Chapter 8 Flashcards
portfolio investment
investment in a foreign country via the purchase of stocks, bonds, or other financial instruments. Do not exercise managerial control of the foreign operation
sovereign lending
loans from private financial institutions in one country to sovereign governments in the other countries
foreign direct investment (FDI)
investment in a foreign country via the acquisition of a local facility or the establishment of a new facility. Do mantain managerial control of foreign operation
World Bank
An international institution that provides loans below market interest rates to developing countries, typically for development projects
Recession
A sharp slow down in the rate of economic activity
Depression
A severe downturn in the business cycle typically associated with a major decline in economic activity, production, and investment; a maintain contraction of credit; and sustained high unemployment
Default
to fail to make payments on a debt
austerity
the application of policies to reduce consumption, typically by cutting government spending, raising taxes, and restricting wages
Bank for International Settlements
One of the oldest international financial organizations, created in 1930, its members include the world’s principal central banks, and under its auspices, they attempt to cooperate in the financial realm
International Monetary Fund (IMF)
A major international economic institution, established in 1944 to manage international monetary relations and that has gradually reoriented itself to focus on the international financial system
Multinational Corporation (MNC)
an enterprise that operates in a number of countries, with production or service facilities outside its country of origin
Bilateral investment treaty
an agreement between two countries about the conditions for private investment across borders
