• MEANING OF INTERNATIONAL FINANCE
• ALSO REFERRED
AS INTERNATIONAL MONETARY ECONOMICS OR INTERANTIONAL MACROECONMOCIS
• A BRANCH
OF FINANCIAL ECONOMICS BROADLY CONCERNED
WITH MONETARY AND MACROECONOMIC INTERRELATIONSHIP BETWEEN TWO OR MORE
COUNTRIES.
•
IT EXAMINES:-
•
GLOBAL FINANICAL SYSTEMS AND UNDERSTANDING OF
WORKING OF ALL MULITNATIONAL COMPANIES
•
INTERNATIONAL MONETARY SYSTEM
•
BALANCE OF PAYMENTS
•
EXCHANGE RATES
• FOREGIN DIRECT INVESTMENTS
• MEANING OF
INTERNATIONAL FINANCE
•
ALSO CALLED MULTINATIONAL FINANCE.
•
CONCERNED WITH MATTERS OF INTERNATIONAL
FINANCIAL MGMT,FOREIGN EXCHANGE RISK AND POLITICAL RISK,MARKET IMPERFECTIONS
AND EXPANDED OPPORTUNITY COST
•
IT IS CONCERNED WITH UNDERSTANDING OF THE
PROCEDURES ,TECHNIQUES AND TOOL RELATED TO HELPING FIRM IN ASSESSING GLOBAL
MARKET FOR SHORT TERM AND LONG TERM FUNDS.
•
DEFINITION OF INTERNATIONAL FINANCE
•
BRANCH OF FINANCIAL ECONOMICS THAT REVIEWS THE
ELEMENTS OF EXCHANGE RATES OF CURRENCIES,MONETARY SYSTEMS OF THE WORLD,FOREIGN
DIRECT INVESTMENT AND HOW THESE INFLUENCE INTERNATIONAL TRADE
•
ALSO FURTHER EXAMINES THE INTERNATIONAL
PROJECTS,INTERNATIONAL INVESTMENTS AND CAPITAL FLOWS
•
INTERNATIONAL FINANCE CAN BE BROADLY DEFINED AS
THE STUDY OF FINANCIAL DECISIONS TAKEN BY MULTINATIONAL CORPORTATIONS IN THE
AREA OF INTERNATIONAL BUSINESS
•
REASON FOR GROWTH IN INTERNATIONAL FINANCE
•
ECONOMIC INTERDEPENDENCE:- REMOVAL OF TRADE
RESTRICTION,RATIO OF THE IMPORT AND EXPORT
•
GLOBALIZATION: SYSTEM MOVED FROM BANK ORIENTED
TO MARKET ORIENTED PHASE.
•
LIBERALIZATION OF FINANCIAL
MARKET:-DEREGULATION OF FINANCIAL MARKETS,NEW AND INNOVATIVE FINANCIAL PRODUCTS
•
GROWTH OF INFORMATION TECHNOLOGY:-
•
IMPORTANCE OF INTERNATIONAL FINANCE
•
PLAYS CRITICAL ROLE IN INTERNATIONAL TRADE AND
INTER ECONOMY EXCHNAGE OF GOODS AND SERVICCES
•
IMPORTANT TOOL TO FIND THE EXCHNAGE
RATE,COMPARE INFLATION RATE AND ECONOMIC STATUS OF THER COUTNRIES
•
EXCHNAGE RATE IS VERY SIGNIFICANT AS IT MAKE
AWARE THE RELATIVE VALUES OF CURRENCIES
•
ECONOMIC FACTORS HELP IN MAKING AND
IDENTIFICATION OF INTERNATIONAL INVESTMENT DECISIONS
•
MAINTAINS PEACE AMONG NATIONS
•
INTERNATIONAL FINACE ORGANIZATION SUCH AS
IMF,WORLD BANK AND PROVIDES A MEDIATOR ROLE IN MANAGING FINANCE DISPUTE,
•
SCOPE OF INTERNATIONAL FINANCE
•
INTERNATIONAL TRADE AND FINANCE :
•
MODES OF INTERNATIONAL TRAE
•
BALANCE OF PAYMENTS
•
CURRENT ACCOUNT TRANSACTIONS
•
CAPITAL ACCOUNT TRANSACTIONS
•
