Green Field Investment

AAA

DEFINITION of 'Green Field Investment'

A form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. In addition to building new facilities, most parent companies also create new long-term jobs in the foreign country by hiring new employees.

This is opposite to a brown field investment.

INVESTOPEDIA EXPLAINS 'Green Field Investment'

Green field investments occur when multinational corporations enter into developing countries to build new factories and/or stores.

Developing countries often offer prospective companies tax-breaks, subsidies and other types of incentives to set up green field investments. Governments often see that losing corporate tax revenue is a small price to pay if jobs are created and knowledge and technology is gained to boost the country's human capital.

RELATED TERMS
  1. Outward Direct Investment - ODI

    A business strategy where a domestic firm expands its operations ...
  2. Subsidy

    A benefit given by the government to groups or individuals usually ...
  3. Tangible Asset

    Assets that have a physical form. Tangible assets include both ...
  4. Brown Field Investment

    When a company or government entity purchases or leases existing ...
  5. Human Capital

    A measure of the economic value of an employee's skill set. This ...
  6. Foreign Direct Investment - FDI

    An investment made by a company or entity based in one country, ...
Related Articles
  1. Fundamental Analysis

    Mergers And Acquisitions: Understanding Takeovers

    In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game.
  2. Bonds & Fixed Income

    Cashing In On Corporate Restructuring

    Companies use M&As and spinoffs to boost profits - learn how you can do the same.
  3. Investing

    What happens to the stock prices of two companies involved in an acquisition?

    When a firm acquires another entity, there usually is a predictable short-term effect on the stock price of both companies. In general, the acquiring company's stock will fall while the target ...
  4. Forex

    How do businesses decide whether to do FDI via green field investments or acquisitions?

    When businesses decide to expand their operations to another country, one of the more important dilemmas they can face is whether it is most beneficial to have the business take matters into ...
  5. Options & Futures

    The Basics Of Mergers And Acquisitions

    Learn what corporate restructuring is, why companies do it and why it sometimes doesn't work.
  6. Economics

    What Is Happening To The BRIC Economies?

    Ten years ago, it was about the BRIC countries –Brazil, Russia, India, and China, and it was thought that capitalizing their resources would elevate them.
  7. Trading Strategies

    General Electric: Good News/Bad News

    General Electric is generous to its shareholders, but that's not the only factor to consider.
  8. Markets

    Why Are Investors Turning Down The Volume?

    Many U.S. investors are choosing to turn down the volume over the holidays, perhaps saving their song for when volatility improves.
  9. Economics

    Evaluate Your Investment Portfolio For 2015

    The beginning of a year is a good time to evaluate your investment portfolio and think about how to position it going forward.
  10. Economics

    Gary Gordon Positions Your Portfolio For 2015

    Seeking Alpha, the popular financial web portal, interviews Gary Gordon for its Positioning for 2015 series. Here is a transcript of that exchange.

You May Also Like

Hot Definitions
  1. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  2. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  3. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  4. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  5. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  6. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
Trading Center