Question

What is meant by factor income to abroad? State its components.

Answer 1

Factor income to abroad refers to the factor income paid to the normal residents of other countries (i.e. non-residents) for their factor services within the economic territory.
Components of factor income to abroad:
(i) Compensation of employees paid to the non-resident workers working within the economic territory.
(ii) Income from property (rent, interest) and entrepreneurship (dividend) paid to the rest of the world.
(iii) Retained earnings of enterprises owned by non-residents within the domestic territory