The international movement of capital is the most important form of the IER

As you know, international relations in the field of economics have many forms, and it is incorrect to treat them solely as relations of sale and purchase of goods, during which they cross state borders . Experts distinguish between three and eight forms of IEA, and the international movement of capital is one of the most important forms of international economic cooperation. We will discuss it in more detail in this article.

The international capital movement (MDC) is an objective economic process. The reason for this movement is the difference between the profitability of capital in different countries. In essence, capital is the same resource as the rest, but its price is not expressed in terms of money, but in the percentage of return that its investment can bring. Thus, in developed countries, sooner or later, so much capital accumulates, in which interest rates no longer satisfy its owners. In this case, they begin to look towards less developed countries, where there is a significant deficit of this resource in the markets, which means that the return on investments will be much higher.

The basic forms of international capital flow:

1) export of entrepreneurial capital. It is implemented in the form of portfolio (portfolio) or direct (direct) investment abroad. The principal difference between these types of investment is that direct investments are aimed at obtaining the right to manage the enterprise, and portfolio investments are only used to receive dividends or to play on the difference in stock prices;

2) export of borrowed capital. It is similar to the export of entrepreneurial capital, but with the only difference that in this case all the principles of the loan are observed : the payment for the use of borrowed resources (in the form of a rate of interest), urgency, the repayment of the principal amount and the availability of a pledge or suretyship;

3) international economic assistance. It is a gratuitous transfer of financial resources, material benefits or the forgiveness of borrowers' debts (the London debt is the private debt, and the Paris Club of creditors is in charge of the public debt).

It should be noted that any country acts as an exporter and importer of capital. Russia in the international capital movement is no exception. So, many companies invest in the creation of new industries in their country (a vivid example can serve as automakers investing in the creation of their own plants in the territory of the Russian Federation). At the same time, our residents also invest in other countries (for example, Gazprom, which develops its infrastructure in the countries through which transit flows pass).

The international movement of capital is not just the transfer of financial and other resources between different countries. This is a powerful automatic controller, thanks to which levels of economic development of countries are leveled, and this regulator activates nothing more than the situation in the capital markets of a particular state. The international capital movement provides an opportunity for countries with a lower level of development to find investors who will be willing to invest in projects at high risk (due to political instability, imperfect system of legislation, lack of experience in investing in that state), but at the same time with greater profitability. Thanks to this process, it becomes possible to create new jobs and production capacities, the population is provided with the necessary goods, and the state budget - by income in the form of taxes from established enterprises.