OFFICIAL RESERVES ACCOUNT
•
SECTORAL INDEPENDENCE
•
DOMESTIC AND INTERNATIONL TRADE
•
COMPONENTS OF INTERNATIONAL FINANCIAL SYSTEM
•
FOREIGN EXCHNAGE MARKET
•
INTERNATIONAL CURRECNY
•
ROLE OF INTERNATIONAL FINANCIAL MGR
•
MAKING INVESTMENT DECISIONS
•
DEPLOYMENT OF RESOURCES TO ACHIEVE THE FIRM’S
GOAL
•
MAKING WISE DECISIONS
•
TOTAL AMOUNT OF ASSETS,MAKE UP OF ASSETS
•
UNDERSTANDING THE PERCEPTION OF BUSINESS RISK
FROM THE POINT OF VIEW OF INVESTOR
•
MANAGING WORKING CAPITAL
•
MAINTAINING ADEQUATE LIQUID RESOURCES
•
MANAGING THE TIMING OF THE FLOW OF FINANCIAL
RESOURCES
•
OPTIMUM LEVEL OF CASH
•
AVAILABILITY OF APPROPRIATE CURRENCY,OVERALL
POLICY AND EXCHANGE RISK
•
TRANSFERRING FUNDS AT THE DESIRED PLACE AND IN
TIME
• ROLE OF
INTERNATIONAL FINANCIAL MGR
•
MAKING FINANCING DECISIONS
•
TO CONSIDER LOTS OF FACTOR ASSOCIATED WITH
INTERNATIONAL ECONOMIC ENVIRONMENT LIKE GOVT INFLUENCE,JOINT GOVT ACTION OF
EXCHANGE RATES ON THE TRANSFER OF FUNDS TO OFFSHORE
•
CAPIATAL STRUCTURE DECISIONS. INTERNATIONAL
GLOBAL CAPITAL STRUCTURE
•
CONTROLLING FINANCIAL ACTIVITIES:
•
THE LOCAL MGR IS GIVEN THE RESPONSIBILITY FOR
ALL FINANCIAL DECISIONS AND MESAURED FROM THE INCOME STATEMENT
•
RESPONSIBILITY IS PLACED AT PARENTING LEVEL AND
LOCAL MGR IS EVALUATED ON THE BASIS OF OPERATING PROFITS.
• ROLE OF
INTERNATIONAL FINCIAL MGR
•
IMPORTANT CONSIDERATIONS:-
•
FLUCTUATING EXCHANGE RATE
•
COMPLEX INTERNATIONAL TAXATION SYSTEM
•
FLOW OF FUNDS WITHIN THE AFILIATE OF AN MNC
•
MANGING INTERNATIONAL ACCOUNT RECEIVABLE,INVENTORIES
AND LONG TERM ASSETS
•
MANAGING CASH IN DIFFERNENT AFFILIATES
•
INFLATION
•
DIFFERENT INTERST RATES
•
POLITICAL UNCERTAINITES AT HOME AND ABROAD
•
COMPETITIVE ENVIORNMENT
•
THREATS OF HOSTILE TAKOVER
•
LEGAL RULES
•
FUNCTIONS OF THE INTERNATIONAL FINANCIAL MGR
•
FINANCIAL PLANNING AND CONTROL
•
THE EFFICIENT ALLOCATION OF FUNDS
•
THE ACQUISITION OF FUNDS
•
CHALLENGES OF INTERNATIONAL BUSINESS AND
FINANCE
•
GLOBAL TRADE PRACTICES: ADOPTING OF
INTERNATIONAL APPROACH
•
ROLE OF CULTURE AND LANUAGE
•
FOREGIN POLITICS
•
ECONOMIC AND FINANCIAL CHALLENGES
•
SOCIAL FACTORS
•
NATURAL ENVIORNMENT
•
EXCHANGE RATE MOVEMNT
•
GOALS OF INTERNATIONAL FINANCE
•
BALANCE OF PAYMENTS
•
INTERNATIONAL ECONOMICS/INTERNATIONAL
FINANCE/MACRO ECONOMICS
•
DR. SHASHI AGGARWAL
•
(SHARE,
SUBSCRIBE AND LIKE )
•
BALANCE OF TRADE
•
REFERS TO BALANCE OF DIFFERENCE BETWEEN THE
VALUE OF TOTAL IMPORTS AND EXPORTS OF VISIBLE MATERIAL GOODS.
