What effect will an equal amount of imports and exports have on a country?
Introduction
What do you know about exports and imports? They help to provide things like make-up from Korea, Iphones from the US, technologies from China and so on to other countries. But as well they sell those products they purchase resources that they can’t produce. And usually the country exports or imports more. But what if the value of exports will be the same as the value of imports?
Understanding exports vs imports
First, let's understand what imports and exports are.
Imports - a good or service bought in one country that was produced in another.
Exports - goods and services that are produced in one country and sold to buyers in another.
For example, Kazakhstan is exporting raw materials as phosphorus, coking coal and titanium, while Europe buys those products and they are being imported to the country.
So the amount of exports and imports of a country can be different everywhere. Some can import more than export like the UK, the US, Mexico, Brazil and so on. And other vice versa like China, Russia, UAE etc. This is called the trade deficit and trade surplus.
Trade deficit - occurs when a country's imports exceed its exports during a given time period. It is also referred to as a negative balance of trade
Trade surplus - is an economic measure of a positive balance of trade, where a country's exports exceed its imports.
Usually there are some countries with current account surpluses and others with deficits. But an interesting question occurs, is it possible that all have surpluses or trades? Answer is pretty easy, since we understand that if there are no exports, there are no imports. So either no one is interacting with each other or there are some surpluses and deficit accounted countries.
The effect of equal exports and imports
So getting back to our question. Having the same amount of exports and imports means that the country's current account isn't in deficit nor in surplus. There can be two different situations:
This country doesn’t give and receive nothing.
It means that you can buy only domestic products, made within the country's borders. All goods and services made in the country can be cheaper than imported. You know about the approximate quality of a product. Country doesn’t rely on others.
It doesn’t mean that you can’t go abroad, however it means that you can buy things there so basically some money is going abroad which means there is some import. Moreover it means there is no income from abroad. And producing all goods and services can lead to loss in efficiency, because there can be not enough work force to produce all this.
After thinking for a bit, the first country that comes to mind is North Korea. Since they are closed from the outside world they produce everything themselves and don’t rely on others.This country manages amount of imports and exports
This seems like a perfect situation. You still get all products and services from other countries, there is no unemployment and can lead to an economic growth. However, you still don’t get income from abroad since all this money you spend on imports and as we suppose there are the same. Besides, it is nearly impossible to control it, because we can’t predict the future and the amount demanded will vary. Also it can appear that international products are more demanded and it will lead to bigger exports of those products which will lead to a disbalance.
There are imports and exports in the international market. We can get products with better quality from abroad and trade them for something of our domestic production. It may appear that we have the same amount of imports and exports, however it won’t take long until this situation will change because you can’t say what will happen in the future.
All terminology is taken from https://www.investopedia.com/
Written by Amina Beiganova | Proofread by Amina Meirkhan