Export-driven economy?

A question from Yahoo! Answers:

Export-driven economy?? what does that mean !!?

Does it meant that hte country’s economic system is failing =)

Export-driven economy is one where exports are relatively large relative to GDP. In and of itself export orientation is neither good nor bad; a lot depends on how diversified the exports are. If exports are poorly diversified (say, a country exports only one commodity or a few related commodities), the country is exposed to price shocks (a drop in the price of the single export can seriously hurt employment and national income). If, however, exports are well-diversified (and consist mostly of manufactures and services, rather than minerals and agricultural commodities), price shocks are not as important.

The ultimate export-driven economies of today are Luxembourg (which has world’s highest GDP per capita) and Malaysia (not very wealthy by any standard, but quickly improving), where both exports and imports substantially exceed GDP.

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