An ownership stake in a foreign company or project is known as a foreign direct investment (FDI) and is made by a foreign investor, business, or government. Typically, the word refers to a corporate decision to buy a significant portion of a foreign company or to buy it entirely in order to expand operations to a different territory. The term is generally not used to refer to a stock purchase in a single overseas firm. FDI is a crucial component of global economic integration since it forges strong, long-lasting ties between nations' economy.

Target businesses or projects in open economies that have an educated manpower and above-average development potential for the investor are generally taken into consideration by businesses or governments seeking a foreign direct investment (FDI). The value of minimal government regulation is also common. FDI usually requires more than just capital expenses. It might also entail the provision of management, technology, and tools. The fact that foreign direct investment develops effective control over the foreign company, or at the absolute least significant influence over its decision-making, is one of its key characteristics. Foreign direct investments may include mergers, acquisitions, or joint ventures in the manufacturing, retail, service, and logistics industries.

The FDI-motive-based method is currently used in a number of the research described in the working paper, but its systematic use would make it possible to structure reform initiatives around certain investor traits. Future studies should also keep improving the methodology to take into consideration the particulars of the industries and the activities carried out by different participants in the global value chains.