Foreign Direct Investment

Foreign Direct Investment

1. a flow of investment from one country to another, when a firm with its head office sets up factories/ offices etc in other countries

2. mostly from one developed country to another

   • increasingly, FDI is flowing into developing economies

3. may be associated with outsourcing production in countries with lower wages

4. may be directed towards production in foreign markets

5. as trade barriers are reduced, FDI flows increase

6. provides finance for investment and helps create jobs

   • one introduction of FDI may encourage others