Foreign Direct Investment (FDI)

Definition

Foreign Direct Investment (FDI) refers to when a company or individual from one country invests in another country by establishing business operations or acquiring assets. FDI involves a long-term commitment and can include activities such as building factories, buying shares in companies, or creating joint ventures.

Related terms

Balance of Payments: The balance of payments refers to the record of all economic transactions between one country and the rest of the world during a specific period. It includes trade, investments, and transfers.

Multinational Corporation (MNC): A multinational corporation is a large company that operates in multiple countries. MNCs often engage in FDI as they establish subsidiaries or acquire existing businesses abroad.

Capital Flight: Capital flight occurs when investors move their assets out of a particular country due to concerns about economic instability or unfavorable conditions. This can contribute to an economic crisis.