Country risk, foreign direct investment, institutions


Attracting foreign direct investment for a developing country such as Romania is a key driver for economic growth and, thus, for development. But what factors determinates the FDI in Romania? To answer this question, our paper investigates in which extend the country risk influence the foreign direct investment flows in Romania. We had chosen country risk because it gathers in one composite rating the most important variables that asses the political, economic and financial environment of a country. Using data from UNCTAD for foreign direct investment, economic growth, as control variable, and International Country Risk Guide Composite Rating for a period of 21 years, our study shows that country risk ratings have a strong negative impact on FDI in case of Romania

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