4 Ways That Help Us Is the Largest Exporters
A trading nation is a nation where most domestic commerce constitutes a high percentage of its gross domestic product. In simple terms, it is a nation where domestic trade and foreign trade make up the overwhelming majority of the nation’s gross domestic product. No other form of commerce accounts for more than 25 percent of the gross domestic product of any nation. While every country has a unique way of doing business, there are five characteristics that all trading nations have in common. These characteristics are quite simply to be found in nearly every nation on earth and they are: stable currency, free capital, open market, moderate interest rates and flexible exchange rates. These features are true of every trading nation on earth and the one common thread among them all is that these nations do not have major economic issues that hinder their ability to trade.
Now let’s take a look at these five characteristics in detail. First, stability. No matter what the economic climate of any nation may be, no matter how strong or weak that economy is, no matter what political turmoil occurs that may affect the country’s ability to trade, there will always be traders that will be purchasing and selling between all involved parties. No matter what the political situation in China might be, no matter what might transpire between the U.S. and China in the future, there will always be markets for goods in which both countries will participate.
This means that there is always a marketplace for goods between Canada and China. The second feature that a trading nation must have in order to be called a trading nation is free capital. In order to facilitate trade, there must be a free flow of capital from one nation to another and this capital must be invested by the exporters in order to increase production and increase demand. It also has to be invested by companies that are domiciled in those markets so that they can expand their presence into new markets.
Another characteristic that a trading nation must have is flexibility. There will always be situations where an exporter desires to sell their products into a different market because that market does not have any demand for what they have to offer. In these instances, having a nation that is flexible will allow exporters to have their products available whenever a need arises rather than having to wait for an opening in the domestic market to do business with them. A free capital market and flexibility in terms of the location of the exporter’s business and the amount of money that can be invested by them will make it easier for exporters to expand their businesses into new markets.
Finally, the fourth characteristic that makes a trading nation a good choice for exporting goods is the level of security that they enjoy. If there was not security in trade for a trading nation, then they would not be able to provide the same level of protection to their exports as that which the United States and other first world nations are able to provide. Exporting to these nations provides them with jobs, revenue and the ability to secure their currencies against external factors like terrorism and other threats. For this reason, many see the United States as a safe exporter of goods compared to a trading nation that does not have such benefits.
All four characteristics listed above make the United States a great exporter of goods and services. It is not even surprising that we are the largest exporter of goods and services worldwide. We do however have to be careful that we do not lose our competitive edge due to the large number of competitors that are trying to export to us. Each of the four characteristics listed above should help us keep our trading position strong. This will allow us to continue to export more to the international community and help us grow as a trading nation.