Direct investment - investments ( investments ) of funds in material production and marketing with the aim of participating in the management of the enterprise or company in which the money is invested and earning income from participation in their activities (direct investments ensure the possession of a controlling stake ).
In accordance with the accepted international classification of foreign investments, direct investments include investments , as a result of which the investor receives a share in the authorized capital of the enterprise of at least 10% [1] . The acquisition of a share in the capital of an enterprise of at least this value makes it possible to directly participate in the management of the enterprise, in particular, to have a representative on the board of directors . Direct investment allows you to directly influence the invested business. In the modern world, there is a tendency to increase the volume of direct investments and reduce portfolio ones .
Direct investments are usually carried out through Private Equity funds (private equity funds) - specialized companies that have the obligation of their “subscribers” to transfer pre-agreed amounts of money in case the fund approves certain transactions. The interest of the subscriber is to make a profit after the fund closes 3-5 years after the creation of all invested companies through the sale of to strategic investors or other funds [2] .
Types of direct investment
Foreign direct investment is divided into outgoing, that is, direct investment made by the entities of a given country abroad, and incoming, that is, direct investment made by foreign investors in this country. The ratio of incoming and outgoing investments shows the country's international investment position . For example, data from the USA show that this country is a net exporter of direct investments, that is, the volume of investments made by American companies abroad exceeds the amount of investments of foreign companies in the USA.
| Period | Outbound Foreign Direct Investment | Inbound foreign direct investment | Balance |
|---|---|---|---|
| 1960-69 | $ 42.18 billion | $ 5.13 billion | + $ 37.04 billion |
| 1970-79 | $ 122.72 billion | $ 40.79 billion | + $ 81.93 billion |
| 1980-89 | $ 206.27 billion | $ 329.23 billion | - $ 122.96 billion |
| 1990-99 | $ 950.47 billion | $ 907.34 billion | + $ 43.13 billion |
| 2000-07 | $ 1,629.05 billion | $ 1,421.31 billion | + $ 207.74 billion |
| Total | $ 2,950.69 billion | $ 2,703.81 billion | + $ 246.88 billion |
Note
See also
- Investments
- Investment Memorandum
- Portfolio investment
- Direct foreign investments