... flows would include direct investments by Trans National Corporations (TNCs), hedge funds or hot money (money that is always on the move) and AID. Long-term capital flows would include bank loans and portfolio investments (shares and financial investments into long-term assets); there was a big rise in portfolio investments during the 1990s. Figure one (page 2) shows the implementations of capital flows on a global scale, all three main components (c1- c3) should add up and be equal. This model could be easily applied to the global business environment in order to determine the relationship of capital flows through global economies. It is clear that inflows of foreign savings can affect domestic savings and economic activity of a single economy; also interest rates and exchange rates are directly affected. So, it is correct to say that flows of foreign investments can affect economies on a global scale in terms of interest ...

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