#cfa-level-1 #economics #economics-in-a-global-context #los #reading-20-international-trade-and-capital-flows
Global investors must address two fundamentally interrelated questions:
- where to invest? and
- in what asset classes?
Some countries may be attractive from an equity perspective because of their strong economic growth and the profitability of particular domestic sectors or industries. Other countries may be attractive from a fixed income perspective because of their interest rate environment and price stability.
To identify markets that are expected to provide attractive investment opportunities, investors must analyze cross-country differences in such factors as:
- expected GDP
- growth rates,
- monetary and fiscal policies,
- trade policies
- competitiveness.
From a longer term perspective investors also need to consider such factors as:
- a country’s stage of economic and financial market development,
- demographics,
- quality and quantity of physical and human capital (accumulated education and training of workers), and
- its area(s) of comparative advantage
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Introduction 1. INTRODUCTION Global investors must address two fundamentally interrelated questions: where to invest and in what asset classes? Some countries may be attractive from an equity perspective because of their strong economic growth and the profitability of particular domestic sectors or industries. Other countries may be attractive from a fixed income perspective because of their interest rate environment and price stability. To identify markets that are expected to provide attractive investment opportunities, investors must analyze cross-country differences in such factors as expected GDP growth rates, monetary and fiscal policies, trade policies, and competitiveness. From a longer term perspective investors also need to consider such factors as a country’s stage of economic and financial market development, demographics, quality and quantity of physical and human capital (accumulated education and training of workers), and its area(s) of comparative advantage.1 This reading provides a framework for analyzing a country’s trade and capital flows and their economic implications. International trade can facilitate economic growth by increasing t Summary
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