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Introduction to Topic:
FDI is also known as Direct Business Investment. According to IMF FDI is manual on Balance of Payments is an investment involving a long term relationship and reflecting a lasting interest and control of residual entity in one economy in an enterprise resident in an economy other than that of the direct investors. Such investment involve both initial transactions between the two entities and all subsequent between them and among foreign affiliates.
Features of FDI
Investment made by a foreign company in a home country. The foreign co. may invest either by opening its branch or by having a subsidiary in the home country. Subsidiary can be wholly owned subsidiary or joint venture or may acquire stake in business. Profit is the prime motive. Investor retain control over investment and management of firm concerned. On the winding up of firm, the assets may he repatriated to the country of origin
Categories of FDI
There are three main categories of FDI: Equity capital Reinvested earnings Other capitals
Types of FDI
TYPES of FDI
Other location advantages
Market Seeking
Efficiency seeking