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Some Key Terms

Changes!

Wikipedia

Foreign Aid (International Aid, Overseas Aid, Economic Aid, Foreign Assistance)
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Foreign Aid can involve a transfer of financial resources or commodities (e.g., food or
military equipment) or technical advice and training. The resources can take the form of

grants or concessional credits (e.g., export credits). The most common type of Foreign
Aid is official development assistance (ODA), which is assistance given to promote

development and to combat poverty. The primary source of ODA--which for some
countries represents only a small portion of their assistance--is bilateral grants from one
country to another, though some of the aid is in the form of loans, and sometimes the aid

is channeled through international organizations and non-governmental organizations
(NGOs). For example, the International Monetary Fund (IMF), the World Bank, and the

United Nations Children's Fund (UNICEF) have provided significant amounts of aid to
countries and to NGOs involved in assistance activities.

"Foreign Aid."
Encyclopedia Britannica

Foreign Direct Investment (FDI) 35
Foreign direct investment (FDI) is an investment from a party in one country into a

business or corporation in another country with the intention of establishing a lasting
interest. Lasting interest differentiates FDI from foreign portfolio investments, where

investors passively hold securities from a foreign country. A foreign direct investment
can be made by obtaining a lasting interest or by expanding one's business into a foreign
country.

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An investment into a foreign firm is considered an FDI if it establishes a lasting interest.
A lasting interest is established when an investor obtains at least 10% of the voting

power in a firm.

The key to foreign direct investment is the element of control. Control represents the
intent to actively manage and influence a foreign firm's operations. This is the major

differentiating factor between FDI and a passive foreign portfolio investment.

***
Types and Examples of Foreign Direct Investment

Typically, there are two main types of FDI: horizontal and vertical FDI.