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FDI-Foreign Direct Investment

FII- Foreign Institutional Investors

Difference between the two


FDI- is the investment in capital goods such as machineries
FII- invest mainly in stocks and debentures and govt securities (Gilt edged)

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Participation in the Kyoto Protocol, where dark green indicates countries that have signed and
ratified the treaty, yellow is signed, but not yet ratified, grey is not yet decided and red is no
intention of ratifying. The only country that has no intention of ratifying the Kyoto Protocol is
the United States of America.
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate
Change (UNFCCC or FCCC), aimed at combating global warming. The UNFCCC is an
international environmental treaty with the goal of achieving "stabilization of greenhouse gas
concentrations in the atmosphere at a level that would prevent dangerous anthropogenic
interference with the climate system."[1]
The Protocol was initially adopted on 11 December 1997 in Kyoto, Japan and entered into force
on 16 February 2005. As of November 2009, 187 states have signed and ratified the protocol.[2]
The most notable non-member of the Protocol is the United States, which is a signatory of
UNFCCC and was responsible for 36.1% of the 1990 emission levels.
Under the Protocol, 37 industrialized countries (called "Annex I countries") commit themselves
to a reduction of four greenhouse gases (GHG) (carbon dioxide, methane, nitrous oxide, sulphur
hexafluoride) and two groups of gases (hydrofluorocarbons and perfluorocarbons) produced by
them, and all member countries give general commitments. Annex I countries agreed to reduce
their collective greenhouse gas emissions by 5.2% from the 1990 level. Emission limits do not
include emissions by international aviation and shipping, but are in addition to the industrial
gases, chlorofluorocarbons, or CFCs, which are dealt with under the 1987 Montreal Protocol on
Substances that Deplete the Ozone Layer.
The benchmark 1990 emission levels were accepted by the Conference of the Parties of
UNFCCC (decision 2/CP.3) [2] were the values of "global warming potential" calculated for the
IPCC Second Assessment Report. These figures are used for converting the various greenhouse
gas emissions into comparable CO2 equivalents when computing overall sources and sinks.
The Protocol allows for several "flexible mechanisms", such as emissions trading, the clean
development mechanism (CDM) and joint implementation to allow Annex I countries to meet
their GHG emission limitations by purchasing GHG emission reductions credits from elsewhere,
through financial exchanges, projects that reduce emissions in non-Annex I countries, from other
Annex I countries, or from annex I countries with excess allowances.
Each Annex I country is required to submit an annual report of inventories of all anthropogenic
greenhouse gas emissions from sources and removals from sinks under UNFCCC and the Kyoto
Protocol. These countries nominate a person (called a "designated national authority") to create
and manage its greenhouse gas inventory. Countries including Japan, Canada, Italy, the
Netherlands, Germany, France, Spain and others are actively promoting government carbon
funds, supporting multilateral carbon funds intent on purchasing carbon credits from non-Annex
I countries,[3] and are working closely with their major utility, energy, oil and gas and chemicals
conglomerates to acquire greenhouse gas certificates as cheaply as possible.[citation needed] Virtually
all of the non-Annex I countries have also established a designated national authority to manage
its Kyoto obligations, specifically the "CDM process" that determines which GHG projects they
wish to propose for accreditation by the CDM Executive Board.
current account

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Definition
The net flow of current transactions, including goods, services, and interest payments, between countries

In economics, the current account is one of the two primary components of the balance of
payments, the other being the capital account. It is the sum of the balance of trade (exports minus
imports of goods and services), net factor income (such as interest and dividends) and net
transfer payments (such as foreign aid).

