Comprehensive Report on International Trade, Finance & Investment

This report provides an overview of international trade, finance, and investment, highlighting their complexities and potential benefits for economic growth. It explores capital allocation strategies within domestic and international markets, using the UK and Germany as case studies. The report exami...Read More

International Trade,
Finance & Investment

EXECUTIVE SUMMARY
The purpose of this study is to understand the complexity of international commerce,
finance, and investments. With both the knowledge on investment opportunities, an entrepreneur
will engage in an industry with the expectation of a larger return. Some of these variables
contribute to their GDP growth. The organisation can allocate capital from a variety of domestic
and external sources. Besides that, the economics of any Germany and the issues it has in terms
of economic growth are explored.

Contents
EXECUTIVE SUMMARY.................................................................................................................................2
INTRODUCTION...........................................................................................................................................4
MAIN BODY.................................................................................................................................................4
Background of financial market...............................................................................................................4
Capital allocation with domestic company............................................................................................5
Capital allocation within international markets.......................................................................................7
Evaluation of an economy of Germany...................................................................................................8
Critical Evaluation of Challenges that the country faces due to Industrialisation and Trade Policies......9
CONCLUSION.............................................................................................................................................11
REFERENCES..............................................................................................................................................12

INTRODUCTION
International commerce refers to the trade of goods among nations. Here, two countries buy or
increase their sales to each other. Exports and imports are two types of trade. It is the method in
which the economies of two countries communicate. International trade financing is a system in
which institutional factors provide financial assistance so that commerce among nations may
take place. For foreign finance, a variety of financial products are employed. This notion is being
introduced to ensure that the deal runs smoothly. Last but not least, international investment is a
technique in which a group of investors pool their funds to acquire a range of resources on the
international market. All are effective instruments for expanding a country's economy and
fostering positive relationships inside it. Aside from it, this study addresses topics that are
directly relevant to the present monetary market in the UK. Furthermore, the report discusses
capital management approaches that are now in use by various systems in order to improve sales
and profits in the present market condition. The selected economy of Germany which is facing a
challenge due to industrialization and trade policies (Harpaz, 2021)
MAIN BODY
Background of financial market
The financial market is the place wherever asset classes may be freely traded. Resources
are transferred throughout this exchange to develop opportunities. It's also referred to as the
equity market or the barrier marketplace. Essentially defined, it is a space where capitalists and
executives gather to secure funding for a cause. Stock exchange and equity markets are the 2
type of financial systems. The capital market is the venue where protracted investments are
handled. Investor confidence is split up into two sectors: main and secondary exchanges. The
core shares for a profit and organizations trade things straight, although the secondary market
seems to be where traders transact lengthy commodities. It is costlier to play the stock market.
The market is a marketplace that specializes in quick commodities that can be rapidly reinvested.
The commodities that can be unloaded in even less than a year would be regarded as working
capital. This marketplace was formed so that the administration or other businesses could rise
funding quickly. The following are the many examples of investment markets (Yao and et.al,
2021):

