This document provides an overview of international capital movements. It discusses various types of capital movements including foreign direct investment, portfolio investment, and official flows. Foreign direct investment involves direct ownership in companies overseas, while portfolio investment is a passive investment in securities abroad. Official flows include loans and grants from governments and international organizations. The document also examines determinants of capital flows and the role of foreign capital in economic development for countries.
This document is a project report submitted by Mr. Jiten H Menghani, a student at the University of Mumbai, for his M.Com degree. The report is about international capital movements and was guided by Prof. Mrs. Rachana Joshi. It includes an abstract, introduction, types of international capital movements such as foreign direct investment and portfolio investment, and factors influencing capital flows. It also discusses the role, impacts and drawbacks of foreign capital as well as capital flows to developing countries and India.
This document provides an overview of foreign portfolio investment (FPI) in India. It discusses the origin and composition of FPI flows, including foreign institutional investments, depository receipts, and offshore funds. It explains that FPI consists of passive investments in stocks, bonds, and other securities, as opposed to foreign direct investment which involves ownership and management of firms. The document outlines the benefits of FPI to India's economy as well as trends in FPI over time. It also analyzes the determinants and impacts of FPI flows, including both risks and benefits. In summary, the document serves as a comprehensive introduction to the topic of foreign portfolio investment in the Indian financial market.
Foreign direct investment (FDI) involves a company from one country making a physical investment in building or expanding a business in another country. There are several potential benefits of FDI for host countries, including transferring technology, exploiting natural resources, and generating employment. However, the effects of FDI depend on the type (e.g. greenfield vs mergers and acquisitions) and can include both positive and negative externalities. Political risk also affects foreign investment and refers to complications from political decisions and instability in a country that impact business objectives and outcomes.
This document is a project report submitted by a student to the University of Mumbai on international capital movement. It includes a declaration by the student, acknowledgements, a table of contents, and sections covering objectives, research methodology, and various topics related to international capital movement such as meaning, types, factors affecting, role, importance, trends, and policies. The report provides an overview of concepts and issues related to the flow of capital across international borders.
2.2. Balance Of Payment Capital Account To Finance Ca DeficitHai Vu
International Finance related issues.
The Capital Account of the balance of payments measures all international economic transactions of financial assets. It is divided into two components:
+ The Capital Account
+ The Financial Account.
Capital Accounts consist of:
- Direct Investment – in which the investor exerts some explicit degree of control over the assets.
- Portfolio Investment – in which the investor has no control over the assets nor any participation in the management.
- Other Investment – consists of various short-term and long-term trade credits, cross-border loans, currency deposits, bank deposits and other capital flows related to cross-border trade.
DSR - Debt Service Ratio:
The Debt Service Ratio - DSR is the percentage of a borrower's income that will be used to pay off a loan. It is one of the factors a lender will use to assess your application. Most lenders set the maximum DSR from 30% to 30%, which means that the loan repayments should not take up more than that part of your salary. This ensures that you will be able to pay off your loan comfortably, with little to no risk of defaulting or going bankrupt. The DSR may be calculated based on your monthly, weekly or fortnightly earnings.
This document provides an outline for Chapter 19 of a textbook on multinational finance. The chapter discusses the multinational finance function and how companies raise funds globally. It covers external sources like global debt and equity markets as well as internal sources through intercompany transfers. The chapter also explores foreign exchange risk management, international capital budgeting, taxation issues for multinational enterprises, and how companies finance imports and exports. An opening case study describes how Nu Skin Enterprises manages currency risk across its operations in many countries.
The document provides an overview of foreign capital in India. It discusses the historical context of foreign capital in India dating back to the Indus Valley civilization and periods of trade along the Silk Road. It outlines the need for foreign capital to fill savings-investment gaps and address shortages in management skills, technology, and infrastructure. The document traces India's liberalization of foreign investment since the 1990s, resulting in increased foreign direct investment. It examines the forms of foreign capital such as investment, loans, aid, and the trends in capital inflows to India over time.
This document provides an overview of international capital movements. It discusses various types of capital movements including foreign direct investment, portfolio investment, and official flows. Foreign direct investment involves direct ownership in companies overseas, while portfolio investment is a passive investment in securities abroad. Official flows include loans and grants from governments and international organizations. The document also examines determinants of capital flows and the role of foreign capital in economic development for countries.
This document is a project report submitted by Mr. Jiten H Menghani, a student at the University of Mumbai, for his M.Com degree. The report is about international capital movements and was guided by Prof. Mrs. Rachana Joshi. It includes an abstract, introduction, types of international capital movements such as foreign direct investment and portfolio investment, and factors influencing capital flows. It also discusses the role, impacts and drawbacks of foreign capital as well as capital flows to developing countries and India.
This document provides an overview of foreign portfolio investment (FPI) in India. It discusses the origin and composition of FPI flows, including foreign institutional investments, depository receipts, and offshore funds. It explains that FPI consists of passive investments in stocks, bonds, and other securities, as opposed to foreign direct investment which involves ownership and management of firms. The document outlines the benefits of FPI to India's economy as well as trends in FPI over time. It also analyzes the determinants and impacts of FPI flows, including both risks and benefits. In summary, the document serves as a comprehensive introduction to the topic of foreign portfolio investment in the Indian financial market.
Foreign direct investment (FDI) involves a company from one country making a physical investment in building or expanding a business in another country. There are several potential benefits of FDI for host countries, including transferring technology, exploiting natural resources, and generating employment. However, the effects of FDI depend on the type (e.g. greenfield vs mergers and acquisitions) and can include both positive and negative externalities. Political risk also affects foreign investment and refers to complications from political decisions and instability in a country that impact business objectives and outcomes.
This document is a project report submitted by a student to the University of Mumbai on international capital movement. It includes a declaration by the student, acknowledgements, a table of contents, and sections covering objectives, research methodology, and various topics related to international capital movement such as meaning, types, factors affecting, role, importance, trends, and policies. The report provides an overview of concepts and issues related to the flow of capital across international borders.
2.2. Balance Of Payment Capital Account To Finance Ca DeficitHai Vu
International Finance related issues.
