Foreign Direct Investment (FDI)

Foreign direct investment (FDI) is the investment in income-generating assets that are outside the economy of the investor. Unlike foreign portfolio investment, in which the investment is in foreign financial instruments, FDI provides the investor with control over the acquired asset. Control of an asset has been defined (Organisation for Economic Co-operation and Development benchmark) as owning 10% or more of the ordinary shares or voting stock in an incorporated enterprise or the equivalent in an unincorporated enterprise. FDI can occur in various forms: greenfield investments, in which there is an investment in a new facility; mergers, in which the assets and operations of firms from two different countries are combined to form a new entity; and acquisitions, in which there is a transfer of ...