•
FAVOURABLE OR SURPLUS BALANCE OF TRADE
•
UNFAVOURABLE OR DEFICIT BALANCE OF TRADE
•
BALANCED BALANCE OF TRADE
•
BALANCE OF PAYMENTS
•
THE BALANCE OF PAYMENTS OF A COUNTRY IS SYSTEMATIC RECORD OF ALL
ECONOMIC TRANSACTIONS BETWEEN ITS RESIDENTS AND RESIDENTS OF FOREIGN COUNTRIES.
•
INCLUDE THREE TYPES OF ITEMS:
•
VISIBLE ITEMS WHICH ARE PHYSICAL GOODS THAT ARE
RECORED AT PORTS
•
INVISIBLE ITEMS WHICH INCLUDE SERVICES AND
THESE ARE NOT RECORDED AT PORT
•
CAPITAL TRANSFERS WHICH ARE RELATED TO THE
RECEIPT AND PAYMENTS OF CAPITAL
•
FAVORABLE WHEN RECEIPTS EXCEDD THE PYMENT
•
UNFAVOURABLE WHEN PAYMENT EXCEED THE RECEIPTS
•
FEATURES OF BALANCE OF PAYMENTS
•
SYSTEMATIC RECORD OF RECEIPTS AND PAYMENTS
•
STATEMENT TO GIVEN PERIOD OF TIME
•
RECORDE ON DOUBLE ENTRY SYSTEM
•
THERE IS DIFFERENCE IN DEBIT AND CREDIT NEED IS
FELT FOR NECESSARY ADJUSTMENTS
•
BALANCE OF PAYMENT INCLUDE RECEIPTS AND
PAYMENTS OF ALL ITEMS GOVT AND NON GOVERNMENT
•
COMPOSITION OR STRUCTURE OF BALNCE OF PAYMENTS
•
CURRENT ACCOUNTING:-
•
CONSISTS OF ALL TRANSACTIONS RELATING TO TRADE
IN GOODS AND SERVICES AND UNILATERAL TRANSFERS
•
SERVICE TRANSACTION INCLUDE TRANSFER PAYMENTS
LIKE GIFTS,PENSIONS,PRIVATE REMITTANCE
•
VISIBLE EXPORT AND IMPORTS
•
CAPITAL ACCOUNT:- REFERS TO FINANCIAL
TRANSACTIONS.
