Full Form of FDI | What is the meaning of FDI

Hello Everyone, In this article we will discuss about full form of FDI, Benefits of FDI, Pros and cons of FDI and other.

The full form of FDI is Foreign Direct Investment. It is a process whereby residents of one Country acquire ownership of assets for the purpose of controlling the production, distribution and other activities of a firm in another country.

Full FORM of FDI: Foreign Direct Investment

FDI can also be defined as the direct investment of the company or individual in another country firm. FDI play a very significant role for a particular Country.

Suppose, if India ban FDI, then what will happen no foreign country will come here and invest, the result of that action will lead to the slow development of economy, we can’t gain new skills and technology that can result in improved efficiency.

There are several pros and cons of FDI. FDI also create competition for domestic firm by using the latest technology and machines.

Definition of FDI

IMF’s Balance of Payment manual defines FDI as an investment that is made to acquire a lasting interest in an enterprise operating in an economy other than that of an investor, the investor’s purpose being to have a voice in the management of the enterprise.

The United Nations(1999)World Investment Report(UNCTAD) defines FDI as an investment having involving long term relationship and reflecting a lasting interest and control of resident entity in one economy in an enterprise resident in an economy other than that of the foreign direct investor.

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Forms Of FDI

There are mainly three forms of FDI which are as follows:

  • Green Field Investment
  • Merger and Acquisition
  • Brown Field Investment.

Types Of FDI

The types of  foreign direct investment which are as follows:

  • Horizontal FDI
  • Platform FDI
  • Vertical FDI

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Theories of FDI 

There are various types of theories of FDI which are as follows:

  • Mac Dougall-Kemp Hypothesis
  • Industrial Organization Theory
  • Currency Based Approaches
  • Location –Specific Theory.
  • Product Cycle Theory
  • Political –Economic Theories

Benefits of FDI

  • It helps in the development and improvement in economic growth.
  • It helps to create employment opportunities.
  • It also helps to gain new skills and technology.
  • It helps in exchange and to bring foreign capital in the country.
  • It leads to an increase in tax revenue and exports.
  • It also helps in optimum utilization of resources.

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Final Words

FDI full form is Foreign Direct Investment. It is an investment in another company firms.As we know there are various pros and cons of every policies and plans, So FDI also have limitations and benefits. But at the last excess of everything is harmful and have a negative impact.

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