Imports

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Definition

Imports refer to goods and services purchased from another country. For instance, industrialized countries usually import oil from OPEC countries. The term ‘imports’ also refers to the economic value of all goods and services bought abroad.

Components

Imports are generally composed of agricultural products (rice, corn, wheat), fuel (oil, petroleum), metals (gold, silver, copper), equipment and machinery, and intermediate services (transportation, banking, shipping).

Imports contribute to domestic consumption by increasing consumers’ purchases of goods and services. It also adds to domestic investment by enhancing production capabilities with new tools and equipment. Lastly, it contributes to domestic production through an increased supply of raw materials and spare parts.

Importance

A country's trade balance is affected by its imports. A trade surplus occurs when a country's imports are less than its exports while a trade deficit occurs when its imports are larger than its exports. If a trade deficit persists, it usually implies that local production is weak since the demand for foreign goods and services is higher than the demand for domestic goods and services. This could translate to weaker employment and eventually lower consumption.

Related Articles:

Import Prices

Exports

Trade Balance

Inflation

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