A company will be referred to as a net importer when it purchases more goods and services through trade than what it exports to other companies outside the company's country of operation. A net exporter, on the other hand, is a country that’s able to produce more goods thus the value of goods and services exported by the country precedes its need for importing produces from other territories. The value of goods imported by ACME Company supersedes its value of exportation by $200,000; therefore, the company is classified under net importers.
A country should be both a net importer and a net exporter depending on different circumstances. Such factors that affect the position a country takes in importing and exporting include; the availability of resources in the country to satisfy a specific need. Example, japan can be classified as both a net importer and a net exporter (Hayes, 2020) . The country japan lacks enough oil reserves to meet its vast demand for energy required to power machinery around the country, due to the lack of oil japan imports more oil, making it a net importer. On the contrary, the country becomes a net exporter as it can export electronic devices to other countries that cannot produce such goods.
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Through net importing a country like the USA can be able to avoid a shortage of goods and further avoid other economic calamities. Although importing can be advantageous, the results are for a short time. A high net importation rate by a country results in trade deficits. This deficits furthermore create limitations in the long run. The deficits might facilitate a way for a country to be economically colonized.
A country that continually runs trade deficits allows foreign investors to acquire funds to buy up capital in that nation—directly affecting the rate of making new investments that increase productivity and creation jobs in the nation. Countries that are net exporters such as Canada and Saudi Arabia benefit from their activities but also face difficulties. Some of the advantages gained by these countries include: they can diversify their markets; thus, they aren't dependent on a single market (Cambazoğlu, 2020). Also, a positive trend in economic growth and lastly better trade margins are realized by these countries. Despite the profits of exportation, some of the difficulties faced by net exporters include an increase in administration costs due to regulations during exporting. Also exporting nations face the problem of lack of control in overseas markets.
References
Hayes, A. (2020, October 14). economy, government and policy, net importer . Retrieved from investopedia.com: https://www.investopedia.com/terms/n/netimporter.asp
Cambazoğlu, B. (2020). Trade Protectionism: Pros and Cons. In International Trade Policies in the Era of Globalization (pp. 94-115). IGI Global.
