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Foreign direct investment (FDI)

Foreign direct investment, FDI, is defined as an investment involving a long-term relationship.

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Foreign direct investment, FDI, is defined as an investment involving a long-term relationship and reflecting a lasting interest and control by a resident entity in one economy, foreign direct investor or parent enterprise, in an enterprise resident in an economy other than that of the foreign direct investor, FDI enterprise, or affiliate enterprise, or foreign affiliate.

FDI implies that the investor exerts a significant degree of influence on the management of the enterprise resident in the other economy. Such investment involves both the initial transaction between the two entities and all subsequent transactions between them and among foreign affiliates– both incorporated and unincorporated. FDI may be undertaken by individuals as well as business entities.

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Fundamentals of International Business

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