A
domestic market is a financial market within a given country for products
and services. Also known as an internal market, it has a more limited scope
than international markets, usually with reduced competition. Some companies
choose to focus on doing business domestically, while others may expand to
external markets in order to capture more market sectors and access
additional trading opportunities. Most nations keep statistics on their
domestic markets for the purpose of tracking economic health.
In a domestic market, companies can operate across multiple sectors, as
seen for example with a company that manufactures scientific instruments and
medical supplies. Certain areas of the market may include niches unique to a
nation, exploited by companies that want to take advantage of them. Interest
in various products and services waxes and wanes between different
countries, such as markets for specific culinary ingredients. A company
making maple syrup, for example, could take advantage of the considerable
domestic market for this product in the United States, but might find fewer
buyers in Afghanistan.
Within domestic markets, both domestic and international companies can be
found trading. Many nations want to promote their domestic business sectors
and tend to create incentives for domestic companies to do business. Foreign
companies may have to pay taxes and tariffs, or face other regulatory
barriers. Domestic companies can receive assistance like tax credits for
manufacturing or creating jobs within their home nations. Countries must
balance their desire to promote the domestic economy with treaties and trade
agreements with other nations, some of which insist on removing barriers to
trade to allow international companies to operate more freely.
The domestic market also includes trade on stock exchanges and other
financial markets. In these markets, many people trade heavily in domestic
companies, although international corporations can also usually apply for
listings. Activities on these markets can be an indicator of overall
economic conditions. When trading is high, it is indicative of confidence on
the part of traders. Sluggish or falling trading suggest uncertainty and can
be a warning of economic troubles to come.
Statistics about domestic market performance are usually published in
financial and trade publications in addition to being released by the
government when they are collected. People can look at archived material to
track trends and changes over time, and can also compare performance with
markets in other nations to see how well a country is doing economically.
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