Selected papers~ SPECIAL EDITION - Index of

MINISTRY OF EDUCATION, RESEARCH, 

YOUTH AND SPORTS 

THE ANNALS OF THE 

UNIVERSITY OF ORADEA 

ECONOMIC SCIENCES 

TOM XX 

1 st ISSUE / JULY 2011 

~Selected papers~ 

SPECIAL EDITION - “20 YEARS OF ACADEMIC 

ECONOMIC EDUCATION IN ORADEA” 

ISSN 1222-569X (printed format) 

ISSN 1582-5450 (electronic format)

The publication of the papers in the Journal - THE ANNALS OF THE UNIVERSITY OF ORADEA. 

ECONOMIC SCIENCES - Tom XX, 2011, ISSN 1582-5450 (electronic format), ISSN 1222-569X 

(printed format), a journal couted by the National Authority as B+ CNCSIS - Romania, RePEc, EBSCO, 

DOAJ, CABELL’S DIRECTORY OF PUBLISHING OPPORTUNITIES indexed and respectively on the 

site of the journal: http://anale.steconomiceuoradea.ro, with open access, is a result of a peer review 

evaluation process. The papers published in this volume are exclusivily engaging authors. 

Editorial Board 

Chief Editor: 

Dr. Anca DODESCU, University of Oradea, Romania; 

Associate Editors: 

Dr. Ioana POP-COHUŢ, University of Oradea, Romania; 

Dr. Adriana GIURGIU, University of Oradea, Romania; 

Members: 

Academician, Mircea Maliţa, Member of the Romanian Academy, Romania, Dr. H.C. of the University of Oradea; 

Dr. Gheorghe Zaman, Corresponding Member of the Romanian Academy, Romania, Dr. H.C. of the University of 

Oradea; 

Dr.Ahmet Aktas, University of Akdeniz, Alanya, Turkey; 

Dr.Mihaela Belu, The Bucharest Academy of Economic Studies, Romania; 

Dr. Gordon Biggs, Moray College UHI Millennium Institute, Scotland, Great Britain; 

Dr. Luminita Chivu, The Romanian Academy, Romania; 

Dr. José Cifuentes – Honrubia, University of Alicante, Spain; 

Dr.Mircea Ciumara, The Romanian Academy, Romania; 

Dr.Constantin Ciutacu, The Romanian Academy, Romania; 

Dr. Marin Dinu, The Bucharest Academy of Economic Studies, Romania; 

Dr.Xavier Galiegue, University of Orleans, France; 

Dr. Valeriu Ioan-Franc, The Romanian Academy, Romania; 

Dr. Zoran Ivanović, University of Rijeka, Croatia; 

Dr.Kormos Janos, University of Debrecen, Hungary; 

Dr.Eszter Lang, University of Debrecen, Hungary; 

Dr. Nicola Mattoscio, “G. D’Annunzio” University of Chieti, Pescara, Italy; 

Dr. Piero Mella, University of Pavia, Italy; 

Miguel Angel Moreno San Juan, The Leadership Institute, Arlington, USA; 

Dr. Guido Montani, University of Pavia, Italy; 

Dr. András Nábrádi, University of Debrecen, Hungary; 

Dr. Giuseppe Paolone, “G. D’Annunzio” University of Chieti, Pescara, Italy; 

Dr. Nicolae Pop, The Bucharest Academy of Economic Studies, Romania, Dr. H.C of the University of Oradea; 

Dr. Ioan Popa, The Bucharest Academy of Economic Studies, Romania ; 

Dr. Wiktor Pozniak, College of Europe, Poland; 

Egidio Rangone, ”G. D’Annunzio” University of Chieti, Pescara, Italy; 

Dr. Jean-Emmanuel Tyvaert, University of Reims Champagne-Ardenne, France; 

Dr. Adriana Tomescu, University of Oradea, Romania; 

Dr. Valentina Vasile, The Romanian Academy, Romania. 

Responsible for the English version: Dr. Mirabela Pop, University of Oradea, Romania. 

