Question

Foreign saving is used for domestic investment when foreigners engage in

a. foreign direct investment.
b. foreign portfolio investment.
c. either foreign direct investment or foreign portfolio investment.
d. none of the above is correct.

Answer 1

Foreign saving is used for domestic investment when foreigners engage in either foreign direct investment or foreign portfolio investment.

To add, ‘Foreign savings’ and the ‘net external resources inflows’ are the two popular acronyms used for the current account deficit in the balance of payments.