4.5 The role of Foreign Direct Investment (FDI) Introduction
In defining Foreign Direct Investment you must understand it is not the same as Portfolio Investment or saving in another country´s bank or government (eg buying Cvt Bonds). Portfolio investment (see balance of payments - Financial Account) is to do with buying debt or paper assets such as shares.
Foreign Direct Investment
is funding the operations of existing businesses in a developing country from abroad and/or funding the start up of a new business in the developing country.
See next page for more sophisticated definitions but always be aware of the above description.