POLS 100 Lecture Notes - Lecture 3: Bretton Woods System, Floating Exchange Rate, United States Dollar
19 Oct 2016
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Document Summary
Countries that put together the trillion euro bailout package wanted standards implemented in the 4 countries that would include; higher taxes, less government spending and pensions, higher retirement age and selling public enterprises. This caused conflict among the public in the debtor nations. Portfolio investments allow you to receive a rate of return without taking a role in the management of the company; stocks and loans. Sovereign lending is loans from private financial institutions in one country to another government; purchases of gov bonds by foreigners, banks to governments. Direct investment is investment that establishes facilities or ownership over existing ones, and assumes managerial responsibilities; toyota opening a factory in thailand. Significant assumed risk in this, unlike portfolio investment. A country"s average profit rate depends on how plentiful capital is. Capital is plentiful in rich countries so interest is low, but the opposite is true in developing countries.
