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FDI Definition

Discuss FDI Definition within the Financial Management ( FM ) forums, part of the Resolve Your Query - Get Help and discuss Projects category; DEFINITION OF FOREIGN DIRECT INVESTMENT FDI is the process whereby residents of one country (the home country) acquire ownership of ...

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Sunanda K. Chavan
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FDI Definition - October 8th, 2010

DEFINITION OF FOREIGN DIRECT INVESTMENT
FDI is the process whereby residents of one country (the home country) acquire ownership of assets for the purpose of controlling the production, distribution and other activities of a firm in another country (the host country).

IMF DEFINITION
According to International Monetary Fund, FDI is defined as “investment that is made to acquire a lasting interest in an enterprise operating in an economy other than that of the investor. The investor’s purpose being to have an effective voice in the management of the enterprise.”


According to The World Investment Report 2002.

Flows of FDI comprise capital provided (either directly or through other related enterprises) by a foreign direct investor to an FDI enterprise, or capital received from an FDI enterprise by a foreign direct investor. FDI has three components: equity capital, reinvested earnings and intra-company loans.

• Equity capital is the foreign direct investor's purchase of shares of an enterprise in a country other than its own.

• Reinvested earnings comprise the direct investor's share (in proportion to direct equity participation) of earnings not distributed as dividends by affiliates, or earnings not remitted to the direct investor. Such retained profits by affiliates are reinvested.

• Intra-company loans or intra-company debt transactions refer to short- or long-term borrowing and lending of funds between direct investors (parent enterprises) and affiliate enterprises.
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Rose Marry
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Re: FDI Definition - April 16th, 2016

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Originally Posted by sunandaC View Post
DEFINITION OF FOREIGN DIRECT INVESTMENT
FDI is the process whereby residents of one country (the home country) acquire ownership of assets for the purpose of controlling the production, distribution and other activities of a firm in another country (the host country).

IMF DEFINITION
According to International Monetary Fund, FDI is defined as “investment that is made to acquire a lasting interest in an enterprise operating in an economy other than that of the investor. The investor’s purpose being to have an effective voice in the management of the enterprise.”


According to The World Investment Report 2002.

Flows of FDI comprise capital provided (either directly or through other related enterprises) by a foreign direct investor to an FDI enterprise, or capital received from an FDI enterprise by a foreign direct investor. FDI has three components: equity capital, reinvested earnings and intra-company loans.

• Equity capital is the foreign direct investor's purchase of shares of an enterprise in a country other than its own.

• Reinvested earnings comprise the direct investor's share (in proportion to direct equity participation) of earnings not distributed as dividends by affiliates, or earnings not remitted to the direct investor. Such retained profits by affiliates are reinvested.

• Intra-company loans or intra-company debt transactions refer to short- or long-term borrowing and lending of funds between direct investors (parent enterprises) and affiliate enterprises.
Hello sunanda,

Please check attachment for Definition of Foreign Direct Investment (FDI) Terms by Art Ridgeway, so please download and check it.
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