•
FINANCIAL TRANSFER AND NO DIRECT EFFECT ON THE
INCOME,OUTPUT AND EMPLOYMENT
•
SHORT TERM AND LOANG TERM INTERNATIONAL CAPITAL
TRANSFERS
•
MOVMENT OF GOLD
•
PAYMENT ON PVTINTEREST,GRANTS
•
RECEIPTS ON INSTITUTIONAL
•
ACCOUNT AND GOVT LOANS
•
OVERALL BALANCE OF PAYMENTS
•
STRUCTURE OF BALANCE OF PAYMENT
•
STRUCTURE OF BALANCE OF PAYMENT
•
BALANCE OF PAYMENTS 2
•
INTERNATIONAL ECONOMICS/INTERNATIONAL
FINANCE/MACRO ECONOMICS
•
DR. SHASHI AGGARWAL
•
(SHARE,
SUBSCRIBE AND LIKE )
•
BOP
• CURRENT ACCOUNT
DEFICIT
•
TOTAL EXPENDITURE OF THE COUNTRY EXCEEDS ITS
TOTAL RECEIPTS SO THERE IS CAPITAL
INFLOW IN THE FORM OF LOANS FROM THE ABROAD
•
FOR AN ECONOMY WHERE DOMESTIC INDUSTRY ARE
GROWING RAPIDLY AND EFFICIENTLY DEFICIT SHOWS A HEALTH SIGN. ATTRACTS FOREGIN
INVESTMENTS WHICH ACDELERATES THE SPEED
OF GROWTH
• CAPITAL ACCOUNT
BALANCE
•
INDICATES HOW THE BALANCE IN THE CURRENT
ACCOUNT HAS BEEN FINANCED
•
SHORT TERM/LONG TERM
•
FINANCE OBTAINED ON COMMERCIAL TERM/SOFT TERMS
•
WHEN BOP IS IN DEFICIT/SURPLUSOFFICIAL RESERVE
IS SEPARATED
•
BUT IF CURRENT ACCOUNTPLUS CAPITAL IS DEFICT
THEN MATCHED SURPLUS ON OFFICIAL RESERVE
•
BALANCE OF PAYMENTS ALWAYS BALANCES
•
BALANCE OF PAYMENT IN ACCOUNTING SENSE
•
ACCOUNTS ARE PREPARED ON THE BASIS OF DOUBLE
ENTRY SYSTEM
•
RECEIPT SIDE IS ALWAYS EQUAL TO PAYMENT SIDE
•
BALANCE OF PAYMENT ALWAYS BALANCES
•
•
BALANCE OF PAYMENTS IN OPERATIONAL SENSE
•
ALSO CALLED ECONOMIC BALANCE
•
WHEN CURRENT ACCOUNT IS DEFICIT OR SURPLUS THEN
THE BALANCE IS RESTORED WITH THE HELP OF CAPITAL ACCOUNT
•
DEFICIT OF CURRENT ACCOUNT IS BALANCED WITH THE
HELP OF SURPLUS OF CAPITAL ACCOUNT
•
SURPLUS OF CURRENT ACCOUNT IS USED TO MEET THE
DEFICT OF SURPLUS ACCOUNT
•
CAUSES OF DISEQUILIBIRUM
•
NATURAL CAUSES:
•
ECONOMIC CAUSES:-
•
ECONOMIC DEVELOPMENT PLANS
•
PRICE COST EFFECT
•
CYCLICAL FLUCTUATIONS
•
CHANGE IN FOREIGN EXCHANGE RATES
•
DECLINE IN FOREIGN DEMAND
•
DEMONSTRATION EFFECT
•
FOREIGN CAPITAL INVESTMENT OUTFLOW
•
POLITICAL CAUSES:-
•
EXPANSION OF EMBASSIES AND THEIR MAINTAINENCE
•
POLITICAL INSTABILITY
•
INTERNATIONAL RELATIONS
•
PARTITION/UNIFICATION OF THE ECONMY
•
MEASURES TO CORRECT ADVERSE BALANCE OF PAYMENTS
•
ECONOMIC MEASURES
•
POLITICAL MEASURES
•
SOCIAL MEASURES
•
INTERNATIONAL MEASURES
•
ECONOMIC MEASURES
•
MONETARY MEASURES
•
DEFLATION
•
DEVALUATION
•
EXCHANGE CONTROL
•
EXTERNAL DEBTS
•
NON MONETARY MEASURES
•
DISCOURAGING IMPORT
•
IMPORT DUTIES
•
IMPORT QUOTAS
•
IMPORT SUBSITUTION
•
EXPORT PROMOTION
•
ATTRACTION OF FOREGIN TOURISTS
•
ENCOURAGMENT TO FOREIGN TOURISTS
•
OTHER MEASURES
• POLITICAL MEASURES
•
A CHECK ON POLITICAL ALLIANCES
•
POLITICAL ADMINSITRATION THRIFTINESS
•
CHANGE IN POLITICAL IDEOLOGIES
•
OTHER MEASURES
•
SOCIAL MEASURES
•
INTERNATIONAL MEASURES
•
FOREIGN DIRECT INVESTMENT
•
INTERNATIONAL FINANCE
•
DR. SHASHI AGGARWAL
•
MEANING
•
A FOREIGN DIRECT INVESTMENT IS AN INVESTMENT IN
THE FORM OF CONTROLLING OWNERSHIP IN A BUSINESS IN ONE COUNTRY BY AN ENTITIY
BASED IN ANOTHER COUNTRY. IT IS DIFFERENT FROM FOREGIN PORTFOLIO INVESTMENT BY
A NOTION OF DIRECT CONTROL
•
THE INVESTMENT
MAY BE MADE EITHER INORGANICALLY BY BUYING A COMPANY IN THE TARGET
COUNTRY OR ORGANICALYY BY EXPANDING THE OPERATIONS OF AN EXISTING BUSINESS IN
THAT COUNTRY.
