Outward Direct Investment - ODI

What is an 'Outward Direct Investment - ODI'

An outward direct investment (ODI) is a business strategy where a domestic firm expands its operations to a foreign country either via a Green field investment, merger/acquisition and/or expansion of an existing foreign facility. Employing outward direct investment is a natural progression for firms as better business opportunities will be available in foreign countries when domestic markets become too saturated.

BREAKING DOWN 'Outward Direct Investment - ODI'

The increase of a nation's outward direct investment can be seen as a proxy that the nation's economy is booming to the extent that sufficient risk capital is available for further ventures. For example, in the 1990s foreign firms entered China and gave a large influx of foreign capital into the Chinese economy. As a result of subsequent economic activity in the years to come, China's economy flourished to the point where Chinese companies now engaged in large scale outward direct investments. In fact, in 2005 Chinese companies spent over $6.9 billion in ODI.

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RELATED FAQS
  1. 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 ... Read Answer >>
  2. I live in the U.S. How can I trade stocks in China and India?

    Foreign markets have always been an object of envy to domestic investors because the indexes in some foreign countries have ... Read Answer >>
  3. What does it mean when a country has little activity in its capital account?

    Know what a country's capital account represents and understand what the implications are if a country has little activity ... Read Answer >>
  4. What nations are actively recruiting FDI (foreign direct investments)?

    Understand the concept of foreign direct investments, and learn which countries most enthusiastically pursue investments ... Read Answer >>
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