Implications of Greenfields and Acquisitions on Host Countries

Abstract

This paper investigates the implications of greenfields and acquisitions as entry modes used by transnational corporations (TNCs) in host countries. First, the impact of the two types of foreign direct investment (FDI) on host economies is analyzed comparatively, by sifting through the main opinions in the literature. The focus is on transition countries, where most of the acquisitions occurred within the privatization process. The analysis is then applied to the particular case of Romania. By means of statistical data, the distribution of FDI flows on greenfields and acquisitions is presented. Moreover, their impact on the economy is analyzed using the ranking of the largest companies in Romania by turnover. Based on the results of the analysis, some conclusions are drawn concerning the main implications brought about by greenfields and acquisitions.