International migration of capital - the movement of capital between countries, including exports and imports of capital and its operation abroad. Movement of capital is an objective economic process when capital leaves the economy of one country in order to obtain a higher income in another country.
The impact of international capital flows on the global economy is large and ever-growing following an increase in migration of capital. International migration of capital stimulates the development of the world economy can reallocate scarce economic resources more efficiently. The two distinct effects of migration of capital for the world economy as a whole:
- Movement of capital is in search of the most profitable areas of its investments, thus increasing the investment activity of its subjects and the rate of growth of the world economy;
- It encourages the further development of the international division of labor and on this basis, the processes of international economic co-operation;
- As a result of increased activity of international corporations increased trade between countries, encouraging the development of world trade;
- The mutual penetration of capital between countries strengthens the processes of international cooperation, to a certain degree of mutual benefit is the guarantor of countries' foreign policy.
Along with the obvious benefits of such a migration of capital for the development of the world economy can be isolated and the negative effects of this process.
Negative influence on the development of the world economy has a migration of speculative capital. Focusing on making a profit from short-term speculative trading on the exchange rate, or speculation on the international stock market, speculative capital may undermine both the activities of individual companies and entire countries and economic regions (causing a stock market crash, causing large fluctuations in exchange rates). Such transfer of capital dramatically disrupt the balance of payments and increase the instability of the world monetary system.
International migration of capital is a mixed impact on the countries - exporters and importers of capital. In many ways, the role and impact of international migration of capital depends on the shape of its migration.
Movement of capital in two forms: in the form of business and loan capital.
Removal of venture capital is in the form of investments in foreign economies with a view to profit. Removal of the loan capital is aimed at getting lending rate from the use of capital abroad.
A distinctive feature of the foreign direct investment (FDI) is the fact that they are the real investment in physical capital, that is invested directly in the manufacture and provide an opportunity for profit and control of the entity receiving the capital. FDI carried out by means of:
- The direct purchase of the company;
- Purchase of the voting shares (more than 10 percent of the share capital), which gives the investor the right to operate the business;
- The construction of the new enterprise.
As a rule, foreign direct investments are long term in nature, involve the use of long-term production strategy.
The purpose of portfolio investment - receiving income from investments in securities without the possibility of management. For portfolio investments include non-voting stakes (up to 10% of the share capital), as well as investments in bonds and other debt securities. Investments portfolio investors are short term in nature. Much of portfolio investments are designed not to receive dividends and to receive income from the sale of securities, ie, they are speculative.
Form of loan capital migration involves getting the owner of the capital income abroad as a percentage. In this case, the owner of capital can either invest in a foreign bank and earn interest on deposits, or bypassing the banking sector, to give the money to the credit abroad and receive interest on the loan. Issuance of money on credit is more profitable operation than placing money in a bank deposit, but also much more risky.
In addition to placing the money in bank deposits abroad, and commercial lending, loan to form inter-state movement of capital are government loans and credits. The objectives of these borrowings are to reduce the state budget deficit and restructuring the economy. Countries that resort to external borrowing, thus form the external debt of the country. When building the external public debt is very important efficiency of the economy. Thus, the industrialized countries have a fairly efficient economy and extensive experience in managing public debt. Therefore, they can carry out almost fearlessly external borrowings to pay the budget deficit and restructuring during economic crises in the hope that during the economic recovery efficiency of the economy will be high enough for the payment of principal and interest thereon.
Developing and underdeveloped countries should be more wary of foreign loans, because the low efficiency of the economy could lead the country into a "debt trap" when the country does not have the funds to pay interest on the loan in time for the repayment of this debt has to resort to new borrowing. Lenders respond to the precarious financial situation of the borrower and the increased risk of loan default increasing amount of interest on subsequent loans. Thus, it may become a vicious circle of debt, out of which the debtor country is very difficult.
A characteristic feature of the world economy today is not so much the extent of the growth of world trade, as the growth in migration of capital. Thus, according to the WTO, 1990-2000. average annual growth rate of exports of capital exceeded the growth rate of international trade in goods and services to more than 2 times.
Investment capital in modern conditions flows freely in those countries and regions where the return on investment is higher, in turn, contributing to the further development of the world financial market. The fate of individual countries and regions are directly related to the state of the global financial market. Significant fluctuations in exchange rates and securities could cause the financial collapse of not only individual companies but entire countries.
The main flows of capital moving into the modern world among industrialized countries. For example, in 2000 the share of industrialized countries accounted for 81% of the total export of capital.
The largest donor and recipient at the same time the capital is the U.S., followed by the United Kingdom, Canada, Germany, the Benelux countries and Switzerland.
Since the 80's. activates movement of capital between the rapidly developing "newly industrialized countries", as well as between them and the industrialized countries. To date, the main flow of investment industrialized countries to developing countries is concentrated in the 10-15 developing countries in Asia and Latin America. Considerable success in attracting FDI have made China and India, pursuing an active policy of attracting FDI.
Among the modern trend of capital outflow should be noted an increasing share of entrepreneurial forms of capital in total capital. In motion the largest amount of venture capital account for portfolio investment, although the share of FDI increases with time.
The peculiarity of the modern movement of capital can also be called an increase in investment by multinationals. Expanding, multinational corporations create industrial infrastructure around them, thus causing a concomitant increase in FDI in manufacturing.
Since the 50's. XX century. observed consistent with the shift of FDI mining to manufacturing, and from the 80s., there is rapid growth of investment in services compared to investments in mining and in manufacturing.
An important factor in the revitalization of the international movement of capital, starting with the last third of the XX century., Is the liberalization of the conditions of movement of capital inherent in both developed countries and, to an even greater extent, developing countries interested in the flow of capital into the national economy.
The process of liberalization of movement of capital contributes to the activities of international integration structures such as the EU, NAFTA, ASEAN, APEC, etc. In the framework of international integration formations occur coordination of the positions of the participating countries in the investment field, the unification of investment standards and monitoring compliance with international law in the field of investment. The European Union, rising to the highest level of integration for today associations formed supranational institutions regulating the economy and pursue a unified investment policy within the region.
Developing countries seek to attract global flows of FDI into their national markets. There is a tough competition in developing countries for FDI. Under these conditions, a feature of the investment policies of developing countries is government support for FDI - the so-called policy of "open doors" which stimulates the flow of direct