The Balance of Trade (BoT) is the difference between the value of a country’s imports and exports for a given period. The Balance of Trade is the largest component of a country’s Balance of Payments. Economists use the BoT to measure the relative strength of a country’s economy. The Balance of Trade is also referred to as the trade balance or the international trade balance.

Following are the main factors which affect BoT:

(i) Cost of production

(ii) Availability of raw materials

(iii) Exchange rate

(iv) Prices of goods manufactured at home