International Trade Finance and Investment

INTERNATIONAL TRADE
FINANCE AND INVESTMENT

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................1
BACKGROUND OF FINANCIAL MARKETS............................................................................2
CAPITAL ALLOCATION WITHIN THE DOMESTIC ECONOMY...........................................3
CAPITAL ALLOCATION IN THE INTERNATIONAL ECONOMY.........................................4
EVALUATION OF ECONOMY OF UK.......................................................................................6
NATIONAL ECONOMIC POLICIES ...........................................................................................9
EVALUATION OF TRADE POLICY CHALLENGES ...............................................................9
CONCLUSION..............................................................................................................................10
RECOMMENDATIONS...............................................................................................................11
REFERENCES..............................................................................................................................13

EXECUTIVE SUMMARY
It can be summarized that financial markets play an important role in an economy, where they
direct the flow of money either by way of savings or investment to form capital. This capital
further facilitates production of goods and services and trade. It further enunciates the allocation
of capital within domestic and international economy, which is used for4 the growth and
developmental purposes of the company. Apart from that detailed analysis of the UK free trade
economy and the challenges it faces because of industrialization and the various trade policy
decisions.
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BACKGROUND: FINANCIAL MARKETS
Financial markets are the one which facilitates trade between buyers and sellers who
exchange goods at a particular price, which is also decided by the forces of this market. It plays a
crucial role in directing money flow from the savers to the investors in the economy. They
determine the growth and development of the economy by accumulating capital that is further
used in the production of goods and services (Huang and Zhang, 2017).
The origin of these markets can be traced in the past, before the 20th century. The wall street that
was started in 1792 in VOC Amsterdam is one of the initial establishments which was
synonymous to the stock market. In London the evolution began with the forming of the London
Stock Exchange in 1801. The issuing of shares was banned until 1825 after it established. It has
been governed over the years for its strong performance
UK's financial markets with capital and capabilities is one of the most innovative and dynamic
markets globally. Most of the global finance companies wishes to incorporate their business in
UK. The role of such financial market in the growth of the British economy is immense and it
has established itself as one of the largest fund management centre of the world. It is also famous
for its wealth management services to the domestic as well as overseas client. It has a well-
established banking systems, derivative markets and foreign exchange, which is possible by a
stable political environment with favourable legal and regulatory structures. It has suitable
private equity and the venture capital segments which is a major contributor towards its GDP
growth rate. The efficient financial markets are responsible for the smooth conduct of its
business activities (Polzin, 2017).
The regulation of these markets is done by a single regulatory authority under which further the
other companies are consolidated. The FSA is the governing body for regulating the all the
finance related activities and services in UK. Analysis of all the activities on the basis of their
risk and return portfolio is done by this organization.
Proper money supply is maintained between those who have surplus and those who need money
to facilitate their operations. The effectiveness of the money markets is also very important
because it helps in governing the interest rates, the level of trade, exchange rate and ultimately
the GDP growth rate. It helps in controlling the rate of inflation in the economy and also re-
bounces the economy from a depressed condition. Some major functions played by the financial
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