Compare the roles of different economic flows in the transfer of capital from core to periphery
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Transcript of Compare the roles of different economic flows in the transfer of capital from core to periphery
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Compare the roles of different economic flows in the transfer of capital from core to periphery
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You have 3 minutes….to draw this and annotate
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• 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
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OUTSOURCING!
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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
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• From the video • 1) Write down the key terminology• 2) Write down the key ideas (1 sentence each)
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Basics of economic flows
• Lenders• Borrowers• Transactions • Credit • Asset • Liability • Market • Debt • Interest
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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
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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
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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
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• Since 2002 – net flow to the developed world of $229 billion
• $784 billion in 2006
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• Hard currency – long term and reliable value of a currency
• Soft currency – likely to depreciate or fluctuate against other currencies
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• 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.
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Types of flows
• Loans• Debt repayment • Remittances • FDI • Aid • Repatriation in the transfer of capital
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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?