export literally means the transfer of goods or services from one country to another, so that this transfer has taken place through official and customs channels between countries. In this case, the seller of goods or services is known as the “exporter” and the buyer of goods or services is also known as the “importer”. In general, in international trade, “export” refers to the sale of goods and services to markets outside the customs territory of the country of production.
Export and free trade
The theory of relative superiority emerged in the 19th century in the writings of classical economists. This theory is based on the principle that every country or group and economy should produce those goods that are superior in production, because it offers goods at a cheaper price than other countries or individuals and groups. The theory of relative superiority, articulated by the renowned British economist Ricardo, has been around for many years, including the theoretical view of international trade. In today’s economic world, technological changes and developments are so rapid and dramatic that no country alone can produce everything for itself, and development and prosperity will not happen without the cooperation and benefit of trade with others. Classical and neoclassical economists attribute the increase in competition, innovation, product quality, and economic mobility in developing countries largely to foreign trade and economic relations.
Exports of goods enable companies to increase the quality of their products and reduce production costs in order to maintain their competitive position in global markets. Increasing employee skills is another benefit of companies ‘exports, because companies have to increase their employees’ knowledge to produce standard goods. Increasing market share and preventing the reduction of production and sales of the product if competitors operate in the domestic market are other benefits of exports. Thus, in the event of a recession in the domestic market, the company has a good market abroad. Exports help the economic growth and development of countries and the establishment of trade balance and economic balance.
For medium and small companies (companies with less than 250 employees), the production of goods and services that can be sold in foreign markets seems more difficult than the domestic market. The reason for this is the lack of knowledge of trade rules, cultural differences, different languages and foreign exchange conditions that are in conflict with the interest in exports. Another problem is the risk of exchange rate fluctuations during export activity, which challenges the company’s financial management. On the other hand, it should always be borne in mind that international customers demand more services from their vendors than domestic buyers, such as equipment installation, maintenance or warranty, and more after-sales service.
Exports and free zones
According to many economists, the creation of free zones is a tool that developing countries can use the principle of relative superiority and accelerate their economic development by employing cheap manpower as well as raw materials and intermediate goods and promoting free trade in those areas. Since one of the ways to develop foreign trade is to use the tools of the free zone, so many economists consider the use of these tools useful. In particular, the use of this tool can be a factor in preventing shocks caused by the transition stages of the economy and to harmonize domestic policies to a large extent with the developments of the global economy and increase economic efficiency.