1 Knowledge in international economics We are talking about what we refer to exchange rate regimes… International finance consists of an area of knowledge that combines elements in two important areas, one is international economics where exchange rate regimes, the global monetary system, these adjustment processes that are involved in the balance of payments.
Everything related to the risk to the change at the time of risk and to carry out procedures that contribute more than one international currency to financing worldwide in any aspect when economic changes are made worldwide with corporate finance, therefore we speak of exchangeable finance at the international level bone the risk of making transactions involving more than one currency, International financing Among other aspects, when we combine international economics with corporate finance then we are talking about international finance. What refers to international operations worldwide those related to exchange risk is the risk of making transactions involving more than one currency and international financing investment in international portfolios among other aspects When we combine the international economy with corporate finance we are talking about international finance.
International finance is basically given because we have different currencies in the countries why we have different markets, elements appear that differentiate the rules of the game from one country to another as is the case of labor legislation of tax not among other elements.
What will basically be the international economics
Because we live in a tremendously globalized world, what is economic, what is financial, what is cultural policy, what is environmental and we see how today we have a higher level of trade internationally as we trade more and more goods and services internationally as we have large flows of foreign investment, As a political level what happens in one country significantly affects the others, in the cultural we see how television and the internet, also with the cinema, in short different aspects that affect the culture of the countries.
We also have that environmental phenomena are not so localized but many of them are global so they are humanization is a process of integration that takes them to a single market.
We see then how the increase in trade has occurred in a readable growth during the last decades, to such an extent that the integration brought to such an extent that it is already false that a product says made in Mexico or made in the United States because in reality a product is not made in a single country. It may be designed in that country or it may have raw materials from another country or it may be assembled in another nation.
So we have that there is practically no longer a product that is entirely national every day we see more transnational and multinational companies, in fact, that the volume of production of these companies has become enormous even higher than the gross domestic product of many countries.
We have that the role played by international financial markets is increasingly important, that is, we see how investment flows as we see in an investment fund for example:
- It seeks to diversify and then it is not only an entity that invests nationally, but seeks to invest in different markets to try to reduce risk and then they begin to integrate more and more with the international economy.
- Globalization has a number of positive aspects but also some that we could say negative in the sense that globalization produces a higher level of trade which allows us to enjoy the benefits, all that theory of comparative advantage that tells us that we can acquire imported goods from another nation at a lower relative cost which then produces an advantage especially for consumers in different countries. These benefits of trade translates into greater economic growth we see during the last decades how the countries most open to the international economy are the countries that have had higher growth rates as has been the case of China, India and some other countries worldwide as well.
This globalization if we apply the right policies can lead to higher rates of economic growth, but in many countries they may not benefit equally from globalization in the sense that their policies have not been the best so we see here a whole series of positive aspects in favor of globalization.