The role, place and relationships between FDI and GDP for Romania between 2002 - 2010

• Author: Maria Alexandra Ivan - Irina-Elena Gentimir
• Position: PhD in progress, Doctoral School of Economic 'A.I. Cuza', Iasi - PhD in progress, Doctoral School of Economic 'A.I. Cuza', Iasi
• Pages: 521-528

Performance and Risks in the European Economy

521

The Role, Place and Relationships

between FDI And GDP ror Romania between 2002 – 2010

Ivan Maria – Alexandra

1

, Gentimir Irina - Elena

2

Abstract: T he Foreign Direc t Investments for the European Union reac hed a volume of 2 89 billion USD,

while the mergings and acquisitions volume was 11 5.3 billion USD. The EU-27 states, including Romania,

have lately experienced a constant evolution of t h FDI flows and stocks, but they now seem to be the ones

that face up s ome harsh times. International studies s how that the FDI are attracted by factors such as labour

force flexiblity and the depth of the financial sectors for the „tradable” sectors, and the quality of t he judicial

system and the quality of the infrastructure for the „nontradable” sectors. None of these four factors is up to

the expectation for the moment in Romania.

Keywords: Foreign Direct Investments (FDI); Gross domestic product (GDP); Globalization

JEL Classification: G01; G32; F36

1. Introduction

„While investors are still concerned about the economic crysis, their trust is expected t o rise in the

near future”. This is a conclusion in the United Nation Conference for Trade and Development –

UNCTAD, concerning world investments. The insistence is upon the developing countries and the

„green economy”.

Global cashflows are steadily rising; this is one of the main conclusions in the 2010 World Investment

Report, carried out by UNCTAD. Foreign Direct Investments (FDI) have risen in t he first half of 2010

and they are expected to reach a volume of more than 1200 billion USD (866 billion EURO) this year,

to approximatively 2.000 billion USD (1.443 billion EURO) in 2012, reaching the level of 2007.

In 2009, the FDI outflows were the witnesses of some significant constrictions, as a result of the

economic activity, with a decrease of 43%, evaluated t o 1.114 billion USD (804 billion EURO). The

whole system was affected by the recession. The industry has experienced the decrease of the

investment volume, with a 77% decrease, compared to 2008. This phenomenon seems not to have

reversed. The investors priorities regarded other branches, such as electricity, gases and water

distribution, electronic equipment, constructions and communications.

The Foreign Direct Investments for the European Union reached a volume of 289 billion USD, while

the mergings and acquisitions volume was 115.3 billion USD. The EU-27 states, including Romania,

have lately experienced a constant evolution of th FDI flows and stocks, but they now seem to be the

ones that face up some harsh times. This happens due to countries with low economic development

speed, as a result of the declining export opportunities on the most advanced European markets and

the precarious situations of many national financial systems. This phenomenon lead to the decreasing

FDI stocks in South – Eastern Europe with a percentage of 31.

1

PhD in progress, Doctoral School of Ec onomic “A.I. Cuza”, Iasi, Address:

11

Carol I Blvd., Iasi 700506, Romania, tel. Tel:

+40 (232) 201744, Fax: +40 (232) 201152, Corresponding author: ivanalexandra@univ-danubius.ro

2

PhD in progress, Doctoral School of Economic “A.I. Cuza”, Iasi, Address:

11

Carol I Blvd., Iasi 700506, Romania, tel. Tel:

+40 (232) 201744, Fax: +40 (232) 201152, Corresponding author: gentimir.irina_elena@yahoo.com.