Stock market: This is a form of trade in which publicly traded firm investors can buy. The value
at which stocks are exchanged is determined by the corporation. Companies identify their
securities for public selling with the aid of the stock market (LE and et.al, 2021).
Commodity market: A location wherein mineral wealth is bought and sold. Gold, oil, coal, and
other natural resources are examples. Such a marketplace is being formed since they are mineral
materials, and the values of these funds fluctuate based on market and quantity (Cuong, Luu and
Tuan, 2021).
United Kingdom Economy
In compared to other countries' economies, the UK's economy is well-developed. It has the
world's sixth strongest economy. The UK economy is slowing slightly since 2016, but the
situation is expected to worsen in 2020 as a result of the Covid 19 epidemic. In the first phase,
the GDP rate fell by 2.2 percent, and in the second batch, it fell by 20.4 percent. Following
World War II, the situation has deteriorated significantly. Following the government's numerous
attempts to stabilize the market, consumer spending and corporate expenditure have both
decreased. The UK's GDP will grow by 5.3 percent in 2021, according to an IMF analysis. In
addition, the country is the leading manufacturer of war materials and pharmaceuticals, as well
as the tenth largest oil producer in the world. With a rating of 47.334 percent, the UK exchange
rate is the most preferred. It is ranked ninth in the world in terms of citizen buying power. The
United Kingdom is also the world's fourth producer of products. The country's economy has
become significantly more international, with virtually complete diversification across all market
segments (Bruno, Campos and Estrin, 2021).
Capital allocation with domestic company
Capital allocation is the process by which companies identify the numerous strategies or
methods by which they might obtain funding domestically or abroad. The primary goal of
collecting funds locally is for the company to allocate its monetary materials in such a manner
that profits and capabilities are maximized. The UK allocates cash locally so that their
economies may flourish and their governments can prosper in order to avoid future crises and
promote balance. The choice to allocate money is made by the company's senior executives,
including the company's board of directors. There really are 2 methods in which the United

Kingdom's economy might be developed in order to boost trade and investment (Dong, Miao and
Zhang, 2021).
Infrastructure development: It is the most efficient way to distribute capital. The United
Kingdom is often considered to be the nation's top construction provider. Investors will profit
from their investments in the national resources, which will also aid in the expansion of
commerce and monetary investment. The United Kingdom is the world leader in steam powered
manufacturing. The United Kingdom believes that investing in infrastructure is the best method
of allocating cash inside the nation while also assisting in productivity expansion. The leader of
the country encourages citizens to participate in it. Their top goal is capital spending. The United
Kingdom is inviting both the retail and social sectors to invest in it. This is done in order to
provide the greatest infrastructure programme possible. As a result, commerce increases as some
other countries begin to import the highest-quality equipment for the UK (Elheddad and et.al,
2021).
Large-scale businesses: The UK government offers a variety of services to major
corporations in need of funding. These are done in the hopes of generating funds and increasing
profitability. They offer a variety of loans, programmers and subsidiaries to businesses so that
they may boost their output and access resources more quickly and successfully. Its being
undertaken in the hopes of inadvertently assisting them in expanding their commerce and
industry. This assistance will also entice investors to begin investing in the firm and get a higher
return (Padmaja and Sasidharan, 2021).
Interests and dividends are paid to the borrowers of such an investment, allowing them to earn
money from this resource. There are several governing agencies that control their operating for
the public's best interest, which income is being utilized and also firms that are spending that
cash. The Financial Service Authority (FCA) in the United Kingdom monitors businesses and
financial markets to ensure that they are doing their obligations and implementing all policies
and procedures, or that they are not violating these agencies' regulations. Aside from that, the
Financial Service Authority (FSA), the Government, and the Bank of England are all concerned
with financial market regulation. They make sure that clients are getting decent bargains by
protecting them against deception (Yao and et.al, 2021) .

