THEORY OF INTERNATIONAL TRADE
Inter-regional .’S. International Trade (Inter-regional trade is trade between different regions within the saarc country. whereas international trade is between different countries. It should he noted that the difference between inter-regional trade and the international trade is only one of degree, not of kind. The fundamental principles in both cases arc thc same. International trade, like.inter-regional trade, is the result of division of labour. In internal or interregional trade. people specialise in producing goods in which they have a greater comparative advantage: the same thing happen, III international trade. I tween and FUfl,’gn Trude. There arc. however, several differences between domestic trade foreign trade which necessitates the formulation of a cparatc theory of international trade: i\ !ohilil) of Fadm” of Rodrigo, Ricardo advocated a separate theory theory of international trade 011 the ground that within the same country.labour and capital arc more mohi Ie than they arc between different countries.
As regards labour. as adam Smith puts it, “Of all sorts of luggage man is the most difficult tu be transported.” Several causes arc Responsible fur this: differences of language. tradition. religion, customs, social ami political lifc, erc., or mere inertia
may keel’ lahore at home, Capita!