Balance of Trade

 The balance of trade, commercial balance, or net exports (sometimes symbolized as NX), is the difference between the monetary value of a nation's exports and imports over a certain time period. Sometimes a distinction is made between a balance of trade for goods versus one for services. The balance of trade measures a flow of exports and imports over a given period of time. The notion of the balance of trade does not mean that exports and imports are "in balance" with each other.

If a country exports a greater value than it imports, it has a trade surplus or positive trade balance, and conversely, if a country imports a greater value than it exports, it has a trade deficit or negative trade balance. As of 2016, about 60 out of 200 countries have a trade surplus. The notion that bilateral trade deficits are bad in and of themselves is overwhelmingly rejected by trade experts and economists.

Factors that can affect the balance of trade include:

• The cost of production (land, labor, capital, taxes, incentives, etc.) in the exporting economy vis-à-vis those in the importing economy;

• The cost and availability of raw materials, intermediate goods and other inputs;

• Currency exchange rate movements;

• Multilateral, bilateral and unilateral taxes or restrictions on trade;

• Non-tariff barriers such as environmental, health or safety standards;

• The availability of adequate foreign exchange with which to pay for imports; and

• Prices of goods manufactured at home (influenced by the responsiveness of supply) 

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