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

Author

Listed:
  • Paula Neto

    (ISCA, Universidade de Aveiro)

  • António Brandão

    (Faculdade de Economia, Universidade do Porto)

  • António Cerqueira

    (Faculdade de Economia, Universidade 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.

Suggested Citation

  • Paula Neto & António Brandão & António Cerqueira, 2008. "The Impact of FDI, Cross Border Mergers and Acquisitions and Greenfield Investments on Economic Growth," FEP Working Papers 291, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:291
    as

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    File URL: http://www.fep.up.pt/investigacao/workingpapers/08.09.12_wp291.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Sabina Silajdzic & Eldin Mehic, 2016. "Absorptive Capabilities, FDI, and Economic Growth in Transition Economies," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(4), pages 904-922, April.
    2. Nicola Cortinovis & Riccardo Crescenzi & Frank van Oort, 2020. "Multinational enterprises, industrial relatedness and employment in European regions [Innovation: mapping the winds of creative destruction]," Journal of Economic Geography, Oxford University Press, vol. 20(5), pages 1165-1205.
    3. Derado Dražen & Horvatin Darko, 2023. "FDI and Economic Growth – Perspective of Southeast European Countries," Zagreb International Review of Economics and Business, Sciendo, vol. 26(1), pages 119-148.
    4. Aleksy Kwilinski & Oleksii Lyulyov & Tetyana Pimonenko, 2023. "Greenfield Investment as a Catalyst of Green Economic Growth," Energies, MDPI, vol. 16(5), pages 1-16, March.
    5. Damioli, Giacomo & Marin, Giovanni, 2024. "The effects of foreign entry on local innovation by entry mode," Research Policy, Elsevier, vol. 53(3).
    6. Nicola Cortinovis & Riccardo Crescenzi & Frank van Oort, 0. "Multinational enterprises, industrial relatedness and employment in European regions," Journal of Economic Geography, Oxford University Press, vol. 20(5), pages 1165-1205.
    7. Dirk H M Akkermans, 2017. "Net profit flow per country from 1980 to 2009: The long-term effects of foreign direct investment," PLOS ONE, Public Library of Science, vol. 12(6), pages 1-28, June.
    8. Justyna Pilarska, 2016. "Cultural Diversity as a Source of Conflict in the Focus of Non-Governmental and International Organizations: Bosnian Case Study," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 2, ejes_v2_i.

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    More about this item

    Keywords

    Foreign Direct Investment; Cross Border Mergers and Acquisitions; Greenfield Investments; Economic Growth;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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