The Capital Account of the balance of payments measures all international economic transactions of financial assets. It is divided into two components:
+ The Capital Account
+ The Financial Account.
Capital Accounts consist of:
- Direct Investment – in which the investor exerts some explicit degree of control over the assets.
- Portfolio Investment – in which the investor has no control over the assets nor any participation in the management.
- Other Investment – consists of various short-term and long-term trade credits, cross-border loans, currency deposits, bank deposits and other capital flows related to cross-border trade.
DSR - Debt Service Ratio:
The Debt Service Ratio - DSR is the percentage of a borrower's income that will be used to pay off a loan. It is one of the factors a lender will use to assess your application. Most lenders set the maximum DSR from 30% to 30%, which means that the loan repayments should not take up more than that part of your salary. This ensures that you will be able to pay off your loan comfortably, with little to no risk of defaulting or going bankrupt. The DSR may be calculated based on your monthly, weekly or fortnightly earnings.
This document provides an outline for Chapter 19 of a textbook on multinational finance. The chapter discusses the multinational finance function and how companies raise funds globally. It covers external sources like global debt and equity markets as well as internal sources through intercompany transfers. The chapter also explores foreign exchange risk management, international capital budgeting, taxation issues for multinational enterprises, and how companies finance imports and exports. An opening case study describes how Nu Skin Enterprises manages currency risk across its operations in many countries.
The document provides an overview of foreign capital in India. It discusses the historical context of foreign capital in India dating back to the Indus Valley civilization and periods of trade along the Silk Road. It outlines the need for foreign capital to fill savings-investment gaps and address shortages in management skills, technology, and infrastructure. The document traces India's liberalization of foreign investment since the 1990s, resulting in increased foreign direct investment. It examines the forms of foreign capital such as investment, loans, aid, and the trends in capital inflows to India over time.
This document provides an overview of national capital markets and international financing. It discusses several key topics:
1. Trends in corporate financing including a decline in bank lending worldwide and a rise in direct financing through capital markets.
2. The globalization of financial markets and how technology has reduced barriers and increased interconnectivity.
3. National capital markets serving as international financial centers and how certain cities have become hubs for global capital flows.
4. The various sources of development financing including multilateral banks like the World Bank as well as regional and national development banks.
5. Project finance as a method for raising funds for large infrastructure projects where lenders look primarily to the cash flows from the project
Foreign capital includes any inflow of capital from abroad in the form of foreign aid, loans, grants, or foreign investment. It can benefit both developed and developing countries by filling financial gaps, supporting high investment levels, transferring technology, and exploiting natural resources. However, foreign capital flows have not always been satisfactory in all regions and countries. The document then discusses various sources of foreign capital like foreign direct investment, foreign portfolio investment, external commercial borrowings, and differentiates between them. It also outlines some benefits and risks of foreign capital inflows.
Foreign direct investment (FDI) involves a company from one country making a physical investment into building or acquiring assets in another country, such as by establishing a factory or purchasing a company. The document discusses various types of FDI, incentives for attracting FDI, and its importance and impact. It also provides examples of FDI statistics and trends in countries such as China, Africa, and European nations. While FDI can spur economic growth, increase skills and technology transfers, it also introduces risks such as political instability and crowding out of local firms.
This document discusses transnational capital flows (TCFs), which refer to large movements of capital across borders. TCFs have increased significantly in recent decades due to factors like growth of sophisticated financial instruments and improved technology. There are several forms of TCFs, including foreign direct investment (FDI), foreign institutional investment (FII), and cross-border lending. While TCFs provided developing countries with investment capital, the volatility of some flows like currency transactions have also caused financial crises, such as the 1997 Asian financial crisis which was exacerbated by short-term foreign borrowing and currency mismatches.
The document provides an overview of foreign direct investment and the retail sector in India. It discusses the key forms and types of FDI, the historical evolution of FDI in India, and sectors that allow 100% FDI such as hotels, non-banking financial services, and power. It also summarizes the phases of evolution of the retail sector in India and highlights organized retail makes up a small percentage compared to other countries. Finally, it outlines some challenges facing the organized retail sector in India like changing consumer habits, lack of retail space, and shortage of skilled labor.
A foreign direct investment is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct control.
FDI as A Source of External Finance to Developing Countries: A Special Refere...iosrjce
In this era of increasingly globalized world economy, FDI is particularly a significant driving force
behind the interdependence of national economies and is considered as the main source of external finance. The
considerable decline in official development assistance (ODA) and commercial bank lending to developing
countries, which are considered as the main sources of meeting the external financing needs of developing
countries, have seen a greater reliance on private capital especially foreign direct investment as a source of
development finance. This is because of the fact that FDI not only remains much less volatile than portfolio and
other investments but it has also proved to be resilient enough during East Asian crisis of 1997-98 and the
Mexican crisis of 1994-95. In view of this growing significance of foreign direct investment, this paper aims to
study the role of FDI in external financing to developing countries, particularly India and China and the
benefits of combining FDI with other private sources of external finance. The paper concludes that FDI is the
major source of external finance for developing economies not only in absolute terms but also relative to other
sources of private capital flows, contributing on an average more than half of net private and official flows
during the period under review. The findings also presented a completely different picture with regard to the
structure of external financing for India and China. For China, FDI is the major external source of finance
followed by debt. On the other hand, for India Workers’ Remittances is the major source of external finance
followed by debt. The paper further concludes that China and India are the first and third most developing
country destinations for investment flows respectively and both are vying with each other to attract more and
more FDI inflows.
Brief overview of Foreign Portfolio Investments - impact on the economy and impact by the economic variables, with special statistics & focus on India.
International investment and foreign direct investment play an important role in the global economy. There are different types of foreign investment such as foreign direct investment, portfolio investment, and investment in depository receipts. Foreign direct investment provides benefits like increased investment, technology transfer, and competition but it also faces criticism like undermining economic autonomy. Factors like natural resources, market size, production efficiency, interest rates, and government policies affect international investment flows. India moved from a restrictive policy on foreign investment pre-1991 to a more liberalized policy with automatic approval for foreign investment in many industries.
