Notes

Financial Sectors and International Investment
Financial Services or finance as it is popularly known to us, includes a huge collection of financial industries. It includes banks, insurance companies, investment and pension funds, lending companies etc. There are various government departments which regulate the functioning of these financial sectors. The main regulators are the Federal Reserve Bank, Securities and Exchange Commission and Department of Treasury. In addition, there are some private bodies too who regulate these markets. The main areas that are regulated include: (I) Interest rates (ii) The number of credit hours (iii) Credit card companies (iv) Insurance policies (v) The functioning of the financial sector itself

The basic role of all these financial services is to provide financial products and services to individuals and companies. This involves various activities like: (a) The provision of loans; (b) The supply of securities in the stock market; (c) Offering of financial products such as derivatives, bridge or forward contracts, credit default swaps, swap agreements etc; (d) The facilitation of banking relationships between individuals and companies. It also involves the facilitation of international banking relationships. The main areas where financial services are offered are: (I) Banks; ((j) Broker Banks; (k) Mortgage and Urban Development; (l) Corporate and Private Financial Products; (m) Public Financial Services; (n) Insurance sectors.

Financial products that are offered by financial services include: (a) Credit Cards; (b) Debts; (c) Loans; (d) Home Equity Loans; (e) Student and Home Equity Lines of Credit; (f) Employee Stock Options; (g) Dealer Futures; (h) Public Debt and pension products; (I) Permanent Capital Markets; (j) Short Term Investments; (k) Interest Rate Reduction Facilities. The subtopics under the heading of financial services are: (I) Consumer Protection; (j) Credit Repair; (k) Enterprise Customer Protection; (l) Insurance, including Mortgage Insurance; (m) Public Accounting and Auditing; (n) Real Estate and Finance; (o) Regulation, including Insurance and Securities Law.

The industrial sector encompasses the production of consumer staples and other intermediate goods. These include: (a) Textiles; (b) Woolen and Clothing; (c) Furniture and Home Furnishings; (d) Tools and Equipment; (e) Pharmaceuticals and Biotechnology; (f) Energy Goods and Gas; (g) Timber. The services that are performed in the domestic industry include: (a) House Cleaning and Janitorial Services; (b) Marketing and Advertising; (c) Business Process Outsourcing; (d) Wholesale and Retail Sales; (e) General and Fund Accounting Services; (f) Legal and Professional Services; and (g) Food preparation and retailing.

The financial sectors employ persons who perform work in the following categories: (a) Bankers and Finance Officers; (b) Debt Collectors; (c) Grant Writers; (d) Loan Managers; (e) Market Technicians; (f) Market Researchers; (g) Marketing and Advertising Specialists; and (h) Financial Products Managers. These professionals are employed by Firms that engage in activities related to creating consumer staples, or in activities related to providing loans, grants, and financial products to households. A number of large banks and financial institutions are examples of such firms. In addition, a large number of consumer-related firms also practice the business of creating consumer staples.

Developing economies around the world are undergoing significant transformations in terms of their financial sectors. This has been brought about by a number of factors. One of these factors is international economic policy. Since most developed economies have maintained strict restrictions on foreign investment, developing economies have sought ways of opening up their markets so that they can increase the rate of growth of their Gross Domestic Product and attract more foreign investment.

In pursuing this objective, developing countries have pursued financial sector reforms that enable them to open up their markets to foreign investment. One of the many areas of focus has been on enhancing the efficiency of the domestic market. One way of doing this is by ensuring better access to credit by households. Another strategy pursued by developing countries seeking international investment is to liberalize import controls so that they can reduce the cost of imported goods. Moreover, developing nations have sought assistance from the United Nations Development Program (UNDP), which is administered by the United Nations Educational, Scientific, and Cultural Organizations.

Finally, in pursuing reforms that would allow for greater market competition, developing nations have tried to improve the efficiency of their supply and demand processes. They have done this by streamlining delivery processes, improving distribution mechanisms, improving the pricing of goods and services, and increasing the productivity of workers. These efforts to build efficient supply chains have helped to raise the economy's overall efficiency, allowing it to attain higher market sector productivity, and allowing it to attain higher levels of market sector flexibility. As a result of these changes, it has become easier for businesses in these sectors to invest in the sectors that will create the largest and fastest growth.
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