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International Finance (405-B)

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Chapter 1

Overview of International Business

International business

Any type of Business activity that cross national borders.

Need of International Business

Categories in International business

- Foreign Trade

- Trade in Services

- Portfolio Investments

- Direct Investments

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 Globalization

“It refers to a process of integration of the world into

one huge market” Impact of Globalization

-Configuring anywhere in the world

-Inter-linked and Inter-dependent Economies

-Lowering of trade and tariff barriers-Effect on related industries

-Mobility of skilled resources

-Market side Efficiency

-Formation of regional blocks-Intra structural resources and inputs and internationalprices

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• Features of Globalization

•

Drivers of Globalization

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• WTO(World Trade organization)

Is an international organization design by the

founders to supervise and liberalize international trade.• Functions of WTO

• Organisation of WTO

  - Hierarchical conference

 – Ministerial conference

 – General council

 – Councils

 – Committees and Management Bodies

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•  World Bank(IBRD)

 – Is an inter governmental institutions ,corporate in form,the capital stock of which is entirely owned by its member

government

• Objectives of World Bank

•Role of World Bank – Advances loans

 – Provide technical assistance

 – Imparts Training

 – Settlement of International disputes

 – Provide Financial; Assistance

 – Conduct economic research

 – Establishing Subsidiary institutions

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• International monetary fund – IMF was created with a goal to stabilize exchange

rates and assist the re-construction of the worlds

international payment system

• Functions of IMF – Short term credit Institutions

 – Acts as a mediator – Dispensation of Justice

 – Technical Assistance

 – Publication

• Organization structure

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• SDR(Special Drawing rights)

 –

Is the monetary unit of the reserve asset of theIMF

• Role of SDR

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International Finance

Def-IF is the branch of economics that studies

the dynamics of exchange rates, foreign

investments, and how these affectinternational trade

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Nature and Scope of International Finance

 –

Foreign exchange management – Exchange rate determination

 – Exchange rate risk and its managements

 – MNC,s investment decisions

 – International Working Capital Decisions

 – Financing decisions of the MNC,s

 – Inter accounting and taxation

 – Inter indebtedness

Significance of International Finance

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Use of IT in International Business

 – ITES(IT enabled services)

 – KPO(Knowledge Process Outsourcing)

 – E-Business enterprises