Question

What are the Components of Net Factor Income from Abroad?

Answer 1

Components of Net Factor Income from Abroad —

(i) Net Compensation of Employees : it is the difference between compensation (of employees) received by resident workers, temporarily employed abroad and a similar payment made to non-resident workers who are employed temporarily within the domestic territory of a country.

(ii) Net Income from Property and  Entrepreneurship (other than Retained Earnings of Resident Companies of Abroad) : It is the difference between the income in the form of rent, interest and profit received by the residents of a country and similar payments made to the rest of the World.

(iii) Net Retained Earnings of Resident Companies Abroad : It is the difference between the retained earnings of foreign companies located within the domestic territory of a Country.