COUNTRY RISK EVALUATION IMPACT ON FDI FLOW. MEDIUM RUN EVIDENCE FROM ROMANIA

Abstract

During the last two decades, Romanian economy suffered numerous changes, with direct impact in the socio-economic and political life. This affected also the investment environment, the degree of attractiveness for investors and the flow of FDIs. As the economic system has a global dimension, the need of evaluating different countries from a risk perspective (that will serve as starting point for investor’s decision) has increased the role of rating agencies, especially in the economic crisis context. Therefore, by applying two econometric models, we will determine in which degree the risk rating (using the Euromoney index) is influencing the FDI flow in Romania, having as evidence the period 1996-2012.

Keywords

• country risk
• FDI
• rating agencies