Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Net Exporter

What it is:

A net exporter is a country that sells more to other countries than it buys from other countries. Countries are often net exporters in some industries (natural gas, for example) but net importers in others.

How it works (Example):

Net exports are measured by comparing the value of the goods imported over a specific time period to the value of similar goods exported during that period. The formula for net exports is:

Net Exports = Value of Exports - Value of Imports

For example, let's suppose Canada purchased $3 billion of gasoline from other countries last year, but it also sold $7 billion of gasoline to other countries last year. Using the formula above, Canada's net gasoline exports are:

Net Exports = $7 billion - $3 billion = $4 billion

Why it Matters:

When the value of goods exported is higher than the value of goods imported, the country is said to have a positive balance of trade for the period. When taken as a whole, this can be an indicator of a country's savings rate, future exchange rates, and to some degree its self-sufficiency (though economists constantly debate the idea).