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Balance
of Trade (BOT) |
Balance
of Payment (BOP) |
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Balance of trade may be defined as
difference between export and import of goods and services. |
Balance of payment is flow of cash
between domestic country and all other foreign countries. It includes not
only import and export of goods and services but also includes financial
capital transfer. |
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It records only merchandise (i.e., goods)
transactions |
It records transactions relating to both goods
and services. |
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It does not record transactions of
capital nature |
It records transactions of capital nature. |
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It is a part of current account of BOP. |
It includes balance of trade, balance of
services, balance of unilateral transfers and balance of capital transactions |
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It may be favourable, unfavourable or in
equilibrium. |
It always remains in balance in the sense that
receipt side is always made to be equal to payment side |
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Defect in BOT cannot be met by BOP |
Defect in BOP can be met through BOT. |
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It is not true indicator of economic relations or
economic prosperity of a country |
It is true indicator of economic performance of
an economy. |