Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/148390
Authors: 
Ashraf, Ayesha
Herzer, Dierk
Nunnenkamp, Peter
Year of Publication: 
2016
Series/Report no.: 
Kiel Working Paper 2068
Abstract: 
This study examines the effects of greenfield FDI and cross-border mergers and acquisitions (M&As) on government size in host countries of FDI. Using panel data for up to 130 countries for the period from 2003-2011, the study specifically tests the compensation hypothesis, suggesting that by increasing economic insecurity, economic openness leads to larger government size. It is found that greenfield FDI increases labour market volatility and thereby economic insecurity while M&As are not significantly associated with labour market volatility. The main results of this study are that greenfield FDI has a robust positive effect on government size, while M&As have no statistically significant effect on government size in the total sample of developed and developing countries, as well as in the sub-samples of developed and developing countries.
Subjects: 
greenfield FDI
mergers & acquisitions
economic insecurity
government size
JEL: 
F21
F23
E62
Document Type: 
Working Paper

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