of trade:

domestic trade occurs inside a country, on the contrary, international trade occurs two or more countries. The field of International trade is higher than the domestic trade

  1. Differences in the dynamics of the material:

the raw material of production can move freely inside the country in case of domestic trade. But in the case of international trade, the raw material of production can’t move freely between the countries. Due to geographical location, language differences, social distance, transportation cost, and overly government rules and regulations can hamper the free movement of the raw material of the production.

  1. Differences between natural resources:

there is no difference in characteristics of natural resources inside a country.but different countries have different types of natural resources and there exist huge differences in their characteristics.

For example, some countries are good in agricultural sectors and some are in industrial sectors.

  1. Differences between the money and banking system:

same monetary policy and banking system exist inside a country. But different countries have different rules and regulations in their banking and monetary systems. The foreign exchange rate is essential for international trade. For that reason, international trade is more complex than domestic trade.

  1. Differences between business policy:

domestic trade follows the same business policy in case of trade . for that products can move freely inside the country ad transactions can be done in an easier manner. but international trade isn’t able to follow the same rules and regulations. Because many countries follow different types of rules and regulations. For that many new problems may arise in international trade.

  1. Differences between market:

There are no fundamental differences between people in their taste, choice, and preferences in domestic trade. besides, there exist differences in the many countries’ markets having different choices, tastes ad preferences, different cultural programs .that’s why international trade required more attention than domestic trade.

  1. Differences between finance policy:

there exist differences between fiscal policy, tax policy, and tariff policy. The central bank of a country follows favorable rules for their country. Domestic trade follows the same rules whereas international trade doesn’t follow the same rules in their trading systems.

  1. Difference between production systems:

different countries have different production and economic systems. There exist different rules and regulations in the production system, labor law, factory act in different countries. That s why international trade is separate from domestic trade as a result the production cost is different from one country to another country

  1. Differences between transportation cost :

due to geographical location, domestic trade doesn’t bother about transportation costs. But in international trade, transportation cost is a big matter and its impact is higher in international trade.

  1. Balanced of transactions:

domestic trade has no problem with the balanced of transactions. But in international trade, a balanced transaction is very important. In international trade, money inflation, money reduction, and export control systems are taken to keep favorably balanced transactions in international business.

  1. Separate national government :

there exist separate national governments in both domestic and international trade. Every country has a separate national government. they adopt separate and free rules in their trading systems. For that, international trade faces more problems than domestic trade. That’s why international trade required separate theories.

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