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The dynamic relationship between greenfield investments, cross-border M&As, domestic investment and economic growth in Vietnam

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  • Hieu Thanh Nguyen

    (National Economic University)

  • Hiep Ngoc Luu

    (University of St Andrews
    Centre for Applied Economics and Business Research)

  • Ngoc Ha Do

    (Centre for Applied Economics and Business Research)

Abstract

This paper investigates the dynamic linkages between different types of foreign direct investment (FDI), domestic investment and economic growth in Vietnam. We decompose the aggregated FDI level into its two major components: greenfield investments, and cross-border mergers and acquisitions (M&As). The empirical results reveal that greenfield investments and cross-border M&As exhibit different impacts on economic growth. While greenfield investments appear to complement domestic investment, which subsequently promotes long-run economic growth, cross-border M&As exert a significant crowd-out effect and subsequently impede growth in both the short- and the long-run. These results provide important implications for policies to attract FDI in order to stimulate sustainable growth.

Suggested Citation

  • Hieu Thanh Nguyen & Hiep Ngoc Luu & Ngoc Ha Do, 2021. "The dynamic relationship between greenfield investments, cross-border M&As, domestic investment and economic growth in Vietnam," Economic Change and Restructuring, Springer, vol. 54(4), pages 1065-1089, November.
    • Handle: RePEc:kap:ecopln:v:54:y:2021:i:4:d:10.1007_s10644-020-09292-7
    DOI: 10.1007/s10644-020-09292-7
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