Perspectives on Global Development and Technology · 2009 · 10 citations · 0 references
BusinessBusiness EconomicsEconomicsEconometricsForeign Direct InvestmentInternational EconomicsFdi DeterminantsGreenfield InvestmentGrowth TheoryInternational ExpansionInvestmentMergers And AcquisitionsEconometric IdentificationForeign Direct Investment AnalysisGreenfield EntryGreenfield ExpansionGrowth RatesMarket Seeking FdiMergers And Acquisitions TheoryResource Seeking Fdi
Abstract Based on conventional wisdom, Greenfield foreign investment is more beneficial to host countries as compared to the FDI that comes through the merger and acquisition route. However, the current economic thinking has been dominated by the argument that such a distinction is meaningless, though there has not been any concrete evidence to the contrary. Given this context, this study tries to assess the impact of both types of FDI on the growth rates of host countries. The study looks into the theoretical possibilities, conducts an econometric analysis, and as a result, finds that not only is the merger and acquisition-related FDI less beneficial, compared to Greenfield investment, it may also have an adverse impact on growth.