Some Basic Concepts in International Trade


Some Basic Concepts in International Trade includes the followings
•        Visible trade – consists of the import and export of goods. 
•        Invisible trade – consists of the imports and exports of services.
•        Balance of trade – this is the difference between the visible imports and the visible exports of a country. If a country exports more goods than she imports during a specified period, she would   have a favorable balance of trade. If her imports exceed her exports, the difference would be called an unfavorable balance of trade.
•        Balance of payments – The difference between the receipts and payments on both current and capital account.
•        A country makes and receives payments for her imports and exports of goods. In addition, she pays and receives money for invisible imports and exports.
•        If receipts exceed payment the difference is called a favorable balance of payments. If payments exceed receipts, the balance is termed as ‘unfavorable’.
•        Payments on capital accounts - Is when a country may invest in other countries by either loaning money or establishing industries there. Such expenditure and difference between receipts and payments.



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