This document discusses foreign direct investment (FDI). It provides information on: 1) Trends in FDI have seen increases in both flows and stocks over the past 25 years, growing more rapidly than world trade and output as FDI is a way to circumvent trade barriers. 2) Why companies undertake FDI, including limitations of exporting and licensing, maintaining control over operations and strategy, and when a firm's capabilities are not suited to licensing. 3) Home country policies can encourage both outward and inward FDI through incentives like tax breaks or loans, or restrict it using measures like ownership limits or performance requirements.