People are talking about international investment and all the big player in that game. Have you ever wondered what does that actually entail? And what are the rules of investment schemes all over the world? What are the governing bodies that make them work?
Some of those questions will be answered here in this article and hopefully, you will have a better understanding of world trade, what exactly goes on in international institutions, and how does this all influence the prosperity of individual countries.
There are many theories in an economy that try and explain what are the principles behind international trade and why is it significant for the development of humankind. What can be abstracted, as a sort of general rule behind the complex trade systems is that countries substitute the lack of certain resources, products or services by trading with other countries?
That was the simplified version of the answer, the complete one will consider a lot of other factors that will influence the continuing makeup of the world trade system. Things like geographic distance and ideological similarities What market does the country have access to will be determined by its presence in international organizations, that have their own agendas? What this entails is that governments of countries have to work together to improve the markets abilities of their own countries and to bust their production and trade.
There is also one rule that addresses the type of product that sovereign countries trade with. Usually, less developed countries trade with raw resources as they do not have the industrial capacities to make products from those resources. More developed countries usually import more raw resources, but they also produce products and offer particular services that are in demand all over the world.
Countries that have a high level of export of any kind will have enough earnings to invest in less developed countries. And this is the principle that has found the most application in modern neo-liberal capitalism that has opened up the world to globalization.
This process has brought about the dismemberment of national companies and the production of international corporations that are taking over the world’s consumer market. This could not have been possible without international trade and investment. Less developed countries depend on the money they will get from the leading countries of the world because with it they will develop their own production capacities. The country that is investing will have products that are on demand in their country and they will have a low wage workforce. That will cut down the cost of production and create more opportunities for money to flow through the market.
The other part of the international investment is political. Because developed countries usually have sets of rules that they demand from less developed countries to fulfill. Those rules are usually associated with law and general issues linked with the organization and governance of the state.
When we think about all the countries in the world there is a very striking difference between them in the way they are governed and in the amount of political and economic success they have in their endeavors. How does one go about and comparing the different system in order to determine how advanced it is, or what kind of changes it needs so we can think of that country in terms of good governance?
The following article will explain the six different aspects that are taken into consideration when the effectiveness of state governance is brought into question. The analyzing process is conducted by the World Bank and it biased on conducting various research studies and then combining the different findings into a wholesome system of determination. The purpose of this grading is here to help potential investors determine what kind of markets are they going into when they approach a country and it allows the WB to know how their clients progress in their responsibilities towards their creditors.
This aspect of the grading process analyzes the countries debt and their ability to pay back what is required of them. But it also determinedness whether or not a state is capable of investing in foreign markets and to what extent can she do that.
This factor considers the political and social liberty in a country and determines whether or not it is suitable for major investments. Stability in governance is important both economical and political reasons, no country is willing to invest in a state where there is no stable government to make sure that all the terms of the international agreements are met.
This aspect of the grading system looks at the countries administrative system and the effectiveness of the said system to pass out reform and arrange all that is necessary for international collaboration and investment endeavors.
Every country has governing bodies that are in place to make sure that all the laws are abode by and that everyone pays their share. The institutions that have to implement those procedures and check the public can have various extents of effectiveness.
Maybe one of the most important parts of the measurements procedure because it will give us an idea of how well all the other institutions perform in the governance of the entire state. If the law system that is in place is followed through by all its citizens, then it is safe to presume that there will be no problems in a monetary sense as well.
The last parameter is not the lest important. There are many countries that have modern governance systems in place but they have high levels of corruption in them. This fact can often be disabling for the economy because investment and the market are not free but in grate control of corrupt politicians and controversial businessman.