Definition Foreign Direct Investment (FDI) refers to an investment made by a company or individual in one country in business interests in another country. This investment involves establishing business operations or acquiring assets in the foreign country. Unlike portfolio investment, where investors only buy stocks and bonds, FDI implies a lasting interest and significant influence over the business operations.
Components of FDI Equity Capital: This is the investment amount directly associated with ownership in foreign enterprises, usually exceeding a 10% stake.
Definition Foreign Exchange Reserves, often referred to as FX reserves, are the assets held by a country’s central bank or monetary authority in foreign currencies. These reserves are crucial for managing a country’s currency value, participating in international trade and addressing economic challenges such as currency volatility.
Components of Foreign Exchange Reserves Foreign exchange reserves consist of various components, including:
Foreign Currency Deposits: These are bank deposits held in a foreign currency.
Definition The Global Financial Crisis (GFC), which occurred between 2007 and 2008, is often regarded as one of the most severe financial crises in modern history. It began in the United States but quickly spread to economies worldwide, leading to significant financial disruptions and a global recession. The crisis was fueled by a combination of factors, including risky mortgage lending practices, excessive risk-taking by financial institutions and regulatory failures.
Definition Global Macro Strategy is an investment approach that seeks to capitalize on macroeconomic trends and themes across global markets. This strategy involves analyzing economic indicators, geopolitical developments and market movements to make informed investment decisions across a wide range of asset classes, including equities, fixed income, currencies and commodities.
Key Components Macroeconomic Analysis: At the heart of Global Macro Strategy lies the analysis of macroeconomic indicators such as GDP growth, inflation rates, interest rates and unemployment figures.
Definition The term Global Supply Chain refers to a network of interconnected businesses and organizations that work together to produce and deliver products and services to customers across the globe. It encompasses everything from sourcing raw materials to manufacturing, logistics and distribution, all while being influenced by various economic, political and technological factors.
Key Components of a Global Supply Chain Suppliers: These are the businesses that provide raw materials and components needed for production.
Definition Global Value Chains (GVCs) refer to the full range of activities that businesses engage in to bring a product or service from conception to delivery and beyond. This includes design, production, marketing and distribution, often involving multiple countries and stakeholders. GVCs have become increasingly important in today’s interconnected world, as companies seek to optimize resources and enhance competitiveness.
Components of GVCs GVCs are made up of several key components:
Definition Globalization is a multifaceted process that involves the expansion of economic, cultural, technological and political interactions among nations and individuals. It signifies an increasingly interconnected world where businesses, markets, ideas and communities transcend national borders, shaping global policies and practices.
Components of Globalization Economic Globalization: Consists of international trade, investment flows and cross-border partnerships. It encompasses the deregulation of markets, reduction of trade barriers and integration of economies.
Definition Gross Domestic Product (GDP) is the total monetary value of all final goods and services produced within a country’s borders in a specific period, usually annually or quarterly. It serves as a broad measure of overall economic activity and is a vital indicator used by economists and policymakers to gauge the economy’s health.
Components of GDP GDP can be broken down into four primary components:
Consumption (C): This includes all private expenditures by households and non-profit institutions.
Definition Gross National Product (GNP) is a crucial economic metric that measures the total market value of all final goods and services produced by the residents of a country in a specified period, usually a year. Unlike Gross Domestic Product (GDP), which only accounts for production within a country’s borders, GNP includes the value of goods and services produced by residents abroad, making it a broader indicator of economic activity.
Definition The International Monetary Fund (IMF) is an international organization that aims to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth and reduce poverty around the world. Founded in 1944, it currently has 190 member countries and plays a crucial role in the international financial system.
Key Functions of the IMF The IMF serves several key functions, including:
Surveillance: The IMF monitors the economic and financial developments of its member countries, providing insights and advice on policies that promote stability and growth.