Measuring International Trade

Different types of importing and exporting

Exports/Imports are defined as invisible/visible as follows:

• Visible exports occur when Irish businesses sell physical products abroad, bringing money into Ireland. For example, Irish farmers sell beef to French supermarkets.
• Invisible exports happen when Irish businesses sell services to foreign countries, bringing money into Ireland. An example is British tourists staying in a hotel in Dublin.
• Visible imports are when Irish businesses and people buy physical products from foreign countries, sending money out of Ireland. For instance, Dunnes Stores buys fruit from South Africa.
• Invisible imports take place when Irish businesses and people buy services from foreign countries, sending money out of Ireland. An example is an Irish family staying in a hotel in Paris. It is important to recognise that using/providing services in another country counts as an import/export.

Measuring Trade: Balance of Payments

The Balance of Trade:

• The balance of trade measures the difference between physical goods being sold out of and into a country during the course of a year. It is the difference between visible exports and visible imports.
• Formula: Visible Exports - Visible Imports
• Interpretation: If visible exports is larger than visible imports (So BoT is positive), there is a trade surplus. If visible exports is smaller than visible imports (So BoT is negative), there is a trade deficit.

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Balance of Payments:

• The balance of payments measures the total amount of money entering and leaving a country during the course of a year. It is the difference between total exports (visible and invisible) and total imports (visible and invisible).
• Formula: Total exports - total imports
• Interpretation: If total exports is larger than total imports (So BoP is positive), there is a payments surplus. If total exports is smaller than total imports (So BoP is negative), there is a payments deficit.