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International Investment Essay examples

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In 2002, imports to the United States from developing nations totaled a whopping $317 billion. (The United States is the single largest market for developing nations' goods.) Exports from the U.S. to those nations totaled $130 billion. Both imports and exports are important, but look at the difference, that is, the trade deficit that resulted for the United States: $187 billion. That's 44 percent of the entire trade deficit that the United States ran last year with all nations. In other words, with developing countries, the United States buys a good deal more than it sells. Consider a few examples. Last year, the Philippines sold exports worth $11 billion to the United States and bought American imports worth $7 billion, for a deficit (to …show more content…

An academic paper published earlier this year by Geert Bekaert of Columbia University and two colleagues found that "equity market liberalizations, on average, lead to a one percent increase in annual real economic growth over a five-year period." That figure, say the authors, "is surprisingly large" (after all, GDP growth averages only about 3 percent a year). "Liberalization" means that foreign investors can invest in the securities of other countries -- their stocks and bonds. The researchers also discovered that the countries that gained the most from liberalization were those -- such as developing nations -- that were furthest behind but moving forward in implementing macroeconomic reforms. For example, in the five years after liberalization, GDP growth in India averaged 5.7 percent annually, compared with 3.2 percent in the five years before liberalization. Thailand's average five-year growth was 8.7 percent after liberalization of its securities markets and 3.5 percent before. Of course, not all developing nations enjoyed such increases, but the average country did, and the results are powerful. Again, investment is a two-way street. Because the United States is a relatively stable and safe place to invest, it provides an enormous haven for capital investments (in stocks, bonds, real estate, and whole businesses) from abroad. Those capital inflows provide the necessary

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