EECS 1530 Lecture Notes - Lecture 23: International Trade, Portfolio Investment
21 Jun 2018
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EECS 1530 Lecture 23 Notes
Introduction
Point counter-point
International trade activity has grown over time in response to several government
agreements to remove cross-border restrictions.
In addition, MNCs have commonly used outsourcing in recent years, subcontracting with
a third party in a foreign country for supplies or services they previously produced
themselves.
Thus outsourcing is another reason for the increase in international trade activity.
A country’s international trade flows are affected by inflation, national income,
government restrictions, and exchange rates.
High labor costs, high inflation, a high national income, low or no restrictions on
imports, and a strong local currency tend to result in a strong demand for imports and a
current account deficit.
Although some countries attempt to correct current account deficits by reducing the
value of their currencies, this strategy is not always successful.
A country’s international capital flows are affected by any factors that influence direct
foreign investment or portfolio investment.
Direct foreign investment tends to occur in those countries that have no restrictions and
much potential for economic growth.
Portfolio investment tends to occur in those countries where taxes are not excessive,
where interest rates are high, and where the local currencies are not expected to
weaken.
Several agencies facilitate the international flow of funds by promoting international
trade and finance, providing loans to enhance global economic development, settling
trade disputes between countries, and promoting global business relationships between
countries.
Should Trade Restrictions Be Used to Influence Human Rights Issues?
Document Summary
International trade activity has grown over time in response to several government agreements to remove cross-border restrictions. Direct foreign investment tends to occur in those countries that have no restrictions and much potential for economic growth. Activity has grown over time in response to several government agreements to remove cross-border restrictions. In addition, mncs have commonly used outsourcing in recent years, subcontracting with a third party in a foreign country for supplies or services they previously produced themselves. Thus outsourcing is another reason for the increase in international trade activity. A country"s international trade flows are affected by inflation, national income, government restrictions, and exchange rates. High labor costs, high inflation, a high national income, low or no restrictions on imports, and a strong local currency tend to result in a strong demand for imports and a current account deficit.
