What type of investment does FDI represent?

Foreign Direct Investment (FDI) is characterized by the investment in the business activities of another country. This typically involves a firm or individual from one country making an investment in a foreign country with the intention to establish a lasting interest or significant influence in the foreign business operations. This can include taking a controlling interest in a foreign company, establishing new operations, or expanding existing foreign businesses.

FDI is distinct from other types of investments, such as domestic investments (the same country), investments solely in stocks (which may or may not involve direct business control), or local real estate investments that are confined to a specific geographic area. The essence of FDI lies in its cross-border nature and the intent to engage in productive economic activities in a foreign market, making this option the most accurate representation of what FDI entails.