FDI full form Foreign Direct Investment. FDI in simple word, when a company A based on USA invest in company B based on other nation like India is called FDI. Open market is necessary for FDI investment, In a close market FDI is not an easy task.
Like in India before 1991 Indian market is closed therefore India’s growth is low, but after 1991 the Indian market is open for other county and any buddy invests in India company or purchases stock in the Company.
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FDI is four type
When a company invest in other company in a other nation but produce the same type of product is called Horizontal FDI.
For example Company A based on USA produce sports product and invest in Germany Company B which also produce sports product. Both the company has the same industry but the different nation.
Vertical FDI is the opposite of Horizontal FDI. In Vertical FDI investment is made within the supply chain, it is not necessarily the company has same industry.
When company A invests in the company B which are entirely different company. For example mobile producer company invests in Sports Company.
Platform FDI held on where Company A invests in other county but sell or export their product on third company.
Pro and Corn of FDI
- Benefits of the global economy.
- Increase wage
- Improve health lifestyle style
- Decrease poverty.