What is foreign direct investment (FDI)?

Foreign direct investment (FDI) refers specifically to the investment made by a company or individual in one country into business interests in another country. This typically involves acquiring a lasting interest, such as establishing business operations or acquiring assets in the foreign country, which allows the investor to have significant influence or control over the foreign business entity. FDI is a critical factor in globalization and economic development as it often results in capital inflows, technology transfer, and job creation in the host country.

The other choices do not accurately define FDI. For instance, investment that only involves purchasing foreign stocks is more aligned with portfolio investment, which does not establish a lasting interest or presence in the foreign economy. Furthermore, investment that excludes real estate and manufacturing fails to capture the broad range of sectors where FDI can occur, as it can encompass various industries including services and technology. Lastly, a government-controlled investment in foreign markets misrepresents FDI as it can occur through private enterprises and is not restricted to government actions. Such nuances highlight why the definition provided in option A is the most accurate and comprehensive understanding of foreign direct investment.