Answer #1

FII and FDI are terms linked to investment, particularly in foreign countries. FDI is the direct investment made a parent organization in another country. In contrast, FII is the investment made by a certain investor in foreign markets. Both are important investment option s and their differences are discussed here below.

The FII, also called hot money, has more freedom since investors have the freedom of selling it and also taking it back. However, the same is impossible in FDI. Simply put, FII can easily enter a stock market and easily withdraw as well. Meanwhile, FDI cannot exit and enter that effortlessly. This disparity is the key point that makes the FDI more popular than the FII. FDI is used all over the world as it is regarded as the most useful investment for an entire economy.

The FDI targets specific enterprises within the foreign country. It focuses on increasing the productivity or capacity of the enterprise or simply modifies its management. In the FDI, capital is translated to extra production. However, the FII only flows to the secondary markets. It assists in enhancing capital accessibility in general instead of improving the capital within a specific area.

Generally, the FDI is much more stable compared to FII. It not only provides the capital for running the business but it assists in attaining good management practices and technology transfer. Even though the FII also helps to improve accounting and good governance, it lacks all the extra benefits associated with the FDI.

Finally, you can also differentiate these two investment options based on their overall time span. Whereas the FII is preferred for carrying out short-term ventures, the FDI is used for long term business ventures. As such, FDI has actually more profits than FII. In addition, FDI flows primarily to the main market, while FII is used in the secondary market.

Answered By: daniel [554 ]