presentation slides on international funds flow prepared by the group members in a new way thanks guys for providing such a beneficial, knowledgeable slides.

2.  SHUMAILA AKBAR (01)
 EMAD FARRUKH (64)
 MUNEEBA SARDAR (29)
 HARIS (31)
 Amir Nawaz (23)

3.  IMPORTANCE OF INTERNATIONAL FLOW OF
FUNDS.
 BALANCE OF PAYMENT
 FACTORS AFFECTING INTERNATIONAL TRADE
FLOWS
 INTERNATIONAL CAPITAL FLOW
 TRADE ISSUES
 AGENCIES FACILITATING INTERNATIONAL
TRADE

4.  Economic development
 Foreign exchange earnings
 Market expansion and increase in competition
 Increase in local and foreign investment
 Increase national income and employment
 Lower production costs

5.  The balance of payments is a statistical
statement that systematically summarizes, for a
specific time period, the economic transactions
of an economy with the rest of the world.
 It accounts for transactions by businesses,
individuals, and the government.

6. 1) CURRENT ACCOUNT:
The summary of flow of funds due to
• purchase of goods or services or
• provision of income on financial assets or
• Transfers of governments
SUB SECTIONS:
I. Payments for merchandise and services
II. Factor income payments
III. Transfer payments

7. 2) CAPITAL ACCOUNT:
It includes the value of non-produced non-
financial assets that are transferred across
country borders, such as:
 Patents
 Trade marks

8. 3) FINANCIAL ACCOUNT:
I. Direct foreign investment
II. Portfolio investment
III. Other capital investment

9. 4) OFFICIAL RESERVE TRANSACTIONS:
The transactions in the form of international
reserve assets such as gold and major currencies.
5) ERRORS AND OMISSIONS:
Measurement errors can occur when attempting
to measure the value of funds transferred into or
out of the country.

10.  After World War II, the US experienced a
large balance-of-trade surplus.
 During the last decade, the US has
experienced balance-of-trade deficit.
 US current account balance for 2013 was
-$400.3 billion and in 2014 -$410.6 billion.
 US capital account balance in 2013 was -
$5,383.0 billion and in 2014 was -$6,915.3
billion .

11. 1) Inflation
2) National income
3) Exchange rates
4) Government policies
5) Natural factors
6) Political factors

12. INFLATION:
A relative increase in a country’s inflation
rate
 Increases its imports
 Decreases its exports
 Decrease it’s current account

13. NATIONAL INCOME:
A relative increase in a country’s income level
will
 Increase its imports
 Decrease its exports
 Decrease it’s current account

14. GOVERNMENT POLICIES:
A country’s government can have a major
effect on its balance of trade due to its
policies
 Subsidies for exporters
 Restrictions on imports
 Lack of restrictions on piracy

15. IMPACT OF EXCHANGE RATES:
Each country’s currency is valued in terms of
other currencies through the use of exchange
rates.
 Appreciation of home currency
 Depreciation of home currency

16. NATURAL CAUSES:
E.g. flood and earth quake
POLITICAL CAUSES:
 Relationship with other countries
 Barriers i.e. tariff and quota

17. The movement of money on international level
for the purpose of investment, trade or
production.
TYPES OF INTERNATIONAL CAPITAL FLOW:
 Direct foreign investment
 International portfolio investment

18.  Attract new sources of demand
 Exploit monopolistic advantages
 Enter profitable markets.
 React to trade restrictions.
 Diversify internationally.
 Fully benefit from economies of scale.
 Use foreign factors of production.
 Use foreign raw materials and technology.

19. 1. Changes in restrictions
2. Privatization
3. Potential economic growth
4. Tax rates
5. Exchange rates

20. 1. Tax rate on interest or dividends
2. Interest rates
3. Exchange rates

22. 1) Events that increase international trade:
I. Removal of Berlin wall.1986
II. Single European Act.1980 act 1987 negotiated still 1992
III. North American Free Trade Agreement (NAFTA).1993
IV. General Agreement on Tariffs and Trade (GATT)1993
result of uruguay round started in1986 across 117
countries
V. Inception of the Euro.1999.other transaction 2001
completely replaced 2002.
VI. Expansion of the European Union.2004. Bulgaria and
Romania 2007.
VII. Central American Trade Agreement
(CAFTA)2006.dominican republic central American
countries and Caribbean nation.

23. 2) Trade Friction:
 International trade and government
strategies.
 Using exchange rate as a policy.
 Outsourcing.
 Trade policies and politics.

24. 1) INTERNATIONAL TRADE AND GOVERNMENT
STRATEGIES:
 Tariffs and Quotas
 Environmental restrictions
 Child labor laws
 Govt. allow firms to offer bribes to large
customers for industrial development.
 Subsidies to exporters
 Tax break

25. 2) OUTSOURCING:
The process of subcontracting to a third party in
another country to provide supplies or services
that were previously produced internally.
 Impacts of outsourcing on value of MNC’s.
 Criticism on outsourcing.
 Managerial decisions.

26. 3)EXCHANGE RATE AS A POLICY
4) TRADE POLICIES AND POLITICS

27. 1) International monetary fund
2) World bank
3) World trade organization
4) International financial corporation
5) International development association
6) Bank for international settlements
7) Organization for economic corporation and
development
8) Regional development agencies

28.  International Monetary Fund(IMF) was formed
in 1944.
 It consist of 188 members.
OBJECTIVES OF IMF:
 Co-operation among the countries on
international monetary issues.
 Stability in exchange rates.
 Correct imbalances of international
payments.
 Promote free trade.

29.  Established in 1944.
 Primary objectives is to make loans to
countries to enhance economic development.
 Main source of funds is the scale of bonds
and other debt instruments to private
investors and governments. The World Bank
has a profit-oriented philosophy.
 World bank provided a small portion of
financing needed by developing countries.
 To spread its funds by entering into co-
financing

30.  Official Aid Agencies. Development agencies
may be join the world bank in finance
development projects in low income
countries.
 Export credit agencies. the world bank
cofinaces some capital intensive projects
that are also financed through export credit
agencies
 Commercial banks. The world bank has
joined with commercial banks to provide
financing for private-sector development.

31.  Started operation in 1995 with 81 members.
 Consist of 161 members
 The World Trade Organization (WTO) is the
only global international organization dealing
with the rules of trade between nations.
 The goal is to help producers of goods and
services, exporters, and importers conduct
their business

32.  Established in 1956
 Has 184 member countries, a group that
collectively determines our policies.
 Is a member of the World Bank Group
 Largest global development institution focused
exclusively on the private sector in developing
countries.
 Allows companies and financial institutions in
emerging markets to create jobs, generate tax
revenues, improve corporate governance and
environmental performance, and contribute to
their local communities

33.  Part of the World Bank that helps the
world’s poorest countries.
 Established in 1960
 IDA aims to living conditions reduce
poverty by providing loans (called
“credits”) and grants for programs
that boost economic growth and
reduce inequalities.
 Largest sources of assistance for the
world’s 771 poorest countries, 39 of
which are in African countries.

34.  It is the single largest source of donor funds
for basic social services in these IDA-financed
operations deliver positive change for 2.8
billion people, the majority of whom survive
on less than $2 a day.