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Romania in the European Economy
Prof. Gabriela TIGU, PhDVive-Rector
Bucharest University of Economic Studies (ASE Bucharest)[email protected]
GDP in 2010
5.700 EUR
4.600 EUR
3.300 EUR
2.661 EUR
9.800 EUR
10.400 EUR
3.192 EUR
4.720 EUR
4.220 EUR
Sursa: Eurostat
GDP in agriculture - % in total
6%
5,3%
9,8%
16,8%
2,9%
4,8%
7,51%
8%
8%
Sursa: I.N.S.
GDP in industry - % in total
26,4%
23,1%
24%
8,9%
22,5%
16,4%
17,16%
9,5%
19,2%
Sursa: I.N.S.Datele sunt pe anul 2009 pentru Muntenegru, Albania, Bosnia-Herţegovina, Macedonia, Serbia
GDP in tertiary sector / services - % in total
47,6%
63,5%
53,6%
51,2%
55,5%
59,3%
55,74%
59,1%
54,5%
Sursa: I.N.S. Datele sunt pe anul 2009 pentru Muntenegru, Albania, Bosnia-Herţegovina, Macedonia, Serbia
3940
5354
6119
8218
4446
3532
4313
5753
5080
5709
7625
4040 4168
36803292
2653
4054
3043
43084135
6412
4067
34603484 3032
35706709
380645373708
5950
4015
7712
69234048
3242 3938
23773924
3860
Bucureşti: 14289Ilfov: 9767Sursa: Comisia Naţională de Prognoză
6,1%
3%
1,6%
3,4%
4,7%
1,1%
2,1%
0,5%
6,5%
Sursa: Eurostat pentru România, Bulgaria, Ungaria, Croaţia. Oficiile Naţionale de Statistică pentru Macedonia, Albania, Serbia, Muntenegru, Bosnia Herţegovina.
7,3%
10,2%
32%
15%
11,2%
11,8%
27,2%
19,6%
19,2%
Sursa: Eurostat şi Vienna Institute for International Economic Studies, Country expertise
Sursa: I.N.S
6,0%
6,0%
6,3%
7,4%
6,3%
6,9%
11,4%
9,8%
7,8%
5,7%
8,5%
9,0%
9,6%
8,4%
10,8%
8,2%
9,8%
9,8%
8,6%
3,7%
5,2%
5,8%4,9%
8,2%
9,6%
8,1%5,8% 7,1%
9,6%
9,7%8,4%
8,5%
7,4%7,7%9,6%
7,5%
8,8%7,9%
7,8%
7,5%
Bucureşti: 2,3%Ilfov: 2,8%
449 EUR
328 EUR
491 EUR
246 EUR
735 EUR
1054 EUR
622 EUR
715 EUR
461 EUR
Sursa: Vienna Institute for International Economic Studies, Country expertise
Sursa: I.N.S.
255
243
289
340
255
303
306275
261 277233 328
284247
307
242
315
257
251
244
285
241
284
254
311
262
314277355
283352 331
243
245289339
276
251253
241
Bucureşti: 462Ilfov: 409
PROFIT 16%TVA 24%
PROFIT 10%TVA 20%
PROFIT 10%TVA 18%
PROFIT 10%TVA 20%
PROFIT 10% / 19%TVA 25%
PROFIT 20%TVA 23%
PROFIT 10%TVA 17%
PROFIT 9%TVA 17%
PROFIT 10%TVA 18%
Sursa: Agenţii naţionale de promovare a investiţiilor
Sursa: O.N.R.C.
* Societăţi comerciale cu participare străină la capital
Sursa: O.N.R.C.
2,69 mld. EUR
1,64 mld. EUR
0,22 mld. EUR
0,83 mld. EUR
1,20 mld. EUR
0,44 mld. EUR
0,05 mld. EUR
0,57 mld. EUR
1,00 mld. EUR
Sursa: Vienna Institute for International Economic Studies, Country expertise
Sursa: Banca Naţională a României (B.N.R.), date provizorii pentru anul 2010 şi pentru primele 5 luni din anul 2011
* După capitalul social subscris Sursa: O.N.R.C.