Taking assistance from numerous banks in the country to provide mortgages at reduced
interest rates for their expansion is one of the other methods that enterprises may generate cash
and add to the growth of the country.
Capital allocation within international markets
The United Kingdom's capital allocation in the global market is defined as the
administration or the general population of the United Kingdom saving their money beyond the
national border. It will assist the country in diversifying its currencies and expanding their
industry. Whereas if United Kingdom diversifies its wealth, it will be able to boost its gross
national product. Globalization and dealing in the stock market is equally risky. The investment
made is subject to risk. Internalization refers to the management of economic resources in such a
manner that they can gain long-term benefits and raise the existing contract. In global business,
several of the methods for allocating capital include (Minović, Stevanović and Aleksić, 2021):
Mergers and acquisitions: Mergers occur when two companies join forces and choose to
do trade as partners, resulting in the formation of a new company. In layman's terms, two
businesses merge to form a new enterprise. For instance, suppose a UK firm merges with a
Chinese firm to form a new corporation. Whenever a large corporation buys a small company, it
is called acquisition. There is no independent corporation; in reality, the purchasing firm now
owns all of the bought firm's statement of financial position. A UK business, for instance, has
purchased a Japanese firm. This really is the finest choice for the United Kingdom to improve its
business and commerce. The economic growth economic output rises as a result of mergers and
acquisitions, and prosperity is maximized.
FDI: The UK government has established a fantastic idea in the form of foreign direct
investment. In this method, a UK corporation invests in a foreign commercial body and assumes
absolute control. Not only is foreign cash gained, but also information, abilities and technologies
are utilized such that the UK may improve its economic by leveraging the experience of other
nations (Islam and Wheatley, 2021).
Dividend: A dividend is a portion of a net value that it pays to its preferred shareholders.
It is a lump sum payment made on a routine basis. In the United Kingdom, companies offer
significant dividends to their shareholders, attracting a growing number of overseas investors.

When more money is invested, it will result in more output, which will improve commerce and
aid industrial prosperity.
Debt repayment: It refers to the process of repaying income which has been acquired or
lent. This method is used in the United Kingdom so that the debts may be serviced without
creating a problem or increasing the nation's debt. When a nation's debt grows, it will have an
impact on the economic growth since the nation's assets and resources will be utilized to pay off
its loans (Liu and et.al, 2021).
Evaluation of an economy of Germany
Finance Minister Peter Altmaier stated Wednesday that the German economy will grow by
2.6 percent this year, which is less than planned. The declaration arrives as Europe's largest
country's economic present government moves to pass over power to a new coalition. The
German government had predicted a 3.5 percent growth rate for 2021, but that estimate was
lowered owing to support business interruptions and feedstock constraints, according to the
ministry. "Next year's development will be smaller than we would have all anticipated," Altmaier
said on public broadcaster ARD. In the 2nd period of 2021, the German economy began
expanding, with all main signs now pointing to expansion. GDP increased by 1.6 percent in Q2
2021 as compared to Q1. The German economy has increased alarmingly, and in 2021, it is
predicted to rise at a rate of roughly 2.2 percent.
This trend is being fueled by Germany's vaccine schedule, which has reached over 68
percent of the population with doses, with roughly 64 percent of people now completely
immunized. Over 100 million doses have been given out thus far. This change had a direct
influence on German business confidence, with enterprises indicating increased contentment
with their existing business environment. The ifo Business Conditions Indicator (ifo institute
2021) has dropped below 100, indicating a recession. The ifo Business Conditions Index dropped
to 99.4 marks in August, down from 100.7 points in July. The key reason for this drop was a
considerable drop in company objectives. Following a 4.9 percent decrease in GDP in 2020, we
estimate German economic production to grow by 2.2 percent year on year in 2021. Families
with higher demand and public spending are fueling the recovery period the coronavirus-related
drop in economic growth at the start of 2021 (-2.0 percent in Q1 and +1.6 percent in Q2).

