Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/48294
Authors: 
Harms, Philipp
Méon, Pierre-Guillaume
Year of Publication: 
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

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