Learn all about foreign trade

“Trade by a company within the country in which it is based, is known as home trade or domestic trade”.

In the home trade, people try to specialize in the production of those commodities in which they have a comparative advantage. Definition of International trade: “The business of buying and selling commodities beyond national borders, is known as international/foreign trade”.

Differences between foreign trade y International trade:

Worldwide trade such as the home trade, is the consequence of division of work and expertise. In the national trade, individuals attempt to focus on the production of those goods in which they’ve a comparative benefit. This is also just what happen in the worldwide trade.

In internal trade, people try to buy commodities from those markets which are the cheapest ones. Both in internal and external trade, exchange of goods takes place between persons with the only difference that in international trade people live in two different independent countries. The fact is that difference between national trade and international trade is only a matter of degree rather than of kind.

Those economist who differ with the above view state that there are some important points of difference between home trade and international trade and so, they say the international trade should be treated separately from home trade. The important points of difference between home trade and international trade is:

Mobility of Labor and Capital: One crucial difference between home trade and foreign trade is that work and capital are not so mobile between various countries as they are in their own countries. Labor normally does not like to migrate from country because of differences in language, family ties, patriotism, traditions, monetary systems, religious, social circumstances, etc. Recently, the tightening of immigration legislation has further influenced the mobility of labor.

El Comercio Exterior writes cool stuff. Get more of it at comercioexterior and also check Comercio internacional for more specific information

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