Foreign Direct Investment (FDI) refers to the investment made by a company or an individual in a country into a business interest in another country. It is an ownership share in a foreign company made by an investor from another country. This is a term to describe a decision in business to obtain a considerable share in a foreign business or buy it instantly to expand business operations to a new region. FDI is a vital element in international economic integration as it creates steady and long-term connections between economies.

Companies considering FDI normally observe target firms or projects in open economies providing a skilled team with greater growth prospects for the investors. FDI is often beyond just a capital investment. It could include a prison of management, technology, and equipment.

Launching an FDI establishing a controlling interest based on guidelines by the Organization for Economic Co-operation & Development (OECD), is at least 10% ownership share in a foreign company. There are certain instances where effective controlling interest in a firm is established with less than 10% of the company’s shares.