Domestic Territory in economics

Understanding Domestic Territory in Economics

Today we will learn about an important concept in Economics called Domestic Territory. This concept is very important for calculating national income.

What is Domestic Territory?

Domestic Territory is the geographical area that a country's government controls or manages. It's the place where people, goods, and money can move around freely.

What does move around freely mean?

What does "move around freely" mean? It simply means that in this area, people, goods, and money can move without any barriers. You don't need special permission to go from one place to another. For example, when you travel from Delhi to Mumbai, you don't need a visa or permit because both cities are part of the same domestic territory. You can also send your goods anywhere in India and transfer money easily from one place to another in India. This is what we mean by "moving freely"!

And why does people, goods and money move freely in India? Because it is under the control of the same Government i.e. Government of India. And that s why it is why the whole of India is one domestic territory.

Domestic Territory is also called economic territory. Remember, domestic territory is not just the land inside political borders - it extends beyond that. It's the area where a country has full economic control and authority.

What is Included in Domestic Territory?

Now, let's understand what all domestic territory includes and and what does domestic territory excludes.

Activities Inside Political Boundaries

• Political boundaries mean the borders of a country. Domestic territory includes all economic activities that happen inside a nation's political boundaries, such as:
  • Manufacturing facilities : Manufacturing factories, farmland, and service centers
  • Commercial places: All types of retail and wholesale trade
  • Government areas: Government offices and public infrastructure
  • Other economic activities: Schools, colleges, hospitals, etc.

Apart from what is mentioned above there can be many more types of activities within political frontiers. Almost everything will be included within the domestic territory of the country.

Territorial Waters

Territorial waters means the sea area up to 12 nautical miles from the coastline. All economic activities within this area are part of the country's domestic territory. Examples could be the fishing activities within this area.

This point applies only to the countries which has a sea coast This point is not applicable to the countries which are land locked.

Ships and Aircrafts

Ships and aircraft that are owned and operated by residents of a country are also part of that country's domestic territory, no matter where they are operating in the world!

This includes commercial, military, and private ships or aircraft.

For example, if an Indian airline is flying from Delhi to Dubai, it will be considered part of Indian domestic territory because it is owned and operated by an Indian company.

Even if an Indian airline operates flights between US and UK, without ever coming to India, still it will be part of domestic territory of India, if it is owned and operated from India

Fishing Vessels and Offshore Platforms

• The following are part of domestic territory of the India if these are owned and operated by residents of India.
  • Fishing vessels operating in international waters
  • Offshore platforms for oil and gas extraction
  • Oil and natural gas rigs or floating platforms operated by residents in international waters

All these are part of the country's domestic territory. For example, an ONGC oil rig in international waters is part of Indian domestic territory because ONGC is an Indian company.

Territorial Enclaves

Diplomatic and Military Establishments

A country's embassies, consulates, and military establishments in other countries are also part of the domestic territory. For example, the Indian Embassy in the USA is part of Indian domestic territory.

What is NOT Included in Domestic Territory?

However, foreign embassies, consulates, and military establishments of other countries in our country are not part of our domestic territory. For example, the US Embassy in New Delhi is not part of Indian domestic territory.

A general rule for territorial enclaves is that these are part of domestic territory of the country to which they belong and not part of domestic territory of the host country.

International Organizations

Offices of international organizations like the United Nations (UN), World Health Organization (WHO), etc., are not part of domestic territory of the country where these offices are located. This is because they operate under international law and have global jurisdiction. For example, the UN office in Mumbai is not part of India's domestic territory.

Now we have discussed all the rules of domestic or economic territory. Next, we will understand the concept of economic territory through case studies and examples.

Domestic Territory Examples

Conclusion

We have seen that domestic territory covers not only the political boundaries of a country but it extends beyond that. It covers territorial waters, fishing vessels, ships और aircraft owned and operated by the residents of a country, oil and natural gas rigs, floating platforms owned and operated by residents of a country और territorial enclaves abroad like embassies, consulates, military establishment, scientific stations, immigration offices, etc.

Video Explanation