Romania’s Economy Is The Next European Superpower!

Romania’s GDP has increased by more than ten times over the last decades, outpacing its struggling neighbours. Opening up the economy after the Romanian Revolution laid the foundation for the nation’s growth. Their strategic positioning and foreign investment have made it a hub for tech, with initiatives like the “200 euro” program providing financial aid to purchase computers for students. Romania’s membership in the EU has greatly boosted foreign investment, job creation, and economic growth, helping the country catch up with its richer neighbors. But has there involvement in the Soviet Union pushed them pack in their development?

How has the Romanian Economy developed over the last few decades? What’s pushed them forward to come to where they are? And how are Romania doing in there current situation?

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Some of the footage used in this video is not original content produced by Macro Mates. Portions of stock footage were gathered from multiple sources.

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Romania moved back into the high-income  category after falling into the middle   upper-income category due to the Covid-19  pandemic’s economic effects in 2019, but after   making a strong comeback in 2021, they succeeded  in staying in the high-income category in 2022.  

In fact, its GDP per capita has been  increasing since 2015 and this trend   is expected to remain until 2027. Nevertheless,  some economic and political challenges render   the path of continued growth. 1. Overall economic context:   Over the past 20 years, Romania has improved its  economic performance and prosperity, contributing  

To the country’s convergence of living standards  with those of the European Union (EU). However,   a number of obstacles prevent it from achieving  more equitable, environmentally and economically   sustainable growth, including inadequate  institutions, a lack of qualified labor,  

And the consequences of climate change. Things  are coming down on Romania like a ton of bricks!   Its average per capita income has been fast  approaching the OECD average during the past   20 years. Its economy has also shown to  be resilient; following a severe downturn  

Brought on by the coronavirus outbreak  in 2020, activity quickly recovered.   Short- and medium-term difficulties still exist  though. Cautionary macroeconomic policies are   needed in light of the recent spike in inflation  and the ongoing pandemic wave. Financial   sustainability will eventually need to increase  in order to handle aging. Because productivity  

Levels are still far below the OECD average, it  is necessary to lower obstacles to competition,   invest more in human capital, strengthen the  legal setting, and upgrade transportation   infrastructure. No quick fix, right?! Romania ought to take advantage of this   chance to increase funding for the digital  and ecological transformations. The rate  

Of poverty is still high, and many groups find  it difficult to enter the workforce. Actually,   the unemployment rate there is still high  compared to other countries in Europe.   Reiterating active labor market policies and  providing access to training are essential if  

One intends to solve the skills gap. Ultimately,  strengthening the rule of law and combating   corruption are necessary in order to pursue  convergence to the highest OECD standards.   If you like the video so far, please consider  liking and subscribing to the channel!   2.Romania’s economic history: Romania’s distinct cultural past and  

Its political-economic history following World War  II make it a fascinating country for international   attention. A more Stalinist administration led  the country and unprecedented levels of economic   mismanagement and human rights violations took  place. Following the fall of Nicolae Çeausescu,   the country was ruled by an ex communist  government. Even though the Çeausescu dictatorship  

Was less harsh than its predecessor, Romania  nonetheless mishandled economic policies and   experienced more difficult political and economic  transitions than other Eastern European nations.   Difficulties spiral out of control in Romania! Prior to World War II, its economy was mostly   based on agriculture. It did  have enormous petroleum reserves,  

Which made it a desirable target for the  conflict. After World War II, the nation   underwent a dramatic shift to an industrialized  nation. As per the orders of the Soviet Union,   every private company was nationalized by 1948.  Subsequently, an immense heavy manufacturing  

Sector was developed centrally planned: massive  oil refineries and power plants, steel plants,   chemical and mechanical combines were built from  the bottom up. Manufacturing production surged as   unemployment in rural areas vanished completely.  Additionally, the infrastructure was broadened:   in Bulgaria, the Danube bridge between Giurgiu  and Russe opened in 1954. But the enormous Black  

Sea-Danube canal project was abandoned in  the middle and wasn’t finished until 1984.   This astounding rate of industrialization  was attained, as in other communist nations,   at the price of a stagnant agricultural  sector and sharply reduced consumer goods   production. Furthermore, this growth was broad  in scope due to rising energy, raw material,  

And labor consumption. The government made  an effort to veer off course around the end   of the 1960s, emphasizing collaboration with  Western companies and more technologically   advanced industries. They’re trying to  never let grass grow under their feet!   All the errors of the Russian Stalinist agenda  were replicated by the Romanian Stalinists in  

The Romanian People’s Republic. There was a  lack of food as a consequence of the breakdown   of collective ownership of agriculture.  In search of employment, many from the   rural districts escaped collectivization and  moved to the metropolis. Similar to Russia,   some production and employment were gained by  substantial industry investment, but not much.  

Ultimately, Romania’s large industrial activities  required the costly importation of fundamental   raw resources like iron ore and crude oil to  maintain them, and by the 1980s, the once-proud   “breadbasket of eastern Europe” was unable to  feed even its own citizens. The gloves are off!  

