Rajeev Gandhi College Research Journal Research Scapes, Bhopal, Research Scapes An International Multidisciplinary Journal, Bhopal

Direct foreign investment (FDI) is a flow of entrepreneurial capital, in the form of some mixture of managerial skills and financial lending. Its more specific balance-of-payments accounting definition is any flow of lending to, or purchase of ownership in, a foreign enterprise that is largely owned by residents of the investing, or "source" country. The returns earned by the direct investors are accordingly a mixture of interest, dividends, license fees, and managerial fees. Some FDI consists of investments in foreign branches by a parent firm clearly based in one source country. In other cases, the investing firm is a true multinational, with no clear home country.