International Trade and Investment

This report discusses the impact of international trade and finance on the economic position of a nation and its GDP. It covers topics such as financial markets, capital allocation, challenges of industrialization, and more.

International Trade
and Investment

Table of Contents
EXECUTIVE SUMMARY.................................................................................................................................3
INTRODUCTION...........................................................................................................................................3
Task 1...........................................................................................................................................................3
Background of financial market:..............................................................................................................3
Capital allocation within UK’s domestic economy...................................................................................5
Capital allocation within international market: ......................................................................................5
TASK 2..........................................................................................................................................................7
Economy of England................................................................................................................................7
Critical evaluation of challenges faced by the country with respect to Industrialization and trade
policies ....................................................................................................................................................8
CONCLUSION.............................................................................................................................................10
REFRENCES................................................................................................................................................11

EXECUTIVE SUMMARY
International trade and finance means the trading activities across the border of nation.
They have a direct impact on economic position of the nation and also enhance the gross
domestic product. The report is based on the financial market and the allocation of funds in
domestic as well as International market. There is discussion related to challenges that are faced
due to industrialization.
INTRODUCTION
International finance refers to financing activities that are conducted between different
countries involved for a specified time period. These include financial transactions between
various countries of the world. It includes expanding of business in other countries that assist
them in generating more income. This may be for the purpose of investment for country. The
report is based on International trade and investment (Delany, Signal and Thomson, 2018). There
is discussion related to background of financial market which are considered as main platforms
that increases liquidity of the company and enhances gross domestic product of the nation. The
role of financial markets and how they help in efficient utilisation of resources is described.
There is discussion related to capital allocation within domestic economy. In the end there is
description related to challenges that are faced due to industrialisation of trade policies.
Task 1
Background of financial market:
The investors get return on the return on the investment. It is a place where the people that
want money get the money from the one who have excessive money. Financial market plays a
vital role in economic growth of a nation. It mobilizes the savings for their productive
investment. There are different instruments that are dealt in financial markets. All the procedures
are conducted in electronic form and do not have any physical existence. It is time when
electronic trading takes place in the market. Individuals go to financial market today for the
growth of their business and it helps them to make more money. The aim of the investor is to
generate more profit from the securities. Financial market has advantage of asset liquidity as the

buyer and seller can decide to treat at any time (Kowalski and Rabaioli, 2017). There is Equality
for each investor or debtor no matter what the size is. The various types of market are money
market, derivatives market, forex market, capital market, bond market and over the counter
market. This over the counter market does not have any physical location. Participants are
directly indulged in trading and there in electronic form. It can be explained as there is no
requirement of broker in this market. In respect to bond market the lenders lend money for a
specified time period and the rates are also decided. Bond is type of agreement between borrower
and lender. It also includes bills, notes, and so for private and public expenditures. Bonds
generally have fix payment and are for specified period of time. The person that wants regular
returns with minimum return can choose bond market. In context to financial market help to
lower down the unemployment rate as they provide many job opportunities. It is a place where
businesses get money for their expansion and growth. Forex market is related with selling,
speculation and purchase of currency. It is important to understand each market and then enter.
Along with that there are various rules and regulations that are formulated and essential to be
followed. Capital market instruments are used by various companies to raise funds to do their
business. The capital market instruments include shares and bonds issued by the company. The
six core sector of capital market are the stock market and private, leveraged loans, corporate
bonds, M&A activity, and equity equity capital markets.
World Trade Organization is an organization that promotes free trade between all the
countries. It is the only organization that regulates the trade between all the countries. WTO
reduces the tariffs and eliminate the barriers so that there free trade between various countries.
All the trade agreement between various countries are managed by WTO.
England financial market
UK covers around 25% of European equity market. London stock exchange is considered
as the largest stock market at place. It gives employment to around 5000 people in United
Kingdom. The companies that are listed in UK they have two principle markets from which they
can choose. They are London Stock Exchange (LSE) and the Alternative Investment Market
(AIM). The financial services industry is largest in London. The sector is contributing to the
gross domestic product of the nation. The business person prefer the financial market as that is
the place where they get funds that help them to expand their business (Owens and Zhan, 2018).

