Internal consumption is the use of a good or service produced within a country, once it is acquired through the buying and selling process.
Internal consumption is carried out within the market of the country in which the good is made or the service is provided.
Importance of domestic consumption
If domestic consumption is robust, that is, strong enough to be a significant proportion of the gross domestic product (GDP) of a country, then there is self-sufficiency, that is, it satisfies its needs with local companies.
Economic theory supports that, in the case of the existence of a surplus of goods, these are sold outside the country where they were produced. However, this does not always occur in reality, since in many cases countries specialize in certain products, finding a place in an external market, which is willing to pay for some distinctive quality, without implying that the market is exhausted. internal in the first instance.
When domestic consumption is artificially sustained, then one speaks of the existence of protectionism.
Examples of domestic consumer products
There are goods or services that are difficult to acquire in an external market, such is the case of the following:
- Hairdressing services.
- Dry cleaning or laundry services.
- Purchase of real estate in the city where the consumer lives.
- Repair and maintenance at the customer's home.
Advantages of internal consumption
If a country consumes everything it produces and thus satisfies all its needs, then there is no dependence on consumption from other countries.
Domestic consumption drives companies in the country.
Disadvantages of domestic consumption
Impossibility for companies to grow and develop new products by increasing their sales in an external market.
Impossibility of consuming products from abroad, therefore, their specialization.
Lack of competitive advantage between countries that drive the need for innovation.
Tags: USA derivatives economic-analysis