The international movement of capital - is the flow of funds between lenders and borrowers in various countries between the owners and their companies that they own abroad.
The essence of the export of capital is reduced to the withdrawal of financial and material resources of the process of national economic turnover in one country and include them in the production process in other countries.
The main reason for the export of capital is outstripping domestic economic development exporting country compared to the growth of its foreign trade. The export of capital caused by the formation in the industrialized countries of excess capital, which is due to its over-accumulation, that is, when the falling rate of profit in the domestic economy is not compensated by an increase of its mass.
Now it is not clear that capital move only at a high rate of return. The strategy of capital export, new, more complex motives. At the forefront were the following:
development and retention of their niches in international markets;
introduction to the scientific and technical management experience of other countries;
overcoming trade barriers of individual countries and regional groupings.
Migration of capital would not usually involve moving from one country to any investment products. When a businessman takes an overseas investment goods, such a transaction will be considered as foreign trade. However, if the investment goods shipped to another country as a contribution to the authorized capital created or acquired by the company there, then the transaction will be treated as export of capital.
Classification of international capital flows:
1. Functional purpose: loan capital, entrepreneurial capital.
2. Intended use: direct investment, portfolio investment.
3. Affiliation: private equity, public equity, capital of international organizations.
4. Dates: short-term capital, capital of the medium, long-term capital.
Capital has its movement in two basic forms: business and loan.
The movement of the loan capital is in the form of international credit, and business - through foreign investment.
Loan capital brings income to the owner in the form of interest on deposits, loans and credit. The business capital earns revenue primarily in the form of profit.
Entrepreneurial capital is divided into direct and portfolio investments.
A characteristic feature of direct investment is that the investor has managerial control over the entity in which it invested capital. Portfolio investments such controls do not give. They are usually represented by stakes, which account for less than 10-25% of equity of the firm.
After removal of direct investment overseas investors establish a new firm. Abroad such firms are called foreign affiliates. They are divided into departments, subsidiaries, associated companies.
Office, although registered abroad is not an independent company with its own balance sheet and full (100%) owned by the parent company, and therefore not a legal entity.
A subsidiary company is registered abroad as an independent company, that is a legal entity with its own balance sheet. According to control it exercises its parent company by virtue of the fact that it has a major part of the shares of the subsidiary or all of its capital.
An associate is different from a subsidiary that is not under the control of, and under the influence of the parent company due to the fact that one belongs to a significant (but not the main) part of the shares.
Private equity assets represented by private firms, commercial banks and other non-governmental organizations that are moving between countries to address the governing bodies of these organizations.
State capital - is the state budget is being moved abroad by the decision of the government.
Capital international economic organizations is used by the decision of the governing bodies of international organizations (IMF, World Bank, European Bank for Reconstruction and Development (EBRD), the European Central Bank, etc.).
After the Second World War, the volume of foreign trade grew steadily, but very often this growth was due to the movement of capital, ie the export of capital has become a means to promote the export of goods abroad. This happened in the following circumstances:
- Export of capital in the form of commodities means delivery of machinery, equipment, technology, etc.;
- Export of capital - are loans granted for the purchase of goods by the creditor country;
- Export of capital - is in-house delivery of the goods within transnational corporations (TNCs).
Direct investment showing signs of accelerated growth. In the mid-60's direct investment amounted to 108 billion dollars, and by the end of the XX century - 3000000000000. U.S..
In the initial period, the export of capital came from the industrialized countries in the agricultural, dependent. England and France have invested in India, Egypt, Algeria, Syria, and the other colonies, the United States - in Latin America, Germany - South-West Africa.
At the same time, capital poured in industrialized countries with a slow pace of economic growth in the country where the pulse of the economic life of a hard fought. For example, from England to the United States, or from England and France - in Germany and at the same time, the U.S. invested heavily in the British economy.
Industry areas of foreign investment determined the level of economic development of host countries.
In industrialized countries - in the production of finished products (high-end).
In less developed countries the capital was heading to the mountain, mining, metallurgy, petrochemical industry, credit and banking systems, infrastructure for the development of their natural wealth and