We explore the effect of foreign direct investment on economic growth in developing countries, distinguishing between mergers and acquisitions ("M&As") and "greenfield" investment. A simple model captures the key difference between the two types of FDI: unlike greenfield investment, M&As partly...

Despite the economic importance of international foreign direct investment (FDI) flows, investment decisions of multinational firms are not well understood. A multinational firm can establish a subsidiary in a foreign country through greenfield investment or through acquiring an existing firm in...