Economic growth represents an undisputed economic phenomenon and an ultimate policy objective irrespective of the prevailing economic doctrine. It makes possible for countries to achieve higher level of development and for individuals to improve their economic status on a sustainable manner. As such, economic growth is usually modelled as a result of the interaction of labour, capital, and technology. In this context, FDI has a multiplying effect on economic growth. On the one hand the inflow of foreign capital increases local capital base and employment, while on the other hand it ensures transfer of modern technology, know-how, and improves local labour skills, what can be ultimately identified in higher productivity growth. At the company level FDI shows an immediate effect on business performance (direct short-term effects), while later it creates the spillover effects, which spread across sectors and time spans. These effects can be identified in the improved productivity level, as well as in the general efficiency of the economy (indirect long-term effects). However, empirical findings regarding the growth effects of FDI are not so unanimous. Potential reasons for such ambiguous findings are: the use of total FDI flows and lack of differentiation between the fundamentally different ways of entering the host economy, i.e. greenfield investment and mergers and acquisition (M&A); a bulk of researches has been done on a too big, and sometimes even heterogeneous sample of countries; empirical analysis are often done on relatively short time series; lack of proper differentiation between short- and long-term effects. The main objective of this research is to establish the relationship between research variables, and to examine and scientifically explain the impact of FDI on economic growth and labour productivity through the effects of the recipient countries, taking into account the differences in the features of various forms of FDI (greenfield and M&A) and level of host country technological development. The research is based on the theory of economic growth and the theory of foreign direct investment, taking into account the various empirical contributions of earlier studies. Empirical analysis of EU members grouped according to the Innovation Union Scoreboard, showed that M&A has a stronger impact on productivity and economic growth for countries on higher technological level, whereas greenfield is more important for technologically less developed countries. Spillover of FDI technology are mostly realised through interaction of M&A and human capital.