International Business in Romania

Executive Summary

Romania is one of the richest countries in terms of natural resources and cultural heritage. There are large corporations that are working in Romania and most of them are doing pretty well. Some of the largest foreign direct investments are Petrom SA, Automobile Dacia, and Ispat Sidex. The paper discusses the international business expansion opportunities in Romania. Because of its strategic location, the company has managed to attract a lot of foreign direct investment. However, one of the major weakness of Romania as a country that has become a hindrance to foreign direct investment is the politically instable conditions in Romania. The country needs some serious structural reforms. The inward FDI percentage is one of the key ratios that determines the balance of payment, eternal liquidity and external solvency perception of the country. The inward FDI as a percentage of GDP in the year 2006 was 9.3 and is now only 5.2. If the government pays close attention to the policies and procedures and complies with the agreements it has signed with different countries, there is no doubt that it will be able to make its FDI grow at an increasing rate in the coming years.

Table of Contents

Country Description & Macro Environment1

Country Description1

Political Situation & Stability3

Legislation affecting Foreign Investment3

Economic Conditions4

Cultural Issues affecting Business & Social Stability5

Factor Endowments5

Summary5

Conclusion6

End Notes7

International Business in Romania

Country Description & Macro Environment

There are 42 counties in Romania and they all come under the central government. The major cities of the country are Craiova, Constanta, Sibiu, and Bucuresti, to name a few. These are also the cities that are the most favorable for international business transaction as people of these cities have higher purchasing power. The country is fairly developed in terms of infrastructure, transportation and establishment and development of key industries. However, the distribution of wealth is uneven. As expected, the people in the urban areas are living an easy life, while those in the rural areas are struggling to make ends means owing to lack of access to education, health and opportunities for career.

Romania is a member of United Nations, North American trade Organization or NATO and the European Union. The population of the country according to population census for the year 2007 was recorded at 21,537,563. The inflow of Foreign Direct Investment has been on the upward trend for the past decade and is showing a growing trend. This is illustrated hereunder.

Hence, there are large corporations that are working in Romania and most of them are doing pretty well. Some of the largest foreign direct investments are Petrom SA, Automobile Dacia, and Ispat Sidex.

The foreign direct investments have occurred in multiple sectors across the Romanian economy. The share of each of these is given hereunder.

Whenever a business is looking for international expansion opportunities, it is imperative that the business takes place at several levels. Hence, there are reasons to believe that various sector have benefitted from global crisis. However, only few companies have imitated it and will always have ...