External balance

from Wikipedia, the free encyclopedia

The external balance is in the context of the external economic theory a national goal , which presupposes the balance of the current account .

General

Since foreign trade theory and the reality of world trade do not show any foreign trade equilibrium for all states , there are always both exporting nations (" world export champions ") and import-heavy states. In 2015, 123 countries worldwide had a trade deficit , but only 62 countries had a trade surplus . Both are lacking in external balance, because the trade surplus is also an imbalance. Equilibrium means that the balance of expenditure from imports and income from exports is "zero" in the medium term.

The demand for external balance is about ensuring that the economic development of a state is not burdened by harmful foreign trade relations. In the case of export- and import-heavy countries, measures could be necessary if the importing country has a trade balance deficit that will not be reduced even in the medium term through devaluation . This state cannot defend itself other than restricting imports and / or promoting its own exports through foreign trade instruments. If this does not succeed , the import-heavy states face high national debt with the risk of national bankruptcy , while export-heavy states initially amass state assets . However, these include export claims against import-heavy countries, which trigger a bad debt loss in export-heavy countries, which consequently have to accept a loss of receivables from write- offs .

causes

Harmful foreign trade relations can arise with:

  • constantly negative current account or negative external contribution, as this leads to
    • leads to indebtedness of the deficit state, which cannot compensate for this due to a lack of its own exports,
    • can lead to high unemployment in a deficit country, as not enough goods are produced domestically;
  • constantly positive current account or positive external contribution, there
    • this can lead to inflation in the surplus country if there are insufficient capacities for production,
    • this leads to high demands by the surplus country on deficit countries, which may then fail.

A policy that tries to solve domestic problems at the expense of other countries (more precisely: at the expense of foreign trade partners) is also called beggar-thy-neighbor-policy, or simply protectionism when it comes to massive import restrictions.

Balance of payments related definitions

In the context of the balance of payments, the term is used for two different balance of payments situations:

An external balance is always spoken of when such a balance is present on a multi-year average.

Germany

External balance is in § 1 StabG demands, after which federal and states the requirements of their economic and financial policies macroeconomic balance have to be observed. "The measures are to be taken in such a way that, within the framework of the market economy, they simultaneously contribute to the stability of the price level , a high level of employment and an external balance with steady and appropriate economic growth ". In the event of external trade disruptions in the overall economic equilibrium, which cannot be countered by internal economic measures or only with impairment of the goals specified in Section 1 of the StabG , the Federal Government has to use all possibilities of international coordination in accordance with Section 4 of the StabG. If this is not sufficient, it uses the economic policy resources available to it to maintain the external balance ”. In order to comply with this law, Germany would either have to upgrade (obstacle: unilaterally not possible with the euro ) or upgrade internally (wage increases in all export sectors), levy export duties (obstacle: the customs union ) or implement the comparative cost advantages and leave entire economic sectors to its trading partners . However, these economic policy instruments are capable of restricting free trade .

International

The EU Commission assumes an external balance in the EU member states as long as the current account surplus or deficit does not exceed the threshold of 6% of gross domestic product within 3 years . Only a few countries exceeded this threshold with regard to the current account surplus in 2017, namely Malta (+ 13.6%), the Netherlands (+ 10.5%), Switzerland (+ 9.8%), Ireland (+ 8.5%), Germany ( + 7.9%), Denmark (+ 7.6%) and Slovenia (+ 7.1%). Only the Netherlands, Switzerland, Germany and Denmark exceeded this threshold for 3 years. Turkey (- 5.6%), Great Britain (- 3.8%) and the USA (- 2.3%) all had a current account deficit .

Individual evidence

  1. ↑ International Monetary Fund, World Economic Outlook , October 2015, pp. 25 ff.
  2. ↑ Christian Felber, Ethischer Welthandel , 2017, p. 42
  3. ↑ Torsten Bleich / Meik Friedrich / Werner A. Halver / Christof Röme / Michael Vorfeld, Volkswirtschaftslehre , 2016, p. 14
  4. ↑ Statistics portal of the Institut der deutschen Wirtschaft, Germany in figures: table balance of the current account - in percent of GDP , 2017