The Effects of Greenfield FDI and Cross‐border M&As on Total Factor Productivity

Abstract We examine the effects of greenfieldFDIand cross‐border mergers and acquisitions (M&As) on total factor productivity (TFP) in developed and developing host countries ofFDI. Using panel data for up to 123 countries over the period from 2003 to 2011, we find that greenfieldFDIhas no statistically significant effect onTFP, while M&As have a positive effect onTFPin the total sample. GreenfieldFDIand M&As both appear to be ineffective in increasingTFPin the subsample of developing countries. In contrast, M&As have a strong and positive effect onTFPin the subsample of developed countries.