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HomeHomework HelpeconomicsInternational Capital Mobility Effects

International Capital Mobility Effects

International Capital Mobility Effects refer to the impact of the free movement of financial capital across borders on economic variables such as investment, interest rates, and exchange rates, influencing both domestic and global economic conditions. These effects can lead to increased investment opportunities but may also result in economic volatility and disparities between nations.

intermediate
3 hours
Economics
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Overview

International capital mobility plays a crucial role in shaping the global economy. It allows financial capital to flow freely across borders, influencing investment patterns, exchange rates, and economic growth. Understanding the dynamics of capital mobility is essential for grasping how countries i...

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Key Terms

Capital Mobility
The ability of financial capital to move freely across borders.

Example: High capital mobility allows investors to seek the best returns globally.

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 is an example of FDI.

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

Example: Buying shares of a foreign company is portfolio investment.

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

Example: If 1 USD equals 75 INR, the exchange rate is 75.

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

Example: A country experiencing a rise in GDP is undergoing economic growth.

Financial Crisis
A situation in which the value of financial institutions or assets drops rapidly.

Example: The 2008 financial crisis was triggered by a collapse in the housing market.

Related Topics

Global Financial Markets
Study of how financial markets operate on a global scale and their impact on economies.
intermediate
Currency Trading
Understanding the buying and selling of currencies in the foreign exchange market.
advanced
Economic Policy
Exploration of government policies that influence economic performance and capital flows.
intermediate

Key Concepts

Capital FlowsExchange RatesInvestmentEconomic Growth