THE LINK BETWEEN EXPORTS AND INWARD FOREIGN DIRECT INVESTMENT: THE CASE OF ROMANIA
THE LINK BETWEEN EXPORTS AND INWARD FOREIGN DIRECT INVESTMENT: THE CASE OF ROMANIA

Summary/Abstract: This paper investigates the relationship between a country’s exports and foreign direct investment (FDI) by transnational corporations, with a focus on Romania. First, we lay out the theoretical background concerning the manner in which FDI shapes a country’s exports. Then, we give a short overview on the recent evolution of Romania’s foreign trade, highlighting sectors in which Romania has revealed a comparative advantage. Further, we take into consideration the increase of inward FDI and its main destinations within the Romanian economy. The influence of FDI on the competitiveness of Romanian exports is then analyzed in detail, employing correlation instruments. The findings lead us to the conclusion that from a statistical point of view, exports and inward FDI are not correlated in the case of Romania. Finally, we make some suggestions and policy recommendations both for attracting FDI and for stimulating the competitiveness of Romanian exports.

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