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27 Jul 2022

Foreign Direct Investment (FDI)

Foreign Direct Investment (FDI)

Foreign Direct Investment (FDI) has long since been around as an effective means of increasing global reach and gaining control and influence in foreign regions. UK investors are looking more at how they can profit from successful foreign businesses while also helping them to grow. In a mutually beneficial partnership, FDI has its place in the global expansion of business pursuits.


To begin, quite simply, an FDI is an investment into a foreign business which builds a lasting interest. This is where the investor gains at least 10% of the voting power of the company invested in. The investor receives such benefits as global expansion, additional power and influence, and a share of the profits made. Moving into international territory gives the investor a chance to make their mark overseas and establish themselves as a global business leader.


An outward investment refers to the position of the investment that a domestic investor makes in a foreign country. If the investor is from the UK, it signifies the influence that the UK might have on foreign markets or businesses. In fact, in 2019, the total cost of investment made from the UK into companies abroad was £1.50 trillion, which marked an increase from £1.45 trillion the previous year. This demonstrates the popularity of FDI outward investment from the UK.


Significantly, there are a lot of benefits with FDI to the investor, the business, and the hosting country itself which explains its popularity. This makes FDI especially lucrative for both parties. The business stands to gain lowered labour costs, tax incentives, possible subsidies, and the opportunity to diversify its market. The country that the business is situated in also profits from economic growth, more employment opportunities, and access to further expertise, management, and technology. Developing countries can finance new infrastructure to ensure the continued growth of their business economy. 


Some examples of where there are investment opportunities are with organisations like Botswana Investment & Trade Centre, Consorcio de la Zona Especial Canaria, Invest Cayman Islands, Investment and Business Development Agency (Czech Invest), and Nord France Invest. Through these organisations, you can see statistics about the country’s economy and why you might consider investing in a business there. It will provide you with the information you need to make an informed decision on your investment.


Overall, FDI promises to be a lucrative business decision for both investors and the business that receives the investment. Expanding your control and influence further, as a UK investor, will only broaden your networking opportunities and mark you as a player in the game of international business pursuits.

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