The link between international trade flows of "Machinery and transport equipment" and foreign direct investment in Romania

The paper investigates the causal relationship between the Romania's exports and imports of "Machinery and transport equipment", the group of goods with the largest percentage share in the international trade and foreign direct investments, using annual data series for the period 1990-2016. The developed econometric model has demonstrated the strong connection between these indicators, showing that exports of machinery and transport equipment are 85% influenced by imports of similar goods and by foreign direct investments. In the long run, the study reveals a direct link between foreign direct investments and growth in exports, as confirmed by other empirical studies on exports and imports at national and international level, too. The VECM analysis was performed using EViews 10 statistical software and it is based on data extracted from the United Nation statistical database (UNCTAD database).