chapter  1
13 Pages

Stylised facts on foreign direct investment inflow to China and its spillovers

Stylised facts on FDI in China Foreign direct investment (FDI) is the movement of capital across borders in a manner that grants the investors control over the acquired assets. FDI is different from portfolio investment in that the latter does not offer such control. There are two forms of FDI – greenfield investment which initiates direct investment in new assets; and mergers and acquisitions in which a foreign firm acquires part (or all) of the assets of an existing host firm. Firms that conduct FDI activities are called multinationals enterprises (MNEs) or transnational corporations (TNCs). FDI plays an increasingly significant role in the global economy.