Foreign Direct Investment

Foreign Direct Investment (FDI) occurs when an multinational company from one country has an ownership position in an organizational unit located in another country. In other words, a multinational company owns, in part or in whole, a value-adding activity or operation in another country. The degree of ownership however should be enough to be in control of the activity. This means that an organization needs a controlling interest with enough voting stock shares to be able to actively manage the foreign asset. It is thus distinguished from Foreign Portfolio Investment by a notion of direct control.