Question 1 Week 5

chapiter FlowsIt is proved that inter earthal capital emanates strongly venture the returns of the same period . Actually , capital flows can scram sparing development of the country as well as to cause condescension shortfalls and economic crisis . International capital flows project movements of a capital from one country to another self-governing state with monetary authority . Cash flows have been significantly changed over the past decades in their quality and quantity . notwithstanding apparent difficulties the quantity of cash flows has dramatically annexd since mid-seventies . In such a way , net spheric capital flows to the developing world increased from approximately 11 .3 billion in 1970 to over 207 .4 billion in 1994 (Canzano 1998 ) indeed , internationalist capital flows are related to significant increase in private capital rather than official flowsCapital flows extract large returns , though they may lead to trade deficit . For example , in the States trade deficit may reach new record . It is admitted that the Statesn trade deficit isn t caused by either unfair trade practices abroad or declining industrial competitiveness at home (Griswold 1998 ) In America trade deficit is the result of international capital flows determines by national rates of savings and investment . Thus , trade policy should aim at reducing a nation trade deficit . Nevertheless , it is argued that trade deficit caused by capital flows may be good news for American economy , because it suggest that global investors are confident in the country and that purchasing power among domestic consumers is rising fleetly . it is impossible to fix trade deficit by center of protectionism or export subsidies as they would fail , because of those tools of intervention addresses the inherent causes of the trade deficit .

Trade deficit depends mainly on nations s net flow of foreign investment . Cash flow is the indicator of financial stability and it is necessary to manage international cash flow statements and balance sheets . Return expectations could destabilize the economic markets (Griswold 1998ReferencesCanzano , Alan (1998 .Managing Financial Risk : A Risk-Analysis Framework for International Capital Flows . Retrieved February 28 , 2007 , from HYPERLINK http / entanglement .princeton .edu jpia /1999 /Canzano .htm _edn1 http /www .princeton .edu jpia /1999 /Canzano .htm _edn1Ghosh , A . R Ostry , J (1995 . The Current Account in develop Countries : A Perspective from the Consumption Approach . The World trust Economic Review 9 , 2 , 305 - 333Griswold , Daniel (1998 , April 20 . America s Maligned and Misunderstood Trade Deficit . Retrieved February 28 , 2007 , from HYPERLINK http /www .freetrade .org /pubs /pas /tpa-002 .html http /www .freetrade .org /pubs /pas /tpa-002 .htmlPAGEPAGE 2...If you want to get a broad(a) essay, order it on our website: Orderessay

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