When firms from one country make investments in another, it is known as __________.
A) direct foreign investment (DFI)
B) direct licensing (DL)
C) foreign direct investment (FDI)
D) investment transfer authorization (ITA)

Question

Quizplus · Accepted Answer

Foreign direct investment (FDI) is the correct term used to describe a situation where a business from one country makes an investment in another country. Direct foreign investment (DFI) is a synonym for FDI, so option A could be considered partially correct, but FDI is the more commonly used term. Direct licensing (DL) is a strategy that allows a firm to grant permission to a foreign firm to use its intellectual property in exchange for royalties or other compensation, but it is not the same as making a direct investment. Investment transfer authorization (ITA) is not a term used in international business.

When Firms from One Country Make Investments in Another, It