Can You Differentiate Between Balance Trade And Balance Payment?

There is not even a single country in the world to claim self sufficient. The time and stage of self sufficiency is over. As a result of international economic relations there is a flow of goods and service between the countries. The exporting country receives the value of the products from the importer country. The outflow of goods and service creates credit for the country and inflow of goods and services constitutes debit for the country. The receipt and payments have to balance in the long run. A comprehensive statement of receipts and payments of a country over a period of time constitutes the balance of payment sheet.


The balance of payment sheet may be defined as a comprehensive record of economic transaction of the residents of the world during a given time period of time. The record is so prepared as to provide meaning and measures to the various components of a country's external transactions. The balance of payment of a country may be deficit or surplus. A deficit occurs when the receipt fall short of payments to be made to other countries. In opposite case they have a surplus in her balance of payments.

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The balance of trade is the difference in value over a period of time between a country's imports and exports of goods and services, usually expressed in the unit of currency of a particular country
While the balance of payments (the sum total of all economic transactions between one country and its trading partners around the world), which includes capital movements (money flowing to a country paying high interest rates of return), loan repayment, expenditures by tourists, freight and insurance charges, and other payments.

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