ROMANIA: Economic Policy Analysis

This site presents an analysis of the Romanian government's economic policies compared to a list of 34 economic policies as prepared by Mr. Iulian Georgescu with the McKeever Institute of Economic Policy Analysis in the Spring of 2012 (MIEPA). To read the analysis scroll through this site. To learn more about the background policies, click here

Introduction and Policy Recommendations

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Several foreign born students living in California have completed a study of their home country governments' economic policies as compared to the MIEPA list of policies as outlined above. The study on Romania is shown below. The ratings herein are based on the following rating scale:


5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2012. Used herein with permission]

To read a disclaimer about the analysis in this file, scroll to the bottom of the file.

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Comparison of Romania's economic policies to MIEPA criteria as prepared by native student of Romania, Mr. Iulian Georgescu, studying in San Francisco in Spring, 2012.



      1               3.5           10.5             15.0        70%

      2               3.0            9.0             15.0        60

      3               2.0            6.0             15.0        40

      4               2.0            6.0             15.0        40

      5               3.0            9.0             15.0        60

      6               4.0           12.0             15.0        80

      7               3.5           10.5             15.0        70

      8               2.5            7.5             15.0        50

      9               2.0            6.0             15.0        40

      10              4.0           12.0             15.0        80

      11              1.0            3.0             15.0        20

      12              4.0           12.0             15.0        80

      13              2.0            4.0             10.0        40

      14              3.0            6.0             10.0        60

      15              4.5            9.0             10.0        90

      16              2.0            4.0             10.0        40

      17              2.5            5.0             10.0        50

      18              2.0            4.0             10.0        40

      19              2.0            4.0             10.0        40

      20              4.0            8.0             10.0        80

      21              1.5            3.0             10.0        30

      22              3.0            6.0             10.0        60

      23              3.5            7.0             10.0        70

      24              3.5            7.0             10.0        70

      25              3.5            7.0             10.0        70

      26              4.0            8.0             10.0        80

      27              3.5            7.0             10.0        70

      28              3.0            6.0             10.0        60

      29              3.0            3.0              5.0        60

      30              3.5            3.5              5.0        70

      31              1.5            1.5              5.0        30

      32              4.0            4.0              5.0        80

      33              4.0            4.0              5.0        80

      34              3.5            3.5              5.0        70           

  TOTAL             101.5          218.0            365.0       59.7%
                    =====         ======           =====        =====
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1. Freedom from internal control: 3.5

Romanian citizens can move freely within and out of the country with little – no governmental involvement. Everyone is able to freely maneuver through the country as long as it is legally permitted. Entrepreneurs have the ability to go from city to city to conduct their business as long as they have the proper paperwork to conduct their type of business.

Source 1:

2. Freedom of speech: 3.0

Freedom of speech and media is a constitutional right in Romania. The media is allowed to publish anything within reason; however they are easily manipulated and tend to favor political agendas.

Source 1: ; Source 2: Personal

3. Effective, fair police force: 2.0

Less than 30% of the Romanian population trusts in the police force and many believe they are corrupt. The general population feels the police force dose more in the interest of politics and the politicians at power, instead of protecting the general population.

Source 1: ; Source 2:

4. Private property: 2.0

Protection of property rights is dependent of the location of the property. Big cities have kept better records and are more developed to properly identify and fix any disputes that may occur. Smaller towns were not maintained as well and disputes occur quite often with no results.

Source 1:

5. Commercial banks: 3.0

There are several big Commercial Banks in Romania; one of the primary is BCR (Commercial Bank of Romania). There are many ways of funding in Romania from inside and outside sources. They all provide competitive pricing and funding.

Source 1: ; Source 2:

6. Communication systems: 4.0

The communication system has developed drastically in the recent years, you are able to find plenty TV stations and newspapers. Land Lines are well establish but dominated by cell phones. You are also able to find internet access very inexpensive even in the most secluded areas.

Source 1: ; Source 2: Personal

7. Transportation: 3.5

Romania has a well developed train network that covers almost the entire country. Due to EU funding over the past several years roads have improved dramatically as well. Smaller busses, privately owned, are able to take individuals from the outskirts of towns or small towns to markets or main cities and are closely priced to the price of a train ticket.

Source 1: ; Source 2: ; Source 3:

8. Education: 2.5

Romania is ranked as #39 out of 100 based on education. On average people spend 13.8 years in schooling. There is a lot of room for improvement, and the government is primarily focused on other topics while education is left behind.

Source 1:

9. Social Mobility: 2.0

Social Mobility is somewhat limited; people that are well educated or are good business men have some mobility. But majority of the population are quite stuck and are unable to maneuver in the global market. With more time passing it’s getting harder and harder for those at the bottom and uneducated to keep their heads above water.

