Romania – An Attractive Market for Foreign Investors

Theoretical and Applied Economics, 2014

As an EU member, Romania is firmly anchored in the global economy, making it sensitive to its developments, but also to its regression. The current period is still quite cloudy; Romania is still subject to major risks. As a result of deepening economic and financial crisis macroeconomic indicators have not had the sustained positive development. Romania’s GDP in 2009 declined from 7.3% to -7.1%, in 2010 the decrease was about 1.2%, as in 2011 and 2012 to record slightly positive developments of 2.5% and 0.3%. For 2013 it is expected an increase of 2% for Romania's GDP, while global economic growth is still quite slow. Since 2010 inflation rate is decreasing, going from 6.09% to 3.33% in 2012 and by the end of 2013 it should be around 3.4% according to the Economist Intelligence Unit. In 2010 the unemployment rate in Romania was at 7.3% reaching to 7% in 2012. We will try in this article to make a brief analysis of the current situation of Romania, but also to see what its prospe...

RePEc: Research Papers in Economics, 2008

Last year, Romania ranked among first countries in the region as receiver of foreign direct investments and the positive signals from those who have a hard word to say regarding business community didn't delay to appear. Prestigious international companies choose Romania, and today our country is already checked out on the international map of success locations as attractive destination for capital placements. You exist as a country, as destination in the business environment when you prove as country and to those from exterior when they look at you, that you can offer, you can assure the premises and the necessary frame for obtaining profit. 2007 proved not only that Romania exists as a country from the point of view of business destinations, but is situated on a much honorable position in front of the big international "players" which grants Romania today maybe the most valuable country rating: the respect. The present policy of foreign direct investments in Romania was conceived for attracting foreign investors. Romania's economic potential is attractive through the internal market dimension (second market from Central Europe after Poland), through the high level of qualification of labor force, through the importance of existing resources and not in the last place through the proximity from the Occidental Europe countries, which represents the investment sources. The improvements of the business environment, the effects of introducing the unique quote of taxation and the positive attitude of foreign partners toward Romania conduced to the accented increasing of foreign direct investments in the last years. Each foreign investment represents an investment in Romania, in the people of this country, in its capacity to become a credible partner for the international business environment representatives. Investments are those which locate you on the map. It represents the barometer, the "health" of a nation.

2012

This paper analyzes the dynamic of economic development in Romania, underlying the steps already made by Romania on the way of economic development, as well as the causes of the slowness of this long term process. Four dimensions of the economic development are particularly analyzed here, i.e. the GDP, health, education and income inequality, with a great emphasis on the per capita GDP dynamic. The paper also looks at two contemporary challenges of Romania with a considerable impact on economic development – the progress made in the process of EU funds absorption and the income polarization, which is at present a matter of concern for the whole EU. The components of Romania’s economic development are presented in comparison with those of the New Member States. Keywords: economic development, economic growth, Gini.

Annals of University of Craiova Economic Sciences Series, 2008

Romania attracted large inflows of foreign direct investments (FDI), thanks to an improved business environment and still-low labor costs. Romania offers to the foreign investors many major reasons to invest in Romania: great market potential, strategic location, significant natural resources, high skilled labor force, high potential for economic growth, new EU member, infrastructure growing steadily, friendly business environment, access to European funds, competitive taxation. But still there are possible many contradictories evolutions generated both by Romanian government decisions and by the influence of the external factors. Virtually, the size on the above potential shows the countries with low FDI potential but strong FDI performance. The same time, the United Nations Conference on Trade and Development (UNCTAD) matrix considers that Romanian economy has less advantages than the Romanian Agency for Foreign Investment (ARIS) offers. Therefore, Romania is below potential wanted by foreign investors. Therefore many challenges must be addressed to enhance competitiveness and to attract additional FDI. The Foreign Investors Council (the FIC) from Romania believes that Romania must still improve the enforcement of new laws and regulations; tackle major social reforms, including reform of the labor market; increase its competitiveness and improve its infrastructure.

2011

In this paper we identify a framework of the main macroeconomic indicators an investor must look when investing in a country, depending on his activity business sector. Using a qualitative method of research on the Romanian case in period of 2000-2010, we establish that a series of leading indicators, as Gross Domestic Product (GDP) growth rate, inflation rate and industrial production, are appropriate to get a brief snapshot of the economic outlook of a country. The following period, since 2011 to 2014, confirm our results. Beside the traditional indicators, we set as significant the degree of business cycles synchronization with the European Union (EU) in order to predict the next path of the Romanian economy. We use a structural divergence index for assessing the similarity of economic structure between Romania and EU. The results of this study confirm that Romania lags behind EU, offering the possibility to decide the next step of an investor's business strategy.

2010

The views expressed in this publication cannot in any circumstances be regarded as the official position of the European Union

2014

The economic development is not exclusively a contemporary reality but a feature of historical systems and eras in general. This aspect was also observed by Romanian economic school representatives, like Mihail Manoilescu, Gheorghe N. Leon, N.P. Arcadian. The present paper aims to be an insight into the issue of investment and industrialization – factors of economic development – of interwar Romania.

