Vertical FDI

Vertical Foreign Direct Investment (FDI) occurs when a company invests in a foreign business that operates at a different stage of the production process. For example, a manufacturer might invest in a foreign supplier for raw materials (backward vertical FDI) or in a foreign distributor to sell its products (forward vertical FDI). This strategy helps companies control their supply chains, reduce costs, improve efficiency, and expand their market reach by integrating operations across borders. Essentially, it allows a company to have more control over the steps involved in creating and delivering its products or services.