The effects of the trade balance surplus and deficit countries economy


This is no doubt that the trade balance, which sometimes represents (NX) is described as the difference between the monetary value the import and export of farm production declined for a certain period of time. It is also seen as the relationship between the nation's imports and exports. If a positive indication of the balance sheet, it is called a trade surplus, that is, if you are exporting to more than imports and the trade deficit or a trade gap if the situation is reversed. sometimes divided balance the trade balance of goods and services. This includes the export and import activities. It is expected that a country who does more on exports than imports is a great chance to enjoy the trade balance surplus in the economy more than a counterpart who does the opposite.

Economists and government agencies attempt to track trade deficits and surpluses of recording transactions as many foreign organizations as possible. Economists and statisticians collect revenues from customs and routinely total imports, exports and financial transactions. A full accounting is called "balance Payments & # 39; – this is used to calculate the trade balance, which almost always result in a trade surplus or deficit

knowledge Pre-Contemporary functioning of the trade balance was informed of the economic policy of early modern Europe, where below. grouped "mercantilism."

mercantilism economic doctrine that government control of foreign trade is extremely important for ensuring prosperity and military security of the state. in particular, it demands a positive trade balance. the main goal was to increase the nation's wealth by Government regulation of all national commercial interest. it was believed that the national strength can be maximized by limiting the import tariffs and to maximize exports. This has encouraged more exports and imports discouraged to acquire the balance of trade advantage is that, ultimately, the trade surplus in the nation. in fact, it was a common practice in the west, where they could get the superiority of commercial colonies and third world countries, such as Australia, Nigeria, Ghana, South Africa and other African countries as well as in some parts of the world. This is still the main reason that many still enjoy the benefit of these countries trade surplus up to date. It was through steadily prevailing lack of technical know-how and capacity sufficient quantities and lasting up to standard goods in these countries, a situation where only foreign goods to run the economy, and most of the times, the dying industries can be seen leaning on foreign imports to survive .

What trade surplus?

trade surplus can be defined as an economic measure has a positive trade balance, if a country's exports exceed its imports. The trade surplus in net inflows, the national currency in foreign markets, and contrary to the trade deficit, which represents a net outflow.

Investopedia further explained the concept of the trade surplus, as when a nation has a trade surplus; The majority of control over the currency. This causes the risk reduction sell another nation's currency, which is a drop in value if the currency loses value, it makes imports more expensive to buy, which is even greater imbalances.

The trade surplus usually creates a situation where the surplus will only grow (due to the rising value of the national currency making imports cheaper). There are many arguments against Milton Freidman's belief that trade imbalances correct themselves naturally.

What trade deficit?

trade deficit can be viewed as an economic measure a negative trade balance, which is the country's imports exceed exports. This is simply the excess of imports over exports. As usual, economics, trade deficits multiple views, depending on who you talk to. It can be perceived good or bad, or both, immaterial, depending on the situation. However, some economists argue that the trade deficit is always good.

Economists who believe the trade deficit to poor believes that a nation that consistently moves deficit of the current account deficit with foreign borrowing or the sale of fixed assets -long-term assets -A finance current purchases of goods and services . They believe that the continued borrowing is not a viable long-term strategy, sales and financing of long-term assets current undermine future production.

Economists, who are associated with high trade deficit positive economic development, especially in the higher income, consumer confidence and investment. They claim that the trade deficit will allow the United States to finance the import of capital investments in production capacity. Far from hurting employment can be detected earlier. They also expect that the trade deficit is financed foreign investments in the United States help to increase outside the US for employment.

Some economists view the concept of the trade deficit, as a mere expression of consumer preferences and irrelevant. These economists generally equate economic well-being of the growing consumption. If consumers want imported food, clothing and cars, why not buy them? That up to the election they are considered as signs of a successful and dynamic economy.

