Portfolio capital flows to emerging economies tend to be larger than flows of foreign direct investment.

Question

Quizplus · Accepted Answer

Foreign direct investment (FDI) tends to be more stable and larger in volume compared to portfolio capital flows to emerging economies, as FDI involves long-term investments in businesses, infrastructure, or production in another country, whereas portfolio investments are more volatile and can quickly move in and out of countries, often reflecting short-term investment strategies.

Portfolio Capital Flows to Emerging Economies Tend to Be Larger