FOREIGN DIRECT INVESTMENTS AS A FACTOR FOR ECONOMIC GROWTH IN ROMANIA

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By: Piotr MISZTAL
JEL: F43
Keywords: Economic growth, foreign direct investments, vector autoregressive model

The main aim of the article is to present the influence of foreign direct investments (FDI) on the economic growth in Romania between 2000 and 2009. The article consists of two parts. The first part presents a theoretical analysis of the FDI-led growth hypothesis. This part overviews empirical research, while the next one analyses the importance of foreign direct investments for economic growth in Romania using the Vector Autoregression Model (VAR). The elasticity coefficients of gross domestic product (GDP) to changes in gross fixed capital formation, employment, exports of goods and services, and foreign direct investments in Romania are estimated on the basis of impulse response function. Finally, the author offers a decomposition of the gross domestic product variance to assess the degree of GDP determination by changes in gross fixed capital formation, employment, exports of goods and services, and foreign direct investments in Romania.