Foreign direct investment

Foreign direct investment is cross-border investment that gives an investor lasting ownership or control of a business enterprise in another country, rather than merely holding tradable securities.

Greenfield investment: A foreign investment that establishes new facilities or operations in a host country. It creates controlled operations from the ground up rather than acquiring an existing business.
Horizontal FDI: Foreign investment that replicates a firm's home-country activities in another market. It lets a firm produce locally to serve foreign customers.
Technology transfer: The movement of technical knowledge, methods, or equipment between organizations or countries. Foreign-owned operations can introduce technologies and practices to host economies.
Foreign portfolio investment: Cross-border purchases of securities that do not confer lasting control over a business. It is the principal investment counterpart to FDI, with more liquid ownership and less managerial influence.
Cross-border merger and acquisition: A merger or acquisition in which the buyer and target are based in different countries. It transfers control of an existing foreign enterprise, a major route for FDI.
Vertical FDI: Foreign investment that places different stages of a firm's production chain in different countries. It links host-country operations to upstream inputs or downstream production.
Knowledge spillover: The diffusion of know-how to firms or workers outside the organization that produced it. Domestic businesses may learn from foreign investors without directly acquiring their technology.
Foreign aid: Voluntary transfers of resources from one country or institution to another for development or relief purposes. Unlike aid, FDI is a private investment made with an expectation of ownership returns.
Multinational corporation: A company that owns or controls business operations in more than one country. Multinational corporations are the principal firms organizing and receiving FDI.
Export-platform FDI: Investment in a foreign location used to produce goods for export to other markets. It uses one host country as a base for serving regional or global markets.

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