Education as a service export in UK balance of payments

Steps:

• Identify the transaction: A foreign government pays for UK university education services provided to its students.
• Classify the category: Education qualifies as a service under the current account's trade in services.
• Determine direction: Payment received by the UK represents an export of services.
• Record as inflow: This credits the UK's current account with a positive entry.

Why C is correct:

• Per IMF Balance of Payments Manual (BPM6), personal, cultural, and recreational services include education exports, recorded as a credit (inflow) when non-residents pay for services in the exporting economy.

Why the others are wrong:

• A: Secondary income covers unrequited transfers like aid or remittances, not payments for services.
• B: Secondary income inflows involve transfers without quid pro quo, unlike this service exchange.
• D: Trade in services outflow applies to UK imports of foreign services, not exports.

Final answer: C