Why do many developong countries have a balance of trade deficit?
Good afternoon… Great question and I hope I can shed some light on this for you. I will however, simplfy this idea to make it make more sense. First you must keep in mind that balance of trade includes both exports and imports. The two combined form what’s called a balance of trade. The balance of trade is one part of an account, if you will. A lot like our checking accounts we use here. We import and export money out of that account. Developing countries struggle with numerous issues, most new countries would. Everything from accurate accounting to proper plans in place to measure the systems being used. Much like when we balance our own checking accounts as young adults. It’s trial and error. The diffference here, as I over-simpfly, is they are dealing with a lot bigger numbers and other factors than you and I do. The trade balance is identical to the difference between a country’s outsource and its domestic demand, which does not include money re-spent on foreign stocks, nor does
