Foreign Investment PPT 4 Flashcards
(19 cards)
What is foreign investment?
t refers to capital inflows from overseas in the form of borrowing (foreign debt) or ownership (foreign equity).
What are Australia’s foreign liabilities?
The total stock of foreign investment into Australia.
What are Australia’s foreign assets?
The total stock of foreign investment by Australians overseas.
Benefit #1 – What is the most important benefit of foreign investment into Australia?
t supplements domestic savings, helping fund a higher level of investment and economic activity.
What is Australia’s net international investment position?
The difference between foreign liabilities and foreign assets; also called net foreign liabilities.
Benefit #2 – How does foreign investment improve international competitiveness?
It increases the stock of capital, which boosts productivity, expands aggregate supply, and lowers price levels.
How does foreign investment impact GDP and living standards?
It increases investment expenditure, which boosts employment, national income, and living standards.
What is a security concern related to foreign ownership?
Foreign control of critical infrastructure, such as the leasing of the Darwin port to a Chinese company.
Why is foreign debt a concern for future generations?
Higher debt may mean larger interest payments, which could become unsustainable if rates rise.
Benefit #3 – How does foreign direct investment impact technology and productivity?
It introduces new technologies and managerial skills, improving labour productivity and long-term growth.
What is meant by “loss of economic sovereignty”?
When foreign ownership increases, Australians lose control over domestic assets.
How does FDI affect the capital-to-labour ratio?
t raises it, giving workers better tools and increasing output per hour worked.
What is the biggest debit in Australia’s income balance?
Interest payments on foreign debt.
What does foreign investment do to Australia’s foreign position?
: Increases foreign liabilities (when inflows) and foreign assets (when outflows).
Under what condition is foreign debt not a problem?
If it’s used for productive investment that boosts future income.
