International Economics
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figure_12.4.docxThe U.S. International Investment Position
A country’s international investment position is related to the capital account in its balance of payments. The capital account in a balance of payments statement shows the flow of capital to or from a country during the year. A country’s international investment position reflects these capital flows and all previous capital flows. This allows one to compare the size of the country’s foreign assets with the size of its foreign liabilities. If the assets exceed the liabilities, the country is a net creditor (positive balance). If the liabilities exceed the assets, the country is a net debtor (negative balance).
The U.S. net international investment position over the period 1976–2006 is shown in Figure 12.4. The dramatic decline in the U.S. position since 1980 reflects the U.S. current account deficits. Since the current account deficits reflect greater spending than U.S. income, another way to view the decline in the U.S. international investment position is that foreigners have been financing (loaning) the excess spending through a capital inflow into the U.S. This makes the U.S. the world’s largest debtor nation.
Figure 12.4 The Net International Investment Position of the U.S., 1976–2006
The U.S. International Investment Position
A cou
ntry’s international investment position is related to the capital account in its balance of
payments. The capital account in a balance of payments statement shows the flow of capital to or
from a country during the year. A country’s international investme
nt position reflects these
capital flows and all previous capital flows. This allows one to compare the size of the country’s
foreign assets with the size of its foreign liabilities. If the assets exceed the liabilities, the country
is a net creditor (posi
tive balance). If the liabilities exceed the assets, the country is a net debtor
(negative balance).
The U.S. net international investment position over the period 1976
–
2006 is shown in Figure
12.4. The dramatic decline in the U.S. position since 198
0 reflects the U.S. current account
deficits. Since the current account deficits reflect greater spending than U.S. income, another
way to view the decline in the U.S. international investment position is that foreigners have been
financing (loaning) the e
xcess spending through a capital inflow into the U.S. This makes the
U.S. the world’s largest debtor nation.
Figure 12.4 The Net International Investment Position of the U.S., 1976
–
2006
The U.S. International Investment Position
A country’s international investment position is related to the capital account in its balance of
payments. The capital account in a balance of payments statement shows the flow of capital to or
from a country during the year. A country’s international investment position reflects these
capital flows and all previous capital flows. This allows one to compare the size of the country’s
foreign assets with the size of its foreign liabilities. If the assets exceed the liabilities, the country
is a net creditor (positive balance). If the liabilities exceed the assets, the country is a net debtor
(negative balance).
The U.S. net international investment position over the period 1976–2006 is shown in Figure
12.4. The dramatic decline in the U.S. position since 1980 reflects the U.S. current account
deficits. Since the current account deficits reflect greater spending than U.S. income, another
way to view the decline in the U.S. international investment position is that foreigners have been
financing (loaning) the excess spending through a capital inflow into the U.S. This makes the
U.S. the world’s largest debtor nation.
Figure 12.4 The Net International Investment Position of the U.S., 1976–2006
