Business, Legal & Accounting Glossary
FDI (foreign direct investment) refers to investments made by a company in another country to create a business entity or production facility, for example, to construct a factory or manufacturing plant. It is different from indirect investments such as portfolio investments, in which money is passively invested. In the current scheme of things, direct investment has also come to include an interest in the management of a company outside the territory of a nation. The different forms of investment include the construction of a facility, acquiring control over a foreign company and entering into an alliance or forming a part of a joint venture with a regional firm.
In recent years, FDI has been instrumental in the globalization of business.
There are three broad types of category by which foreign direct investment may be differentiated – direction, motive and target. Foreign direct investment is also categorized by the direction of money flow – inward and outward.
This category looks at the direction of the money flow.
This categorization looks at the target or objective of the investment.
This categorization looks at the driving force that has caused the investing company to seek foreign investment.
These are the major recipients of foreign direct investment or FDI inflows as of 2006:
FDI is the investment made in capital goods such as machinery, while an FII or Foreign Institutional Investor is an investor who makes investments made mainly in capital markets to buy stocks, debentures and government or company securities or bonds.
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Definitions for Foreign Direct Investment are sourced/syndicated and enhanced from:
This glossary post was last updated: 2nd April, 2020 | 1 Views.