Foreign Direct Investment and Regional Development in Romania

The regional integration of the Romanian economy implies the continuation of modernizing existent structures, expanding the new entrepreneurial culture and foster the individual competences for corresponding to the European model. Foreign direct investments represent the link between financial and productive systems, integrating them at a regional and global level. Beside the imported capital flows, they have a direct impact upon the management of the productive entities, assure a transfer of modern technologies, increase the level of occupation and the household available income, modifying the consumers culture. The regional development policy must ensure the reduction of disparities between the different levels of development of the Romanian regions through encouraging foreign direct investment capable of completing the little dimension of the local capital. Taking into consideration the movement of disparities to East and the fact that the increase of economical development disparity after the last two European Union enlargements did not involve a higher level of allocated funds, foreign direct investments remain an alternative for the disparity elimination and accelerating the restructuring marked by the globalizationregional development, socio-economical disparities, foreign direct investments

Steps in the development of the Romanian financial system and the corellation with the level of economical growth

Along the history it has been asserted that among the determinant agents of the economical growth can be also cited the conservation and the endowment with physical, technological and human capital. This thing involves the realization of certain investigations in the infrastructure, development, and innovation, as well as in the education and the formation, that can raise the existent level of these resources in every country and to lead to a growth in the productivity, and in the competition of that country materialized through a higher GDP of a capital. But there is an extremely important factor like the way of financing, the degree of development of the financial system of the economy that leads to economical growth. On a microeconomic level, in what concerns the economical agents, financing is the most important for the development. All in all, no matter how good the product or how efficient the commercialization channels or the correlation level between technology and the human factor may be, if the business does not have an efficient financing politics, regarding the liquidity as well as the solvency and the profitableness, it will crash minimizing the other successfully realized aspects. Except the fact that it offers an efficient allocation and a reduced cost of the financial services, a well developed financial compartment identifies the potential investors, monitors and gives information regarding the behavior of the beneficiaries of the chartered capital. The financial system unifies the capital demand and the offer through banks, capital markets, and other financial mediates like mutual funds or pension funds. An efficient financial system mobilizes the collected saving by the unities that, after they satisfy their own objectives of investment and consumption, have a financing capacity for channeling it towards those units that, for realizing their investing objectives, need financing, offer an efficient payment and clearing system, in this way facilitating the financial transactions. An efficient system is the one that realizes an optimum getting in and allocation of the resources, that it has realized in a satisfying manner the remuneration conditions, assurance, and liquidity of the equivalent deposits or the instruments of collecting the resources, and on the other hand, the cost conditions and financing term for the allocated resources. Until short time ago, it was believed that the financial system develops after the contracting sector, channeling towards investments, at the request of the undertaker, the over pluses obtained as a consequence of the economies of the population. Following what Schumpeter first expressed in 1912, recent theories showed that an efficient financial system is a stimulus for the technological innovation identifying and financing the undertakers capable to successfully innovate the product and the production process. One of those who have opted for this kind of thought is Ross Levine who assures the fact that “a theoretical as well as an empirical constant work volume tends to make even the most skeptical to believe that the development of the financial system is a determinant of the economical growth, and not only a passive answer to this growth.” Levine and the others that share his opinion believe that there are inherent relations between financial intermediate and productivity and , as the amelioration of the productivity level produces on a long term benefic effects on the level of economic development, it can be said that also the financial intermediate generates economical growth. Moreover, Levine suggests that the development of the financial system has an important positive effect over the economical growth saying that “it can be eliminated a third of the already existent inequality between the countries with an important growth and those with a slow growth through the development of the financial intermediation for the latter ones until they reach a developing level comparable with the one of the countries with a quick development”. The positive association between the degree of development of the financial system and economical growth was at large analyzed also by Demirguc-Kunt (2006), Levine and King (1993), and Levine and Beck (2004). They get to the conclusion that this correlation stays significant even when other factors of influence are taken into consideration. Moreover, they prove that regarding a country with a developing financial system, the degree of financial development is correlated not only with the current growth, but also with the future economical growth. In order to do a thorough analysis of the way in which the Romanian financial system evolved, being correlated with the economical growth of the financing structure of the Romanian economy between 1990 and 2006, we leveled this analysis depending on the mutations that took place during the time in the Romanian economical and financial landscape. We have taken one by one the mutations that took place during this period regarding the Romanian banking system and capital market, as main financial agents, then the macro economical politics and their impact on the development of the financial system, and, least but not last, recent evolutions experienced by the Romanian financial system and regional level (Central and Eastern Europe) and European Union comparisons.Romanian financial system, capital market, development

