(FDI): is money invested in production by a foreigner rewarded with part-ownership (stocks) of production For example, a foreign corporation may finance a factory in return for stock certificates, giving a share of the profits from production and some voting rights in the enterprise management The World Bank defines FDI as net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor
FDI is defined as a firm based in one country (the 'home country') owning 10 percent or more of the stock of a company located in a foreign country (the 'host country') -- this amount of stock is generally enough to give the home country firm significant control rights over the host country firm Most FDI is in wholly-owned or nearly wholly-owned subsidiaries Other nonequity forms of FDI include: subcontracting, management contracts, franchising, and licensing and product sharing
a joint venture between a foreign company and a United States company investing in United States businesses by foreign citizens (often involves stock ownership of the business)
the purchase of land, equipment or buildings or the construction of new equipment or buildings by a foreign company FDI also refers to the purchase of a controlling interest in existing operations and businesses (known as mergers and acquisitions) Multinational firms seeking to tap natural resources, access lucrative or emerging markets, and keep production costs down by accessing low-wage labour pools in developing countries are FDI investors Classic examples of FDI include American banks taking over Korean ones or Canadian mining companies building mines in Brazil (see also portfolio investment)
Buying stock, real estate, and other assets in another country with the aim of gaining a controlling interest in foreign economic enterprises Different from portfolio investment, which involves investment solely to gain capital appreciation through market fluctuations
Financial transfers by a multinational corporation from the country of the parent firm to the country of the host firm to finance a portion of its overseas operations Foreign direct investment occurs when a corporation headquartered in one nation invests in a corporation located in another nation, either by purchasing an existing enterprise or by providing capital to start a new one In portfolio investment, on the other hand, foreign investors purchase the stock or bonds of national corporations, but do not control those corporations directly
Investment by firm based in one country in actual productive capacity or other real assets in another country, normally through creation of a subsidiary by a multinational corporation Measure of globalization of capital Effects on growth and inequality in developing countries disputed
Acquisition of foreign assets for the purpose of controlling them; under U S regulations, FDI occurs when an investor owns at least 10 percent of the voting stock of a foreign company