what is an export 
exports are goods and services that are produced in one country and sold to buyers in another exports along with imports make up international trade instead of confining themselves within their geographical borders countries often intentionally seek external markets around the world for commerce achieving greater revenue and transactional opportunities investopedia eliana rodgersunderstanding exportsexports are incredibly important to modern economies because they offer people and firms many more markets for their goods one of the core functions of diplomacy and foreign policy between governments is to foster economic trade encouraging exports and imports for the benefit of all trading parties export agreements are often heavily strategic with countries exchanging agreements to ensure their own country can not only receive the goods they need via imports but can distribute goods for more domestic revenue via exports also consider how governments may use exports as leverage over political situations in response to the war in ukraine the white house issued an executive order prohibiting both the importation and exportation of certain goods to and from russia 2companies often measure their net exports which is their total exports minus their total imports because net exports are a component of a country s gross domestic product gdp exports play a factor in determining a country s financial and economic well being goods may be sent via direct exporting or indirect exporting direct exporting entails working directly with an importer the exporting company handles all of the client communication as a result they do not pay a middleman fee because the direct export method may require teams with specialized knowledge many companies opt to contract out a third party to facilitate an indirect export in 2022 latest information the world exported almost 31 34 trillion worth of goods 3 7 trillion of this activity came from china the world s largest exporter 1the export processin many cases a country will partner with another country to understand the demand needs for certain products instead of blindly manufacturing goods and hoping for an international buyer the export process often starts with the manufacturing country receiving an order the exporting country must often receive proper clearance from their home country to export goods this is often done by obtaining an export license or meeting other country specific requirements the export process usually entails settling several financial matters upfront first the exporter may seek out a letter of credit from the importer if applicable this ensures the exporter can have greater faith in the transaction and will receive compensation for the goods once exported the exporter and importer also fix the exchange rate at which the exported goods will be exchanged at from the foreign currency to the home currency at this point an invoice is most often issued and paid for finalizing the sale as the order is prepared formal documents are gathered including a permit issued by the importer s country financial documents such as a bill of lading and shipping documents these documents are remitted to the seller of primary importance is the shipment advance which notifies the importer how goods will be transmitted trade barriers and other limitationsa trade barrier includes any government law regulation policy or practice that is designed to protect domestic products from foreign competition or to artificially stimulate exports of particular domestic products the most common foreign trade barriers are government imposed measures and policies that restrict prevent or impede the international exchange of goods and services trade barriers present exporting companies with a unique set of challenges extra costs are likely to be realized because companies must allocate considerable resources to researching foreign markets and modifying products to meet local demand and regulations exports facilitate international trade and stimulate domestic economic activity by creating employment production and revenue companies that export are typically exposed to a higher degree of financial risk payment collection methods such as open accounts letters of credit prepayment and consignment are inherently complex and take longer to process than payments from domestic customers advantages and disadvantages of exportscompanies export products and services for a variety of reasons exports can increase sales and profits if the goods create new markets or expand existing ones they may even present an opportunity to capture significant global market share companies that export spread business risk by diversifying into multiple markets exporting into foreign markets can often reduce per unit costs by taking advantage of economies of scale finally companies that export to foreign markets gain new knowledge and experience that may allow the discovery of new technologies marketing practices and insights into foreign competitors to export goods countries may need to incur high transportation costs and the risk of loss due to the transportation of goods if ownership of the goods does not pass to the buyer until the goods are received this may make the exportation unduly risky for the exporter because of logistic and economic constraints small and medium sized businesses or governments may find difficulty in exporting goods in addition smaller companies often do not have the in house personnel needed to potentially navigate international trade regulations exporting of goods is much more common for larger bodies with greater resources to seek out these outside markets last exporting to foreign countries may result in currency risk depending on exchange rate agreements at the time of contract a foreign currency s worth may deteriorate negatively affecting an exporter consider when one currency strengthens against another if the exporter is to be paid in the currency whose value has depreciated their export may be devalued this devaluation may also occur based on extenuating tariffs or lower export prices often allows for greater economic activity leading to higher revenuemay result in production efficiencies due to scaling manufacturingmay result in greater innovation and r d through working with foreign partnersmay reduce operational risk in some areas as revenue streams become more diversifiedmay result in high transportation chargesmay not be achievable by smaller entities due to lack of knowledge and resourcesmay result in currency exchange risk due to devaluing currenciesmay increase operational risk in some areas due to unknown political or geographical risksexample of exportsthe united states is one of the top exporters of automotive vehicles as domestic companies manufacture cars trucks and other vehicles these are shipped around the world and used by non u s entities in 2022 latest information the observatory of economic complexity reported that the u s was the world s third largest exporter of cars distributing 57 5 billion of vehicles around the world the u s distributed over 16 9 billion worth of vehicles to canada making up 29 3 of car exports the largest percentage other top countries receiving u s made vehicles are germany china south korea and mexico 3alternatively the u s was also the top importer of vehicles in 2022 it imported 159 billion of cars most of which came from mexico japan and canada 3of the u s manufacturers that distribute goods around the world bmw manufacturing led domestic companies by the value of cars exported in 2022 latest information the group s south carolina plant alone exported over 227 000 vehicles to roughly 120 countries an export total of nearly 9 6 billion 42022 was the ninth consecutive year that bmw manufacturing led automotive exports by value and more than 15 5 of the company s exports were delivered to germany the top export market in 2023 the plant s value of exports increased to 10 1 billion 54