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Foreign Direct Investment

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Foreign direct investment (FDI) is the cross-border holding of assets that represent a controlling ownership of shares in a foreign business entity. Multinational firms are the most common conduits for FDI, both into and out of the U.S. Like exporting, FDI enables multinationals to expand in global markets; unlike exporting, however, FDI may help them avoid trade barriers, reduce exchange risk, secure low-cost inputs, or tailor products more closely to local markets.

Suggested citation: "Foreign Direct Investment," Federal Reserve Bank of Cleveland, Economic Trends, no. 99-11, pp. 18, 11.01.1999.

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