Reinvestigating Determinants of Foreign Direct Investment Inflows in European Countries: Any Difference from the Romanian Economy?

Abstract

The aim of this study is to investigate the determinants of FDI inflows in Romania. Data was collected from the UNCTAD and WDI from 1990 to 2018, and econometric technique was utilized to address the objective of the study. Consequently, there exists a negative relationship between FDI inflows, growth rate and market size in Romania. However, GDP per capita and per capita growth has a positive relationship with FDI inflows. Furthermore, it could be established that there is an existence of a unidirectional causality which runs from FDI inflows to economic growth. Therefore, the policy makers in Romania should ensure the sustainable growth of GDP per capita and capita per output in the country. Also, as a matter of urgency the authorities in Romanian economy should embark on aggressive policy that will expand the market size and ensure a sustainable rate of economic growth in the country.