CROSS BORDER MERGERS & ACQUISITIONS AND ITS IMPACT ON THE ECONOMIC GROWTH: AN ECONOMETRIC STUDY

Dr. Namita Rajput

Abstract


The corporate sector all over the world is restructuring its operations through mergers and acquisitions in an unprecedented manner in order to successfully overcome the challenges posed by globalization. Over the last two decades, the share of cross-border mergers and acquisitions (CB M&As) in the global FDI inflows has been more than 50%. There is a boom in   Indian Corporate sector in this form of FDI. The objective of the present paper is to examine the trends, contribution and impact of CB M&As on various facets of Indian companies. FDI Confidence Index has improved significantly in 2012. Liberalized foreign investment regime and regulations have resulted in favourable business environment in the Indian market. This scenario is shown by OECD FDI Regulatory Restrictiveness Index, which is a tool for benchmarking countries, measuring reform and assessing its impact.To find whether there exist a significant relationship between FDI Confidence index and OECD FDI Regulatory Restrictive Index and the stock of FDI, OLS (Regression technique) was applied which showed significant results.To examine the impact of FDI inflows (M&A) on GDP (a proxy of economic growth). The results exhibit bi-directional causality i.e GDP leads to rise in FDI and vice versa. Hence owing to its role in the economic development important steps must further be taken by the government relating to policy issues and further liberalisation to improve the present landscape and taking this to a marked level.

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ISSN : 2251-1555