Chapter

2
International Flow of Funds

South-Western/Thomson Learning © 2003

 Chapter Objectives

• To explain the key components of the

balance of payments; and
• To explain how the international flow of
funds is influenced by economic factors
and other factors.

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 Balance of Payments
• The balance of payments is a measurement
of all transactions between domestic and
foreign residents over a specified period of
time.
• Each transaction is recorded as both a credit
and a debit, i.e. double-entry bookkeeping.
• The transactions are presented in three
groups – a current account, a capital
account, and a financial account.

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 Current Account
1. Payments for Merchandise and Services
Merchandise exports and imports represent tangible products,
such as computers and clothing, that are transported between
countries.
Service exports and imports represent tourism and other services,
such as legal, insurance, and consulting services, provided for
customers based in other countries.
The difference between total exports and imports is referred to as
the balance of trade.
A deficit in the balance of trade means that the value of
merchandise and services exported by the United States is less
than the value of merchandise and services imported by the
United States.
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 Current Account
2. Factor Income Payments
•represents income (interest and dividend payments)
received by investors on foreign investments in
financial assets (securities).
•factor income received by U.S. investors reflects an
inflow of funds into the United States. Factor income
paid by the United States reflects an outflow of funds
from the United States.
3. Transfer Payments
represent aid, grants, and gifts from one country to
another
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 Current Account
Examples of Payment Entries
•every transaction that generates a U.S. cash inflow
(exports and income receipts by the United States)
represents a credit to the current account
•while every transaction that generates a U.S. cash
outflow (imports and income payments by the United
States) represents a debit to the current account.
•Larger current account deficit indicates that US is
sending more cash abroad to buy goods or services
or to pay income than it is receiving from those same
reasons
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 Summary of U.S. International Transactions
(For the Year of 2000 in Millions of Dollars)

Current Account
Exports of goods and services and income receipts 1418568
Goods, balance of payments basis 772210
Services 293492
Income receipts 352866
Imports of goods and services and income receipts -1809099
Goods, balance of payments basis -1224417
Services -217024
Income payments -367658
Unilateral current transfers, net -54136
Balance on current account -444667

Source: U.S. Bureau of Economic Analysis C2 - 7

 Capital and Financial Accounts

• The capital account includes the value of

financial assets transferred across country
borders by people who move to a different
country.
• It also includes the value of non produced
non financial assets that are transferred
across country borders, such as patents and
trademarks.

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 Capital and Financial Accounts

• the financial account are payments for

• (1) direct foreign investment,
• (2) portfolio investment, and
• (3) other capital investment.

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 1. Direct Foreign Investment

• Direct foreign investment represents the

investment in fixed assets in foreign countries
that can be used to conduct business
operations.
• In 2006, the United States increased its direct
foreign investment abroad by $248 billion, while
non-U.S. countries increased their direct foreign
investment in the United States by $185 billion

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 2. Portfolio Investment

• Portfolio investment represents transactions involving

long-term financial assets (such as stocks and bonds)
between countries that do not affect the transfer of
control.
• Purchase of Netherlands stock by US investor.
• In 2006, the U.S. net purchases of foreign stocks were
$129 billion, while its net purchases of foreign bonds
were $149 billion. Non-U.S. net purchases of U.S.
stocks were $114 billion in 2006, while non-U.S. net
purchases of U.S. bonds were $507 billion.
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 3. Other Capital Investment.
• A third component of the financial account consists of other
capital investment, which represents transactions involving
short term financial assets (such as money market
securities) between countries.
Errors or Omissions
• If a country has a negative current account balance, it should
have a positive capital and financial account balance.
• However, there is not normally a perfect offsetting effect
because measurement errors can occur when attempting to
measure the value of funds transferred into or out of a
country. For this reason, the balance-of-payments account
includes a category of errors and omissions

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 International Trade Flows
• Canada, France, Germany, and other European
countries rely more heavily on trade than the United
States does.
• Canada’s trade volume of exports and imports per
year is valued at more than 50 percent of its annual
gross domestic product (GDP).
• The trade volume of European countries is typically
between 30 and 40 percent of their respective GDPs.
• The trade volume of the United States and Japan is
typically between 10 and 20 percent of their respective
GDPs. As of 2006, exports represented about 18
percent of U.S. GDP.
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 Distribution of U.S. Exports and Imports

• Exports to Canada were valued at $230 billion.

