Foreign direct investment

Definition

Foreign direct investment is when a company or individual from one country invests in business interests in another country, by either establishing business operations or acquiring business assets in the foreign country, including ownership or controlling interest in a foreign company. It plays a crucial role in the global economic system by facilitating the flow of capital across borders.

Related terms

Balance of Payments:

A record that summarizes all transactions made between entities in one country and the rest of the world over a specific period, including the capital flows from FDI.

Multinational Corporation (MNC): A corporate organization that owns or controls production of goods or services in at least one country other than its home country, often involved in FDI activities.

Bretton Woods Institutions: These include the International Monetary Fund (IMF) and the World Bank, which were established to help regulate international financial relations and support economic development, influencing how FDI is managed globally