International capital flows

Abstract

The flows of capital are the deposits of the enterprises or private individuals in the country: they may be defined as the flow of finance meant for the enterprises or private persons in another country for the purposes such as the investments or commercial activity. Nowadays, in the conditions, in which the free trade zones are formed, the international flows of capital are of great importance for those with large savings and commercial enterprise for more effective use of its assets. It is widely believed that the foreign investments are profitable for the economic growth of the countries. The increase in the international investments and capital flows in any country contributes to the correction of the balance of payments and the external trade deficit due to the growth of the overall productivity of a country. The quality of legal defense provided for the foreign investors, and the level of efficiency of law enforcement are the key political issues for the promotion of higher levels of portfolio investments of foreign capital. The measures for the safety of investors, particularly those who related to the foreign investments are the essential crossed aspect specifying the international portfolio investments in the shares. The flows of capital impact the economy of the countries on macro and micro levels. Though the macroeconomic indexes reflect the general parameters, their monitoring and evaluation are extremely significant in economic context. As the investments are estimated in the view of future expectations, it is known that when speaking on the investment prospects of a country, not only social-economic conditions, but political stability are essential as well.