• About 23 percent of all U.S. exports are to Canada,
while 13 percent of U.S. exports are to Mexico.
• Canada, China, Mexico, and Japan are the key
exporters to the United States: Together, they are
responsible for more than half of the value of all U.S.
imports.

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 U.S. Balance-of-Trade Trend
• Since 1976, the value of U.S. imports has exceeded the
value of U.S. exports, causing a balance-of-trade deficit
• In 2006, U.S. exports to China were about $55 billion, but
imports from China were about $255 billion, which resulted in
a balance-of-trade deficit of $200 billion with China.
• Shortly after World War II, the United States experienced a
large balance-of-trade surplus because Europe relied on
U.S. exports as it was rebuilt.
• During the last decade, the United States has experienced
balance-of-trade deficits because of strong U.S. demand for
imported products that are produced at a lower cost than
similar products can be produced in the United States.

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 Should the United States Be Concerned
about a Huge
Balance-of-Trade Deficit?
• United States sends more than $200 billion in
payments for products per year to other countries
than what it receives when selling products to other
countries. IT created jobs in foreign countries
• some benefits of international trade for the United
States.
• First, international trade has created some jobs in
the United States, especially in industries where U.S.
firms have a technology advantage.
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• International trade has caused a shift of production
to countries that can produce products more
efficiently.
• In addition, it ensures more competition among the
firms that produce products, which forces the firms to
keep their prices low.

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 Distribution of U.S. Exports and Imports
For the Year of 2000 in Billions of $
Exports Imports
Australasia Other Asia South Other Asia Australasia
14.8 1.9% 23.6 3.0% 47.4 East 88.0 56.5 4.6% 8.8 0.7%
6.1% Asia 7.2%
Canada
Canada 229.2
178.8 148.5
19.0% 18.8%
22.8%
East Asia
Mexico
340.3
135.9
Mexico 28.0%
11.2%
111.7 11.0
14.3% 1.4% Other
Africa America
Other 27.6 73.3
America 2.3% 6.0%
59.3 Eastern Europe 181.3 Western 241.0 Eastern Europe
7.6% 6.1 0.8% 23.2% Europe 19.8% 16.2 1.3%
Source: U.S. Office of Trade and Economic Analysis C2 - 18
 International Trade Issues
A. Events That Increased International Trade
1. Removal of the Berlin Wall
• In 1989, the Berlin Wall separating East Germany from
West Germany was torn down.
• It encouraged free enterprise in all Eastern European
countries and the privatization of businesses that were
owned by the government.
2. Single European Act
• In the late 1980s, industrialized countries in Europe
agreed to make regulations more uniform and to
remove many taxes on goods traded between these
countries.
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• Best Foods (now part of Unilever) was one of many
MNCs that increased efficiency by streamlining
manufacturing operations as a result of the
reduction in barriers.
3. NAFTA
• As a result of the North American Free Trade
Agreement (NAFTA) of 1993, trade barriers
between the United States and Mexico were
eliminated.
• The removal of trade barriers between the United
States and Mexico allows Mexican firms to export
some products to the United States that were
previously restricted.
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4. Inception of the Euro
•Only the euro is used for transactions in these countries, so firms
(including European subsidiaries of U.S.-based MNCs) no longer face
the costs and risks associated with converting one currency to
another.
5. Expansion of the European Union
•In 2004, Cyprus, the Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Malta, Poland, Slovakia, and Slovenia were admitted to the
EU, followed by Bulgaria and Romania in 2007.
•Nevertheless, their admission into the EU is relevant because
restrictions on their trade with Western Europe are reduced.
•Since wages in these countries are substantially lower than in
Western European countries, many MNCs have established
manufacturing plants there to produce products and export them to
Western Europe.

