Foreign Direct Investment (FDI) happens when a business from one country invests in another country to build or own a new business. This creates a long-term relationship and gives the investor significant control over the foreign company.

Key features of FDI:

• It is a long-term investment, not a quick, short-term trade.
• The investor usually owns at least 10% of the foreign company.
• It includes greenfield projects (building a new factory from scratch) and brownfield investments (buying an existing company).

Reasons why countries want FDI:

• It brings in money (capital) to help local economies grow.
• It helps share new technology, skills, and management methods.
• It creates new jobs for local workers.
• It helps improve infrastructure like roads, power, and communications.

FDI is different from portfolio investment. While portfolio investment is just buying stocks for profit, FDI involves active management and control of the business.