IDEAS home Printed from https://ideas.repec.org/a/hde/epregl/v76y2025i4p315-337.html
   My bibliography  Save this article

Impact of Greenfield Investment and M&A on the Host Country’s Economic Growth: An Assessment of the EU Member Countries

Author

Listed:
  • Dražen Derado

    (Faculty of Economics, Business and Tourism, University of Split)

  • Darko Horvatin

    (Effectus University College Zagreb)

Abstract

Empirical literature regarding the ultimate effects of foreign direct investment (FDI) on host countries’ economic growth does not reach a unanimous conclusion. To fill the gap, this paper differentiates greenfield investments from mergers and acquisitions (M&A) and focuses on the host country’s innovativeness. A total sample of 25 member countries of the European Union (EU) over the period 1999-2018 has created a balanced panel dataset, which made it possible to analyse the separate effects of greenfield investment and M&A on economic growth. Panel data analysis with fixed effects, corrected for groupwise heteroskedasticity and cross-sectional correlation, confirms that different types of FDI generate different effects on economic growth and concerning the host country’s innovation capacity. More specifically, M&A achieve the strongest contribution to economic growth in countries with stronger innovation capacities, while greenfield investments add more to economic growth in countries lagging behind in innovation.

Suggested Citation

  • Dražen Derado & Darko Horvatin, 2025. "Impact of Greenfield Investment and M&A on the Host Country’s Economic Growth: An Assessment of the EU Member Countries," Ekonomski pregled, Hrvatsko društvo ekonomista (Croatian Society of Economists), vol. 76(4), pages 315-337.
    • Handle: RePEc:hde:epregl:v:76:y:2025:i:4:p:315-337
    DOI: 10.32910/ep.76.4.5
    as

    Download full text from publisher

    File URL: https://doi.org/10.32910/ep.76.4.5
    Download Restriction: no
    File URL: https://libkey.io/10.32910/ep.76.4.5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hde:epregl:v:76:y:2025:i:4:p:315-337. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Josip Tica (email available below). General contact details of provider: https://edirc.repec.org/data/hdeeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.