Unit 4 → Subtopic 4.2
How Balanced is your Country’s Trade?
Every country participates in global trade, exporting goods and services to international markets while importing products that may not be available or competitively produced domestically. A nation’s balance of trade (BOT), the difference between its exports and imports, plays a crucial role in economic stability, currency value, and employment rates. Some countries run a trade surplus, exporting more than they import, while others operate at a trade deficit, importing more than they export. This project challenges students to investigate their country’s trade balance and evaluate whether it is economically sustainable.
Students will begin by researching the concept of trade balance and understanding how it is calculated. They should explore whether their country has a trade surplus or trade deficit, identifying its major exports and imports. They should also assess whether their country relies heavily on certain industries, trade partners, or foreign investments to sustain its economy.
A key focus of this project is evaluating the economic consequences of trade imbalances. While trade surpluses can indicate strong export-driven economies, they may also create currency appreciation issues that harm competitiveness. Conversely, trade deficits might signal strong consumer demand, but they can also lead to higher foreign debt and dependency on external financing. Students should analyze how government trade policies, tariffs, and trade agreements influence their country’s trade balance.
Another major component is comparing trade balances over time. Students should examine whether their country’s trade balance has improved or worsened in recent years and determine what factors—such as currency fluctuations, global demand, technological advancements, or political instability—have contributed to these trends. They should also explore whether protectionist policies or free trade agreements have impacted national trade performance.
The final investigation report should assess whether their country’s trade balance is beneficial or problematic for long-term economic stability. The goal of this project is for students to develop an understanding of how trade policies, economic dependencies, and global markets shape a country’s financial health.
Recommended Procedure:
Research Trade Balances and Their Economic Impact – Study the concepts of trade surplus, trade deficit, and how a country’s balance of payments affects its economy.
Analyze Your Country’s Import and Export Data – Investigate the major industries, goods, and services your country exports and imports, using government trade reports and economic data.
Evaluate the Consequences of a Trade Deficit or Surplus – Assess how imbalances impact national economic growth, employment, currency value, and trade relationships.
Examine Government Policies That Influence Trade Balances – Study tariffs, trade agreements, subsidies, and currency manipulation strategies that affect trade performance.
Write an Analysis on the Stability of Your Country’s Trade Balance – Discuss whether your country benefits from its current trade position or if policy changes are needed to create a more balanced economy.
Suggested Sources:
Understanding Trade Balances and Economic Performance:
Investopedia: What Is a Trade Surplus and Trade Deficit? – https://www.investopedia.com
Khan Academy: How Trade Balances Impact National Economies – https://www.khanacademy.org
2. Case Studies on National Trade Balances:
The Balance: The Effects of Trade Surpluses and Deficits on Economic Growth – https://www.thebalancemoney.com
Harvard Business Review: How Trade Policies Shape a Country’s Economic Performance – https://hbr.org
3. Government Strategies for Managing Trade Balances:
World Bank: How Nations Use Trade Policies to Manage Deficits and Surpluses – https://www.worldbank.org
OECD: The Impact of Protectionist Policies on Global Trade Balances – https://www.oecd.org
4. The Future of International Trade and Economic Stability:
IMF: Trade Balances in a Globalized Economy – https://www.imf.org
United Nations: Sustainable Trade Strategies for Long-Term Economic Growth – https://www.un.org
Grading Rubric:
Total Points: __ /20
