Judicial Reform in Romania: A Catalyst for Long-Term Market Stability and Foreign Investment

Romania's judicial reforms since 2020 have positioned the country at a critical juncture in its quest to balance institutional credibility with economic growth. While the European Commission and international observers acknowledge incremental progress in curbing corruption and aligning with EU standards, persistent governance challenges continue to shape investor perceptions and capital allocation decisions in Central and Eastern Europe (CEE). This analysis examines how systemic judicial cleanup-marked by both successes and shortcomings-has influenced Romania's attractiveness to foreign direct investment (FDI) and its broader role in the CEE market.

Progress in Judicial and Anti-Corruption Reforms

Romania's commitment to judicial reform has included the establishment of specialized institutions and alignment with international frameworks. The 2024 creation of the Agency for Monitoring and Assessing the Performance of State-Owned Enterprises (AMEPIP) reflects efforts to strengthen corporate governance in public companies, a key concern for investors according to the State Department report. Additionally, Romania's accession to the OECD Anti-Bribery Convention in September 2023 signaled a broader commitment to transparency and accountability as reported by the State Department.

The Cooperation and Verification Mechanism (CVM), introduced in 2007, has also played a pivotal role in sustaining judicial independence and curbing political interference. Laura Stefan and Bianca Toma, cited in a 2024 report, emphasize that the CVM has been instrumental in ensuring the sustainability of reforms, particularly through the work of the National Anticorruption Directorate (DNA). High-profile prosecutions, such as the 2012 conviction of former Prime Minister Adrian Nastase, underscored the DNA's effectiveness in targeting elite corruption as detailed in the EURActiv analysis.

Governance Challenges and Institutional Credibility

Despite these strides, Romania's administrative capacity and policy predictability remain under scrutiny. The European Commission's 2023 Country Report highlighted delays in implementing the National Resilience and Recovery Plan (NRRP), attributing them to weak governance and limited public administration efficiency as noted in the State Department report. These challenges are compounded by a lack of public consultation and inconsistent enforcement of reforms, which have eroded institutional credibility. Transparency International's 2023 Corruption Perceptions Index ranked Romania 63rd out of 180 countries, reflecting ongoing concerns about transparency and accountability.

The BTI 2024 Country Report further notes that Romania's reliance on EU oversight for reforms has weakened domestic accountability mechanisms, creating a dependency that limits long-term institutional resilience as highlighted in the EURActiv analysis. This dynamic is particularly evident in the uneven implementation of regulatory impact assessments and the politicization of key policy decisions, which have contributed to an unpredictable business environment according to the State Department report.

Impact on Investor Confidence and FDI Trends

The interplay between judicial reforms and investor confidence is evident in Romania's FDI performance. According to the 2024 U.S. Embassy Investment Climate Statement, Romania defied a broader European FDI downturn by recording a 57% increase in FDI projects in 2024, albeit with a 14% decline in FDI value compared to 2023. This growth was driven by manufacturing, business services, and R&D investments, with Germany, Turkey, and the United States as key contributors as reported in the EY analysis.

However, structural challenges persist. The EY Romania Attractiveness Survey 2025 notes that while 58% of investors expect Romania's investment climate to improve over the next three years, concerns about infrastructure quality, regulatory complexity, and AI readiness remain significant barriers according to the EY report. The expansion of FDI screening requirements-initially targeting non-EU investors and later extended to EU entities in 2023-has added layers of regulatory scrutiny, particularly in critical sectors like energy and infrastructure as detailed in the Gruiadu Faut analysis.

Broader CEE Market Context

Romania's FDI trajectory must be contextualized within the broader CEE market. While the region has seen a six-month decline in manufacturing output as of October 2025, driven by supply chain disruptions and global trade uncertainties, Romania's strategic location and access to EU markets continue to attract capital as reported by SP Global. The country's labor costs and skilled workforce remain competitive, though it lags behind Poland and Czechia in institutional quality and policy favorability according to SP Global analysis.

The 2024 Investment Climate Statement underscores that Romania's alignment with EU and OECD standards has improved long-term investor confidence, but sustained growth will require addressing digital infrastructure gaps, scaling R&D spending, and ensuring fiscal sustainability as highlighted in the EY report.

Conclusion

Romania's judicial reforms have undeniably influenced investor confidence and FDI flows, but their impact is tempered by persistent governance challenges. While the country has made strides in curbing corruption and aligning with international norms, administrative inefficiencies and policy unpredictability continue to hinder institutional credibility. For Romania to fully capitalize on its strategic advantages in the CEE market, it must prioritize strengthening administrative capacity, enhancing regulatory predictability, and fostering a transparent policy environment.