• INVESTMENT
MADE TO ACQUIRE LASTING INTEREST IN ENTERPRISES OPERATING OUTSIDE THE ECONMOY
OF THE INVESTOR.
•
METHODS
•
BY INCORPORATING A WHOLLY OWNED SUBSIDIARY OR
COMPANY ANYWHERE
•
BY ACQUIRING SHARES IN AN ASSOCIATED ENTERPRISE
•
THROUGH MERGER OR ACQUISITION OF AN UNRELATED
ENTERPRISE
•
PARTICIPATING IN AN EQUITY JOINT VENTURE WITH
ANOTHER INVESTOR OR ENTERPISE
•
DIFFERENT TYPES OF FDI
•
ON THE BASIS OF DIRECTION:-
•
INWARD FDI:-
•
WHEN FOREGIN CAPITAL IS INVESTED IN LOCAL
RESOURCES
•
ENCOURAGED BY:-
•
TAX BREAKS,SUBSIDIES,LOW INTEREST RATE
•
RESTRICTED BY :
•
OWNERSHIP LIMITS
•
DIFFERENTIAL PERFORMANCE REQUIRMENTS
•
:
•
SHORT QUESTIONS
•
INTERNATIONAL FINANCE
•
DR. SHASHI AGGARWAL
• MEANING OF
INTERNATIONAL FINANCE
• ALSO REFERRED
AS INTERNATIONAL MONETARY ECONOMICS OR INTERANTIONAL MACROECONMOCIS
• A BRANCH
OF FINANCIAL ECONOMICS BROADLY CONCERNED
WITH MONETARY AND MACROECONOMIC INTERRELATIONSHIP BETWEEN TWO OR MORE
COUNTRIES.
•
IT EXAMINES:-
•
GLOBAL FINANICAL SYSTEMS
•
INTERNATIONAL MONETARY SYSTEM
•
BALANCE OF PAYMENTS
•
EXCHANGE RATES
•
FOREGIN DIRECT INVESTMENTS
•
ALSO CALLED MULTINATIONAL FINANCE.
•
CONCERNED WITH MATTERS OF INTERNATIONAL
FINANCIAL MGMT,FOREIGN EXCHANGE RISK AND POLITICAL RISK,MARKET IMPERFECTIONS
AND EXPANDED OPPORTUNITY COST
•
IT IS CONCERNED WITH UNDERSTANDING OF THE
PROCEDURES ,TECHNIQUES AND TOOL RELATED TO HELPING FIRM IN ASSESSING GLOBAL
MARKET FOR SHORT TERM AND LONG TERM FUNDS.
•
SHORT QUESTIONS
•
EURO AS A RESERVE CURRENCY
•
A RESERVE CURRENCY(ANCHOR CUURENCY) MEANS THAT
IS HELD IN SIGNIFICANT QUANTITIES BY GOVT AND INSTITUTIONS AS A PART OF THEIR
FOREIGN EXCHANGE RESERVES. THE RESERVE CURRENCY IS COMMONLY USED IN
INTERNATIONAL TRANSACTIONS,INTERNATIONAL INVESTMENTS AND ALL ASPECTS OF GLOBAL
ECONMY. OFTEN CONSIDERED AS HARD CURRENCY OR SAFE HEAVEN CURRENCY.
