Exports in international trade are goods or services produced in one country that are sold to another country. The producer and seller of the good or service is the exporter and the country buying is the importer.
Exports are extremely important for a country’s economy. Exports offer companies and firms more markets for their goods than what’s available in their home countries. Additionally, economic trade is a major component of 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. Governments will typically use trade protections that consist of tariffs to raise the price of imports to give their industries an advantage in markets. Additionally, countries also negotiate trade agreements with other countries by reducing trade protections and creating mutually beneficial trade relationships with other countries.
Countries that have natural commodities to produce valuable exports have a comparative advantage, which is when a country produces an export for a lower opportunity cost than other countries. For example, India’s population is the country’s comparative advantage because many of the people speak English, allowing them to be affordable call center workers. Some countries have the perfect climate to grow certain crops, such as Jamaica has the right climate to grow coffee, giving the country an edge in exporting coffee.
Aside from the European Union, China is the world’s largest exporter. In 2017, China exported an estimated $2.16 trillion worth of goods and services, primarily electronic equipment and machinery. This comprised about 19.6% of China’s total GDP that year. In 2018, China’s exports made up about 12.9% of the global total.
The U.S. is the second-largest exporter in the world, with an estimated $1.58 trillion in exports for 2017. The largest exports of the U.S. are planes, spacecraft, pharmaceuticals, helicopters, and refined petroleum. One of the reasons that the United States is behind China in exports is because many goods cannot be produced in the U.S. for a price comparable to that in China.
Exporting an estimated $1.40 trillion worth of goods and services in 2017, 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 (notably BMW and Volkswagen), pharmaceuticals (Bayer), machinery, electronics, and chemicals. Germany is the third of three countries to have exports above $1 trillion behind China and the United States.
Japan’s exports for 2017 were valued at an estimated $683.3 billion. Japan’s major exports include automobiles (third-largest manufacturer of automobiles), automobile parts, and electronics (Nintendo, Panasonic, Sony, and many more). About 20.2% of Japan’s exports go to the United States and about 17.6% goes to China.
5. South Korea
South Korea is the fifth-largest exporter of goods and services in the world. South Korea’s 2017 estimate of exports was $577.4 billion. South Korea is dependent on and its economy is driven by exports, as the country does not have rich natural resources. Its largest exports include electronics, automobiles, computers, ships, and petrochemicals. Notable companies for exports include Samsung, LG, KIA, and Hyundai.