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HomeHomework HelpeconomicsCross-Border Capital Flows

Cross-Border Capital Flows

Cross-border capital flows refer to the movement of financial assets and investments across international borders, which can significantly influence economic growth by providing access to resources, technology, and markets. These flows can enhance productivity and stimulate development in both the originating and receiving countries, depending on the regulatory environment and economic conditions.

intermediate
3 hours
Economics
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Overview

Cross-border capital flows play a crucial role in the global economy by facilitating investment and trade between countries. These flows can take various forms, including Foreign Direct Investment (FDI), portfolio investments, and remittances, each contributing differently to economic growth. Unders...

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Key Terms

Foreign Direct Investment
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 foreign company.

Remittances
Money sent back home by migrants to their families.

Example: A worker in the U.S. sending money to their family in Mexico.

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

Example: A country experiencing a rise in GDP.

Capital Account
A component of a country's balance of payments that records all transactions involving the purchase or sale of assets.

Example: Investments made by foreign entities in domestic companies.

Balance of Payments
A record of all economic transactions between residents of a country and the rest of the world.

Example: A country’s trade balance with other nations.

Related Topics

Global Trade
The exchange of goods and services between countries, impacting economies worldwide.
intermediate
International Finance
The study of financial transactions that occur between countries, including exchange rates and investments.
intermediate
Economic Development
The process of improving the economic well-being and quality of life for a community or country.
advanced

Key Concepts

Foreign Direct InvestmentPortfolio InvestmentRemittancesEconomic Growth