•
EURO AS A RESERVE CURECNY
•
US DOLLARS IS THE MOST POPULAR . IT MAKES UP
64% OF ALL KNOWN CENTRAL BANK FOREIGN EXCHANGE RESERVES AND THAT MAKES THE
DOLLAR AS GLOBAL CURRENCY AND NEXT IS EURO . ONLY 19.19 IS IN THE FORM OF
EUROS.
•
CAPITAL CONTROL
•
ARE RESIDENCY BASED MEASURES SUCH AS
TRANSACTION TAXES,OTHER LIMITS OR OUTRIGHT PROHIBTIONS THAT A NATION’S
GOVERNEMENT CAN USE TO REGULATE FLOWS FROM CAPITAL MARKETS INTO AND OUT OF THE
COUNTER’S CAPITAL ACCOUNT.
•
THESE MEASURES MAY BE :
•
ECONMOY WIDE
•
SECTRO SPECIFIC
•
INDUSTRY SPECIFIC
•
TYPES OF FLOW
•
TYPES OF CAPITAL CONTROL:-
•
EXCHANGE CONTROL:-PREVENT OR LIMIT THE BUYING
AND SEELING OF NATIONAL CURRENCY AT THE MARKET RATE.
•
TRANSACTION TAX
•
WERE AN INTEGRAL PART OF THE BRETTON WOOD
SYSTEM.
•
EXCHANGE RATE QUOTATIONS
• DIRECT
QUOTE:-
•
HOW MANY UNITS OF LOCAL CURRENCY TRADERS NEED
TO BUY ONE UNIT OF FOREGIN CURRENCY.
•
DOMESTIC CURRECNY IS ALWAYS LISTED AS THE BASE
CURRENCY.
•
RS 65 =ONE $
• INDIRECT
QUOTE:-
•
HOW MANY FOREIGN CURRENCY ARE NEEDED TO
PURCHASE ONE UNIT OF DOMESTIC CURRENCY. FOREGIN CURRENCY IS BASE CURRENCY AND
FOREIGN CURRENCY IS THE QUOTE
•
US $1=C $ 1.7517
•
CROSS RATE:-
• THE
EXCHANGE RATE BETWEEN ANY TWO NON DOLLAR
CURRENCY IS REFERRED AS CROSS RATES. A RELATIVELY LARGE NUMBER OF CROSS RATES
WOULD BE REQUIRED TO TRADE EVERY CURRENCY DIRECTLY AAGAINST EVERY OTHER CROSS
RATES
• INVERSE
QUOTES:-FOR EVERY QUOTE(A/B) BETWEEN TWO CURRENCIES THERE EXIST AN INVERSE
QUOTE(B/A)/ WHERE CURRENCY A IS BEING PURCHASED AND SOLD WITH ITS PRICE IS
EXPRESSED IN TERMS OF CURRENCY B.
•
PURCHASING POWER PARITY
•
WHICH STATES THAT EXCHANGE RATE BETWEEN
CURRENCIES ARE IN EQUIBLIBIRUM WHEN THEIR PURCHASING POWER IS THE SAME IN EACH
OF THE TWO COUNTRIES.
•
THIS MEANS THAT THE EXCHANGE RATE BETWEEN TWO COUNTRIES SHOULD EQUAL THE RATIO
OF TWO COUNTRIES PRICE LEVEL OF A FIXED BASKET OF GOODS AND SERVICES
•
WHEN A COUNTRY DOMESTIC PRICE LEVEL INCREASES
THAT COUNTRY’S EXCHANGE RISK MUST BE DEPRECIATED IN ORDER TO TO RETURN TO
PURCHASING POWER PARITY.
