Increasing Romania's attractiveness for Foreign Direct Investment (FDI) has been a constant priority for the Foreign Investors Council (FIC) in its more than 25 years of activity. An essential element in attracting foreign investment is Romania's accession to international structures. Both NATO membership and later EU membership were events that spurred FDI growth in Central and Eastern European states.
In the case of Romania, if we consider the last 2 decades, we can see that the share of FDI stocks as a percentage of GDP (21% in 2003 before the country joined NATO) almost doubled and reach 39% of GDP by 2022 according to UNCTAD[1] data. Equally importantly, if we look at the share of foreign capital inflows in the Romanian economy each year, they have made a significant contribution to growth and investment, representing in the last 9 years (excluding the 2020 pandemic year) between 10% and 15% of gross national fixed capital formation.
Romania's accession to the Organisation for Economic Cooperation and Development (OECD) would represent another important step in attracting foreign investment to Romania, as we can see from examples of countries in the region, according to UN and World Bank statistics. The Czech Republic became a member in 1995 and registered an increase in FDI stock from 12% to 70% of GDP. Hungary joined in 1996 and we can see an increase in the share of FDI stock in GDP from approximately 24% at the time of OECD accession to 59% in 2022. Similarly, in Poland, the stock of FDI increased from 7% in 1996, when the country obtained OECD membership, to 40% of GDP. Estonia joined in 2010 and currently has approximately a 79% share of FDI stocks in GDP, having reached a maximum of 96% of GDP in 2020. Latvia joined in 2016, and in just 5 years, the share of FDI stock in GDP increased from 54% to 59%.
The OECD guidelines are also aligned with the FIC’s vision for the sustainable development of Romania for the next 20 years. Under the umbrella of the project Va Urma (https://vaurma.ro/) developed by the FIC, we discussed with the Government, with representatives of Parliament, and with international structures a series of measures that will support convergence with the standards that our country must meet in order to be able to join the OECD. Both specialist studies and Va Urma show that structural reforms in key areas implemented in OECD countries, such as in education, taxation, state-owned companies, and administrative capacity can increase the annual GDP growth rate by up to 1 percentage point.
Romania can obtain the international recognition that comes from joining the OECD, especially the possibility of attracting Foreign Direct Investment (FDI) with added value that would reduce the pressure on the state budget. For some companies, OECD membership is one of the necessary conditions to invest in a particular country, as this is seen as a guarantee of high economic and legislative standards. Consequently, there is a need for a more coherent and strategic approach by Romania to FDI.