Economic development

The prerequisite for a country’s development is economic growth and the distribution of results to other sectors, with an impact on living standards. That is the reason why the main indicators are GDP growth rate and GDP per capita. It is important for even a moderate growth to be constant and balanced across sectors and regions, to generate development. Unfortunately, in Romania the gaps in GDP growth rate and GDP per capita have widened constantly across development regions and urban-regional areas. It looks as if there are several Romanias, with completely different development rates. [read more]

This subfield equally analyses what supports the country’s economic evolution compared to the rest of the region and of the EU. It is important for economic activity to be diversified and for growth to rely on those economic sectors with high added value, such as breakthrough industries or IT. In Romania, the share of industry in the GDP has dropped significantly in the last years in favour of construction and services (from a share of 49% in GDP to 23% in 2015), which sees Romania now highly dependent on imports. While in 1990 Romania’s GDP was made up of sectors with high gross added value (115.81%), in 2013 gross added value was just 87.7%.

Another solution to stimulate economic development is to support exports. However, Romania’s GDP dependence on exports (rising from 26% of GDP in 1990 to over 43% in 2017) has increased jointly with its dependence on imports (from 12% in 1990 to over 43% in 2017).

Economic growth can be achieved by appeal to foreign loans. The so-called “debt-driven development” is only beneficial when it supports driver investments (in infrastructure, for instance) and not import-fuelled consumption, which stimulates development elsewhere. Although Romania has the third lowest debt ratio in the region, debt has grown by approx. 22% a year, while investment in the economy (gross fixed capital formation) has increased by 12% only.