ABSTRACT
This chapter focuses on the two equity-based forms of financial flows to developing countries: foreign direct investment (FDI) and portfolio equity flows. The common vehicle for FDI is the transnational corporations (TNC). FDI has grown massively as a proportion of all resource that transfers to developing countries. It represents a transfer of ownership and productive potential from domestic capital to foreign hands. The key source for getting inside FDI is the United Nations Conference on Trade and Development (UNCTAD). There are two broad types of FDI namely Mergers & acquisitions (M&A), and Greenfield. The chapter contains development impact, growth, and inequality, export processing zones (EPZs), spillovers and linkages. Portfolio equity includes a number of push and pull factors which explain the flows of portfolio equity. Portfolio equity flows emerge from one of two types of transaction: through the initial public offerings (IPOs) equity placements, which is where shares are first made publicly available, and through sales in the secondary market.
