Foreign Direct Investment (FDI) is a long-term, cross-border investment where a company or entity from one country acquires a lasting interest—typically at least 10% ownership—in an enterprise located in another country. It involves active management and control of the foreign business, rather than passive investing.
- Lasting Interest & Control: The investor aims to influence or manage the foreign company's operations, defined by holding 10% or more of voting power.
- Types of FDI:
- Greenfield Investment: Building new operational facilities (factories, offices) in a foreign country.
- Brownfield Investment/Acquisition: Purchasing or merging with an existing foreign company.
- Components: Includes equity capital, reinvestment of earnings, and intra-company loans.