Years the European Banks have greatly increased contractual medium-term lending (term loan), and this

Type of advance now accounts for over half the bank advances to foreign customers.

Export of entrepreneur’s capital.

It takes place by means of constructing foreign enterprises (subsidiaries) and purchasing a block

Of shares (stocks) of acting foreign enterprises.

There are two kinds of entrepreneur’s capital depending upon the investment verification (control)

— direct foreign investments and portfolio (indirect) foreign investments (Table 11.1).

In 1995, e.g., it increased by $235 billion and reached $2,6 trillion. The largest international

Creditors (lenders) and borrowers are presented in Table 6.

Loan capital differs from entrepreneur’s capital in the following: in the first case an investor

Receives an interest (when lending money), while in the second case an investor makes a profit.

Table 11.1. The largest lenders and borrowers in the world capital market (in percent)

1970 1975 1980 1985 1990 1995 2000 2003

Canada

Portfolio investment 2.0 1.9 2.1 2.4 6.0 12.9 18.7 14.3

Equity 3.1 3.2 3.6 3.5 9.6 25.4 29.3 21.2

Bonds 0.7 0.6 0.4 1.3 1.9 2.2 3.2 3.6

Germany

Portfolio investment 4.9 2.4 2.7 5.8 10.2 14.5 30.0 31.1

Equity 16,9 37,8 42,1

Bonds 13 23 25,7

Japan

Portfolio investment 1.3 2.0 6.9 10.7 12.1 13,6 13,7

Equity 2,2 4 8,3 9,9

Bonds

United Kingdom

Portfolio investment 9.5 8.6 11.4 27.5 34.0 37.1 42.6 48.1

Equity 33.1 33.5 40.9 52.4

Bonds 35.6 43.4 46.4 42.1

United States

Portfolio investment 1.5 2.1 2.3 2.2 3.5 6.4 7.8 7.4

Equity 0.8 1.1 1.3 2.0 5.6 9.3 10.5 12.7

Bonds 2.7 3.1 3.3 2.4 2.1 3.5 3.8 2.3

Sources: Tesarand Werner (1995); Lane and Milesi-Ferretti (2005b); IMF, Balance of Payments Statistics;

National flow of funds and balance sheet statistics; and IMF staff calculations.