Economics · International Macroeconomics - FDI vs FPI
Which statement best captures the conceptual difference between Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both investment categories structurally award equal voting rights to the external entities in the domestic corporate enterprise.
- 2FDI is meticulously recorded in the current account ledger; FPI is recorded inside the capital account ledger.
- 3FDI involves only equity financing instruments; FPI involves both equity options and complex debt securities.
- 4FDI is investment with a lasting interest and significant managerial control; FPI is passive asset investment without active management control.✓
Correct answer
FDI is investment with a lasting interest and significant managerial control; FPI is passive asset investment without active management control.
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