HOME COUNTRY MACROECONOMIC DETERMINANTS OF OUTWARD FDI: THE CASE OF ROMANIA

The 90s marked the remarcable increase of foreign direct investment (FDI) flows globally. Thus, global FDI outflows increased from 244 billion dollars in 1990 to 1,35 trillion dollars in 2014, with a peak record of 2,13 trillion dollars in 2007, according to UNCTAD statistics. In Romania, the value of outward FDI stock increased from 66,1 million dollars in 1990 and reached a peak in 2010, when total outward FDI stock cumulated 1510,7 million dollars. As the global economic and financial crisis has led to the unfavorable evolution of the Romanian economy, the business opportunities and the investment resources of Romanian companies have decreased significantly. Since 2011 the value of outward FDI stock entered a downtrend that was maintained until 2014, when outward FDI stock cumulated 695,7 million dollars. As a percentage of GDP, Romania’s outward FDI stock recorded only sub-unit values from 1990 to present. The aim of this empirical research is to analyze the influence of several macroeconomic factors on outward FDI from Romania, during 1991-2014. Using simple regression models, the empirical study reveals that factors such as interest rate, inflation rate, money supply, exchange rate and gross domestic product (GDP) have an important role in explaining outward FDI from Romania, while the influence of trade openness is weak. Between the outward FDI stock and money supply, exchange rate, gross domestic product, respectively trade openness, there is a direct and linear correlation and between the outward foreign direct investment stock and the interest rate, respectively the inflation rate, there is an inverse linear correlation. The results obtained from our empirical study emphasize that the evolution of macroeconomic factors in Romania, as a home country, represents an important stimulus for Romanian companies to invest abroad. The presence of Romanian companies on the international market was very limited and that is why an increase of the competitiveness of domestic companies on the national and then global market is imposed