We know that the U. S. is a substantial net debtor to foreigners. How, then, is it possible that the U. S. received more foreign asset income than it paid out?

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Business

Matthias Zhang

1 May, 06:56

We know that the U. S. is a substantial net debtor to foreigners. How, then, is it possible that the U. S. received more foreign asset income than it paid out?

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Answers (1)

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Martha Lucero · Answer 1

The annual income from investment made on foreign assets is higher than the annual incomes foreigners earn from investing on u. s asset.

Explanation:

U. S companies take greater risk in direct investment when investing in foreign subsidiaries because they have potential for higher rewards while foreign companies take lesser risk when investing in U. S. A.

The number of years that an overseas subsidiaries have been in existence have an important and positive influence on it's rate of return and U. S. A has been establishing companies in foreign countries in the last 30 yearsyears.