Get It Right This Time? Leaving the Periphery of the European Economic Development

Abstract

In 1990, the Central and East European countries started, at approximately the same level, the race to change their economic systems from communism to capitalism, which in turn was undergoing full-fledged mutations. Almost three decades later, the gap between Romania and other ex-communist, presently EU member states, is wider. Moreover, after joining the European Union, Romania did not surmount the inequalities, so in 2016 it was a paradoxical country, enjoying the highest rate of economic growth in the UE but, at the same time, ranking systematically low in welfare and development ratings. How can one explain such a meandering evolution? How is it that a country of significant natural resources and a development level like the others’ in the region, is behind three decades later? What can still be done, in the context of a globalized economy, undergoing higher and higher and unexpected pressure, where the big tend to become ever bigger? Decision makers might answer that the economy needed to be systemically changed to contain high value, ripple-effect activities. Yet this would involve structural investments in education and R&D and attracting funds for production capacities that do not rely only on cheap labour at a time when Romania is facing a constant demographic decline, a lack of domestic capital and a deterioration in the systems of education, research and transport.