Foreign Direct Investment and Competitiveness. Evidences from Romanian Economy
Abstract
The activity of companies with foreign capital is more often in the center of attention of the public opinion, researchers and public authorities considering the positive effects but also the negative externalities that it generates on the economies of the host countries. With the liberalization of capital movements, FDI was consider the panacea that could solve all economic, environmental and social problems in the host less developed countries, but the reality is much more complex. In order to test if foreign direct investment (FDI) is caused by competitiveness in case of Romania, we considered FDI inflows externalities for national economy, net inflows (% of GDP) and Competitiveness index for the time period 2007-2018. The econometric methodology used to model FDI and Competitiveness Index is Granger Causality. The results of the study suggest that there is a unidirectional causality, flowing from Competitiveness Index to foreign direct investment. Thus, in case of Romania, foreign direct investment represents the result of competitiveness, FDI does not influence Competitiveness index.
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