Friday, July 13, 2018

12/7/18: Romania's Uneven convergence Path: 2007-2018


A new World Bank report, led by Donato De Rosa, covers Romania's reforms and economic development experience. Worth a read! |
"From Uneven Growth to Inclusive Development : Romania's Path to Shared Prosperity" https://openknowledge.worldbank.org/handle/10986/29864.

Quick summary:

  • "Romania’s transformation has been a tale of two Romanias: one urban, dynamic, and integrated with the EU; the other rural, poor, and isolated."
  • "Reforms spurred by EU accession boosted productivity ...GDP per capita rose from 30 percent of the EU average in 1995 to 59 percent in 2016."
  • "Today, more than 70 percent of the country’s exports go to the EU, and their technological complexity is increasing rapidly... the gross value added of the information and communications technology (ICT) sector in GDP, at 5.9 percent in 2016, is among the highest in the EU."
  • "Yet Romania remains the country in the Union with by far the largest share of poor people, when measured by the $5.50 per day poverty line (2011 purchasing power parity)".  More than 26% of country population lives below that poverty line, "more than double the rate of Bulgaria (12%)."


  • "While Bucharest has already exceeded the EU average income per capita and many secondary cities are becoming hubs of prosperity and innovation, Romania remains one of the least urbanized countries in the EU, with only 55 percent of people living in cities."
  • "Overall, access to public services remains constrained for many citizens, particularly in rural areas, and there is a large infrastructure gap, which is a drag on the international competitiveness of the more dynamic Romania and limits economic opportunities for the other Romania in lagging and rural areas."
The positive effects of Accession were frontloaded, when it comes to structural reforms:
  • "Romania was invited to open negotiations with the EU in December 1999.  Until Romania joined in January 2007, EU accession remained an anchor for reforms, providing momentum for the privatization and restructuring of SOEs and for regulatory and judiciary reforms."
  • "Output gradually recovered, and until 2008 the country enjoyed high but volatile growth... Unemployment was on a declining trend, but youth and long-term unemployment remained elevated. Skills and labor shortages became increasingly widespread. High inactivity persisted stubbornly, particularly among women. Gains in labor force participation were modest overall. ...Inequality increased further, as large categories of people—the Roma in particular—continued to be excluded from the benefits of growth."
  • "Although output has recovered since 2008, institutional shortcomings have compounded the effects of the crisis, contributing to significant setbacks in poverty reduction, and are again leading to macroeconomic imbalances."
  • "Fiscal consolidation during 2009–2015 has helped place economic growth on a strong footing. However, lack of commitment and underfunding for the delivery of public services and poor targeting of social programs have contributed to the negative income growth of the bottom 40 percent of the income distribution (the so-called bottom 40) in 2009–2015, with poverty remaining above pre-crisis levels, and inequality still among the highest in the EU."

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