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 B. Trade Friction
• Most countries still impose some type of trade
restrictions on particular products in order to protect
their local firms.
• Free trade can be beneficial because it encourages
more intense competition among firms, which enables
consumers to obtain products where the quality is
highest and the prices are low.
• Each country’s government wants to increase its
exports because more exports result in a higher level
of production and income and may create jobs.
However, a job created in one country may be lost in
another, which causes countries to battle for a greater
share of the world’s exports. C2 - 22
• tariff or quota on imported goods prevents free trade
and gives local firms an unfair advantage in their own
market.
• foreign firms or provide incentives that give local
firms an unfair advantage in the battle for global
market share
1.environmental restrictions
2.not subject to child labor laws
3.to offer bribes to large customers when pursuing
business deals in a particular industry.
4.subsidies from the government
5.tax breaks if they are in specific industries
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2. Using the Exchange Rate as a Policy
•At any given point in time, a group of exporters may
claim that they are being mistreated and lobby their
government to adjust the currency so that their exports
will not be so expensive for foreign purchasers.
•In 2004, European exporters claimed that they were at
a disadvantage because the euro was too strong
•U.S. exporters still claimed that they could not compete
with China because the Chinese currency (yuan) was
maintained at an artificially weak level.

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3. Outsourcing
•technology support of computer systems used in the United
States may be outsourced to India, Bulgaria, China, or other
countries where labor costs are low.
•Creates balance on trade deficit.
•However, it shifts jobs to other countries and is criticized by the
people who lose their jobs due to the outsourcing.
Should Managers Outsource to Satisfy Shareholders?
•Managers of a U.S.-based MNC may argue that they produce their
products in the United States to create jobs for U.S. workers.
•when the same products can be easily duplicated in foreign
markets for one-fifth of the cost, shareholders may pressure the
managers to establish a foreign subsidiary or to engage in
outsourcing
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• The MNC’s board of directors governs the major
managerial decisions and could pressure the managers to
have some of the production moved outside the United
States.
• it must also consider the possible adverse effects due
to bad publicity or to bad morale that could occur
among the U.S. workers.
• a possible compromise is to allow foreign production
to accommodate any growth in its business.
• In this way, the strategy would not adversely affect
the existing employees involved in production

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4. Using Trade Policies for Political Reasons
•Every international trade convention now attracts a
large number of protesters, all of whom have their
own agendas.
•People expect countries to restrict imports from
countries that fail to enforce environmental laws or
child labor laws, initiate war against another country,
or are unwilling to participate in a war against an
unlawful dictator of another country.
•Although all of the protesters are clearly dissatisfied
with existing trade policies, there is no consensus as
to what trade policies should be.

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 Factors Affecting
International Trade Flows
1. Inflation
¤ A relative increase in a country’s inflation
rate will decrease its current account, as
imports increase and exports decrease.
2. National Income
¤ A relative increase in a country’s income
level will decrease its current account, as
imports increase.

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 Factors Affecting
International Trade Flows
3. Impact of Government Policies
A country’s government can have a major
effect on its balance of trade due to its
policies on
a. subsidizing exporters
b. restrictions on imports
c. lack of enforcement on piracy

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a. Subsidies for Exporters
•firms can produce products at a lower cost than their
global competitors.
•Many firms in China commonly receive free loans or
free land from the government. These firms incur a
lower cost of operations and are able to price their
products lower as a result, which enables them to
capture a larger share of the global market.
b. Restrictions on Imports
•If a country’s government imposes a tax on imported
goods (often referred to as a tariff), the prices of
foreign goods to consumers are effectively increased.
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• In addition to tariffs, a government can reduce its
country’s imports by enforcing a quota, or a
maximum limit that can be imported.
c. Lack of Restrictions on Piracy
• Piracy is one reason why the United States has a
large balance-of-trade deficit with China. However,
even if piracy were eliminated, the U.S. trade deficit
with China would still be large

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4. Exchange Rates
•If a country’s currency begins to rise in value, its
current account balance will decrease as imports
increase and exports decrease.
•A weak dollar is expected to reduce the U.S. balance-of-
trade deficit. The dollar’s weakness lowers the price paid for
U.S. goods by foreign customers and can lead to an increase
in the demand for U.S. products.
•A weak dollar also tends to increase the dollar price paid
for foreign goods and thus reduces the U.S. demand for
foreign goods.

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Example: A tennis racket that sells in the
United States for $100 will require a payment of
C$125 by the Canadian importer if the
Canadian dollar is valued at C$1 $.80. If C$1
$.70, it would require a payment of C$143,
which might discourage the Canadian demand
for U.S. tennis rackets.

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 Correcting
A Balance of Trade Deficit
• It may be argued that a large balance-of-trade deficit causes a transfer of
jobs to some foreign countries. Consequently, a country’s government may
attempt to correct a balance-of-trade deficit.
• A floating exchange rate could possibly correct any international trade
imbalances in the following way.
• A deficit in a country’s balance of trade suggests that the country is
spending more funds on foreign products than it is receiving from exports to
foreign countries.
• Because it is selling its currency (to buy foreign goods) in greater volume
(supply) than the foreign demand for its currency, the value of its currency
should decrease. This decrease in value should encourage more foreign
demand for its goods in the future.

