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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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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3 Comments
Underrated
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Half the country lives with 400 euro per month, the gdp is just a bad joke.