Inward investment is the injection of money from an external source into a region, in order to purchase capital goods for a branch of a corporation

Corporation

A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...

 to locate or develop its presence in the region.

Foreign sources, such as transnational corporations or multinational corporation

Multinational corporation

A multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...

s invest money by introducing new industrial sites to an area, in order to produce more of their product, sometimes in response to changes noticed in that area, such as a growing population or enhanced transport network. Inward investment creates jobs in an area and brings wealth into the economy.

Some places do however attract inward investment due to their relative remoteness, for example a company wanting to recruit personnel with relatively common skills might deliberately relocate to an area where wage rates are relatively low, a factor that could arise because of the absence of similar jobs or localised underemployment

Underemployment

Underemployment refers to an employment situation that is insufficient in some important way for the worker, relative to a standard. Examples include holding a part-time job despite desiring full-time work, and overqualification, where the employee has education, experience, or skills beyond the...

. Some international investors might seek to take advantage of relatively lax regulation through investing abroad.

Some economic development agencies, governments or local authorities are occasionally accused of concentrating on attracting inward investment to such an extent that they neglect to nurture home-grown small businesses or entrepreneurs with exciting ideas. As with much marketing effort, a balance is often required to maximise economic progress that is socially and environmentally appropriate.

Another aspect of inward investment is financial inward investment activity, which rather than focusing on attracting "offshoot" operations of overseas companies, focuses on encouraging global focused overseas venture capitalist and hedge-fund investment into companies in a country or region.