SHORT ANALYSIS OF REGIONAL DISPARITIES ÎN …Annals of the „Constantin Brâncuşi” University of Târgu Jiu, Economy Series, Issue 1/2018 „ACADEMICA BRÂNCUŞI” PUBLISHER,

Annals of the „Constantin Brâncuşi” University of Târgu Jiu, Economy Series, Issue 1/2018

„ACADEMICA BRÂNCUŞI” PUBLISHER, ISSN 2344 – 3685/ISSN-L 1844 - 7007

SHORT ANALYSIS OF REGIONAL DISPARITIES ÎN ROMÂNIA

CEAUȘESCU IONUȚ ASSISTANT PH.D., FACULTY OF ECONOMIC SCIENCE,

CONSTANTIN BRANCUSI UNIVERSITY OF TARGU-JIU

e-mail:[email protected]

Abstract The regional disparities in the development and living standards of the population, disparities existing before

the creation of the Community, have been a concern for all the member states. The European Union's regional policy

needs to encourage the harmonious development of the territory, enabling all regions of the Union to take full

advantage of the opportunities offered by the single market and to contribute to the success of the economic and

monetary union.

The need for balanced development by reducing disparities between regions and helping the least developed

countries was recognized in the preamble to the Treaty of Rome in early 1957, which also provided for the promotion

of the labor force and the increased mobility of workers within the Community.

We aim to analyze the main macroeconomic results indicators in this study so as to show whether, more than

ten years after joining the EU, Romania has managed to reduce the existing development gaps at its level or maybe on

the contrary these have been emphasized. The period under review of this study is between 2008 and 2017, but we are

also attempting a short radiography of the future for this towards the horizon of 2021.

Keywords: economic development, regional gaps, social cohesion, economic cohesion, regional disparities

Classification JEL: R10, R11, R12

1. INTRODUCTION

The complex problem of the dynamics of macroeconomic outcomes and their social effects

is captured in the economic theory by a series of economic notions and categories such as

reproduction, economic growth, economic expansion, economic development, economic progress

and economic and social progress.

In relation to the content and objectives of economic growth in the literature, a series of

concepts are presented, such as: whereby economic growth consists of the ability of a country to

provide increasingly diverse economic assets, capacity based on the use of high technology and

institutional and ideological adaptations (US economist SK Kuznets); it consists in increasing the

national income per total or per inhabitant (H.W. Amdt); economic growth is identified by

increasing the size of the national economy expressed in total goods and services obtained over a

period of time (including amortization) [1].

By synthesizing, we can define economic growth based on the process of increasing the

total and per capita macroeconomic results, while modernizing the structure of the national

economy and maximizing the efficiency of the production factors combined with different variants.

The link between economic growth and development can be considered on the basis of the

whole-part report; usually economic growth determining growth; not any growth determines

economic development. environmental, political, etc.

Disparities can be measured through several relevant indicators such as unemployment,

income, investment, growth, and so on. Certainly, such indicators are not entirely independent, as

exemplified, for example, in Okun's law that correlates economic growth with unemployment.

The convergence of regional disparities is a complex phenomenon that refers to the mechanisms by

which the welfare differences between regions could disappear. In the discussions on convergence,

we can see that increasing attention is being paid to the opening of space systems, reflected inter

alia in labor mobility, the movement of people in general between the region. [2]

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Addressing the issue of disparities (in the literature some authors consider that inequalities

become disparities when they exceed the amplitude of 30%.) Regional economic growth (in short,

regional growth) simultaneously leads to vivid discussions due to various ways of defining output

growth on one occupied person, the increase in output per capita. In turn, output can be measured

by: total (gross) production of a region, gross domestic product of the region, net domestic product

of the region.

On the other hand, it is well known that in a country the development potential can vary

from one region to another, both in terms of natural resources and human and technological

resources, living standards, social and material infrastructure.These elements contribute in one way

or another to the conditioning of the way of development [3].

Another controversial issue related to disparities in regional growth refers to the medium to

long-term vision of the consequences of regional growth. Thus, according to the neoclassical

model, which emphasizes the role of the supply, regional growth leads to convergence in the

economic and social development of the regions, while in the view of models based on post-

Keynesian approaches to demand (the model based on export potential, the model of cumulative

causes) regional growth accentuates divergence. [4]

2. THE CAUSES OF REGIONAL DISPARITIES IN ROMANIA

The regional imbalances in Romania is a legacy of the interwar period when, in the context

of economic development general low, the industrial activity was concentrated in a small number

of areas, dependent on access to mineral resources and energy, with a location favorable from the

perspective of the pathways important for transport (Bucharest, Prahova Valley, Brasov,

Hunedoara, Jiu Valley, Resita, Braila, Galati, Constanta) [5].

