Mihaela Simionescu,

Institute for Economic Forecasting of the Romanian Academy,

Bucharest, Romania,

E-mail: mihaela_mb1@yahoo.com

Effects of European economic integration on foreign direct investment: The case of Romania

Abstract. In the context of recent debates about the real benefits of European economic integration, the aim of this paper is to assess the impact of the EU membership on FDI in Romania (bilateral FDI and FDI inflows). The Heckman selection models estimated for the period 2005-2016 show that Romania attracted more FDI and grew bilateral FDI in this period due to the EU membership. The separate models for 2005-2006 show that Romania did not attract more FDI from the EU countries as compared to non-EU countries. Since 2007, the EU membership had a strong and positive impact on FDI in Romania. However, countries with more exports are more likely to invest in Romania suggesting that foreign companies with lower productivity chose Romania as a destination country. However, other economists might argue that this result should be mostly due to the balance of trade (exports constitute external financing).

Received: May, 2018

1st Revision: August, 2018

Accepted: November, 2018

DOI: 10.14254/2071-789X.2018/11-4/6

JEL Classification: C51, C53, F21

Keywords: FDI, economic integration, GDP per capita, exports, Romania, EU membership