Honorary Committee: 

Academician, Mircea Maliţa, Member of the Romanian Academy, Romania – Dr. H.C of the University of Oradea; 

His Excellency, Jonathan Scheele – Dr. H.C of the University of Oradea; 

Dr. Aurel Negucioiu – Dr. H.C of the University of Oradea; 

Dr. Gheorghe Gh. Ionescu – Dr. H.C of the University of Oradea; 

Aldo Poli – Dr. H.C of the University of Oradea; 

Franco Antiga - Dr. H.C of the University of Oradea; 

Dr. Constantin Roşca – Dr. H.C of the University of Oradea; 

Dr. Gheorghe Olah – University of Oradea; 

Dr. Gheorghe Zaman, Coresponding Member of the Romanian Academy, Romania – Dr. H.C. of the University of 

Oradea.

Scientific Committee: 

Dr. Băbăiţă Carmen, West University, Timişoara, Romania; 

Dr. Bătrâncea Ioan, “Babeş – Bolyai” University, Cluj-Napoca, Romania; 

Dr. Liviu Begu, The Bucharest Academy of Economic Studies, Romania; 

Dr. Nicolae Bibu, West University, Timişoara, Romania; 

Dr. Rodica Boier, “Gh. Asachi” Technical University, Iaşi, Romania; 

Dr. Sorin Briciu, “1 Decembrie 1918″ University, Alba Iulia, Romania; 

Dr. Cristiana Cristureanu, “Dimitrie Cantemir” Christian University, Bucharest, Romania; 

Dr. Marin Dinu, The Bucharest Academy of Economic Studies, Romania; 

Dr. Liliana Feleaga, The Bucharest Academy of Economic Studies, Romania; 

Dr. Niculae Feleaga, The Bucharest Academy of Economic Studies, Romania; 

Dr. Emilian M. Dobrescu, Romanian Academy, Bucharest, Romania; 

Dr. Nicoleta Farcane, West University, Timişoara, Romania; 

Dr. Xavier Galiegue, University of Orleans, France; 

Dr. Elena Hlaciuc, “Ştefan cel Mare” University, Suceava, Romania; 

Dr. Tatiana Moşteanu, The Bucharest Academy of Economic Studies, Romania - Dr. H.C of the University of Oradea; 

Dr. Marin Opriţescu, University of Craiova, Romania; 

Dr. Nicolae Al. Pop , The Bucharest Academy of Economic Studies, Romania – Dr. H.C of the University of Oradea; 

Dr. Ion Popa, The Bucharest Academy of Economic Studies, Romania; 

Dr. Gheorghe Popescu, “Babes-Bolyai” University, Cluj Napoca, Romania; 

Dr. Gabriela Prelipcean, “Ştefan cel Mare” University, Suceava; 

Dr. Petru Prunea, University of Oradea, Romania; 

Dr. Gabriela Stănciulescu, The Bucharest Academy of Economic Studies, Romania; 

Dr. Ovidiu Rujan, The Bucharest Academy of Economic Studies, Romania; 

Dr. Ioan Talpos, West University, Timişoara, Romania; 

Dr. Adriana Tiron Tudor, “Babeş – Bolyai” University, Cluj Napoca, Romania 

Dr. Jean-Emmanuel Tyvaert, University of Reims Champagne-Ardenne, France; 

Dr. Constantin Tulai, “Babeş-Bolyai” University, Cluj-Napoca, Romania; 

Dr. Ioan Trenca, “Babeş-Bolyai” University, Cluj-Napoca, Romania; 

Dr. Gordon T. Biggs, Moray College, Scotland, Great Britain; 

Dr. Maria Madela Abrudan, University of Oradea, Romania; 

Dr. Olimpia Ban, University of Oradea, Romania; 

Dr. Alina Bădulescu, University of Oradea, Romania; 

Dr. Mihai Berinde, University of Oradea, Romania; 

Dr. Elena Botezat, University of Oradea, Romania; 

Dr. Nicoleta Bugnar, University of Oradea, Romania; 

Dr. Gheorghe Ţară, University of Oradea, Romania; 

Dr. Naiana Ţarcă, University of Oradea, Romania; 

Dr. Daniela Zăpodeanu, University of Oradea, Romania. 

