THE CONTRIBUTION OF FOREIGN DIRECT INVESTMENT TO THE DEVELOPMENT OF ROMANIA'S TRADE IN SERVICES

Georgeta Ilie ()
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Georgeta Ilie: Institute for World Economy, Romanian Academy

Global Economic Observer, 2024, vol. 12, issue 2, 60-72

Abstract: During the last three decades, foreign direct investment (FDI) inflows have made an important contribution to the Romanian economic transformation. The recognition of their positive impact on the economic development has been sustained by favourable national investment policies, while the investing companies have been attracted by the Romanian market advantages. The paper highlights that the service sector in Romania experienced the most important growth, one of its determinant factors being the FDI it benefited from, so that this sector came to have a considerable support to the added value in GDP, employment and total foreign trade. The main objective of the paper is to emphasize the contribution of FDI to supporting Romania's trade in services, developed in a quantitative analysis focused on the evolution of indicators regarding FDI in services and service exports of foreign companies investing in Romania. This investigation is doubled by a qualitative search of the factors that have attracted FDI in the service industries and also the FDI effects particularly on the information and communication technology, professional, financial, telecommunications and trade services. The final remarks in the last part of this paper underline the dependence of the service sector of Romania on FDI, this relationship continuing to bring many benefits to the Romanian trade in services and thus sustaining GDP and employment and also enabling access to new technologies in services, but at the same time exposing the service sector to some potential vulnerabilities.

Keywords: foreign direct investment; services; trade in services; Romania; economic development (search for similar items in EconPapers)
JEL-codes: E22 F23 F43 F63 L8 (search for similar items in EconPapers)
Date: 2024-12
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