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HomeHomework HelpeconomicsCapital Flows in Markets

Capital Flows in Markets

Capital flows refer to the movement of money for investment, trade, or business operations between countries, while emerging markets are economies that are in the process of rapid growth and industrialization, often characterized by increasing foreign investment and higher volatility compared to developed markets.

intermediate
3 hours
Economics
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Overview

Capital flows are crucial for the economic development of emerging markets, providing the necessary funds for investment in infrastructure and businesses. Understanding the types of capital flows, such as Foreign Direct Investment and portfolio investment, helps in analyzing their impact on economic...

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Key Terms

Foreign Direct Investment (FDI)
Investment made by a company or individual in one country in business interests in another country.

Example: A U.S. company opening a factory in India.

Portfolio Investment
Investment in financial assets such as stocks and bonds in a foreign country.

Example: Buying shares of a Brazilian company from the U.S.

Exchange Rate
The value of one currency for the purpose of conversion to another.

Example: 1 USD = 75 INR.

Economic Growth
An increase in the production of goods and services in an economy over time.

Example: A country’s GDP growing by 5% annually.

Capital Flight
A large-scale exit of financial assets from a country.

Example: Investors pulling out funds from a country due to political instability.

Volatility
The degree of variation of a trading price series over time.

Example: Stock prices can be highly volatile during economic crises.

Related Topics

Global Trade
The exchange of goods and services between countries, which is influenced by capital flows.
intermediate
Investment Strategies
Methods used by investors to allocate capital effectively, considering risks and returns.
intermediate
Financial Markets
Platforms where financial assets are traded, affected by capital flows and investor behavior.
advanced

Key Concepts

Foreign Direct InvestmentPortfolio InvestmentExchange RatesEconomic Growth