An Analysis of the Impact of Italian Industrial Investment in Romania: Economic, Political and Labour Implications

8 Introduction After the huge geopolitical changes in Eastern Europe at the beginning of the 1990’s, the central and eastern countries have begun the difficult process of transformation that involved both the political and economic structures. The transformation process of the economic structure is surely one of the most delicate because of its social implications. The development of a capitalistic market required the presence of foreign capital and a simultaneous growth of interest from western firms (Ellman 1993, Cooper 1997, Blachard 1998). In fact, foreign direct investments represent a very important element of economic integration and growth for the Central and Eastern European Countries (CEECs) (Hunya 2000, Dyker 1999, Artisan 1993). Nevertheless, the distribution of FDI between the CEEC is not uniform. Firstly, it depended on the process of transition and modernisation of the CEECs. The economic growth has been neither very rapid nor a constant process in the last 10 years: the different approaches adopted by the different countries such as, shock therapy or gradualism, had a huge influence on the inflow of investments. Moreover, the FDI have highly depended on the numerous variables such as location-specific advantages, infrastructure facilities and human capital development. The countries that received the 75% of FDI are Poland, Hungary, and Czech Republic because of their better macro-economic performance and stability, with a faster pace of institutional transformation (ISTAT-ICE 2000). Their potential of attraction does not seem to be comparable with Romania, Bulgaria and Slovenia that are ‘tail enders’ because of the slow process of renovation. Within CEECs, Romania had one of the most protracted and painful transitions to a market economy because of the extreme centralisation and a high degree of bureaucracy.