Causal Links between Trade Openness and Foreign Direct Investment in Romania

Journal of Risk and Financial Management

Bianca Tescașiu¹  MalshaMayoshiRathnayaka Mudiyanselage¹  Gheorghe Epuran¹ 

[1] Faculty of Economics Sciences and Business Administration, Transilvania University of Brasov, Universitatii Street, No. 1, Building A, 500068 Brasov, Romania;

关键词: foreign direct investment;    trade openness;    ARDL model Romania;    panel data analysis;   

DOI  :  10.3390/jrfm14030090

来源: DOAJ

【 摘 要 】

In this increasingly globalized era, foreign direct investments are considered to be one of the most important sources of external financing for all countries. This paper investigates the causal relationship between trade openness and foreign direct investment (FDI) inflows in Romania during the period 1997–2019. Throughout this study, Trade Openness is the main independent variable, and Gross Domestic Product (GDP), Real Effective Exchange Rate (EXR), Inflation (INF), and Education (EDU) act as control variables for investigating the relationships between trade openness (TOP) and FDI inflow in Romania. The Auto Regressive Distributed Lag (ARDL) Bounds test procedure was adopted to achieve the above-mentioned objective. Trade openness has negative and statistically significant long-run and short-run relationships with FDI inflows in Romania throughout the period. Trade openness negatively affects the FDI inflow, which suggest that the higher the level of openness is, the less likely it is that FDI will be attracted in the long run. The result of the Granger causality test indicated that Romania has a unidirectional relationship between trade openness and FDI. It also showed that the direction of causality ran from FDI to trade openness.

【 授权许可】

Unknown