WE OFTEN ASK OURSELVES WHAT IS THE IMPORTANCE OF FOREIGN DIRECT INVESTMENT (FDI)? ARE THEY SOMEHOW RELATED TO EXPORTS?
In the political and business circles, or in the Romanian public space, the debate over attracting foreign investment started to look more and more like a “gold rush”. It seems to be a right comparison, taking into account that foreign investments bring an important added value through technology and management and due to their export contribution, generated by technology and management infusion. Benefits don’t stop here, one could also underline FDIs contribution to GDP, GAV (gross added value), especially in economic sectors like manufacturing, transport, trade, banking and finance etc.
It is possible to design and develop a complex mechanism nationwide that will allow reinforcement measures to the Romanian economy to design, a business-friendly environment. In the present national economic context we are confronted with two plans or two challenges, one of maintaining the already existing companies, collaborating with them for stimulating economic growth, and another one, of attracting new foreign investments.
For the second plan, the attraction of foreign investments, besides well-known measures that remained only at theoretical level (political and fiscal stability and predictability, measures against corruption and tax evasion, a bureaucracy more supple, infrastructure improvements), an incisive economic diplomacy is also highly necessary.
WHAT MEANS AN INCISIVE ECONOMIC DIPLOMACY?
First of all, let’s think about promoting the comparative advantages of Romania. Such an approach is an extremely necessary governmental activity, whose importance is diminished and hidden in Romania in an unjustified manner. There are visible signs of reluctance and backlog in Romanians’ actions (at institutional and individual level) to promote overseas.
Some of the advantages of the Romanian economy are often mentioned in specialized editorials or political speeches and they refer to qualified and cheap labor force, significant natural resources, opportunities opened up by a developing economy that leaves a large space for action, favorable geopolitical position in the context of the emerging dynamics of the international system.
Debating these advantages in the public sphere is not a replacement or supplement for an important governmental strategy for a sustainable economic promotion. On the contrary, it makes it more necessary. In other words, this action refers to establishing a clear identity, strategically designed for the attractiveness of foreign investors. This means creating and enhancing a national identity oriented towards a well-defined objective, assumed and scheduled in time, which has to become operational.
One practical example in strengthening this action, in addition to designing the general framework and creating the specialized bodies in economic diplomacy area, is the importance given to increasing the number of business representatives who participate on diplomatic trips.
The attraction of specialists in economics (both theorists and practitioners and experts in international trade) in the framework of a well-defined structure within the Ministry of Foreign Affairs, is another extremely advantageous and constructive initiative.
Facilitation of economic activity - trade, foreign investments in Romania’s economic strategic areas, including production and marketing capabilities, Romanian companies opening work points, branches or subsidiaries, etc. It’s another aim that must be realized through efforts to revitalize the national economy. Basically, the two actions are in a position of mutual determination.
A healthy economic policy that supports this goal has to stimulate tradable goods and services production. In order to achieve this it’s important to identify the demand in Romania’s areas of interest and economic expansion. The Romanian system that supports economic diplomacy activities is extremely fragile and there could be major improvements brought to it.
Adjustments could be taken into account. The Ambassadors in the main areas of national economic interest will consistently conduct their economic promotion activities.
Economic attachés have to coordinate a self-sustainable structure for economic promotion, they also need to set well defined targets, time-scheduled objectives, and they must directly manage, under Ambassadors’ supervision, the activities pertaining to the promotion of the economy. In the meantime, they have to coordinate the results of bilateral Romanian Chambers of Commerce.
THESE SHOULD BE INTEGRATED - AS DIRECTIONS AND AS RESULTS ALSO IN A CENTRAL BODY
One also has to admit that this proposed structure has a significant development space. There are many strategic areas where diplomatic structures, including the economic attachés, are absent. Also bilateral or multilateral Romanian Chambers of Commerce are more a wish than a reality. They have to be created, as absolutely necessary tools and investments and profitable for the Romanian economy over the medium and long term. The achievement of such structures should not be related to the economic profitability of moment T0, that means NOW, it should take into account the opportunity and forecast of moment T1, which has to be created.
THUS THERE IS THIS TURNING IN CIRCLES. IN A VICIOUS CIRCLE
A diplomatic network, including that of economic diplomacy, is not being developed because there isn’t sufficiently important trade with one country or area, but without creating these structures is difficult to assume they'll ever exist! That is mainly because trade relations and economic activity are not born from nothing. They require a minimum of resources, energy, people, work, courage and accountability, institutional effort, management and implementation at macro and micro level.
Efforts to attract foreign investments must be assisted with domestic actions to create a favorable business climate, friendly, safe, especially to help sustain a dialogue and to develop collaborations with present companies, be they foreign or domestic.
The Romanian pattern of growth needs to have a pathway set from inside – out, so that priorities should focus on internal measures, on structural reforms, but also on domestic resource mobilization and on a saving stimulusvery well designed and put into practice.
Romania’s dependency on the euro area and its negative trends effects determine good governance’s main orientation to seriously treat domestic problems and to use all available tools to diminish any forms of addiction, be they monetary, commercial or energy. Thus, economic diplomacy has an important role in attracting foreign investment, as well as in "opening" foreign markets and revitalizing the economy.
This must be started and then turned into tradition. It's definitely a game to play and a bet to win!