In the postwar period, Romania, in the purpose of economic development, has forced a

policy of industrialization. In this framework, in a bid to ensure a balanced development of all

regions and use the full human potential, have been targeted by central planning, investment in

industry and infrastructure to all areas of the country, in particular by the least developed countries.

The effects of this policy were::

the development of the industry in particular in poor areas (located in the north - east and

south – east of the country);

redistribution on economic criteria, of limited resources development, the redistribution that

has led to the slowdown in economic growth and subsequent depletion of internal factors to support

this growth.

After 1989, the disparities interregional grew strongly in the years of transition to market

economy, as political control over the economy was gradually replaced by the influence of the

market. Economic restructuring had a significant negative impact on the areas of mono-industrial

that have experienced an industrial development forced artificially, this being the first affected by

the processes of economic restructuring. Amid the depression of global economic, the trend of

economic decline and in the field of infrastructure has been reduced in intensity in the relatively

more developed than in the less developed countries. in consequence, the economic disparities

regional have increased, in particular in relation to employment and industrial production, but also

in the field of income and financial resources of the households. There has been a growth of

disparities and in the field of social indicators (education, healthcare, local public services). Areas

of the less developed regions of Romania are in northern Moldova, the south-western and south-

eastern Romanian Plain and the more developed areas include, in addition to Bucharest and

Constanta, the regions of Transylvania and in Banat[6].

For instance,it can be said that in Romania, the disparities in regional development were

reduced when the economy has developed and increased in the period of economic decline, similar

process that took place and in the countries of the European Union.

Among the major causes that led and lead to increased disparities can remember[7]:

the location and the scale of foreign investment in developing regions;

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loss of competitiveness capacity of enterprises both on internal markets, and external, due to

obsolescence and physical accented technologies (especially in the regions located in the

eastern part of the country) and limited access to financing for SMES;

special factors: specialised work force; the tradition in crafts and trade; potential in

infrastructure; proximity to sources of raw materials; proximity to markets – internal and/or

external

some government programs that stimulate the mobility to the big cities of Romania.

3. THE STATISTICAL ANALYSIS OF THE DIFFERENCES OF ECONOMIC DEVELOPMENT OF THE REGIONS

In our analysis we start with a relatively eloquent indicator, namely the regional GDP, and

then we will present other macroeconomic indicators of results, representative for the analysis we

are going to perform.

TABEL 1 - Regional GDP dynamics - millions of lei, current prices -

2008 % 2012 % 2014 % 2015 % 2016 % 2017 % TOTAL ECONOMIE

514700 100 599060 100 666637 100 711103 100 761474 100 816544 100

Nord-Est 54940.9 10,6 60815.5 10,1 68130.4 10,2 70603 9,9 75725 9,9 81461 9,9 Sud-Est 55865.9 10,8 63131.3 10,5 69653.4 10,4 78632 11.05 83733 10,9 89709 10,9 Sud Muntenia

65451.8 12,7 80374.8 13,4 78181.4 11,7 89727 12,06 95465 12,5 102559 12,5

Sud-West Oltenia

41921.9 8,1 46452.6 7,7 50837.4 7,6 52380 7,30 55142 7,2 59360 7,2

West 50020.5 9,7 59593.4 9,9 66417.7 9,9 64774 9,1 69620 9,1 74572 9,1 Nord-West 57937.1 11,2 68991.1 11,5 75361.9 11,3 81682 11,48 87822 11,5 94158 11,5 Centru 57586.8 11,1 67240.4 11,2 744765 11,1 78263 11.00 83958 11,0 89858 11,0 Bucuresti - Ilfov

130521.7 25,3 151967.9 25,3 183167.2 27,5 194554 27,35 209505 27,5 224348 27,4

514700599060

666637 711103 761474816544

0

200000

400000

600000

800000

1000000

2008 2012 2014 2015 2016 2017

TOTAL ECONOMIE Nord-Est Sud-Est Sud Muntenia Sud-Vest Oltenia

Vest Nord-Vest Centru Bucuresti - Ilfov

Source: Romanian Statistical Yearbook 2016, National Commission for Prognosis

It can be seen from the analysis of the data presented in Table 1 that the South-West Region

shows the lowest regional gross domestic product, which shows that the region has one of the

highest levels of poverty.