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 Why a Weak Home Currency Is
Not a Perfect Solution
1. Counter pricing by Competitors
When a country’s currency weakens, its prices
become more attractive to foreign customers, and
many foreign companies lower their prices to remain
competitive with the country’s firms.
2. Impact of Other Weak Currencies
The currency does not necessarily weaken against all
currencies at the same time.

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3. Prearranged International Transactions
•Many international trade transactions are prearranged
and cannot be immediately adjusted.
•Over time, non-U.S. firms may begin to take
advantage of the weaker dollar by purchasing U.S.
imports, if they believe that the weakness will continue.
The lag time between the dollar’s weakness and the
non-U.S. firms’ increased demand for U.S. products
has sometimes been estimated to be 18 months or
even longer.

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• The U.S. balance of trade may actually
deteriorate in the short run as a result of
dollar depreciation, since U.S. importers
would need more dollars to pay for the
imports they contracted to purchase. The
U.S. balance of trade only improves when
U.S. and non-U.S. importers respond to the
change in purchasing power that is caused by
the weaker dollar.
• This is known as the J-curve effect.

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 J-Curve Effect
U.S. Trade Balance

0 Time

J Curve

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4. Intracompany Trade
•Many firms purchase products that are produced by
their subsidiaries in what is referred to as
intracompany trade.
• This type of trade makes up more than 50 percent of all
international trade.
•The trade between the two parties will normally
continue regardless of exchange rate movements.
•the impact of exchange rate movements on intracompany
trade patterns is limited.

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 International Capital Flows

• Capital flows usually represent portfolio

investment or direct foreign investment.
• The DFI positions inside and outside the
U.S. have risen substantially over time,
indicating increasing globalization.
• In particular, both DFI positions increased
during periods of strong economic
growth.

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 Direct Foreign Investment Positions
of the United States on a Historical Cost basis
1400

1200
DFI by U.S. Firms
Billions of US$

1000

800

600

400
DFI in the U.S.
200

0
1980 1985 1990 1995 2000

Source: U.S. Bureau of Economic Analysis C2 - 41

 Distribution of DFI for the U.S.
For the Year of 2000
DFI by U.S. Firms DFI in the U.S.
Other Asia Other
Japan & Pacific Canada Other Western Canada Asia &
4.5% Hemisphere
11.6% 10.2% 19.2% 3.4% 8.1% Pacific Japan
Middle 2.5% 13.2%
East France
1.0% Middle
9.6% East
Africa 0.7%
1.3% Germany
9.9%
Other Other
Europe France
3.1% Europe
16.6% 21.5%
Germany
4.3%
United Kingdom United Kingdom
18.8% Netherlands
9.3% 12.3% 18.5%
Source: U.S. Bureau of Economic Analysis C2 - 42
 Factors Affecting DFI

• Changes in Restrictions
¤ New opportunities may arise from the
removal of government barriers.
¤ Many U.S.-based MNCs, including Bausch
& Lomb, Colgate-Palmolive, and General
Electric, have been penetrating less
developed countries such as Argentina,
Chile, Mexico, India, China, and Hungary.

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• Privatization
¤ DFI has also been stimulated by the selling of
government operations.
¤ Privatization was used in Chile to prevent a few
investors from controlling all the shares and in
France to prevent a possible reversion to a more
nationalized economy.
¤ The primary reason that the market value of a firm
may increase in response to privatization is the
anticipated improvement in managerial efficiency.
¤ managers of a privately owned enterprise are more
motivated to ensure profitability because their
careers may depend on it.
¤ The trend toward privatization will undoubtedly
create a more competitive global marketplace.
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 Factors Affecting DFI
• Potential Economic Growth
¤ Countries with higher potential economic growth
are more likely to attract DFI.
• Tax Rates
¤ Countries that impose relatively low tax rates on
corporate earnings are more likely to attract DFI.
• Exchange Rates
¤ Firms will typically prefer to invest their funds in a
country when that country’s currency is expected
to strengthen.

