---
title: "Foreign Direct Investment (FDI) — AP Comp Gov Definition"
description: "FDI is when a foreign company invests directly in a country's economy by building or buying operations there. Central to Unit 5 liberalization and sovereignty questions."
canonical: "https://fiveable.me/ap-comp-gov/key-terms/foreign-direct-investment-fdi"
type: "key-term"
subject: "AP Comparative Government"
---

# Foreign Direct Investment (FDI) — AP Comp Gov Definition

## Definition

Foreign Direct Investment refers to the investment made by a company or individual from one country into another country. It involves the establishment of business operations or acquiring ownership in foreign companies.

## Related Study Guides

- [5.7 Impact of Industrialization and Economic Development](/ap-comp-gov/unit-5/impact-industrialization-economic-development/study-guide/WxYJmfuOguzn5ucXqzLs)
- [5.3 Challenges from Globalization](/ap-comp-gov/unit-5/challenges-globalization/study-guide/dermEaxc7quZiPihtrd4)
- [5.4 Policies and Economic Liberalization](/ap-comp-gov/unit-5/policies-economic-liberalization/study-guide/ediBJluYzYdzotmy82R0)

## Review

### Related Terms

- Multinational Corporation: A multinational corporation is a company that operates in multiple countries, with headquarters usually located in one country.
- Balance of Payments: Balance of payments refers to the record of all economic transactions between residents of one country and residents of other countries over a specific period.
- Sovereign Wealth Fund: A sovereign wealth fund is a state-owned investment fund that invests globally, typically funded by surplus revenues from natural resources or foreign exchange reserves.