foreign direct investment is a direct investment in production and business in a domestic country by an individual or a company of an another country . company making foreign direct investment in other country aims to expand its business operations in other countries and becomes multinational companies.
greenfield investment is a type of foreign direct investment in which parent company establishes its business operations in other country or foreign countries .it builds and make investments like constructing buildings ,offices and other facilities .it also aims to create long term employment in foreign country by hiring employees. all these investment helps to develop and grow underdeveloped countries so this is the reason government of developing and emerging countries try to attract such investments by offering subsidies and other incentives to bring more greenfield projects.
advantages of Greenfield investment:
- it helps to increase opportunities in production ,finance ,transportion ,marketing etc.
- helps to increase competition
- creats employment opportunities
disadvantages of Greenfield investment are :
- it will be difficult for domestic firms to deal and compete with these foreign firms .
- the entry process in foreign countries can take years to complete