Foreign Trade10/10/2011

Invisible ImportsImports without physical

presence.Common Feature of all imports is

that foreign goods and services come into Ireland and money leaves Ireland

Examples of Invisible Exports:◦Irish tourist holidaying abroad◦English bands playing at the o2 in

Dublin

Invisible ExportsExports without physical

appearanceCommon Feature of all exports is

that Irish goods and services leave Ireland and money comes into Ireland

Examples of Invisible Exports:◦American Tourists visit Ireland◦U2’s world tour

Balance of TradeThe balance of trade is the

difference between visible exports and visible imports for a given year.

If visible exports are greater than visible imports then its known as a Balance of Trade Surplus

If visible exports are less than visible imports then its known as a Balance of Trade Deficit

Balance of PaymentsThe balance of payments is a

statement comparing all payments by Irish people to the rest of the world, and all payments received by Irish people form the rest of the world

It is the Balance of trade with Invisible Imports and Exports included

Balance of PaymentsIf there is a surplus i.e. payments to

Ireland are greater than payments by Ireland, there is an increase in our foreign currency reserves

If there is a deficit, i.e. payments to Ireland are less than payments by Ireland it is met by borrowing from foreign countries