There are Basically Two types of foreign investment
- port polio foreign investment
- Direct Foreign investment
Advantages of Portfolio investment:-
- Easy to disinvestment
- Minimum regulatory requirement
- Minimum political risk
- Risk can be managed by diversification of portfolio
Minimum Regulatory Requirement :- The direct investment require a lot of formalities and non objection certificate from different department. The problem is more intense in developing countries where there are lacking procedure in this regard. The red tap-ism is also a problem in developing countries and off course one other problem one can face is corruption.
Minimum Political Risk:- The other advantages that many political risk are minimized by port folio investment as the position can be off load immediately.
Direct investment :-
The direct foreign investment is other than investment in stock exchange. There are different types of foreign direct investment.
- Joint Ventures Arrangements
- Licensing Arrangements
- Foreign Subsidiary
- Foreign Branches
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