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Title:An FDI is an FDI is an FDI? The growth effects of greenfield investment and mergers and acquisitions in developing countries PDF Logo
Authors:Harms, Philipp
Méon, Pierre-Guillaume
Issue Date:2011
Series/Report no.:Proceedings of the German Development Economics Conference, Berlin 2011 38
Abstract:We explore the effect of foreign direct investment (FDI) on economic growth in developing countries, distinguishing between mergers and acquisitions (M&As) and Greenfield investment. We find that these two types of FDI differ substantially with respect to their influence on growth. While Greenfield FDI substantially enhances growth, M&As have no effect, at best. We also demonstrate that, in contrast to Greenfield FDI, a larger volume of M&As results in an appreciated real exchange rate. The resulting loss in price competitiveness may explain the poor growth effect of the M&A variant of FDI.
Subjects:Growth
foreign direct investment
mergers and acquisitions
green-field investments
JEL:F21
F23
F43
O16
Document Type:Conference Paper
Appears in Collections:Proceedings of the German Development Economics Conference, 2011 (Berlin)

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