Greenfield Foreign Direct Investment and Mergers and Acquisitions : Feedback and Macroeconomic Effects
Foreign direct investment (FDI) flows to developing countries surged in the 1990s to become their leading source of external financing. This rise in FDI volume was accompanied by a marked change in its composition: investment taking the form of acq...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2004/01/2893049/greenfield-foreign-direct-investment-mergers-acquisitions-feedback-macroeconomic-effects http://hdl.handle.net/10986/13941 |
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okr-10986-139412021-04-23T14:03:20Z Greenfield Foreign Direct Investment and Mergers and Acquisitions : Feedback and Macroeconomic Effects Calderón, César Loayza, Norman Servén, Luis AUTOREGRESSION BALANCE OF PAYMENTS CAPITAL FLOWS CAPITAL FORMATION CAPITAL INFLOWS CENTRAL BANK COMPETITIVE PRESSURE COUNTRY GROWTH DEBT DEVELOPED COUNTRIES DEVELOPMENT ECONOMICS DOMESTIC ECONOMY DOMESTIC FIRMS DOMESTIC INVESTMENT DOMESTIC INVESTORS ECONOMETRIC ANALYSIS ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC POLICY EMPIRICAL ANALYSIS EMPIRICAL STUDIES EQUITY FLOWS EXPENDITURES EXTERNAL FINANCING FDI FINANCIAL MARKETS FINANCIAL SERVICES FINANCIAL TRANSFERS FIXED ASSETS FIXED CAPITAL FIXED INVESTMENT FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN ENTRY FOREIGN FIRMS FOREIGN INVESTMENT GDP GLOBAL DEVELOPMENT FINANCE GLOBALISATION GROSS FIXED CAPITAL FORMATION GROWTH RATE HOST COUNTRY HOST ECONOMY HUMAN CAPITAL INCOME INDUSTRIAL COUNTRIES INDUSTRIAL ECONOMIES INTEREST RATES INTERNATIONAL CAPITAL INTERNATIONAL ECONOMICS INTERNATIONAL FINANCIAL INTERNATIONAL TRADE INVESTMENT FLOWS LDCS LIQUIDATION LIQUIDITY LOCAL FIRMS LOCAL MARKETS MACROECONOMIC ANALYSIS MANUFACTURING SECTOR MARKET ENTRY MARKET INTEGRATION MERGERS MONETARY ECONOMICS MULTIPLIERS NET INFLOWS OPEN ECONOMIES PORTFOLIO PRODUCTIVITY PRODUCTIVITY GROWTH PRODUCTIVITY SPILLOVERS PUBLIC POLICY REAL GDP TECHNOLOGY SPILLOVERS TECHNOLOGY TRANSFER TECHNOLOGY TRANSFERS TIME SERIES WORLD INVESTMENT WORLD MARKET Foreign direct investment (FDI) flows to developing countries surged in the 1990s to become their leading source of external financing. This rise in FDI volume was accompanied by a marked change in its composition: investment taking the form of acquisition of existing assets (mergers and acquisitions) grew much more rapidly than investment in new assets ("greenfield" FDI), particularly in countries undertaking extensive privatization of public enterprises. This raises two issues. First, is the mergers and acquisitions boom a one-time effect of privatization, or is it likely to be followed by a rise in greenfield investment? Second, do these two types of FDI have different macroeconomic causes and consequences in relation to aggregate investment and growth? The authors focus on establishing the stylized facts in terms of time precedence between both types of FDI, investment, and growth, using annual data for the period 1987-2001 and a large sample of industrial and developing countries. The authors find that in all samples, higher mergers and acquisitions is typically followed by higher greenfield investment, while the reverse is true only for developing countries. In industrial and developing countries alike, both types of FDI lead domestic investment, but not the reverse. Finally, neither type of FDI appears to precede economic growth in developing or industrial countries, but FDI does respond positively to increases in the growth rate. 2013-06-13T21:56:44Z 2013-06-13T21:56:44Z 2004-01 http://documents.worldbank.org/curated/en/2004/01/2893049/greenfield-foreign-direct-investment-mergers-acquisitions-feedback-macroeconomic-effects http://hdl.handle.net/10986/13941 English Policy Research Working Paper; No. 3192 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
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Digital Repository |
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Foreign Institution |
| institution |
Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
| language |
English |
| topic |
AUTOREGRESSION BALANCE OF PAYMENTS CAPITAL FLOWS CAPITAL FORMATION CAPITAL INFLOWS CENTRAL BANK COMPETITIVE PRESSURE COUNTRY GROWTH DEBT DEVELOPED COUNTRIES DEVELOPMENT ECONOMICS DOMESTIC ECONOMY DOMESTIC FIRMS DOMESTIC INVESTMENT DOMESTIC INVESTORS ECONOMETRIC ANALYSIS ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC POLICY EMPIRICAL ANALYSIS EMPIRICAL STUDIES EQUITY FLOWS EXPENDITURES EXTERNAL FINANCING FDI FINANCIAL MARKETS FINANCIAL SERVICES FINANCIAL TRANSFERS FIXED ASSETS FIXED CAPITAL FIXED INVESTMENT FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN ENTRY FOREIGN FIRMS FOREIGN INVESTMENT GDP GLOBAL DEVELOPMENT FINANCE GLOBALISATION GROSS FIXED CAPITAL FORMATION GROWTH RATE HOST COUNTRY HOST ECONOMY HUMAN CAPITAL INCOME INDUSTRIAL COUNTRIES INDUSTRIAL ECONOMIES INTEREST RATES INTERNATIONAL CAPITAL INTERNATIONAL ECONOMICS INTERNATIONAL FINANCIAL INTERNATIONAL TRADE INVESTMENT FLOWS LDCS LIQUIDATION LIQUIDITY LOCAL FIRMS LOCAL MARKETS MACROECONOMIC ANALYSIS MANUFACTURING SECTOR MARKET ENTRY MARKET INTEGRATION MERGERS MONETARY ECONOMICS MULTIPLIERS NET INFLOWS OPEN ECONOMIES PORTFOLIO PRODUCTIVITY PRODUCTIVITY GROWTH PRODUCTIVITY SPILLOVERS PUBLIC POLICY REAL GDP TECHNOLOGY SPILLOVERS TECHNOLOGY TRANSFER TECHNOLOGY TRANSFERS TIME SERIES WORLD INVESTMENT WORLD MARKET |
