What are the different types of foreign investment?

There are four different types of foreign investment. These are foreign direct investments (FDI), foreign investment in portfolio (FPI), official flows and commercial loans. These types of foreign investments differ especially in the one who provides a loan and how the investor with the loan receiver is involved.

FDIS occurs when the company invests in a company in another country. In order for a private foreign investment to be considered a foreign investment, a company that invests must have at least 10% of the shares belonging to a foreign company. In these international business relations, there is a company that invests, known as the parent company, while a foreign company is known as a subsidiary of the parent company. Multinational corporations, which spread between several nations, often begin FDIS. It can also be made by an individual with mutual funds. While FDI enables Thinvesting company to ownership of a subsidiary of a subsidiary of a company may be more tempi. InVestive tools such as stocks and bonds are usually traded in FPI. Shares and bonds are examples of investment that are easy to trade. A company that has shares and bonds from a foreign company does not necessarily participate in this company in which it invests.

Foreign investment known as the official flow occurs among nations a place among companies. In the case of official flow, a more developed or economically prosperous nation will invest money in a nation that is less developed. The recipient of the nation will usually receive financial support as well as higher -class technology and government and economic proceedings.

Commercial loan is a type of foreign investment, which usually occurs in the form of a bank loan. This kind of investment can appear among nations or companies that are in different countries. While a commercial loan can be provided JEssential, usually occurred among larger organizations.

commercial loans were the most common type of foreign investments up to 80, especially in cases where investments in society and government of economically developing countries went. Since then, FPI and FDI have been much more common. The term globalization is usually used to describe the phenomenon of increased use of FPI and FDIS. While commercial loans are issued by banks and supported by the government, FPI and FDIS are private investments.