X. GRECIA
3,47%
IX. ELVEŢIA
4,9%
VIII. Marea BRITANIE
5%
VII. SPANIA
5,06%
VI. ITALIA
5,13%
V. FRANŢA
6,55%
IV. CIPRU
7,15%
III. GERMANIA
8,48%
II. AUSTRIA11,3%
I. OLANDA 27,03%
Sursa: O.N.R.C.* Dupa capitalul social subscris
COGEME SET RO 6,3 mil. euro
LAPP INSULATORS 11,3 mil. euro
MKB ROMEXTERRA BANK 44.3 mil. euroGEDEON RICHTER ROMANIA 27.3 mil euro
ROSIA MONTANA GOLD CORPORATION 123 mil. euroKRONOSPAN 21,1 mil. euro
LUFKIN
28,2 mil. euro
DELPHI DIESEL 15,0 mil. euro
EGGER 7,2 mil. euro
CONTINENTAL 12,2 mil. euroOBRIST EASTERN EUROPE 8,8 mil.euro
KOYO 8,9 mil. euro
ROMPETROL 184.7 mil. euro
PIRELLI 96.1 mil. euro
RAFO 43,4 mil. euro
BARLINEK 42,4 mil. euro
ENEL GREEN POWER 33,3 mil. euro
MEDIA INDUSTRIES 21,4 mil. euro
ARCELORMITTAL 89 mil. euro
INFOPRESS 10,9 mil. Euro
EUROPOLIS REAL ESTATE ASSET MANAGEMENT 235.2 mil euroUPC ROMANIA 233.4 mil euroGARANTI BANK 185.3 mil euroGRAN VIA ROMANIA 114 mil euroADEVARUL HOLDING 109.9 mil euroREAL - HYPERMARKET ROMANIA 89.2 mil euroALPHA BANK ROMANIA 73.7 mil euro
ADAMA MANAGEMENT 41,2 mil. euro
INTESA SANPAOLO 27,5 mil. euro
BUNGE ROMANIA 40,8 mil.euro
OLYMPUS DAIRY 20,7 mil. euro
FERAL 20 mil. euro
ARCELLORMITTAL 10,9 mil. euro
SHINHEUNG ELECTRONICS 9,8 mil. euro
ALTEX 8,7 mil. euro
Sursa: I.N.S.
* Absolvenţii de învăţământ superior public şi privat, an universitar 2009 – 2010 Sursa: I.N.S.
III. Cluj-Napoca11.918
VII. Sibiu5.500
VI. Timişoara8.897
V. Craiova9.241
X. Târgu-Mureş2.162
IV. Iaşi 11.069
II. Braşov22.796
VIII. Galaţi4.903
IX. Piteşti3.057
I. Bucureşti71.972
Romania has made significant progress over
the past 3 yearsStabilization of the Economy:– Improvement in the fiscal balance– Stabilization of the exchange rate– Lower risk premium and interest rates– Record low inflation– Stabilization of the banking system– Improvement of external imbalances
The Fiscal BalanceRomania: Cash Fiscal Balance
(% of GDP)
The Fiscal BalanceRomania: Structural Fiscal Balance
(% of GDP)
The Exchange RateNational currency against the euro
(index)
Interest Rates
Inflation
Banking Sector Stability
• Banks remain well-capitalized• Liquidity in the system is high• No banks in Romania have failed
External Imbalances
-20
-15
-10
-5
0
5
2007Q1 2008Q1 2009Q1 2010Q1 2011Q1
Current Account(Percent of GDP)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
-30
-25
-20
-15
-10
-5
0
5
2007M1 2008M1 2009M1 2010M1 2011M1 2012M1
Romania Trade(Billions of Euro)
Trade Balance (12 months, lhs)Exports (sa)Imports (sa)
So stabilization has been fairly successful, but what about growth?
Economic Growth
Romania: GDP Growth Comparative Growth
•But what about sustainable, long-term, high growth?
•How does Romania converge with richer EU countries?
•Sustained growth is different from economic recovery
Romania and Economic Institutions
• Is Romania’s economic structure well-adapted for stable, high economic growth?
• I would say not yet.• Difference between “policies”
and “institutions”
Romania’s growth challenge
• 0. Maintain macroeconomic stability• 1. Increase the quantity and quality of
capital in the economy • 2. Increase the quantity and quality of
labor• 3. Improve the physical infrastructure
that firms and workers use (roads, railways, electricity, water, etc.)
• 4. Improve the institutional infrastructure
1. How can Romania increase Capital?
Investment• Financial sector:
– Assure good functioning of the banking system
– Reduce country risk interest rates down, investors come
• Absorb EU investment funds!• Privatization, private participation
2. How can Romania increase Labor?
• Improve market functioning higher productivity
• Higher labor force participation• Reduce informal economy
formal economy• Human capital: Education and
training
3. Improving physical infrastructure
• EU funds absorption• Prioritizing public investment• Attract private capital/improve
efficiency of public enterprises in infrastructure
• Improve regulatory framework• Embedded technology vs.
innovation
3. Improving physical infrastructure
• EU funds absorption• Prioritizing public investment• Attract private capital/improve
efficiency of public enterprises in infrastructure
• Improve regulatory framework
4. Improving the “institutional” infrastructure
• The laws, norms, institutions (public and private) and customs that determine the economic environment.
• It is the rule of law, but also much more.– Examples: constitutions, the EU
acquis.
4. Improving the “institutional” infrastructure • Structural reforms under the IMF/EU
program have aimed at improving policies, sometimes with improvements in institutions.
