Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI) occurs when a firm invests directly in facilities to produce and/or market product in a foreign country. When discussing FDI it is important to distinguish between the flow of FDI and the stock of FDI (both indicate growth of FDI). Flow of FDI refers refers to the amount of FDI undertaken over a period of time, while the stock refers to the total accumulated value of foreign owned assets at a given time.
There are two main forms of FDI:
- Green field investment
- Acquiring or merging with an existing firm in a foreign country