Net Borrower (D. McTaggart, C. Findlay, M. Parkin 2013, p. 535) - A country that takes for temporary use more from the rest of the globe than it is giving to the globe is termed a net borrower. Likewise, a net lender is a region that lends more to the globe than it is taking from it. Accordingly, to that, the country with a current excess record is a net lender and the net borrower is a country with a deficiency.
Examples of net borrowers countries
Exemplary countries that historically were net borrowers or to this day are (D. McTaggart, C. Findlay, M. Parkin 2013, p. 535), (A. Datar 2010, p. 84):
- The country that has been a net borrower the most since World War II is Australia. Only at the 1990s more than $350 billion was borrowed by Australia. United States is named the biggest net borrower since the 1980, with an exclusion of just one year, 1991, U.S. borrowed an astonishing sum of $7.5 trillion - comparable to half of year's United States GDP.
- Since India was a net borrower between 1956/1957 and 1968/1969, it is acceptable to suppose capital receipts to be imitated in the current account deficit; if not, the enlightenment might be that India encountered struggles in buying goods from Eastern Europe and had to rack up idle balances, which in effect constitute a waste of credit financing. An examination of India's transaction with the countries of Eastern Europe and the rest of the world reveals distinctions, although India was a net borrower from both classes.
Augmented net borrowing
Increased net borrowing adds to general government data off-budget quasi-fiscal activity, mainly infrastructure. The projections were built on the basis of information on funding (below-the-line). The calculation requires many hypotheses to fill in data gaps, highlighting the uncertainty surrounding the estimates. We add off-budget financing by LGFVs to the general government deficit in order to calculate increased net borrowing. Because off-budget funding comes from the financial markets, we can use market data to construct estimates. In particular, we add borrowing from trust firms, commercial banks and the corporate bond market to local government financing vehicles (Y. Zhang, S. Barnett 2014, p. 10).
Net borrowing in business cycle
There are two marks that should be mentioned about the business cycle (G. Harcourt, P. Kriesler 2013, p. 467):
- All over the time, the process of capacity utilization led by household net borrowing, swinging up as the economy emerged from recession. The driving strength was the rise in residential investment. This trend was not clear as it emerged from the recent recession, casting hesitation on the pace of the rehabilitation.
- Secondly, government net borrowing is countercyclical due to tax receipt adjustments and procyclical expenses powered by automatic stabilizers like unemployment insurance along with aware fiscal procedure shifts.
- Coates D., Smith K. (2012)., The Oxford Companion To American Politics, Tom 2, Oxford University Press, p. 309
- Currie D. (2016)., Country Analysis: Understanding Economic And Political Performance, Routledge, p. 151
- Datar A. (2010)., India's Economic Relations With The USSR And Eastern Europe 1953 To 1969, Cambridge University Press, New York, p. 84
- Harcourt G., Kriesler P. (2013)., The Oxford Handbook Of Post-Keynesian Economics, Volume 2: Critiques And Methodology, Oxford University Press, USA, p. 467
- McTaggart D., Findlay C., Parkin M. (2013)., Economics, Pearson Australia, Australia, p. 535
- Winkler B., Riet A., Bull P. (2014)., A Flow-Of-Funds Perspective On The Financial Crisis Volume II: Macroeconomic Imbalances And Risks To Financial Stability, Palgrave Macmillan, p. 289
- Zhang Y., Barnett S. (2014)., Fiscal Vulnerabilities And Risks From Local Government Finance In China, International Monetary Fund, China, p. 10
Author: Wiktor Woźny