Edition prepared by: 

Associate editor – Dr. Ioana POP COHUŢ 

Ec. Cătălin ZMOLE

TABLE OF CONTENTS 

DISERTATION AT ACADEMIC CEREMONY OF AWARDING THE UNIVERSITY 

OF ORADEA HONOR DEGREE OF DOCTOR HONORIS CAUSA TO PROFESSOR 

DR. GHEORGHE ZAMAN, CORRESPONDENT MEMBER OF THE ROMANIAN 

ACADEMY, ON MAY 27, 2011 ................................................................................................ 9 

CHALLENGES, VULNERABILITIES AND WAYS OF APPROACH IN 

ROMANIA'S EXTERNAL DEBT SUSTAINABILITY ............................................... 11 

Zaman Gheorghe .......................................................................................................... 11 

PLENARY SESSION ............................................................................................................... 45 

EXPERIENCES AND TENDENCIES OF DECENTRALIZATION AT REGIONAL 

LEVEL IN THE EUROPEAN UNION ........................................................................... 47 

Dodescu Anca ............................................................................................................... 47 

A NEW THINKING FOR A NEW WORLD. REPRESENTATIONS FROM 

ECONOMY ....................................................................................................................... 63 

Negucioiu Aurel ............................................................................................................ 63 

CONTINUING INTERNATIONAL TRADE LIBERALIZATION IN THE 

FINANCIAL CRISIS CONTEXT ................................................................................... 85 

Berinde Mihai ............................................................................................................... 85 

EUROPEAN AUSTERITY WITHOUT GROWTH? EUROPEAN GROWTH 

WITHOUT EUROPEAN DEMOCRACY?HOW EUROPEAN CITIZENS CAN 

REVIVE THE EUROPEAN PROJECT AND DEFEAT EUROSCEPTICISM ......... 91 

Montani Guido .............................................................................................................. 91 

ACCOUNTING FOR SUSTAINABILITY: WHAT NEXT? A RESEARCH 

AGENDA ........................................................................................................................... 97 

Cunningham M. Gary ................................................................................................... 97 

Arne Fagerström ........................................................................................................... 97 

Lars G. Hassel .............................................................................................................. 97 

LE DYNAMISME DES TPE ET PME ET L'ÉVOLUTION DE L'ÉCONOMIE 

ROUMAINE .................................................................................................................... 113 

Jubénot Marie-Noëlle ................................................................................................. 113 

A QUALITATIVE RESEARCH REGARDING THE MARKETING 

COMMUNICATION TOOLS USED IN THE ONLINE ENVIRONMENT ............ 119 

Pop Nicolae Alexandru ............................................................................................... 119 

Acatrinei Carmen........................................................................................................ 119 

SECTION INTERNATIONAL BUSINESS AND EUROPEAN INTEGRATION: ......... 127 

SUB-SECTION: INTERNATIONAL BUSINESS............................................................... 127 

THE IMPACT OF THE CRISIS ON THE QUALITY OF LIFE AND SOLUTIONS 

TO REDUCE THE CRISIS EFFECTS. CASE STUDY: ROMANIA ....................... 129 

Meşter Liana ............................................................................................................... 129 

Bugnar Nicoleta .......................................................................................................... 129 

Fora Andreea .............................................................................................................. 129 

5

SECTION: INTERNATIONAL BUSINESS AND EUROPEAN INTEGRATION ......... 135 

SUB-SECTION: EU SUSTAINABLE ECONOMIC DEVELOPMENT AND 

COMPETITIVENESS ........................................................................................................... 135 

POVERTY AND LIVING. ROMA POOR NEIGHBORHOODS IN ROMANIA AND 

HUNGARY ...................................................................................................................... 137 

Olah Gheorghe ........................................................................................................... 137 

Olah Șerban ................................................................................................................ 137 

Flora Gavril ................................................................................................................ 137 

Szekedi Levente ........................................................................................................... 137 

UTILISATION OF BENCHMARKING TECHNIQUES FOR FUNDAMENTING 

DEVELOPMENT STRATEGIES IN THE MANUFACTURING INDUSTRY IN 

ROMANIA ....................................................................................................................... 185 

Rujan Ovidiu ............................................................................................................... 185 

Ţarţavulea Ramona Iulia ............................................................................................ 185 

Vasilescu Felician ....................................................................................................... 185 

Geambaşu Cristina Venera ......................................................................................... 185 