Financial globalization refers to the integration of financial markets around the world. It has increased capital flows between countries and led to benefits like increased funds and prevention against financial crises. However, critics argue that it also increases the risk of financial crises and that advanced countries are hypocritical in their policies around aid and trade. Foreign direct investment and foreign institutional investors have also played a major role in financial globalization and the economies of countries like India.
Business BVI Janury 2016 Edition - The BVI - Corporate Evolution Serving Glob...Greg Boyd
This document summarizes changes in the legal profession over the past 20 years due to technology and globalization. Law firms have expanded globally and now use computers, laptops, and smartphones in their work. Client meetings are often electronic and major deals are closed through email exchanges of documents. The legal landscape has also been impacted by various global economic events like the Global Financial Crisis, which has led to an evolution in how offshore finance centers like the British Virgin Islands (BVI) operate to adapt to changing business needs and regulations. The BVI in particular provides a flexible corporate structure that supports foreign direct investment and multinational businesses.
Foreign direct investment (FDI) in India was introduced in 1991 under the Foreign Exchange Management Act. It has since become a major political issue, with debates around further liberalizing FDI rules. While FDI into India has increased substantially, proposals to allow more foreign ownership in multi-brand retail met resistance from political parties concerned about effects on small retailers. The policy has been delayed and remains a contentious topic in Indian politics and economics.
Brad faber-outline foreign direct investmentdk1089
Foreign direct investment (FDI) involves investing in or gaining control of businesses in other countries. While FDI can promote economic growth in host countries by increasing investment, it also presents some risks like reducing competition and national autonomy. Countries take different approaches to FDI, from restricting it to promote domestic industry to strategically courting FDI in certain sectors. The impact of FDI on regional development is complex, as it can both intensify economic inequalities while also spreading technology and skills.
The balance of payments (BOP) records all economic transactions between a country's residents and the rest of the world over a period, usually a quarter or year. It includes payments for exports and imports of goods, services, financial capital, and transfers. Sources of funds like exports are recorded as surpluses, while uses of funds like imports are recorded as deficits. For the BOP accounts to balance overall, any trade deficit must be counterbalanced by surpluses from other transactions like foreign investment returns or loans.
Microcredit involves extending very small loans to impoverished borrowers who lack collateral or a credit history. It aims to support entrepreneurship and alleviate poverty, especially for women who often lack stable employment.
Relation Between Inflow Of FDI and The Development Of India's EconomyIJTEMT
1) The document examines the relationship between foreign direct investment (FDI) inflows and economic development in India. It discusses how FDI has increased in India since economic reforms began in 1991, with sectors like services, telecommunications and software attracting significant investment.
2) The paper aims to analyze the impact of FDI on India's GDP as a measure of economic development. It also examines how economic reforms have affected FDI in India and constraints to increasing FDI.
3) The document provides context on the growth of FDI globally and its potential benefits, like increasing employment, productivity, and technology transfer. However, it notes that some studies have struggled to find a definitive causal link between FDI and economic
The document provides an overview of the key features and components of the Indian financial system. It discusses the features of the system including payment systems, pooling of funds, and risk management. It then describes the major types of financial institutions in India such as regulatory institutions, banking institutions like commercial banks, and non-banking institutions. It also provides classifications of financial markets and instruments. In closing, it discusses important financial services available in India.
Finance refers to the management of money and funds for activities. It involves planning, organizing and controlling the procurement and use of financial resources. International finance deals with monetary and economic relations between countries. It refers to managing the financial functions of international businesses. Key aspects of international finance include foreign exchange risk, political risk, market imperfections, and expanded investment opportunities from operating in multiple countries and currencies. The balance of payments accounts for and balances all economic transactions between a country and the rest of the world over a period of time. It is classified into the current, capital and official reserve accounts.
This document discusses foreign direct investment (FDI). It defines FDI as investment made by transnational corporations to increase international business, usually through establishing new production facilities abroad. Businesses and governments engage in FDI to expand markets and acquire foreign resources. There are various methods for firms to invest abroad, like joint ventures or mergers and acquisitions, which are less risky than direct FDI. The document also discusses factors that attract FDI to countries, like market size, infrastructure, and political stability. It outlines sectors where FDI is permitted and not permitted in India.
Comparison beween Multinational Financial Management and Domestic Financial Management?
Discuss evolution and International Financial Management System?
Write Special features of foreign exchange?
Describe the country risk Analysis in International Business?
Short notes on:
(i) Franchise system
(ii) Short term assets and liabilities
(iii) Foreign direct investment
SUMMER 2023 CLASS PRESENTATION ON INTERNATIONAL FINANCIAL INSTITUTIONS (IFIS)...GeorgeKabongah2
The economic health of every country is a proper matter of concern to all its neighbors, near and far — U.S. President Franklin D. Roosevelt at the opening of Bretton Woods
In addition, students will develop research skills by leading individual and group projects, as well as analytical and communication skills in writing and oral exercises.
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This document provides an overview of national capital markets and international financing. It discusses several key topics:
1. Trends in corporate financing including a decline in bank lending worldwide and a rise in direct financing through capital markets.
2. The globalization of financial markets and how technology has reduced barriers and increased interconnectivity.
3. National capital markets serving as international financial centers and how certain cities have become hubs for global capital flows.
4. The various sources of development financing including multilateral banks like the World Bank as well as regional and national development banks.
5. Project finance as a method for raising funds for large infrastructure projects where lenders look primarily to the cash flows from the project
Foreign capital includes any inflow of capital from abroad in the form of foreign aid, loans, grants, or foreign investment. It can benefit both developed and developing countries by filling financial gaps, supporting high investment levels, transferring technology, and exploiting natural resources. However, foreign capital flows have not always been satisfactory in all regions and countries. The document then discusses various sources of foreign capital like foreign direct investment, foreign portfolio investment, external commercial borrowings, and differentiates between them. It also outlines some benefits and risks of foreign capital inflows.
