Distinguish between Balance of Trade and Balance of Payment.

By | April 17, 2017

The concepts of Balance of Payment (BOP) and Balance of Trade (BOT) can be compared as discussed below:

  1. The Balance of Payment (BOP) is a wider concept than the Balance of Trade (BOT). It includes not only visible items but also invisible items. The balance of payment thus gives a better picture of any country’s economic and financial transaction with the rest of world than the balance of trade.
  2. The balance of payment is a comprehensive and systematic record of all economic transitions between the residents of a country and the rest of the world. It presents an account of all receipts and payments on account of goods exported, services rendered and capital received by residents/government of a country (inflows from abroad) and cargo imported goods, services received and money transferred by the residents/government of a country (outflows abroad).