Horizontal FDI occurs when a firm performs the same activity abroad that it performs at home — like a bank opening branches in another country. Vertical FDI occurs when a firm moves different stages of its value chain to different countries — like sourcing raw materials abroad while manufacturing at home.
Horizontal vs Vertical Foreign Direct Investment Foreign direct investment takes two primary forms. Horizontal FDI occurs when a firm duplicates its home-country operations in a foreign country — performing the same activities abroad that it performs domestically. Vertical FDI occurs when a firm relocates different stages of its value chain to different countries, taking advantage of cost or capability differences at each stage. Key Takeaways Horizontal FDI = same activity, different country. Dr