Debtor Nation

DEFINITION of 'Debtor Nation'

A nation with a cumulative balance of payments deficit. A debtor nation has negative net investment after recording all of the financial transactions it has completed worldwide.

BREAKING DOWN 'Debtor Nation'

Nations that have invested fewer resources than the rest of the world has invested in them are known as debtor nations. In 2006, The United States was the world's biggest debtor nation, posting a trade deficit of more than $61 billion and total debt of trillions of dollars.

One of the biggest contributors to America's status as debtor is the availability of inexpensive manufacturing capabilities in China, as more and more U.S.-based businesses spend vast amounts of money in China for that purpose.

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