Term paper 3 Trade and investment. Valuation M are valued usually at CIF (Cost Insurance Freight) X are recorded FOB (Free on Board) => M value higher.

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Presentation transcript:

Term paper 3 Trade and investment

Valuation M are valued usually at CIF (Cost Insurance Freight) X are recorded FOB (Free on Board) => M value higher than X value by the value of freight and insurance.

Trade classifications SITC = Standard International Trade Classification HS = Harmonized System

FDI definitions IMF BoP Manual (5 th ed 1993) and OECD Benchmark Definition of FDI (3rd ed) 1996: “the category of international investment that reflects the objective of obtaining a lasting interest by a resident entity in one economy in an enterprise resident in another economy...”

Components of FDI Flows and Stocks * Equity capital * Reinvested earnings: in addition to equity capital * Intercompany loans: loans extended by the paternal company to the affiliate

Measurement Approval vs. disbursements data – two sides of the FDI coin Gross and net measures Directional principle

Assignment 27 September 2010: Trade and investment Provide an overview and brief analysis of developments in international trade and investment flows over the last decade in [country:XXX

Trade: Limitation: Merchandise trade (excluding trade in services) Main indicators: * Total XM values (trade balance) * Composition of trade * Major regional groups/countries: source (M)/destination (X)

FDI: Limitation: Inward foreign direct investment (FDI) excluding outward FDI and foreign portfolio investments (FPI)/foreign indirect investment (FII). Main indicators: Total size (approved/disbursed/BoP-concept) Sectors (broad sectors, ISIC) Source countries Sectors/source countries