Foreign and Public Investment and Economic Growth: The Case of Romania

In the last decades, there were many empirical studies regarding the role of private and public investment in the growth process. The aim of this paper is to examine, in the Romanian economy, the relationship among 5 macroeconomic variables: Gross Domestic Product, Foreign Direct Investment, Foreign Portfolio Investment, Foreign Other Investment and State Public Investment, using quarterly data over the period 2006Q1-2016Q2. A multiple regression model is used to investigate the effects of the selected independent variables (FDI, FPOI, FOI and SPI) on the endogenous variable (GDP). The results obtain from the multiple regression model show a positive relationship between Gross Domestic Product and Foreign Direct Investment, State Public Investment and Foreign Portfolio Investment (in this order) and a negative relationship between Gross Domestic Product and Foreign Other Investment. We hope that this paper can be a useful tool for government and policy makers in formulating the right investment policies in order to enhance economic development.