Britannica AI Icon

Quick Summary

Foreign direct investment (FDI) involves investing in an enterprise in a country different from the investor's home country, with the goal of establishing a lasting interest and control. This can take the form of building new facilities, mergers, acquisitions, or joint ventures. FDI is a key driver of economic globalization, motivated by the pursuit of new markets, efficiency, or knowledge, and is often attracted by strong economic fundamentals in the host country.1

International investing, which includes FDI, diversifies portfolios by spreading risk across different markets. It allows participation in growth opportunities outside one's home country, particularly in emerging markets. However, international investments can involve higher costs and geopolitical risks. Exchange rates, determined by supply and demand influenced by factors like interest rates and economic growth, play a crucial role in international finance.234

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

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.