Professional Documents
Culture Documents
International Flow of Funds
International Flow of Funds
2
International Flow of Funds
Chapter Objectives
Current Account
Exports of goods and services and income receipts 1418568
Goods, balance of payments basis 772210
Services 293492
Income receipts 352866
Imports of goods and services and income receipts -1809099
Goods, balance of payments basis -1224417
Services -217024
Income payments -367658
Unilateral current transfers, net -54136
Balance on current account -444667
Capital Account
Capital account transactions, net 705
Financial Account
U.S.-owned assets abroad, net (increase/financial outflow) -580952
U.S. official reserve assets, net -290
Other U.S. Gov’t assets, net -944
U.S. private assets, net -579718
Foreign-owned assets in the U.S., net (increase/financial inflow)
1024218
Foreign official assets in the U.S., net 37619
Other foreign assets in the U.S., net 986599
Net financial flows 443266
Statistical discrepancy (sum of items in all accounts with sign reversed)
696
Egypt (3,1)
Nigeria (1,11)
Gabon (0,2)
Distribution of Angola
(0,4)
U.S. Exports
and Imports
For the Year of 2000
(exports, imports) South Africa (3,4)
in Billions of $
Source: U.S. Census Bureau
Iraq (0,6) Bangladesh (0,2) Japan
Israel (8,13) Pakistan (65,146)
Kuwait (0,2)
South Korea
(1,3) (28,40)
China
Saudi Arabia (16,100)
(6,14) Taiwan (24,41)
India Hong Kong
United Arab (4,11) (15,11)
Emirates Sri Lanka Macao (0,1)
(2,1) (0,2)
Philippines
Distribution of Thailand (9,14)
(7,16)
U.S. Exports Indonesia
(2,10)
Malaysia
and Imports (11,26) Australia
(12,6)
For the Year of 2000 Singapore
(exports, imports) (18,19)
in Billions of $ New Zealand
Source: U.S. Census Bureau (2,2)
Distribution of U.S. Exports and Imports
For the Year of 2000 in Billions of $
Exports Imports
Australasia Other Asia South Other Asia Australasia
14.8 1.9% 23.6 3.0% 47.4 East 88.0 56.5 4.6% 8.8 0.7%
6.1% Asia 7.2%
Canada
Canada 229.2
178.8 148.5
19.0% 18.8%
22.8%
East Asia
Mexico
340.3
135.9
Mexico 28.0%
11.2%
111.7 11.0
14.3% 1.4% Other
Africa America
Other 27.6 73.3
America 2.3% 6.0%
59.3 Eastern Europe 181.3 Western 241.0 Eastern Europe
7.6% 6.1 0.8% 23.2% Europe 19.8% 16.2 1.3%
Source: U.S. Office of Trade and Economic Analysis
International Trade Flows
1100
U.S. Imports
900
Billions of US$
700
500
300
U.S. Exports
100
0 Time
J Curve
International Capital Flows
1200
DFI by U.S. Firms
Billions of US$
1000
800
600
400
DFI in the U.S.
200
0
1980 1985 1990 1995 2000
• Changes in Restrictions
¤ New opportunities may arise from the removal
of government barriers.
• Privatization
¤ DFI has also been stimulated by the selling of
government operations.
• Potential Economic Growth
¤ Countries with higher potential economic
growth are more likely to attract DFI.
Factors Affecting DFI
• Tax Rates
¤ Countries that impose relatively low tax
rates on corporate earnings are more likely
to attract DFI.
• Exchange Rates
¤ Firms will typically prefer to invest their
funds in a country when that country’s
currency is expected to strengthen.
Factors Affecting
International Portfolio Investment
m
n
E CFj , t E ER j , t
j 1
Value =
t =1 1 k t
E (CFj,t ) = expected cash flows in currency j to
be received by the U.S. parent at the end of
period t
E (ERj,t ) = expected exchange rate at which
currency j can be converted to dollars at the end
Chapter Review
• Balance of Payments
¤ Current, Capital, and Financial Accounts
• International Trade Flows
¤ Distribution of U.S. Exports and Imports
¤ U.S. Balance of Trade Trend
¤ Recent Changes in North American and
European Trade
¤ Trade Agreements Around the World
Chapter Review