3.3.5 West Region

Image 3.20:

Romania’s Development Region West – Regiunea Vest

Regiunea Vest - The Development Region West in Romania

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

The Development Region West in Romania contains four counties (Arad, Caraș-Severin, Hunedoara and Timiș), which are host to 1.93 million inhabitants (8.93 % of the total population) on 13.4 % of the Romanian territory. About 10 % of the GDP of Romania was generated in the West Development Region (2005). Regional GDP per capita in the West reached 5,256 € in 2006 and was mainly generated by the viable services sector. According to CNP projections the Vest region might reach a GDP per capita of 9,127.8 € by 2010 (cf. CNP 2008 a: 11). Anyhow, the West region managed already a threefold growth as GDP per capita amounted just to a mere 1,697 € in 1998. Services contributed 2006 to 38.8 % of employment, followed by industry and construction (34.5 %), while the agricultural sector is relatively small with a share of 26.7 %.

The region profits from its traditional occidental orientation and profile and from its various links to high quality transportation networks beyond the borders. Front-runner is the county Timiș with its Capital Timișoara, which contributes 16 to the 30 top ranked enterprises by NewsIn (2008: 100). Arad follows with 8 enterprises, Hunedoara with further 5 firms, but Caraș-Severin with just one. Timiș is host to nearly 660,000 inhabitants and over 40,000 students (INS 2007). Many important investors such as the car industry supplier Hella are attracted by the region and especially Timișoara. Despite its attractive economic profile migration is an important issue to Romania’s West Region. Not only most Saxons (Germans) and Serbs left the country, also many Romanians from the West region preferred to try their luck abroad and left the labor market with shortages of specialists and qualified labor. This trend tends to affect FDI-inflows negatively and decreased the unemployment rate (3.4 % for the region and 1.7 % for Timiș in 2007; cf. INS 2008) while the occupation rate even increased by 3.1 % (cf. NewsIn 2008: 40). Demand deposits in foreign currencies of the population amounted up to 127 million € in 2007, what meant a twofold growth within a single year.

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

Nevertheless, the region Vest attracted 5.6 % (about 1.948 billions of Euros, 1,010 € per capita; cf. ADRC 2008) of total FDI-inflows to Romania (sharing the second place with the Development Region Center, concerning per capita FDI), which helped considerably to shift the region’s economy from heavy industry to prefabrication (cf. NewsIn 2008: 105). The various transportation roads and railways toward the EU-markets, also used as transit area for international trade with non-EU countries, plus four airports (two of them international), stimulated various economic activities in a broad range of domains. About 15.3 % of total Romanian exports were produced in Romania’s West Region, what settled the four counties directly after the Capital Bucharest. Thus, despite considerable imports the regions contribution to Romania’s external deficit has been neglectable in the past, though it might increase in the future. Nonetheless, the West Region is not without regional disparities either. After industrial restructurations and shutdowns in Hunedoara and Caraș-Severin both counties are confronted with persisting high unemployment rates (4.9 % and 7.1 % in 2007; INS 2008) as a new wave of economic activities is still absent. FDI tends to avoid both counties. Anyhow, even the two tail ends of the region exhibit a relatively good economic performance. Caraș-Severin still generates a GDP per capita that was just 2.44 % below the national average; Hunedoara even exceeded the national average by 2.18 %. Arad’s GDP per capita was nearly 29 % higher than the average and Timiș exceeded it by nearly 55 %, only outperformed by Ilfov and Bucharest (INS 2008, own calculations).

The public administration was ranked only fifth, reaching an overall score of 14.1 points (from 20 possible). Hunedoara (same county) and Timișoara (county Timiș) gained both 17 points, while Arad decreased the score with a contribution of 8.5 points. Again, the relatively bad result for Arad assassed against the much better result for Hunedoara might increase doubts that an attractive business environment is just a simple function of the quality of public administration.