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Saturday, January 29, 2011

Visible, Invisible trade and balance of invisible trade

Visible Trade

Visible trade involves trading of goods which can be touched and weighed.
Examples include trade in goods such as Oil, machinery, food, clothes etc.
Visible Trade consists of

  • Visible exports: Selling of tangible goods which can be touched and weighed to other countries.
  • Visible imports: Buying of tangible goods which can be touched and weighed from other countries.

Balance of trade

It is the difference between the value of visible exports and value of visible imports of a country.
If the value of visible exports is more than visible imports the country will have a Surplus balance of trade.
If the value of visible imports is more than visible exports the country will have an Unfavourable balance of trade.

Invisible trade

Invisible trade involves the import and export of services rather than goods.  Example include services such as insurance, banking, tourism, education.
If a UK student comes to Singapore to study, it would be invisible export for Singapore as it is earning foreign exchange by providing educational services.
If a Singapore citizen travels to UK for a holiday. It will be invisible import for Singapore and invisible export for UK.

Balance of invisible trade

It is the difference between the value of invisible exports and value of invisible imports of a country.

Source : dineshbakshi.com

1 comment:

  1. Thanks so much !it really helped me not get mixed up anymore.

    ReplyDelete

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