Net export is the amount by which the total value of exports of a country surpasses or exceeds its total value of imports.
Net export is an important component of the calculation of the gross domestic product of an economy. If the total exports have a value that is less than the total value of goods and services imported, then it is considered as a positive value of net exports.
Similarly, if the value of exports is less than imports, it is considered to be negative. The positive and negative values of net exports help people witness a trade surplus or a trade deficit in an economy.
A country that receives the trade surplus shows that it gets more money from other countries. In contrast, the trade deficit economy spends more money in the foreign market.
The net export formula can be represented as follows:
Net exports = Value of exports – Value of imports
Where,
The value of exports is the money earned by a country from foreign countries by providing goods and services.
The value of imports is the money spent by a country by availing goods and services from other countries.
Net export serves as an indicator of the economic growth of a country. A high net export amount contributes to the GDP of the nation and also makes the country an attractive destination for conducting business.
This completes the topic on the net export formula, which is a very important concept for calculating the value of net exports. It is a part of determining the GDP of a nation. To read more about such interesting concepts on economics for class 12, stay tuned to BYJU’S.
Comments