The term export is derived from the conceptual meaning as to ship goods and services out of the port of a country. There are varied reasons why businesses enter into exporting. Some may say that there is a need for exporting if a product or service is applicable to a wider market and has been tested to be efficient, chances are, it will prove to be profitable in the international market. Exporting is also a low cost activity to get involved in the international business and thus expanding profit. Companies who venture into exporting business usually have to have presence or representation in the overseas market, this might need additional personnel and thus, promote development. Exporting also creates market diversification that helps offset sales when local markets fluctuate. Given this advantages I believe that exporting is really necessary since it is a major factor that shapes the world’s economy.
Why exporting matters? In macroeconomic terms, increased exports help us pay for our imports as our economy grows. Philippines for example is a small country with a limited domestic market, so exporting is the only way in which it can grow and take advantage of economies of scale. There are also microeconomic reasons why our country needs to export. By exporting overseas we can compete with the best companies in the world and are therefore driven to be innovative and use the most modern technology and management practices. Another economic reason for exporting is knowledge transfer from “learning by doing”. Economists argue that the development of knowledge drives modern economies. This is known as “endogenous growth theory”, which has both microeconomic and macroeconomic elements. If firms in the Philippines are exporting they are more likely to be exposed to international trends in technology, product design, consumer behavior and so on. As exporters benefit from “learning by doing” their knowledge and access to technology will potentially “spillover” to...
Please join StudyMode to read the full document