Nevertheless, manufacturing output in Germany fell by 1.3 percent over the period of
2021, and if Foundation predicts that it will fall again in the third quarter. As per forecasts, the
scenario will not improve until the end of each year. As a result, industrial production will
increase by 2.2 percent this year. In terms of nominal gross domestic product, Germany's
economy is predicted to create $4.2 trillion1 in 2019. Held by The united States, China, and
Japan, the country has the world's fourth-largest economic. Buying power equivalence must be
used to evaluate GDP between nations. Some argue that Germany has been thriving for the past
12 years, thanks to Chancellor Angela Merkel's strong economic development and
underemployment. Germany's economy is mixed. In consumer items and commercial services, it
enables for a free market system. However, even in such regions, the government establishes
restrictions to safeguard its residents. Because everybody enjoys the advantage, including those
with increased revenues pay higher taxes, Germany has a centrally planned economy in defence.
Medical coverage and schooling are funded by the government. That is, they contribute to the
system based on their income and collect welfare based on actual necessity (Elheddad and et.al,
2021).
Critical Evaluation of Challenges that the country faces due to Industrialisation and Trade
Policies
In the second part of the nineteenth century, Germany underwent tremendous
industrialization. Agriculture and industrial plants were displaced as the most major sectors of
the German economy by contemporary businesses including such manufactures (electronic
goods - Siemens and AEG), pharmaceuticals, and engine development (Karl Benz and Gottlieb
Daimler). After reunification in 1871, Germany's industrialization increased, and by 1900,
Germany had Europe's greatest industrial base (LE and et.al, 2021).
In the years leading up to 1914, Germany was a young and developing country. It adopted
imperial expansion, commanded by Bismarck and Kaiser Wilhelm that exacerbated the origins
of World War I. In the second part of the nineteenth century, Germany underwent tremendous
industrialization. Crop sector and industrial plants were displaced as the most significant sectors
of the German economy by contemporary businesses including such manufactures (electrical
goods - Siemens and AEG), pharmaceuticals, and engine building (Karl Benz and Gottlieb
Daimler). After unification in 1871, Germany's industrialization increased, and by 1900,

Germany had Europe's greatest industrial base. This massive industrial boom resulted in
enormous population shifts. By 1910, 60% of Germans were living in urban centers. Between
1875 and 1910, the demographic of Berlin quadrupled, while other cities such as Munich, Essen,
and Kiel saw tremendous growth. By 1910, Germany had 48 cities with a population of
exceeding 100,000 people. There were just eight in 1871 (King, Loncan and Khan, 2021).
Trade policies challenges face by Germany
Germany's rules and excessive bureaucracy may be a challenging stumbling block for
firms seeking to penetrate new markets, and U.S. exporters must pay special attention.
Complicated safety regulations, which are not usually discriminating but are often overly strict,
make it difficult for many U.S. goods to enter the market. Sellers in the United States should do
their research completely to ensure that they understand which guidelines are applicable to their
item and also that they acquire training and certification in a reasonable timeframe (Lin, 2021).
Market challenges: German policy provides virtually little legal impediments to U.S. trade or
investments, other from restrictions linked with EU rules and regulations. Germany has
encouraged the European Commission to decrease burdensome regulations and stimulate
innovation in order to boost the productivity of EU member states. The approval of the EU’s
European Agricultural Subsidies by Germany, as well as German prohibitions on biotech
agricultural goods, poses challenges for crucial American exports. While still not openly
discriminating, government intervention may provide some security to entrenched local suppliers
due to the complex nature. The strict implementation of environmental safety requirements
might result in extra bureaucratic procedures and make it more difficult for U.S. businesses to
get access to the market. Businesses engaged in selling to Germany should research which
guidelines are applicable to their products and acquire training and certification as soon as
possible. Because EU-wide requirements are frequently based on previous German standards,
compliance with German standards is especially important for US exporters (Harpaz, 2021).
Balanced saving and investments: Germany had the world's highest budget surplus, meaning
that it sold more than it received. However, this suggests that Germans are saving instead of
consuming, which stifles economic progress. The balance of payments, according to Lagarde, is
excessively enormous. They recognized a huge problem for Germany in persuading older

individuals to continue in the workplace in order to reduce any need for people to save enough
for retiring. It is evident that the corona virus outbreak led to periodic border restrictions and a
slowdown in commerce. Germany's minimal corona virus-related mortality and rapid economic
recovery, on the other hand, may boost its benefits once commerce restarts (Cuong, Luu and
Tuan, 2021).
CONCLUSION
From the foregoing research, it can be established that all fiscal institutions, whether little or
large, have an impact on how people countries operate. They serve as a conduit between money
searchers and savers on a national and worldwide level by acting as a middleman. Regulating
bodies oversee all organizations at both the national and local levels, ensuring that their rules and
operations are in order. The functioning of these entities has an impact on the entire business.
The impact of Brexit and the epidemic on the economics of the United Kingdom and the rest of
the globe has been devastating, and it will take even longer. Improvements in trade and
industrialization policies also had an impact on how countries operated.

