Written by the Fiveable Content Team • Last updated September 2025
Verified for the 2026 exam
Verified for the 2026 exam•Written by the Fiveable Content Team • Last updated September 2025
Definition
Foreign direct investment (FDI) occurs when an individual or company from one country invests directly in businesses located in another country.
Related terms
Multinational corporations: These are companies that operate in multiple countries and have business activities in various locations around the world.
Host country: The host country is the nation where foreign direct investment takes place, receiving investments from individuals or companies based in other countries.
Capital inflow: Capital inflow refers to the movement of money into a country for investment purposes, including foreign direct investment.