The use of FDI is favorable to long-term economic development, especially in the current context, when we face limited resources for large investment projects and the government’s ability to mobilize such resources is narrowed by significant budget constraints, the organization, which includes over 120 multinational companies, said in a report on foreign direct investment drawn up in collaboration with the Academy of Economic Studies (ASE) in Bucharest.
Foreign direct investment in Romania dropped 60.38% in 2020, to EUR1.92 billion, compared with EUR4.85 billion in 2019, central bank data showed Monday.
FIC said in its report that Romania benefited from 0.45% of total FDI flows globally, or EUR81.12 billion in 2018. central bank data show that FDI companies accounted for 75% of the country’s exports and 68% of its imports. The number of employees in FDI companies represents 26% of the total number of employees in Romania, slightly lower compared with previous years.
Even though FDI stock has increased in Romania every year since 2008, the differences remain significant compared with other countries in the region, when we look at the FDI level in relation to GDP or population numbers.
The services sector has the largest share of FDI stock in Romania, approximately 47% of the total. However, in 2016, Romania attracted only 5% of the total volume of FDI related to high-tech industries and knowledge-intensive services in the region.
Instead, 52% of the stocks were directed to Hungary, 18% to Poland and 14% to the Czech Republic.
“It is important to determine which way Romania is heading and to identify ways of action. Public policy measures could focus on encouraging higher value-added FDI and facilitating the reorientation of FDI in high-tech and knowledge-intensive industries in services areas,” FIC said.
The organization warns Romania risks becoming specialized in industries with low added value and low technological intensity in the absence of concrete measures to increase competitiveness, focused on attracting a certain type of FDI.