Calculating Net Exports: Definition & Formula

Calculating Net Exports: Definition & Formula
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  • 0:00 What Are Net Exports?
  • 1:11 Positive Net Exports
  • 2:05 Negative Net Exports
  • 2:50 Lesson Summary
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Lesson Transcript
Instructor: Tara Schofield
Understanding the impact of imports and exports helps explain the financial health of a country and whether the country is selling more products than it is purchasing. This lesson offers examples to illustrate calculating net exports.

What Are Net Exports

Each year the United Stated exports products to countries around the world. Food, furniture, electronics, clothes, and cars are just a few of the thousands of items that are shipped from the United States to around the globe.

In the same period, Americans purchased billions of dollars of products that are imported from other countries. Wine, food, clothes, household items, and automobiles are just the start of the items we buy from other countries. It is the import and export of products that allow us to have more options.

Net exports is the difference between the amount of products that are exported, or shipped out of the country, and the amount imported, or shipped into the country. It is calculated as:

Net Exports = Exports - Imports

The net exports of the country can help state the financial condition of a country. When countries are healthy financially, they have more money to purchase more products from other countries. Likewise, when a country sells products to other countries, it can strengthen its financial status by increasing the amount of money that is coming into the country.

Positive Net Exports

What happens when a country sells and exports more then it buys and imports? Just like your personal budget, if you bring more money in than you spend, you have a positive net amount. You have money left over. The same principle applies to a country's budget. This is called positive net exports.

Let's look at it this way. If the United States exports $5M in products and imports $4M in products, the net export is $1M, which is a positive net export.

To put this in an equation:

Net Exports = Exports - Imports

Net Exports = $5,000,000 - $4,000,000

Net Exports = $1,000,000

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