Balance of Trade (BOT) vs Balance of Payments (BOP) | Class 12 Economics | Ecoholics

Balance of trade
The balance of trade is the distinction between the value of a nation’s imports and exports for a given time frame. The BoT is the largest constituent of a nation’s balance of payments. Economists utilize the BoT to compute the associative potency of a nation’s economy. The BoT is also known as the trade balance or the international trade balance.
Balance of payment
The balance of payment is a statement of all the transactions that are made between entities in one nation and the rest of the world over a particular time frame, such as a quarter or a year. To put it in other words, the BoP is a set of accounts that identifies all the commercial transactions operated by the nation in a specific period with the remaining nations of the world. It documents a record of all the monetary transactions performed globally by the nation on goods, services, and income during the year.
Fundamental Difference
Balance of trade (BoT) is the difference that is obtained from the export and import of goods.
Balance of payments (BoP) is the difference between the inflow and outflow of foreign exchange.
The type of transactions included
Transactions related to goods are included in BoT.
Transactions related to transfers, goods, and services are included in BoP.
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