balance of trade

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Related to Trade Balances: Favorable Balance of Trade

Balance of trade

Net flow of goods (exports minus imports) between two countries.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Balance of Trade

The difference between the value of a country's exports and the value of its imports. If the value of exports exceeds that of imports, a country is said to have a trade surplus, while the opposite case is called a trade deficit. Analysts disagree on the impact, if any, of the balance of trade on the economy. Some economists believe that an overly large trade deficit causes unemployment and lowers GDP growth. Others believe that the balance of trade has little impact, because the more international trade occurs, the more likely it is that foreign companies will invest in the home country, negating any negative effects.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

balance of trade

A net figure calculated by subtracting a country's imports from its exports during a specific period. If a country sells more goods and services than it purchases, its balance of trade is said to be positive, that is, exports exceed imports. Such a balance is generally considered to be favorable. Conversely, a negative balance is said to be unfavorable. A country's balance-of-trade position has great impact on its economic activity and on the profits of companies operating within it. See also trade deficit, trade surplus.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Balance of trade.

The difference between the value of a country's imports and exports during a specific period of time is called the balance of trade.

If a country exports more than it imports, it has a surplus, or favorable balance of trade. A trade deficit, or unfavorable balance, occurs when a country imports more than it exports.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

balance of trade

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

balance of trade

a statement of a country's trade in GOODS (visibles) with the rest of the world over a particular period of time. The term ‘balance of trade’ specifically excludes trade in services (invisibles) and concentrates on the foreign currency earnings and payments associated with trade in finished manufactures, intermediate products and raw materials, which can be seen and recorded by a country's customs authorities as they cross national boundaries. See BALANCE OF PAYMENTS.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
This leads us to make a distinction between the direct and indirect effects of FDI on the current account balance: direct effects determine the investment account balance, while indirect effects influence the current account balance by shaping the trade balance (Mencinger, 2008).
The factors underlying the relationship between trade balance and FDI need then to be examined in the developing and transition countries of Asia (called thereafter "developing Asia"), one of the most dynamic area in these regards.
This paper is theoretical in nature and specifically a review article on the determinants effect of exchange rate movement on the trade balance. It provides a survey of the alternative theories that focus on the effect of exchange rate changes on the trade balance.
The Determinants Effect of Exchange Rate on Trade Balance: The Reviews and Approaches
Thus, under the case of a consumer surplus maximizing antitrust authority, the additional producer gains reaped by home producers in postmerger international markets, which might be particularly high under positive trade balances, would enhance the incentive for merging firms to increase their lobbying efforts in order to secure antitrust approval (Clougherty, 2002).
Testing the two competing propositions requires a measure of trade balance to examine whether greater trade balances lead to more strict or more lenient merger policy for an industrial sector.
To cut to the conclusion, our results indicate that the effect of the budget balance on the trade balance, if any, is modest.
However, the dynamic nature of this relationship and the adjustment of the trade balance to shocks in the budget surplus remains unspecified.
Do devaluations affect real magnitudes, in particular the trade balance? A devaluation may effect the trade balance through two channels: devaluation of the real exchange rate and a direct effect on domestic absorption.
The controversy over the effects of devaluation on the trade balance arises because according to Frenkel and Johnson [1976, 42] "the monetary approach rejects the emphasis given to the role of relative prices in the analysis of devaluation." Global monetarists argue that neither of the links in the chain postulated by the traditional approach is likely to hold in practice (see Laffer [1977]).
While the critiques of the GL index are based on a presumed distortion in the measurement of the phenomena, which would only affect the aggregate version of the indicator, the inadequacy of the normalized trade balances as detectors of specialization is also found at the disaggregated level.
The next section contains a selective review of the empirical studies that have examined the sensitivity of China's trade balance to movements in the real effective exchange rate of the renminbi.