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– Fact Sheets)
Foreign
Direct Investment
An enterprise that wishes to
establish a presence in a foreign market can do so via a number of
different routes. Often the easiest and most rapid choice is to export
goods or services to the new market. However, many enterprises have
complemented external trade by seeking to produce and often to sell their
own goods and services in countries other than where they were first
established. This latter approach is known as foreign
direct investment (FDI), whereby the enterprise concerned either
invests to establish a new plant/office, or alternatively, purchases
existing assets of a foreign enterprise, for example, by way of
acquisition, merger or takeover.
Thus, FDI is a category of
international investment made by an entity that is resident in one economy
(the direct investor) to acquire a lasting interest in an enterprise
operating in another economy. Such
a lasting interest is deemed to exist if the direct investor acquires at
least 10% of the equity capital of the enterprise concerned. A direct
investor may be an individual, an incorporated or unincorporated, public
or private enterprise, a government, a group of related individuals, or a
group of related incorporated and/or unincorporated enterprises. Outward
flows (flows during the reference period) and stocks (stocks at the end of
the reference period) of FDI (or FDI abroad) report investment by resident
EU entities in an affiliated enterprise abroad.
