domestic market

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  • European single market : EU
  • EFTA with full access to the European internal market
  • DCFTA with restricted access
  • European Customs Union (EUCU)
  • In economics, an internal market is a defined economic area that is characterized by the free movement of goods , services , capital and workers as well as an harmonized legal system. Since this economic area often coincides with the borders of a state , the term internal market is often used to denote the national market - as opposed to the world or export market.

    For an internal market that has arisen through the economic integration of different states , the term common market is used - sometimes synonymously - whereby common market can also denote a not yet fully realized internal market. The currently most advanced example of the economic integration of formerly national economies is the European internal market , which was created by the European Economic Community and forms one of the foundations of the European Union . This is also the world's largest domestic market, followed by that in the USA , the People's Republic of China , India and Japan .

    Internal market as an economic and legal term

    Internal market is not only a form of economy, but also a legal term. Because a single market does not automatically emerge on its own. It is a highly developed and complex economic and legal system of competition and performance, the creation and functions of which often have to be enforced against diverse resistance from states, companies and employees or consumers.

    A perfect internal market requires that all transport barriers are eliminated. On the one hand, this relates to markets for final goods , the trade of which must be further facilitated by the dismantling of non-tariff trade barriers (e.g. different quality or production standards) vis-à-vis the customs union . On the other hand, the most important additional element of a common market compared to the customs union is the abolition of any barriers to mobility for workers and capital . One speaks therefore of a free movement of the factors of production .

    What is a single market?

    An internal market is an area without borders for everything that should move from one place to another in economic activity, be it goods sold and services offered (domestic trade) , people looking for work ( freedom of movement in the labor market) or the necessary capital (common financial market ) .

    Economic activity in an internal market is regulated by many laws, ordinances and standards, e.g. B. About the types and amount of taxes, about the approval of food, about state social benefits, etc. They are largely different from the regulations of other domestic markets, and sometimes even intentionally counteracted in order to protect the economy within the domestic market from external competition.

    A common internal market does not yet emerge if two or more states only abolish all tariffs and form a free trade area or customs union . Even then, their borders remain under state control, goods, services, capital and people cannot move freely from one state to another, there is no - or only limited - freedom of movement for workers and no freedom of establishment for craftsmen and companies. All these restrictions must be lifted in a common internal market.

    The four freedoms in the European single market

    The basis for the development of the European single market are the following, so-called four freedoms:

    Free movement of goods

    The free movement of goods is one of the cornerstones of the common market without internal borders. This is created by the customs union and deals with the quantitative (person-specific) restrictions between the member states. These are the prohibition of granting state aid and the prohibition of a tax disadvantage for imported goods and the prohibition of a tax advantage for exports.

    Free movement of people

    The freedom of movement of persons includes the free movement of workers, the right of establishment of the self-employed traders, freelancers and companies as well as the free movement of non-working people such as tourists, students and pensioners.

    The freedom of movement of people is still restricted by material, technical and tax barriers.

    Under physical barriers is understood as the controls at the internal borders, which are subject to persons when crossing the border.

    The technical barriers are all rules and regulations existing in the member states that are suitable for restricting or hindering the intra-Community movement of persons, in particular the freedom of establishment.

    With the tax barriers not only indirect taxes are meant those goods and services are loaded very differently in the various Member States in part, but also the direct taxes, especially the income, payroll and corporate tax.

    Free movement of services

    The trade in services relates to services against payment that are not subject to the regulations on the free movement of goods and capital and on the free movement of people, in particular commercial, commercial, manual and professional activities.

    A distinction must be made between two cases:

    On the one hand the active freedom to provide services and on the other hand the passive freedom to provide services . With active freedom to provide services, the service provider temporarily moves to the country of the service recipient. With the passive freedom to provide services, the service recipient goes to the country of the service provider.

    Free movement of capital

    The free movement of capital is an essential complement to the implementation of the other internal market measures. The area without internal borders is inconceivable without the free movement of capital. The term capital includes both physical capital (e.g. real estate, company investments) and monetary capital (securities, loans). Movement of capital can be understood as the unilateral transfer of physical and monetary capital from one Member State to another. As a rule, this is an investment.


    There are basically three methods of creating an internal market.

    First of all, the legal and administrative provisions of the member states are to be harmonized in order to establish the internal market . Approximation means harmonization of national regulations. The approximation or harmonization does not represent a standardization of national law. The principle of proportionality must be observed. Only in exceptional cases is it conceivable that total harmonization is necessary. These could be directives, regulations or decisions. The most suitable directives are likely to be those that set the target bindingly, but leave the design to the individual member states.

    Furthermore, the method of legal standardization through uniform law in the member states can also be considered in individual cases . The most suitable measure for this is the regulation. Legal standardization through a regulation is always necessary when the mere approximation of national legal provisions is not sufficient to create conditions similar to that of the internal market.

    In addition to the methods mentioned so far, another method of removing barriers within the Member States can be used. This is the principle of recognition . The national laws and regulations that have not yet been aligned will be recognized as equivalent to the regulations of the other member states. The principle of mutual recognition is based on the idea of ​​the fundamental equivalence of provisions for the protection of certain legal interests . For example, the principle of recognition was generally established in the European single market by the Cassis-de-Dijon judgment of the European Court of Justice , before legal standardization was also introduced with the Single European Act .

