Which FDI type involves investing in the distribution of products to consumers?

The type of Foreign Direct Investment (FDI) that involves investing in the distribution of products to consumers is forward-vertical FDI. This form of investment occurs when a company invests in operations that are closer to the consumer in the supply chain, such as distribution centers or retail outlets. By establishing these facilities, the company enhances its ability to reach customers directly and efficiently, thus improving its market presence and control over how products are delivered to end-users.

Forward-vertical FDI allows firms to achieve greater market penetration and better respond to customer preferences, while also managing distribution costs more effectively. It is a strategic move to ensure that products are accessible and available in the markets where the firm operates, thereby driving sales and enhancing customer satisfaction.

In contrast, the other forms of FDI have different focuses. Horizontal FDI involves investing in the same stage of production in a foreign market, typically to gain market share. Backward-vertical FDI focuses on investing in supply sources or production facilities that provide the raw materials needed for production rather than direct consumer engagement. Direct FDI is a more general term that could encompass various types of investments without specifically indicating the focus on distribution.