Table 2 - Dynamics of GDP per capita for development regions in Romania %

2008 2010 2012 2014 2015 2016 TOTAL 100 100 100 100 100 100

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ECONOMIE Nord-Est 61,7 59,0 58,7 62,6 60,3 60,3 Sud-Est 82,8 80,5 80,5 90,1 88,3 88,1 Sud Muntenia 83,3 88,1 88,5 78,7 82,1 81,9 Sud-West Oltenia 77,4 74,3 74,7 73,1 72,8 71,9 West 108,5 111,3 111,4 104,5 100,0 100,2 Nord-West 88,9 90,9 90,7 87,2 88,2 88,4 Centru 95,3 95,3 95,0 94,2 90,0 92,9 Bucuresti - Ilfov 242,6 239,7 238,2 233,2 237,2 236,9

0

50

100

150

200

250

300

2008 2012 2014 2015 2016 2017

Nord-Est

Sud-Est

Sud Muntenia

Sud-Vest Oltenia

Vest

Nord-Vest

Centru

Bucuresti - Ilfov

Source: Romanian Statistical Yearbook 2016, National Commission for Prognosis

The table shows that, in terms of GDP per capita, the West Region ranks second in the

country, being only advanced by the Bucharest-Ilfov region. The Gross Domestic Product of the

West Region in the year 2016 represents 100.2% of the Gross Domestic Product per capita at

national level, resulting in a high level of economic development of the region. The West Region is

the only region in the country where the disparity index of GDP per capita compared to the national

average has always had a positive evolution. The South / West Oltenia Region ranks 7th among the

development regions of Romania. The largest interregional disparity is registered in the Bucharest-

Ilfov region, while the South region has a similar situation, followed by the North-East region a

short distance away.

It can be seen from the analysis of the data presented in Table 2 that the North-East Region

shows the lowest gross domestic product per capita, which shows that the region has a higher

poverty level. The North-East Region is one of the poorest regional development regions of South

West Oltenia, South East, South Muntenia and North West, with values below the national average

of the indicator.

The index of disparity of the gross domestic product per capita as compared to the total

country, at the horizon of the year 2021, will show that the current hierarchy will be retained. The

Bucharest region will overtake, over 2 times the level of GDP per total economy. This can be seen

in table 3.

Tabel 3 - Indications of disparity of GDP per capita 2016 2017 2018 2019 2020 2021 National media 102.56 105.25 105.25 104.75 104.38 105.38 Nord-Est 60.3 60.0 60.2 60.1 60.3 60.4 Sud-Est 88.1 86.9 87.5 87.8 88.1 88.5 Sud Muntenia 81.9 81.2 81.7 82.0 82.3 82.8 Sud-West Oltenia 71.9 75.0 75.1 75.7 76.3 77.1 West 100.2 100.2 100.3 100.2 100.2 100.2 Nord-West 88.3 88.5 88.3 88.2 88.2 88.2 Centru 92.9 94.2 94.0 94.1 94.1 94.3 Bucuresti - Ilfov 236.9 234.4 232.4 230.1 227.5 224.5

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0

50

100

150

200

250

2016 2017 2018 2019 2020 2021

National media

Nord-Est

Sud-Est

Sud Muntenia

Sud-Vest Oltenia

Vest

Nord-Vest

Centru

Bucuresti - Ilfov

Source: http://www.cnp.ro/user/repository/prognoze/prognoza_profil_teritorial_decembrie_2017.pdf, data accesări:

11.02.2018

The analysis of the data in the table shows several significant aspects:

In the analyzed period, the South-West Oltenia and North-East regions had the lowest share

of participation in the national GDP, the opposite is the West and especially Bucharest-Ilfov;

The proportion of participation in the establishment of national GDP had a decreasing trend

in 2 of the 8 regions of development (North - East, South - West Oltenia region), the regions

Bucharest -Ilfov and the West were showing a rising trend, and the regions South-Muntenia, North

- West and Centre will have a relatively constant evolution..

It is also noted that the disparity index of monthly net average earning follows the same

trajectory as the GDP / inhabitant disparity index (Table 4)..

Table 4 - Disparity index of net average monthly earnings 2016 2017 2018 2019 2020 2021 Nord-Est 84,0 86,2 86,1 85,2 84,9 84,7 Sud-Est 84,4 83,6 82,0 81,0 80,6 80,4 Sud Muntenia 90,5 89,6 88,3 86,9 86,0 85,0 Sud-West Oltenia 85,6 86,7 86,7 86,7 86,4 85,4 West 97,0 97,4 98,9 98,9 99,5 99,5 Nord-West 89,6 91,8 94,9 94,9 95,6 96,3 Centru 91,3 91,3 94,1 94,1 94,2 94,9 Bucuresti - Ilfov 139,6 136,5 135,6 135,6 136,0 136,4 Source: http://www.cnp.ro/user/repository/prognoze/prognoza_profil_teritorial_decembrie_2017.pdf, data accesări:

11.02.2018

However, and in connection with this indicator we can highlight the following:

further during the period under analysis, the regions South - West Oltenia and North-East

register the lowest levels of earnings average net earnings, and at the opposite pole is situated the

Bucharest-Ilfov region with the highest level but for which it is estimated a slight reduction to the

horizon of the year 2021;

Sustainable growth is recorded in the West, Center and North West regions, while for the

South-East and South Muntenia regions forecasts of monthly net average earnings.

