Exporting and Importing

AuthorKevin Nelson, Hal Kirkwood

Page 281

Exporting is the act of producing goods or services in one country and selling or trading them to another country. The term export originates from the Latin words ex and portare, meaning to carry out. The counterpart to exporting is importing which is the acquisition and sale of goods from acquired from another country and selling them within the country. Although it is common to speak of a nation's exports or imports in the aggregate, the company that produces the good or service, as opposed to a national government, usually conducts exporting in terms of logistics and sales transactions. However, export and import levels may be highly influenced by government policies, such as offering subsidies that either restrict or encourage the sale of particular goods and services abroad. Certain exports, such as military technology, may be banned entirely, at least for certain recipients, in cases of trade embargoes or other government regulations (e.g., U.S. companies generally can't export to or import from Cuba). Exporting is just one method that companies use to establish their presence in economies outside their home country. Importing is the method used to acquire products not readily available from within the country or to acquire products at a less expensive cost than if it were produced in that country.

Countries may be in a favorable position to export for several reasons. A country may export goods if it is the world's sole supplier of a certain good, such as when it has access to natural resources others lack. Some countries are also able to manufacture products at a relatively lower cost than other countries, for example, when labor costs less. Other factors include the ability to produce superior quality goods or the ability to produce the goods in a season of the year when other countries need them (Branch, 1990).


A country's international trade consists of both importing and exporting goods and services. The difference between the amount exported and the amount imported equals the balance of trade. A trade surplus consists of exporting more than importing while a trade deficit consists of importing more than exporting.


The United States has been heavily dependent upon exporting throughout its history. It has played an important role in global trade as well. Even before its Declaration of Independence, the United States relied heavily on the exportation of cotton, tobacco, and other agricultural products to Europe for much of its commerce. After the Revolutionary War, the United States endured English duties and restrictions in Europe and the West Indies. This caused the United States to form new trade ties with overseas buyers in Africa, India, and East Asia, helping to form a legacy of U.S. trading overseas.

Although the United States thrived in exporting during its first 100 years, it was not until the Industrial Revolution gained momentum in the late 19th century that exporting began to significantly increase. This occurred mainly due to the technological advancements in communications, manufacturing, transportation, and food preservation techniques. It was during this time that the United States made the transition from being a supplier of agricultural products to a manufacturer of industrial goods, such as ships, rail-roads, clothes and cars.

However, in the first decades of the twentieth century there was an increase in protective trade barriers and restrictions created by counties to further their own trade interests. As a result, many laws were created to protect domestic industries and give local firms an advantage in trade. The Sherman Antitrust Act of 1890, the Federal Trade Commission Act of 1914, the

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Figure 1

U.S. International Trade in Goods and Services (in billions of US dollars)

SOURCE. US Census Bureau: Foreign Trade Statistics. Available from: www.census.gov/indicator/www/ustrade.html.

Trading with the Enemy Act of 1917, and the Smoot-Hawley Tariff Act of 1930 were some of the laws passed in the United States at this time. While not all of these were intended to reduce trade, and probably none were intended to devastate U.S. exports, the general pattern internationally was to raise protectionist trade barriers and tariffs in kind, creating an unfavorable climate for U.S. exports. This repressive trade environment is considered one of the causes of the Great Depression.

During the mid-...

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