In the context of foreign direct investment, a joint venture involves the merger of companies.

Foreign direct investment (FDI) is an investment made by a firm or individual in one country into business interests located in another country.

Explanation:

In the context of foreign direct investment, a joint venture involves the merger of companies. FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company.

Foreign direct investments are distinguished from portfolio investments in which an investor merely purchases equities of foreign-based companies.