Source 1: ; Source 2:

10. Freedom from outside control: 4.0

A Romanian citizen is protected by law from other government influence. However if crimes have been committed in a different country the Romanian court will take in consideration and input on punishment from the other government. Depending on the seriousness of the crime the Romania government may also extradite the individual to the country in which the crimes were committed.

Source 1: ; Source 2:

11. Protection of Domestic Enterprises: 1.0

Upon joining the UN the Romania parliament past several laws they thought beneficial. However the outcome has dramatically changed the business climate within Romania. Some restriction stated a sum that must be invested before a company would be allowed to conduct business within Romania. The outcome allowed BIG business, corporations with deep pockets, to move in and dominate the maker. Small shops and food vendors privately owned used to be everywhere now you find German Giant grocery stores, Burger King, Pizza Hut, Starbucks and everything else you can think of.

Source 1: ; Source 2:

12. Foreign currency transactions: 4.0

Primarily RON, the new leu, is accepted everywhere without question. There are a few places that exchange currency. Main city banks and some individual businesses that have been licensed can exchange currency. However there are a group of small business owners that accept foreign currencies, such as street vendors in tourist hot spots.

Source 1: ; Source 2: Personal

13. Border control: 2.0

Borders are loosely monitored since Romania was considered to become part of the European Union. There are still borders establishes and routine checks however since the consideration, and attempt to join the EU, border control efforts have been reduced.

Source 1: ; Source 2:

14. Currency: 3.0

In 2005 Romania had a currency reform, this was due to mismanagement of the previous currency the leu “ROL” was discontinued and replace by the new leu “RON” exchange rate was set 10,000 ROL = 1 RON. This effort was taken in the process of stabilizing the national currency. In the past foreign currencies were preferred after the switch on a national scale the RON was more stable and not so vulnerable to inflation. Although the switch was made in 2005 prices at most shops are in both new and old lei, which could confuse tourists.

Source 1:

15. Cultural, language homogeneity: 4.5

Majority of customs are common across the country, and typically surrounding religious events. Romania also has a strong primary religion (Romanian Orthodox — 86.7% practiced by the population) culture is quite uniformed. Ethnicity over 88% Romanina and the primary language practiced is Romania.

Source 1:

16. Political effectiveness: 2.0

Major events typically get a good response and are solved and fixed within a timely manner. Rural areas however sometimes receive support with a delay or sometime none at all, it all depends on the situation and the budget at hand for each event.

Source 1:

17. Institutional stability: 2.5

Over the past several years Romania has had some stability. With large amounts of money invested in the economy for development by the European Union the country took a change for the better. Unfortunately with the European financial crises these amounts have shrunk and depleted which makes the future uncertain.

Source 1: ; Source 2:

18. Honest government: 2.0

The Romanian government has had trouble in the past with dishonestly. Bribery and corruption was always a big problem within Romanian politics. Recent changes with the recent acceptance in the EU are in the process of creating a more honest government. One that will be held responsible when it comes to bribery and corruption.

Source 1:

19. Common laws: 2.0

The laws and judicial system is supposed to provide equal opportunities for legal representation. However as in most countries, money is a common factor, wealthier people are able to afford better representation, and sometimes just straight buy their freedom by bribery. Romania has one of the higher corruption ratings in the EU. In 2011 Romania passed a policy to fight anti bribery. This will still some time to take effect and unsure if it will work.

Source 1: ; Source 2:

20. Central bank: 4.0

The NBR (National Bank of Romania) is a independent public institution. The NBR is managed by a Board of Directors consisting of nine members with little to no government influence which allows them to move freely and focus on the tasks at hand and to better the economy in the long run.

Source 1:

21. Domestic budget management: 1.5

The Romanian government has not been doing a great job at maintaining their finances in order. They continue to spend more than they take in through taxation, while borrowing more and more every ear to offset their pour financial management.

Source 1: ; Source 2:

22. Government debt: 3.0

Governmental debt is at 33.3% of GDP for 2011. With an increase of 2.8% from 2010, while still maintaining and staying in the shallow end compared to neighboring countries and other European Union members.

Source 1:

23. Economic statistics: 3.5

While some numbers and figures attempted to be kept secret very few actually remain a secret from the general population. Due to freedom of press, plenty of TV coverage, magazines and newspapers, now from all across the European union, and with the help of the world wide web it has become quite difficult, and most often impossible to hide any information from the general population. The younger generation, the post communism era, are aware and know the means of getting the right information out to the general public.

