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3.1 The Initial Conditions


Academic Research paper and Study of the Economy of Romania and Romanian Business

It has often been noticed that the Romanian transition period was harder and for a long time less successful than in other Eastern European Countries (e.g. Dăianu 2000; Wyplosz 2000, Maniu et. al 2001; Scrieciu & Winker 2002, Dulleck 2006; Ianoș 2006). The reasons are mainly attributed to sluggish and incoherent reforms, which often were interrupted by unsustainable, populistic economic policies. As a consequence, the misallocation of resources persisted longer and a lack of credibility blocked the needed FDI-inflows for modernization and adjustment. But sluggish reforms during transition do not need to be a function of missing political will or sheer incompetence, only. Even researchers, which favor the governance-approach (such as Dăianu 2000) underscore that there are upper bounds to adjustment capacities. These, in turn, are influenced by the initial conditions for transition and the magnitude of required reforms. Hence, sometimes stop and go measures can hardly be avoided (cf. ibid: 23), even if they do not foster a fast readjustment.[1]

Taking the initial conditions for the Romanian transition into account, a comparison of Romania to the other coutries in Eastern Euope shows that the latter underwent at least partially reforms, especially during the 1980s while Romania “practiced late Stalinism until the very end of the Communist regime” (ibid: 3) and entered during the 1980s a state sometimes described as “self-dependence” (Scrieciu & Winker 2002: 3) or (semi-) autarky (cf. Maniu et. al. 2001: 17; Dulleck 2006: 644).

Thus, while most other CEECs’ start into transition was already backed by an existing political opposition, at least rudimentary existing market economy institutions, some foreign (non COMECON) trade relations and better governance Romania had to develop these institutions during the 1990s from next to nothing.

Footnotes

[1] Especially as readjustments like resources flowing at new prices “from low to high productive areas … can generate much pain in a real economy” (Dăianu 2000: 3).  Wyplosz (2000) assessed the debate between gradualists and fast-movers against the evidence gained so far from transition and concludes “that Big Bang is highly desirable but impracticable, while gradualism is unavoidable but ought to be compressed as much as possible” (ibid: 36).