foreign factor income


in economics, the net income from -ssets that are owned by foreigners. the citizens of a country will own -ssets that are physically located overseas (for example, real estate in another country, shares of foreign stock, or even labor performed while an expatriate), and those -ssets earn income. at the same time, foreigners likewise earn income on -ssets located in ones’ own country.

if domestically-owned -ssets located abroad earn more income than domestic -ssets owned by foreigners, then there will be a net flow of income from overseas. this is a collateral benefit to running a trade surplus, especially over several years.

an example might be the united kingdom (uk) during the 19th century. prior to the 1880’s, the uk exported far more than it imported. with the foreign money, it bought -ssets in the economies of other countries, such as the usa, continental europe, and the future commonwealth of nations. these -ssets naturally earned a lot of income, as they acc-mulated over many decades. the income from these -ssets was so large that, after the 1880’s, the uk ran a trade deficit but still had a current account surplus.

in the case of the uk, the current account surplus from the nffi was still large enough that the uk could continue to buy foreign -ssets that earned income, even as its trade deficit grew during the early 20th century.
gross national product (gnp) is gross domstic product (gdp) minus net foreign factor income (nffi).

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