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Analysis of Trade and Investment Valuation Trends in International Markets

This paper reviews the valuation methods used in international trade and investment, particularly focusing on the CIF (Cost Insurance Freight) for imports and FOB (Free on Board) for exports, highlighting how freight and insurance values affect trade measurements. It covers Trade Classifications like SITC and HS, and delves into Foreign Direct Investment (FDI) definitions, including components like equity capital, reinvested earnings, and intercompany loans. An overview of global trends in trade and FDI flows is presented, with key indicators analyzed for a specified country.

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Analysis of Trade and Investment Valuation Trends in International Markets

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  1. Term paper 3 Trade and investment

  2. Valuation M are valued usually at CIF (Cost Insurance Freight) X are recorded FOB (Free on Board) => M value higher than X value by the value of freight and insurance.

  3. Trade classifications SITC = Standard International Trade Classification HS = Harmonized System

  4. FDI definitions • IMF BoP Manual (5thed 1993) and OECD Benchmark Definition of FDI (3rd ed) 1996: “the category of international investment that reflects the objective of obtaining a lasting interest by a resident entity in one economy in an enterprise resident in another economy...”

  5. Components of FDI Flows and Stocks * Equity capital * Reinvested earnings: in addition to equity capital * Intercompany loans: loans extended by the paternal company to the affiliate

  6. Measurement Approval vs. disbursements data – two sides of the FDI coin Gross and net measures Directional principle

  7. Assignment 27 September 2010: Trade and investment Provide an overview and brief analysis of developments in international trade and investment flows over the last decade in [country: XXX

  8. Trade: Limitation: Merchandise trade (excluding trade in services) Main indicators: * Total XM values (trade balance) * Composition of trade * Major regional groups/countries: source (M)/destination (X)

  9. FDI: Limitation: Inward foreign direct investment (FDI) excluding outward FDI and foreign portfolio investments (FPI)/foreign indirect investment (FII). Main indicators: Total size (approved/disbursed/BoP-concept) Sectors (broad sectors, ISIC) Source countries Sectors/source countries

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