direct investment

economics

Written by

The Information Architects of Encyclopaedia Britannica

Last updated

June 25, 2026

Quick Summary

Direct investment involves investing capital in physical assets or taking ownership of an entire enterprise. This is distinct from portfolio investment, which focuses on purchasing securities.12

Foreign direct investment (FDI) specifically refers to investments made in an enterprise located in a country different from the investor's home country. The key characteristic of FDI is the establishment of a long-term relationship, aiming for lasting interest and control over the economic entity, often with an influence on management. Common forms of FDI include developing new production facilities (greenfield investments), mergers and acquisitions, and joint ventures. FDI is a significant indicator and driver of economic globalization, motivated by the pursuit of markets, efficiency, or knowledge, and is often attracted by strong economic fundamentals in the host country.3

Summary created from Britannica articles using AI. AI can make mistakes, so verify using Britannica articles.

3 Britannica Sources

Ask Britannica AI about this topic

Britannica doesn't have a full article on this topic, so we've curated a list of our relevant coverage.

international payment and exchange
Long-term flows
Long-term capital movement divides into direct investments (in plant and equipment) and portfolio investments (in securities). In the 19th century direct investment in plant and equipment was preponderant. The United Kingdom was by far the most important contributor to direct investment overseas. In the early part of the century it…
Read More
Long-term capital movement divides into direct investments (in plant and equipment) and portfolio investments (in securities). In the 19th century direct investment in plant and equipment was preponderant. The United Kingdom was by far the most important contributor to direct investment overseas. In the early part of the century it…
Read More