## Formula to Calculate Net Exports of a Country

The proportion of net export formula is calculated with reference to the GDP. The importance of net exports for the country can be gauged by calculating this proportion. For instance, in a country like the USA, this proportion is tiny indicating that the relative importance of net exports in its GDP is less.

Net exports are the difference between the value of exports and the value of imports of a country. If a country’s exports are more than the imports, then the net exports would be positive. If a country’s imports are more than exports, then the net exports would be negative. The Net Exports formula is represented as below:

**Net Exports**

**= Value of Exports – Value of Imports**

In symbolic terms,

**Net Exports = X – M**

When,

- X is the value of exports
- M is the value of imports

Exports and Imports include items such as oil, gold, jewelry, textiles, automobiles, travel, defense goods, and services such as IT (Information Technology), BPO (Business Process Outsourcing), consulting, etc.

### Steps to Calculate Net Exports

In order to calculate net exports, use the following steps:

**Step 1**: Calculate the value of exports for the country**Step 2:**Calculate the value of imports for the country**Step 3:**Calculate the net exports using the formula:

**Net Exports = Value of Exports – Value of Imports**

In certain cases, Gross Domestic Product (GDP), consumption expenditure, investment, government expenditure are given. In such cases, net exports are given by:

**Net Exports = GDP – C – I – G**

Where,

- C is Consumption Expenditure
- I is Investment
- G is Government Expenditure

### Examples

#### Example #1

**The total value of exports of a nation is $5 billion and the value of imports is $3 billion. Calculate the net exports for the nation.**

**Solution**

Use the following data for the calculation of net exports.

Therefore, the calculation of the net exports is as follows,

- = $5 – $3

**Net Exports will be –**

**= $2 billion**

The value of net exports for the nation is $2 billion.

#### Example #2

**The Finance Minister was having discussions with the Prime Minister of the country regarding economic affairs. The Prime Minister told the Finance Minister to calculate the Net Exports of the country. He summoned the Chief Statistician who gave the following information. Calculate the net exports of the country for the Finance Minister.**

**Solution**

- GDP = C + I + G + (X – M)
- X – M = GDP – C – I – G
- X – M is nothing but net exports

Therefore, the calculation of the net exports is as follows,

- = $100 billion – $40 billion – $10 billion – $20 billion

**Net Exports will be –**

**= $30 billion**

The Net Exports of the country are $30 billion.

#### Example #3

**Economists were debating about different countries regarding their dependence on net exports. They wanted to find out the country with the highest and least amount of net exports from a set of countries. The data for the countries is as under: Find out the country with the highest and the least amount of net exports from these countries.**

**Solution**

Therefore, the calculation of the net exports of country A is as follows,

- =600-700

**Net Exports of country A will be – **

**= -100**

Similarly, we can calculate net exports for the remaining countries.

Country E has the highest amount of net exports at $700 million. Country A has the least amount of net exports at -$100 million.

#### Example #4

**A country has the following data of exports and imports:**

**Solution**

** Step 1**

Aggregate all the exports. Insert the formula =B3+B5+B6+B8 in cell B10 to aggregate all the exports from the data given.

**Total Value of Exports**

**Step 2: **Aggregate of all the imports. Insert the formula =B4+B7+B9 in cell B11.

**Total Value of Imports**

**Step 3: **Calculate the net exports. Insert the formula =B10 – B11 in cell B12.

**Step 4: **Press Enter to get the Answer

The Net Exports are $50 million.

### Net Exports Calculator

Value of Exports | |

Value of Imports | |

Net Exports Formula | |

Net Exports Formula = | Value of Exports - Value of Imports | |

0 - 0 = | 0 |

### Relevance and Uses

Net Exports are an important component in the calculation of the GDP of a country. GDP is the sum of consumption, investment, government expenditure, and net exports. Economists look at the GDP growth rate and the underlying trend in the GDP. Net exports play a role in this analysis.

Net exports measure the total trade of a country. A country is said to have a trade surplus if its net exports are positive. Conversely, if its net exports are negative, the country is said to have a trade deficit. If net exports are positive, it leads to an increase in GDP as the net export figure is added. Conversely, if the net exports are negative, it leads to a decline in GDP. A country is said to be export-oriented if its net export figure is positive. If a country’s net exports are negative, it is known as import oriented.

Net exports give an idea about a country’s future foreign exchange rate, savings rate, etc. For instance, if the net exports are consistently negative, it is possible that the country’s currency may depreciate in the future. However, a country’s foreign exchange rate cannot be predicted with certainty and only the likelihood can be predicted. For instance, though the USA has negative net exports, the US dollar has remained strong with reference to other currencies. Similarly, an idea of a country’s self-sufficiency can be obtained through the net export figure.

A number of factors can affect the net exports of a country. When there is devaluation in a country’s currency, it boosts a country’s exports and makes its imports expensive. Thus, devaluation in currency leads to an increase in the net exports for the country. Similarly, strengthening a country’s currency leads to a decline in the net exports for the country.

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