Which of the following, if undertaken by a SA economic agent, would be classified as foreign direct investment?
A)A purchase of 100 shares in Vodacom.
B)A loan of r₁ million to a Brazilian mining company.
C)A purchase of shares in Swiss firm Nestlé.
D)The establishment of a new accountancy practice in Gaborone, Botswana.

Question

Quizplus · Accepted Answer

Foreign direct investment involves the establishment of new business operations in a foreign country. Option D, the establishment of a new accountancy practice in Gaborone, Botswana, is the only choice that fits this definition. The other options involve buying shares or making loans to foreign companies, which are not considered foreign direct investment.

Which of the Following, If Undertaken by a SA Economic