An important part of the international capital movement is in a different form known as foreign direct investment. This term refers to international capital flows in which a company of a country creates or extends its representation in another country. Foreign direct investment is a direct investment in production or business in a country by a company from another country, by purchasing a company in a given country or by extending the operations of a permanent business in that country. Foreign direct investment has many forms. Widely viewed FDI include acquisitions and acquisitions, building new facilities, reinvestment of profits earned in external operations and internal corporate loans. The investment is direct because the investor, company or group of investors requires control, management or significant influence over a foreign company. FDI is the largest source of external financing, and accordingly, it appears that countries with limited capital typically have an influx of finance from rich countries. According to the World Bank, FDI and the development of small business types are two crucial elements necessary for developing the private sector in underdeveloped countries, as well as reducing the economic gap.
Export Diversification in Sub-Saharan Africa: What are the Explanatory Factors in Country Groups?
