What type of enterprises are involved in Foreign Direct Investments (FDIs)?

The correct answer focuses on multinational enterprises (MNEs), as these organizations are typically the primary participants in Foreign Direct Investments (FDIs). MNEs operate in multiple countries and have the resources to invest directly in foreign markets through establishing subsidiaries, acquiring local companies, or expanding existing facilities abroad. Their size, financial strength, and global reach enable them to navigate international markets, make strategic investments, and benefit from operational synergies across borders.

In contrast, small and medium-sized enterprises might engage in international trade but usually lack the resources for substantial direct investments in foreign markets. Domestic-only firms have no incentive or capability to invest abroad since their operations are confined to their local market. Non-profit organizations generally do not engage in FDIs, as their focus is on humanitarian or developmental objectives rather than capital investment for profit generation. Therefore, MNEs are uniquely positioned to leverage FDIs as a strategic tool for growth and expansion in the global marketplace.