•
THE BASIS FOR THE PPP IS LAW OF ONE PRICE.
•
SPECULATION
•
PURCAHSE OF AN ASSET( COMMODITY,GOODS,OR REAL
ESTATE) WITH THE HOPE THAT IT WILL BECOME MORE VALUABLE AT FUTURE DATE,
•
IN FINANCE THE SPECULATION IS ENGAGING IN RISKY
FINANCIAL TRANSACTIONS TO GET THE PROFIT FROM SHORT TERM FLUCTUATIONS IN THE
MARKET.
•
SPECULATORS FOCUSSES ON PRICE MOVMENTS ARE
COMMONLY FOUND IN STOCKS,BONDS,COMMODITY FUTURE,CURRENCIES,REAL ESTATE ETC.
•
NAFTA
• THE NORTH
AMERICAN FREE TRADE AGREEMENT( NAFTA)
• IN 1994,THE
NORTH AMERICAN FRE TRADE CAME INTO EFFECT,CREATING ONE OF THE WORD’S LARGEST
FREE TRADE ZONES AND LAYING THE FOUNDATIONS FOR STRONG ECONOMIC GROWTH AND RISING PRSOPERITY FOR
CANADA,THE UNITED STATES AND MEXICO.
• THE ARES
COVERED BY THE AGREEMENTS:-
•
TARIFF REDUCTION
•
FREE MOVMENT OF PROFESSIONAL AMONG THREE
COUNTRIES
•
FINANCIAL AND DIRECT INVESTMATTERS
•
CONSUER’S SAFETY
•
SPECIFIC ISSUES RELATED TO PROTECTION OF LABOUR
•
PROTECTION OF NATURAL ENVIRONMENT
•
WTO(WORLD TRADE ORGANIZATION)
•
THE WTO WHICH BEGAN ITS OPERATIONS IN 1995 IS A
SUCCESSOR OF GATT. THE GATT WAS AFORUM WHERE THE MEMBERS COUNTRIES MET FROM
TIME TO TIME TO DISCUSS AND SOLVE WORLD
TRADE PROBLEMS
•
WTO IS DIFFERENT FROM GATT AS IT IS A CHARTERED
TRADE ORGANIZATION AND HAS ALEGAL STATUS AND ENJOYS PRIVILEDGES/IMMUNITIES ON
THE SAME FOOTING AS IMF AND WORLD BANKING. THE WTO IS BASED IN
GENEVA,SWITZERLAND.
•
ITS MAIN FUNCTIONS:-
•
TO LIMIT HARMFUL TRADE PRACTICES
•
ACTING A FORUM FOR MULTILATERAL TRADE
NEGOTIATINS
•
OVERSEEING NATIONAL TRADE POLICIES
•
TO ADMINISTER THE DISPUTE SETTLMENT
UNDERSTANDING
•
MAIN OBJECTIVE IS TO ENSURE GLOBAL FREE TRADE
AND REDUCTION OF TARIFF AND NON TARIFF BARRIERS,EXPAND PRODUCTION,TRADE AND
OPTIMAL USE OF WORLD RESOURCES
•
BOP(BALANCE OF PAYMENTS)
•
ACCOUNTING RECORD OF ALL MONETARY TRANSACTIONS
BETWEEN A COUNTRY AND REST OF THE WORLD. THESE TRANSACTIONS INCLUDE PAYMENTS
FOR THE COUNTRY’S EXPORTS,IMPORTS OF GOODS AND SERVICES ,FINANCIAL CAPITAL AS
WELL AS FINANCIAL TRANSFERS.
•
INTERNATIONAL TRANSACTIONS FOR SPECIFIC PERIOD
AND ON THE PRINCIPLE OF DOUBLE ENTRY BOOK KEEPING.
•
PREPARED IN SINGLE CURRENCY
•
WHEN ALL COMPONENTS OF BOP SHEET ARE INCLDED
THAT IT MUST BALANCE AND THAT IT MUST BE ZERO. NO OVERALL SURPLUS OR DEFICIT
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