Final answer:
Foreign direct investment (FDI) involves purchasing a firm in another country or starting a new enterprise abroad, enabling companies to expand internationally and access new markets.
Explanation:
Foreign direct investment (FDI) is the financial activity that helps a company based in another country. FDI involves purchasing a firm (at least ten percent) in another country or starting up a new enterprise in a foreign country. For example, when the Belgian beer-brewing company InBev bought the U.S. beer-maker Anheuser-Busch in 2008, it was a significant FDI transaction.
FDI requires exchanging currency and plays a vital role in the global economy. It enables companies to expand their operations internationally and gain access to new markets, resources, and opportunities. FDI is a long-term investment strategy that involves managerial responsibility and planning, distinguishing it from other financial activities.
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