International trade involves the exchange of goods and services between countries, with differences from internal trade within a country. Key differences include the mobility of factors of production being more restricted internationally, separate markets defined by language and other criteria across borders, and varied geographical and climate conditions affecting production. Other differences driving international trade are independent economic policies, currencies, and sovereign states between trading partners.

1. Economicsofinternationaltrade
B.Com Semester-V

2. Unit –I
Principles of international
trade

3. Difference between internal &
international trade

4. Introduction
• Trade means exchange of goods and services between two
persons, states or countries.
• specialization is the mother of trade.
• In this world many countries famous in various types of
production like Switzerland would specialize in watches,
Germany in the manufacture of various types of machinery,
India specialize in textile and jute production.

5. Meaning of internal trade
• When buying and selling of goods and
services take place within the geographical
boundaries of country, it is referred to as
internal trade.
• Example:- Trade between Gujarat and
Maharashtra.

6. Meaning of international trade
• International trade is the exchange of
goods and services between countries.
• Example :- Trade between India and USA,
Trade between Japan and Srilanka.

7. Differences in factor mobility
• Land, labour, capital and entrepreneur is
the four factors of production.

8. Separate market
• A market is a separate market based on
language, usage, weight, criteria, terms of
sale, unit of currency, etc.

9. Differences in geographical and
climate condition
• The geographical diversity seen in different
places is a great gift given by nature.

10. Different economic policies
• Every country has to formulate economic
policies to keep its economy afloat.

11. Sense of nationalism
• Each country gives first priority to its own
country in all matters which we can call
nationalism.

12. Different currency system
• Each country has developed its own
currency to facilitate the exchange of its
own.

13. Existence of independent
sovereign states
• A state with a defined territory that
administers its own government and is not
subject to or dependent on another
power.

14. Conclusion
• In short Internal trade is between us, while international trade
is between us and them.