FOREIGN DIRECT INVESTMENTS AND THEIR NON-TRADITIONAL QUALITY FACTORS. A VAR ANALYSIS IN ROMANIA AND BULGARIA

Abstract

The aim of this paper is to present an econometric analysis using VAR techniques for emphasizing the political institutional factors, economic freedom factors and the quality of labor force factors impacting on FDIs attracted in Bulgaria and Romania. We used yearly data series between 2000 and 2014, provided by the World Bank. These two countries display a very friendly climate (law income corporate tax), but they attracted large amounts of FDIs only for a short period of time at mid-2000s’. The foreign investments sharply dropped during the crisis, and the perspectives are not so good. The foreign investors claim that high corruption and bureaucracy greatly diminish the advantages of an attractive fiscal environment in these two specific countries.

Keywords

• FDIs
• Quality political institutional factors
• Economic freedom factors
• Quality economic institutional factors
• Quality of labor force factors
• VAR analysis