Net Export
Candlefocus EditorNet exporting indicates economic strength. Countries with a trade surplus demonstrate the ability to export resources, products and services to other parts of the world, making them more desirable targets for foreign investments. Not only does this produce a positive balance of payments for the exporting country, but also boosts their international attractiveness and contributes to the growth of their currency.
Net exporting is largely based on comparative advantage. Countries with an adequate supply of natural resources, such as oil and gas, often have a comparative advantage over other countries and enjoy a net exporting status. Australia and Saudi Arabia are two examples of countries enjoying a net exporting advantage.
In addition to a strong supply of natural resources and comparative advantages, a weak currency exchange rate can be beneficial for the nation’s net exporting. A weak currency means that the purchasing power of the nation’s domestic currency is low, making exports more attractive in terms of cost when traded with foreign currency. This has the effect of boosting foreign demand and pushing the country’s exports.
Ultimately, a nation’s net exports indicate the strength of its economy. A positive net export number will contribute to the nation’s competitive advantage and helps the country attract more foreign investments, propelling the nation’s economy further.