ABSTRACT
A country's balance of payments on current account measures the excess of the value of the country's exports of goods and services to foreigners over the value of its imports of goods and services from foreigners. A surplus on the balance of payments on current account so defined is the same as the country's foreign investment in the sense that it measures the net amount of the country's exports that are being used to build up the country's net holding of foreign assets abroad rather than to pay for the import of additional goods and services. In what follows, therefore, we shall talk of a country's total investment as being the sum of its domestic investment (i.e. the value of the addition to its real capital equipment at home) plus its foreign investment (i.e. the value of the increase in its overseas assets, which is necessarily equal to its balance of payments on current account). The country's total investment thus measures the value of the amount of its current output of real goods and services that it is using to build up capital resources for future use at home and abroad rather than for current use and consumption.
