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This study aims to test the impact of different institutional quality indicators on two modes of foreign direct investment (FDI)-greenfield investment and cross-border mergers and acquisitions (M&As) for a sample of 110 countries over the period 2003–2017.

The authors develop a model of well-known FDI determinants, such as market size and potential, openness, the value of the national currency and the quality of institutions. The authors examine one-by-one five different institutional factors: law and order, investment profile of the host country, control of corruption (anti-corruption); democratic accountability, and government stability, applying a generalized method of moments (GMM) estimator that assures no endogeneity and reverse causality of the key explanatory variables.

The results point out the fact that fertile institutional conditions for attracting greenfield FDI to developing countries require law and order, good investment conditions and a state of democracy, but not necessarily tight control of corruption and a stable government. On the other hand, the appropriate institutional environment for attracting cross-border M&A sales flows to developing countries includes strong law and order, good investment conditions, strict control of corruption and strong democratic accountability. The results for developed countries show overall smaller importance of institutions as a determinant of both types of FDI.

This is the first study to analyze the differentiated determinants of the two modes of investment. The study holds implications for crafting two different policies for attracting greenfield FDI and M&A sales.

This study aims to examine the effect of greenfield foreign direct investment (GFDI) and mergers and acquisitions (M&A) on the environment and more specifically, on the sectoral emissions of CO₂. The authors identify significant differential and income effects with various data classifications of foreign direct investment (FDI) mode of entry.

The authors use system generalized method of moments with instruments for income and GFDI and M&A, which allows us to control for present reverse causality and endogeneity of income and the two modes of FDI.

Evidence from the full sample reveals that GFDI increases pollution, supporting the pollution haven hypothesis, while M&As decrease pollution in line with the halo effect hypothesis. GFDI flowing into poorer countries worsens the environment, while M&As flowing to industrialized economies reduce pollution. Entry-mode effects are also present at the level of industry emissions. GFDI in developed economies decreases pollution in transport industry but increases it in poorer countries.

The authors demonstrate: first, a recipient country level-of-development effect: GFDI investment flowing into poorer countries has harmful effects on environment, but no significant effect in rich economies, while M&As flowing to industrialized economies have a beneficial effect to the environment, supporting the halo hypothesis. Second, the authors demonstrate a differential entry-mode effect at the industry level: GFDI in developed economies decreases pollution from transport industry, while both modes of entry in developing economies increase it.

M&As emerge as a type of FDI that is less harmful to the environment. This is especially true in the case of developed economies. However, policymakers should oversee strictly the inbound GFDI flows and determine whether they carry “dirty” or “clean” production processes. This is the type of FDI to be regulated and scrutinized to ensure that economic development is fostered alongside environmental conservation.

In existing theoretical and empirical literature, little guidance is available on which mode of entry would have greater effect on the environment of the host country. This paper answers this issue by disaggregating FDI flows into GFDI and M&As and examining how each mode of entry impacts pollution in host countries. To the best of the knowledge, this is the first study that analyzes the environmental impact of the two modes of entry of FDI while disentangling the environmental Kuznets curve effect from the halo effect.

The authors investigate natural disasters’ impact on manufacturing and services foreign direct investment (FDI), both, in contemporaneous and time-lag contexts. Manufacturing and services FDI account for different types of technology transfers, respectively, through tangible physical assets and intangible knowledge assets. This paper aims to hypothesize that natural disasters that have pronounced physical impact, have different effect on different sectoral FDI.

The authors merge a data set from emergency events database, which covers natural disasters occurrences with a sector-level data on FDI for 69 countries for the period 1980-2011, distinguishing between four different kinds of natural disasters such as meteorological, climate, hydrological and geophysical, as well as between different geographical regions.

Controlling for commonly accepted determinants of FDI, such as output growth, quality of institutions and natural resource abundance, the authors find that manufacturing FDI is negatively affected immediately after the disaster and positively in the longer run- a finding that is in unison with the “creative destruction” growth theory. Services FDI, on the other hand, do not show such pattern. Meteorological disasters have no effect on services FDI and climate and hydrological disasters have long-lasting negative effects. For both, manufacturing and services FDI, geophysical disasters have a positive impact on FDI in the long run.

The study is limited to 69 countries for the period 1980-2011.

FDI bears tangible and intangible knowledge assets and provides means of financing, even in countries with under-developed banking systems and stock markets. FDI is impacted by climate change, manifested by intensifying and increase of frequency of natural disasters.

Natural disasters destroy infrastructure and displace people. The rebuilding of infrastructure and intangible capital present an opportunity for upgrading.

This is the first study that analyzes the impact of natural disasters on sector-level FDI in a multicounty and regional context.