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Welcome to Johnbirchall-economist.com!
(
EU 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.