Importance of Imports and Exports in the International Trade

Posted by Javaneh Mottaghi on October 23rd, 2015

International trade involves the buying and selling of goods, products, and services across national borders. It is the backbone of the commercial world as producers and manufacturers in different nations try to make profit from an expanded, global market rather than limiting themselves to trading and selling their goods within their own borders. International trade occurs not only because businesses want greater profit opportunities but because it can result in lower production costs (such as in the case of regions with cheaper labor). International trade also provides access to specialized industries otherwise unavailable to a particular nation and it aids in the management of lacking/surplus natural resources.

Importation and exportation of goods and services are exactly what international trade is all about. Importation is the transfer of goods and services from foreign countries to a home country, while exportation is the transfer of the same from a home country to foreign consumers. Both import and export trade assume very important roles in the context of world economy and its overall performance. Upward trends in import and export trade are indicative of the efficiency and the smooth function of world economies, whereas downward trends stem from economic instability.

Good import trade administration is essential to ensure the free in-flow of goods and services to a particular country. This is because quotas, tariffs, and government subsidies would often stand in the way of this free flow. With proper import administration, appropriate anti-dumping measures and fair trade practices can be implemented across borders so that competitive import trade can continue. This kind of healthy import trade environment ensures a good and increasing inflow of funds to a particular home country, while also increasing the competitiveness of the domestic market.

Export trade on the other hand, plays a huge role in international trade by serving as the principal source of foreign exchange for countries. A country benefits from exporting commodities and services to another nation, if it has a significant comparative advantage in the production of such commodity or service over foreign competitors. As per the Heckscher-Ohlin international trade model, a country that specializes in a particular commodity and exports it/intensively uses its production and abundant supply gains from the trade depending on the difference between the importing and exporting country's  autarkic terms of trade. Customs authorities are the ones in charge of enforcing regulations and codes to ensure fair import and export trade practices in the global market.

About the author:
Javaneh Motaghi is the E-commerce representative at White Rose Group established in 1992 to offer businesses and organizations, whether SME or large corporate enterprise, a unique cost-effective Import and Export solution covering the width and breadth of Iran, through having branches in four different locations of Iran; Tehran, Chabahar, Bandar Abbas and Sari."