Compare the roles of different economic flows in the transfer of capital from core to periphery

Compare the roles of different economic flows in the transfer of capital from core to periphery

You have 3 minutes….to draw this and annotate

• Now swap with your neighbour and assess for

1) STRENGTHS

2) WEAKNESSES

You also need to add in syllabus statements from the global interactions course

OUTSOURCING!

Key ideas

• A range of flows of finance create global networks.

• Countries become dependent upon one another for economic success.

• Decision makers at national and international scales have influence over flows

• From the video • 1) Write down the key terminology• 2) Write down the key ideas (1 sentence each)

Basics of economic flows

• Lenders• Borrowers• Transactions • Credit • Asset • Liability • Market • Debt • Interest

International capital flows

• The importing of a good or a service (think outsourcing)

• Flows from core to periphery: Core can receive higher rates of return than otherwise

• Workers in resource rich peripheral areas can access capital they need to increase productivity and wages

Capital

• Financial or physical assets which can generate income, such as property or investments.

• Capital is one of the factors of production, it is the stock of man-made resources used in the production of goods and services. The other factors of production are land, labour and entrepreneurs.

• Money is just a representation of goods or resources - try building a boat on a deserted island with just a pocket full of Euros.

Geographyalltheway

e.g.

• Core (UK) Periphery(Kenya)Asset rich Human resourceHome of TNCs Land resourcesCapital rich need for capital

When a country’s imports exceed its exports, it has a current account deficit

• Since 2002 – net flow to the developed world of $229 billion

• $784 billion in 2006

• Hard currency – long term and reliable value of a currency

• Soft currency – likely to depreciate or fluctuate against other currencies

• Therefore LICs / NICs have felt the need to increase their hard currency reserves.

• Therefore their currency reserves will be less likely to lose their value.

• E.g. investment in gold instead of soft currency which may be worth very little in a few months time.

Types of flows

• Loans• Debt repayment • Remittances • FDI • Aid • Repatriation in the transfer of capital

Homework The influence of decision makers

Task: • Find out the headquarters of the world trade

organisation, the international monetary fund and the World Bank.

• What do they do?