Foreign Direct Investment Vs Foreign Portfolio Investment  

FDI, also known as Foreign Direct Investment, is playing a role in enhancing global business. In fact, companies that have diversified their business globally have maximized their profits and also spread out their losses.

If their business is not doing well in United States, it could have been flourishing in some other country.Also, through foreign direct investments the firm explores new markets, channels, save on production facilities, access the new technology and also explore newer ways of conducting business. In addition, the company which is receiving the foreign direct investment can benefit by investing in their own economy. Foreign direct investment policies bring several advantages for a business and also the host for the business. The United States and India have had a beneficial symbiotic business relationship due to foreign direct investment.

A foreign portfolio investment is completely different from an FDI. In the case of an FDI, a company based in the United States will come to a new country and operate through an LLC company. They still operate under the same brand name and spread their brand across the new country. When a company in the United States invests in a portfolio, they are just playing a financial role in the new company. They may choose a company in a sector that is performing well. By investing, they can make profits and have a portion of it. Companies may do it to maximize their financial risks. They can do it as an investment gimmick. Also, companies in developing countries look for investors so that they can build their infrastructure.

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Foreign Direct Investment Vs Foreign Portfolio Investment




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