CopperCore Inc., a U. S. business, took a 31 percent equity interest in Javier Holdings, a family business based in Spain. According to the U. S. Department of Commerce, this would be an example of:

a. Multilateral investment.
b. Foreign direct investment.
c. Reciprocal foreign investment.
d. International divestment.
e. Asset divestment.

The correct answer is b. Foreign direct investment.

Explanation:

Foreign Direct Investment (FDI) consists of the capital investment by a natural person or a legal entity (institutions and public companies, private companies, etc.) in a foreign country. In the country of destination, this capital inflow can be made through the creation of new production plants or the participation in companies already established to form a subsidiary of the investment company. According to the OECD, FDI aims to exercise long-term control over the acquired or investee company, and the criteria established to define it is that the property acquired by the parent company be at least 10% of the subsidiary.

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