balance of payments Flashcards
what does BoP show
trading transitions with the rest of the world over a period of time
what does the current account show
shows imports and exports and gives and idea of a countries trading performance
what is balance of trade in goods
visible trade is the export and import of manufactured goods
what is balance of trade in services
invisible trade is the export and import of services e.g. tourism
what is net investment income
Interest, profit and dividends received on UK investments overseas minus the interest, profit and dividends paid to foreigners investing in the Uk
what are transfers
these are normally payments and receipts to and from the UK government and international organisations and aid
what is the capital/finance account
it shows all purchases and sales of assets to and from the uk
what is FDI
investment in land, premises and equipment by UK companies setting up branches overseas and vice versa
effect of FDI on BoP (4)
- increased investment improves BoP
- increased manufacturing which is sold abroad increases Scottish exports
- other business benefit from technology transfers
- repatriation of profits to home country: investment leaving Scotland
what is a direct portfolio investment
purchase of stocks and shares by foreigners and purchase of foreign stocks and shares overseas by Uk residents
what is movements of income
uk nationals living abroad transferring money into UK banks or vice versa
what is short term capital flows
investments in UK foreigners to take advantage of higher UK interest rates than elsewhere in world or vice versa
what is the UK international trade situation (7)
UK has a balance of trade deficit meaning imports of goods is higher than exports
increased imports due to cheaper produce abroad e.g. cheap labour, low rent and less health and safety measures
Improved transport makes it easier to produce elsewhere
there has been a reduction in natural resources in the Uk
low investment in manufacturing and poorer reputation and reliability and design
uk can trade its banking, insurance and financial service as it requires higher levels of education
Tourism in the UK improves the BoP
what is the balance of payments made of (3)
financial account: increase of decrease in a countryside asset ownership
capital account: keeps track of net change in assets
current account: records international transactions with the rest of the world