Nowadays, the service sector makes up the majority  of the GDP followed by the industrial then the   agricultural sector. In 2022, the share  of agriculture in Romania’s gross domestic   product was 4.46 percent, industry contributed  approximately 28.83 percent and the services   sector contributed about 57.45 percent. 3.Optimising investment location:  

A 2023 EY Romania Attractiveness Survey showed  that Romania saw an 86% rise in the number of   FDI projects in 2022, up seven positions from the  year before and ranking it as the fifteenth most   attractive European investment target. While Romania has not been immune to the  

Geopolitical and economic upheavals around the  world, it has demonstrated more resilience than   many other European nations and has seen a  notable increase in foreign investment since   2020. FDI reached a new high of 14 billion Euros  in 2022 compared to 12.5 billion Euros in 2021.  

Among the markets in Central and Eastern Europe,  Romania was still behind Poland and Serbia.   Source: CEIC data The fact that nearly twice   as many executives planned to invest more than 100  million euro in 2023 as opposed to a year earlier,   further suggests this heightened confidence.  The vast majority, nevertheless, still intends  

To invest less than EUR 10 million. In the  upcoming years, the development of large-scale,   bankable investment projects will be essential  to Romania’s transformation in the economy. The   EU program financing of EUR 80 billion that  is available for 2021–2027 ought to be the  

Driving force behind transformation and serve  as a multiplier by encouraging more investment   from the private sector. 4.Romania is a tech hub:   Romania’s technology industry has been steadily  expanding, mostly due to the country’s highly   skilled labor population. Remarkably, the  ICT industry in Romania accounts for about  

6.2% of the GDP of the nation. It’s expected to  raise its ICT exports from $7.4 billion in 2021   to $9.3 billion by 2026. Since 1999, the nation’s  exports have increased on average 3.7% annually.   There are 433 software development companies  there, and they are all well-versed in a  

Variety of technical and domain areas, such as IT,  business and financial services, and healthcare.   A 2022 study by the Employers’ Association of the  Software and Services Industry states that the   Romanian IT business is expanding rapidly, with  some 220,000 computer science and engineering  

Personnel already employed. The Romanian  labor force is highly skilled in technology,   but they also have excellent commercial acumen  and a thorough awareness of the demands and   obstacles of the market. It should come as no  shock that businesses from all over the world  

Are drawn to them in their quest to create the  next big financial brands and products. Seems   like they know all the tricks of the trade! The industry there is growing and has a lot of   promise because big companies like  Amazon, Microsoft, Intel, Google,  

And Oracle are recruiting and hiring a lot  of the expertise that is out there and new   international firms are joining the market. Even though they presently make up roughly 67%   of all IT businesses in the Romanian tech sector,  small-sized suppliers have a tendency to expand  

In both quantity and size. There are now 41 major  vendors in the country that employ more than 250   people as of 2023. Of them, 14 enterprises are  notable for having more than 1,000 workers; two   of them have more than 10,000 workers. Seems like  they’re keeping their nose to the grindstone!  

5.Corruption: Government inefficiency and corruption   have long plagued Romania. When Bucharest was  scheduled to take over the rotating presidency   of the European Union in January 2019, after  years of growing dissatisfaction in Brussels,   prominent insiders implicitly challenged the  rationality of admitting the nation to the  

Union. “We knew perfectly well at the time that  Romania and Bulgaria were not ready,” stated a   participant in the accession process. The claimed  error was thinking that the two would conform to   European norms just by means of becoming members. There, corruption became a major issue during  

The country’s shift from a communist to a  democratic government. Following the 1989   Romanian Revolution, there was a significant  institutional and legislative vacuum that led to   major dysfunctions in both the criminal justice  system and politics. These days, corruption is   accepted as a normal aspect of Romanian corporate  culture since it is still considered appropriate  

To provide a gift or money in exchange for a  favor from the public administration. It’s like   corruption is a necessary evil there! In addition  to the institutional and political context,   the healthcare system has consistently  been linked to corruption issues.   It ranked second in the European  Union for corruption as of 2019,  

Behind Bulgaria, in accordance with Transparency  International’s Corruption Perception Index. In   2016, there were over 600 corruption  offenses reported to Romanian courts,   which was a record high. With the exception of the  crime of bribery, which grew from 2018 to 2019,   the majority of corruption offenses  have since somewhat decreased.  

Conclusion: In order to maintain its   competitive edge and increase its allure amidst  the European heavyweights, Romania will need to   foster technical and economic advancement,  cut red tape, and guarantee that investors   perceive the nation’s legal system as stable and  transparent. As a result, there will be a greater  

Chance that Romania will establish an atmosphere  that is progressive and welcoming to investors,   surpassing the previous peak in terms of  the total number of investment programs.   Thanks for watching till the end! If you  enjoyed this video, make sure to hit the  

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