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UPSC 2011: Both Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. Which one of the following statements best represents an important difference between the two?
(a)FII helps bring better management skills and technology, while FDI only brings in capital
(b)FII helps in increasing capital availability in general, while FDI only targets specific sectors
(c)FDI flows only into the secondary market, while FII targets primary market
(d)FII is considered to be more stable than FDI
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Not attemptedCorrect Answer: (b) FII helps in increasing capital availability in general, while FDI only targets specific sectors
Foreign Institutional Investment (FII) is portfolio money spread across equity/debt markets, so it broadly increases the overall supply of capital; Foreign Direct Investment (FDI) is a long-term stake in specific enterprises or sectors (e.g., a new factory) and is therefore targeted rather than economy-wide. The other statements either reverse these characteristics or misstate stability/technology aspects. ([studyadda.com](https://www.studyadda.com/solved-papers/solved-paper-general-studies-2011_q82/771/355513?utm_source=openai))
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What is the correct answer to this UPSC 2011 Indian Economy question?▼
The correct answer is option (b): FII helps in increasing capital availability in general, while FDI only targets specific sectors. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this External Sector & Balance Of Payments question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 2011, GS Paper 1, as Question 28. It falls under Indian Economy > External Sector & Balance Of Payments.
What is the difficulty level of this UPSC question?▼
This question is rated "moderate". It requires sound conceptual understanding of the topic.
How many UPSC Prelims questions have been asked from External Sector & Balance Of Payments?▼
UPSC has asked 49 questions from External Sector & Balance Of Payments (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.