Economic Development, Technological Change, and Growth
Keywords:
positive and negative effects; disequilibrium; microeconomic and macroeconomic level; current account deficit fundingAbstract
The purpose of the article is to compare the financing of the current account deficit by foreign
direct investments and by external loans, presenting the advantages and disadvantages of each type of
financing. The analysis shows that both foreign direct investments and external loans may have positive
and negative effects on the economy of the host country. In addition, some advantages of foreign direct
investments have disappeared in recent years (eg stability has been partly replaced by volatility). In the
article, the author also presents the characteristics of current account deficit financing in Romania
during the period 2006-2018. Concerning the foreign debt, it is noticed that in Romania there has been
a replacement of institutional creditors with private creditors, which we consider to be a negative
evolution of the situation of the Romanian economy from the point of view of the reimbursement effort
and the sustainability. The research methods used consist in comparative analysis in time, qualitative
and quantitative evaluations, interpretations and correlations.
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