No matter how rich the country is, how big or small, no nation is self-sufficient. It can never be totally independent having everything it needs. No matter how powerful the country is, they need raw materials from other countries to produce products. Which can be simply said as: Every country is involves in import and export.
Years ago, the Far East, Europe and United States were importing and exporting goods between themselves and across countries. It had already set up a global sourcing and a simple system of trading, on a smaller scale. Today, import and export has become a very crucial part of the economy export import system.
It is also highly possible now for small countries to reach beyond the borders of their countries and go out to a wider marketplace that can bring in products and supplies which are needed. Due to global sourcing, businesses have access to more product and technology options that are up to international standards which are not otherwise available in that place.
Exporting and importing helps national economies to grow and expand the global market. Every country is endowed with certain advantages in skills and resources. Say for example, some countries are rich in natural resources, such as timber, fossil fuels, fertile soil or precious metals and minerals, while other countries have shortages of many of these resources. Furthermore, some countries have highly developed educational systems, infrastructures and capital markets that permit them to engage in complex manufacturing and technological innovations, while many countries do not.
Importing is not necessarily bad, as it gives us access to important resources and products which are not available or at a cheaper cost. However, just like eating too much candy, it can have bad consequences. On the other hand, the more a country exports, the more occurrence of domestic economic activity. More exports means more production and more revenue.
Growth in exports can create employment. Say for example, the growth in car exports has created many jobs in car industries, such as Nissan in Sunderland and BMW factory in Oxford.
Rising exports will help in increasing aggregate demand and cause higher economic growth. Growth in exports can also have a knock on effect to related service industries. For example, the success of car exports in various countries will help the local economy with local clubs and shops benefiting from increased spending.
CURRENT ACCOUNT DIFLICT
The strength of exports plays a huge role in determining the current account deficit. In the past few decades, the UK had a persistent current account deficit, which many attribute to the UK’s relative poor export performance.