Download - FDCL
Download - FDCL
Download - FDCL
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
32<br />
2.1 Foreign direct investment:<br />
An opportunity for development and human rights?<br />
Foreign investment by definition can be split up into portfolio-investment and<br />
direct investment. Foreign portfolio-investment is defined as capital investment like<br />
bonds, stocks, investment-fund shares, etc., made from abroad, such that due to its<br />
minority share (less than 10% of the total value) it has no substantial influence on the<br />
management or the company as a whole. Foreign Direct Investment (FDI) is defined<br />
by the United Nations Conference on Trade and Development (UNCTAD) as:<br />
“[...] an investment involving a long-term relationship and reflecting a lasting<br />
interest and control by a resident entity in one economy (foreign direct investor<br />
or parent enterprise) in an enterprise resident in an economy other than that<br />
of the foreign direct investor (FDI enterprise or affiliate enterprise or foreign affiliate).<br />
FDI implies that the investor exerts a significant degree of influence on<br />
the management of the enterprise resident in the other economy. [...] FDI may<br />
be undertaken by individuals as well as business entities.” 57<br />
Foreign Direct Investment Flows, 58 are defined by the UNCTAD as:<br />
“Flows of FDI comprises capital provided (either directly or through other related<br />
enterprises) by a foreign direct investor to an FDI enterprise, or capital<br />
received from an FDI enterprise by a foreign direct investor. FDI has three components:<br />
equity capital, reinvested earnings and intra-company loans.” 59<br />
Foreign Direct Investment Stock 60 is defined as:<br />
“FDI stock is the value of the share of their capital and reserves (including retained<br />
profits) attributable to the parent enterprise, plus the net indebtedness<br />
of affiliates to the parent enterprise.” 61<br />
Furthermore, a distinction can be made between a so-called Greenfield-Investment,<br />
i.e., the realization of a new investment, and the area of Mergers and Acquisitions<br />
(M&A), which refers to take-overs of already existing investments. According to<br />
KPMG Corporate Finance, the value of global company transactions fell by almost<br />
57 United Nations Conference on Trade and Development (UNCTAD): World Investment Report 2003 - FDI Policies for<br />
Development: National and International Prespectives, New York/Geneva 2003, p. 231.<br />
58 Abbreviation: FDI-Flows.<br />
59 United Nations Conference on Trade and Development (UNCTAD): World Investment Report 2003 - FDI Policies for<br />
Development: National and International Prespectives, New York/Geneva 2003, p. 231.<br />
60 Abbreviation: FDI-Stock.<br />
61 United Nations Conference on Trade and Development (UNCTAD): World Investment Report 2003 - FDI Policies for<br />
Development: National and International Prespectives, New York/Geneva 2003, p. 232.