Introduction
Foreign direct investment (FDI) refers to an investment made to acquire lasting interest in enterprises operating outside of the economy of the investor. A foreign individual or multinational enterprise (MNE) invests in the productive capacity of another country, either in existing industries and businesses or with the goal of promoting new industries. Both economic theory and recent empirical studies suggest that, whether an individual or a firm chooses to invest in a foreign country’s economy, buy into a foreign company, or expand business abroad, FDI has a beneficial impact on developing countries and provides benefits to investors. But FDI also carries potential risks, and it is important to evaluate the level of economic and political stability in a potential host country. Policy recommendations for developing countries should focus on improving the investment climate for all kinds of capital, domestic as well as foreign.
Foreign Direct Investment: An Overview
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Smith, E.C., Hamel, Z. (2019). Foreign Direct Investment (FDI). In: Romaniuk, S., Thapa, M., Marton, P. (eds) The Palgrave Encyclopedia of Global Security Studies. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-74336-3_336-1
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