Perhaps the best and get the best picture Trade deficit in a balanced picture. If the trade deficit means instead of borrowing to finance current long-term investment and results in inflationary pressures, eroding or outside the United States for employment, then it is wrong. If the trade deficit will help to finance long-term borrowing or investment reflects rising incomes, confidence and investment and does not hurt employment, then this is good. If the trade deficit simply reflects consumer preference, instead of these phenomena, it shall be treated as irrelevant.

How to work due to a trade surplus and deficit?

The trade surplus is generated when countries sell more goods than it imports. By contrast, the trade deficit arises when countries import more than they export. The value is recorded in imports of goods and services are exported to the country version of the ledger known as the "current account". The positive account balance surplus means the nation's media. Work of the Central Intelligence Agency fact book, China, Germany, Japan, Russia, and Iran is a net creditor Nations. lack examples of countries or a "net debtor nation the United States, Spain, the United Kingdom and India.

Difference trade surplus and trade deficit

A country is said that the trade surplus to export than it imports. in contrast, a country's trade deficit if it imports more than it exports. a country that is a comprehensive trade deficit or surplus. or just in a particular country. or about problems casts a long high-level period of time, but the surplus generally a positive development, the deficit is seen as negative. economists recognize that the trade imbalances of any kind are common and necessary in international trade.

competitive advantage in the trade surplus and trade deficit

16 and 18th century, the Western European countries believe that the only way to engage in commerce has been exporting many products and services as possible. With this method, always carried a surplus countries and maintained large sum of gold. Under this system, the so-called "mercantilism", the concise encyclopedia of economics states that were competitive advantage of nations that enough money in the event of the outbreak of the war, to be able to maintain an independent citizens. The interconnected economies of the 21st century due to the increasing globalization means new priorities in some countries and commercial aspects, such as war. Both surplus and deficit its advantages.

trade surplus Advantage

Nations trade surplus and more competitive advantage by providing a current account surplus of reserves; the nation's funds in other countries. For example, China and Japan Surpluses are used to buy US bonds. Buying the debt of other nations allows the customer to a certain degree of political influence. An October 2010 New York Times article describes how President Obama must consistently engage in discussions with China to $ 28 billion deficit in the country. Similarly, the United States is able to consume hinges China's ongoing acquisition of US assets and cheap goods. Carrying a surplus also provides cash flow with which to reinvest in machinery, labor and the economy. In this regard, holding a surplus, a similar operating margins in excess reserves, opportunities and choices that will be based on the national debts of debts and obligations to repay considerations.

trade deficit Advantage

George Alessandria, chief economist at the Philadelphia Fed explains the trade deficit to show an efficient allocation of resources: Shifting goods and services in China enables US businesses to pay towards more money for basic skills such as research and development. Debt also allows countries to take more ambitious undertaking and take greater risks. Although the United States will no longer produce and export as many goods and services, the nation remains one of the most innovative. For example, Apple is able to pay workers more money to develop the best Sales, Cutting Edge Products for outsource the production of goods in the country overseas.


This chapter describes the efforts made to explain some of the questions that the trade balance and trying to x-ray the benefit of some of the arguments on the trade balance and imbalances in order to find answers to some of the outstanding questions and proper understanding of the concept of trade balance surplus and deficit, which is fast becoming a serious problem in the world economy, which scientists such as John Maynard Keynes once thought today.

in a bid to find a solution to this will be discussed in the following sections;

(a). Circumstances where the trade imbalances can be problematic.

(B). Circumstances where the trade imbalances should not be problematic.

2.1. Circumstances where the trade imbalances can be problematic

Those who ignore the effect of the trade deficit in the long term can be confusing the principle of comparative advantage by David Ricardo, Adam Smith's principle of absolute advantage, specifically ignoring the latter. The economist Paul Craig Roberts notes that the comparative advantage principles developed by David Ricardo do not hold where the factors of production, international mobile. Global labor arbitrage, this is known as the economist Stephen S. Roach, a country which takes advantage of cheap labor would be different in the case of absolute advantage that is not mutually beneficial. Since the stagflation of the 1970s, the US economy has been characterized by slower GDP growth. In 1985, the US began increasing trade deficit with China. In the long run, nations trade surplus in general, is that the excess savings. The US savings rate is usually lower than commercial partners, mostly trade surplus. Germany, France, Japan, Canada, and has maintained a higher savings rate than the United States in the long run.

