FDI

Foreign direct investment (FDI) is probably the single most important factor contributing to the globalization of the international economy. FDI are increasingly strong economic links between developing and industrialized countries, and also among developing countries. Foreign direct investment in developing countries (LDCs) have increased nearly four-fold in the 1990s and now account for almost 40 per cent, reaching some $120 billion in 1997. Foreign direct investment is now by far the largest source of all capital flows to …

…help the country, either directly or indirectly, to earn foreign exchange, the negative effects of the outflow may be serious. A change in the exchange rate between the two countries currency may reduce the value of an investment in a security valued in the foreign currency, or based on that currency value. Of course, the currency rate change may either benefit or hurt the investor but the direction of the change is difficult to predict