Net International Investment Position (NIIP)

Definition of 'Net International Investment Position (NIIP)'


A nation’s stock of foreign assets minus its foreign liabilities. The Net International Investment Position (NIIP) can also be defined as the value of overseas assets owned by a nation minus the value of domestic assets owned by foreigners. The NIIP can therefore be regarded as a nation’s balance sheet with the rest of the world at a specific point in time. NIIP includes overseas assets and liabilities held by a nation’s government, the private sector and its citizens. A negative NIIP figure indicates that a nation’s foreign liabilities exceed its foreign assets, while a positive NIIP figure indicates that its foreign assets exceed its liabilities. Most nations release NIIP figures quarterly.

Investopedia explains 'Net International Investment Position (NIIP)'


A nation’s NIIP is a key component of the national balance sheet, since NIIP plus the value of nonfinancial assets equals the economy's net worth. In addition, the NIIP together with the balance of payments transactions comprise the economy’s set of international accounts.

The NIIP position is an important barometer of a nation’s financial condition and creditworthiness. Two metrics used to assess the NIIP's size in relation to the economy's size are the ratio of NIIP to GDP and the ratio of NIIP to the economy’s total financial assets, both expressed as a percentage.

In the NIIP, assets are divided into direct investment, portfolio investment, other investment and reserve assets (which include foreign currencies, gold and special drawing rights). Liabilities are reported with the same classification, except for “reserve assets,” which have no equivalent on the liabilities side.

For an NIIP example, consider the U.S. position as of the second quarter of 2013. This data is published by the Bureau of Economic Analysis and contains a wealth of information on the subject.

The U.S. NIIP was -$4,504.1 billion at the end of the second quarter of 2013, which means that the value of overseas U.S. investments was well below the value of foreign investments in the U.S. Here’s how the numbers stacked up:

  1. U.S.-owned assets abroad at end-Q2 2013 = $20,984.3 billion
  2. Foreign-owned assets in the U.S. at end-Q2 2013 = $25,488.4 billion
  3. Net International Investment Position = a - b = -$4,504.1 billion




comments powered by Disqus
Hot Definitions
  1. Quanto Swap

    A swap with varying combinations of interest rate, currency and equity swap features, where payments are based on the movement of two different countries' interest rates. This is also referred to as a differential or "diff" swap.
  2. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  3. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  4. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
  5. Centralized Market

    A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
  6. Balanced Investment Strategy

    A portfolio allocation and management method aimed at balancing risk and return. Such portfolios are generally divided equally between equities and fixed-income securities.
Trading Center