THEORETICAL FOUNDATIONS OF FOREIGN INVESTMENT AND ECONOMIC GROWTH
Abstract
Foreign investment has become one of the most significant factors shaping economic development trajectories in the modern global economy. The deepening integration of national economies, the expansion of international trade, and the development of global financial markets have substantially intensified cross-border capital flows, transforming foreign investment (FDI) into a central instrument for stimulating economic growth, technological progress, and international economic cooperation. According to the joint methodology of the World Bank and the International Monetary Fund, foreign investment refers to investment equity flows in the reporting economy, comprising the sum of equity capital, reinvestment of earnings, and other capital. investment is a category of cross-border investment associated with a resident in one economy having control or a significant degree of influence on the management of an enterprise resident in another economy. Ownership of 10 percent or more of the ordinary shares of voting stock is the criterion for determining the existence of a investment relationship. This threshold allows FDI to be distinguished from portfolio investment, which is typically characterized by a lower degree of management participation and greater liquidity. [1]
[1] World Bank (2024) Foreign Direct Investment — Glossary, World Development Indicators. Washington, D.C.: World Bank. Available at: https://databank.worldbank.org
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