Download financial flows - Ms Topping`s IB Geography page

Compare the roles of different economic flows in the transfer of capital
from core to periphery
You have 3 minutes….to draw this and annotate
• 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
OUTSOURCING!
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
• From the video
• 1) Write down the key terminology
• 2) Write down the key ideas (1 sentence each)
Basics of economic flows
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Lenders
Borrowers
Transactions
Credit
Asset
Liability
Market
Debt
Interest
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
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
e.g.
• Core (UK)
Asset rich
Home of TNCs
Capital rich
Periphery(Kenya)
Human resource
Land resources
need for capital
When a country’s imports exceed its exports, it has a
current account deficit
• Since 2002 – net flow to the developed world
of $229 billion
• $784 billion in 2006
• Hard currency – long term and reliable value
of a currency
• Soft currency – likely to depreciate or
fluctuate against other currencies
• 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.
Types of flows
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Loans
Debt repayment
Remittances
FDI
Aid
Repatriation in the transfer of capital
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?