international capital movements

international capital movements
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China University of Mining & Technology, Beijing School of Management

International Capital Movements

International Trade Theory and Practice Huang Xianghong Vice-Professor 中国矿业大学(北京)管理学院

Learning Objectives

To learn the two types of international capital movements To study the trends of global FDI and the development of FDI in China To understand the principal factors that influence international investment decisions To learn the potential benefits and costs of foreign direct investment to a host country
中国矿业大学(北京)管理学院

§1 An Overview of the Trends of Global FDI and the
Development of FDI in China

When speaking of the international movement of “capital”, we need to distinguish two types of capital movements: foreign direct investment and foreign portfolio investment. This chapter covers foreign direct investment.

中国矿业大学(北京)管理学院

Content

The Two Types of International Capital Movements Foreign direct investment (FDI) Foreign portfolio investment Trends of global FDI in China Trends of global FDI The development of FDI in China

中国矿业大学(北京)管理学院

§1.1The Two Types of International Capital Movements

Foreign direct investment (FDI)

Foreign direct investment is the full or partial ownership of an enterprise located in one country by investors located in another country. For example, the building of the new facility---a branch plant---by the U.S. company.

中国矿业大学(北京)管理学院

§1.1The Two Types of International Capital Movements
Foreign direct investment (FDI)

Foreign direct investment is usually discussed in the context of: the multinational corporation (MNC) the multinational enterprise (MNE) the transnational corporation (TNC) the transnational enterprise (TNE)

中国矿业大学(北京)管理学院

§1.1The Two Types of International Capital Movements
Foreign direct investment (FDI)

These terms all refer to the same phenomenon----production is taking place in plants located in two or more countries but under the supervision and general direction of the headquarters located in one country.

中国矿业大学(北京)管理学院

§1.1The Two Types of International Capital Movements
Foreign portfolio investment

Foreign portfolio investment does not involve ownership of control but the flow of what economists call “financial capital” rather than “real capital”. For example, the deposit of funds in a U.S. bank by a Chinese company, the purchase of a bond of a Swiss company or the Swiss government by a citizen or company based in Italy.

中国矿业大学(北京)管理学院

§1.1The Two Types of International Capital Movements
Foreign portfolio investment

These flows of financial capital have their immediate impacts on balance of payments of exchange rates rather than on production or income generation.

中国矿业大学(北京)管理学院

§1.2Trends of globa

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