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 Factors Affecting
International Portfolio Investment

• Tax Rates on Interest or Dividends

¤ Investors will normally prefer countries where
the tax rates are relatively low.
• Interest Rates
¤ Money tends to flow to countries with high
interest rates.
• Exchange Rates
¤ Foreign investors may be attracted if the local
currency is expected to strengthen.

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 Impact of International Capital
Flows
• The United States relies heavily on foreign capital in many
ways.
• First, there is foreign investment in the United States to
build manufacturing plants, offices, and other buildings.
• Second, foreign investors purchase U.S. debt securities
issued by U.S. firms and therefore serve as creditors to these
firms.
• Third, foreign investors purchase Treasury debt securities
and therefore serve as creditors to the U.S. government.

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• Foreign investors are especially attracted to the U.S.
financial markets when the interest rate in their home
country is substantially lower than that in the United States.
• the long-term interest rate in the United States is
determined by the interaction between the supply of
funds available in U.S. credit markets and the amount
of funds demanded there.
• Graph domestic flows and international flows

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Does the United States Rely Too Much
on Foreign Funds?
• If Japan and China stopped investing in U.S. debt
securities, the U.S. interest rates would possibly rise,
and investors from other countries would be attracted
to the relatively high U.S. interest rate.
• the United States would still be able to obtain funding
for its debt, but its interest rates (cost of borrowing)
may be higher.
• In general, access to international funding has allowed
more growth in the U.S. economy over time, but it also
makes the United States more reliant on foreign investors
for funding. C2 - 49
 Agencies that Facilitate
International Flows
International Monetary Fund (IMF)
• The IM F is an organization of 183 member
countries. Established in 1946, it aims
¤ to promote international monetary
cooperation and exchange stability;
¤ to foster economic growth and high levels of
employment; and
¤ to provide temporary financial assistance to
help ease imbalances of payments.

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 Agencies that Facilitate
International Flows
International Monetary Fund (IMF)
• Its operations involve surveillance, and
financial and technical assistance.
• In particular, its compensatory financing
facility attempts to reduce the impact of
export instability on country economies.
• The IM F uses a quota system, and its unit of
account is the SDR (special drawing right).

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 Agencies that Facilitate
International Flows
International Monetary Fund (IMF)
• The weights assigned to the currencies in
the SDR basket are as follows:
Currency 2001 Revision 1996 Revision
U.S. dollar 45 39
Euro 29
Deutsche mark 21
French franc 11
Japanese yen 15 18
Pound sterling 11 11
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 Online Application

• You may learn more about the IMF at

http://www.imf.org.

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 Agencies that Facilitate
International Flows
World Bank Group
• Established in 1944, the Group assists
development with the primary focus of
helping the poorest people and the
poorest countries.
• It has 183 member countries, and is
composed of five organizations - IBRD,
IDA, IFC, MIGA and ICSID.

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 Agencies that Facilitate
International Flows
IBRD: International Bank for Reconstruction
and Development
• Better known as the World Bank, the IBRD
provides loans and development assistance
to middle-income countries and creditworthy
poorer countries.
• In particular, its structural adjustment loans
are intended to enhance a country’s long-term
economic growth.

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 Agencies that Facilitate
International Flows
IBRD: International Bank for
Reconstruction and Development
• The IBRD is not a profit-maximizing
organization. Nevertheless, it has earned a
net income every year since 1948.
• It may spread its funds by entering into
cofinancing agreements with official aid agencies,
export credit agencies, as well as commercial
banks.

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 Agencies that Facilitate
International Flows
IDA: International Development Association
• IDA was set up in 1960 as an agency that lends
to the very poor developing nations on highly
concessional terms.
• IDA lends only to those countries that lack the
financial ability to borrow from IBRD.
• IBRD and IDA are run on the same lines,
sharing the same staff, headquarters and
project evaluation standards.

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 Agencies that Facilitate
International Flows
IFC: International Finance Corporation
• The IFC was set up in 1956 to promote
sustainable private sector investment in
developing countries, by
¤ financing private sector projects;
¤ helping to mobilize financing in the
international financial markets; and
¤ providing advice and technical assistance to
businesses and governments.

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 Agencies that Facilitate
International Flows
M IGA: Multilateral Investment Guarantee
Agency
• The MIGA was created in 1988 to promote
FDI in emerging economies, by
¤ offering political risk insurance to investors
and lenders; and
¤ helping developing countries attract and
retain private investment.

