Exporting—the production and sale of goods from one country to another—is both a business decision and part of a country’s economic and political policies. Businesses export PRODUCTs and SERVICES to markets where they expect to earn PROFITs. From a business perspective, exporting is part of a firm’s MARKETING STRATEGY. Countries exchange goods and services based on COMPARATIVE ADVANTAGE. Because the U.S. market is the largest in the world, for many years American companies did not feel the need to participate in global markets; domestic DEMAND created sufficient opportunities. For some U.S. companies, export expansion resulted from needs generated by World War II; for others creation of the General Agreement on Tariffs and Trade (1947), now part of the WORLD TRADE ORGANIZATION, led to export expansion. Most trade is conducted among industrialized countries and among large MULTINATIONAL CORPORATIONs (MNCs). MNCs often produce raw materials, components, and partially assembled products in many different countries, shipping these products to other factories and markets around the world. Intrafirm trade is a major part of total exports. One of the issues associated with this type of trade is transfer pricing, the price assessed for goods “sold” from one division of a company to another in a different country. Exporting contributes to a country’s GROSS DOMESTIC PRODUCT, adding output and INCOME to an economy. Many countries create TRADE BARRIERS, blocking IMPORTS while supporting domestic exporting activity. In the 1980s Japanese automobile manufacturers, fearing the creation of new BARRIERS TO ENTRY into the U.S. market, agreed to voluntary export constraints, limiting the number of cars shipped annually. With decreased SUPPLY and increasing demand, retailers of Japanese cars raised prices in the United States. One study found this voluntary export constraint program cost American consumers $250,000 for every domestic job saved. Exporting depends heavily on price competitiveness in world markets, and this, in turn, depends on EXCHANGE RATES. The relatively high-valued dollar in the 1990s reduced U.S. exports while stimulating demand for imports, contributing to a continuing U.S. trade deficit. The United States (as well as the governments of most other industrialized countries) provides support for business exporting. The OVERSEAS PRIVATE INVESTMENT CORPORATION and the EXPORT-IMPORT BANK OF THE UNITED STATES provide INSURANCE and investment CAPITAL for U.S. companies. The Department of Commerce and many state commerce departments provide a variety of trade seminars, tradeshow services, and other assistance to businesses attempting to expand their export-marketing efforts. The U.S. State Department provides assistance through commercial attaches to U.S. businesses seeking opportunities abroad.
See also EXPORT CONTROLS.