Foreign Direct Investment (FDI)
Investment made by a company in the target market�s economy through the acquisition of local assets, establishing operations, or reinvesting profits.
Implications
An investment made by a company or individual in one country into business interests in another country, typically involving acquiring assets, establishing operations, or entering into joint ventures, often used to expand global reach and access new markets.
Example
Example: A European car manufacturer makes a foreign direct investment by building a new production facility in China, allowing it to serve the growing Asian market more effectively and reduce production costs.
Related Terms
Different from portfolio investment, which involves purchasing securities like stocks and bonds in foreign countries, FDI involves direct control and ownership of business assets in another country.
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