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- Publisher
- Wiley
- Copyright
- © 2018 John Wiley & Sons Ltd
- ISSN
- 0965-7576
- eISSN
- 1467-9396
- DOI
- 10.1111/roie.12302
- Publisher site
- See Article on Publisher Site
Abstract
We explore the effect of foreign direct investment (FDI) on economic growth, distinguishing between mergers and acquisitions (M&As) and “greenfield” investment. A simple model underlines that, unlike greenfield investment, M&As partly represent a rent accruing to previous owners, and do not necessarily contribute to expanding the host country's capital stock. Greenfield FDI should therefore have a stronger impact on growth than M&A sales. This hypothesis is supported by our empirical results that are based on a panel of up to 127 industrialized, emerging, and developing countries over 1990 to 2010.
Journal
Review of International Economics – Wiley
Published: Jan 1, 2018