International Trade, Finance, and Investment

International Trade,
Finance, and
Investment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
DOMESTIC ECONOMY AND INTERNATIONAL TRADE INVESTMENT AND
DEVELOPMENT:.................................................................................................................3
Background of the financial market:......................................................................................3
National economy and capital allocation in the UK:..............................................................4
International economy and capital allocation.........................................................................5
Financial investment and trade theory....................................................................................6
Contributions of international trade........................................................................................7
TASK 2............................................................................................................................................7
MAJOR CHALLENGES FACED BY DEVELOPING ECONOMY DUE TO
INDUSTRIALIZATION AND TRADE POLICIES:............................................................7
BRICS:...................................................................................................................................7
Thorough analysis of Indian Economy focusing on 4 significant factors:.............................8
Key issues India is facing because of WTO's trade policies:...............................................15
Challenges India is facing because of trade-policies setup by WTO:..................................17
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
International Trade pertains to the exchange of goods, items and services with a
consideration from nation to nation which simply called as importing and exporting. Trade a
wider level generally implies to international trades. While financing and funding for these
international trading operations and related business activities are referred to as international
finance and investments (Anderson and et. al., 2014). This study exhibits key characteristics and
roles of fiscal markets (Domestic or International) in context of trade developments. Further an
emerging economy is critically evaluated along with major issues faced by it due to latest trade
practices policies of WTO.
TASK 1
DOMESTIC ECONOMY AND INTERNATIONAL TRADE INVESTMENT AND
DEVELOPMENT:
Background of the financial market:
Financial market relates to marketplace where fiscal assets like securities, preferred
stock, debt funds, futures, currencies etc. are generated and exchanged. In assigning constrained
resources, it performs a vital part in the economy of a country. By mobilizing capital among
participants, it serves as a channel among investors and stakeholders. In addition, by offering
worthwhile details on financial instruments exchanged on the financial market, it minimises
costs. This saves parties' effort, monies and time as they don't have to spend money and funds to
locate possible stock market participants. Such financial markets are majorly classified as Debt
and Equity Market (Anderson and et. al., 2014).
An Equity market is mainly concerned with the trading of securities. Here shares,
securities are issued into the market as well as further trade may be via stock exchanges or any
OTC markets. This is the most critical area of the financial market since it allows corporations to
issue capital and provide a simple and accessible framework for small and large investors to
make investments in different securities (Armijo, 2012).
While a debt/bond market, implies to market which are dedicated towards promoting
investment in debts/loans which they can buy or sell as securities. No specific exchange has been
setup for exchanging these bonds/debt securities. Mostly transactions take place among large
institutions, brokers or investors (Akhtar and Jones, 2014).

National economy and capital allocation in the UK:
Banking System:
1. Role of central bank: A central bank implies to a national independent body
conducting monetary & fiscal policy, regulating banking institutions, and offering financial
facilities along with economic analysis. Its aim is to deflate the exchange rate, maintain
employment, and control inflation. Bank of England is the central bank of the UK, which
controls all financial and monetary functions of the country and regulates all banks/financial
institutions (Armijo, 2012).
2. Monetary policy: UK's monetary policy is being determined by a Committee named
Monetary Policy Committee (MPC) and mainly governed by the Bank of England. This
committee is independent it fixes and changes interest rates with the aim to minimise the
country's inflation rate. Bank of England determines the base rate which is the rate at which
different banks get their loans from BOE. Altering the base rate affects entire economy's interest
rates (Chen, 2015).
3. Regulations governing the financial system: BOE the central bank of the UK along
with MPC issue different rules and regulations to regulate the entire UK's financial system.
Banks are required to follow these regulations. These bodies also have power to impose penalties
in case of non compliance of these regulations issued by them (Banks of UK, 2019).
Domestic money market
a) Savings (Short term): The saving facilities of banking institutions like ISA accounts, flex
accounts stands to benefit small companies and individual people. The bankers are also rising
saving rates to fit the market levels in a suitable layout (Chow, 2013).
b) Loans (Long term): In the UK, the functional potential of long-term mortgages is enhanced
by approx 66 percent of residential real estate buyers. Excepting the overly heavy non-crash
periods of entire mortgage, the raising of collaterals is a major step towards property ownership –
as well as personal loans (Vijayakumar, Sridharan and Rao, 2015).
Stock markets
London stock market: The London Stock Exchange (LSE) is UK's leading stock market. And
Europe's greatest. Originating in 1773, the local exchanges were integrated into Great Britain and
Ireland's stock exchange in year 1973, eventually designated as London Stock Exchange (LSE).
The LSE establishes cost-effective exposure to many of the biggest and perhaps most accessible