Foreign direct investment fdi is capital provided by a foreign direct investor, either directly or through other related enterprises, where the foreign investor is directly involved in the management of the enterprise. Development of a new business or acquisition of at least 10% interest in a domestic company or a tangible assets, purchase of bond amp stock. Foreign direct investment is the transfer by a multinational firm of capital, managerial, and technical assets from its home country to a host country.

Fdi has three components: equity capital, reinvested earnings and intra company loans. Fdi flows are recorded on a net basis capital account credits less debits between direct investors and their foreign affiliates in a particular year. Outflows of fdi in the reporting economy comprise capital provided either directly or through other related enterprises by a company resident in the economy foreign direct investor to an enterprise resident in another country fdi enterprise. Inflows of fdi in the reporting economy comprise capital provided either directly or through other related enterprises by a foreign direct investor to an enterprise resident in the economy called fdi enterprise. Foreign direct investment fdi includes significant investments by foreign companies, such as construction of production facilities or ownership stakes taken in u.s. Fdi not only creates new jobs, it can also lead to an infusion of innovative technologies, management strategies, and workforce practices.

'the ultimate flow of foreign involvement is direct ownership of foreign based assembly or manufacturing facilities. The foreign company can buy part or full interest in a local company or build its own facilities. If the foreign market appears large enough, foreign promotion facilities offer distinct advantages. First, the firm secures cost economies in the form of cheaper labor or raw material, foreign government incentives, and freight savings. Second, the firm strengthens its image in the host country because it creates jobs.

Third, the firm develops the recent relationship with the government, customers, local suppliers, and distributors, enabling it to adapt its product better to the local environment. Forth, the firm retains full retain over its investment and therefore can develop manufacturing and marketing policies that serve its long term international objectives. Fifth, the firm assures itself access to the market in case the host country starts insisting that locally purchased goods have domestic content.

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A country that maintains significant operation in multiple countries but manages them from the base in the home country.the mnc's are playing an important role in economic development of developing countries. Of the developing countries is able to fill up the reserves gap by taxing the profits of mnc's. Fourthly, mnc's fill the gaps in management entrepreneurship, technology and skills in the developing countries.

A country that maintains the significant operation in more than one country but decentralize management to the local country. An approach to going global that involves partnerships between an organization and a foreign company in which both share knowledge amp resources in developing new products or building production facilities. T is an agreement typically between a large company with established products amp channel of distribution and an emerging technology company with a promising research and development program in areas of interest to the larger company. In exchange for its financial support, the larger established company obtains a stake in the technology being developed by the emerging company. Today, strategic alliance is common place in the biotechnology, information technology amp the software industries an approach going global that is a specific type of strategic alliance in which the partners agree to form an independent organization for some business purpose. A contractual joint venture between firms is usually for a specific project, such as manufacturing a component or other product for a fixed period of time. In equity joint venture is when firms hold an equity stake in the setting up of a joint subsidiary, again to produce a good or a service, for example toyota and general motors formed the subsidiary nummi to manufacture cars in the united states.