difference between foreign trade and foreign investment
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Difference Between Foreign Trade and Foreign Investment
Key Differences Between Foreign Trade and Foreign Investment
The differences between foreign trade and foreign investment are discussed in the following points in detail:
Exchange of goods and services across the national borders of the country is known as foreign trade. On the contrary, Foreign investment implies the type of investment that a company or individual from a country makes, in the equity of the company located in another country.
Every country does not possess all the resources, and that is why, foreign trade is required, to fulfil the demand for the resources which are deficient in a country. Conversely, foreign investment tends to fulfil the capital requirement of the company, from the source outside the country.
Foreign trade connects the markets of different countries of the world. In contrast, foreign investment brings additional investment to the company in the form of money, technology and other resources.
Foreign trade creates a good opportunity for the domestic producers to capture global markets and increase their overall reach. As against, foreign investment tends to bring long-term capital in the company and that too in foreign currency.
The primary objective of foreign trade is to earn a profit and create an impression in the international market. Unlike, a foreign investment which is made with an objective to generate returns in the long term and have an ownership stake in the company based in another nation.