Final answer:
Foreign direct investment is a financial commitment in a foreign company, typically more than 10%, involving managerial responsibility and long-term engagement, exemplified by InBev's purchase of Anheuser-Busch.
Step-by-step explanation:
Foreign direct investment can be in the form of a new operation which occurs when a firm establishes a new enterprise in a foreign market. A common example of this is when a company from one country acquires a significant stake, usually more than 10%, in a company from another country or starts a new business there, taking on a measure of managerial responsibility. For instance, the 2008 acquisition of the U.S. company Anheuser-Busch by the Belgian beer-brewing firm InBev illustrates foreign direct investment. InBev had to provide euros to the foreign exchange market and demand U.S. dollars to complete the purchase. Unlike portfolio investments that often have a short-term focus and can be easily liquidated, foreign direct investments are associated with a long-term view and are not as easily withdrawn.
Foreign direct investment can be in the form of a new operation in a foreign market.
Foreign direct investment (FDI) refers to the purchase of a firm (at least ten percent) in another country or starting up a new enterprise in a foreign country. For example, in 2008, the Belgian beer-brewing company InBev bought the U.S. beer-maker Anheuser-Busch for $52 billion. This acquisition of a U.S. firm by a foreign company represents foreign direct investment in the form of establishing a new operation in a foreign market.