Question

Explain in detail the classification of International capital flows.

Answer 1

Meaning of International Capital Movements:

The international trade and the movements of productive resources such as labour, capital and technology are substitutes for one another. A relatively capital-abundant country like the United States can export either capital-intensive commodities or export capital itself.

The conditions of capital-scarce countries require them to either import capital-intensive goods or procure the desired flow of capital from abroad. The movement or flow of financial resources from one country to another either for the adjustment of BOP disequilibrium or for expanding the production frontier in a country denotes international capital flow or movement.

Answer 2

The international trade and the movements of productive resources such as labour, capital and technology are substitutes for one another. A relatively capital-abundant country like the United States can export either capital-intensive commodities or export capital itself.

The conditions of capital-scarce countries require them to either import capital-intensive goods or procure the desired flow of capital from abroad. The movement or flow of financial resources from one country to another either for the adjustment of BOP disequilibrium or for expanding the production frontier in a country denotes international capital flow or movement.