It is worth noting here that the effects of an injection into the
economy from exports will necessarily have a positive impact on the
economy, regardless of the level of employment (although the exact
effects will differ). In a situation where there is not full employment, and
there is an injection into the economy, unemployed resources are
absorbed by the increased demand for exports, and there is a resulting
increase in national income. In a situation where there is full employment,
and there is an injection into the economy from exports, there will be a
reorganisation in the composition of the economy. Greenaway and Tuck
state that: “Expanding output in such [export] activities allows the system
to adjust by contracting output in areas of comparative disadvantage and
importing the commodities concerned. The labour released by the
contracting sector is more effectively employed in the export sector”. This
is an intuitive conclusion drawn from the theory of comparative
advantage, whereby international trade results from the different relative
efficiencies of different countries in producing and providing different
goods and services.