Following are the types of foreign direct investment except
- ((a))
Horizontal FDI
- ((b))
Management Contract
- ((c))
Vertical FDI
- ((d))
Conglomerate FDI
Show Answer
Management Contract
The correct answer is Management contract.

Key Points Horizontal FDI, vertical FDI, and Conglomerate FDI are different types of FDI. A management contract is not part of FDI.

Important PointsForeign Direct Investment (FDI):
Foreign direct investment refers to the investment made by one nation in another nation through investment in manufacturing, business or purchasing a corporation. It is usually done through securities and shares. According to WTO, "FDI occurs when an investor based in one country acquires an asset in another country with the intent to manage the asset."
FDI increases foreign capital inflow helps in boosting the economic production of the country and is generally preferred over other kinds of investments. These investments are nondebt and nonvolatile and their gains rely on the performance of projects.
Types of FDI
Based on the entry:
- Greenfield investment: It consists of developing a completely new company in a foreign country. It leads to more capital outlay and transfer of all technical know-how and managerial skills.
- Brownfield investment: It consists of acquiring an already established business in a foreign country. These investments help In gaining a competitive edge in the international business.
Based on the type of activity:
- Horizontal FDI: It refers to the investment in the foreign business which is similar to the business that has been carried out in the home country. E.g. Coca cola and Standard chartered bank.
- Vertical FDI: This is a type of investment where foreign companies undertake activities that are not similar to the activities performed in the home country. These are further classified into backward FDI, forward FDI, and conglomerate FDI.
- Backward FDI: Here the firm in the home country acquires assets from the foreign country to use them as input for production.
- Forward FDI: It occurs when the company invests or acquires another company to provide a market network or mix up the operations that are produced in the home country.
- Conglomerate FDI: In this type of foreign investment, the company invests or acquires firms that do not perform similar kinds of operations. For example, a manufacturing firm buys a service firm.
Hence, the correct answer is management contracts.



















