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Foreign Direct Investment

The acquisition by an investor in one country of an asset in another country With the intent to manage that asset. In most cases, both the investor and the asset that is under management are companies. As such, the investor is known as the 'parent company' while the asset is referred to as the 'affiliate' or 'subsidiary.'

Additional Comments:

The three main categories of FDI are equity capital (the value of shares or voting power in a foreign company, usually 10% or more to be considered a controlling interest), reinvested earnings (the parent company's share of the affiliate's earnings which are reinvested in the affiliate rather than distributed as a dividend or remitted to the parent), and other capital (short- or long-term loans between the parent company and the affiliate).

Because an  international standard for calculating foreign direct investment is not yet available, the comparability of FDI data from different countries is limited.

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