| spellingShingle |
AUTOREGRESSION BALANCE OF PAYMENTS CAPITAL FLOWS CAPITAL FORMATION CAPITAL INFLOWS CENTRAL BANK COMPETITIVE PRESSURE COUNTRY GROWTH DEBT DEVELOPED COUNTRIES DEVELOPMENT ECONOMICS DOMESTIC ECONOMY DOMESTIC FIRMS DOMESTIC INVESTMENT DOMESTIC INVESTORS ECONOMETRIC ANALYSIS ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC POLICY EMPIRICAL ANALYSIS EMPIRICAL STUDIES EQUITY FLOWS EXPENDITURES EXTERNAL FINANCING FDI FINANCIAL MARKETS FINANCIAL SERVICES FINANCIAL TRANSFERS FIXED ASSETS FIXED CAPITAL FIXED INVESTMENT FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN ENTRY FOREIGN FIRMS FOREIGN INVESTMENT GDP GLOBAL DEVELOPMENT FINANCE GLOBALISATION GROSS FIXED CAPITAL FORMATION GROWTH RATE HOST COUNTRY HOST ECONOMY HUMAN CAPITAL INCOME INDUSTRIAL COUNTRIES INDUSTRIAL ECONOMIES INTEREST RATES INTERNATIONAL CAPITAL INTERNATIONAL ECONOMICS INTERNATIONAL FINANCIAL INTERNATIONAL TRADE INVESTMENT FLOWS LDCS LIQUIDATION LIQUIDITY LOCAL FIRMS LOCAL MARKETS MACROECONOMIC ANALYSIS MANUFACTURING SECTOR MARKET ENTRY MARKET INTEGRATION MERGERS MONETARY ECONOMICS MULTIPLIERS NET INFLOWS OPEN ECONOMIES PORTFOLIO PRODUCTIVITY PRODUCTIVITY GROWTH PRODUCTIVITY SPILLOVERS PUBLIC POLICY REAL GDP TECHNOLOGY SPILLOVERS TECHNOLOGY TRANSFER TECHNOLOGY TRANSFERS TIME SERIES WORLD INVESTMENT WORLD MARKET Calderón, César Loayza, Norman Servén, Luis Greenfield Foreign Direct Investment and Mergers and Acquisitions : Feedback and Macroeconomic Effects |
| relation |
Policy Research Working Paper; No. 3192 |
| description |
Foreign direct investment (FDI) flows to
developing countries surged in the 1990s to become their
leading source of external financing. This rise in FDI
volume was accompanied by a marked change in its
composition: investment taking the form of acquisition of
existing assets (mergers and acquisitions) grew much more
rapidly than investment in new assets
("greenfield" FDI), particularly in countries
undertaking extensive privatization of public enterprises.
This raises two issues. First, is the mergers and
acquisitions boom a one-time effect of privatization, or is
it likely to be followed by a rise in greenfield investment?
Second, do these two types of FDI have different
macroeconomic causes and consequences in relation to
aggregate investment and growth? The authors focus on
establishing the stylized facts in terms of time precedence
between both types of FDI, investment, and growth, using
annual data for the period 1987-2001 and a large sample of
industrial and developing countries. The authors find that
in all samples, higher mergers and acquisitions is typically
followed by higher greenfield investment, while the reverse
is true only for developing countries. In industrial and
developing countries alike, both types of FDI lead domestic
investment, but not the reverse. Finally, neither type of
FDI appears to precede economic growth in developing or
industrial countries, but FDI does respond positively to
increases in the growth rate. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Calderón, César Loayza, Norman Servén, Luis |
| author_facet |
Calderón, César Loayza, Norman Servén, Luis |
| author_sort |
Calderón, César |
| title |
Greenfield Foreign Direct Investment and Mergers and Acquisitions : Feedback and Macroeconomic Effects |
| title_short |
Greenfield Foreign Direct Investment and Mergers and Acquisitions : Feedback and Macroeconomic Effects |
| title_full |
Greenfield Foreign Direct Investment and Mergers and Acquisitions : Feedback and Macroeconomic Effects |
| title_fullStr |
Greenfield Foreign Direct Investment and Mergers and Acquisitions : Feedback and Macroeconomic Effects |
| title_full_unstemmed |
Greenfield Foreign Direct Investment and Mergers and Acquisitions : Feedback and Macroeconomic Effects |
| title_sort |
greenfield foreign direct investment and mergers and acquisitions : feedback and macroeconomic effects |
| publisher |
World Bank, Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2004/01/2893049/greenfield-foreign-direct-investment-mergers-acquisitions-feedback-macroeconomic-effects http://hdl.handle.net/10986/13941 |
| _version_ |
1764429869853179904 |