1. International Economics
B.COM SEM-V
UNIT-II

2. BALANCE OF TRADE
&
BALANCE OF PAYMENTS

3. Introduction
• Each person tries to bring balance between
economic transactions by preparing his own
income and outgoing accounts. Like an
individual, every country also tries to bring
balance between economic transactions by
preparing its own inbound and outbound
accounts. Thus the economic transactions
pertaining to the country are known as balance
of trade and balance of payments.

4. Meaning of Balance of Trade
• The balance of trade of a country
represents a systematic record of
transactions pertaining to all visible
items of exports and imports during
a given period.

5. Meaning of Balance of Payments
• The balance of payments of a country is a
systematic record of all economic transactions
between the residents of a reporting country
and residents of foreign countries during a
given periods of time
- Prof.Kindleberger

6. Difference between
Balance of Trade & Balance of Payments
• Meaning
The balance of trade of a country represents a systematic record of transactions pertaining
to all visible items of exports and imports during a given period.
The balance of payments of a country is a systematic record of all economic transactions
between the residents of a reporting country and residents of foreign countries during a
given periods of time
• Records
The Balance of Trade accounts for, only physical items, whereas Balance of Payment
keeps track of physical as well as non-physical items.
• Real economic position of country
The Balance of Trade provides the only half picture of the country’s economic position.
Conversely, Balance of Payment gives a complete view of the country’s economic position.
• Result
The Balance of Trade can show a surplus, deficit or it can be balanced too. On the other
hand, Balance of Payments is always balanced.
• Component
It is a component of Current Account of Balance of Payment.
Current Account and Capital Account.

7. Structure of Balance of Payments

8. Structure of Balance of Payments

9. THANK YOU
PREPARED BY
DR.JAGDISH MAHESHWARI
ASSISTANT PROFESSOR,
TOLANI INSTITUTE OF COMMERCE,ADIPUR