Foreign direct investements and economic growth in Romania

Abstract

Transition economies are a special case in what concerns foreign direct investments (FDI) and important attention has been paid to the level of FDI in these countries, considering the assumption that they are essential for economic development. The first part of this paper focuses on FDI inflows and trends of the basic macroeconomic indicators in Romania, showing that foreign capital has played an im-portant role in Romania’s economy. The second part aims to determine whether foreign direct invest-ments are associated with economic growth and if the presence of foreign investors conducted to a higher standard of life. The results indicate that foreign direct investments contributed to higher economic growth rates during 2000-2010 and had a favorable effect on the economy.