Favorable balance of trade def

Related to balance of trade: Balance of Payment. The difference in value between the total exports and total imports of a nation during a specific period of time. All rights reserved. Also called: visible balance Compare invisible balance. Copyright, by Random House, Inc. Switch to new thesaurus. Based on WordNet 3. Mentioned in? References in classic literature? There are persons who imagine that they can never be carried to too great a length; since the higher they are, the more it is alleged they will tend to discourage an extravagant consumption, to produce a favorable balance of tradeand to promote domestic manufactures.

View in context. And that unconsumed surplus, sold abroad, becomes what we call our favorable balance of trade. Are we all agreed so far? Backed by the political and people-to-people interactions, bilateral trade continued to soar despite global headwinds. Despite the unfavorable balance of tradethe economy expanded at a rate of 5.

Economy expands but imports rise. February exports down, imports up. The scenario demanded urgency to negotiate with our close friend Indonesia so that balance of trade between two countries may equally compliment exports from Pakistan, said the BMP President. Businessmen for essential trade related negotiations with Indonesia.

The balance of trade surplus in is favor of the United States with RO, BEIRUT: Lebanon urged Russia to facilitate the entry of more Lebanese-made goods into the country to narrow the deficit in the balance of trade between the two states.

Import more Lebanese goods, minister urges Russia.

Balance of trade

Bulgariaas balance of trade remained negative in July and amounted to Euro Dictionary browser? Full browser?A positive or favorable trade balance occurs when exports exceed imports. A negative or unfavorable balance occurs when the opposite happens. Simply put, if a country exports more than what it imports, for a given period of time, it has a positive BOT. What is the definition of balance of trade? Moreover, the BOP data also highlights key inferences from the past performances, which help create better strategies for future.

Thus, this country has an unfavorable balance because it imports more than it exports. This is typically considered unfavorable because it shows how little the country produces and how dependent it is on foreign countries.

favorable balance of trade def

Country X is a reputed player in the rubber products industry, owing to the climate that accentuates rubber cultivation. It also has a majority share in its export portfolio. The political and business leaders focus heavily on the same and ensure more and more rubber exports in coming years. However, this has led to jeopardized attention to food grains cultivation, which was observed from the high import value in the balance of trade figures of the particular year.

This can result in costlier imports. Contents 1 What does Balance of Trade mean? Search for:.It's easy to measure since all goods and many services pass through the customs office.

The trade balance is also the biggest part of the current account. It's the trade balance plus any other payments across borders. A country's trade balance equals the value of its exports minus its imports. Imports are goods and services bought by a country's residents but made in a foreign country.

It includes souvenirs purchased by tourists traveling abroad. Services provided while traveling, such as transportation, hotels, and meals, are also imports. It doesn't matter whether the company that makes the good or service is a domestic or foreign company.

If it was purchased or made in a foreign country, it's an import. When a country's exports are greater than its imports, it has a trade surplus. When exports are less than imports, it has a trade deficit. On the surface, a surplus is preferable to a deficit. However, this is an overly simplistic assumption. A trade deficit is not inherently bad, as it can be indicative of a strong economy.

Moreover, when coupled with prudent investment decisions, a deficit can lead to stronger economic growth in the future.

favorable balance of trade def

Many countries implement trade policies that encourage a trade surplus. These nations prefer to sell more products and receive more capital for their residents, believing this translates into a higher standard of living and a competitive advantage for domestic companies. For some, this holds true, especially over the short term. Unfortunately, to maintain a trade surplus, some nations resort to trade protectionism. They defend domestic industries by levying tariffs, quotas, or subsidies on imports.

Soon, other countries react with retaliatory, protectionist measures, and a trade war ensues.

Favorable Balance of Trade

Inevitably, this results in higher costs for consumers, reduced international commerce, and diminished economic conditions for all nations. Sometimes, a trade deficit can be unfavorable for a nation, especially one whose economy relies heavily on the export of raw materials.

Generally, this type of nation imports a lot of consumer products. As a result, its domestic businesses don't gain the experience needed to make value-added products. Rather, its economy becomes increasingly dependent on global commodity prices, which can be highly volatile.

Some countries are so opposed to trade deficits that they adopt mercantilism. This is an extreme form of nationalism that seeks to achieve and maintain a trade surplus at all costs. It advocates protectionist measures, such as tariffs and import quotas. The balance of trade is the most significant component of the balance of payments. A country can run a trade deficit, but still have a surplus in its balance of payments.It is one of the element in the current account of BOP.

favorable balance of trade def

In case, exports are more than the imports, then it is known as trade surplus or favorable BOT balance of trade. However, if imports are greater than exports, then it is known as unfavorable BOT. Imports refers to the goods and services that are manufacture in a foreign country and purchase by the residents of domestic country. On the other hand, exports refers to the selling of goods and services manufacture in domestic country to the foreign country.

What is Balance of Trade (BOT)?

Each and every country in this world always wants to increase their exports. As increase in exports results in flow of money and foreign exchange in the country. All the countries make policies or channelize their efforts for increasing their exports comparatively to their efforts.

It is just like making profit for a country. A favorable balance of trade results in increasing the employment level in the country, increase in the income, higher standard of living and ultimately resulting in increasing the national income of the country.

