Economics · External Sector
Which of the following best captures a core structural distinction between Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1FDI and FPI are both governed solely by SEBI and hence have no macroeconomic differences
- 2FDI implies long-term ownership and management interest in an enterprise, while FPI comprises liquid, short-term financial flows without direct control✓
- 3FPI includes direct management control of firms, while FDI is restricted to passive asset holdings
- 4FDI involves speculative investments in stock markets, while FPI creates long-term industrial infrastructure
Correct answer
FDI implies long-term ownership and management interest in an enterprise, while FPI comprises liquid, short-term financial flows without direct control
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