Chaptr 1 An Overview On International Investment.docVIP

Chapter 1 An Overview On International Investment Section 1: The conception and the types of International Investment The conception Simply stated, investment is a vehicle into which funds can be placed with the expectation that they will be preserved or will increase in value or will generate positive returns. The term investment can cover a wide range of activities. Idle cash is not an investment, since its value is likely to be eroded by inflation and it fails to provide any type of return. The same cash placed in a bank savings account would be considered as an investment, since the account provides a positive return. The various types of investments can be differentiated on the basis of a few factors, such as option; short or long term; domestic or international. International Investment refers to any economic behaviors through which investors such as TNCs, transnational financial institutions, official and semi-official institutions and individuals invest their assets in countries other than their own with the expectation of positive return. Although international investments cover almost the same varieties of domestic investments, they are extensively regarded more complicated and difficult than domestic ones due to its internationalization. International investment can be divided into many types according to different standards. For example, we have long-run investments and short-run investments according to the period an investment payback covers. Official investments and private investments based on investors themselves; according to whether investors own control right in the management of a firm or not, it usually falls into two types; foreign direct investment （FDI）and international indirect investment ( also Foreign Portfolio Equity Investment, abbreviated as FPEI)，FDI and FPEI are the most cited types in both the practice and theoretical study of international investment. FDI and FPEI According to the IMF and OECD definitions, FDI reflects the aim o