FDI
This week’s word of the day is “FDI”. Well, actually it’s not one word, but three. Today you get a three for one deal!
FDI stands for foreign direct investment. It simply refers to when a company invests money in another country by buying a company there or by creating its own. So for example, if an American company builds a factory in Canada, that is FDI. Foreigners are directly investing in the Canadian economy. Indirect investment normally involves financial institutions buying smaller amounts of shares or bonds in another country.
FDI is one of the major indicators of a country’s economic health and its potential for growth. A great definition (and the only useful one I found) is located here. It was made by The Economist, a first-rate magazine dealing with world economics and politics.
FDI is often spoken of in the news, especially with regard to developing countries. The USA is the largest recipient of FDI each year, followed by China. Some people say that governments and economists over-emphasize FDI numbers. What do you think?
