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HomeHomework HelpeconomicsForeign Direct Investment

Foreign Direct Investment

Foreign Direct Investment Dynamics refers to the patterns and processes through which investments made by individuals or entities in one country are directed towards establishing or expanding business operations in another country, influencing economic growth, technology transfer, and global market integration. This concept encompasses the motivations, flows, and impacts of such investments on both the host and home economies.

intermediate
3 hours
Economics
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Overview

Foreign Direct Investment (FDI) plays a vital role in the global economy by allowing companies to invest in foreign markets, which can lead to economic growth and development. It encompasses various forms, including greenfield investments, joint ventures, and acquisitions, each with its own strategi...

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Key Terms

Greenfield Investment
A type of FDI where a company builds a new operation in a foreign country from the ground up.

Example: A tech company establishing a new factory in India.

Brownfield Investment
A type of FDI where a company purchases or leases existing facilities to start new production.

Example: A car manufacturer buying an old plant in Mexico.

Joint Venture
A business arrangement where two or more parties agree to pool their resources for a specific project.

Example: Two companies collaborating to develop a new product.

Acquisition
When one company purchases another company to gain control over it.

Example: A large corporation buying a smaller competitor.

Balance of Payments
A record of all economic transactions between residents of a country and the rest of the world.

Example: FDI inflows positively impacting a country's balance of payments.

Market Entry Strategy
A plan for how a company will enter a new market.

Example: Deciding between exporting or establishing a local subsidiary.

Related Topics

Global Trade
The exchange of goods and services between countries, influencing FDI patterns.
intermediate
International Business
The study of business operations across national borders, including FDI strategies.
intermediate
Economic Development
How countries grow economically, often influenced by FDI and foreign investments.
advanced

Key Concepts

Investment TypesEconomic ImpactRegulatory EnvironmentMarket Entry Strategies