外国直接投资通常被定义为外国所有制的一种衡量标准，它意味着一个公司在另一个国家的生产或经营的直接投资。它可以是通过购买一家某个国家受青睐的公司，或通过扩大在该国现有业务的交易或活动。由于不同的理论背景，对外国直接投资有了不同的方法。事实上，它一直很难有一个确切的定义，外国直接投资，因为每一个作者有自己的方式观看它喜欢的例子：
FDI is normally defined as a measure of foreign ownership which implies direct investment into either production or business in a country by a company in another country. It can be either by buying a company in the favoured country or by expanding transactions or activities of an existing business in that country. Various approaches have been made to FDI because of different theoretical background. Indeed, it has been difficult to have an exact definition of FDI since every author has their own way of viewing it like for example:
'It is defined as foreign investors moving their assets into another country where they have control over the management of assets and profits.' Graham & Spaulding (2005)
'It is the operation and control of income creating activities in more than one country where the firm processes not competitive advantages over firms of another nationalities and which are more profitable to internalize than to sell or lease to other enterprise.' Dunning (1973, 1979)
'FDI as a way to capture remaining profit by overseas production via the product life cycle.' Vennon (1966)
According to the International Monetary Fund: 'FDI refers to an investment made to acquire lasting or long-term interest in enterprises operating outside of the economy of the investor.' The investment is direct because the investors which could be a foreign person, company or group of entities, is seeking to control, manage or have significant influence over the foreign enterprise.
From the definitions above, FDI is quite the opposite of portfolio investment which is a passive one in the securities of another country such as stocks and bonds. There are different types of FDI namely horizontal, platform and vertical. All of them include several forms of investment activities including building new facilities, greenfield investment, mergers and acquisition, intercompany loan and also reinvest the gained profit from abroad transactions.
Research conducted by UNCTAD for the World Investment Report 2012 stated that cross-border M&As and Greenfield investments have shown diverging trends over the past three years, with M&As rising and Greenfield projects in slow decline, although the value of Greenfield investments is still significantly higher. Most investment has taken the form of mergers and acquisition of existing assets rather than investment in new assets that is Greenfield. M&As have become a popular mode of investment of companies wanting to protect, consolidate and advance their positions by acquiring other companies that will enhance their competitiveness. M&As are defined as the acquisition of more than 10% equity share, involve in transfer of ownership from domestic to foreign hands, do not create new productive facilities. Based on this definition, M&As raise particular concerns for developing countries, such as the extent to which they bring new resources to the economy, the denationalization of domestic firms, employment reduction, loss of technological assets and increased market concentration with implications for the restriction of competition. However, although, M&As are likely to result in profit for the investing firm but destruction of the domestic industry, there is a noteworthy policy mechanism which protects the domestic economy which is a competition policy.
'A competition policy is central to ensuring the effective operation of the market. The main purpose of a competition policy is to oversee the efficient allocation of resources and to ensure consumer welfare. In the absence of a competition policy, markets that are open to private business, face the danger of firms engaging in monopolistic and restrictive trade practices. The basic importance of a competition policy lies in its ability to assess the competitive impact of mergers and acquisiti
