6533b822fe1ef96bd127cbbb
RESEARCH PRODUCT
Good and useless FDI: The growth effects of greenfield investment and mergers and acquisitions
Philipp HarmsPierre-guillaume Méonsubject
business.industry05 social sciencesGeography Planning and DevelopmentDeveloping countryMonetary economicsInternational tradeForeign direct investmentDevelopmentInvestment (macroeconomics)Capital stockHost countryGreenfield project0502 economics and businessMergers and acquisitionsEconomics050207 economicsbusiness050205 econometricsdescription
We explore the effect of foreign direct investment (FDI) on economic growth, distinguishing between mergers and acquisitions (M&As) and “greenfield” investment. A simple model underlines that, unlike greenfield investment, M&As partly represent a rent accruing to previous owners, and do not necessarily contribute to expanding the host country's capital stock. Greenfield FDI should therefore have a stronger impact on growth than M&A sales. This hypothesis is supported by our empirical results that are based on a panel of up to 127 industrialized, emerging, and developing countries over 1990 to 2010.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2017-07-13 | Review of International Economics |