What you should know about importation

Imports are the set of goods and services purchased by a country in foreign territory for use in national territory. Along with exports, they are an essential national accounting tool.

An import is basically any good and/or legitimate service that a country (called ‘importer’) buys from another country (exporter) for its use.

Imports are normally subject to economic restrictions and they are regulated by all countries for the entry of products. Thus, there are many agreements between countries to agree advantageous regulations for the countries that sign them.

Imports and aggregate demand

The role that imports play in a country's economy is fundamental. A country can generate production to be self-sufficient, but it can also buy it from abroad. If the value of imports increases, then aggregate demand will decrease. And vice versa, if we reduce what we buy from abroad, then aggregate demand will increase.

Imports in the current account balance

To account for these two concepts, the term current account balance is used. A very important term to see the foreign trade status of a country. The current account balance consists of a difference, in economic value, between exports and imports. It is an indicator that is very important in gross domestic product (GDP) when we count it from the point of view of aggregate demand.