Source 1: ; Source 2: Personal

24. Protection of public health and safety: 3.5

Infant mortality rate in 2011 was 11.02 deaths per 1000 living babies. This rate is among the higher in the area surpassed only by Bulgaria with a 16.68/1000. There has been a decrease in these numbers consistently every year over the past 5 years with double digit changes in the last couple of years.

Source 1:

25. High wage policies: 3.5

Wages have been influenced by the process Romania is currently in of joining the EU. The European Union is in the process of approving Romania for the Euro which will take place in 2015. This change has forced wages to increase to become more competitive with other European Nations. This has however set some turbulence as the equilibrium has not been established. With higher waves, businesses had to increase prices thus the cost of living increased. In the years there has been a change in currency that has improved and damaged some workers. The new workers, the young and well educated, have well established lives while the older and blue collar works can barely make ends meet.

Source 1: ; Source 2: ; Source 3:

26. Environmental protection: 4.0

Environmental protection is a big part of Romanian society. Due to strict regulations enforced by EU, Romania has to follow different laws and regulations that they did not have to prior to 2007.

Source 1: ; Source 2:

27. Strong army: 3.5

The amount spent on National Defense is only 1.33% of total national GDP. The small budget limits the amount of technology the military can afford. Due to lack of resources, and military funding Romania would only be able to defend against smaller countries if attacked. If a more powerful nation such as Russia, Germany or other were to attack Romania, the battle would be short and end in defeat.

Source 1:

28. Foreign trade impact: 3.0

Romania has benefited from joining the EU in 2007. They have benefited from a constant increase in exports since 2003 despite negative GDP growth in 2009. Despite the global recession in 2009 the country’s exports grow 22.54%. The Exports + Imports total up to 44% of GDP.

Source 1: ; Source 2: ; Source 3:

29. Management of foreign currency budget: 3.0

Based on the 2010 GDP numbers and information Romania is importing more than it is exporting. In 2010 Exports totaled $52.22 Billion while Imports total 64.01 Billion. This totals to about 7% of GDP.

Source 1: ; Source 2:

30. Layers of collective action: 3.5

There is no denying the fact that there are layers in the Romanian structure. Local offices are chosen by election, same with schools and other industries. The primary reason why this earned this score was due to corruption, and manipulation. Many of these so called elected officials end up underperforming once they have reached the desired office title, at which point they must be bribed into doing their jobs.

Source 1: Personal

31. Pro-business climate: 1.5

Similar to other eastern European countries corruption, power and money go hand in hand. It all comes down to who you know and who trusts in you, are you a worthy person that someone would watch your back? As a rule there are always exceptions and you will find information for business loans however business loans are quite difficult to get unless you have a proven record or a working business model.

Source 1: ; Source 2: Romania Business Owner

32. Government enterprises: 4.0

There are very little government enterprises left, as over the years corrupted politicians and state officials have auctioned off government entities. There are still a small amount owned in Natural Gas and Energy.

Source 1: ; Source 2: Romanian Residents

33. International security agreements: 4.0

Romania has been part of N.A.T.O since March of 2004, and part of the E.U. from January 1st 2007. They are actively part of N.A.T.O and E.U. movements and provide soldiers and support as these two unions see fit. Information on the support provided can be found at the Minister of National Defense on source 3. The reason I gave this a 4 out of 5 is based on the resources Romania has as a country, as a single country their military still needs to grow and further develop.

Source 1: ; Source 2: ; Source 3:

34. Protection of domestic enterprises from government mandated costs: 3.5

According to and the Romanian business owner to start a business require the completion of six procedures; Getting a DBA; Obtain a bank deposit slip; Getting an ok on the headquarters office; Register with Unique Office; Register for Taxes; and register with the Labor Union. Costs are normal and so is taxation around 44.4%, which is somewhat average if not lower then the surronding countries. In addition to taxation the biggest problem similar to most estern european countries is corruption. Even though over the past years laws have been passed to make it easier to report bribery and corruption it is still difficult to get by without having to bribe your way into doing business including the capital.

Source 1: ; Source 2: Romania Business Owner


All the information and conclusions in each country analysis are solely the responsibility of the indivi dual student and have not been verified, corrected, checked for copyright infringement or evaluated in any way by MIEPA or Mike P. McKeever. You are solely responsible for the results of any use you make of the information and conclusions in these studies. Use them at your own risk as interesting supplemental information only instead of seasoned judgements about the policy factors contained herein. Each student has granted permission for his or her work to be displayed here under his or her own name or wishes to remain anonymous and have either created a pen name or used no name at all; if you wish to contact them for any reason, forward your request to MIEPA and the student will be notified of your interest.

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Introduction and Policy Recommendations

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Essay: Balanced Trade: Toward the Future of Economics

Moral Economics


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