Explanation:

• Foreign Direct Investment (FDI) is the investment of funds by an organisation from one country into another, with the intent of establishing ’lasting interest’.
• The difference between FDI and FPI (Foreign Portfolio Investments): In FPI the investor purchases equity of foreign companies. FPI means only equity infusion, and does not imply the establishment of a lasting interest.

Potential advantages of FDI

• Recipient businesses get access to latest financing tools, technologies and operational practices from across the world.
• Human Capital refers to the knowledge and competence of the workforce. Once developed, human capital is mobile. It can train human resources in other companies, thereby creating a ripple effect.
• Not all goods produced through FDI are meant for domestic consumption. Many of these products have global markets and thereby increase export potential of a country.
• The constant flow of FDI into a country translates into a continuous flow of foreign exchange. This helps the country’s Central Bank maintain a comfortable reserve of foreign exchange. This in turn ensures stable exchange rates.

Hence option 4th is correct.