Economic Growth and Types of Foreign Direct Investment: Disaggregating by Industry, and Greenfield vs. M&A FDI
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2020
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Haverford College. Department of Economics
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Thesis
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Award
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eng
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Dark Archive until 2025-01-01, afterwards Open Access.
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Abstract
This thesis examines how different types of FDI affect economic growth. Specifically, I explore whether FDI inflows into various industries are associated with differential economic growth rates, and if M&A FDI has a different effect than Greenfield FDI on per capita GDP growth rates. Analysis conducted using cross-country panel data between 2000-2016 indicates that FDI inflows into the farming, construction, and manufacturing industries are positively correlated with economic growth rates, whereas FDI inflows in the professional service and the recreation & hospitality industries are negatively correlated with economic growth. Moreover, I find that M&A FDI has a significant and positive effect on economic growth while greenfield FDI has an ambiguous effect on economic growth. These results are robust to measures of financial market development, other determinants of economic growth, and country and year fixed effects.