Globalization and Investment

INTRODUCTION

"As in commodity markets, in international capital markets there is a similar pattern of nineteenth century globalization, followed by a brief episode of interwar deglobalization, and late twentieth century reglobalization... If countries existed in isolation, they would have to finance their investment needs using their own savings. If this were the case, they could not spend more than they earned in a year, and all their income would have to be spent domestically. Domestic expenditure would have to equal domestic income. In reality, we see lending and borrowing across borders, between individuals, financial institutions, companies, and governments." (Core Econ, Chapter 18).

In today's class we will learn about the forces that control foreign direct investment and foreign portfolio investment and consider the consequences of this cross border phenomenon.

HOMEWORK DUE TODAY

You should have read the following section in Chapter 18 ("The Nation and the World Economy") of Core Econ: 18.2 Globalization and Investment.

ASSESSMENTS AND ACTIVITIES

  1. Write a blog post about the sections you read for homework, relating the ideas in the reading to the country you have chosen to study.

  2. Share a question that you would like to discuss as part of our Socratic Discussion today.

    1. Participate in a Socratic Discussion. This rubric will be used to evaluate your blog post and discussion.

WORK DUE NEXT CLASS

Read the following section in Chapter 18 ("The Nation and the World Economy") of Core Econ: 18.3 Globalization and Migration.

EXTENSION RESOURCES

  1. Data Set: FRED Economic Data (U.S. Federal Reserve Bank of St. Louis)

  2. Article: The Paradox of Capital by Eswar Prasad, Raghuram Rajan, and Arvind Subramanian