ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A net international investment position (NIIP) measures the gap between a nation’s stock of foreign assets and a foreigner’s stock of that nation’s assets. It can be viewed as a nation’s balance sheet with the rest of the world at a specific point in time.

Detailed explanation-2: -What is the international investment position? The accumulated value of U.S.-owned financial assets in other countries and U.S. liabilities to residents of other countries at the end of each quarter. The difference between assets and liabilities is the U.S. net international investment position.

Detailed explanation-3: -What is international investing? International investing is an investment strategy that involves selecting global investment instruments as part of an investment portfolio. People often invest internationally to expand diversification and distribute investment risk between markets and global companies.

Detailed explanation-4: -The current account reflects the overall borrowing needs of a country. For example, if a country experiences a deficit in the current account, it will need a foreign country to lend it the equivalent amount. Thus, the Net International Investment Position of the country changes with a change in its current account.

Detailed explanation-5: -Key Takeaways. Foreign portfolio investment is the purchase of securities of foreign countries, such as stocks and bonds, on an exchange. Foreign direct investment is building or purchasing businesses and their associated infrastructure in a foreign country.