Balance of Trade(BOT)

Balance of Trade(BOT)

Balance of Trade(BOT)

Balance of trade refers to the difference between the values of exports and imports of visible items (physical goods) of a country.

Or

Balance of trade refers to the systematic record of visible items of a country in a financial year.
Or

In other words, it is the value of imports and exports of commodities.

Visible items-Visible items refer to those items which are made of some matter or material and can be seen, touched and measured. for example- plant and machinery, rice, tea, Coffee, cloth etc.

Government Budget

*BALANCE OF TRADE= EXPORTS OF GOODS – IMPORTS OF GOODS

*If the exports exceed imports, the BOT is said to be favourable, and unfavourable in case of vice versa.
Thus, Favourable BOT = Exports receipts > Import payments.
Unfavourable BOT = Exports payments > Import receipts.

*BOT is a simple statement related to the foreign trade of the country.

BALANCE OF PAYMENTS

Difference between Balance of Trade (BOT) Balance of Payments (BOP)
Difference between Balance of Trade (BOT) Balance of Payments (BOP)

Difference between Balance ofTrade(BOT)  and Balance of payments (BOP)

Basis Balance of Trade Balance of Payment
Meaning Balance of Trade refers to the difference between the amount of import and export of the visible goods. Balance of Payment of a country is a statement of accounts which shows all the economic transactions of a country with the rest of the world in a systematic manner, during a particular period of time.
Components It includes the transactions relating to visible goods only. It records all types of transactions I.e. Tangible, intangible goods, unilateral transfers and capital transfers and all transactions related to services.
Capital Transactions It does not record any transaction relating to capital nature. It records all transactions of capital as well as current nature.
Scope of Concept BOT is a narrow concept. BOP is a wider concept and Balance of Trade is a part of it.
Settlement An unfavourable Balance of Trade can be settled out of favourable Balance of Payment An unfavourable BOP cannot be settled out of favourable BOT
 

National Income Meaning

Circular flow of income

ISC Accounts Sample paper 2023-3

 

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