Foreign investments are classified into two categories: foreign direct investment ( FDI) and foreign portfolio investment (FPI).

FORBES: The ABCs Of Investing In India

Companies flooded the big emerging markets with foreign direct investment and portfolio managers bought higher yielding bonds in all four of the BRICs.

FORBES: What A "QE3" Would Mean For Emerging Markets

Portfolio investment and foreign direct investment by Indians abroad has tailed off sharply since 1996 (see chart).

ECONOMIST: Indian bonds

The budget increases the investment limit for foreign portfolio investors in Indian companies from 24% to 30%.

ECONOMIST: India looks east

Worse trouble has been staved off by seven years of budget restraint, large foreign-exchange reserves and a hefty overseas investment portfolio.

ECONOMIST: Libya and the bombed airliners

This makes them consistent with other measures to relax restrictions on the capital account such as the expansion of the Qualified Foreign Institutional Investor scheme, which allows foreigners to bring portfolio investment capital into China but only in a carefully regulated manner.

WSJ: Business Asia: The Quietly International Yuan

Presumably, countries that attract more foreign direct investment suffer less than those that have a greater amount of footloose portfolio investment or short-term bank lending.

ECONOMIST: Economics focus

By contrast, foreign direct investment in poor countries fell by a third during the crisis, and portfolio inflows fell by more than half.

ECONOMIST: Remittance corridors: New rivers of gold | The