Politics and Trade Within a Research Paper

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A low dollar for instance increases the competitiveness of the sales, as well as the sales volume, but decreases their value and weakens the positive results in the balance of payments. Subsequently, a high dollar decreases competitiveness within the international market place, but strengthens the balance of payments (Wang, 2009).

Then, aside from the exchange rate, the balance of payments is also influenced by the balance trade in the meaning that this tends to "move markets on release" (FX Words). The same impact is generated by the current account balance, as well as by the net purchases of foreign security (FX Words). All these factors are directly or indirectly generated by the political field and they, as such, represent political causes for changes in the balance of payments.

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Finally, Jain, Ohri and Majhi also point out to the existence of several political factors causing changes in the balance of payments. They as such point out the following:

The expansion of the U.S. embassies and their maintenance, which engage vast resources and negatively impact investments and as such generate negative impacts on the balance of payments

Political instability, which discourages foreign investments, and last

International relationships, in the meaning that cordial relationships would be positive, whereas hostile relationships could be negative for the balance of payments (Jain, Ohri and Majhi)......

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