The Role of FDI in Shaping Economic and Labour Market Development—A Panel Analysis of EU Country Groups: Where Does Romania Stand?

This paper aims to assess the relationship between foreign direct investment (FDI) and economic development/employment rate over the period 2013–2023 for Romania, as well as for other European Union country groups (Central and Eastern Europe, Northern and Western Europe and Peripheral Europe). In this respect, we used the Panel FEGLS method adjusted with cross-section SUR and found a positive relationship between FDI and Gross Domestic Product (GDP) per capita for all panels, the strongest estimated relationship being identified for Romania (followed by the one specific to Central and Eastern European states), considering the important role of the level of economic development in shaping these differences. Regarding the relationship between FDI and employment rate, we also found positive coefficients, the highest ones being identified for Central and Eastern Europe and Romania. However, the weakest estimated relationship between FDI and GDP per capita/employment was identified for the Peripheral Europe countries.