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Economic and financial flows in a globalised world - Coggle Diagram
Economic and financial flows
in a globalised world
Balance of payments
Economic Indicator - tracks transactions
Current Account
Payments for imports and exports
transfers of money by individuals, to and from abroad
Capital Account
Records of transfers of capital, to and from abroad
Financial Account
Financial inflows
Claims or liabilities to non-residents
Direct investments
portfolio investments
Reserve Assets
capital held by monetary authorities (e.g. central banks)
Must balance
provide a comparative between one country and another
Can be influenced by governments or left to market forces
Global Imbalances
"Surplus countries"
Countries with savings
Could force other countries into borrowing money
Leading to less being spent by these countries
Lack of spending extra income
China Japan Switzerland Norway
Oil rich countries
Foreign Direct Investments
Multinationals
Companies that have operations in at least two different countries
Arm's length method
transactions should be valued as if they had been carried out between unrelated parties, each acting in his own best interest
Unitary Taxation
income of profits (and losses) of different branches of a corporation are calculated under one group