What are Imports and Exports?
Imports are the goods and services that are purchased from the rest of the world by a country’s residents, rather than buying domestically produced items. Imports lead to an outflow of funds from the country since import transactions involve payments to sellers residing in another country. Exports are goods and services that are produced domestically, but then sold to customers residing in other countries. Exports lead to an inflow of funds to the seller’s country since export transactions involve selling domestic goods and services to foreign buyers.
How Important are Imports and Exports?
Countries vary considerably with regard to how important imports and exports, and their overall balance of trade is to their economies. For China, the world’s largest exporting country, exports and a net positive balance of trade are critical to the success and growth of the country’s economy. Maintaining a high level of exports is also very important to the economies of the U.K. and Australia.
The growth of economies of developing countries is often fueled by massive exports of commodities and raw materials to developed nations. For this reason, mining is commonly a key industry in such countries.