Multiplying financing choices through capital markets

Considerable evidence shows that countries with the most developed financial sectors and capital markets enjoy the strongest economic growth over the long run. The non-financial sector, small and medium sized entities can access a wider availability of more innovative and lower cost finance to aid their growth, while larger companies profit from an overall reduction in the cost of capital and a wider range of financial products. These economical agents in search of alternatives for financing their projects demand the greatest level of flexibility regarding the use of the financing instruments available and this flexibility can determine the success or failure of such a project. Capital markets also facilitate the efficient allocation of savings to where it is most productive. They allow large numbers of investors to reduce their financial risks through diversification. By spreading risk widely, they also cushion the economy against economic and financial shocks.capital market, financial innovation, flexible financing decisions

Opportunities offered by the capital market for financing public administration

Nowadays, covering the financial deficit of public administration in Romania is a difficult task, taking into consideration the fact that in a continous way, this institutional sector must implement and manage investment projects, that suit the local needs of Romanian colectivity and dynamize their adaption to the social,economical and political requirements of the integration in the European Union. Therefore, the alternative of financing through the capital market is well received by the public authorities, especially because there is a lack of flexibility and variety of financing possibilities for the public administration. The interest for this type of financing has increased over the time, once with becoming familiar with the mechanisms and advantages of such a type of financing by all entities that operate on the market (issuers, investors, intermediaries).capital market, T-bonds, public debt management

The multinational companies - an institutional response to the changes in the technological market

The globalization process, from both a temporal and locational point of view, has led to changes in the human interrelations, to the unification and expansion of economical activities over the regions and countries. The Romanian economy is depending strongly on the decisions made by large multinational companies that influence upon its integration in the international productive system. Setting up subsidiaries of these multinational companies in Romania is determined by cheap working factors, adaption of the production to the local market demand, penetration of the Romanian market and of the regional markets, an increase in the global effiency at the level of such multinational company. The cross-border inflows of foreign direct investments contribute to the technological transfer, to an increase of the productivity, a better allocation of capital, a significant increase in the exports and of the quality of the life. The foreign direct investments realized in Romania have led to a visible bettering of the country rating and of the economical performances. The technological transfers performed by multinational companies generate positive spillovers through the reduction of the productivity disparities, the accorded technical assistance, the continuous process of formation of the qualified personnel and managers. The mechanisms through which technological spillovers are realized, are represented not only by the foreign direct investments made by multinational companies, but also by the strategic alliances, licence buying, licence change and the assistance accorded by foreign counselors, foreign and local suppliers of new materials, products and equipments. Despite the fact that the process of taking over new technologies by Romanian firms depends mainly on the decision of multinational companies, the success of technological transfers depends on the efforts made in the direction of taking over, assimilation, and bettering these absorbed technologies, and also by the level of training of the personnel. To conclude with, the technological transfer traffic is not free within the multinational firms and far less, outside them. Consequently, the Romanian economy can beneficiate only by a part of the scientifical and technological know-how. This is kept and conducted by the multinational companies and controled by them. The capacity of absorbtion of the new technologies depends on the relations that multinational subsidiaries keep with the local research centres, the economical politics promoted by subsidiaries as far as concerns the recruitment and the profesional formation, the purchase of products realized from the local suppliers, the sales realized on the Romanian market, the state policies concerning the attraction of foreign direct investment and the help accorded to the research and industrial innovation. This dispersion of technologies generates a reallocation of the working places, productivity externalities for the Romanian companies, know-how, and some imitative processes regarding the formation strategies of employees from the multinational companies.multinational companies, foreign direct investments, technological transfer

