BOT- Balance Of Trade
The Balance of Trade is the difference between the income that a country receives from exports and the investment it spends on imports, for example the balance of trade between deficit-surplus or adverse-favourable balance of trade.
The short name of this economic term is BOT.
The Trade Balance is applied to help economists and analysts to understand the strength of a country's economy in partnership with other countries.
The exact formula for calculating the BOT can be streamlined as the total value of imports minus the total value of exports.
From another point of view, a trade surplus or a deficit is not always a reliable proof of an economy’s prosperity and it must be affirmed in the context of the business programmed sequence and other economic indicators. For example, in a recession, countries opt more for export than for to create jobs.
Considering the economic expansion, countries opt in favor of importing than to promote price competition. The BOT has a direct connection with balance of payments which represents the total sum of all economic transactions between one country and its trading partners around the world. This economic concept formed between countries is divided into two types: Favorable BOT and Unfavorable BOT.
Economies that depend on global commodity prices are included in Unfavorable BOT. As for Favorable BOT, it includes competitive advantage and trade surplus. These two methods are defined as visible trade and invisible trade.
Without International trade and Balance trade each country would have to be totally self-sufficient. Each would have to realize what it could produce on its own. This would be the same as a human being totally self-sufficient, providing all goods and services that would accomplish all needs. International trade allows each nation to specialize in the production of those goods it can produce most efficiently.