Few economists believe that GDP and employment, dragged down by a very large deficit in the long term. Others believe that the trade deficit is good for the economy. The alternative costs outweigh the perceived loss of tax base gains, particularly where there is an artificial currency pegs and manipulations are present in trade-distorting.

Wealth-generating primary sector jobs in the US, such as manufacturing and computer software often been replaced by a much lower value wealth-consuming jobs such as those in the retail and government services sectors, where the economic downturn recovered . Some economists argue that accumulates during import used to finance US borrowing unsustainable amounts of debt.

In 2006, the primary economic concerns focus: high public debt ($ 9 trillion), high non-bank corporate debt ($ 9 trillion), high mortgage debt ($ 9 trillion), high financial institution debt ($ 12 trillion), high unfunded Medicare liabilities ($ 30 trillion), high unfunded social security liability ($ 12 trillion), high external debt (amount owed to foreign creditors) and to a serious deterioration in the US net international investment position (NIIP) (-24% – in), high trade deficit and an increase in illegal immigration.

These issues have raised concerns among economists and unfunded liabilities mentioned as a serious problem the President of the United States 2006 State of the Union address. On June 26, General Electric, called the US in 2009, Jeff Immelt, the CEO of increased manufacturing base employment to 20% of the labor force, commenting that the US outsourced too much in some areas and no longer rely on the financial sector and consumer spending to drive demand.

2.2. Circumstances where the trade imbalances can not be problematic

Retail trade deficit is generally not considered to be harmful to either the importing or exporting economy. However, when a national trade imbalance expands beyond prudence (generally thought to be more [clarification needed] as a percentage of GDP, for a few years), the corrections usually occur. While unsustainable imbalances may persist for a long time (cf, Singapore and New Zealand surpluses and deficits, respectively), the distortions are likely to be caused by the large waves of wealth out of the economy and the other one is inclined unbearable.

In simple terms, the trade deficit is paid to the foreign exchange reserves, and continue until exhausted. Such a point, the importer could not purchase more than sold abroad. This is probably the consequences of exchange rate: a sharp loss of value to the shortage economy surplus economy, currency exchange rate changes in the relative price of tradables, and facilitate a return to balance or (preferably) a surplus of over-shooting the other way.

more complex, the economy is not able to export many goods to pay for imports, but also be able to find funds elsewhere. Services exports, for example, more than enough to pay for Hong Kong's domestic exports deficit. In poorer countries, foreign aid to fill the gap, while rapidly developing economies of the capital account surplus of current account deficit is often off-sets. There are farms where transfers from nationals working abroad significantly contributes to paying the import. the transfer of examples from the Philippines, Bangladesh and Mexico rich economies. Finally, a part of the country to balance the quantitative easing at home. This includes the central bank to buy government bonds in the long term without reference to interest other domestic financial institutions (which is typically low, QE if needed), seriously increases the money supply. It debases the local currency, but also reduce the debt of foreign lenders – effectively "exporting inflation"

factors influencing the trade balance

factors that influence includes the trade balance;

1. The cost of production (land, labor, capital, taxation, incentives, etc.) in exporting and importing economy.

2. The cost and availability of raw materials, intermediate products and raw materials.

movements in exchange rates 3.