The Current Account Balance is one of two major measures of the nature of a country's foreign
trade (the other being the net capital outflow). A current account surplus increases a country's net
foreign assets by the corresponding amount, and a current account deficit does the reverse. Both
government and private payments are included in the calculation. It is called the current account
because goods and services are generally consumed in the current period.[1]
The balance of trade is the difference between a nation's exports of goods and services and its
imports of goods and services, if all financial transfers, investments and other components are
ignored. A nation is said to have a trade deficit if it is importing more than it exports.
Positive net sales abroad generally contributes to a current account surplus; negative net sales
abroad generally contributes to a current account deficit. Because exports generate positive net
sales, and because the trade balance is typically the largest component of the current account, a
current account surplus is usually associated with positive net exports. This however is not
always the case with open economies such as that of Australia featuring an income deficit larger
than the CAD itself.
The net factor income or income account, a sub-account of the current account, is usually
presented under the headings income payments as outflows, and income receipts as inflows.
Income refers not only to the money received from investments made abroad (note: investments
are recorded in the capital account but income from investments is recorded in the current
account) but also to the money sent by individuals working abroad, known as remittances, to
their families back home. If the income account is negative, the country is paying more than it is
taking in interest, dividends, etc. For example, the United States' net income has been declining
exponentially since it has allowed the dollar's price relative to other currencies to be determined
by the market to a point where income payments and receipts are roughly equal.[citation needed] The
difference between Canada's income payments and receipts have been declining exponentially as
well since its central bank in 1998 began its strict policy not to intervene in the Canadian Dollar's
foreign exchange.[2] The various subcategories in the income account are linked to specific
respective subcategories in the capital account, as income is often composed of factor payments
from the ownership of capital (assets) or the negative capital (debts) abroad. From the capital
account, economists and central banks determine implied rates of return on the different types of
capital. The United States, for example, gleans a substantially larger rate of return from foreign
capital than foreigners do from owning United States capital.
In the traditional accounting of balance of payments, the current account equals the change in net
foreign assets. A current account deficit implies a paralleled reduction of the net foreign assets.

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Capital account
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In financial accounting, the capital account is one of the accounts in shareholders' equity. Sole
proprietorships have a single capital account in the owner's equity. Partnerships maintain a
capital account for each of the partners.
In economics, the capital account is one of two primary components of the balance of
payments, the other being the current account. The capital account is referred to as the financial
account in the IMF's definition; the IMF has a different definition of the term capital account.
[citation needed]
(See balance of payments.)

The capital account records all transactions between a domestic and foreign resident that
involves a change of ownership of an asset. It is the net result of public and private international
investment flowing in and out of a country. This includes foreign direct investment, portfolio
investment (such as changes in holdings of stocks and bonds) and other investments (such as
changes in holdings in loans, bank accounts, and currencies).
From a domestic point of view, a foreign investor acquiring a domestic asset is considered a
capital inflow, while a domestic resident acquiring a foreign asset is considered a capital outflow.
Along with transactions pertaining to non-financial and non-produced assets, the capital account
may also include debt forgiveness, the transfer of goods and financial assets by migrants leaving
or entering a country, the transfer of ownership on fixed assets, the transfer of funds received to
the sale or acquisition of fixed assets, gift and inheritance taxes, death levies, patents, copyrights,
royalties, and uninsured damage to fixed assets. [1]
Countries can impose capital controls to control the flows into and out of their capital accounts.
Countries without capital controls are said to have full Capital Account Convertibility.
monetary policy

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Definition
The regulation of the money supply and interest rates by a central bank, such as the Federal Reserve Board in the U.S., in order to control inflation and stabilize currency. Monetary
policy is one the two ways the government can impact the economy. By impacting the effective cost of money, the Federal Reserve can affect the amount of money that is spent by
consumers and businesses.

CAC (Capital Account Convertibility) for Indian Economy refers to the abolition of all limitations with respect to the movement of capital from India to different countries across the globe. In fact, the
authorities officially involved with CAC (Capital Account Convertibility) for Indian Economy encourage all companies, commercial entities and individual countrymen for investments, divestments, and real
estate transactions in India as well as abroad. It also allows the people and companies not only to convert one currency to the other, but also free cross-border movement of those currencies, without the
interventions of the law of the country concerned.

currency convertibility
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Definition

The ability to exchange money for gold or other currencies. Some governments which do not have largereserves of hard currency foreign reserves try to restrictcurrency convertibility,
since they are not in a position to handle large currency market operations to support their currency when necessary.