Comprehension and Discussion Questions

1. What is the balance of trade and how is it correlated with the economic development of a nation?

2. How does a developing nation finance its imports?

3. What is the balance of payment and why is it more important than balance of trade in international economies?

4. What is the current account and what is the capital account?

5. What is debit and credit?

Ex. 1. Read the text and do the tasks:

1. Give adjectives which are used to characterize “balance of trade”. Translate them into Russian and explain their meaning.

2. Give all the meanings of the word “account” you know. Show the difference by using the word in sentences of your own.

3. Explain what are physical.

Ex. 2. Translate the following sentences into English in writing. Make use of the Vocabulary notes, if necessary.

1. По мере вовлечения наций в мировую торговлю, одни страны завершают свои операции с благоприятным балансом торговли, а другие имеют неблагоприятный торговый баланс.

2. Существует тесная взаимосвязь между экономическим развитием нации и состоянием ее торгового баланса.

3. На ранних стадиях национального экономического развития экспорт обычно состоит из сырьевых материалов. Развивающаяся страна, как правило, финансирует импорт за счёт продажи природных ресурсов.

4. По мере своего развития страна будет всё больше производить собственного капитала и готовых товаров, и всё меньше будет нуждаться в импорте.

5. В мировой экономике более важную роль, чем торговый баланс, играет баланс платежей (или платежный баланс).

6. Платёжный баланс является статистическим расчётом финансовых операций между странами за период равный одному году.

7. Большинство операций по текущим счетам представлены куплей-продажей товаров и услуг.

8. Счёт движения капитала показывает перемещение инвестиций между странами, в том числе покупку и продажу физических и финансовых актов.

Unit VI Text I. Capital Investments

When mobilizing resource for its development, a country must rely on transfers of foreign resources until it achieves the capacity for self-sustaining growth. Capital flows in the form of foreign aid, private foreign investment, and private bank lending are the principal ways by which resources can come from rich to poor countries. The transmission of technology, ideas and knowledge are other special types of resource transfer.

The recent expansion in exports of manufactures from the newly industrializing countries has been closely related to foreign investment by multinational or transnational corporations (TNCs).

Transnational corporations, large-size firms with sales running into hundreds of millions of dollars, with more than 25,000 foreign affiliates, are scattered around the globe, employing some 25 million people. Most parent companies of TNCs are located in the developed countries. The United States, together the United Kingdom, France and Germany, account for 80 per cent of foreign activities by TNCs.

The United States is the largest home country for TNCs and the second largest host country for foreign direct investment. As the world’s largest developed market economy, the United States therefore continues to play a leading role in the internationalization of the economic activity. Approximately three of every 10 foreign affiliates in developed market economies (mainly concentrated in the European industrial market and the Near East oil market) are associated with United States-based transnationals.

All the TNCs are in fact national companies that have extended their operation abroad. By its multinational operations and intrafirm transactions, the TNCs transcend the national barriers to commodity trade and impediments to international factor movement. It is a unit of integration in the world economy. The population of TNCs has increased remarkably, and many more large firms operate an expanding number of foreign subsidiaries in a number of countries.

While in the world as a whole foreign subsidiaries continue to be principal from of the extension of TNCs into host countries, a variety of other forms of participation of TNCs in foreign economies have made their appearance in recent years: joint ventures, licensing, management contracts, franchising, turn-key operations, international subcontracting and a number other contractual arrangements.