    Development of economic areas

    United States

    The United States' foreign trade and global economic policies have changed dramatically in the two centuries since the country was formed. In the early days, the state and the economy focused mainly on developing the domestic economy, regardless of what was happening abroad. Since the Great Depression in the 1930s and World War II , the country has been committed to dismantling trade barriers and coordinating the world economic system. Americans believe that trade promotes economic growth, social stability, and democracy in individual countries, as well as prosperity, the rule of law, and peace in international relations. The United States therefore supports trade liberalization . You were instrumental in the conclusion of the General Agreement on Customs and Trade ( GATT ), an international code of customs and trade rules.


    For the time being, Japan will remain the leading economic and technological power in Asia and, after the USA, the second strongest economic nation in the world. Japan generated a good 9% of world income in 2007, more than the emerging economies of China and India combined. With a population of 127.2 million, Japan has a gross national product of 4.7 trillion. USD (2007, compared to Germany 3.6 trillion USD). Due to the geographical proximity, Japanese industry benefits particularly from Asia's economic rise. Japan's industry not only uses the markets in China or Southeast Asia as a production platform , but has also established efficient value-added networks there, increasingly secured by bilateral free trade agreements, thereby strengthening its international competitiveness.


    The gradual transition to an increasingly market economy orientation has unleashed great growth forces in China. The consistent growth policy has created a spirit of optimism and thus a momentum of its own, which, given the size of China and its catch-up potential, should continue for a long time. The growth rates had declined somewhat since the 1980s and early 1990s, but in recent years the People's Republic has reported economic data for which it is envied by neighboring countries and competitors: China is now the fourth largest economy and third largest trading nation in the world. Despite an average domestic product per capita of over $ 2,500, however, it remains the largest emerging economy in terms of economic development. China has meanwhile replaced Germany as export world champion.


    With 9% growth in the 2007/2008 financial year (an average of 8.8% in the last 7 years), India is the world's fastest growing economy after China. With a current population of 1.1 billion, it will probably not only be the most populous country on earth by the middle of the century, but also rank third in terms of its gross domestic product after China and the USA.


    According to the European Commission, the European single market has created several million new jobs since it was founded in 1993 and generated additional prosperity worth over 800 billion euros. Thanks to internal market rules, calls within Europe now cost a fraction of what they cost ten years ago; many airfares in Europe have fallen significantly and many new air connections have been created; Households and companies in the EU are now free to choose their electricity and gas suppliers.


    Based on his own studies over many years, Thomas Piketty points out that the free movement of capital did not promote the economic convergence of countries, but rather aggravated the differences through redistributive effects. The opening of the goods and service markets is far more important for the integration of states into the world economy than the free movement of capital, as the example of China shows, which still restricts the movement of capital, but still achieves a high rate of capital accumulation and high productivity growth. The profits from opening up even large countries to the gross world product are also small and can hardly outweigh the effects of the redistribution on the losing countries.

    See also


    • Gerold Schmidt: Agricultural law and the emergence of today's constitutional term “internal market”. In: Agrarrecht, journal for the entire law of agriculture, agricultural markets and rural areas. Hiltrup b. Münster, 27th year 1997, pp. 269-277.
    • Gerold Schmidt: The new subsidiarity principle regulation of Article 72 GG in the German and European economic constitution. In: The Public Administration (DÖV), journal for public law and administrative science. 48th year 1995, pp. 657-668.
    • Harald Zschiedrich: Single European market - introduction to the basics. Gabler Verlag, Wiesbaden 1993, ISBN 3-409-13535-9 .
    • Mario Monti: The single market and the Europe of tomorrow. Bundesanzeiger Verlag, Cologne 1997, ISBN 3-88784-750-4 .

    Web links

    Individual evidence

    1. ^ Gerold Schmidt: Agricultural law and the emergence of today's constitutional term "internal market". In: Agrarrecht, journal for the entire law of agriculture, agricultural markets and rural areas. Hiltrup b. Münster, 27th year 1997, pp. 269-277.
    2. What is a single market?
    3. ^ Josef Weindl: European Community. Oldenbourg Verlag, Munich 1993, p. 90.
    4. ^ Josef Weindl: European Community. Oldenbourg Verlag, Munich 1993, p. 97.
    5. ^ Josef Weindl: European Community. Oldenbourg Verlag, Munich 1993, p. 148.
    6. ^ Josef Weindl: European Community. Oldenbourg Verlag, Munich 1993, p. 185.
    7. ^ Josef Weindl: European Community. Oldenbourg Verlag, Munich 1993, p. 227.
    8. ^ Josef Weindl: European Community. Oldenbourg Verlag, Munich 1993, p. 95.
    9. ^ US economy> foreign trade.
    10. Foreign Office: Economy in Japan. Federal Foreign Office, September 1, 2010, accessed on March 21, 2011 .
    11. Foreign Office: Economy in China. Federal Foreign Office, October 1, 2010, accessed on March 21, 2011 .
    12. Foreign Office: Economy in India. Federal Foreign Office, September 1, 2010, accessed on March 21, 2011 .
    13. Internal market.
    14. Thomas Piketty: Capital in the 21st Century. Beck, Munich 2014, ISBN 978-3-4066-7131-9 , p. 102 f. and technical appendix.