Exports are goods and services produced within one country (or territory) and sold by economic agents (individuals or firms) of that country to economic agents of another country. Exports are an important part of international trade, the counterpart being imports, which allow countries to participate in the global economy by expanding their markets for goods and services.
Exports originated with the start of communication and have been present since prehistoric times. According to the historian Peter Watson, people begun bartering goods and services 150,000 years ago, as part of long–distance commerce. There is also evidence of exchange of obsidian and flint during the Stone Age, while materials used for making jewelry were exported to Egypt since 3,000 BCE. Long–range export routes first appeared in the third millennium BCE, when Sumerians in Mesopotamia traded with the Harappan civilization, and continued with the Phoenicians, who traveled across the Mediterranean Sea and established trade colonies. From the beginning of the Greek civilization until the fall of the Roman Empire in the fifth century, exports from the Far East to Europe flourished. However, the fall of the Roman Empire and the Dark Ages led to a disruption of the main export networks. Subsequently, noteworthy landmarks included the contribution of Vasco da Gama to the trade of spices and the dominance of Holland, Portugal, and Britain in the sixteenth, seventeenth, and eighteenth centuries, respectively. Exports continued to expand in the nineteenth and twentieth centuries, particularly after World War II with the creation of international institutions, and in the twenty–first century with the telecommunications revolution.
The reduction of barriers to international trade has been crucial for exports. With technology improvements—container ships, telecommunication networks, and the Internet—it is easy for producers in one country to reach consumers in another and to export their products quickly. Governments have also recognized the importance of free trade and have reduced export (and import) quotas and tariffs, including in the context of multilateral agreements (the European Union and the North American Free Trade Agreement). Moreover, the World Trade Organization was created to facilitate free trade by mandating mutual most favored nation trading status between all members. Finally, to help exporters find markets for their products, countries have set up export promotion agencies as an integral part of their export strategies.
The payments and receipts associated with exports take place in major international currencies (U.S. dollar, euro, and yen) and are recorded in the current account of the balance of payments. The latter is usually kept in terms of the international currency in which the country’s majority of trade transactions are conducted. The current account balance is calculated as the difference between exports and imports of goods and services. When the value of receipts from external transactions exceeds (falls short of) the one of payments, the country runs a current account surplus (deficit). Several different models have been developed to study export developments and analyze the effects of export policies. The Ricardian model— developed during the first quarter of the nineteenth century by economists David Ricardo, James Mill, and Robert Torrens—postulates that countries specialize in producing and exporting what they produce best. The Heckscher–Ohlin–Samuelson (H–O–S) model incorporates the neoclassical price mechanism and argues that the pattern of exports (and trade) is determined by differences in factor endowments (labor, capital, and know–how). It predicts that countries will export (or import) goods that make intensive use of locally abundant (or scarce) factors. Finally, the gravity model postulates that exports and imports are determined by the distance between countries and the interaction of the countries’ economic sizes.
Macroeconomic policy could have significant influence on export developments, since the demand for a country’s exports is a function of each good’s price in foreign currency. Thus, macroeconomic policies that affect the exchange rate weigh on exports. For example, tight monetary and expansionary fiscal policy both lead to a higher real interest rate, which makes domestic assets attractive to foreign investors; as foreigners demand domestic assets, the real value of the domestic currency rises sharply. Because the domestic currency is strong, exports become more expensive and thus could fall sharply.
One measure to gauge the importance of exports is their ratio to gross domestic product, known as the index of openness. Countries with high value of the index are considered relatively open, while the opposite is the case for relatively closed economies. In line with globalization trends, the average (worldwide) index of openness increased from 30 percent in 1980–1990 to 40 percent in the beginning of the twenty–first century. The most open economies have values of the index over 100 percent: Hong Kong (190% in 2004), followed by Luxemburg (146%), and Malaysia (121%). On the other hand, relatively closed economies are characterized by low openness indexes: Burkina Faso (8.6%), Burundi (8.9%), and Rwanda (10.3%).
