Explain five circumstances under which a country may realise surplus in its balance of payments. (10 marks)

Circumstances under which a country may realise surplus in its balance of payments

​Circumstances under which a country may realize surplus in its balance of payment include: 

1. When the country exports highly valued finished products.
   The demand for such products is high and they fetch higher prices in the international market.
2. When the country mainly imports lowly valued primary goods.
   These cheap imports are converted into finished goods hence earning profits from international trade.
3. When the country aggressively promotes its exports.
   This will create more market for exporting goods thus increasing the country’s earnings.
4. When the country devalues its currency.
   This makes imports more expensive forcing local consumers to by locally produced goods while exports become cheaper and are sold in large volumes.
5. When the country enjoys favourable economic order.
   The country may be able to influence the world market prices to favour its exports.
6. When the country diversifies its exports.
   The country increases the range of its exports hence becoming more competitive.
7. When the country has access to adequate capital and technology.
   This makes the country to have a highly developed manufacturing and processing sector.

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