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In what terms do Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) differ?

  1. A
    FDI brings capital, technology, and management, while FII only brings capital
  2. B
    FDI targets specific sectors, and FII helps in increasing the availability of foreign capital
  3. C
    FII is considered more stable than FDI
  4. D
    FII targets both primary and secondary markets while FDI only targets the primary market

Solution & Step-by-step Explanation

FDI involves long-term direct investment in production or business, bringing in physical capital, technical knowledge, and corporate management. FII, on the other hand, represents passive financial portfolio investment strictly into secondary capital markets.

Practice this question

Try it yourself before checking the explanation above.

In what terms do Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) differ?
A
FDI brings capital, technology, and management, while FII only brings capital
B
FDI targets specific sectors, and FII helps in increasing the availability of foreign capital
C
FII is considered more stable than FDI
D
FII targets both primary and secondary markets while FDI only targets the primary market

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Foreign InvestmentMacroeconomicsIndian Economy

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