EJIST - European Journal of Interdisciplinary Studies

The objective of this paper is to identify how an increase in competitiveness could improve FDI in ten Central and Eastern European (CEE) countries. For assessing competitiveness, we employ the variables used by World Economic Forum in designing the Global Competitiveness Index and find that half of the analyzed countries could see the most important increases in FDI/capita if making institutions more competitive, four other countries should accelerate on improving innovation and infrastructure while another country should work on labour market efficiency. We also calculate the potential increase in FDI/capita due to similar changes in different competitiveness variables.

Keywords:
foreign direct investment, competitiveness, Central and Eastern Europe
JEL:
F23, H11, O52

Our paper addresses the activity of the foreign-capital controlled companies versus domestic companies in Romania, in order to highlight the differences in performance between the two categories of firms, given the increased importance of foreign-owned companies in the Romanian economy in recent years. The research and analysis are based on data available from Eurostat FATS - Foreign Affiliates Statistics. The comparative analysis of performance between foreign-owned and Romanian-owned companies is carried out for the period 2008-2014 on two levels: (i) The total performance of foreign-owned and Romanian-owned companies; (ii) The determination of the “average”-sized foreign-owned and Romanian-owned company attributes. Our main findings show that foreign-owned companies generate higher cash flows that are essential for business development, backed up by a higher value of production, higher turnover and higher gross operating profits, despite a higher number of employees and higher personnel costs compared to Romanian-owned companies. At the same time, Romanian-owned companies claim higher profitability ratios due to their reduced dimensions. Read more

Keywords:
performance, foreign-owned companies, Romanian-owned companies, foreign direct investment
JEL:
F23, L25, O10