Exports are goods and services that are produced in one country and purchased by the residents of another country. It doesn’t matter what the good or service is, or how it’s sent.
A product can be shipped, sent by email, or carried in personal luggage on a plane. It’s an export if it’s produced domestically and sold to someone in a foreign country. The effects of this process can trickle down to consumers.
Definition and Examples of Exports
Exports are a component of international trade. They’re the goods and services bought by a country’s residents that are produced by a foreign nation. In combination with imports, they make up a country’s trade balance.
Businesses export goods and services when they have a competitive advantage. They’re better than any other companies at providing that particular product.
They also export products and services that reflect the country’s comparative advantage. Countries have comparative advantages in commodities that they have a natural ability to produce. For example, Kenya, Jamaica, and Colombia have the right climate to grow coffee.2 This gives their industries an edge in exporting coffee.
India’s population is its comparative advantage. Its workers speak English, which gives them an edge as affordable call center workers.3 China has a similar advantage in manufacturing due to its lower standard of living.4 Its workers can live on lesser wages.
How Exports Work
Most countries want to increase their exports. Their companies want to sell more, and they want to sell overseas when they’ve sold all they can to their own country’s population. They gain expertise in producing goods and services, and they gain knowledge about how to sell to foreign markets.