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foreign direct investment
What is foreign direct investment?
- A corporation from nation A will invest in country B by starting their own commercial activities there or by buying a local company. This practice is known as foreign direct investment (FDI). The new company in country B must be controlled and managed by the investor from nation A in order to qualify for FDI.
- The investment could entail purchasing a material supply, growing a business's reach, or establishing a global presence.
- By 2020, the United States will trail China in terms of FDI attraction.
Why do companies engage in foreign direct investment?
- Avoid trade restrictions. National protectionism still appears occasionally despite the increased prevalence of free trade.
- Lower the cost of production. Companies increasingly use foreign direct investment to lower production costs.
Examples of Foreign Direct Investments
- Mergers, acquisitions, or joint ventures in the retail, service, logistics, or manufacturing sectors may be part of foreign direct investments. They point to a global business expansion plan.
learn more about characteristics of foreign direct investment at
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