||The thesis starts with the identification of balance of trade within the general theoretical framework of the balance of payments. In the environment of the transition economy, balance of trade has especially large influence on the external balance and we try to point out that trade flows should always be evaluated in this broader perspective. Factors that influenced the creation of positive trade balance in the 2000-2005 period are summed up and discussed in the next part. Empirical verification of great impact of income and price elasticities on the Czech trade balance is presented using simple OLS framework and data for trade flows with EU. Second aim of the thesis is to explore more closely the microeconomic supply-side-based approach to trade balance. Analysis of sectoral structure of the trade balance using the classical comparative advantage concept as the main determining factor is presented. We attempt to verify that the exchange of goods in manufacturing industry is carried out at least to some degree in accordance with this classical theory. We also use analytical method by calculating different revealed comparative advantage indices for disaggregated manufacturing industries as a demonstration of a more dynamic and heterogenous approach to sectoral competitiveness.