Final answer:
A typical investment starts with a large cash outflow followed by potential cash inflows. On an international level, this pattern affects trade and economic growth, and carries risks related to foreign capital flow reversals due to economic instability.
Step-by-step explanation:
The question you've asked pertains to the typical pattern of cash flows associated with investments. A typical investment usually involves a large initial cash outflow, which may be the purchase of property, equipment, or stocks, where money is spent in the hope of generating returns. Over time, this investment is expected to produce a series of cash inflows, which can come in the form of rental income, dividends, or sale of assets, assuming the investment is successful.
On an international scale, such investments can lead to movements of financial capital between countries, with high-income countries often investing abroad and potentially reaping high returns, while low-income countries benefit from the inflow of capital for economic growth.
However, there are risks associated with investment flows, especially when a country has high levels of foreign investment in short-term portfolio investments rather than long-term physical capital investment. Sustained high trade and budget deficits can become concerning, and a small piece of bad economic news can lead to a drastic and rapid outflow of financial capital.