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

However, probably the quick recovery proves Wyplosz’ conclusion right that “it has paid to start early and to move fast” (Wyplosz 2000: 36). After 1999 no more negative growth had to be recorded in Romania. On the contrary, since 2000 Romania experienced high growth rates – as the other Central and Eastern European Countries already did during the later 1990s – despite a downturn of the global and European Economy (cf. BA-CA 2004: 4f.).

The new government, though seeming again committed to a more gradualist approach, stuck to the formerly agreed stabilization program and even accelerated privatization (cf. Scrieciu & Winker 2002: 10) at the beginning.[1] A further incentive for acceleration of reforms and privatizations were EU-Accession negotiations and preparations, which also helped to maintain and deepen macroeconomic stability (cf. IBRD 2006: 2).

The contribution of the private sector to GDP exceeded the government’s contribution, reaching a weight of 65.6 % of GDP by 2000 and expanding to nearly 70 % by 2005 (INS 2007). The number of SMEs has been on the rise and unemployment in Romania was significantly reduced (Ianoș 2006: 609ff.). By 2005 some 431,135 SMEs (1992: 126,549) contributed to 60.7 % of employment in Romania (1992: 12.3 %) and to 57.6 % of total turnover (1992: 30.9 %) in the main sectors (INS 2007).[2]

However, the activity rate (Figure 3.6, chapter remained low and still indicates persisting problems on the labor market, which is regional and sectoral torn between sharp shortages and excess labor force (cf. chapter 3.3, subchapters and chapter 3.4).

Further privatizations brought new investors and FDI-inflows to Romania while the election of a new, liberal Government in 2004 might have strengthened confidence in the country. Accession negotiations were conducted until 2004 and in 2005 the treaty was signed. By 2007 Romania joined the European Union. Currently, Romania is the second most attractive CEEC for FDI (after Poland) among European investors (cf. A.T. Kearny 2007: 36).


[1] Later, to avoid further social costs, especially in one-company towns, restructuring lagged again while arrears increased. These were often shifted to the “private” sector. Most problematic sectors were mining and railways. Total arrears ranged between 35.4 % and 40.5 % of GDP from 2000 to 2003 (cf. IMF 2004).

[2] On the other hand, big enterprises still play a major role in Romania. The six leading companies (Petrom, Electrica, Rompetrol, Automobile Dacia, ArcelorMittal Galați and Metro) had together a turnover of some 13 billion of Euros in 2007 (cf. Groenendijk 2008). According to current Eurostat (2008) data this would account roughly for over 10 % of Romania’s total GDP at market prices.