Terms of Trade: This means the prices at which the country’s exports exchanges for her imports. If the prices at which a country’s exports exchange for her imports are greater, it is said that the country has favourable terms of trade if that of imports are greater than exports. It is unfavourable terms of trade.
Visible exports are mainly commodities and they appear in a country’s balance of trade. Invisible exports are services that are seen but are calculated in terms of money e.g. insurance civil aviation, shipping, tourist services etc. they appear in the balance of payments of a country.
IMPORTS
Visible imports include commodities that are easily seen that a country buys from other countries. They features in a country’s balance of trade. Invisible import are service rendered to other countries are calculated in term of money and appear in balances of payments.
BALANCE OF PAYMENT DEFICITS
This refers to a situation whereby a country receipts are less than that of its payments over a given period of time and this means that the economy is not self-sufficient.
CAUSES OF UNFAVOURABLE BALNCE OF PAYMENT
- Fall in a country’s export.
- Low technology or use of crude implements.
- Low production.
- Bad weather that result in low harvest.
- High taste for foreign made goods and service.
MEASURE TO CORRECT BALANCE OF PAYMENT DEFICIT
- Devaluation of local currency that will reduce the value of a country’s export and make imports expensive.
- Exports of imports
- Reduction of imports
- Increase in local production in order to boost export.
- Sales of country’s foreign investment.
- Grants and aids form richer countries.
- Borrowing from financial institutions e.g. I.M.F {international monetary fund} and world bank.
See also
INTERNATIONAL TRADE
MODERN TRENDS IN RETAIL TRADE
WAREHOUSING
WHOLESALE TRADE
MODERN TRENDS IN RETAILING