Foreign trade and capital flow problem, Public Economics

Assignment Help:

In the wake of the Asian financial crisis, policymakers, governments, and academics around the world are busy devising ways to reform the global financial architecture. The plethora of articles, speeches, and essays on this topic, however, has failed to produce a consensus on the path that reforms should take, largely because the issue is highly complex.

On the one hand, foreign investment brings clear benefits. International investors provide an extra pool of lenders for borrowing nations, particularly developing countries, for increasing liquidity, lowering the costs of borrowing, and raising output.

With foreign direct investment the host country may also derive benefit from positive spillover effects such as new technologies, ideas, and skills. Even the often-criticized speculative capital flows enable investors to hedge against risk such as exchange rate fluctuations. Not all of the above capital flows constitute investment. Economists define investment as expenditure on productive, as opposed to expenditure on consumption. Hence, foreign investment is defined as the purchase of assets in Country A by residents of Country B. It is usually divided into two categories: Foreign Direct Investment (FDI). This refers to investment where the foreign investor (from Country A) owns or controls the assets (in Country B). Foreign Portfolio Investment refers to investment where a foreign resident provides the capital, but the activity is owned and operated by domestic residents.


Related Discussions:- Foreign trade and capital flow problem

Pareto improvement, 1. is pareto improved demonstrated using the edgeworth ...

1. is pareto improved demonstrated using the edgeworth box daigram?

.., Consider the Edgeworth box with the production of consumption goods B a...

Consider the Edgeworth box with the production of consumption goods B and health- investment goods I. (a) Briefly explain the derivation of the contract curve. (b) How does one der

Open access resources and common property resources, Normal 0 f...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Complex systems as tool for policy process, Quantitative policy process dep...

Quantitative policy process depends on a portfolio of tools that have been drawn from a variety of disciplines besides discretionary political decision. Over the past two decades

Pigouvian tax, Normal 0 false false false EN-IN X-NON...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

What is meaning of market economy, The meaning of a market economy is in wh...

The meaning of a market economy is in which the decision and production are prepared. The consumption of goods services are based on voluntary swap in markets.

Determine the natural rate of unemployment, Suppose the firm mark up over t...

Suppose the firm mark up over the cost is 10% and the wage setting equation is W=P (1-u) where U is the unemployment rate. a) Find out the real wage rate implied by the price se

Pigovian analysis, Pigovian Analysis   The starting point of the Pigovi...

Pigovian Analysis   The starting point of the Pigovian welfare analysis is the notion that there  is a resource allocation  problem  that can be  optimally  solved. Through  hi

Indirect taxes on smoking, Discuss whether high indirect taxes are the best...

Discuss whether high indirect taxes are the best way to discourage smoking.

Price and extraction path over time, Normal 0 false false f...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd