Foreign direct investment (FDI)

Definition

Foreign Direct Investment (FDI) is the investment made by a company or individual in one country in business interests located in another country, in the form of either establishing business operations or acquiring business assets in the foreign country, including ownership or controlling interest in a foreign company. It plays a crucial role in global economic growth and development, allowing capital to move across borders for investments in infrastructure, businesses, and technology among others.

Related terms

Multinational Corporation (MNC): A large company that operates in several countries, often involved in FDI by setting up subsidiaries, manufacturing plants, or acquiring companies outside its home country.

Globalization: The process by which businesses or other organizations develop international influence or start operating on an international scale, often facilitated by FDI.

Bilateral Investment Treaty (BIT): An agreement between two countries to ensure mutual protection and encouragement of investments by residents and companies from their respective countries into each other’s territories