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Finance in a global context - Coggle Diagram
Finance in a global context
Balance of payments
International financial institutions
Mechanisms for international financial cooperation & economic stability
United Nations in USA established - IMF and World bank after World War II to ensure world economic stability. Most world countries are members.
Long term projects-help build up countries
End extreme poverty 2. Promote shared prosperity
Struggles - fraud & corruption of deceptive leaders
Sort term projects-loans to very poor countries
Give aid to migrant crisis
Provide training & technical assistance to fight corruption
=Economic indicator
Individuals, firms, governments
Transactions -rest of the world
Current account-money in/out by individuals 2. Capital account-capital/assets in/out by country companies 3. Financial account-investments + reserve assets by monetary authorities
Countries-Large current account
surplus
Export goods &services
Income from abroad - bigger than expenses to foreign countries. Lead to less spending of income on investments. Lower demand & expenditure.
Surplus countries=China+13 OPEC Countries, Russia, Norway, Switzerland & Japan
Countries-Large current account
deficit
Borrow money for imports
Lead to reduce spending & higher savings+ global imbalances between countries
Foreign direct investment FDI
Multinationals
businesses in 2/more countries - (cross border investment)
500 biggest multinationals, 25% world production & 50% world trade
Forms part of GDP for countries
Operational control - Important - global trade environment
New Innovations improve consumers lives
negative
lots of power to small number of shareholders
Policymaking - lobbyists influencing taxes
Less competition - higher prices products/services for consumers
'Transfer pricing' - tax havens - pay fever taxes
Multinationals - powerful with finance management
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