Foreign Direct Investment


The concept describes the importance of foreign direct investment in today's increasingly globalised world. Using research and case study examples, it explains the strengths and drawbacks of FDI and outlines some critical factors for success.

Technique Overview

Foreign Direct Investment Definition

Foreign direct investment (FDI) refers to a category of cross-border investment associated with a resident in one economy having control or a significant degree of influence on the management of an enterprise that is resident in another economy (IMF, 2009). The concept of FDI emphasises two differences: FDI versus Foreign Portfolio Investment (FPI): the former actively manages the investment, whereas the second takes a passive approach (Mankiw, 2011). FDI is undertaken with the intention of exercising control over an enterprise (UNCTAD).

Foreign Direct Investment Description *

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Business Evidence

Foreign Direct Investment Strengths *

Foreign Direct Investment Weaknesses *

Examples of Foreign Direct Investment *

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Business Application

Foreign Direct Investment Implementation *

Success Factors of Foreign Direct Investment *

Measures of Foreign Direct Investment *

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Professional Tools

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Further Reading

Foreign Direct Investment Web Resources *

Foreign Direct Investment Print Resources *

Foreign Direct Investment References (4 of up to 20) *

  • Baumol, W. J. and Blinder, A. S. (2010) Macroeconomics: Principles and Policies, Cengage Learning.
  • Bloomberg (2011) Foreign Direct Investment in China in 2010 Rises to Record $105.7 Billion. Jan 18. Available at: http://www.bloomberg.com/news/2011-01-18/foreign-direct-investment-in-china-in-2010-rises-to-record-105-7-billion.html
  • Brown, K. (2011) Foreign direct investment into Asia declines. Financial Times, Jan 16. Available at: http://www.ft.com/intl/cms/s/0/ca309fd2-21a3-11e0-9e3b-00144feab49a.html#axzz1cx6IvcPE
  • Hausmann, R. and Fern├índez-Arias, E. (2000) Foreign Direct Investment: Good Cholesterol? Inter-American Development Bank Working Paper No. 417 (Washington).

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