Foreign Direct Investment FDI


 
 
Concept Explanation
 

Foreign Direct Investment FDI

Some modes that interlink production across countries are given below-

Foreign Direct Investment (FDI): It is an investment made by a company or entity based in one country (usually an MNC), into a company or entity based in another country. MNCs set-up the production units through investment in the concerned country either by setting up factories or offices in the foreign country. The money that is spent to buy assets such as land, building, machines and other equipment is called investment and any investment made by MNCs is called Foreign Direct Investment, An investment is made with the hope to earn profits.

By Entering into Partnerships/Joint Venture: Sometimes MNCs join hands with local companies and produce jointly. This way local company can get two-fold production. First, MNCs can provide money for additional investments like buying new machines for faster production. Second, MNCs might bring latest technology with them for production.

 
 


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