A Comparative Analysis of FDI in Terms of "Quantity" and "Quality": Turkish Case

Abstract

INTRODUCTION "Quality" of FDI depends on several factors listed in the FDI literature. Among the others, "mode of entry" of the FDI, which can be greenfield versus brownfield investments, place among the most important ones in the list in terms of benefeting from FDI for developmental purposes. This can be direct positive impact of FDI on economic development through investment, namely, increasing the gross fixed capital formation. In this regard, it is maintained that compared to the other mode, namely, brownfield investment, greenfield investment is accepted more useful to the economic growth of the host developing country. London Economics (2010) puts it as follows: "Greenfield investment directly results in investment in structures, plants, etc. which, ceteris paribus, raises the capital formation of an economy and hence stimulates GDP growth...In contrast, the support to economic growth provided by cross-border M&As 1 to economic growth can be less certain" (London Economics, 2010, p. 23). Although in the literature, for developmental purposes it has been started to be focused on "quality" of FDI more than its "quantity", in practice, developing countries are not at this stage at all both in terms of their political perspectives and policies that they prefer to implement towards FDI. They are likely to invite FDI unconditionally for developmental purposes. To this end, most developing countries simultaneously adopt very similar policies. They

Green field investment and environmental performance: A case of selected nine developing countries of Asia

“…However, it is held that FDI can be either green field investment or mergers and acquisitions (M&As) or both. Green field investment involves the establishment of new plant for production activity in the host country while M&A has to do with the purchase of already existing firm or production unit in the foreign country . Since Greenfield investment is manufacturing FDI in which production activities take place, one would expect more negative impact on environment from these activities than M&A activities, which may largely consist of financial industries or institutions where less production activities take place.…”