Foreign Investment Flashcards
what are foreign liabilities (inflow - we owe)
when aus resident borrows money from overseas or sells assets (shares) overseas - inflow of money from overseas
what are the 2 types of foreign liabilities
- foreign debt - borrowing
2. foreign equity - foreign ownserhip (no longer liability - we hold more foreign assetts)
what are foreign assetts (we own - outflow)
when residents lend money to foreign residents or purchase forign assets
how much has foreign liabilities increased since 2008
40%
what does the financial account record
flow of foreign investment in and out of aus
is foreign investment a drain on the economy?
CAB reflects S/I gap so higher levels of investment will increases nations stock of capital expanding the econ
what is foreign investment used for by gov
to fund infrastrcuture for future income
what is private debt and why is it better than public
happens with profit motive in mind, increases investment which expands productive capacity of economy and provides income stream
what are the 2 potential costs of high foreign debt
- credit rating falls - if we borrow too much without paying back
- interest payments on aus foreign debt contribute to large deficit
what are the 3 main benefits of foreign investment
- develop industry
- brings new tech
- FDI provides jobs
what are the 2 costs of foreign investment
- income payment rise
- equity investmet has fallen and is now more borrwing