4. Multilateral, bilateral and unilateral trade restrictions or taxes.

5. Non-tariff barriers, such as environmental, health and safety regulations.

6. The available sufficient foreign currency with which to pay the price of imports and goods produced at home.

In addition, the trade balance is likely to vary according to the business cycle, export-led growth (such as oil and early industrial products). The trade balance improves during economic expansion. But

driven by domestic demand growth (as in the United States and Australia), the trade balance will deteriorate at the same stage in the business cycle.


mid-1980s, the United States has been the lack of growth in manufactured goods, especially in Asian countries such as China and Japan now hold massive amounts of US debt. Interestingly, because of the US trade surplus with Australia favorable trade benefits, which is more than the latter.

TO CARRY economic policies would help trade surplus.

(a) Savings

economies such as Canada, Japan and Germany, which usually runs a trade surplus of extra savings. China, the high growth economies tend to run a trade surplus. A higher savings rate usually corresponds to the trade surplus. Accordingly, the US savings rate is lower, however, tend to run high trade deficits, especially Asian Nations Association.

(b) Reduction

imports and increasing exports.

countries like the United States and Britain is the main proponent of this theory. It is also known as the trade theory. In practice, where the government strictly regulates the inflow and outflow of the economy in terms of imports and exports. One of the biggest advantages of the theory that the end result is a nation's independence and the multiplier effect on the overall development throughout the nation.

SAVE objections economic policies as a means of recognizing trade surplus

Save as a means of realizing trade surplus is not advisable. For example, if a country who is not saved in the trading and multiplied by the monetary condition in the long run it's better for them, and the downside is that a country with a limited acceptance of and relying on savings policy as it seems that the cosmetics in the short term, and the impact would be exposed if the commercial activities of the nation is so profitable investment. This could lead to an economic tsunami.

reducing imports and increasing exports

a situation in which the exports, which are more value to the economy of the host country just as Frederic Bastiat sincerity principle to such as reducing imports and increasing exports would be an exercise

objections economic policies in futility. He cited an example where a Frenchman, French wine exported and imported British coal turned a profit. He felt he was in France, and sent a barrel of wine was worth 50 francs to England. The customs export record of 50 francs. If England, the wine sold 70 francs (or the pound equivalent), which will be used to buy coal, imported by France and found that it is worth 90 francs in France, I would have made a profit of 40 francs. But the customs agency say that the value of imports exceeded that of exports and trade deficit ledger was against France.

The correct understanding of the topic, since it's not available when you open the famous scientists who lived in the past, it did not investigate.

In light of the above, it is appropriate to analyze the views of different scholars, who in a bid to draw a conclusion deductive argument serve as a template for drawing a conclusion outlined in this topic. This can be explained in a row as follows

(a) Frédéric Bastiat mistake in the trade deficit.

(b) Adam Smith's trade deficit.

(c) John Maynard Keynes in the trade balance.

(d) Milton Freidman trade deficit.

(e) Warren Buffet in the trade deficit.

3.1. Frédéric Bastiat mistake in the trade deficit

economist and philosopher of the 19th century Frédéric Bastiat expressed the idea that the trade deficit actually were manifestations of profit instead of a loss. He suggested as an example assume that he, French, French wine exported and imported British coal turned a profit. He felt he was in France, and sent a barrel of wine was worth 50 francs to England. The customs export record of 50 francs. If England, the wine sold 70 francs (or the pound equivalent), which will be used to buy coal, imported by France and found that it is worth 90 francs in France, I would have made a profit of 40 francs. But the customs agency say that the value of imports exceeded that of exports and trade deficit ledger was against France. watching the arguments, one would say that this is the best place to have a trade deficit as a trade surplus. In Vain, it is clear that the domestic trade and internal trade may be a hypothetical trade surplus to a trade deficit if the cited example of Fredric Bastiat applied. It is later, in the 20th century, economist Milton Friedman confirmed.

