FDI in Greenfield Investment vs M&A : its Impact on GD : a Comprehensive Analysis of Developed, BRICS & East Asian Economies

Capital formation is an important determinant of economic growth. While domestic investments add to the capital stock in an economy, FDI plays a complementary role in overall capital formation and in filling the gap between domestic savings and investment. This paper attempts to examine the effect of two modes of FDI - Mergers &Acquisitions (M&As) and Greenfield FDI on GDP of a nation in different categories of countries - Developed Economies, BRICs and the 5 South East Asian (A5) nations. Using the VAR methodology, it was found that the GDP, cross border M&A and Greenfield FDI impact each other to some extent. There is a link between cross border M&A, Greenfield FDI and GDP. The extent varies according to the type of the country.