Dayton Business Daily

can someone explain to me what foreign direct investment (FDI) means?

what do companies need to do to overcome any home and host nation concerns over such an investment? ( sorry im preparing my exam, and this is one of the questions on the past exam papers!) thanks for any advice!

Public Comments

1. to directly invest in or with foreign currency.
2. If you directly invest in a foreign country you are using resources that might have been used to stimulate growth in your own country. When a foreign country company invests in your country this may have benefits in terms of providing jobs, but equally if economic circumstances change they may feel little conscience in 're locating' their investment... This has happened in the UK numerous times. Encouraging investment in a country (as Governments sometimes do) by offering incentives is always risky-- Investing outside of your own country may give you access to other markets, but is has a negative impact on things like employment in your own country.
3. Foreign Direct Investment (FDI) is a cross-border investment made by an investor with a view to establishing a lasting financial interest in an enterprise and exerting a degree of influence on that enterprise's operations and where the foreign investor holds an interest of at least 10% in equity capital. FDI is often mentioned as a lead driver for economic growth and thought to bring certain benefits to national economies. It can contribute to Gross Domestic Product (GDP), and the balance of payments + fixed assets. For an investment to qualify as FDI, physical capital must be created in the foreign country (such as manufacturing facilities, or factories.) This physical capital is controlled by a firm based outside of the receiving, or host country. Foreign direct investment is considered to be a very stable investment because it involves the creation of physical capital. FDI is considered to be a long term investment because physical capital is not easily liquidated.