What is Foreign Direct Investment (FDI)?

Foreign Direct Investment (FDI) is when one country’s company decides to put its money into a business in another country.

Imagine you have a lemonade stand, and your friend lives across town. Instead of just selling them lemonade, you decide to open another lemonade stand right next door to their house. That way, you can sell more lemonade, and maybe even teach them how to make it too! This is like FDI: one company (you) puts its money into a new place (your friend's neighborhood) to grow its business.

FDI happens when a company from one country starts or takes over a business in another country. They might build a factory, open a store, or buy an existing company. This helps both countries, the company gets new customers and space to grow, while the other country gets jobs and maybe better products.

FDI is like giving your lemonade stand a big boost. The more people who want your lemonade, the more you can sell, and the bigger your business can get! Countries love FDI because it helps them become stronger and richer over time.