In 2016, the United Arab Emirates gained $298.6 billion (US dollars) from exports, and then in 2020, it managed a reputable $335.238 billion (US dollars). That is a 12.3% increase, in four years. In imports, 2016, the UAE gained $226.5 billion (US dollars), and in 2020; $246.886 billion (US dollars); a 9% increase of imported goods over the same four years. But this begs the question, why are imports and exports so valuable to a country’s economy?
Imports and exports are the primary financial exchanges in global trade. Rules from the customs authority and import restrictions limit what can be imported and exported in international trade.
Imports refer to the goods that a country purchases from abroad, usually from neighbouring nations—the act of receiving imports from a country can represent the nature of the relationship between the two parties and can allow an insight into the dependence of one country on another: due to economic or political power. Since payments to sellers are a part of import operations, there is a cash outflow from the nation, as well. Imports can also lead to economic productivity—depending on the type of product imported. It can help reduce manufacturing costs and instead; aid in producing exports.
Export talks about the goods and services that are produced locally, or domestically, and are sold to other governments. Examples of exports include resources like food and/or spices, fuel, and industrial machinery. Due to the creation of these goods in a nation—the overall economic output of a country skyrockets, and unemployment rates decrease as positions/jobs are filled.
Sometimes, nations may export goods that they have a competitive ‘edge’ over, due to climate condition, weather, and overall terrain. It can aid in different product and/or plant growth that would typically be difficult to produce in a different landscape. These kinds of commodities would be easy and can be produced naturally, granting a new, profitable export for the country.
Both imports and exports comprise a nation's trade balance—the difference between the values of country exports and the value of country imports—which influences the general state of the economy. A sought-after trade balance would allow the export value to exceed the import value; meaning a nation would be ‘making’ more money, rather than ‘spending’ it. However, a much more ‘healthy’ trade balance for a country would be one where both imports and exports see continuous, stable increase; showing that the country’s economy can continue to expand steadily and keep that growth. GDP (gross domestic product), interest rates, inflation rates, and exchange rates can also be affected by imports and exports.
Overall, imports and exports are the building blocks for a nation’s economy; needed to allow it to prosper, and grow at a steady, safe pace by maintaining a stable and flourishing trade balance. Imports and exports allow a country to introduce new products to the global market, take part in international trade, increase revenue, reach out to new markets, and produce more effectively and more economically practical.
Written by Anoushay Khan