An example of direct foreign investment is
A) a U.S. bank granting a loan to a Guatemalan ﬁrm.
B) General Motors building an auto production facility in China.
C) a U.S. government foreign aid grant to Bangladesh.
D) the purchase of debt issued by the Panamanian government.

Question

Quizplus · Accepted Answer

Direct foreign investment refers to when a company from one country invests in and controls a business venture in another country, such as General Motors building an auto production facility in China. Option A is an example of a financial transaction, not direct foreign investment. Option C is a form of foreign aid, not direct foreign investment. Option D is an example of purchasing financial instruments, not direct foreign investment.

An Example of Direct Foreign Investment Is