• Examples:– Pension reform (policy and institutions)– Fiscal responsibility law vs. deficit
reduction– SOE reforms, privatization
4. Improving the “institutional” infrastructure • But much more is needed:
– Legal system reforms• Need to make the system more efficient,
more predictable, less costly (in money AND time)
– Public sector reforms to improve efficiency.• Functional reviews• Tax optimization• Simplify and reduce bureaucracy
• Improve regulatory framework
4. Improving the “institutional” infrastructure
• Legal system reforms• Public sector reforms to
improve efficiency• Improve regulatory framework• Attack corruption• “Simplicity, transparency,
accountability”
Conclusions
• Romania has many characteristics needed for sustained growth:– Macroeconomic stability has been
regained and may be more robust this time
– Geographic advantages– Natural resources– Large, educated population that is
underutilized
Conclusions
• Policies have improved, but institutions are a challenge– Legacy of communism– Imported institutions from the EU, but
not complete or ideal.– Rent-seeking behavior vs. wealth
creation.– Institutional stability and efficiency
needed for investment and innovation.
Destination Romania
Romania’s environment
• attractive, rich and various
• a diversity of relief forms – mountains, hills and plateaus, plains, coastal zones -, flora and fauna, thanks to it geographical position.
Romania - the country of the Carpathians,
the Danube and the Black Sea • The Carpathians make an
almost compact ring, with the Transylvania Plateau inside
• Forests cover over a quarter of the country and the fauna is one of the richest in Europe including wolves, bears, deer, lynx and chamois.
Romania - the country of the Carpathians, the Danube and the Black Sea
• Romania has the greatest surface of the hydrographic basin of the Danube, controlling 38% of the navigable course.
• The Danube forms the southern boundary of the country terminating in the Delta on the Black Sea, a heaven for countless native and migratory birds.
Romania - the country of the Carpathians, the Danube and the Black Sea
• And finally, the country is located on the western coast of the Black Sea with a marine opening of 245 km, which confers on it a special status.
At present, Romanian tourism industry is characterized by the following indicators:
• 7.5 million foreign visitors in 2010 (down from 8.9 million in 2008…); out of which, 7.1 million visitors are coming from Europe (the most important markets being Moldavia, Bulgaria, Germany, Italy, Turkey, France, Russia and Spain);
• 10.9 million outbound Romanian tourists (same year); the main destinations are Italy, Greece, Hungary, Bulgaria, Spain, Austria and Turkey;
• more than 1,000 million US Dollars revenue from international tourism, but this amount is quite low in comparison with other European countries;
• 3,405 millions US$ in GDP (or 2.04%) and• 270,000 jobs (3.2% of the total number of employees in
Romania), showing a quite low participation of the tourism in the total Romanian economy (WEF, 2011).
4938 4794
5595
66006972
6037
7700
8862
7575 7498
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
International tourist arrivals in Romania (thousands of tourists)
• all types of tourism programs offered by Romania meet a strong competition from the West-European markets;
• other countries have a large variety of offers for categories of tourists, but the Romanian offer is, in a way, limited, concentrated only in a few resorts, and there, only in a few hotels;
• by comparison with competitors from Bulgaria, Turkey, Greece or Cyprus, the quality of the service in Romania is lower;
• the entertainment is less diversified;• technical and transportation infrastructure is inadequate;• it is imperative to improve the comfort level in hotels in
large urban areas and in the resorts for foreign tourists;• concerning the quality/ price ratio or the value for money,
Romania is not anymore an attractive tourism market.
• the main destinations are Transylvania (Dracula’ tours, fortresses, landscapes), Bukovina (UNESCO monasteries with mural paintings, rural tourism, gastronomy and traditions), Maramures (UNESCO wood churches, landscapes, old villages with tradition and handicrafts), Bucharest (museums, Palace of Parliament, night life and casinos), the Delta of Danube (cruises, birdwatching, fishing and heritage), Carpathian Mountains (active holidays) and seaside;
• highly appreciated are the patience, hospitality, benevolence, and sociability of the people, great satisfaction with accommodation, information and business services;
• main negative aspects are related to infrastructure and the lack of professionalism of the employees around the tourism, the meals and leisure facilities, the non-competitive prices compared to neighbour destinations (Bulgaria, Turkey, Greece);
• the persistence of some problems about the image of Romania as a tourism destination (pocket lifters, taxi drivers which cheat the customers, stray dogs, lack of cleanliness, lack of parks and public toilets etc.);
• the marketing efforts abroad were inconsequent and/or insufficient.
Compared to its main competitors, Romania seems to be
not competitive:
Country The Travel & Tourism Competitiveness Index 2011
Greece 4.78
Croatia 4.61
Montenegro 4.56
Hungary 4.54
Bulgaria 4.39
Turkey 4.37
Romania 4.17
Thank you for attention!