REGIONAL COOPERATION AND ECONOMIC INTEGRATION

PART V:
By economic activity, the most part of FDI in 2007 went to manufacturing (39.2% of
total investment) and significant FDI was also channeled into financial intermediation and
insurance, (23.3 percent of total FDI), wholesale and retail trade (14 percent), construction
and real estate (7.8%) (table 2). Despite their large potential, certain sectors, such as
textiles, wearing apparel, leather goods, as well as hotels and restaurants, still hold a rather
small share of FDI.
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Table 1: FDI - by types (2007)
Activity sector
FDI stock (Euro mn) % from total
2006 2007 2006 2007
Industry, of which: 15,155 17,409 43.9 40.7
- mining 2,105 2,046 6.1 4.8
- manufacturing 11,782 14,071 34.1 32.9
- electricity, heating, natural gas, water 1,268 1,292 3.6 3.0
Financial intermediation, insurance 7,678 9,961 22.2 23.3
Wholesale and retail trade 4,209 5,970 12.2 14.0
Post and telecommunications 2,831 2,784 8.2 6.5
Construction and real estate 2,200 3,329 6.4 7.8
Other activities 2,439 3,317 7.1 7.7
Total 34,512 42,770 100 100
Source: National Bank of Romania, National Institute of Statistics, Foreign Direct Investment (FDI) in Romania
as of 31 December 2007
But major shifts are taking place in the sector composition of FDI flows to Romania.
Investors’ interests are diversifying from exploiting low-cost advantages towards higher
value-added production (Pauwels and Ionita, 2008). This is reflected in the rising share
of the services sector as a destination of total FDI flows. In the services sector, the large
population and rising living standards have attracted significant FDI flows in financial
intermediation and insurance.
But the largest single beneficiary in terms of FDI stocks remains the manufacturing sector,
which held more than 1/3 of the inward investment positions in 2006 and this trend continued
in 2007. The manufacturing sector is also undergoing significant transformations along
with some of the CEE countries that have experienced a similar transformation process
in the same sector. In the early stages of transition, their industrial base relied more on
unskilled-labor-intensive activities but later on, the centre of gravity shifted towards more
value-added skill - and capital-intensive sectors such as the automotive and IT industries.
The types of FDI by contribution to the development and renewal of economic assets in the
FDI recipient country in 2007 are as follows (table nr. 3):
− Greenfield: investment in the establishment and development of enterprises by or together
with foreign investors represents 17.3%;
− Mergers and acquisitions: partial or full takeovers of enterprises by foreign investors
from residents, and their subsequent development. The M&A had 10.5% from the total
FDI in 2007;
- Corporate development: foreign direct investors’ increase in the capital of direct
investment enterprises and represents 72.2% from the total FDI (NBR, 2007).