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What is Domestic Territory of a country class 12?

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Domestic Territory is also called Economic territory. A countries national & domestic income is calculated keeping in mind the production activities are done within or outside the domestic territory of a country.

Define Economic (Domestic) Territory of a country in Economics

The United Nations System of National Accounts, briefly called SNA, defines economic (or domestic) territory as that geographic territory administered by a government within which persons, goods, and capital circulate freely.

The statement ‘administered by a government’ is very significant in definition. It includes and excludes following areas.

What is included in the domestic territory of a country?

  1. Political frontiers including territorial waters and airspace.
  2. Embassy, consulates, military bases located abroad
  3. Ships, aircraft, etc. operated by the residents between two or more countries
  4. Fishing vessels, oil, and natural rigs, etc. operated by residents in the international waters or other areas over which country enjoys exclusive rights or jurisdiction.

What is excluded in the domestic Territory of a country?

  1. Foreign Embassy, consulates, military bases located within the geographical territory of a country.
  2. Ships, aircraft, etc. operated by non-residents within the geographical territory of a country.
  3. Fishing vessels, oil, and natural rigs, etc. operated by non-residents within the geographical territory of a country.

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Note:- Multi-National Company (MNC) comes under the domestic territory of a country where they operate.

For Example, An American company branch situated in India would come under the domestic territory of India itself.

An Indian company branch situated in Japan would come under the domestic territory of Japan itself.

Question and Answers of Domestic Territory

Which of the following are covered under the domestic territory of India?

1 An Indian Company in London.

Ans. Indian Company is an MNC for country London. It would come under the economic territory of London as it is administered by government of London itself.

2 Microsoft Office in India.

Ans. Microsoft is an MNC for country India. It would comer under the domestic territory of India it is administered by Indian government.

3 Company In India own by a Japanese.

Ans. It would come under the domestic territory of India. Right the same reason as above.

4. Office of Reliance Industries in New York.

Ans. It would come under the domestic territory of USA.

5. Branch of Foreign Bank in India.

Ans. It would come under the Domestic Territory of India.

6. Indian Embassy in Japan.

Ans. It would come under the domestic territory of Japan itself.

7. Branch of State Bank of India in China.

Ans. It would come under the territory of China.

8. Russian Embassy in India.

Ans. Embassy of Russia would come under the economic territory of Russia as it is administered by government of Russia.

9. Tata rented its building to google in America.

Building of Tata would come under the economic territory of America as it is administered by American government not by Indian one.

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