An Outline of Foreign Direct Investment – Some of you might be familiar with FDI or Foreign Direct Investment, while another might new to these words. The growth of the economic and social politic of a country can affect the direct investment in that area. If you are wondering what is meant by Foreign Direct Investment, you can check out the brief outline of this type of direct investment and the types of FDI below.
– The Brief Explanation
FDI stands for Foreign Direct Investment. It occurs when an investor who lives in a country’s interest in investing in another country through a company which is similar to online gambling games where you can invest your money through bet wherever you are. It means you can be an investor who invests your money in another foreign country although you’re not living there. At a glance, people see Foreign Direct Investment has the same idea with foreign portfolio investment. However, these kinds of investments are quite different.
Foreign portfolio investment can be defined as the agglomeration of stocks and bonds done by investors or financial experts. Many elements formed the Foreign Direct Investment, such as a merger, reinvesting, management interest and more, which is more complex and that requires skill to read the market. There are many elements needed to build successful Foreign Direct Investment.
An investor said to make a direct investment in a foreign company if he or she owns 10 percent or more of the business. Otherwise, the investor only said to own a stock portfolio investment. Having 10 percent or more of the enterprise cannot make the investor control the company fully. The investor has the authority to take part in the management, policies, and operation of the business.
– The Importance of FDI to a Country
Foreign Direct Investment or FDI can boost the economic growth of a country. It means this foreign investment can give benefits to both parties, which are the investor itself and the targeted country. The investment itself can develop and emerge in the market. The company itself needs support in financial and marketing to make the products and companies worldwide.
Some countries in the world have applied Foreign Direct Investment in their countries and succeed in developing economic growth and the income per capita of the country to a significant level. The support of the government and stable economic growth take an important role in making investment success.
FDI or Foreign Direct Investment happens when an investor who lives in a country interests in investing in another country through a company. An investor said to make a direct investment in a foreign company if he or she owns 10 percent or more of the business. Foreign Direct Investment or FDI can boost the economic growth of a country.