Romanian Economic and Business Review – Vol. 4, No. 4 141 HOW DOES THE DEMOCRACY AFFECTS THE MULTINATIONAL CORPORATIONS PRESENCE? THE CASE OF FDI IN ROMANIA Laura Brancu ∗ Abstract: The foreign direct investment (FDI) towards the Central and Eastern European Countries (CEECs) opens us, in the current context of the globalization, a particularly rich field of research. Closed before 1990 for the foreign capital entries, the CEECs now attracts important volumes of FDI. Many governments from these countries offer important incentives to attract more FDI, motivated by the positive effects expected to rise on the local economy. This paper will concentrate on the Romanian case. There is large body of the literature who emphasize that institutional factors, like democracy, the political stability, the rule of law and the lack of corruption are important elements for foreign investors. By exploiting the results of our survey on the French firms installed in Romania, this paper try to analyze the role of these institutional factors for attracting the foreign firms in Romania. Keywords: foreign direct investment, Central and Eastern European Countries, Romania, institutional environment, democracy. JEL Classification: C31, C33, F21, F23. Introduction After the fall of the Berlin’s wall, the entries of foreign direct investments (FDI) to CEECs knew an important growth. The inward FDI flows received by this group of countries had pass from 2.5 billions dollars at the beginning of their transition to 66.5 billions in 2007 (according to the statistics of UNCTAD, WIR 2008). This tendency represents the logical result of liberalization in these countries, liberalization which is one of the most important reforms realized in the context of the their systemic transformation after 1990. By following the liberalization way, the governments of CEECs encouraged the FDI entries for taking advantage of the global and national benefits that they can bring. Effectively, in the current context of the globalization, the FDI is generally seen as the most dynamic international flow of resources towards developing countries (UNCTAD, WIR, 1999) susceptible to contribute to the process of their convergence. In this paper we are going to concentrate on the Romanian case. Because the statistical data on FDI indicate the marginal position of Romania compared to the other CEECs, we are going to search whether democracy affects FDI in Romania; ∗ Laura Brancu is Assistant Professor of Comparative Management at the Universitatea de Vest in Timişoara. e-mail: laurabrancu@yahoo.co.uk