What is the difference between internal trade and external trade?

Trade is the defined as the exchange of goods and services between person or entity to another. The trade involves buying and selling of goods and services. Trade is the central activity in the economy. Trade not only refers to the exchange of goods and services within the country but also between two or more countries.

Trade is basically divided into two types,

1. Internal Trade
2. External trade

There are a lot of difference between internal trade and external trade

• means

Internal trade refers to the trade within the borders of the country.

External Trade refers to the trade between two or more countries.

• Exchange of Currencies

There is no exchange of currencies takes place in the Internal Trade because there is a same currency in the country

External Trade involves the exchange of currencies between the nations which are involved in the trade.

• Restrictions on transfer of goods

Internal trade usually doesn't have any restrictions on movement inside the country

External Trade is subjected to many restrictions on transfer to certain goods to certain countries.

• Transportation costs

Internal Trade generally has fewer transportation costs and risks to transfer the goods.

External Trade involves very high transportation costs and risky situations to transfer goods from one country to another

• Transport Systems

Internal Trade depends upon the network and internal transport systems like roads, railways, etc.

External Trade depends upon the seaways and the airways between the countries involved in the trade

• Approvals

The Internal trade involves fewer documentations and approvals from the government to transfer the goods.

External Trade involves more documentations and approvals from government and it is a long process to get approvals from government.

• Volume of Trade

The volume of the trade depends upon the population of the country, demand for the product, etc

External Trade has many restrictions imposed on free entry of goods and many duties and taxes have to be paid to trade goods between countries.

• Time Gap

Internal trade usually have less time gap between the goods dispatched and goods received and payment received for the consignment.

External Trade involves wide time gap between the goods dispatched from the home country and goods received by the other country.

• Insurance

The goods ofinternal Trade don't carry a compulsion to have the insurance for goods in transport.

The goods which are sent to other countries by the foreign need to be insured compulsorily.

• Advantage to People

The goods of internal don't carry a compulsion to have the insurance for goods in transport.

The goods which are sent to other countries by the foreign need to be insured compulsorily.