Internal Trade Export value of a nation would make it a worthless, if not handled properly. A situation where the product was originally imported first country is a country of two more value to the country 2 than the initial value of exports from country to one, may lead to a situation where purchasing power would be used to buy more goods quantity country two who usually have a based on the amount of trade surplus in the exporting country to the original value of more imported goods and thus one of the latter suffering more for export by adding more value to the economy, the country exported one ab-initio. The customs agency say that the value of imports exceeded that of exports and the trade deficit was against the general ledger Country 1. But the real meaning of one country benefit trade-wise, to the benefit of the economy. In this light, a fundamental question arises, "would be the concept of profit is now smeared or undermined the concept of Alter Trade surplus or loss? It's mind is why Milton Friedman that" to some of the concerns of the trade deficit unfair criticism in an attempt to push the macro-economic policies favorable exporting industries. "ie, undue support or Advantage exporting nations to make it look that much more profitable than the number of exporting countries in the international business accounting. This can be seen as a cosmetic excavation did not actually enter the correct position of things and it can be misleading in nature.

the reduction and absurd Bastiat argued that the national trade deficit indicator rather than a successful economy if the one. Bastiat predicted that a successful, growing economy would lead to higher trade deficit and the fail-shrinking economy, which is lower than the trade deficit. It is later, in the 20th century, economist Milton Friedman confirmed.

3.2. Adam Smith, the trade deficit

Adam Smith, who is the only propounder of the theory of absolute advantage was of the opinion that the trade deficit should not worry and that nothing is more absurd than the Tan "balance of trade" and it confirmed many economists today. They argued that if, for example Japan, where 51 states from outside the United States, you do not hear from a trade deficit or imbalance, America and Japan. They also argued that the trade imbalances between made it necessary geographical boundaries of nations, which have seen through the competitors themselves among themselves to acquire other commercial superiority of one another, which was not necessary. I have also argued that if the boundaries between Detroit, Michigan and Windsor, Ontario, made a difference for the residents of these cities, except those obstacles created by the government. They claimed that if there was a need to worry about the trade deficit of the United States and Japan, it was perhaps necessary to worry about the deficit that exists between states. Also, it is argued that if the trade balance no matter the personal, neighborhood or city level, it will not matter at the national level. Then Adam Smith was right !.

observed that this was a result of the economic viability of the US has the purchasing power is higher in Asian counterpart, who is exporting more and importing less than in the US and that it would be better if the United States became poorer, less able to buy your products abroad, and said that the economic problems in Asia, causing fewer people to buy foreign products.

"the previous one, based more on principles of the trading system, it imports very unnecessary to lay special restrictions on goods from those countries with which the trade balance is said to be detrimental. This obviously represents the image that is nothing, but it can be more absurd as this whole doctrine of the balance of trade, which not only are these restrictions, but almost all other decrees commercial form when two places trade with each other that [absurd] doctrine assumes that if the balance has none either lose or win.; but if it leans to one side to any degree that one loses, the other gains a conjugation ratio of the current balance. "(Smith, 1776, book IV, ch. II, part III).

3.3. John Maynard Keynes trade balance

John Maynard Keynes was the main author of the "Keynesian plan". In his view, supported by many economists and commentators at the time that the creditor nations to deal with the debtor is responsible Nations imbalance exchanges, and that both should be obliged to trade back to a steady state. if not them that this can have serious economic consequences. in the words of Geoffrey Crowther, "if the economic relations that exist are scattered fairly close to balance between the two nations, it does not have the financial agreement, which is to save the world from the impoverishing the result of the chaos. It's some economists and scientists of view can be seen, very unfair to the creditors as they do not respect their status as creditors based on the fact that there is no clear difference between them and the debtors. This is perceived by the idea of ​​numerous attempts to unclassify creditors debtors.

3.4. Milton Freidman a kereskedelmi deficit

Az 1980-as években, Milton Friedman, aki egy Nobel-díjas közgazdász, a professzor és az Atya a monetarizmus azt állította, hogy egyes aggályok a kereskedelmi deficit tisztességtelen kritika egy kísérletet, hogy álljon makró – gazdaságpolitika kedvező exportáló iparágakban.

továbbá azt állította, hogy a kereskedelmi deficit nem feltétlenül olyan fontos, mint a magas export növelni értékét valuta, csökkentve említett export, és fordítva, a behozatal, így természetesen eltávolítja kereskedelmi hiányt nem miatt beruházás.

