International investment position
Also called: IIP, Net IIP · Topic: Balance of Payments and Exchange Rates · NCERT: Beyond NCERT
Meaning
The international investment position (IIP) is a statement of a country's external financial assets and liabilities at a given point in time. Net IIP = external assets − external liabilities. A positive net IIP makes a country a net creditor to the world, and a negative one makes it a net debtor. The BoP measures flows over a period, while the IIP measures the stock those flows build up.
Example
India's external assets include RBI's forex reserves and Indian firms' investments abroad. Its liabilities include FDI in India, FPI holdings and external debt. Because its liabilities are larger, India has a negative net IIP and is a net debtor.
Don't confuse with
- Balance of payments: the BoP records transactions during a period, such as a year. The IIP is a snapshot of holdings on one date.
Related concepts
- Balance of payments surplus
- Autonomous transactions
- Accommodating transactions
- Official reserve transactions
- Errors and omissions