Topics / Economy
Foreign Investment
Asked 1 times in UPSC Prelims · first asked 2011 · last asked 2011
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Both Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. Which one of the following statements best represents an important difference between the two?
2011Economy
Both Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. Which one of the following statements best represents an important difference between the two?
2011Economy
AFII helps bring better management skills and technology, while FDI only brings in capital
BFII helps in increasing capital availability in general, while FDI only targets specific sectors
CFDI flows only into the secondary market while FII targets primary market
DFII is considered to be more stable than FDI
Explanation
When comparing Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII), an important distinction is that FII focuses on increasing capital availability overall, while FDI is directed towards specific sectors. FII investment is channeled into the secondary market, whereas FDI is invested directly in a particular enterprise.