What is the difference between internal and external trade?

Internal Trade:

Internal trade takes place within the boundaries of the country. Buying and selling of goods takes place within the country and payment for the goods is made in the currency of the country i.e. national currency. This trade has got many names such as inland trade, national trade, home trade or domestic trade. Internal trade is. classified into:

  • Wholesale trade, and
  • Retail trade.

In wholesale trade, buying and selling of goods is made in larger quantities. A person who is in charge of the wholesale trade is known as wholesaler. On the other hand, retail trade means buying and selling of goods in smaller quantities. A person who is involved in retail trade is known as a retailer.

External Trade:

External trade takes place across the boundaries of a country. This is also known as international or foreign trade. This trade occurs in order to exchange one commodity for another or for money. This trade generally takes place between nations.

Foreign trade is classified into three categories:

  • Import trade,
  • Export trade, and
  • export trade.

Import trade occurs when one .country buys goods from another country. For. example—India bought equipment and machinery from This means India has imported something. When one country sells goods to another country, export trade takes place.

For example—India sells leather goods to U.S.S.R. and tea to USA. Such selling of goods for India is known as export trade. export trade is such a trade in which goods are imported from one country and the same are then exported to another country. This is also called entrepot trade. This is done by those countries which have ports so that the goods can be easily and conveniently distributed to the neighboring countries.

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