Question

If a country is a big exporter, is it more exposed to global financial crises. Provide your
arguments for this statement.

Answer 1

Exporting entails the selling, or sending of commodities from a country to others; whereby the commodities move from the economy to other economies, on a trading basis. This has got the effect of earning the country exporting commodities revenue in the long run; thus earning value for the commodities that are produced locally in the economy. In the event that the value of commodities being exported exceeds the value of commodities being imported, then there will be the effect of a favorable balance of payments. This is because the country earns more than it is the spending on imports; which is favorable for economic growth in the long run. However, there is the consideration of financial crises that are associated with the exporting of commodities by a country. This is the definition of the loss of value by any of the broad variety of financial considerations that are attached to an economic entity. In this case of exports, it takes the dimension of fluctuating currencies on the global market scene. As a result of more exports to more destinations across the world, it is factual to state that the country is exposed to more financial risks; as it interacts with very many currencies; which exposes it to far much greater risk in the long run.