Domestic trade – What it is, definition and concept

Internal trade refers to the actions of exchange of goods, both goods and services, between buyers and sellers. This occurs between individuals who have residence in the same locality, region or nation.

Internal trade or internal trade, therefore, is the exchange of goods and services between economic agents, which is produced by agents who have their residence in the same territory.

This type of trade is called internal trade, in addition, due to the fact that these agents are regulated by the same commercial regulations. In this sense, internal trade is that which occurs within the same territory, carried out by agents who also reside in the same territory.

Although this can occur in a local, regional or national geographic area, it usually refers to the one that occurs in a national geographic area, in order to break it down from foreign trade.

Types of domestic trade

Within this type of trade we can break it down and classify it into two types. That is, depending on which buyer we focus on, we can classify this into two types.

  • Retail commerce: The one in charge of offering the products or services to the final consumer. Also known as small business or retail sector.
  • Wholesale trade: It is in charge of distributing the products or services between the different retailers.

Although these are the two main types of commerce, the rise of digitization has caused many authors to include, here, another type of commerce. We are talking about electronic commerce.

This type of commerce, when it comes to online stores, is also a contribution to commerce, as well as to the national economy. Which can be wholesale or retail.

Difference between domestic and foreign trade

Domestic and foreign trade are the two types of trade that an economy thrives on. Both are very important to it, although they have clear differences like the ones we will see now.

Foreign and domestic trade, as their own names show, do not reflect the same thing. In this sense, we could distinguish them as follows:

Foreign trade is the trade we carry out abroad. That is, those commercial transactions for the exchange of goods and services that, from a country, are carried out abroad.

Domestic trade the opposite. It is the trade that occurs within the same territory. In other words, the commercial transactions for the exchange of goods and services carried out by certain economic agents who reside, and exchange, in the same territory.

Thus, foreign trade and domestic trade complement each other, giving rise to magnitudes that reflect the computation of both phenomena.

Importance of domestic trade for economic development

Internal trade is a trade that is of great importance to a given economy. Like abroad, any trade action that occurs has a positive effect on the economy. However, both must maintain a constant flow so that this benefit is passed on to the national economy.

In this sense, internal trade is of vital importance for the economic development of a country. Thanks to the exchange of goods, the flow of money within an economy is constant, which endows the economy with a large volume of economic activity.

In addition, this type of trade produces that the distribution of wealth is compensated between citizens of the same territory, since the exchanges take place within the same territory, generating income to the territory itself via taxes.

Thus, a large domestic trade means that resources do not have to be imported from abroad, which favors producers in the country, as well as the economy itself. That is why domestic trade is always of great importance to many economies.

Deja un comentario

Tu dirección de correo electrónico no será publicada.