What is the full form of FDI
FDI: Foreign Direct Investment
FDI stands for Foreign Direct Investment. It is the investment made by a company based in one country into a company based in another country. It differs from portfolio flow wherein a foreign company invests in the equities listed on the stock exchange of a country.
It is called direct investment as the investor is seeking control or influence over a company or entity of a country. The foreign direct investment is usually made into countries which have open economies, high growth prospects and skilled workforce at relatively cheap rates.
Benefits of FDI
FDI has a number of benefits; some of the major benefits are given below:
Types of FDI
There are various types of FDI; two commonly discussed types of FDI are given below:
Greenfield FDI: It refers to the FDI where instead of investing into existing company of a country the foreign company establishes a new company as its subsidiary. For example, Google, Facebook and Amazon have set up their branches in India.
Brownfield FDI: It refers to the FDI where a foreign company invests in the existing business in a country. It does not establish a new office or production facility. It purchases the existing production facility in a country to grow the existing business. For example, Vodafone bought Hutch.