The Impact of FDIs on Exports, and Export Competitiveness in Central and Eastern European Countries

After 1990, the Central and Eastern European (CEE) countries lowered the barriers to FDIs. Of course, many other developments were taking place at the same time: increasing openness to trade, privatization of previously government-owned production, and many other changes as these countries moved in various degrees from socialist to market economies and democratic governments. They privatized many state-owned enterprises, signed foreign trade agreements with other countries in the region, and have generally achieved a significant level of macroeconomic stability with improved growth rates. They also experienced a significant increase in FDI. As a consequence, the ratio of inward FDI to the CEE countries studied here in total world FDI inflows increased more than three-fold. Over the same period, these countries also achieved a substantial increase in their exports, especially towards Western Europe. We present in this paper the relation between the FDIs and exports in the CEE countries during 1990-2010 using statistic data analysis and literature review and underline the factors that determined an increase of exports in these countries. Despite other CEE countries that succeeded to attract many export-oriented FDIs, Romanian case is different because of many local specific factors such as an insufficient local production and a tight fiscal policy.