Balance of Trade

By balance of trade we mean the difference between what a country pays for imports and what it receives for its exports. Balance of trade records all visible items that are exported to and imported from other countries through sea, air and land routes. Balance of trade, as such gives an estimation of total inflow and outflow of goods that are recorded at the inlet and outlet points.

Balance of trade, therefore acts as a good guide to the government, in particular and the others, in general to understand the country's economic viability, strength, productive capacity, and overall competency in manufacturing and producing goods and services. However, the correct position is still not fully available in view of the fact that there are many invisible items and services that go unrecorded at the inlet or outlet points of international trade.