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Net Creditor and Debtor Countries

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Concerning the balance of international indebtedness, when is a country a net creditor or a net debtor?

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Solution Summary

This solution briefly looks at the difference between net creditor nations and net debtor nations and what this implies for net investment of each case. Balance of payments is also discussed.

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Essentially, what determines whether a country is a net creditor or debtor is its balance of payments. If a country has a surplus of financial transactions in its balance of payments, then it is a net creditor. If it has a deficit in its balance of payments, it is a net debtor ...

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