International Trade and Capital Flows

International Trade and Capital Flows

1. Whats happened?

   • International trade has grown hugely (in 2010 it was 48 times larger than it had been in 1970).
   • Companies have expanded and invested in counties all over the world (TNCs).
   • Banking, insurance and finance companies have become globalised, offering services all over the world.

2. Foreign direct investment?

   • It is the investment which flows from one country to another (often by TNCs).
   • It may involve buying a business or factory in the country, or by expanding an existing business in the country.
   • It is done to take advantage of cheaper labour or resources and increase profit.

3. International trade has increased because:

   • Transport
     • Container ships and air transport have made it easier to transport more goods quickly and cheaply.
   • Communication
     • IT (email,text,fax and phone) has made communication between countries easier.
   • Trade agreements
     • Agreements between countries (EU) have made trade between countries easier.
   • TNCs
     • Growth of TNCs has increased trade between countries.
   • International Monetary Fund
     • IMF has made it easier for state led investments in different countries.