Foreign direct investment (FDI) involves a company from one country making a physical investment into building or acquiring assets in another country, such as by establishing a factory or purchasing a company. The document discusses various types of FDI, incentives for attracting FDI, and its importance and impact. It also provides examples of FDI statistics and trends in countries such as China, Africa, and European nations. While FDI can spur economic growth, increase skills and technology transfers, it also introduces risks such as political instability and crowding out of local firms.
This document discusses transnational capital flows (TCFs), which refer to large movements of capital across borders. TCFs have increased significantly in recent decades due to factors like growth of sophisticated financial instruments and improved technology. There are several forms of TCFs, including foreign direct investment (FDI), foreign institutional investment (FII), and cross-border lending. While TCFs provided developing countries with investment capital, the volatility of some flows like currency transactions have also caused financial crises, such as the 1997 Asian financial crisis which was exacerbated by short-term foreign borrowing and currency mismatches.
The document provides an overview of foreign direct investment and the retail sector in India. It discusses the key forms and types of FDI, the historical evolution of FDI in India, and sectors that allow 100% FDI such as hotels, non-banking financial services, and power. It also summarizes the phases of evolution of the retail sector in India and highlights organized retail makes up a small percentage compared to other countries. Finally, it outlines some challenges facing the organized retail sector in India like changing consumer habits, lack of retail space, and shortage of skilled labor.
A foreign direct investment is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct control.
FDI as A Source of External Finance to Developing Countries: A Special Refere...iosrjce
In this era of increasingly globalized world economy, FDI is particularly a significant driving force
behind the interdependence of national economies and is considered as the main source of external finance. The
considerable decline in official development assistance (ODA) and commercial bank lending to developing
countries, which are considered as the main sources of meeting the external financing needs of developing
countries, have seen a greater reliance on private capital especially foreign direct investment as a source of
development finance. This is because of the fact that FDI not only remains much less volatile than portfolio and
other investments but it has also proved to be resilient enough during East Asian crisis of 1997-98 and the
Mexican crisis of 1994-95. In view of this growing significance of foreign direct investment, this paper aims to
study the role of FDI in external financing to developing countries, particularly India and China and the
benefits of combining FDI with other private sources of external finance. The paper concludes that FDI is the
major source of external finance for developing economies not only in absolute terms but also relative to other
sources of private capital flows, contributing on an average more than half of net private and official flows
during the period under review. The findings also presented a completely different picture with regard to the
structure of external financing for India and China. For China, FDI is the major external source of finance
followed by debt. On the other hand, for India Workers’ Remittances is the major source of external finance
followed by debt. The paper further concludes that China and India are the first and third most developing
country destinations for investment flows respectively and both are vying with each other to attract more and
more FDI inflows.
Brief overview of Foreign Portfolio Investments - impact on the economy and impact by the economic variables, with special statistics & focus on India.
International investment and foreign direct investment play an important role in the global economy. There are different types of foreign investment such as foreign direct investment, portfolio investment, and investment in depository receipts. Foreign direct investment provides benefits like increased investment, technology transfer, and competition but it also faces criticism like undermining economic autonomy. Factors like natural resources, market size, production efficiency, interest rates, and government policies affect international investment flows. India moved from a restrictive policy on foreign investment pre-1991 to a more liberalized policy with automatic approval for foreign investment in many industries.
Financial globalization refers to the integration of financial markets around the world. It has increased capital flows between countries and led to benefits like increased funds and prevention against financial crises. However, critics argue that it also increases the risk of financial crises and that advanced countries are hypocritical in their policies around aid and trade. Foreign direct investment and foreign institutional investors have also played a major role in financial globalization and the economies of countries like India.
Business BVI Janury 2016 Edition - The BVI - Corporate Evolution Serving Glob...Greg Boyd
This document summarizes changes in the legal profession over the past 20 years due to technology and globalization. Law firms have expanded globally and now use computers, laptops, and smartphones in their work. Client meetings are often electronic and major deals are closed through email exchanges of documents. The legal landscape has also been impacted by various global economic events like the Global Financial Crisis, which has led to an evolution in how offshore finance centers like the British Virgin Islands (BVI) operate to adapt to changing business needs and regulations. The BVI in particular provides a flexible corporate structure that supports foreign direct investment and multinational businesses.
Foreign direct investment (FDI) in India was introduced in 1991 under the Foreign Exchange Management Act. It has since become a major political issue, with debates around further liberalizing FDI rules. While FDI into India has increased substantially, proposals to allow more foreign ownership in multi-brand retail met resistance from political parties concerned about effects on small retailers. The policy has been delayed and remains a contentious topic in Indian politics and economics.
Brad faber-outline foreign direct investmentdk1089
Foreign direct investment (FDI) involves investing in or gaining control of businesses in other countries. While FDI can promote economic growth in host countries by increasing investment, it also presents some risks like reducing competition and national autonomy. Countries take different approaches to FDI, from restricting it to promote domestic industry to strategically courting FDI in certain sectors. The impact of FDI on regional development is complex, as it can both intensify economic inequalities while also spreading technology and skills.
The balance of payments (BOP) records all economic transactions between a country's residents and the rest of the world over a period, usually a quarter or year. It includes payments for exports and imports of goods, services, financial capital, and transfers. Sources of funds like exports are recorded as surpluses, while uses of funds like imports are recorded as deficits. For the BOP accounts to balance overall, any trade deficit must be counterbalanced by surpluses from other transactions like foreign investment returns or loans.
Microcredit involves extending very small loans to impoverished borrowers who lack collateral or a credit history. It aims to support entrepreneurship and alleviate poverty, especially for women who often lack stable employment.
Relation Between Inflow Of FDI and The Development Of India's EconomyIJTEMT
1) The document examines the relationship between foreign direct investment (FDI) inflows and economic development in India. It discusses how FDI has increased in India since economic reforms began in 1991, with sectors like services, telecommunications and software attracting significant investment.
2) The paper aims to analyze the impact of FDI on India's GDP as a measure of economic development. It also examines how economic reforms have affected FDI in India and constraints to increasing FDI.
