It is important that the authorities address the current problems by looking also ahead and implementing measures and reforms in accordance with OECD standards, according to Ramona Jurubita, Vice-President of the Foreign Investors Council
Increasing Romania’s attractiveness for Foreign Direct Investment (FDI) has been a constant priority for the Foreign Investors Council (FIC). 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, looking at the last 2 decades, we can see that the share of FDI stocks as a percentage of GDP almost doubled from 2003 before joining NATO (21%) until 2023 (increasing to approximately 36% of GDP) according to UNCTAD data (United Nations Trade and Development Data). An important milestone for Romania was also the recent full adhesion to Schengen and we expect this reinforcement of Romania’s allegiance to the EU to further stimulate investments in our country.
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 65% 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 56% in 2023. Similarly, in Poland, the stock of FDI increased from 7% in 1996, when the country obtained OECD membership, to 41% of GDP.
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.
Since the announcement of Romania’s invitation to begin the accession process and the related dialogue, our country has been the subject of two economic reports compiled by the OECD. One was published in 2022, and the second in March 2024. FIC did a comparative analysis of the two reports, to identify recurrent themes and new topics, to assess the OECD’s perception of the progress made by Romania in terms of the accession process, as well as in terms of the evolution of the economy and society . Our aim was to identify the key topics where the focus of Romania’s actions is expected to support the accession process and healthy and sustainable development of the economy and society.
From an economic point of view, our country is at a critical point, with the highest twin deficit levels in recent history, except in times of crisis. The economic situation of the country must be the priority of the authorities in the coming period and several important reforms must be implemented. Romania can obtain the international recognition that comes from joining the OECD, especially the possibility of attracting 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, Romania needs to take a more coherent and strategic approach to attracting FDI, especially considering the worrying signal received from the rating agency.
Based on the main messages of the OECD from the two analysed reports for Romania, we believe that the main directions of action to support the process of joining the OECD should be grouped on 3 axes: improving budget revenue; a healthy business environment based on a well-motivated and active workforce; energy efficiency. It is important that the authorities address the current problems by looking also ahead and implementing measures and reforms in accordance with OECD standards.
By Ramona Jurubita, Vice-President of the Foreign Investors Council
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