According to the World Trade Organization, in 2005 total exports reached $12.6 trillion, comprising $10.2 trillion of merchandise exports and $2.4 trillion exports of commercial services. Exports of goods and services each increased by an annual average of 10 percent over the 2000–2005 period. Europe dominates world exports, accounting for 43 percent of the total in 2005; Asia follows with 28 percent, and North America with 15 percent. At the individual country level, in 2005 the five largest exporters of merchandise goods were: Germany (9.3% of world exports), the United States (8.7%), China (7.3%), Japan (5.7%), and France (4.4%). The leading exporters of services were: the United States (14.7% of world exports), United Kingdom (7.8%), Germany (6.2%), France (4.8%), and Japan (4.5%).
Turning to the commodity composition, manufacturing exports have led overall growth, increasing by an average of 6.5 percent annually during 1990–2005 compared with 3.5 percent for agricultural products and 3.5 percent for fuels and mining products. In 2005 merchandise exports comprised: $7,312 billion manufacturing, $1,748 billion fuels and mining products, and $852 billion agricultural products. As for services, transportation accounted for $570 billion, travel for $685 billion, and other services for $1,160 billion.
Globalization trends and improvements in telecommunications will support strong export dynamics over the medium and long term. However, due attention needs to be paid to maximize the benefits for economic growth of all countries. In this connection, although recent efforts on trade liberalization are encouraging, some calls for protectionist policies raise concerns. There is no doubt that continued trade liberalization will create more opportunities and raise the potential for faster global growth.
SEE ALSO Absolute and Comparative Advantage; Balance of Payments; Balance of Trade; Exchange Rates; Heckscher-Ohlin-Samuelson Model; Imports; Liberalization, Trade; Macroeconomics; Mill, James; Ricardo, David; Samuelson, Paul A.; Trade; Trade Deficit; Trade Surplus; World Trade Organization
Ricardo, David. 1821. On the Principles of Political Economy and Taxation. 3rd ed. London: John Murray.
Watson, Peter. 2005. Ideas: A History of Thought and Invention from Fire to Feud. New York: HarperCollins.
World Trade Organization. 2006. International Trade Statistics. Geneva: Author.
"Exports." International Encyclopedia of the Social Sciences. . Encyclopedia.com. (July 20, 2018). http://www.encyclopedia.com/social-sciences/applied-and-social-sciences-magazines/exports
"Exports." International Encyclopedia of the Social Sciences. . Retrieved July 20, 2018 from Encyclopedia.com: http://www.encyclopedia.com/social-sciences/applied-and-social-sciences-magazines/exports
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Exports are goods and services that are produced in one country but shipped to another country for consumption. Some examples would be lumber grown in the United States but shipped to Japan; U.S. wheat shipped to Russia; Hollywood movies sent around the world; and U.S. jet fighter planes made here but sold to allied nations such as Israel and Saudi Arabia.
The United States exports thousands of types of goods and services. The United States, however, exports a relatively small portion of its total output, generally less than 10 percent, compared to some other nations. Some European nations, for example, export 25 percent or more of their total production. Where there is a difference between the amount that a country imports and the amount it exports, a trade imbalance exists.
The United States, which has the wealth to import a vast array of goods from around the world, typically runs a rather large trade deficit with other nations. This deficit worries many government officials who fear that U.S. citizens are supporting foreign workers with their dollars, but not workers at home. Because of such fears, many governments try to increase the export of their own goods and decrease imports. There are various ways to do this. Nations may give exporting companies tax breaks to encourage them to send their products overseas. Or they may create special banks whose job is to loan money to firms that export goods.
See also: Balance of Trade, Imports, Trade
"Exports." Gale Encyclopedia of U.S. Economic History. . Encyclopedia.com. (July 20, 2018). http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/exports
"Exports." Gale Encyclopedia of U.S. Economic History. . Retrieved July 20, 2018 from Encyclopedia.com: http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/exports