Key Concepts and Summary
Contents
The trade balance measures the gap between a country’s exports and its imports. In most high-income economies, goods make up less than half of a country’s total production, while services compose more than half. The last two decades have seen a surge in international trade in services; however, most global trade still takes the form of goods rather than services. The current account balance includes the trade in goods, services, and money flowing into and out of a country from investments and unilateral transfers.
Glossary
balance of trade (trade balance)
the gap, if any, between a nation’s exports and imports
current account balance
a broad measure of the balance of trade that includes trade in goods and services, as well as international flows of income and foreign aid
merchandise trade balance
the balance of trade looking only at goods
unilateral transfers
“one-way payments” made by governments, private entities, or individuals that are sent abroad with nothing received in return