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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (2749)	7/27/2001 4:33:32 PM
From: frankw1900	Read Replies (1) \| Respond to of 24758

Hell, I am an amateur. Have I got this straight? Exports come from excess domestic capacity [little extra investment required]. We get foreign money for the exports and buy imports with it. If we export more stuff than we import, we have foreign currency left over. If we want to use that foreign left over currency at home, we have to buy our currency using the foreign. Thus cost (exchange rate) of our native currency is bid up in terms of the foreign. And foreign stuff becomes [should be] cheap - foreigners [should] sell us lots more stuff than previously. If we decide to import more stuff and use up the foreign currency we have, then we have to buy foreign currency using ours, and the cost of ours is bid down in terms of the foreign. And foreign stuff becomes [should be] dear - we [should] sell to them lots more than before. If we export a hell of a lot more than we import, and do so for a long time, foreign producers will see a possibility due to our now expensive currency [price level there has risen due to imports from us] and start competing with us in their market and ours. Thus our exports eventually lead to economic development/improvement in the foreign place and sow the seeds of their own competition. Our producers can respond to this new foreign competition by 1. lowering prices [lower profits] 2. becoming more efficient and lowering prices [more output per worker, profit maintained] 3. making/exporting different products 4. spending the foreign currency building factories in the foreign place [price level there has risen sufficiently to make this profitable] but they still have to buy our currency if they wish to bring profits home, thus maintaining the currency discounts 5. having our government bar competing imports and risking retaliation from the foreign government 6. having our government in some way destroy our currency's premium relative to the foreign one. 5 and 6 have negative consequences and ultimately are unsuccessful: Domestic businesses and consumers will object to unnecessarily high prices and degradation of profits and living standards. Have I got the basic structure correct?