The Impact of Exchange Rate Volatility and Production Capacity Index on Types of Foreign Direct Investment: Evidence from Selected Emerging Economies

This study examined the impact of exchange rate volatility (ERV) and the production capacity index (PCI) on mergers and acquisitions (M&A) and greenfield FDI in 14 selected emerging economies. We used the nonlinear ARDL model and annual data from 2000 to 2023. We found a significant asymmetric impact of the ERV on M&A in China, Czechia, Romania, and Russia, as well as on greenfield FDI in Bulgaria, China, Hungary, and India. The PCI also significantly impacts M&A in Argentina, Brazil, Bulgaria, China, Czechia, India, Malaysia, and Russia, as well as greenfield FDI in Brazil, Egypt, Hungary, India, Poland, and Russia.