Needed: A New National Export Policy by Prof. Michael R. Czinkota

ovicover_07_02_17.gifThe Trump administration aims to lower imports in order to rebalance, after decades of neglecting economic relationships around the world. Doing so should not only be done by applying the stick of import reductions, but also by having as its second major claw of strength and refinement the principal tool of export promotion.

Exports make a firm’s markets grow and change its home nation’s currency value. When U.S. exports increase, the dollar typically goes up in value. Shrinking exports tend to weaken the dollar. Exports also shape public opinion of globalization and offer the opportunity for economies of scale. Higher production volume often means a lower cost of production.

Since high exports also make imports cheaper, a firm may achieve lower costs and higher profits both at home and at abroad through exports. Exporting also allows firms to learn from their competition and improve their ability to survive in a changing environment.

Firms typically have a domestic advantage in their home countries, due to familiarity, connection, and local government support, whereas firms from abroad typically have a disadvantage. Any firm which survives the burden of foreignness already has demonstrated exceptional performance.

Finally, exporting may well lead to additional international corporate strategies, such as joint ventures, franchising or licensing. All these strategies together contribute to the economic strength and security of a nation.

Read the whole article in Ovi Magazine, HERE!

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