The Modern economists, like Ohlin, Haberler, have regarded the internal and international trade as similar and are of the view that there is no need for a separate theory of international trade.
According to Ohlin. “International trade is but a special case of inter-regional trade.” In the words of Haberler, “Strictly speaking, it is neither possible nor essential to draw a sharp distinction between the problems of foreign and domestic trade.
If we examine the alleged peculiarities of foreign trade, we find that we are dealing with difference in degree rather than with such basic differences of a qualitative nature as would warrant sharp theoretical divisions.”
The following are the similarities between internal and international trade which are generally used as arguments against a separate theory of international trade:
(i) The prices of domestically or internationally trade goods are determined in the same way through the equilibrium between demand and supply forces.
(ii) Factor immobility’s give rise to both internal and international trade. The classical economists are wrong in their assumption that factors of production are perfectly mobile within the country and perfectly immobile between the countries.
In fact, factors are also mobile between nations and immobile within a nation. As Kindleberger points out, “Today it is thought that this distinction of the classical economists has been made too rigorously. There is some mobility of factors internationally. There is also some considerable degree of immobility with in countries.”
(iii) Both types of trade occur due to division of labour and specialisation. Each region or country tends to specialise in the production of those goods for which it is most suited.
(iv) Participants in both internal and international trade aim at maximising their gain. Traders want to maximise their profits and buyers want to maximise their utilities.
In spite of the emphasis of the modern economists on the various similarities of internal and international trade, it is now a well-established fact that there do exist certain basic differences between internal and international trade and the dissimilarities between the two types of trade are more marked than their similarities. Hence, the need for a separate theory of international trade remains.