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What Is Intrastate Commerce?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 06 September 2016
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Intrastate commerce refers to a situation where commercial trade and other forms of business transactions occur within a state’s borders. TThese types of business transactions may come as a result of the desire by the businessmen and women to keep their companies within the state for personal or business goals. Also, it may be a response to an offer by the government for businesses to keep their transactions within the state in exchange for certain benefits that will accrue to them for doing so. Intrastate commerce may include areas like the goods and service sector.

One of the major reasons for the application of intrastate commerce as well as the reason why various governments find it so appealing is the fact that when such commerce occurs within their jurisdiction, they will be able to benefit from the economy boost on both the macroeconomic and microeconomic levels. For example, governments benefit from sales that occur within their territory due to the act that they normally apply charges like taxes and other forms of levy for conducting the transactions. The money can then be used in developing the state through building new infrastructure and improving social services as well as for the purpose of welfare and health service improvement.

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Intrastate commerce is also beneficial due to the fact that a lot of trade or business activity translates to a vibrant economy, a component that is necessary for good showings at the end of every business cycle. When companies invest in a state, they contribute to the growth of that state’s economy through the employment of the indigenes and consequent reduction in the unemployment level as well as through the development of the human capital in the state by the training of the employees. The state will benefit from the training received by the employees, because they can still use the experience and knowledge gained from the company to contribute to another company within the state, even if the previous company relocates. Apart from this, the employees have money to spend, also contributing to the balance between consumption and production.

Most states go to great lengths to promote their state to investors with the hope that they will make an investment. Often, the states will offer investors incentives in the form of reduced taxes or other types of packages. Where the state is seeking for investors who will develop a particular industry within the state, it might offer further incentives as a means of encouraging intrastate commerce.

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