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The Impact of Foreign Direct Investment on the Economic Growth and Countries’ Export Potential

Author

Listed:
  • Pelinescu, Elena

    (Institute for Economic Forecasting, Bucharest, Romania)

  • Radulescu, Magdalena

    (University of Piteti, Romania)

Abstract

Most of the FDI specialists think that FDI had a positive impact upon the economic growth in the receiving countries. They showed that it was a direct relation between the FDI flows (as percent of the GDP) and the growth of GDP per capita not just for the developed countries, but also for most of the developing countries. In this way, the countries that had attracted an important FDI volume had the highest economic growth rates. Since the early '60s of the 20th century, the times with the most intense foreign investment activities had coincided with a sudden increase in the macroeconomic indicators (especially the GDP). Because the economic science proved that there was a direct connection between the FDI volume and economic growth rates, the IMF and the World Bank started to recommend to all countries (recommendation that they make currently) to create favorable conditions to attract FDI for ensuring, in this way, high development rates. The countries in transition need FDI not just to produce more goods and a higher quality. Foreign capital investments are the most efficient and safe way to integrate into the world economy. Concluding, only direct foreign investments would allow the re-specialization of the economy to surpass the situation of maintaining on the world markets only with food products and raw materials. Indeed, the acquired experience shows that FDI substantially enhanced the national economies’ re-specialization processes all over the world. The authors share the opinion of those specialists who affirm that FDI plays a determinant role in respecializing the transition economies and in increasing the export potential. Also, FDI growth leads to increase in the manufactured production quantity. Further, we shall examine some structural changes which occurred under the influence of FDI in the economies of new European Union member states (the Czech Republic, Estonia, Hungary, Lithuania, Latvia, Poland, Slovakia, and Slovenia) and in South-East Europe, drawing also the attention upon the changes in the export potential of those countries.

Suggested Citation

  • Pelinescu, Elena & Radulescu, Magdalena, 2009. "The Impact of Foreign Direct Investment on the Economic Growth and Countries’ Export Potential," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 153-169, December.
  • Handle: RePEc:rjr:romjef:v::y:2009:i:4:p:153-169
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    Citations

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    Cited by:

    1. Gheorghe ZAMAN & Valentina VASILE & Mirela MATEI & Carmen CROITORU & George ENESCU, 2011. "Some challenging (macro)economic aspects of FDI in Romania," Romanian Journal of Economics, Institute of National Economy, vol. 33(2(42)), pages 21-58, December.
    2. Raluca Georgiana POPESCU, 2011. "The Regional Climate of Foreign Direct Investments in Romania," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 8, pages 321-330, December.
    3. Iwasaki, Ichiro & Tokunaga, Masahiro, 2014. "Macroeconomic Impacts of FDI in Transition Economies: A Meta-Analysis," World Development, Elsevier, vol. 61(C), pages 53-69.
    4. repec:jes:wpaper:y:2012:v:4:p:493-501 is not listed on IDEAS
    5. Mihaela Simionescu, 2016. "Foreign Direct Investment and Sustainable Development. A Regional Approach for Romania," Working Papers of Macroeconomic Modelling Seminar 162702, Institute for Economic Forecasting.
    6. repec:rrs:journl:v:11:y:2017:i:1:p:1-17 is not listed on IDEAS
    7. Andrei, Dalina Maria, 2012. "Foreign Direct Investments in Romania. A Structural and Dynamic View," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 129-146, December.
    8. Elena Chirila - Donciu, 2012. "The Main Features Of The Flows Of Foreign Direct Investments In Romania," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4(3a), pages 493-501, September.
    9. Acaravci, Ali & Ozturk, Ilhan, 2012. "Foreign Direct Investment, Export and Economic Growth: Empirical Evidence from New EU Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 52-67, June.
    10. Liliana Scutaru, 2015. "The Structure And Territorial Dynamic Of Foreign Direct Investment In Romania," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 185-190, February.
    11. George GEORGESCU, 2012. "Changes In The Pattern Of Romania’S Foreign Trade Under The Global Crisis Impact," Romanian Journal of Economics, Institute of National Economy, vol. 35(2(44)), pages 139-159, December.
    12. Iwasaki, Ichiro & Tokunaga, Masahiro, 2013. "Macroecnomic Impacts of FDI in Transition Economies: A Meta-Study," RRC Working Paper Series 39, Russian Research Center, Institute of Economic Research, Hitotsubashi University.
    13. Zaman Gheorghe & Vasile Valentina & Cristea Anca, 2012. "Sustainable Development Challenges And Fdi Impact In Host Countries," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 444-460, July.
    14. repec:rjr:romjef:v::y:2017:i:2:p:29-44 is not listed on IDEAS

    More about this item

    Keywords

    foreign direct investment; exports competitiveness; multinational companies; economic growth;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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