Table of Contents
Types of Foreign Direct Investment
Foreign Direct Investment is the investment of funds by people or companies of a country, in assets of another country.
There are 4 main types of foreign direct investment:
- Creation of a new company
- Adquisition an existing company
- Mergers
- Reivestment of utilities
Foreign Direct Investment entails active management of foreign assets, by appointing managers, establishing policies and control rules, endorsing important decisions, etc.
Foreign Direct Investment usually leads to technology transfer from the parent company to the subsidiary company.
Foreign Direct Investment has been linked with corruption cases. Some companies involved in bribes are IBM, Chevron, Siemens and Total S.A..
Vertical vs Horizontal Foreign Direct Investment
Vertical Foreign Direct Investment: only a part of the productive chain takes place abroad.
Horizontal: the parent company engages in the same activities abroad.
Some Facts
In the map we can see, in green, which countries generated more net Foreign Direct Investment (outflow - inflow) per capita.
The regions with more Foreign Direct Investment per capita are Nordic Countries, Western European Countries, North America and Australia, Japan and Chile.
Discussion