US & World Economies Economic Terms What Are Exports? Exports Explained in Less Than 4 Minutes By Kimberly Amadeo Kimberly Amadeo Kimberly Amadeo is an expert on U.S. and world economies and investing, with over 20 years of experience in economic analysis and business strategy. She is the President of the economic website World Money Watch. As a writer for The Balance, Kimberly provides insight on the state of the present-day economy, as well as past events that have had a lasting impact. learn about our editorial policies Updated on October 25, 2021 Reviewed by Michael J Boyle Reviewed by Michael J Boyle Michael Boyle is an experienced financial professional with more than 10 years working with financial planning, derivatives, equities, fixed income, project management, and analytics. learn about our financial review board In This Article View All In This Article Definition and Examples of Exports How Exports Work How Countries Boost Exports Photo: Tom Werner / Getty Images Definition Exports are goods and services that are produced in one country and purchased by the residents of another country. Key Takeaways Exports are products or services that are produced or manufactured in one country and sold in another.Exports help a nation grow. As a trading component, they assume importance in diplomatic and foreign policies.Countries export goods and services in which they have a competitive or comparative advantage.Governments encourage exports because they increase revenues, jobs, foreign currency reserves, and liquidity. Definition and Examples of Exports Exports are a component of international trade. They're the goods and services bought by a country's residents that are produced by a foreign nation. In combination with imports, they make up a country's trade balance. Note A country has a trade surplus when it exports goods more than it imports. It has a trade deficit when it imports more than it exports. The United States imported $903.4 million in goods between January and April 2021. It exported $554.1 million in goods during that same period. This created a deficit of $349.3 million. Businesses export goods and services when they have a competitive advantage. They're better than any other company at providing that particular product. They also export products and services that reflect the country's comparative advantage. Countries have comparative advantages in commodities that they have a natural ability to produce. For example, Kenya, Jamaica, and Colombia have the right climate to grow coffee. This gives their industries an edge in exporting coffee. India's population is its comparative advantage. Its workers speak English, which gives them an edge as affordable call center workers. China has a similar advantage in manufacturing due to its lower standard of living. Its workers can live on lesser wages. How Exports Work Most countries want to increase their exports. Their companies want to sell more, and they want to sell overseas when they've sold all they can to their own country's population. They gain expertise in producing goods and services, and they gain knowledge about how to sell to foreign markets. Note The more a country exports, the greater its competitive advantage. Governments encourage exports because they increase jobs, bring in higher wages, and raise the standard of living for residents. People become happier and more likely to support their national leaders as a result. Exports also increase the foreign exchange reserves held in a nation's central bank. Foreigners pay for exports either in their own currency or the U.S. dollar. A country with large reserves can use this to manage its own currency's value. It has enough foreign currency to flood the market with its own currency. That lowers the cost of their exports in other countries. Countries also use currency reserves to manage liquidity. That means they can better control inflation, which is the result of too much money chasing too few goods. They use foreign currency to purchase their own currency in an effort to control inflation. That decreases the money supply, making the local currency worth more. How Countries Boost Exports Countries try to increase exports in three ways. First, they use trade protectionism to give their industries an advantage. This usually consists of tariffs that raise the prices of imports. They also provide subsidies on their own industries to lower prices. But then other countries can retaliate with the same measures, lowering international commerce for everyone. The Smoot-Hawley tariff lowered trade by 65% and worsened the Great Depression. Second, countries also increase exports by negotiating trade agreements. They boost exports by reducing trade protectionism. The World Trade Organization tried to negotiate a multilateral agreement among its 149 members. This Doha agreement almost succeeded, but the European Union and the United States refused to eliminate their farm subsidies. Most countries relied on bilateral agreements or regional trade agreements for years as a result, but then the Obama administration negotiated the Trans-Pacific Partnership in 2015. The Trump administration dropped out in 2017, but the other countries completed the agreement without the United States. The third way countries boost exports is to lower the value of their currencies. This makes their export prices comparatively lower in the receiving country. Central banks do this by lowering interest rates. A government can also print more currency or buy up foreign currency to make its value higher. Countries that try to compete by devaluing their currencies are said to be in currency wars. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. U.S. Census Bureau. "Trade in Goods with World, Seasonally Adjusted." Accessed June 25, 2021. Coffee Research. "The Optimal Coffee Environment: Best Climate Conditions for Growing Coffee Beans." Accessed June 25, 2021. International Trade Commission. "Growth in Services Outsourcing to India: Propellant or Drain on the U.S. Economy?" Page 2. Accessed June 25, 2021. Department of Commerce. "ACE Tool." Accessed June 25, 2021. Office of the U.S. Trade Representative. "Benefits of Trade." Accessed June 25, 2021. OpenScholar@Harvard. "Principles of Macroeconomics, Chapter 16: The Foreign Exchange Market and Trade Elasticities." Page 291. Accessed June 25, 2021. International Trade Commission. "A Centennial History of the United States International Trade Commission." Page 125. Accessed June 25, 2021. Encyclopaedia Brittanica. "Smoot-Hawley Tariff Act." Accessed June 25, 2021. World Trade Organization. "The Doha Agenda." Accessed June 25, 2021. The White House of Barack Obama. "The Trans-Pacific Partnership." Accessed June 25, 2021. Government of Canada. "The Comprehensive and Progressive Agreement for Trans-Pacific Partnership." Accessed June 25, 2021.