foreign direct investment

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Related to International Investment: International Investment Bank

Foreign direct investment (FDI)

The acquisition abroad of physical assets such as plant and equipment, with operating control residing in the parent corporation.

Foreign Direct Investment

A major investment by a foreign corporation. A common example of foreign direct investment is a situation in which a foreign company comes into a country to build or buy a factory. Many economists believe that foreign direct investment is good for an economy, as it provides jobs and increases domestic capital. Critics point out that profits from foreign direct investment usually leave the country and go to the foreign company. Encouraging foreign direct investment is a major part of some IMF restructuring programs.

foreign direct investment (FDI)

investment by a MULTINATIONAL ENTERPRISE in establishing production, distribution or marketing facilities abroad. Sometimes foreign direct investment takes the form of GREENFIELD INVESTMENT with new factories, warehouses or offices being constructed overseas and new staff recruited. Alternatively, foreign direct investment can take the form of TAKEOVERS and MERGERS with other companies located abroad. Foreign direct investment differs from overseas portfolio investment by financial institutions which generally involves the purchase of small shareholdings in a large number of foreign companies.

FDI is used alongside STRATEGIC ALLIANCES and EXPORTING as an integral part of a multinational enterprise's FOREIGN MARKET SERVICING STRATEGY.

In 2003/2004, the USA was the world's leading outward (overseas) investor accounting for 15.5% of world outward FDI flows, followed by Belgium 13.3%, France 12.8%, the UK 12.7% and the Netherlands 5.8%. The USA was the leading recipient of inward FDI accounting for 17.3% of inward investment in 2003/2004, followed by Belgium 14.4%, Germany 9.7%, China 7.8% and the UK 7.1%.

foreign direct investment (FDI)

investment by a MULTINATIONAL COMPANY in establishing production, distribution or marketing facilities abroad. Sometimes foreign direct investment takes the form of GREENFIELD INVESTMENT, with new factories, warehouses or offices being constructed overseas and new staff recruited. Alternatively, foreign direct investment can take the form of TAKEOVERS and MERGERS with other companies located abroad.

Foreign direct investment differs from overseas portfolio investment by financial institutions, which generally involves the purchase of small shareholdings in a large number of foreign companies. See FOREIGN INVESTMENT for further discussion. See HOST COUNTRY, SOURCE COUNTRY, INVEST UK.

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2007 2008 2009 2010 Assets 490 622 635 707 Direct investment 17 20 23 27 Portfolio investment 106 97 131 156 Equity securities 56 55 77 101 Debt securities 50 43 54 55 Other investment 61 62 71 79 Loans 3 4 4 3 Currency and deposits 42 40 48 51 Other assets 17 18 20 24 Reserve assets 306 443 410 445 Currency and deposits 93 132 111 117 Securities 211 308 286 315 Other reserve assets 2 3 13 13 Liabilities 116 159 197 213 Direct investment 73 112 147 170 Portfolio investment 3 4 4 Equity securities 2 3 3 Debt securities 1 1 1 Other investment 42 44 46 39 Loans 13 14 13 13 Currency and deposits 28 28 25 25 Other liabilities 1 1 7 1 Net international investment position 375 464 439 494
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