There are many factors that affect importing and exporting. Let us look at a few of the most important of these factors.
Trade barriers. The degree to which governments erect or remove trade barriers has a tremendous impact on importing and exporting. The decision of the United States to open its markets significantly after World War II, for example, helped to allow Japan to build its “economic miracle” on exports to the US.
Shipping costs. Importing and exporting typically involves the movement of large amounts of materials. The costs of this movement have a major impact on whether importing and exporting can be profitable. This is one reason that containerization made the post-war boom in trade possible.
Domestic costs and infrastructure availability. One reason that importing and exporting has risen is that it has become cheaper and more feasible to produce many things in poorer countries and ship them to richer ones. This is partly because of high costs in rich countries for things like labor. It is also partly because poorer countries have gained infrastructure that allows them to have productive factories that make things for export.
All of these factors and more affect importing and exporting.
Export and import activities take goods or services created in one country into the market of another country. Exports and imports are vulnerable from many outside forces. Free trade agreements, though meant to benefit export and import activities by protecting interests, can also cause problems due to the political conflicts these agreements can promote. Natural disasters such as tsunamis, hurricanes and volcanic eruptions are other factors that can unexpectedly impact the transportation of imports and exports. The actual production of imports and exports can be impacted by natural disasters as well. Forest fires, for example, may wipe out trees destined to be made into products for export. Imports and exports with some countries may fall victim to a rising foreign exchange rate. Should rates change too much too quickly, importers and exporters may not be able to absorb the cost. Wars also affect exports and imports. Transportation may be impeded because air and rail vehicles have been taken over by war efforts. Additionally, war efforts can interrupt production of the goods being exported.
Just as goods can be imported and exported, so can services. Services such as telemarketing, business consulting and architectural planning can also be exported or imported. Some of the same elements that can affect exported and imported goods can also affect services. Interruptions in transportation and electronics due to natural disasters are one element that might affect this type of import and export.
The factors that affect import and export can be listed as:
- Government Regulations: affect export and imports by making them favorable or unfavorable to prospective buyers and sellers. These may include anti-dumping duties, interest rates, etc.
- Demand and Supply of an item will govern its export and import.
- Country's currency: The stability of a country's currency affects the real cost of a product. Depreciation promotes exports and discourages imports.
- Country's inflation rate: higher inflation leads to more imports
- Quality: better quality means easier exports and brand building
- Marketing: better marketing definitely leads to more exports
- Ease of business: will affect the exports and imports. In today's world, most business can be done online without visiting the site/manufacturing facilities, thus saving time and resources. The Internet has been a big asset to exports and imports.
- Political stability: a stable government means more chances for domestic production, while instability (and war/clashes among groups) means the country will have to depend on imports.