In order to achieve this, countries protect domestic industries by levying tariffs, quotas on imports. To increase the exports, provides subsidies and rebates. To understand balance of trade definition, it is very important to know unfavorable BOT. When the imports of a country exceeds the export it is unfavorable trade or trade deficit.

The entire economy depends upon the other countries for the products and commodities.

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This results in flow of lots of foreign exchange of the country. In addition to this, domestic industries are on the verge of disappearance.

Balance of Trade is a small subset of Balance of Payment. It is possible that balance of trade is showing trade deficit, however there is surplus in BOP. Other items in it can be used to finance the trade deficit in BOT. Exchange Rate: INR. Related Posts.

Financial Dictionary. Generic selectors. Exact matches only. Search in title. Search in content. Search in excerpt. Search in posts. Search in pages. New Delhi. Mon Tue Wed. Weather from Weather Atlas.Favorable Balance of Trade The value of a nation's exports in excess of the value of its imports.

All Rights Reserved. The difference between the value of a country's exports and the value of its importswhere the value of exports is greater. Analysts disagree on the impact, if any, of a trade surplus on the economy. Some economists believe that a trade surplus creates employment and increases GDP growth. Others believe that the balance of trade has little impact. A trade surplus is also called a favorable balance of trade.

See also: Trade deficit. Farlex Financial Dictionary. Mentioned in? References in classic literature? And that unconsumed surplus, sold abroad, becomes what we call our favorable balance of trade. Are we all agreed so far? Chinese exports drop in March, but trade gap with US widens.

The leading industrial nations essentially the Allieswhich had access to raw materials, turned to economic nationalism, withdrew from the world economy, and instituted policies protecting their domestic markets in order to maintain a favorable balance of trade. On the other hand, other industrial powers the Axishaving limited natural resources, resorted to aggression and expansionism and sought recovery from the Depression through the use of force. Although Pakistan is having favorable balance of trade with Portugal and overall trade is also growing for the last three years in particular but there is a lot that can be done.

Pakistan-Portugal Relations. Since India has surplus to export, whereas Pakistan is handicapped due to gas and electricity outages, in addition to high electricity tariff, Pakistan stands to lose.

MFN status for India. Complex issues of world trade, protecting the industry from exploitation and achieving favorable balance of trade is getting an uphill task.The balance of tradecommercial balanceor net exports sometimes symbolized as NXis the difference between the monetary value of a nation's exports and imports over a certain time period.

The balance of trade measures a flow of exports and imports over a given period of time. The notion of the balance of trade does not mean that exports and imports are "in balance" with each other. If a country exports a greater value than it imports, it has a trade surplus or positive trade balanceand conversely, if a country imports a greater value than it exports, it has a trade deficit or negative trade balance.

As ofabout 60 out of countries have a trade surplus. The notion that bilateral trade deficits are bad in and of themselves is overwhelmingly rejected by trade experts and economists.

The balance of trade forms part of the current accountwhich includes other transactions such as income from the net international investment position as well as international aid. If the current account is in surplus, the country's net international asset position increases correspondingly.

Equally, a deficit decreases the net international asset position.

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The trade balance is identical to the difference between a country's output and its domestic demand the difference between what goods a country produces and how many goods it buys from abroad; this does not include money re-spent on foreign stock, nor does it factor in the concept of importing goods to produce for the domestic market.

Measuring the balance of trade can be problematic because of problems with recording and collecting data. This cannot be true, because all transactions involve an equal credit or debit in the account of each nation. The discrepancy is widely believed to be explained by transactions intended to launder money or evade taxes, smuggling and other visibility problems. While the accuracy of developing countries statistics would be suspicious, most of the discrepancy actually occurs between developed countries of trusted statistics, [7] [8] [9].

In addition, the trade balance is likely to differ across the business cycle. In export-led growth such as oil and early industrial goodsthe balance of trade will shift towards exports during an economic expansion. The monetary balance of trade is different from the physical balance of trade [10] which is expressed in amount of raw materials, known also as Total Material Consumption. Developed countries usually import a substantial amount of raw materials from developing countries.

Typically, these imported materials are transformed into finished products and might be exported after adding value. Financial trade balance statistics conceal material flow. Most developed countries have a large physical trade deficit because they consume more raw materials than they produce.

Many [ who? Many countries in early modern Europe adopted a policy of mercantilismwhich theorized that a trade surplus was beneficial to a country.

Mercantilist ideas also influenced how European nations regulated trade policies with their colonies, promoting the idea that natural resources and cash crops should be exported to Europe, with processed goods being exported back to the colonies in return.

Ideas such as bullionism spurred the popularity of mercantilism in European governments. An early statement concerning the balance of trade appeared in Discourse of the Common Wealth of this Realm of England"We must always take heed that we buy no more from strangers than we sell them, for so should we impoverish ourselves and enrich them.

favorable balance of trade def

Since the mids, the United States has had a growing deficit in tradeable goodsespecially with Asian nations China and Japan which now hold large sums of U.

S debt that has in part funded the consumption. The issue of trade deficits can be complex. Trade deficits generated in tradeable goods such as manufactured goods or software may impact domestic employment to different degrees than do trade deficits in raw materials. Economies that have savings surpluses, such as Japan and Germany, typically run trade surpluses. China, a high-growth economy, has tended to run trade surpluses.I ran this trial for 3 months instead of my usual 2 due to the slightly lower number of tips this service advises.

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