Financial investment in the composition of GDP?

Question

In the production function ***Y = C + I + G + NX***Does foreign investment in domestic assets (*i.e. foreign buying of domestic bonds*) - and vice versa - come under the Net Exports variable? Which denotation does domestic investment in domestic assets come under? The Investment variable (I), one would think, however I seem to recall being told that the Investment variable does not include financial investment, so does it come under saving?

Answer 1

Do not confuse "How you store your Wealth" Remember that Savings is that portion of income which is not consumed but rather added to current wealth. Bonds are not wealth and issuing bonds is not investment. The bond as an asset to the lender and a liability to the borrower. However, if a company issues a bond to build a new plant or purchase equipment. The physical stock of capital will increase. The new plant or equipment will be investment in an economic sense.

The NX or Net export component measures the flow of goods (stuff you can consume, you don't eat bonds). However, If a domestic company builds a anew plant and finances it by issuing bonds to say, Chinese investors, the new plant would be investment, not the bonds.