Observational analysis reveals the unpredictable role of FDI in economic growth in Central and Eastern Europe, suggesting the need for policy adjustments.
Key Points
FDI's contribution to growth has fluctuated, showing negative impacts during early transition, neutrality post-crisis, and unpredictability during the pandemic.
Romania exhibits a distinct FDI premium, contributing approximately 0.7 percentage points of growth per percentage point of FDI.
Analysis employs fixed effects panel econometrics to explore the interactions among education, governance, and external shocks, depicting a complex socio-economic system.
The findings underline the importance of nurturing positive feedback loops between human capital and FDI for sustainable growth, emphasizing adaptive institutions.