What term refers to cross-border investment undertaken to acquire a lasting interest in a foreign enterprise?

What term refers to cross-border investment undertaken to acquire a lasting interest in a foreign enterprise?

• A. Portfolio Investment
• B. Remittances
• C. Foreign Direct Investment
• D. Local Investment

Answer: (C)

This question tests Foreign Direct Investment, which is cross-border investment undertaken to acquire a lasting interest in a foreign enterprise. A lasting interest means taking a meaningful ownership stake and influence in the foreign firm, typically through substantial voting shares, a subsidiary, or establishing a new operation abroad. This distinguishes it from portfolio investment, which involves buying financial assets to earn returns without control; remittances, which are money transfers to a home country; and local investment, which occurs within the same country. So, when a firm invests across borders with the aim of lasting influence and involvement in the foreign business, it exemplifies Foreign Direct Investment.

This question tests Foreign Direct Investment, which is cross-border investment undertaken to acquire a lasting interest in a foreign enterprise. A lasting interest means taking a meaningful ownership stake and influence in the foreign firm, typically through substantial voting shares, a subsidiary, or establishing a new operation abroad. This distinguishes it from portfolio investment, which involves buying financial assets to earn returns without control; remittances, which are money transfers to a home country; and local investment, which occurs within the same country. So, when a firm invests across borders with the aim of lasting influence and involvement in the foreign business, it exemplifies Foreign Direct Investment.