The project entails analysis of the microeconomic issues facing Romania in the 21st century. The findings comprise of the data since the beginning of the new millennium to date. The report of the findings and results consists of GDP, unemployment rate, trade, as well as the foreign exchange rates. Moreover, the discussion in the report is about critical analysis of the primary factors that influence Romania's economy. The report is of paramount significance to policy makers through which it facilitates the identification and reviewing of the critical areas of the economy after which important policies may be developed and implemented to improve the economic conditions of a country. Besides, such policies by be adopted by other economies. In the recent past, the application of variety assistance programs facilitated in the improvement of the Romania's macroeconomic imbalances. Since the end of the recent global economic downturn in 2008, the financial sector improved especially due to policy reforms. However, the Country is still facing various challenges that require immediate attention despite implementation of the policy reforms. For example, the Country was amongst the most affected during the European Sovereign Debt Crisis despite preservation of the financial stability in the recent past.

2012

After the year 2000, as business was improving and the flat tax was introduced, the positive perception of Romania by partners has attracted major capital flows in the national economy. Although industry is unanimously considered to be a major source of economic and social imbalance, yet in time it has proved to be by far more attractive to foreign investors than agriculture and tourism, which have a remarkable potential in this country. Major foreign investments are located in the main urban centres, because they are more easily accessible and more open to establishing relations and have a more dynamic economic milieu. Bucharest continues to hold a dominant position, either by hosting foreign companies, or simply their headquarters. Next come the regional capitals, basically cities with more than 300,000 inhabitants, with a large sphere of influence and capacity of coordinating the regional economic space. Moreover, present evolutions have shown that Romania is likely to loose its cheap labour advantage, a situation that makes its further attractiveness for international investment flows really questionable.

2010

Identification of potential investment of the countries in the current context is one of the main important problem of the world economy because the investments, particularly foreign ones, is considered the key factor for economic growth and development. Foreign direct investments are an alternative source for financing the national economy, with a tendency in recent years of a positive effect on the Romanian economy. This paperwork highlights the role of foreign direct investment in Romania's economical growth potential, with major impact on employment, on the economic modernization, technology transfer and on the living standards. At the same time the article analyzed and highlights the contains of the current trend of foreign direct investments, structure and dynamics after Romania joined the European Union and their geographical distribution on the main development regions. Keywords: foreign direct investments, role of foreign direct investments, development regions, economic growth JEL Classification: R12, E22 C CE ES S W Wo or rk ki in ng g P Pa ap pe er rs s, , I II I, , ( (4 4) ), , 2 20 01 10 0 120 An accelerated growth in recent years has placed Romania among attractive FDI destinations. Consequently, the investors interest in Romania has increased steadily in recent years. Cheap and skilled workforce, low taxes, improving the business environment, the positive attitude of foreign partners and favorable geographical location are the main advantages of Romania for foreign investors. Thereby, as can be seen above, Romania has registered an upward trend in attracting foreign direct investment. In 2008, Romania attracted investments worth EUR 9496 billion placing her an enviable position on the statistics that analyzes foreign direct investment flows in South Eastern Europe. As expected, the economic crisis has affected the amount of FDI attracted by Romania, in 2009 recorded a drop regard previous year, leading to the 4556 billion euros. The number of FDI projects has almost halved in 2009 in Romania, while the volume of newly created jobs has decreased by 44%, according to a study released by Ernst & Young. Romania recorded in 2009 a 48% reduction of the number of FDI projects and a deceleration of 44% in the creation jobs, compared to 2008. According to that study, in 2009 Romania has attracted 75 foreign direct investment projects, representing 2% of the total projects in Europe, and generated 6384 new jobs, or 5% of all Europe. Thereby, in 2009 Romania ranked seventh in the European rankings in creating jobs, respectively, ranked 11th by token of the market share in total FDI. The same study shows that in 2008 in Romania were created 11,403 new jobs through the 145 FDI projects. Despite the rather difficult period our country is passing through, Romania is still considered an attractive destination for industrial projects, in 2009 Romania drew about 7 percent of total European investment projects. In 2009, FDI in Romania was also decrease by 48,4% from 2008, to 4556 billion Euros, according to statistics of the national bank. Investments financed the current account deficit at a rate of 96,9% last year. Intra-group loans accounted for 37,4% of FDI, amounting to 1834 billion Euros and equity, including reinvested profits, 62,6%, or 3065 billion Euros in 2009, according to statistics of National Bank of Romania. From the point of orientation for foreign investors into industries (according to NACE Rev. 2), FDI was located mainly in industry (41% of total). On the next place is filled by the financial and insurance sector, followed by construction and real estate, commercial, and telecommunications. Within industry, manufacturing industry attracted the largest volume of investment (31,1%). C CE ES S W Wo or rk ki in ng g P Pa ap pe er rs s, , I II I, , ( (4 4) ), , 2 20 01 10 0 Ivan, M. V., Iacovoiu, V. (2008) Rolul investiţiilor străine directe în contextul obligativităţii indeplinirii criteriilor de convergenţă, Studii financiare.