flows Flashcards
what is mainly meant by flows of capital
money going between countries for investment and production
what happened in late 20th century?
deregulation of world financial markets
- banking, insurance and investment companies able to operate outside national borders
what is BRIC and MINT and their relevance
Brazil, Russia, India and China + Mexico, Indonesia, Nigeria and Turkey - countries that are starting to become more economically developed
what is FDI
foreign direct investment - TNCs based in other countries will invest in their physical capital and assets by either becoming a subsidiary company by acquiring shares or a joint venture
what is repatriation of profits
also known as economic leakage
when the profit of TNCs goes back to the TNCs headquarters in the richer countries rather than staying in the less developed country
what is aid
financial support for poorer countries either provided by the UN (this is known as Official Development Assistance ODA) or provided bilaterally from one government to another
what is migration
out-migration usually from poorer countries to richer countries which exacerbates disparities as typically the more skilled and talented labour leave and pay taxes and spend their earnings in this new country - known as brain drain
however they do send back remittances
what is remittance payments
transfers of money from foreign workers to family in home country
it is the second most important source of income in developing countries above international aid
India receives most remittance payments from their diaspora than any other country
who moves more freely money or people
money because of restrictions on immigration
whats recently been the migration pattern
in recent years more people are crossing international borders for better employment opportunities from developing countries in South Asia, Latin America and Africa to rciher areas in North America, Europe and oil rich Gulf states e.g. Qatar, Bahrain, Saudi Arabia
North America, Europe and Gulf countries in Western Asia attract furthest away immigrants
characteristics of migrants
typically not the poorest in the country but those with some education and financial means
What happened in Asia 2005-2010?
Largest regional flow of labour in the world is in Asia - 2005-2010 around 5 million workers moved from South Asia to West Asia
What is the remittance dilemma in Somalia 2012
- 40% Somalians rely on remittances to meet their basic needs
- 50% GNI
- 80% of all investment in country
- 2012 - US + UK concerned the money was going into hands of terrorist group Al-Shabaab and so banks and money transfer agencies withdrew their services causing human rights protests
they thought this was happening because: - informal economy
- lack of anti-money-laundering laws
- lack of suspicious activity reports for money transmitters
- terrorist groups e.g. Al-Shabaab receive donations
what are the flows of products governed by
- tariffs
- transport and time costs
- transaction costs
how do tariffs affect flows of products
with encouragement of World Trade Organisation (WTO) - tariffs are generally being reduced with global trade
There is near unanimous consensus among economists that tariffs have a negative effect on economic growth and economic welfare, while free trade and the reduction of trade barriers has a positive effect on economic growth.
how do transport and time costs affect flows of products
they have been reduced by containerisation which has enabled more complex and long distance flows of products
air transport has also speeded up delivery and reduced costs of more valuable or perishable cargo
how have transaction costs affected flows of products
they have been reduced by the improvements in flows and data and the ease with which capital can be transferred to pay with transactions
what are two flows of services
high level services and low level services
what are high level services
generally require a higher skill level, they are
usually important and complicated, meaning the person delivering the service should be qualified and trained so that they can deliver the best service possible
e.g. financial services, investment services and advertising which are all services to businesses
they are footloose and can locate anywhere and advancing technology means they can still serve the needs of customers world wide
what are low level services
require less training
services to consumers e.g. banking, travel and tourism, customer call centres and communication services
recent trend = decentralisation of low level services from the developed countries to less developed countries e.g. call centre operations have moved from UK to India where labour costs are generally 10-20% lower
- lack of high level job opportunities in India
what are flows of information
they are governed by movement of people through migration and speed of data and communication transfers
e.g. cultural ideas, language, industrial technology, design, business management support
done this by:
● Fast broadband and connections allows news and financial information to be transferred almost instantly, allowing people to be more informed about global
current events.
● Social media has allowed people to communicate across countries, and allows people to experience other cultures
this allows people to research better employment
what has flows of information enabled
the expansion of knowledge-intensive goods and services = they have an intensive research and development component using highly skilled and educated labour
- high-tech products e.g. computer technology and business services are industries that need to exchange ideas and flows of expertise to flourish
