Trades in goods and foreign investment
Trade in goods
Foreign investment
Refers to the buying and selling of goods and services for money
Advantages
Availability of all types of goods
Specialization
Large-scale production
Disadvantages
Impediment in the development of domestic industries
Storage of Goods
Misuse of natural resources
Includes all goods which add to the imports and exports of a country
Goods not included in the OECD data
Goods transported through a country temporarly admitted or withdrawn
Involves capital flows from one country to another
Foreign investors in domestic companies
foreigners have active role in management
4 takeaways
FI is investment in domestic countries by foreign investor
Include long-term physical investment, such as opening plants
MNC's seek new opportunities by expanding to other countries
Involves corporations, financial institutions and private investors
Foreign Direct Investment
Physical investment by foreign
Opening plants
Buying buildings
Buying machines
Long-term investment to boost the foreign country's economy
Foreign Indirect investments
Involves corporations buying stakes or positions
Also known as Foreign Portfolio Investment
Less favorable as they can easily sell off their investment