Why Export Receipts Are Not a Part of Net Factor Income From Abroad?

Question

Explain Why Export Receipts Are Not a Part of Net Factor Income From abroad?

Answer 1

Export Receipts are not a part of net factor income from abroad because of two reasons :

(1) Exports refer to the purchase of domestically produced goods by the rest of the world. Goods produced within the domestic territory of a country are to be treated as a part of GDP.

(2) Export receipts refer to revenue of the firms from the sale of its output. These are not the receipts of factor incomes from abroad which are to be in the form of rent, interest, profit and wages.