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 Form 4 Business studies lessons and notes on international trade

Ways of correcting the balance of payment disequilibrium

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Answer Text:
Ways of correcting the balance of payment disequilibrium:
The measures that may be taken to correct this may include;
-Devaluation of the country’s currency to encourage more exports than imports, discouraging the importers from importing more into the country.
-Encouraging foreign investment in the country, so that it may increase the
level of economic activities in the country, producing what can be consumed and even exported to control imports
-Restricting the capital outflow from the country by decreasing the percentage of the profits that the foreigner can repatriate back to their country to reduce the outflow
-Decreasing the volume of imports. This will save the country from making more payments than it receives
-Increasing the volume of exports. This enable the country to receive more than it gives to the trading partners.


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