FDIs in Romania: Balancing Growth and Security

Foreign direct investment (FDI) has been identified as an important engine of economic growth, innovation and global integration, and is especially crucial for emerging economies like Romania. Operating as a member of the EU, Romania has utilized FDI to promote its economy and adjust to EU standards. On the other hand, the need to attract foreign capital, while also protecting national security has proven cumbersome, especially considering the obligations enshrined in the EU’s Regulation (EU) 2019/452 regarding the screening of investments in sensitive sectors. The literature on the topic so far has been cautious - emphasizing the need for a balance between economic openness and a strong regulatory framework that could address potential vulnerabilities. Romania’s approach, which incorporates the €2 million investment threshold and screening mechanisms, has faced criticism for its vagueness, uneven enforcement and limited institutional capacity. This is compounded by regional imbalances in investment flows and poor linkages between foreign and local firms — limiting local economic transformation powered by FDI. This research is a quantitative one, focusing on FDI flows from the year 2021 to 2023. Core findings include analysis of total FDI inflows, average investment value per company, and discussion of the relevant thresholds in €2 million. The results uncover tremendous increases in FDI inflows in this time but also variation in patterns of investments, indicative of changes in investment sentiment and the efficacy of policies. This paper also contributes to the larger discourse on investment policy and regulatory convergence by examining Romania’s FDI framework with respect to EU standards. It advocates for actionable recommendations such as upgrading Romania’s institutional capacity to guarantee sustainability of foreign investments and safeguards for Romania‘s interests.