Ez az álláspont egy kifinomultabb változata a tétel először fedezte fel David Hume, ahol azt állította, hogy Anglia nem tudták tartósan nyerhetnek az export, mert felhalmozó arany tenné arany bőségesebb Angliában; Ezért az ára angol áruk szárnyalni, így kevésbé vonzó az export és az idegen áru vonzóbbá import. Ily módon az országok kereskedelmi egyenleg egyensúly ki.

Friedman úgy gondolták, hogy a hiány lenne korrigálni a szabad piac lebegő valutaárfolyamok emelkedik vagy csökken idővel, hogy visszatartsa import mellett a kivitel. Felülvizsgálata újra a javára import, mint a valuta erősödésével.

De megint volt hiányosságokat a kilátás Friedman, mint sok közgazdász azt állította, hogy az ő érveit is kivitelezhető rövid távon, és nem pedig hosszú távon. Az elmélet szerint a kereskedelmi deficit, olyan jó, mint az adósság, nem probléma egyáltalán, mint az adósság vissza kell fizetni. Azt is állította, hogy hosszú távon, mint egy elmélet, a következetes felhalmozódása egy nagy adósság problémát okozhat, mert lehet, elég nehéz fizetni ellensúlyozza az adósság egyszerűen.

Közgazdászok támogatással Friedman azt javasolta, hogy amikor a pénzt húzott ki visszatér a kereskedelmi deficit ország

3.5. Warren Buffet a kereskedelmi deficit

A sikeres amerikai üzleti mogul és befektető Warren Buffet idézte az Associated Press (január 20, 2006), mint azt, hogy "Az amerikai kereskedelmi hiány a nagyobb veszélyt jelent a hazai gazdaság, mint akár a szövetségi költségvetési hiány, illetve a fogyasztói tartozás, és ahhoz vezethet, hogy a politikai zűrzavar … most, a világ többi része birtokolja 3000000000000 $ többen, mint mi a saját őket. " Ő tovább idézte, miszerint a "a hatás, a gazdaság már úgy viselkedik, mint egy rendkívüli gazdag család, amely rendelkezik egy hatalmas farm. Annak érdekében, hogy fogyaszt 4% -kal több, mint amennyit termelünk, vagyis a kereskedelmi hiány-mi nap mint nap óta mind eladási darab a gazdaság és a növekvő jelzálog mi mindig a saját.

Büfé javasolt nevű eszköz "behozatali tanúsítvány", mint megoldást az Egyesült Államokban a problémát, és a kiegyensúlyozott kereskedelmet. Ő tovább idézte; "A külföld tulajdonában van egy megdöbbentő 2500000000000 $ többet az Egyesült Államokat, mint a miénk, a többi országban. Néhány ilyen 2500000000000 $ fektetett követelés checks- amerikai kötvények, mind a kormányzati és a magán- és néhány ilyen eszközt tulajdon és tulajdonviszonyt megtestesítő értékpapírok.

Import tanúsítvány van egy javasolt mechanizmus megvalósítása "kiegyensúlyozott kereskedelem" és eliminate a country's trade deficit. The idea was to create a market for transferable import certificate (ICs) that would represent the right to import a certain dollar amount of goods into the United States. The plan was that the Transferable ICs would be issued to US exporters in an amount equal to the dollar amount of the goods they export and they could only be utilized once. They could be sold or traded to importers who must purchase them in order to legally import goods to the U.S. The price of ICs are set by free market forces, and therefore dependent on the balance between entrepreneurs' willingness to pay the ICs market price for importing goods into the USA and the global volume of goods exported from the US (Supply and Demand).

Source by Newton Obanore

Leave a Reply

Your email address will not be published. Required fields are marked *