The Impact of FDI, Cross Border Mergers and Acquisitions and Greenfield Investments on Economic Growth

Paula Neto (), Antonio Brandao and António Cerqueira ()
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Paula Neto: ISCA, Universidade de Aveiro
António Cerqueira: Faculdade de Economia, Universidade do Porto

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: This paper investigates whether aggregate foreign direct investment (FDI), cross border mergers and acquisitions (M&A) and greenfield investments affects economic growth based on a panel data of 53 countries over the period 1996-2006. Both causality tests and single growth equations are applied to examine this relationship. The evidence suggests that there is bidirectional causality between FDI, M&A and growth. We can also conclude that economic growth Granger causes greenfields, but the reverse is not true. The estimation of the growth equation leads us to conclude that FDI through greenfield investments exerts a positive impact on economic growth in both developed and developing countries. Oppositely, M&A has a negative effect on the economic growth of developing countries, but insignificant on developed countries.

Keywords: Foreign Direct Investment; Cross Border Mergers and Acquisitions; Greenfield Investments; Economic Growth (search for similar items in EconPapers)
JEL-codes: F23 F40 G34 O40 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2008-09
New Economics Papers: this item is included in nep-com and nep-int
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:por:fepwps:291

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