High component of net export in the total expenditure on final goods and services is a sign of higher exports than imports of the domestic Economy.
It implies –
- That the inflow of foreign exchange is greater than the outflow of foreign exchange
- That the domestically produced goods are able to find markets abroad. So that deficiency of demand no longer remains a hurdle in the growth process.
- That we are by the large, self-sufficient. Our imports are so limited that we don’t have to depend much on other countries.