Foreign Investments

Foreign direct investment (FDI) refers to direct investment by a firm in one country (the source country) in productive assets in a foreign country (the host country).

When a firm engages in FDI, it becomes a multinational corporation(MNC) operating in more than one country or having subsidiary firms in more than one country.

Foreign portfolio investment (FPI) refers to shorter-term investment by individuals, firms, and institutional investors (e.g., pension funds) in such foreign financial instruments as foreign stocks and foreign government bonds.