Define net factor income from abroad andwhat are its components?
Dear Student,
Net factor income from abroad refers to the excess of factor income earned by the factors of production of a country from rest of the world over the earnings of the factors of production of other countries from the country concerned. It helps to determine National Income of a country.
Symbolically,
Net Factor Income from Abroad = Factor Income from Abroad – Factor Income to Abroad
Domestic Income + Net Factor Income From Abroad = National Income
Following are the components of Net Factor Income from Abroad:
Net factor income from abroad refers to the excess of factor income earned by the factors of production of a country from rest of the world over the earnings of the factors of production of other countries from the country concerned. It helps to determine National Income of a country.
Symbolically,
Net Factor Income from Abroad = Factor Income from Abroad – Factor Income to Abroad
Domestic Income + Net Factor Income From Abroad = National Income
Following are the components of Net Factor Income from Abroad:
- Net compensation of Employees
- Net income from property and entrepreneurship
- Net retained earning of resident companies abroad.