Definition of International Investment Position

An international investment position is used to determine the net foreign investment of a country. This value is often used by economists, investors and traders for determining a country's risk.

Significance

A country's international investment position shows "total holdings of foreign assets by domestic residents and the total holdings of domestic assets by foreign residents at a point in time," according to Steven M. Suranovic of George Washington University. The international investment position information is similar to a balance sheet for a corporation.

Purpose

The international investment position allows economists, investors or traders to quickly see what a country owns in relation to what it owes. This information is usually combined with reports of the country's non-financial assets to find the net worth.

Example

The U.S. international investment position at the end of 2009 was -$2,737.8 billion. This reveals that the value of foreign debt was higher than than the value of U.S. investments in foreign assets. Suranovic, an associate professor of economics and international affairs at George Washington, has asserted that in 2009 the United States was the largest debtor nation in the world.

References

• International Economics Study Center: The International Investment Position

Resources

• U.S. Bureau of Economic Analysis: