Foreign direct investment
Foreign direct investment (FDI) is defined as "investment made to acquire lasting interest in enterprises operating outside of the economy of the investor." The FDI relationship, consists of a parent enterprise and a foreign affiliate which together form a
transnational corporation (TNC). In order to qualify as FDI the
investment must afford the parent enterprise control over its foreign affiliate. The
UN defines control in this case as owning 10% or more of the ordinary shares or voting power of an
incorporated firm or its equivalent for an unincorporated firm; lower ownership shares are known as
portfolio investment.
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Direct investment
The purchase of a controlling
interest in a company or at least enough
interest to have enough influence to direct the course of the company.
direct investment
Cross-border investment for the purpose of obtaining a lasting interest in an enterprise resident in another economy (assumed, in practice, for ownership of at least 10% of the ordinary shares or voting power). Included are equity capital, reinvested earnings and other capital associated with inter-company loans.
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