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 Foreign Direct Investment and Multinational Corporations (MNCs) - see also next page

Syllabus: Evaluate the impact of foreign direct investment (FDI) for economically less developed countries.


Foreign direct investment (FDI) is a key driver of international economic integration. With the right policy framework, FDI can provide financial stability, promote economic development and enhance the well being of societies. OECD

 NB: Direct investment excludes investment through purchase of shares.

Foreign Direct Investment

Investment from one country into another (normally by companies rather than governments) that involves establishing operations or acquiring tangible assets, including stakes in other businesses. [1]

The purchase or establishment of income-generating assets in a foreign country that entails the control of the operation or organisation.

FDI is distinguished from portfolio foreign investment (the purchase of one country’s securities by nationals of another country) by the element of control.


What the data shows

To get an idea of the magnitude of FDI visit the following World Bank website and review the data showing the net inflows of foreign direct investment.