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 Agencies that Facilitate
International Flows
ICSID: International Centre for Settlement
of Investment Disputes
• The ICSID was created in 1966 to facilitate
the settlement of investment disputes
between governments and foreign
investors, thereby helping to promote
increased flows of international
investment.

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 Agencies that Facilitate
International Flows
World Trade Organization (WTO)
• Created in 1995, the WTO is the successor to
the General Agreement on Tariffs and Trade
(GATT).
• It deals with the global rules of trade between
nations to ensure that trade flows smoothly,
predictably and freely.
• At the heart of the WTO's multilateral trading
system are its trade agreements.

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 Agencies that Facilitate
International Flows
World Trade Organization (WTO)
• Its functions include:
¤ administering WTO trade agreements;
¤ serving as a forum for trade negotiations;
¤ handling trade disputes;
¤ monitoring national trading policies;
¤ providing technical assistance and training for
developing countries; and
¤ cooperating with other international groups.

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 Agencies that Facilitate
International Flows
Bank for International Settlements (BIS)
• Set up in 1930, the BIS is an international
organization that fosters cooperation
among central banks and other agencies
in pursuit of monetary and financial
stability.
• It is the “central banks’ central bank” and
“lender of last resort.”

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 Agencies that Facilitate
International Flows
Bank for International Settlements (BIS)
• The BIS functions as:
¤ a forum for international monetary and financial
cooperation;
¤ a bank for central banks;
¤ a center for monetary and economic research;
and
¤ an agent or trustee in connection with
international financial operations.

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 Agencies that Facilitate
International Flows
Regional Development Agencies
• Agencies with more regional objectives
relating to economic development include
¤ the Inter-American Development Bank;
¤ the Asian Development Bank;
¤ the African Development Bank; and
¤ the European Bank for Reconstruction and
Development.

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 How International Trade Affects
an MNC’s Value
• An MNC’s value can be affected by international trade in
several ways.
• The cash flows (and therefore the value) of an MNC’s
subsidiaries that export to a specific country are typically
expected to increase in response to a higher inflation rate
(causing local substitutes to be more expensive)
• or a higher national income (which increases the level of
spending) in that country.
• The expected cash flows of the MNC’s subsidiaries that
export or import may increase as a result of country trade
agreements that reduce tariffs or other trade barriers.

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• Cash flows to a U.S.-based MNC that occur in the
form of payments for exports manufactured in the
United States are expected to increase as a result
of a weaker dollar because the demand for its
dollar-denominated exports should increase.
• cash flows of U.S.-based importers may be
reduced by a weaker dollar because it will take
more dollars (increased cash outflows) to
purchase the imports.
• A stronger dollar will have the opposite effects on
cash flows of U.S.-based MNCs involved in
international trade.

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Impact of International Trade on an MNC’s Value

National Income in Foreign Countries Inflation in Foreign Countries

Trade Agreements Exchange Rate Movements

m 
n 
 
E CFj , t  E ER j , t  
 j 1 
Value =   
t =1  1  k  t

 
E (CFj,t ) = expected cash flows in currency j to
be received by the U.S. parent at the end of
period t
E (ERj,t ) = expected exchange rate at which
currency j can be converted to dollars at the end
C2 - 68
 Chapter Review

• Balance of Payments
¤ Current, Capital, and Financial Accounts
• International Trade Flows
¤ Distribution of U.S. Exports and Imports
¤ U.S. Balance of Trade Trend
¤ Recent Changes in North American and
European Trade
¤ Trade Agreements Around the World

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 Chapter Review

• Factors Affecting International Trade

Flows
¤ Inflation
¤ National Income
¤ Government Restrictions
¤ Exchange Rates
¤ Interaction of Factors

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 Chapter Review

• Correcting a Balance of Trade Deficit

¤ Why a Weak Home Currency is Not A Perfect
Solution
• International Capital Flows
¤ Distribution of DFI by U.S. Firms
¤ Distribution of DFI in the U.S.
¤ Factors Affecting DFI
¤ Factors Affecting International Portfolio
Investment

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 Chapter Review

• Agencies that Facilitate International Flows

¤ International Monetary Fund (IMF)
¤ World Bank Group
¤ World Trade Organization (WTO)
¤ Bank for International Settlements (BIS)
¤ Regional Development Agencies
• How International Trade Affects an MNC’s
Value

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