Types and forms of FDI
Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds.
Foreign Direct Investment "as any flow of lending to, or purchase of ownership in a foreign enterprise that is largely owned by the residents of the investing company". It may take the form of Cash, securities, plant, equipment, and other factors of production, such as managerial skills, technology, or know how. FDI usually involves some combination of the above. The transfer of this "package" of capital assets as well as the retention of control is what distinguishes FDI from portfolio investment.
Foreign Direct Investment is generally classified into fives types which is:
1. Inward Foreign Direct Investment
2. Outward Foreign Direct Investment
3. Horizontal Foreign Investment
4. Vertical Foreign Investment
5. Platform Foreign Investment
Inward FDI: An inward investment involves an external or foreign entity either investing in or purchasing the goods of a local economy. A common type of inward investment is a foreign direct investment (FDI). This occurs when one company purchases another business or establishes new operations for an existing business in a country different than the investing company's origin. In this case investment of foreign resources is local resources. The factors encourages the growth of Inward FDI contains relaxation of existent regulations, tax breaks, loans on low rates of interest etc.
Outward FDI : A business strategy where a domestic firm expands its operations to a foreign country either via a Green field investment, merger/acquisition and/or expansion of an existing foreign facility. Employing outward direct
Foreign Direct Investment "as any flow of lending to, or purchase of ownership in a foreign enterprise that is largely owned by the residents of the investing company". It may take the form of Cash, securities, plant, equipment, and other factors of production, such as managerial skills, technology, or know how. FDI usually involves some combination of the above. The transfer of this "package" of capital assets as well as the retention of control is what distinguishes FDI from portfolio investment.
Foreign Direct Investment is generally classified into fives types which is:
1. Inward Foreign Direct Investment
2. Outward Foreign Direct Investment
3. Horizontal Foreign Investment
4. Vertical Foreign Investment
5. Platform Foreign Investment
Inward FDI: An inward investment involves an external or foreign entity either investing in or purchasing the goods of a local economy. A common type of inward investment is a foreign direct investment (FDI). This occurs when one company purchases another business or establishes new operations for an existing business in a country different than the investing company's origin. In this case investment of foreign resources is local resources. The factors encourages the growth of Inward FDI contains relaxation of existent regulations, tax breaks, loans on low rates of interest etc.
Outward FDI : A business strategy where a domestic firm expands its operations to a foreign country either via a Green field investment, merger/acquisition and/or expansion of an existing foreign facility. Employing outward direct