Title: What is the value of exports? – Owen Abroad
Headings: What is the value of exports?
What is the value of exports?
Content: It is true that nations benefit from exports (or, to be more precise, they benefit from the imports that exports enable them to buy). But you can’t measure the benefit to a nation of exports by the value of its export earnings, any more than you can measure the profitability of a firm by its turnover. Getting this right is important because, as Paul Krugman pointed out in Peddling Prosperity, if you lose sight of the fundamental economics you get drawn into stupid policy prescriptions such as export subsidies or import tariffs. For example, if you make it a policy goal to increase export earnings, you may subsidise exports, and so start to export goods that cost the nation more to make than someone abroad is willing to pay for them. Though export earnings have gone up, the nation is worse off, not better off, because the exports have cost the nation more than it earns from them. Exports are good for development. There are almost no examples of successful development that have not been built on export-led growth. We should support reductions in trade barriers; and we should support investments that help developing countries to be more productive and so export more at lower cost to themselves. Developing nations would rather have trade than aid, and most taxpayers in donor nations would agree.