FOREIGN DIRECT AND PORTFOLIO INVESTMENT, DIFFERENCES & SIMILARITIES
I. Foreign Direct Investment (FDI)
According to Jones and Wren in Foreign Direct Investment and the Regional Economy (2012):
The standard definition of foreign direct investment is given by the Organization for Economic Cooperation and Development (OECD, 1996). A key aspect of this is that it represents the notion of one enterprise in a particular country having a degree of control over another enterprise in a different country, as opposed to just the provision of financial capital. It is classed as, “investment that adds to, deducts from or acquires a lasting interest in an enterprise operating in an economy” arising from outside the country in order to “have an effective voice in the management of the enterprise” (OECD, 1996, p. 7). In the event that a foreign investor does not have an effective voice in the management of the company, then the investment is classified as „portfolio investment‟ (emphasis added).