There are various functions of financial market like Price Determination, Liquidity, Funds
Mobilization, Risk sharing, Reduction in transaction cost, provision of the Information, Capital
Formation and , Easy Access. The financial markets should maintain transparency that helps to
build the trust of investors. There are large numbers of participant’s in this market and various
people get employment. If wisely used the investors are able to make huge profits. The financial
market contributes to economic development of a nation by channelizing the savings to the
people that are need of money. Many businesses get money for growth from financial markets.
In 1977, Apple persuades a loan of 250000 and gave returns to investors (Jansen, Carpenter and
Pauwelyn, 2017).
Central bank is the apex body of a nation. The Bank Of England is the Apex Bank in UK.
The bank is responsible to manage the flow of money in market. The apex body formulates
strategies in such a way the benefits the country and enhance the flow of money or control it as
per the situation that is going on.
Capital allocation within UK’s domestic economy
Allocation of capital should be done in a manner that helps the nation to achieve profit
and enhance efficiencies. Decisions related to allocation of capital are taken with proper care and
by looking at future growth. It is important to use money in a wise way that is profitable for the
nation. Brexit is separation op United Kingdom with European Union(EU). This happened in
June 2016 when the residents of UK decided and voted to leave EU. As they realized that the
benefit of free trade was not enough to offset the cost of immigration. So UK is separated from
European Market. All the free movement between both ended. Along with that when there is
unemployment in the country that causes negative impact on the currency and that is a negative
sign for the country. A proper research relation to areas of development is conducted before
taking such decisions. The ways in which capital allocation can be implemented are discussed
below:
Development of infrastructure: Infrastructure includes the services that are required by
a country for smooth functioning and social and economic development of the place. It includes
power, Commerce, education, market, leisure activities and irrigation etc. Infrastructure of the
place shows how well the nation is. It is directly related with the economic productivity of the
place. In respect to England the focus is on development of infrastructure (Sauvé, 2020).

Previous activities are conducted to develop the infrastructure and improve the efficiency of the
place. Do you take all the opportunities that come in path for the development of infrastructure
that is profitable for the nation and increases its competitiveness. It helps them to create
employment and get best infrastructure so that people there can live smoothly.
Investment in micro or small business: Small and micro business also generate money
that help in economic growth of the nation. No doubt they are small in size but if taken proper
care and proper investment is made they may also earn huge profits. This business should not be
neglected and taken proper care as they have greater career opportunities. The employment level
in this business is also low. In England the focus is on enhancing this micro and small
businesses. As there is need of proper investment to generate profits and employ more and more
people. They also contribute to the gross domestic product of the economy. They also have
impact on the tax of the nation. In England the importance of these businesses is understood and
investment is done (Dagbanja, 2017).
Capital allocation within international market:
International market is the region outside the country where the company conducts its
business. In simple words outside the territorial boundaries and home country of the company.
Capital allocation shows distribution of financial resources of enterprise, in addition to
investments of country in a way that its profitability, productivity as well as efficiency
improvise. It helps to boost the brand reputation and is advantages in various ways. It also helps
to attract more customers and get connected. The market is expended and business is able to
partner with new organisations. The capital allocation in German market is discussed below:
Repaying debt: That is the money that is borrowed from another party is called debt.
Date and amount is pre decided and there is payment of interest. This is kind of obligation and
burden that the nation's government has taken from the borrowers company. It is important to
pay the date on time to continue with the relations. The government of England takes care to
repay the loans that are taken to improve the credibility of nation. It also impacts the position and
image of the nation in International market. Buy paying timely debt the nation is able to build
good relations for future. If there is high debt that has adverse impact on the economy and that
impacts the capital stocks and even the economic growth of the country. That causes highe

interest rate, inflation and higher taxes. All this impact the fiscal policies and that in turn
hampers the growth rate of the nation.
Acquisitions: It is an approach where a company purchases most of the shares of
another company in International market. It is a crucial decision that needs proper research and
information related to another nation. By acquiring the company is able to generate more profits
and serve more customers. The government of England form strategies to locate the capital for
accusation of big companies in Germany (Petrovic, 2019). This helps the companies to generate
more funds and get brand recognition in International market. It is good to allocate money by the
means of acquision and earn more profits.
Payment of dividend: This means the amount that is paid to the holders of share as
return on their investment. It is a strategy that helps the company to improve its value in the
market. A company is desired to pay dividend as per the profit earned by them and expectations
of shareholders. If a company pays lower dividend it is difficult for them as there is chance that
shareholders sells the shares. If the right amount of dividend is paid and it fulfils the expectations
of the holders it directly improves the position and value of the company in International market.
The dividend is a factor that influenced the decision making of various individuals or companies
while investing in the company (De Bièvre and Poletti, 2017).
UK’s strategies for the inflation to be keep down
Monetary policy – If the interest rate increase it declines the spending power of people
that declines the in inflation.
Tight fiscal policy – If government lower down the spending or increases the income tax
the aggregate demand will fall and that will pull inflation down.
Supply-side policies – If the competition increases the suppliers reduce the cost and want
the customers to buy from them as there are various other competitor that are dealing in same
product. That may reduce the inflation.

