What is the difference between foreign trade and foreign investment?

A country imports something that is not produced. It exports certain things to other countries. This is the so-called foreign trade. Imports and exports of goods and services are called foreign trade. The developing economy lacks domestic capital. Therefore, it participates in and encourages the inflow of foreign capital into the country. Such foreign capital is referred to as foreign investment.

Investment is the purchase of something, in a few years, in the longer term, "return on investment" for the purpose. Imagine a bank investing in another country's oilfields.

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