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?