3) The document provides context on the growth of FDI globally and its potential benefits, like increasing employment, productivity, and technology transfer. However, it notes that some studies have struggled to find a definitive causal link between FDI and economic
The document provides an overview of the key features and components of the Indian financial system. It discusses the features of the system including payment systems, pooling of funds, and risk management. It then describes the major types of financial institutions in India such as regulatory institutions, banking institutions like commercial banks, and non-banking institutions. It also provides classifications of financial markets and instruments. In closing, it discusses important financial services available in India.
Finance refers to the management of money and funds for activities. It involves planning, organizing and controlling the procurement and use of financial resources. International finance deals with monetary and economic relations between countries. It refers to managing the financial functions of international businesses. Key aspects of international finance include foreign exchange risk, political risk, market imperfections, and expanded investment opportunities from operating in multiple countries and currencies. The balance of payments accounts for and balances all economic transactions between a country and the rest of the world over a period of time. It is classified into the current, capital and official reserve accounts.
This document discusses foreign direct investment (FDI). It defines FDI as investment made by transnational corporations to increase international business, usually through establishing new production facilities abroad. Businesses and governments engage in FDI to expand markets and acquire foreign resources. There are various methods for firms to invest abroad, like joint ventures or mergers and acquisitions, which are less risky than direct FDI. The document also discusses factors that attract FDI to countries, like market size, infrastructure, and political stability. It outlines sectors where FDI is permitted and not permitted in India.
Comparison beween Multinational Financial Management and Domestic Financial Management?
Discuss evolution and International Financial Management System?
Write Special features of foreign exchange?
Describe the country risk Analysis in International Business?
Short notes on:
(i) Franchise system
(ii) Short term assets and liabilities
(iii) Foreign direct investment
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To understand the process of project audit
To recognize the value of an audit to project management
To determine when to terminate a project
To identify various reasons why a project is terminated
To identify checklist
Final Class Presentation on Project Audit and Closure.pptGeorgeKabongah2
Project auditing can be defined as the process of detailed inspection of the management of a project, its methodology, its techniques, its procedures, its documents, its properties, its budgets, its expenses and its level of completion.
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Beyond Degrees - Empowering the Workforce in the Context of Skills-First.pptxEduSkills OECD
Iván Bornacelly, Policy Analyst at the OECD Centre for Skills, OECD, presents at the webinar 'Tackling job market gaps with a skills-first approach' on 12 June 2024
Gender and Mental Health - Counselling and Family Therapy Applications and In...PsychoTech Services
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Chapter wise All Notes of First year Basic Civil Engineering.pptxDenish Jangid
Chapter wise All Notes of First year Basic Civil Engineering
Syllabus
Chapter-1
Introduction to objective, scope and outcome the subject
Chapter 2
Introduction: Scope and Specialization of Civil Engineering, Role of civil Engineer in Society, Impact of infrastructural development on economy of country.
Chapter 3
Surveying: Object Principles & Types of Surveying; Site Plans, Plans & Maps; Scales & Unit of different Measurements.
Linear Measurements: Instruments used. Linear Measurement by Tape, Ranging out Survey Lines and overcoming Obstructions; Measurements on sloping ground; Tape corrections, conventional symbols. Angular Measurements: Instruments used; Introduction to Compass Surveying, Bearings and Longitude & Latitude of a Line, Introduction to total station.
Levelling: Instrument used Object of levelling, Methods of levelling in brief, and Contour maps.
Chapter 4
Buildings: Selection of site for Buildings, Layout of Building Plan, Types of buildings, Plinth area, carpet area, floor space index, Introduction to building byelaws, concept of sun light & ventilation. Components of Buildings & their functions, Basic concept of R.C.C., Introduction to types of foundation
Chapter 5
Transportation: Introduction to Transportation Engineering; Traffic and Road Safety: Types and Characteristics of Various Modes of Transportation; Various Road Traffic Signs, Causes of Accidents and Road Safety Measures.
Chapter 6
Environmental Engineering: Environmental Pollution, Environmental Acts and Regulations, Functional Concepts of Ecology, Basics of Species, Biodiversity, Ecosystem, Hydrological Cycle; Chemical Cycles: Carbon, Nitrogen & Phosphorus; Energy Flow in Ecosystems.
Water Pollution: Water Quality standards, Introduction to Treatment & Disposal of Waste Water. Reuse and Saving of Water, Rain Water Harvesting. Solid Waste Management: Classification of Solid Waste, Collection, Transportation and Disposal of Solid. Recycling of Solid Waste: Energy Recovery, Sanitary Landfill, On-Site Sanitation. Air & Noise Pollution: Primary and Secondary air pollutants, Harmful effects of Air Pollution, Control of Air Pollution. . Noise Pollution Harmful Effects of noise pollution, control of noise pollution, Global warming & Climate Change, Ozone depletion, Greenhouse effect
Text Books:
1. Palancharmy, Basic Civil Engineering, McGraw Hill publishers.
2. Satheesh Gopi, Basic Civil Engineering, Pearson Publishers.
3. Ketki Rangwala Dalal, Essentials of Civil Engineering, Charotar Publishing House.
4. BCP, Surveying volume 1
How to Make a Field Mandatory in Odoo 17Celine George
In Odoo, making a field required can be done through both Python code and XML views. When you set the required attribute to True in Python code, it makes the field required across all views where it's used. Conversely, when you set the required attribute in XML views, it makes the field required only in the context of that particular view.
Strategies for Effective Upskilling is a presentation by Chinwendu Peace in a Your Skill Boost Masterclass organisation by the Excellence Foundation for South Sudan on 08th and 09th June 2024 from 1 PM to 3 PM on each day.
Main Java[All of the Base Concepts}.docxadhitya5119
This is part 1 of my Java Learning Journey. This Contains Custom methods, classes, constructors, packages, multithreading , try- catch block, finally block and more.
SUMMER 2022 INTERNATIONAL CAPITAL FOWS & CURRENT ACCOUNT.pptx
1. IRL 6230 A: INTERNATIONAL
FINANCIAL MECHANISMS
International Capital Flows, current
account, reserve accumulation, and
global imbalances
2. Introduction
One of the most important developments in the world economy in the
1990s has been the spectacular surge in international capital flows.
