BALANCE OF TRADE AND BALANCE OF PAYMENT

A positive balance of trade means that a country is exporting more in monetary terms than it is importing while a negative or unfavourable balance of trade means that a country is importing more in monetary terms than it is exporting.

WHAT IS BALANCE OF TRADE

Balance of trade: Balance of trade refers to the total value of goods sold and bought by a country during a given period, usually a year. When visible exports equal visible imports in monetary terms, we have balance of trade. A positive balance of trade means that a country is exporting more in monetary terms than it is importing while a negative or unfavourable balance of trade means that a country is importing more in monetary terms than it is exporting.

what is Balance of Payment:

Balance of payment may be define as a statement or record showing the relationship between a country’s total payment to other countries and its total receipts from them in a year.

A country s’ balance of payment c be grouped into three parts namely cu” account, capital account and monetary movement account.

  • Current Account: Current account  is composed of receipts and payments for visible and invisible services. Invisible services are insurance, banking, transport, interest payment and tourism while visible goods are automobiles, cocoa, cotton and crude oil.

  • Capital Account: Capital account is made up of the inflow and outflow capital both in long and short term consists of capital movement in the form of  investments, loans and grants.
  •  Monetary movement account: account shows how the balance of both current and capital accounts are settled.
  • Favourable balance of payment: Favourable balance of payment occurs when the receipts from invisible and visible export trade greater than payments to other countries invisible and visible imports. A credit balance can be used to increase investment abroad or to add to a country’s gold reserve.
  • Unfavourable balance of payment: Unfavourable balance of payment  is used for debit balance in the balance of payments. It means that payments on visible and invisible import is greater than receipts on invisible exports. It can be referred to as adverse or deficit balance. For more discussion on balance of payment, see previous chapter book.
  1. loans for businesses
  2. how to establish enterprises
  3. what is a firm
  4. price equilibrium
  5. scale of preference
  6. concept of economics
  7. economic tools for nation building
  8. budgeting
  9. factors affecting the expansion of industries
  10. mineral resources and the mining industries

demand and supply      

  1. RINDER PESTS
    148. NEWCASTLE DISEASE
    149. BACTERIA DISEASES
    150. ANTHRAX
    151. BRUCELLOSIS
    152. TUBERCULOSIS
    153. FUNGAL DISEASES

PROTOZOAN DISEASES
155. TRYPONOSOMIASIS

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