REFERENCES
Books and Journal
Harpaz, G., 2021. Labelling Settlement Products: When EU Consumer Law Meets Public
International Law (But Ignores International Trade Law). Journal of World Trade. 55(2).
Yao, X. and et.al, 2021. The impact of trade on energy efficiency in the global value chain: A
simultaneous equation approach. Science of The Total Environment. 765. p.142759.
LE, B. and et.al, 2021. The Relationship between Foreign Direct Investment and Local
Economic Growth: A Case Study of Binh Dinh Province, Vietnam. The Journal of Asian
Finance, Economics and Business. 8(4). pp.33-42.
Cuong, H. V., Luu, H. N. and Tuan, L. Q., 2021. The impact of the shadow economy on foreign
direct investment. Applied Economics Letters. 28(5). pp.391-396.
Bruno, R.L., Campos, N. F. and Estrin, S., 2021. The effect on foreign direct investment of
membership in the European Union. JCMS: Journal of Common Market Studies.
Dong, Z., Miao, Z. and Zhang, Y., 2021. The impact of China’s outward foreign direct
investment on domestic innovation. Journal of Asian Economics, p.101307.
Elheddad, M. and et.al, 2021. The effect of the Fourth Industrial Revolution on the environment:
The relationship between electronic finance and pollution in OECD
countries. Technological Forecasting and Social Change. 163. p.120485.
Padmaja, M. and Sasidharan, S., 2021. Financing constraints and exports: evidence from
India. Journal of Economics and Finance. 45(1). pp.118-145.
Minović, J., Stevanović, S. and Aleksić, V., 2021. The Relationship between Foreign Direct
Investment and Institutional Quality in Western Balkan Countries. Journal of Balkan and
Near Eastern Studies. 23(1). pp.40-61.
Islam, M. N. and Wheatley, C. M., 2021. Impact of Climate Risk on Firms’ Use of Trade Credit:
International Evidence. The International Trade Journal. 35(1). pp.40-59.
Liu, H. and et.al, 2021. Introduction—Southeast Asia And The Belt And Road Initiative: The
Political Economy Of Regionalism, Trade, And Infrastructure.
Yao, X. and et.al, 2021. The impact of trade on energy efficiency in the global value chain: A
simultaneous equation approach. Science of The Total Environment. 765. p.142759.
King, T., Loncan, T. and Khan, Z., 2021. Investment, leverage and political risk: Evidence from
project-level FDI. Journal of Corporate Finance. 67. p.101873.

Harpaz, G., 2021. Labelling Settlement Products: When EU Consumer Law Meets Public
International Law (But Ignores International Trade Law). Journal of World Trade. 55(2).
Cuong, H. V., Luu, H. N. and Tuan, L. Q., 2021. The impact of the shadow economy on foreign
direct investment. Applied Economics Letters. 28(5). pp.391-396.
Lin, R., 2021, June. Risk Analysis and Development Research of Cross-Border E-commerce
Payment Under the Background of Internet Finance. In International Conference on
Applications and Techniques in Cyber Security and Intelligence (pp. 72-79). Springer,
Cham.
LE, B. and et.al, 2021. The Relationship between Foreign Direct Investment and Local
Economic Growth: A Case Study of Binh Dinh Province, Vietnam. The Journal of Asian
Finance, Economics and Business. 8(4). pp.33-42.
Elheddad, M. and et.al, 2021. The effect of the Fourth Industrial Revolution on the environment:
The relationship between electronic finance and pollution in OECD
countries. Technological Forecasting and Social Change, 163, p.120485.