mcom business management part -1

2. Household
• savings
Corporations
• Retained
earnings
Government
• Surplus of
public finance
Every subject of economy have some kind of income that
can be used for consumption and for other purposes
The total available savings in the economy makes up the
available financial resources
If we move this analog to global level,the total available
financial resources of all the nations creates the total
financial resources of the global economy

4. • Development of international capital is
based on the existence of an
internationam monetary system and
financial infrastructural
• That is why the real growth of capital
movements is started only in the 19th
century when modern financial
institutions emerged
Capital is one of the
factors of production
(land,labour and
enterpreneur are
others) and it is the
most mobile of them
at international level
• It can be in the form of physical capital
and financial capital
• The profit can be interest
rate,dividend,share on profit of
corporation abroad or rent
International capital
movement is any
transfer of capital
between
countries(with goal
of obtaining extra
profit)

5.  Portfolio investment is a passive investment in securities
abroad,none which entails in active management or control
of securities issued by the investor.A portfolio investment
may be in the form of stocks and corporate bonds
1. Securites of foreign entities on foreign markets
2. Securities of foreign entities on the domestic market
 Foreign direct investment-FDI is defined as a cross-
border investment by a resident entity in one economy
with the objective of obtaining a lasting interest in an
enterprise resident in another economy

6. Foreign portfolio investments into India seem to be
ebbing. They are also tilting towards debt. Both
features raise macroeconomic and financial stability
risks.
The combination of slowing exports, rising imports and
declining short-term capital inflows raises macro risks.
True, India is no longer as fragile as during the
previous year, but the severe gold import restrictions
and tight monetary-fiscal policies that still aid current
account compression shows the external constraint
remains binding and that dependency upon short-term
foreign capital keeps the economy vulnerable to capital
flight. A slowdown in capital flows thus underlines the
need to contain external funding needs, for reasons of
macroeconomic stability. Oct 2014

7. An analysis of key macroeconomic indicators in the select EMEs reveals that India’s
macroeconomic performance compares with other EMEs which received higher FDI inflows
during 2010 For instance, the GDP growth of India improved during 2010 as was the case
with the select EMEs. The current account balance as percent of GDP deteriorated across
the select EMEs, except Argentina. However, inflation in India was generally higher
(remaining at double digits for a long period) than other select EMEs (except Argentina).

8. Everywhere in the world, including the developed countries, governments are vying with each other
to attract foreign capital. The belief that foreign capital plays a constructive role in a country’s
economic development, it has become even stronger since mid-1980
The need for foreign capital arises because of the following reasons. In most developing countries
like India, domestic capital is inadequate for the purpose of economic growth. Foreign capital is
typically seen as a way of filling in gaps between the domestically available supplies of savings,
foreign exchange, government revenue and the planned investment necessary to achieve
developmental targets. An inflow of private foreign capital helps in removing deficit in the balance of
payments over time if the foreign-owned enterprise can generate a net positive flow of export
earnings.

10. reference
 Capital flows into India becoming slower and
turning riskier - Livemint
 Reserve Bank of India
 Foreign direct investment - Wikipedia, the free
encyclopedia
 International Capital Movement
 Microsoft Word - 88642.doc - 88642.pdf
 Forms of Foreign Capital Flowing into India