According to Nwadikom (1985),
foreign investment is that type investment whether real or financial assets
across the national boundaries of the investors. It can be undertaken by
individual firm or government. Basically, there are two types of investment. Portfolio investment is that
investment in which the in which the investors do not have control over the
financial assets such as bound and stocks.
On the other hand, direct investment
is an investment in a control where the investors have control over their
investment. It usually takes the form of foreigners setting upon subsidiaries
or taking over existing firms in the country. Uzoma (1998) asserted that foreign
investment involves the internalization of products in order to serve markets,
which were served by exports.
Also Casson (1990), asserted that
foreign direct investment is distinguished by the fact that it involves not
only foreign ownership but also foreign control. In order words, foreign direct
investment occurs only if individual or organization in foreign country gains
sufficient interest in an operation to acquire control.
Therefore, foreign direct investment
as a concept differs from international or foreign investment, which is a wider
concept. Thus, by the way of an example individuals or an organization from
Britain, were to buy stock in any amount of long term or short term in any
amount of long term or short term in Nigeria, then, a foreign investment would
take place through any combination of the transactions but these types of
assets are non-moving assets, therefore, the transactions are non-foreign
direct investment.
According to International monetary
fund, foreign direct investment is defined as an investment that is made to
acquire long lasting interest in an enterprise operating in an economy order
than that of investors.
The
investors purposes is to have an effective voice in the management of the
enterprise that makes up the investment enterprise.