Foreign Direct Investment
FDI. Cross-border investment in productive assets where the investor takes a controlling interest (typically 10 percent or more of voting equity), as opposed to passive portfolio holdings. FDI flows are generally considered the most stable form of capital inflow -- a foreign company building a factory or acquiring a controlling stake in a domestic firm is harder to reverse than a portfolio bond holding. Countries with current account deficits funded primarily by FDI tend to be less vulnerable to sudden-stop dynamics than countries funded primarily by short-term portfolio inflows.
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