Which statement correctly describes brownfield FDI?

Which statement correctly describes brownfield FDI?

• A. Brownfield FDI involves creating a new operation.
• B. Brownfield FDI involves licensing technology.
• C. Brownfield FDI involves acquiring or leasing an existing business or facility.
• D. Brownfield FDI relates to currency exchange.

Answer: (C)

Brownfield FDI is about investing in an already established asset in a foreign country—such as acquiring or leasing an existing plant, factory, or business and then upgrading or expanding it. This is precisely what the description about acquiring or leasing an existing business or facility conveys. It differs from greenfield FDI, which would be about building a new operation from scratch. Licensing technology isn’t FDI at all; it’s a licensing agreement that doesn’t involve owning and operating a foreign facility. Currency exchange relates to converting money, not how an investment is structured.

Brownfield FDI is about investing in an already established asset in a foreign country—such as acquiring or leasing an existing plant, factory, or business and then upgrading or expanding it. This is precisely what the description about acquiring or leasing an existing business or facility conveys. It differs from greenfield FDI, which would be about building a new operation from scratch. Licensing technology isn’t FDI at all; it’s a licensing agreement that doesn’t involve owning and operating a foreign facility. Currency exchange relates to converting money, not how an investment is structured.