Foreign direct investments’ efficiency – regional disparities in Romania

Abstract

This paper analyzes the evolution of the Romanian regions during transition under the influence of foreign direct investments (FDI), using efficiency calculations of the macroeconomic indicators. The methodology developed by Romanu & Vasilescu [1993] was chosen because it directly reflects the contribution of the investments into the evolution of macroeconomic indicators and the way in which FDI influenced that evolution. The ratio between the variation of the indicators of effort and effects shows the efficiency and the progress of an effect indicator for every additional value of effort. The level of FDI was adopted to serve as the indicator of effort, whereas gross domestic product (GDP), gross value added (GVA) and formation of gross fixed capital (FGFC) were adopted as the indicators of effect. In the light of such assumptions the evolution of Romanian economic development regions is characterized by huge disparities. The most obvious is the disparity between Bucharest and the rest of the regions. FDI had a strong positive influence on the macroeconomic indicators but the activity became efficient only after 2000.