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  3. International Investment Income
Publisher:
Cambridge University Press
Online publication date:
February 2025
Print publication year:
2025
Online ISBN:
9781009613392
DOI:
https://doi.org/10.1017/9781009613392
Subjects:
Economics, Economics: General Interest, International Economics
Series:
Cambridge Elements in International Economics
Information

Book description

International investments yield returns in the forms of multinational profits, dividends and interest on equity and debt, and the charges on bank loans. These payments are recorded in the current account of the balance of payments and constitute a significant component of many countries' current accounts. Foreign direct investment- (FDI)-generated income is often channeled by firms through countries with low tax rates and regulations. Emerging markets regularly have large FDI income deficits, but a substantial portion of these payments are reinvested. Portfolio securities provide income from diversified securities and lower risk. Global banking offers financing from foreign sources, which may support stability during periods of domestic crises.

References

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