Exports are goods or services produced in one country that are sold to another country. The difference between exports and imports can be confusing, because any given product is both an import and an export, and the appropriate term at any given time is dependent upon whether the user is in the sending country or the receiving country. The country producing and selling a product is the exporter, and the products it sends to other countries are known as exports. Conversely, the country purchasing and receiving the products is known as the importer and calls those products imports. Exports are extremely important for a country’s economy. Exports give producers access to a global marketplace, greatly expanding their potential customer base. Additionally, imports and exports factor heavily into international diplomacy and foreign policy between governments.
Governments encourage exports and generally want to increase exports over imports. Exports create jobs, bring in higher wages, raise the standard of living for a country’s residents, and increase foreign currency reserves and liquidity. Because exports result in international funds coming into the country and imports result in money being sent out of the country, governments will often use trade protections, such as placing tariffs on incoming goods, to raise the price of imports and give their domestic industries an advantage. Alternatively, countries often negotiate trade agreements with one another that reduce trade protections such as tariffs and create mutually beneficial trade relationships.
Top 10 Countries that Export the Most Goods and Services (Current US$ millions - World Bank 2020)
|Rank||Country||Exports (Current US$)|
|8||Hong Kong (China SAR)||$612,566.52|
Why exports and imports are important
One major advantage of the import/export model is that it enables countries to import goods and services that aren't readily available domestically. Another advantage is that it enables countries to specialize in goods or services that are easier to produce, less costly, or in greater supply in that country as compared to others. This gives the country a competitive advantage and enables it to get the most out of its available natural resources or demographic qualities.
For example, Saudi Arabia possesses one-sixth of the world's crude petroleum reserves, but if the petroleum producers could only sell to other citizens of Saudi Arabia, their market would be very small indeed. What's more, crude petroleum would be immensely expensive in countries that lacked large natural reserves of it. However, because Saudi Arabia can export crude petroleum and other countries can import it, crude petroleum is readily available worldwide and Saudi Arabia's petroleum producers have become much more successful by selling to customers outside their national borders.
Similarly, cacao trees can only grow in roughly 25% of the world's countries. If the import/export market did not exist, cacao producers such as Ivory Coast and Malaysia would not be able to export cacao to countries such as Germany, Belgium, and the United States. More importantly to consumers with a sweet tooth, those countries would not be able to export the chocolate made from that cacao all over the world.
Profiles of the world's largest exporters
Aside from the European Union (which is a collective of many countries), China is the world’s largest exporter. In 2020, China exported an estimated $2.72 trillion worth of goods and services, primarily electronic equipment and machinery such as broadcast equipment, computers, integrated circuits, office machine parts, and telephones. In 2018, China’s exports made up about 10.78% of the global total.
2. United States
The U.S. is the second-largest exporter in the world, with an estimated $2.12 trillion in exports for 2020. The largest exports of the U.S. are crude and refined petroleum; integrated circuits; pharmaceuticals and medical instruments; and aircraft including planes, spacecraft, and helicopters as well as their replacement parts. One of the reasons that the United States lags behind China in exports is the cost of labor. Many goods cannot be produced, manufactured, or assembled in the U.S. for a price comparable to that in China.
Having exported an estimated $1.67 trillion worth of goods and services in 2020, Germany is the world’s third-largest exporter. As one of the most technologically advanced countries in the world, Germany’s main exports include automobiles (BMW, Mercedes-Benz, Porsche, Audi, Volkswagen), pharmaceuticals (Bayer), aircraft, machinery, electronics, and chemicals. Germany is the third of three countries to have exports exceeding $1 trillion, behind only China and the United States.
Japan’s exports for 2020 were valued at an estimated $785.4 billion. Japan’s major exports include automobiles (Toyota, Honda, Nissan, Mazda, Suzuki, more) and automobile parts, integrated circuits and electronic devices (Nintendo, Panasonic, Sony, and many more). Japan's largest export customers are China, the United States, South Korea, Taiwan, and Hong Kong.
5. United Kingdom
The United Kingdom ranked as the fifth-highest exporter in the world in terms of dollar value in 2020, shipping an estimated $770.5 billion in goods and services to international customers. The U.K.'s top exports include cars (Bentley, Jaguar, Mini, Rolls-Royce, more), gas turbines, gold, medicines, hard liquor, antiques, and crude petroleum (which is often first imported from Norway, then exported to the rest of Europe, as well as China and South Korea).