Two types of foreign investment play a very significant role in the economic growth of any country and these foreign investments are Foreign Institutional Investors (FIIs) & Foreign Direct Investment (FDI). Government of different countries makes different policies to attract these investors.
I want to differentiate these investments on the basic of stability means which type of investment is required for the stable growth of the country.
As FIIs enters into any market when they see a good & stable economic, social, political condition of the country. But these investors are quite fickle and pump out their money from the economy on any type of fluctuating condition. So, these investments are not stable.
Whereas, FDI investment proven safe for the economy because it is a long term investment. They give stability in the market, a positive sentiment to stock investors. There will be efficiency because there will be more competition in local economy. FDI comes with employment, infrastructure development, improved technology, Management expertise, Access to international markets etc. So, government of the country should promote the FDI in different sectors for the stable growth.