Which of the following is an example of foreign direct investment?

A) A software development company in the United States investing in shares of an American computer manufacturing firm
B) A U.S.investor buying stocks of a German automobile manufacturing company
C) A Canadian firm purchasing a majority stake in a Japanese company
D) A U.S.cell phone manufacturer hiring an Indian firm to provide customer support services and troubleshooting
E) A Chinese steel manufacturing firm exporting 60 percent of its output to European nations

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Khrysta Ameelyenah · Accepted Answer

Final Answer : C, Explanation :  Foreign direct investment (FDI) occurs when a company or individual from one country makes an investment into a business within another country with the intention of establishing a lasting interest. This often involves purchasing a company, expanding operations of an existing business, or investing in new facilities in the foreign country. Option C, where a Canadian firm purchases a majority stake in a Japanese company, is a direct example of FDI because it involves acquiring a controlling interest in a business in another country, thereby establishing a lasting interest and influence in that company's operations.

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