explain the impact of the government effort towards inviting more foreign direct investment and foreign institutional investment to a country on PPC of a country
Answers
There are many ways for a foreign investor to invest in a country. The most direct method, of course, is Foreign Direct Investment. However, there are other ways to enter an economy, like Foreign Institutional Investors. Let us learn more about FII.
Foreign Institutional Investors (FII)
Foreign Institutional Investors (FII) are an investment fund or a gathering of investors. Such a fund is registered in a foreign country, i.e. not in the country it is investing in. Such institutional investors mostly involve hedge funds, mutual funds, pension funds, insurance bonds, high-value debentures, investment banks etc.
We use this term FII for foreign players investing funds in the financial market of India. They play a big role in the development of our economy. The amount of funds they invest is very considerable.
So when such FII’s buy shares and securities the market is bullish and trends upwards. The opposite may also happen when they withdraw their funds from the markets. So they have considerable sway over the market.