Bounces at Financial Market Volume Development Criteria and the Burden of External Debt

Bounces at Financial Market Volume Development Criteria and the Burden of External Debt



     Gross domestic product (GDP) can be measured with market volume, FDI (foreign direct investment) flows the most is more accepted. Take advantage of the economies of scale of a country's market volume reaches a certain size that will allow the country to become a target country for FDI flows covers it. Indeed, only reached sufficient size, specialization of production factors markets and cost minimization to provide. This is the case, the market volume of the hypothesis described reaches a size threshold on the market in question will begin and the market for FDI flows to the country sizes increase and these currents will continue to increase.

    The money or capital markets development in the private sector to measure the financial growth that can be provided that the amount of the loan or securities exchange like GDP value of different variables can be used. The development of a country's financial system, foreign companies to expand innovative initiatives in the host country for the purposes of borrowing can affect the amount of risk reduction in relation to the new investment. Indeed, foreign direct investors have brought with them in addition to the host country of foreign financial resources including financial system whether through borrowing or stock issuance can finance their investments. Therefore, the quality of the financial system, the host country of FDI entry and this entry can affect the technological spread due to positive.

    Public and private sector by foreign currency according to the increase in the amount of external debt, the ability of the country's debts, a decrease and hence loses its ability to provide powerful will lead to an increase in the degree. Total external debt stock to GDP ratio can be represented by an increase in foreign debt load, in addition to a balance of payments crisis, the country's potential exposure will increase, too. This is the multinational firms ' potential profits and the possibility of a restriction on capital transfers coming directly from investors because it will lead to the country's economy can shake confidence and reduces the profitability of investments. As a result of the increase in the foreign debt burden of FDI is expected to lead a deterrent effect the entries.