TASK 2
Economy of England
The economy of England is highly developed economy in terms of social markets across
the globe. It is the largest economy of the four countries of United Kingdom, and is highly
known for its industrialization. It is also a significant produce of textile and chemical products. A
huge portion of its income comes form city of London, making it the largest center of financial
institutions such as banks, insurance company, commodity and futures exchange. Although
Automobile, loco-motives and air-craft are amongst other most important industry products
making huge contribution in the economy. The Gross Domestic Product of England accounts for
nearly euro 1.8 trillion, making it the 8th largest economy of the world in the year 2020. The
country has announced about 28% in context of area allowed in the economy for international
Monetary Funds (Qirjo and Pascalau, 2020). It has a focus on finding the members of the
England Union and its zonal areas. In the year 2017, it has reached to largest surplus of worth
nearly about 310 billion by making exports resulting it in making the greatest exporter at a global
level. It has delivered the goods and services worth nearly 1448.47 billion worldwide in the
financial year 2019. The economy of England constitutes to about 9 percent of total income from
agricultural sector, nearly 41 percent of income form Industrial sector and remaining that
constitute about 50 percent from the service sector. The major 10 export goods offered by
England comprises of products such as Transport vehicles, pharmacy, equipment related to
transportation, basic metal, food products and rubber. The manufacturing sector of this economy
is highly affected by its financial issues and downs. It bridges a path between university and
industry insight. International monetary funds provide advices for sustaining and maintaining its
position in long run.
This was the first country in state of nuclear powers and gases, soler energy, biomasses,
etc. It is the birth place of industrialization and a major nation that was committed for
development of renewable energy transactions and biomasses. The vital part of this
industrialization focuses on conversion of renewable energy in Energiewende. About 99 percent
England companies belongs to small and medium scaled organizations of which, 2000 of largest
public listed companies are registered with the aspect of revenues made and profits earned

(Choudhury and Nayak, 2019). England is one of the most popular location for conducting trade
fairs. Two third of the fair trade conducted took place by exploiting the state of Lower Saxomy.
Economy of the Democratic Republic of Congo
Congo is largest country in sub-Saharan Africa and second largest in whole Africa. The
inflation rate in the country is around 4.71% more as compared to last year. The data is as per
2019. There are good employment opportunities in the Democratic Republic of Congo as if seen
at average maximum rate is 70.35% and minimum 65.13% in 2020. In agriculture there are
around 65% people employed out of total employment rate in 2020. The political condition of
the country is based on semi-presidential republic after the civil war. There is fiscal pressure in
the country from 10.2% from 2016 to 2019. The deficits of country are around 2.6% of total
Gross Domestic Product and that are financed through direct foreign investment. The
Democratic Republic of Congo exports gold, diamond, coltan and that increases the income of
country and helps in balance of payments.
Critical evaluation of challenges faced by the country with respect to Industrialization and trade
policies
Industrialization
Industrialization is a process that relates to transformation of primary agricultural
products or resources for manufacturing goods. Characteristic of industrialization comprises of
economic growth of the country, more effective labor division, use of advanced and innovative
technology for solving problems and less or no dependency on human. It is an economy based on
mass production and manufacturing of goods. It is majorly associated with increased total
income and standards of living of a society. Industrialization occurred in England during the 18th
and 19th centuries. It has marked a significant transformation of rural areas into industrialized
urban areas. And after that it has spreader all over the globe. The major reason behind
industrialization was the need to enhance productivity of farmers and making the manpower
more efficient and self-dependent. In the economy of England emerged a requirement for
improving living style of people and increase their per capita income. So, by industrialization,
there was a rise in strategy formulation that focuses on enhancing development of the individuals
and the economy as a whole in comparison to other countries of the world (Zeng, 2021). They
aimed at utilizing the resources in the most optimum and efficient level so as to increase
productivity of both agricultural and industrial sector. The England economy was favorable in
terms of incentives apart form their transportation costs associated, also, with reducing cost of

production leads to increased profitability and providing goods at a lower price to the buyers.
England focused on improvement that had a great impact on its profit earning capacity and
maximizing its revenues form sale of goods and services. For the development of industries there
was much use of modernization that helped in increased outputs and efficiency in level of
production for an organization. Industrialization in England helped it in reducing poverty,
creation of high number of job opportunities for all high and low level of people in the nation
(Berge and Hveem, 2018). It also helped in enhancing the standard of living of people, increased
productivity of labors, performing the tasks in easy manner, etc. by considering all the above
stated points, there are few challenges that have occurred. Few of the challenges are listed below:
 Challenge 1:
Unequal distribution of Income- Due to industrialization, there have raised problem of
unequal distribution of income among all citizens of the country. It had led in creation of a gap
among people, resulting in differentiated between people becoming rich and poor with respect to
the labor and capital employed. This has also created a problem in non- accomplishment of its
economic activity and financial activity that has resulted in increasing disparity of wealth and
income among individuals that led in creation of various groups on the basis of their income
level. It had a disadvantage for England’s economy because of using industrialization, there has
emerged a division occurred among people in their working conditions and increased
differentiation between rich and poor (Ciuriak, 2021). This has resulted in declining in standard
of living condition of individuals who were living in the country for a huge number of years.
Thus, there was no growth opportunity available for the people belonging to the low earning
income group that has led in increasing poverty conditions in England. This was the reason of a
situation in which rich were becoming richer and poor were becoming poorer.
 Challenge 2:
Emigration- It is the situation where someone leaves a location or a country where he
resides with an intention to settle at some other location or another country. It is a result of the
negative impact that is faced of a locality or a country. In the case of England people have
migrated for one place to another because of the reasons like job lost, poor and unwelcomed
workplace culture, affected health issues with the workers because of difficult working