These flows have emanated from a greater financial liberalisation,
improvement in information technology, emergence and proliferation
of institutional investors such as mutual and pension funds, and the
spectra of financial innovation.
With the increasing capital flows and participation of foreign investors
and institutions in the financial markets of developing countries, the
capital account has been the focus of attention since the late 1980s
and especially so in the 1990s.
The expansion of capital flows has been much larger than that of
international trade flows.
The process has been reinforced by the ongoing abolition of
impediments and capital controls and the widespread liberalisation of
financial markets in the developing countries during the 1990s.
3.
4. Types/Sources of International Capital Movements
Capital movement can be classified by instrument into debt or
equity and by maturity into short-term and long-terms.
Capital movement can be divided in to short-term and long-terms flows.
Depending upon the nature of credit instruments involved.
“A capital movement is short-term if it is embodied in a credit instruments of
less than a year’s maturity. If the instruments has duration of more than a
year or consist of the title to ownership, such as the share of stock or a deed
to property, the capital movement is long-term.”
SHORT-TERM CAPITAL MOVEMENT:-
Short-term capital instruments are demand deposits, bills, overdraft,
commercial and financial papers and acceptances, loan and commercial
banks credits, and items in the process of collection.
They are mostly speculative in nature. Short-terms capital movements may
take the form of hot money movements which refers to capital movements to
take advantages of international difference in interest rate.
LONG-TERM CAPITAL MOVEMENTS:-
They are generally for long-term investments. They may be further classified
in to direct investment, portfolio investment and assistance from
governments and institutions.
5.
6. Foreign Direct Investment [FDI]
Foreign direct investment (FDI) is a direct investment into production or business in a
country by an individual or company in another country, either by buying a company in
the target country or by expanding operations of an existing business in that country.
Foreign direct investment is in contrast to portfolio investment which is a passive
investment in the securities of another country such as stocks and bonds.
Broadly, foreign direct investment includes "mergers and acquisitions, building new
facilities, reinvesting profits earned from overseas operations and intra company
loans".
In a narrow sense, foreign direct investment refers just to building new facilities.
The numerical FDI figures based on varied definitions are not easily comparable.
As a part of the national accounts of a country, and in regard to the GDP equation
Y=C+I+G+(XM)[Consumption + Domestic investment + Government spending
+(eXports - iMports], I is investment plus foreign investment, FDI is defined as the
net inflows of investment (inflow minus outflow) to acquire a lasting management
interest (10 percent or more of voting stock) in an enterprise operating in an
economy other than that of the investor.
7. TYPES OF FDI
Horizontal FDI arises when a firm duplicates its home
country-based activities at the same value chain stage in a
host country through FDI.
Platform FDI Foreign direct investment from a source country
into a destination country for the purpose of exporting to a
third country.
Vertical FDI takes place when a firm through FDI moves
upstream or downstream in different value chains i.e., when
firms perform value-adding activities stage by stage in a
vertical fashion in a host country.
Horizontal FDI decreases international trade as the product of
them is usually aimed at host country; the two other types
generally act as a stimulus for it.
8. METHODS
The foreign direct investor may acquire voting
power of an enterprise in an economy through any
of the following methods:
by incorporating a wholly owned subsidiary or
company anywhere
by acquiring shares in an associated
enterprise
through a merger or an acquisition of an
unrelated enterprise
participating in an equity joint venture with
another investor or enterprise.
9.
10. Portfolio
The term portfolio refers to any collection of financial assets such as stocks,
bonds, and cash.
Portfolios may be held by individual investors and/or managed by financial
professionals, hedge funds, banks and other financial institutions.
It is a generally accepted principle that a portfolio is designed according to the
investor's risk tolerance, time frame and investment objectives.
The monetary value of each asset may influence the risk/reward ratio of the
portfolio and is referred to as the asset allocation of the portfolio.
When determining a proper asset allocation one aims at maximizing the
expected return and minimizing the risk.
This is an example of a multi-objective optimization problem: more "efficient
solutions" are available and the preferred solution must be selected by
considering a tradeoff between risk and return.
In particular, a portfolio A is dominated by another portfolio A' if A' has a
greater expected gain and a lesser risk than A.
If no portfolio dominates A, A is a Pareto-optimal portfolio.
The set of Pareto-optimal returns and risks is called the Pareto Efficient
Frontier for the Markowitz Portfolio selection problem.
11.
12. Official Flows
They are shown as external assistance, i.e. grants and loans from
bilateral and multilateral flows.
Long-term capital movements can also take the form of
government loan grants and loans from international financial
institutions like IBRD, IDA, etc.
Sometimes government of advanced countries may gives loans to
financial project in a developing country. These are known as
bilateral loans.
International financial institution like World Bank, African
Development Bank, etc. also give financial assistance to
developing countries.
These loans are called multilateral loans.
Thus, governments and international institutions play an important
role in international capital movement.
13. Foreign Aid
A part of the foreign capital is received on concessional term and it
is known as external assistance and foreign aids.
It may be received by way of loans and grants. Grants are in a
forms of out right gift which do not have to be repaid.
Loan qualify as aid only to the extent that they bear a concessional
rate of interest and have longer maturity period than commercial
loans.
Foreign aid has mostly been given by foreign governments and
international financial institutions like IMF, World Bank, Africa
Development Bank and so on.
Official flow were about 75-80 percent of capital flow till 1991.
By 1994, this had come down to about 20 percent and has further
fallen to below 5 percent by late 1990s.
14. External Commercial Borrowing
An External Commercial Borrowing (ECB) is an instrument used by
countries to facilitate access to foreign money by their corporations and
PSUs (public sector undertakings).
ECBs include
commercial loans,
buyers' credit,
suppliers' credit,
securitised instruments such as floating rate notes and fixed rate
bonds etc.,
credit from official export credit agencies and
commercial borrowings from the private sector window of multilateral
financial Institutions such as International Finance Corporation
(Washington), ADB, etc.
ECBs cannot be used for investment in stock market or speculation in real
estate.
