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International Financial Markets Essay

1579 words - 7 pages

Running head: International Financial Markets

International Financial Markets
Unit 1 Individual Project
Michelle McCollough
June 8, 2007
American InterContinental University

The below paper will discuss starting an operation in a foreign country. I will compare and contrast the United Kingdom and Hong Kong. I will also explain which country would be best to begin a business in.

International Financial Markets
Acme is planning on having a greenfield production facility overseas. The two foreign countries that I have decided to compare for starting business in is the United Kingdom, which ...view middle of the document...

The UK is a constitutional monarchy as well (Doing Business in the UK, 2005).
The official unit of currency used in the UK is the Pound Sterling that denoted by the GBP. The pound sterling is one of the worlds widely traded currencies along with the Euro, the United States dollar, and the Japanese Yen. The pound sterling is said to be the highest valued of the above mentioned currencies (What is the British Pound GBP, 2005).
The trade policy for the United Kingdom is the same as other members of the European Union. The policy for regulating trade internally is the EU member states have no tariffs on trade; however, there are common tariffs on outside imports. All member states pay the same external tariff. The shipment of goods can happen throughout the EU without an additional step once custom procedures are done (Trade, n.d.).
The external trade policy is to open its market up to trading partners that do like them; providing special treatment to developing and countries that are least developed. The EU, along with its other partners has been a key player in the successful rounds of international negotiations of trade liberalization. This is due to the harmonization of trade policies being centralized in Europe (Trade, n.d.).
Analysis of Hong Kong:
Hong Kong is an administrative region of southeast China on the coast and southeast of Guangzhou. Hong Kong is one of the world’s most open economies that have a per capita GDP that is comparable to other developed countries. “Hong Kong enjoys numerous economic strengths, which include accumulated public and private wealth from decades of unprecedented growth, a sound banking system, no public debt, a strong legal system, and an able and rigorously enforced anti-corruption regime.” Economic restructuring is needed and this poses major challenges for the government. Since the entry of China into the World Trade Organization (WTO), Hong Kong is trying to make the country better as a commercial and trading center. They are continuing to refine its financial architecture (Back Ground Note: Hong Kong, 2007).
Hong Kong has had a steady increase in their population. The population is approximately 6.9 million as of 2006. The language that’s spoken by most in Hong Kong is Cantonese. A third of the population speaks English. English is also widely understood. All major religion is said to be practiced in Hong Kong (Back Ground Note: Hong Kong, 2007).
The currency of Hong Kong is the Hong Kong Dollar (HKD). The Hong Kong dollar and the Pound Sterling have been linked together. Hong Kong exchange rate is at HK$7.8 per US dollars. This exchange rate is due to Hong Kong adoption of a Currency Board Arrangement. This system allows for the entire Hong Kong’s monetary base is backed with US dollars at the linked exchange rate (What is the Hong Kong Dollar HKD, 2005).
Hong Kong succeeds on free trade and this is why it’s a free port. Hong Kong open door policy allows the country to become the world's...

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