environment. There were long working hours that have affected the productivity of employees,
increased fatigue among them and earning less returns for their work done that was faced by the
England due to industrialization. So, the workers moved to other countries in search of better
working environment.
Trade Policy
Trade policies are referred to the rules and regulations that are used for formulating
strategies that helps in controlling imports and exports of a country (Şeker, 2017). It helps in
determining size and nature of markets and have a strong influence in both domestic and
financial markets. In case of England, these policies help in building and maintaining with other
countries and to trade with them. These policies have a vital role in the economic development of
a country.
 Challenge 1:
Welfare of the Economy- Due to Increasing globalization there has increased challenges
of the economy of England, this has resulted in increased conflicts among different countries and
power of the economies based on the size and nature of the economies of other countries.
RECOMMENDATION
 It is important to assure that there is fair distribution of income. People should be
provided equal opportunities so that all have equal money. Equality is important in a
nation.
 Another import thing is to stop emigration by providing job opportunities and good
working culture in the home country so that the individuals stay in home country and can
work.
CONCLUSION
From the above report it can be analyzed that International trade and finance means
financial transactions between various countries. Financial Market are important part of a nation
that includes forex market, stock market, and bond market. There is discussion related to capital

allocation of domestic economy in International market that helps in smooth operations of the
country. Infrastructure development is important for every nation. As well as investing in micro
and small businesses helps the nation to grow. To form a powerful image in International market
it is important to have good relations with them and timely payment of debt is also important.

REFRENCES
Books and Journals
Berge, T.L. and Hveem, H., 2018. The international regime for investment: a history of failed
multilateralism. In Handbook of the International Political Economy of the
Corporation. Edward Elgar Publishing.
Choudhury, R. and Nayak, D., 2019. Relationship between Trade and Investment in the SAARC
Region. World Scientific Book Chapters, pp.99-135.
Ciuriak, D., 2021. Industrial-era Investment Strategies Won’t Work in a Data-driven
Economy. Innovation.
Dagbanja, D.N., 2017. Reasserting the Role of Municipal Law in International Trade and
Investment Protection through Choice of Law. In Modernizing International Trade Law
to Support Innovation and Sustainable Development.
De Bièvre, D. and Poletti, A., 2017. Why the Transatlantic Trade and Investment Partnership is
not (so) new, and why it is also not (so) bad. Journal of European Public Policy, 24(10),
pp.1506-1521.
Delany, L., Signal, L. and Thomson, G., 2018. International trade and investment law: a new
framework for public health and the common good. BMC public health, 18(1), pp.1-12.
Jansen, M., Carpenter, T. and Pauwelyn, J. eds., 2017. The use of economics in international
trade and investment disputes. Cambridge University Press.
Kowalski, P. and Rabaioli, D., 2017. Bringing together international trade and investment
perspectives on state enterprises.
Owens, J. and Zhan, J.X., 2018. Introduction to the special issue. Trade, investment and taxation:
Policy linkages. Transnational Corporations, 25(2), pp.1-8.
Petrovic, V., 2019. Contemporary Challenges of International Economic Relations: Global Trade
and Investment Trends. In Ethical and Sustainable Supply Chain Management in a
Global Context (pp. 152-167). IGI Global.
Qirjo, D. and Pascalau, R., 2020. Would economic growth affect air pollution in light of the
potential transatlantic trade and investment partnership?. International Economics and
Economic Policy, pp.1-30.
Sauvé, P., 2020. Gendered Perspectives on Services Trade and Investment. Journal of World
Trade, 54(4).
Şeker, M., 2017. Trade Policies, Investment Climate, and Export Performance. Bogazici Journal:
Review of Social, Economic & Administrative Studies, 31(2).

Zeng, L., 2021. Impacts of the Transatlantic Trade and Investment Partnership Under the New
Tendency of Regional Trade Agreements. In Contemporary International Law and
China’s Peaceful Development (pp. 507-520). Springer, Singapore.