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RESEARCH PRODUCT

INCREASING COMPETITIVENESS AND JOBS THROUGH FOREIGN DIRECT INVESTMENTS

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After 3 years of collapse, foreign direct investments (FDI) have reached a minimum level of the last 9 years, in 2011, meaning 1, 94 billion Euros, below the 2003 level. In the first 10 months of 2012, foreign direct investments have reached a level of 1,27 billion Euros, surpassing the similar period last year, as the economic growth was centered around 0,5 %. At this time, foreign direct investments represent one third of the current account deficit. Romania is objectively reliant on foreign capital due to its low degree of internal saving. Investors have chosen the automotive industry in Romania, a sector deemed competitive, due to cheap labor force, large market and substantial state aid. The competitiveness of this sector, as investors appreciate it, also depends on the existing transport infrastructure and the stability of the market. Romania remains attractive for foreign investors if the political environment stabilizes, if inflationist pressure drops, and progresses in the public sector will be recorded. We believe that Romania is reliant on foreign capital because it must finance its current account balance, its budget deficits, and external debts. In perspective, Romania must diminish its independence from foreign capital on the basis of internal savings.