What is foreign direct investment? What social factors in the external environment might affect FDI?

What is foreign direct investment? What social factors in the external environment might affect FDI?




Answer: In foreign direct investment (FDI), sometimes referred to simply as direct investment, the investor takes a controlling interest in a foreign company. Control need not be a 100 percent or even a 50 percent interest; if a foreign investor holds a minority stake and the remaining ownership is widely dispersed, no other owner may effectively counter the investor's decisions. A nation's political policies of course affect how international business is conducted within its borders. In particular, political disputes can disrupt the flow of international business. Domestic law, which includes both home- and host-country regulations on issues such as taxation and employment, affects how a company can operate internationally. International law—the legal agreements between countries—also obviously affects FDI.


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