Discuss about balance of payment deficit and surplus

Essay by malaysiafarmerUniversity, Master'sA-, October 2006

download word file, 12 pages 5.0

Table of contents

1.0 Introduction 1

1.1 Brief economy overview 1

2.0 Balance of payment 2

2.1 Concepts of Balance of payment 2

2.2 Balance of Payments Problems 3

3.0 Balance of payment of Malaysia 4

3.1 Malaysia's economic performance 4

3.2 Malaysia balance of payment in 2005 7

4.0 Malaysia's Economic - surplus 12

4.1 Surplus in Balance of Payments 13

Conclusion 14

Reference 15

1.0 Introduction

The topic says that: "Because each nation's balance of payments equals zero, it follows that there is actually no significance to a balance of payments deficit or surplus." Discuss.

In my opinion, this thinking is not so correct, and whether there is significance or not depends on different country and different situation. In this assignment I will discuss that what are trade surplus and deficit and what are the effects to an economy? I will choose Malaysia country to be analyzed. It will write about what is balance of payment and; what are the balance of payment problems, and exam what is the problem with Malaysia balance of payment through the analysis of the balance of payment of Malaysia , (base on 2004, 2005) and also how it effects the country economy.

1.1 Brief economy overview

The structural transformation of Malaysia's economy since it gained independence from the British in 1957 has been pretty spectacular. Although it is fortunate because of its wealth in mineral resources and fertile soils, Malaysia still took decisive steps to strive for progress and development. Its independence on agriculture and primary commodities during 1960s shifted and it has become an export-driven economy spurred on by high technology along with knowledge-based and capital intensive industries.

From being the world's largest producer of rubber and tin, Malaysia is today one of the world's leading exporters of electronic and electrical...