Foreign direct investment is when an investor from one country makes a controlling investment in a business located in another country. It involves spending money to acquire partial or full ownership of a business in another country in order to generate profits. While FDI can stimulate economic development and increase employment and tax revenue for the host country, it also risks crowding out small local businesses and potentially contributing to issues like pollution, exchange rate crises, corruption, and inflation. Some successful foreign companies that have invested in Pakistan include Unilever, Engro, and PepsiCo.