In synthesis of the evolution of the two previous indicators, we can draw up the following

table, a table showing eloquently the trajectory of both Gross Domestic Product per capita and net

average wage.

Tabel 5 – Regional disparities %

Produsul intern brut pe locuitor Câştigul salarial mediu net 2008 2014 2021 2008 2004 2021 Nord-Est 55.2 60.7 60.3 95.7 89.8 85.1

109

http://www.cnp.ro/user/repository/prognoze/prognoza_profil_teritorial_decembrie_2017.pdf




Sud-Est 71.0 89.0 88.4 98.6 92.0 80.8 Sud Muntenia 73.1 83.6 82.6 101.1 98.8 85.5 Sud-West Oltenia 66.7 70.6 77.0 104.1 96.1 85.8 Nord-West 80.7 87.6 88.0 92.7 92.5 96.7 Centru 85.3 92.1 94.1 95.3 93.8 95.4 Bucuresti - Ilfov 229.0 231.8 224.2 150.0 149.9 137.1

Source: http://www.cnp.ro/user/repository/prognoze/prognoza_profil_teritorial_decembrie_2017.pdf, data

accesări: 11.02.2018

At the horizon of the year 2021, according to the National Commission of Forecasting,

Bucharest-Ilfov region will remain with the contribution of the most important (21%), the regions

West, North - West and Center with weights ranging between 12 and 12,5%, and the regions North

- East and South - East will provide to 11.9%, respectively 11.4% of GDP on the economy as a

whole.

CONCLUSIONS The evolution of recent years shows that we can talk about maintaining economic

differences between regions. The ratio between the maximum values (West Region) and the

minimum (North East Region) of Gross Domestic Product per Capita is maintained constantly (the

Bucharest region has a very high GDP per capita.As for the hierarchy of GDP per capita over the

national average, in the horizon of 2017, it will remain the same in the sense that the West, Center

and Bucharest-Ilfov regions will overcome the national level (the first with a slight tendency

decreasing in 2015 as compared to 2014 and increasing Centru and Bucharest regions) and the

North - West, South - East, South - West, South and North - West will remain with a GDP per

capita below the total country. Reducing the gaps between developed and backward areas is a long-

lasting phenomenon as well as narrowing the gap between countries as well as developing

countries / countries progressing over time, albeit at slower growth rates. At the same time, we can observe that in more than 10 years from Romania's accession to

the European Union underdeveloped regions continue to remain in the back of the list in terms of

the indicators analyzed, in other words, the developed regions continue the development process by

increasing their the gap to the underdeveloped regions..

BIBLIOGRAPHY [1] Cioarna Al., Isac F., Cilan T., Economie - Teorie şi practică, voi. II, Ed. Mirton, Timişoara,

2009, p. 122.

[2] Capello R., Nijkamp P. - Handbook of Regional Growth and Development Theories, Edward

Elgar Publishing Limited, Cheltenham, 2009;

[3] Bârna R.C., Economie regională, Ed. Fundaţiei pentru Studii Europene, Cluj-Napoca, 2008, p.

115.

[4] Constantin D.L., Elemente fundamentale de economie regională, Ed. ASE, Bucureşti, 2004, p.

93.

[5] Julea D., Alilenei D., Jula N., Garbovean A., Economia dezvoltării, Editura Viitorul Românesc,

Bucureşti, 1999, pag. 78

[6] Cirnu D., Busan G., Chirtoc I., Romania features of regional development in the european

context, Analele Universitati Constantin Brancusi din Targu-Jiu, Seria Stiinte Economice, nr 1,

Special Issue, volume I/2016

http://www.utgjiu.ro/revista/ec/pdf/2016Special%20ECOTREND%20Vol%201/08_CIRNU%20D

ORU.pdf

[7]. Ceausescu, I., The theoretical and practical aspects relating to the causes of regional disparities

in Romania, http://www.utgjiu.ro/revista/ec/pdf/2012-04.I/15_CEAUSESCU%20Ionut.pdf

***Anuarul statistic 2010, 2013,2015, 2016

***http://www.cnp.ro/ro/prognoze

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Documents

SHORT ANALYSIS OF REGIONAL DISPARITIES ÎN …Annals of the „Constantin Brâncuşi” University of Târgu Jiu, Economy Series, Issue 1/2018 „ACADEMICA BRÂNCUŞI” PUBLISHER,