The BOP or the balance of payments is also called the balance of international payment, summarizes the transactions, which the individuals, government bodoes, and companies of a country have with individuals, government bodies, and countries outside the nation. The transactions include imports and exports of services, goods, capital, and transfer payments like remittances and foreign aid.
The balance of payments demarcates the transactions into two accounts: the capital account and the current account. The capital account is known as the financial account. The current account includes the transactions in investment income, goods, services, and current transfers.
Need for Foreign Trade
The need or importance is discussed in our Foreign Trade and Balance of Payment homework writing help as follows:
Division of Labor: Foreign Trade leads to the division of labor. Some nations have a huge quantity of natural resources. They export raw materials and import finished products from nations that have advanced skilled manpower. It offers advantages to all nations thus resulting in the division of labor.
Optimum Utilization of Resources: Because of specialization, wastage of resources is avoided. Only those resources are used that can give the greatest returns.
Price Equality: Price may be stabilized. Foreign Trade can help to keep the position of demand and supply stable that can stabilize the prices thus making allowances for marketing and transport expenses.
Multiple Choices: Foreign trade helps to provide a better choice for people. Many new varieties are available to people worldwide.
Ensures Standard and Quality Goods: Foreign trade is competitive. For increasing and maintaining the demand for goods, exporting nations should continue to provide quality goods.
More Employment Opportunities: Foreign trade can help to generate employment opportunities by enhancing the mobility of resources and labor. It gives direct employment to people in the import sector and other sectors get indirect employment.