Types of Foreign Capital

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Types of Foreign Capital…

FDI (Foreign direct Investment) FPI(Foreign Portfolio

Investment) FII (Foreign Institutional

Investment) ECB(External Commercial

Borrowings) ADR/GDR( Depository Receipts)

FDI Vs FPI Long Term in nature than FPI. Control and controlling & Interest in

management in its Policies.

Why study FDI…?? Raises concerns and consequences of

Foreign Ownership. Offers the possibility of channeling

Resources to the developing countries.

Types of FDI

Horizontal FDIVertical FDIConglomerate FDI

(A) For Source Country

(B) For Host CountryImport substitutingExport increasingGovernment Initiated

Sequence to develop a Foreign Market for its products.

*Step 3 and 4 requires FDI

Forms of FDIGreenfield InvestmentCross Border Mergers and Acquisitions (M & A)

Joint Ventures

* Brownfield Investment : Investments are formally an acquisition resembling greenfield investment but the investor replaces the plant , labour and the product line of the firm.

Top Investing Countries

Log of GDP = 4.12 + 0.466 Log of FDI

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