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Oana Popovici, Adrian Cantemir Calin and Mihaela Simionescu (Bratu)

Internal Auditing and Risk Management, 2014, vol. 35, issue 1, 55-72

Abstract: In this paper, we study the relationship between GDP and FDI in Romania and we also assess the importance of GDP level for further attracting FDI. Using an ARMA model, we find that FDI in Romania is not explained by the value in the previous period, but is due to the evolution of the errors in the previous period. In the range 1990-2013 we obtain a valid relationship between FDI and real GDP growth. According to the variance decomposition of FDI, we can conclude that 1.06% of the variation of FDI is explained by the changes in real GDP rate in the first period. Then, the influence of GDP rate decreases in time, the variance of FDI explained by GDP rate having a value close to zero in the 10th lag.

Keywords: foreign direct investments; gross domestic product; Romania; ARMA model (search for similar items in EconPapers)
Date: 2014
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Handle: RePEc:ath:journl:v:35:y:2014:i:1:p:55-72