foreign direct investment

Syllable breakdown

Dictionary meaning

investment made by a firm or individual in one country into business interests in another country, in the form of establishing business operations or acquiring business assets — such as ownership or controlling interest in a foreign company — as distinct from portfolio investment in foreign securities; FDI is distinguished from portfolio flows by the element of lasting interest and control, typically defined as ownership of at least ten percent of a foreign enterprise; developing countries compete intensively for FDI as a source of capital, technology, management expertise, and market access, and many have liberalised their investment regimes and established investment promotion agencies to attract foreign investors; evidence on FDI's development impact is mixed — the quality of investment, the sectors in which it concentrates, the extent of domestic linkages, and the strength of host country institutions all determine whether FDI generates broad development benefits or primarily serves investor returns while generating limited local spillovers