Introduction
Foreign Direct Investment has been playing a fundamentalrole in developing countries in attracting
necessary investment. Foreign direct investment (FDI) is the direct investment equity flows into the host
economy. According to Organisation for Economic Co-Operation and Development (OECD), “FDI is
defined as the establishment of a lasting interest in andasignificant degree of influence over the operations
of an enterprise in one economy by an investor in another economy. Ownership of 10% or more of the
voting power in an enterprise in one economy by an investor in another economy is evidence of such a
relationship”. FDIcovers the investment of all cross-border transactions and positions between the bodies
in a foreign direct investment relationship.According to OECD, “There are three main components to FDI
statistics: 1) financial flows, which capture debt and equity investments between related parties in a
specific period; 2) income, which represents the return on equity and debt investment to the direct investor
in a specific period; and 3) positions, which are the value of the accumulated direct investment at a
specific point in time”.