A developing country needs to diversify its exports if it has the resources and manufacturing capabilities to ensure economic growth. Most developed countries have a better chance to ride out an economic slump due to its export concentration. Likewise, export competition for the same products with other countries also factor in the equation. How countries depending on its exports and countries that have the least dependence on its exports have affected their gross domestic product figures and its effect on their overall economy.
Good or Bad? Dependency on Exports
Some economists believe that when components of a country's Gross Domestic Product (GDP) exhibit a low proportion of exports relative to its total GDP, that it is not dependent on the exports. Conversely, a country with a 100% export GDP has that figure canceled out by the same amount of imports. Comparative to GDP, these countries have the lowest share of their value added by the export of goods and services. Yet, the role it plays in a country's economy can not be underestimated. Sudan has at 6.1% the lowest share of its value added by its exports, relative to its GDP. With the independence of South Sudan in 2011, Sudan suffered in its oil exports, with about 80% of the oil fields being located in South Sudan. Its GDP slowed to 3.4% in 2014 and 3.1% in 2015. Afghanistan comes in next at 6.6% and the country does not significantly depend on its exports. Its economy has the assistance of over 5 million returning expatriates who bring with them money, business, and skills. Manufacturing and construction have also helped a lot. Burundi comes in at 7.8% with an agricultural economy although its ability to pay for its imports depends on its exports that also depends on world market prices. Kiribati comes in at 10.8% with its economy dependent on foreign development aid, worker remittances, and tourism. With little domestic production, most essentials must be imported. Brazil comes in at 11.2% with a mixed economic system. Exporter of coffee, beef, steel, ethanol, and heavy industries. Tourism also plays a big role in its economy. Nepal comes in at 11.6% with an economy dependent on agriculture, industry, and the service sector. Poverty is widespread with 76% of the local population working in the agriculture sector while 18% are in the service industry. Ethiopia comes in at 11.6% with maize and coffee as its main export earner. Its mineral and possible oil resources are hampered by political disorder. Pakistan comes in at 12.3% with a service-based economy that until recently almost totally depended on agriculture. Although wheat is still its major foreign exchange earner. The Central African Republic comes in at 12.3% with an informal economy that earns more than its formal economy. Diamonds is its biggest export while ivory, bush meat, and alcoholic beverages make up the rest. The United States comes in at 13.4% with a free-market economy supplemented by high productivity and plentiful natural resources. It is the largest importer of goods and second largest exporter of goods in the world. Transportation equipment is its biggest export while oil is its biggest import.
The Importance of Exports Vs. Domestic Consumption Economies
Throughout the history of economic upturns and downturns, economic predilections have also varied. Business establishments have always found different ways to make profits using new methods to maximize their businesses. Diversified exports ensures that a country's economy survives a price slump in the world market while a country that depends on imports for a domestic consumption driven economy might feel the opposite effect if there is a price hike on its imports. But does a balanced trade help a country's economy or does a country have to choose between an export economy or an import economy?