Exports and Imports

Definition of export: Exports are goods or services produced in

one country and delivered to another for sale. Countries should pay in
their currency or US dollars. The exporting country will then use this
money to purchase goods from other countries.
Definition of imports: Imports are goods brought into the country
from other countries. They must normally be paid for in US dollars.
Imports are goods and services bought from the rest of the world by
residents of a country rather than domestically manufactured products.
Imports cause a net outflow of funds from the country because they
require payments to suppliers in another country.
How Importing and Exporting works?
In today's global economy Consumers are used to seeing goods from all
over the world in their local grocery stores and retail shops. These
imported goods from other countries give consumers more options.
Imports also help consumers manage their strained household budgets
because they are typically manufactured at a lower cost than any
domestically produced equivalent.
 When a country's imports surpass its exports, the trade balance is
distorted and the currency depreciates. Because the value of a currency
is one of the most important determinants of a country's economic
performance and gross domestic product, the depreciation of its
currency can have a significant impact on the daily lives of its people.
The import and export activity of a country may affect its (GDP),
exchange rate, inflation, and interest rates.
What exactly is GDP?
Gross Domestic Product (GDP) is the gross market value of all goods
and services produced within a country's domestic borders over a given
period. It is often referred to as National Income (Y). Total imports
and exports are critical components in calculating a country's GDP.
They are categorized as "Net Exports”.
When exports surpass imports, the figure for net exports is positive.
This means that a nation is running a trade surplus. Net exports are
negative when exports are less than imports. This means that the
country is running a trade deficit.
A country's economic growth is aided by a trade surplus. When a
country's exports increase, it indicates a high level of output from its
factories and industrial facilities, as well as a greater number of people
employed to keep these factories running. When a company exports a
large number of goods, it also brings money into the country, which
stimulates consumer spending and contributes to economic growth.
When a country imports goods, it constitutes a capital outflow from that
country. Local businesses are importers, and they make payments to
foreign organizations or exporters. Imports at a high level indicate
strong domestic demand and a rising economy. If these imports are
primarily productive assets, such as machinery and equipment, this is
even better for a country because productive assets would increase the
economy's productivity in the long run.
A strong economy is one in which both exports and imports are
increasing. This usually indicates economic strength and a long-term
trade surplus or deficit. If exports are increasing while imports are
declining, it may suggest that foreign economies are doing better than
the domestic economy. If, on the other hand, exports fall sharply while
imports rise, it may suggest that the domestic economy is doing better
than overseas markets.
The Effect on Exchange Rates:
Because there is a constant feedback loop between international trade
and how a country's currency is valued, the relationship between a
country's imports and exports and its exchange rate is complex. The
exchange rate influences the trade surplus or deficit, which influences
the exchange rate and so on. In general, however, a weaker domestic
currency encourages exports while increasing the cost of imports. A
strong domestic currency, on the other hand, hinders exports while
making imports cheaper.
Advantages and disadvantages of exports:
In the case of companies that, besides selling their products to their
domestic markets, also have the opportunity to sell their products to
international markets. Exporting can be a difficult decision for a
company because exports also have benefits at the same time and thus
there are restrictions and the advantages and disadvantages of exports
should be considered.
Advantages of exports:
1.Sales and Income Growth: 
If you have only one professional qualification, you can only do one
type of job, which does not offer you many career opportunities, but
you can do multiple job opportunities with multiple qualifications.
Exports are very similar since the sale is limited only if a company
caters to domestic markets but when a company begins exporting to
numerous countries the sales rose as a result of an increase in
consumption, resulting in increased profits for the company in turn.
2.Market Diversification:
Another advantage of exports is that company diversification benefits
because, if the country only concentrates on one market, any problem
on that market leads to a sales collapse, but when companies export in
many countries, any slowness in their sales from one Member State can
be attributed to strong sales growth from another.
3.Lower Production Costs:
When the company starts exporting it produces more products than
expected, and as the company sells the goods in large quantities, the
production costs are lower and the bottom line of the business increases
further. Simply put, higher sales and lower production costs are two
factors that will lead the company to a high level.
Disadvantages of exports:
1.Currency and Country Hazard:
The main drawback of exports is that there are, with the exception of
usual risk, two further export risks associated with country risk and
currency risk. Country risk risks change in policies by countries which
can adversely impact a company, so assume that if the company is
based in Europe and the United States is its primary exporting country
and the United States would determine to impose additional tariffs on
goods coming from Europe, as a result of additional tariffs leading to a
drop in the sales of the company, the company will lose its
competitiveness. Besides country risk, there is a currency risk because
there is always a time lag between the time when the company sells its
goods and the time when the company gets payments for the goods
sold, and if the currency moves negatively the company may lose.
2.Rigid Contest:
Another export problem is that the company will have to compete
strongly, given that it has no domestic market where competition exists
only with other domestic companies, but the company has to face
strong competition from many companies around the world, which are
highly competitive on foreign markets.
3.Culture and Consumption Difference:
Culture and consumer tastes are two other factors that make the
exporter's task difficult because these two considerations play an
important role in the demand for goods of companies since the same
product that is popular in one country cannot be accepted in other
countries. This makes it hard, for example, to find a customer in
conservative countries in Asia compared to Europe or the country
where there is a strong market for such products if the company is
selling fashion products for women.

Advantages of imports: 
1.Manufacturing Cost Reduction:
First and foremost, it contributes to a reduction of manufacturing costs
because it only reduces the production cost and reduces production
costs by businesses importing goods from other countries when they
find cheap and cheaper commodities to produce. Simply put, imports
from other countries can lead to an increase in the company's
profitability if the company can locate cheaper raw materials in other
parts of the globe.
2.Useful in Situations of Emergency:
In the event of an emergency, where countries are unable to produce
enough, flood, or other natural disasters, imports are the only way
because countries without imports will face a serious deficiency of
essentials that can be catastrophic for any country. In simple terms,
imports help to avert chaos by preventing a temporary resource
shortage.
3.Helpful in Strategic Relations:
Imports may be very helpful if countries want to build and maintain
strategic relations with other countries because international trade has
everything in mind and if countries continue to export to other countries
without importing anything other than other nations, they will not like
it.
Disadvantages of imports:
1.Foreign outflow Exchange: 
The main infringement of imports is that they result in the country's
external exchange outflow, because the selling domestic currency by
importers when companies buy goods from other parts of the world
rather than the foreign currency and when these importers buy foreign
currency, leads to a drop in foregoing.

2.Currency and Country Risk:

Another problem with imports is the existence of a country as well as
currency risk because, if the company is completely dependent on other
countries for its raw materials, and the export tariff is imposed in this
country, or worse than it could be, the export risk is not disastrous for
the company otherwise currency risk.
 3.Domestic Producers will be hit:
When country imports raw materials and products from countries other
than domestic and manufacturers are affected because imports cheaper
than domestic products are less expensive than local products and
because of lower demand industries or companies will ultimately be
shut down as they cannot keep absorbing losses for a long time. Simply
put, imports indirectly affect local industries and producers, which can
be a disaster for the country's economies in the long term.
Conclusion:
As can be seen from above, Both imports and exports have benefits and
limitations and while imports from other countries remain the only way
to achieve self-sufficiency, develop local industries and save foreign
currency, it should also try to reduce imports and concentrate on
improving infrastructure so that the environment can provide a
conducive environment to the exchange rate.