15. Twenty Years of EM Capital Flows
-2
-1
0
1
2
3
4
5
6
7
8
9
-200
0
200
400
600
800
1000
1200
1400
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Direct Equity Investment
Portfolio Equity
Nonbanks
Commercial Banks
Net Private Capital Inflowsto Emerging Markets
$ billion percent of EM GDP
Total, Percent
of EM GDP
Sourc e: IIF.
IIF
Forecast
16. Regional Breakdown of Foreign Inflows
-1.5
0.0
1.5
3.0
4.5
6.0
7.5
9.0
10.5
-200
0
200
400
600
800
1000
1200
1400
1990 1995 2000 2005 2010 2015
EM Europe
Latin Americ a
MENA
EM Asia ex. China
China
Total, Perc ent of EM GDP
IIF
Forec ast
Private Non-Resident Capital Inflowsto Emerging Markets
$ billion perc ent of EM GDP
Sourc e: IIF.
17. Determinants Of International Capital
Flows
• The pace, magnitude, direction and composition of international capital flows
have crucial implication for the recipient countries.
• The surge in private capital inflows to developing economies in the 1990s
coincided with the period of low international interest rate in the advanced
economies and domestic policy reform in the developing world .
• The literature on determinants of cross-countries capital flow has identified
various factors which, inter alia, include:
the overall macroeconomic scenario,
political risk perception,
regulatory regimes,
fiscal concessions and
business strategy of the entity from which the capital flow originates.
• The literature usually distinguishes between two broad sets of factors affecting
capital movements.
18. Country-specific “Pull” Factors
They reflect:
• domestic opportunity and risk.
• improved policies that increase the long run expected returns or reduced the perceived
risk on real domestic investments. These includes:
measures that increase the openness of the domestic financial market to foreign investors;
liberalisation of FDI;
credible structural or macroeconomic policies;
sustainable debt and debt service reduced ensuring timely repayments;
stabilisations policies that affect the aggregate efficiency of resource allocation;
policies that affect the level of domestics absorption relative to income; and
the ability of the economy to absorb shocks from changes in international terms of trade.
• Pull factors like rebuts economic reforms in emerging economies are internal to an
economy.
19. Global or “Push” Factors
• The push or exogenous factors are external to an economy
and include parameters like lower foreign interest rates,
abundant liquidity, slow growth, recession abroad, herd mentality
in international capital markets or lack of investment
opportunities in advanced economies.
• FDI may be attracted by the opportunity to use local raw material
or employ a local labour force that are relatively cheap.
• Push and Pull factors explains international capital flows.
• The Pull factors determine the geographic distribution of the
flows amongst the recipient economies.
20. Rate of Interest
• An important factors which has a bearing on the
international capital movements is differences in the
rate of interest.
• According to L. M. Bhole ,” Like population
migration, capital migration can be and has been
explained in terms of the “PULL” and “PUSH
FACTORS”.
• As far as the recent increase in capital flows is
concerned, greater weight has to be given to the
push factors, particularly the falling interest rates in
the US and some other countries.
21. Integration of Financial and other Markets
• The various forms of foreign capital movements depends upon the degree of openness of
the financial and other markets and the extent of their international integration.
• In the recent years most of the countries have adopted the policy of deregulation,
liberalisation, privatisation and structural adjustments.
• They have also dismantled various control related to trade, foreign exchange, foreign
investment, ownership and capital flows.
• All these changes have contributed to recent increase in capital flows.
• Rapid improvements in technologies for collecting, processing, and disseminating
information, along with the opening of domestic financial markets, the liberalisation of
capital account transactions, and increased private savings for retirements have stimulated
financial innovation and created a larger pool of internationally mobile capital.
• At the same time, consolidation in the global banking industry and competition from non-
bank financial institution [including mutual funds] have lured new players to the
international financial area.
• These trends accelerated in the 1990s, expanding investments opportunities for saver and
offering borrowers a wide array of sources of capital.
22. Growing Pool International Financial Capital
• Over the last two decades, the financial markets of leading industrial countries
have transformed into a global financial system, permitting larger amounts of
capital to be allocated not only to theirs economies, but also to developing
economies.
• Firms in developing and industrial countries a like are raising more funds from
international securities markets.
• Multinational corporations are registering their equity on more than one country’s
stock exchange and raising funds from financial markets in different economies.
• Mutual funds, hedge funds, pension funds, insurance companies and other
investments and asset managers now compete with banks for national savings.
• Even though this phenomenon has been confined so far primarily to developed
economies, it has started to spread to some developing countries too.
• Institutional investors have taken advantages of the easing of restrictions in many
developed countries to diversify their portfolios internationally, enlarging the pool
of financial capital potentially available to developing economies.
• According to world development report of 1999-2000, in 1995 these investors
controlled 20trillion dollars, 1980 of which only 2 percent was invested abroad.
• Thus, there was a tenfold increase in the funds and a fortyfold increase
investments abroad.
23. Liberalisation of Capital Account Transactions
and move towards flexible exchange rate regime
• The 1990s have seen a consistent trend toward more flexible
exchange rate regimes and the liberalisation of capital account
transactions.
• The latter involves changes in policies toward different types of
private capital flows, such as foreign direct investments, foreign
bond and equity investments, and short term borrowing from
abroad.
• Most countries have moved towards capital account
convertibility as part of wide-ranging gradual economic reform
program that includes measuring to strengthen the financial
sector.
24. Stability
•Relative stability of economic factors
especially rates of inflation, external value of
different currencies, etc. also determine
foreign capital flows.
•Along with economic stability, political stability
is an important factors which determines
international capital movements.
25. Government Policies
•Policies of governments with respect to
privatisation, foreign investment, foreign exchange,
liberalisation, taxation, etc. are likely to influence
the capital inflows.
•If the governments adopt a policy of liberalisation,
deregulation and dismantling of control related to
investments as being undertaken in Kenya since
1991 it will encourage foreign capital inflows to the
country.
26. Social and Economic Overheads
• Infrastructural facilities, availability of skilled labour,
advances in computer and telecommunication
technologies, etc. will influence private capital investment
into the country.
