BALANCE OF PAYMENT

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BALANCE OF PAYMENT

• by
• 
  Shalini

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• Trade
• Exchange of goods and services with other
  nations.
• Export
• Goods and services sold to other
  countries
• Import
• Goods and services bought from other
  countries

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• In addition, trading involve exchange of Visible
  and invisible goods
• Visible goods Are the material goods exported
  and imported.
• Invisible products Are the non merchandise item.

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Balance of Trade

• It is the difference between the monetary value
  of exports and imports in an economy over a
  certain period of time (only visible goods).

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Balance Of Payment

• Balance of payment takes into account both the
  invisible and visible items.

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Components Of BOP

• Current Account
• Capital Account

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Current Account

• The current account refers to balance in flow of
  goods and services and other current receipts and
  payments.

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Capital Account

• Export and Import of capital and the difference
  between the two represent countries capital
  account balance
• Eg Foreign investment and loans

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BOP Disequilibrium-Factors

• Disequilibrium occurs due to deficit and
  surplus.
• Economic factors
• Political Factors
• Social Factors

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CONCLUSION

• Balance of payment represents a better picture
  of a countrys economic and financial transaction
  with the rest of the world.

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• Reference
• International Business Environment by Francis
  Cherunilam
• Macroeconomic Policy Environment by Shyamal Roy