The influence of the European single market upon the SME activity

The analysis tries to highlight the manner in which the European common market will influence the SME activity in Romania. The challenges caused by regionalization and globalization of markets demand the compliance of SME to the competitive environment, by consolidating their market position and benefit from the economical opportunities. Romanian SME could become an economical growth vector only if the real capacity to adapt to a global competition and knowledge based economy is proved. Regarding this aspect, the authors try to present the most important positive and negative effects on the SME activity. Presently, the small level of competitiveness is due to the lack of necessary capital for supporting investment projects, but also to the constraints of financial sources. The study reveals the importance of SME in an economy and the Romanian SME capacity of overcoming the difficulties of entering a strongly competitive market. Romania has a SME sector which, although has recently followed a positive trend, it possess performances which are still low in comparison with the countries from European Union, including the countries which entered the European Union in May 2004. The branch structure of Romanian SME is still one specific to a less developed country: industries that use a high level of labor force and that has a competitive advantage related to the small cost of this factor; a small proportion of the tertiary sector; and an increased presence of the SME that have as principal activity commerce (2 times bigger than the European average). SME sector contribution to economical growth is well known in the majority of the countries of the European Union. If traditionally, small and medium enterprises were considered economical operators belonging to the internal market, today a growing number of SME are managing to conquer the global markets. Approximately one fifth of the SME involved in the productive activity in the OECD countries realize a proportion of 10 to 40 % of their turnover from international activities. SME contribute in a high proportion to the global industrial exports and increase the volume of foreign direct investments worldwide. Moreover, the European Union experience show that it has a significant contribution to the GDP and to the reduction of the unemployment rate.Competitiveness, SMEs (Small and Medium Entreprises), single market

Dynamics of financial markets in the context of globalization

The transformation of national segmented financial markets into integrated parts of the global financial market- the globalization process - involves cross-border and cross-sector integration in which capital movements and financial services are key determinants. Growth in trade and investments, important changes in production and technology, meaningful innovations in telecommunications and computer applications, and a generalized trend towards liberalization and deregulation of domestic and international markets have led during the last two decades to a closer and deeper interaction among international markets. As a result, the structure of financial markets has changed significantly and new international business opportunities, operations, networks, and challenges have appeared. Financial systems from both developed and developing countries have been subject to change. A key component of recent changes in the financial sector from the developing countries has been the impressive growth and internalization of capital markets. These markets have acquired great importance for the mobilization of international resources to support the continuing and expanding needs of those countries eager to finance their economic activities. The corporate sector plays an important role, since it is in the practice that large corporations have the widest range of funding options. They can engage in arbitrage between less efficient and more efficient markets on a global scale. In this paper we try to highlight the most important transformations that have occurred in the developing countries, with the reforms that have built a more sound and efficient financial system and to try to quantify the impact of globalization upon this system.globalization, innovation, derivatives market

Opportunities offered by the capital market for financing public administration

Nowadays, covering the financial deficit of public administration in Romania is a difficult task, taking into consideration the fact that in a continous way, this institutional sector must implement and manage investment projects, that suit the local needs of Romanian colectivity and dynamize their adaption to the social,economical and political requirements of the integration in the European Union. Therefore, the alternative of financing through the capital market is well received by the public authorities, especially because there is a lack of flexibility and variety of financing possibilities for the public administration. The interest for this type of financing has increased over the time, once with becoming familiar with the mechanisms and advantages of such a type of financing by all entities that operate on the market (issuers, investors, intermediaries)

Foreign Direct Investment and Regional Development in Romania

The regional integration of the Romanian economy implies the continuation of modernizing existent structures, expanding the new entrepreneurial culture and foster the individual competences for corresponding to the European model. Foreign direct investments represent the link between financial and productive systems, integrating them at a regional and global level. Beside the imported capital flows, they have a direct impact upon the management of the productive entities, assure a transfer of modern technologies, increase the level of occupation and the household available income, modifying the consumers culture. The regional development policy must ensure the reduction of disparities between the different levels of development of the Romanian regions through encouraging foreign direct investment capable of completing the little dimension of the local capital. Taking into consideration the movement of disparities to East and the fact that the increase of economical development disparity after the last two European Union enlargements did not involve a higher level of allocated funds, foreign direct investments remain an alternative for the disparity elimination and accelerating the restructuring marked by the globalizatio

Multiplying financing choices through capital markets

Considerable evidence shows that countries with the most developed financial sectors and capital markets enjoy the strongest economic growth over the long run. The non-financial sector, small and medium sized entities can access a wider availability of more innovative and lower cost finance to aid their growth, while larger companies profit from an overall reduction in the cost of capital and a wider range of financial products. These economical agents in search of alternatives for financing their projects demand the greatest level of flexibility regarding the use of the financing instruments available and this flexibility can determine the success or failure of such a project. Capital markets also facilitate the efficient allocation of savings to where it is most productive. They allow large numbers of investors to reduce their financial risks through diversification. By spreading risk widely, they also cushion the economy against economic and financial shocks