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3.3.4 Region South-West-Oltenia

Image 3.20:

Romania’s Development Region South West Oltenia
Sud-Vest Oltenia

Regiunea Sud-Vest Oltenia - The Development Region South-West Oltenia in Romania

Source: ro.wikipedia.org/wiki/Imagine:S_dr_ro.png

The Development Region South-West Oltenia in Romania contains the five counties Dolj, Olt, Vâlcea, Mehedinți and Gorj. 10.68 % (2.306 million) of Romania’s population live here on 10.67 % of Romania’s territory and contributed 8.37 % to the Romanian GDP in 2005. The only county, which exceeded in 2005 the national average, was Gorj (114.66 %). Vâlcea reached some 98 % of the national average GDP per capita (INS 2008, own calculations). Regional GDP per capita in 2006 reached 3,730 €. After a massive restructuring of the mining sector the region contributes to 17.7 % of Romania’s total unemployment and has few prospects for a change of this situation in the following years (NewsIn 2008: 22ff.). As a great deal of unemployment is hidden through subsistence agriculture, unemployment rates ranged 2005 from 6.3 % in Dolj and 9.5 % in Mehedinți (INS 2007). Some 52.5 % of the population live in the rural parts of the region. Despite the low standards of living the migration potential in this region seems to be more modest than in other regions, judged on demand deposits in foreign currency of the population (44 million of Euro in 2007 – this is less than a third of the deposits in foreign currency of the North-East cf. chapter 3.3.1).


FDI-inflows destinated to South-West Oltenia have been modest and reached just a mere 2.7 % (938 millions of Euros, 409 € per capita; cf. ADRC 2008) of total FDI-stocks in Romania up to 2006. This failure in attracting more FDI is due to considerable development deficits:

„Acest lucru s-a întâmplat deoarece Oltenia are o infrastructură precară, cu cea mai mică densitate a rețelei ferovioare, legături comerciale cu vecinii de peste Dunăre practic inexistente, standarde joase ale hotelurilor, incapacitate de a oferi consultanță in afaceri, porturile dunărene fără dotări, un randament slab al agriculturii și efectele sărăciei” (NewsIn 2008: 34).[1]

The industry in South-Vest Oltenia is characterized by coal-fired and hydroelectric power plants. About 75 % of the hydraulic generated energy and about 25 % of the energy depending on fossil fuels stem from this region. Rising energy prices may contribute to a rising income in the future. Some privatizations stimulated the regional economy and in the beginning of 2008 Ford bought a car production plant in Craiova (county Dolj) and drew further investors in the region.[2] Exports (6.8 % of total Romanian exports) have risen in 2006 by 26.7 % and low imports generated even a modest surplus. Again, this surplus reflects rather the low standards of living than the economical strength of the region. CNP forecasts consider a GDP per capita of 6,634.5 € reachable by 2010 (cf. CNP 2008 a: 10). NewsIn (2008), on the other hand, claims that the region might be underestimated as the official forecasts do not take the benefits of important privatizations into account.

Anyhow, the analysts from NewsIn underline the urgent need of “un efort investițional masiv pentru a rezolva problema infrastructurii” (NewsIn 2008: 36).[3] The distribution of the 30 top ranked enterprises from the region according to NewsIn favors Vâlcea (9), followed by Dolj (8), Gorj and Olt (each 5) and Mehedinți (3) on the last place (NewsIn 2008: 92). These relatively low intra-regional disparities might be interpreted as a somewhat equally weak development of the counties.

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

The public administration was monitored in Slatina (county Olt), Târgu-Jiu (county Gorj), Craiova (Dolj) and Dobreta Turnu-Severin (county Mehedinți). The aggregate score was rather low (10.7 of 20 possible points) and rewarded with the sixth rank (only undercut by București-Ilfov, cf. 3.3.8). While Târgu-Jiu (16.5) and Craiova (16) performed well, Slatina decreased the score heavily with a contribution of 2.5, followed by Turnu-Severin (8). The bad ranking of Slatina is of special interest as it again indicates that public administration is not the only important factor for investment decisions in Romania (as suggested by institutional approaches). Slatina managed to attract considerable FDI-inflows with Continental and Pirelli as front-runners. The Pirelli tires are meant for export to world markets and thus, have a strong need for a capable transportation network.[4] Indeed, NewsIn remarks:

„Trei drumuri europene traversează reginuea, unul dintre ele (DE 70) legând Capitala de Timișoara, poarta de ieșire spre Occident. DE70 trece prin câteva dintre principalele orașe ale regiunii, Slatina, Craiova, Drobeta Turnu-Severin“ (NewsIn 2008: 93).[5]

Footnotes

[1] “This is due to the poor infrastructure of Oltenia, which features the lowest railway density, hardly any trade relations over the Danube and business consultancy, low hotel standards, bad endowed ports, a low productivity of the agricultural sector and poverty effects” [NewsIn 2008: 184, SH].

[2] Of course the transaction did not take place without requests for further improvements for the local infrastructure; especially the railway and highway network and the local airport have to be extended (cf. Șerban 2008).

[3] “a massive investment effort in order to solve the infrastructural problem” [SH].

[4] Information gained through a personal conversation with a Pirelli quality engineer during summer 2006 when I was visiting occupationally one of the plants.

[5] “Three European Roads cross the region, one of them (E 70) links the Capital to Timișoara, the doorway towards the Occident. E 70 passes some of the region’s major cities: Slatina, Craiova and Dobreta Turnu-Severin” [SH].