Import vs. Export

Import vs. Export

Both import and export are two main activities of a country's international trade.

Import appears, when domestic companies buy goods abroad and bring them to a domestic country for sale.

The common reason for importing goods is to meet demand on goods, which cannot be produced domestically at an affordable price or at all. The first occurs, when domestic technology, know how or resources are obsolete or expensive. The second occurs, when the given product or service is not possible to produce domestically because of lack skills, resources or technology.

The level of import directly depends on the exchange rate of local currency. If the local currency is strong - which means that you buy more foreing currency and at the same time more foreign goods, the import level increases. If your local currency is weak, then the import level decreases.

Export appears when the domestic companies sell their products or services abroad.

There are several reasons, why companies decide to export their output. First, they may want to enter geographically new markets and thus expand and internationalize. Second, it is possible that by exporting, companies are meeting the demand of those who live abroad because there is no domestic demand for their products or services. Export is also a great way to diminish supply surplus and thus make production more efficient.

The level of export is strictly connected with the exchange rate of local currency. If it is weak - which means that someone with strong foreign currency may buy more of your domestic currency and at the same time your domestic goods, then the export level increases. If your local currency is strong, then the export level decreases.

So, in summary:

Both export and import are main activities of national trade. If export increases import than we have trade surplus, if opposite, than we have trade deficit.

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