The exchange of products and services among regions of the country on the basis of the territorial social division of labor. The mutual exchange of production activity is an objectively necessary phase of social reproduction, linking production and distribution on the one hand with consumption on the other. Natural, historical, socioeconomic, and political factors influence the level of development of interregional economic relations; the roles of each factor vary from region to region. On a national economic scale each region acts both as a supplier and as a consumer of certain products. It is expedient that each region specialize, within optimal limits, in the production of particular products on the basis of its favorable natural and economic conditions. The role and degree of participation of individual regions is measured by the percentage of output that they produce for other regions.
The production that is the specialization of a particular region ordinarily requires smaller national economic expenditures than the same production in an unspecialized region. This is one of the chief factors stimulating the development and deepening of interregional economic relations. The rational specialization of regions in the production of particular types of output promotes reduction in the costs of socialproduction.
Transportation and communications are essential conditions for growth in interregional economic relations; without them the exchange of products and the operational management of the exchange are impossible.
Balance methods constitute the basis for planning the amounts of specialized production by regions. The material balances of the production and consumption of different types of output are used to establish social need and identify surplus output in some regions and scarcities in others. This method of keeping track of social needs makes it possible to select the most efficient methods of production and shape rational marketing zones.