• Labour policies will also have a bearing on the foreign
investments.
• The market potential, i.e. the ability of the market to
absorb the whole range of new products, is also likely to
influence the inflow of foreign capital.
27. Credit Rating
The credit rating and credit
standing of nation, which
depend on economic, political
and social stability, also
influence foreign capital flows.
28. Speculation
Short-term capital movement may
be influenced by speculation
relating to expected changes in
interest rates or rate of return or
foreign exchange rates.
29. Profitability
• Foreign capital movements are also influenced by profitability
considerations of investments.
• It is noteworthy that an overwhelming proportion of
international capital flows towards developing countries is
directed towards middle-income countries.
• Notwithstanding fluctuation over the year, this concentration
has increased, especially with regard to FDI and portfolio
flows.
• Inflow of debt-creating capital toward developing countries
declined sharply in the wake of the East Asian crisis
30. Role of Foreign Capital
• Foreign Capital had played an important role in the early stages of industrialisation
of most of the advanced countries of today like countries of Europe and North
America.
• There is a general view that foreign capital, if property diverted and utilised, can
assist economic development of developing countries.
• These countries need resources to finance investment in health, education,
infrastructure and so on.
• It can supplement a country’s domestic saving effort and foreign exchange
earnings.
• A number of studies have confirmed that international capital flows can contribute
significantly to promote growth in developing countries by augmenting domestic
savings, reducing cost of capital, transferring technology, developing domestic
financial sector and fostering human capital formation.
• Foreign capital can contribute to economics development of developing countries in
following ways:
31. Supplements Domestic Capital formation
• Economic development depends on , among other things, capital
formation.
• The domestic capital formation is inadequate in LDCs.
• The foreign capital can supplements the domestic resources to
achieve the critical minimum investment to break the vicious circle
of low-income-low saving-low investment.
• If more domestic capital is to be created by country’s own efforts,
resources will have to be diverted from the production of goods
requirements for current consumption.
• This may lead to a cut in present living standards.
• Thus, foreign capital can help to supplement the domestic capital.
32. Accelerates Economic Development
Foreign capital helps to accelerate the
pace of economies development by
facilitating imports of capital goods,
technical know-how and other imports
which are required for carrying out
development programmes.
33. Improve Trade Balance
Foreign capital inflow may help to
increase a country’s exports and
reduced the imports requirements
if such capital flows into export
oriented and import competing
industries.
34. Transfer of Technology
The foreign capital may
facilitate transfer of technology
to LDCs. It may helps to
modernise the production
techniques in industry,
agriculture and other sector.
35. Realisation of External Economies
If the foreign capital is allowed to flow
into the development of infrastructure it
may lead to realisation of external
economies which may stimulate
domestic investments in the country.
36. Income and Employment
If foreign capital flows into real
sectors in the form of direct
investments it helps to increase
productivity, income and
employment in the economy.
37. Balance of Payments Adjustment
Inflow of foreign capital, especially the
short-term, may be able to provide a
breathing space to a deficit country to
cover the deficit until a complete
adjustments is achieved to correct the
balance of payments deficit,. However,
such capital movement should be seen as a
temporary phenomenon.
53. • The Statistical Discrepancy
• Data associated with a given transaction may come from
different sources that differ in coverage, accuracy, and timing.
• This makes the balance of payments accounts seldom
balance in practice.
• Account keepers force the two sides to balance by adding to
the accounts a statistical discrepancy.
• It is very difficult to allocate this discrepancy among the
current, capital, and financial accounts.
The Balance of Payments Accounts
54. • Official Reserve Transactions
• Central bank
• The institution responsible for managing the supply of
money
• Official international reserves
• Foreign assets held by central banks as a cushion against
national economic misfortune
• Official foreign exchange intervention
• Central banks often buy or sell international reserves in
private asset markets to affect macroeconomic conditions in
their economies.
The Balance of Payments Accounts
55. • Official settlements balance (balance of payments)
• The book-keeping offset to the balance of official reserve transactions
• It is the sum of the current account balance, the capital account
balance, the non-reserve portion of the financial account balance, and
the statistical discrepancy.
• Example: The U.S. balance of payments in 2000 was -$35.6 billion,
that is, the balance of official reserve transactions with its sign
reversed.
• A country with a negative balance of payments may signal that it is
running down its international reserve assets or incurring debts to
foreign monetary authorities.
The Balance of Payments Accounts
56. The Balance of Payments Accounts
Calculating the U.S. Official Settlements Balance for 2000 (billions of dollars)
57.
58.
59.
60.
61. Global imbalances: past, present, and
future
• Imbalances had many causes and players
• Saving behavior
• Decline in U.S. private saving since 2001 …
• Dramatic increase in the saving rate in China over the past decade.
• Investment behavior …
• U.S. productivity boom and stock market increase in late 1990s …
I
• Investment boom in“peripheral”Europe particularlysince2005 …
I
• Investment boom in peripheral Europe, particularly since 2005.
• Policy choices …
• Accumulation of reserves to strengthen external position …
• Choice by many EM countries to pursue policies of export-led growth …
• US fiscal deterioration 2000-onwards
62. Imbalances had many causes (II)
• Commodity prices
• Gyrations in oil and other commodity prices since the
early2000s
• Attitudes towards risk
• Decline in risk aversion in the 2000s, triggering capital
flows towards fast-growing countries in Southern,
Central, and Eastern Europe …
• Dramatic increase in risk aversion during the crisis, and
increased demand for U.S. Treasury securities.
63. A Timeline for Global imbalances
• 1996-2000 …
• US investment boom, Asian investment bust. …
• US financing through FDI, equity flows …
• Surpluses in emerging Asia, Japan
• 2001-2004
• US fiscal deficits …
Financing through US bonds (incl. foreign central banks) …
• Surpluses in Germany and other Ctr-Nort. Europ. countries, oil exporters
• 2005-2008
• Stable/declining deficits in US, large deficits in peripheral Europe …
Boom in
surplus in China, oil exporters, Central-Northern Europe