This topic is a part of International Financial Management Course for MBA and BBA program students. Students of other disciplines can be benefited from this handout.
Foreign Direct Investment (FDI), a component of country’s national financial accounts. It is an investment of foreign assets into domestic structures, equipment, business and organizations.
FDI has three basic components. These are: Equity capital; Reinvestment Earnings and Intra-Company Loans.
This topic also shows the advantages and disadvantages of Foreign Direct investments.
Some theories of FDI are: Theory of comparative advantage; Life Cycle Theory; OLI Paradigm etc. This lecture will attempt to discuss these theories.
A Greenfield investment is defined as establishing a production or service facility starting from the ground up
The contributor Zulfiqar Hasan is a University Teacher working as an Associate Professor in Finance.