What are international investment portfolios and how can they be beneficial as a component of globalization? How can they be potentially harmful?
What will be an ideal response?
International investment portfolios are packages of foreign stocks, bonds, and mutual funds owned by individual or institutional investors (e.g., a pension fund). International investment can be beneficial because investors may be able to influence decisions of foreign companies to address labor and environmental concerns. International investment provides companies in developing countries with working capital to fund their operations. These portfolios spread risk across countries and allow investments to find their most productive uses. The danger of international investment portfolios is the temptation to engage in currency speculation that creates high volatility in the foreign exchange markets. This volatility can destabilize developing country economies and can have severe negative effects on wages, job opportunities, and living standards.
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a. True b. False Indicate whether the statement is true or false
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