SECTION ECONOMICS AND BUSINESS ADMINISTRATION ................................... 191 

SUB-SECTION: BUSINESS ADMINISTRATION ............................................................ 191 

THE BRAND EQUITY OF TOURISTIC DESTINATIONS – THE MEANING OF 

THE VALUE ................................................................................................................... 193 

Ban Olimpia ................................................................................................................ 193 

Popa Luminiţa ............................................................................................................ 193 

Silaghi Simona ............................................................................................................ 193 

THE TOURISM BARRIERS OF THE DISABLED IN ROMANIA ......................... 201 

Băbăiță Carmen Mihaela ........................................................................................... 201 

Nagy Andrea ............................................................................................................... 201 

Filep Adrian Viorel ..................................................................................................... 201 

START-UP FINANCING SOURCES: DOES GENDER MATTER? SOME 

EVIDENCE FOR EU AND ROMANIA ....................................................................... 207 

Bădulescu Alina .......................................................................................................... 207 

SUB-SECTION: ECONOMICS ............................................................................................ 215 

COMPETITIVENESS - GROWTH FACTOR. POINT OF VIEW ON THE 

SITUATION IN ROMANIA .......................................................................................... 217 

Cismaș Laura.............................................................................................................. 217 

Bucur Oana Nicoleta .................................................................................................. 217 

Pitorac Ruxandra Ioana ............................................................................................. 217 

DYNAMICS ECONOMIC DISPARITIES IN NORTH-WEST REGION OF 

ROMANIA ....................................................................................................................... 223 

Florea Adrian ............................................................................................................. 223 

ABOUT OTHER KIND OF PRODUCTIVITY AND GROWTH (HOMO-SAPIENS 

TO HOMO-OECONOMICUS) ..................................................................................... 229 

Jivan Alexandru .......................................................................................................... 229 

THE POTENTIAL OF FEMALE ENTREPRENEURSHIP AS A REGIONAL 

GROWTH AND DEVELOPMENT ENGINE IN THE WESTERN ROMANIA ..... 237 

Pop Cohuț Ioana ......................................................................................................... 237

TOURISM'S CHANGING FACE: NEW AGE TOURISM VERSUS OLD 

TOURISM ........................................................................................................................ 245 

Stănciulescu Gabriela Cecilia .................................................................................... 245 

Molnar Elisabeta ........................................................................................................ 245 

Bunghez Magdalena ................................................................................................... 245 

YOUTH LABOUR MARKET. MOBILITY, CAREER DEVELOPMENT, 

INCOMES. CHALLENGES AND OPPORTUNITIES .............................................. 251 

Vasile Valentina .......................................................................................................... 251 

Vasile Liviu ................................................................................................................. 251 

SECTION FINANCE, BANKING AND ACCOUNTING .................................................. 265 

SUB-SECTION: FINANCES ................................................................................................ 265 

THE FINANCIAL CRISIS AND ITS IMPLICATIONS ON THE PUBLIC DEFICIT 

OF THE EU COUNTRIES ............................................................................................ 267 

Bǎtrâncea Ioan ........................................................................................................... 267 

Bǎtrâncea Maria ......................................................................................................... 267 

Nichita Ramona-Anca ................................................................................................. 267 

SUBSECTION: ACCOUNTING .......................................................................................... 273 

INTELLECTUAL CAPITAL REPORTING AND DISCLOSURE IN THE ANNUAL 

REPORTS OF ROMANIAN MANUFACTURING LISTED COMPANIES – 

THEORETICAL FRAMEWORK ................................................................................ 275 

Bogdan Victoria .......................................................................................................... 275 

Balint Platon Judit ...................................................................................................... 275 

Farcaş Mariana .......................................................................................................... 275 

PRINCIPLES AND PROCEDURES ON FISCAL ...................................................... 285 

Morar Ioan – Dan ....................................................................................................... 285 

IFRS COMPLIANCE REGARDING INFORMATION DISCLOSED BY 

COMPANIES IN CONSOLIDATED FINANCIAL STATEMENTS - CASE STUDY 

ON IAS 23 BORROWING COSTS APPLICABILITY .............................................. 289 

Tiron-Tudor Adriana .................................................................................................. 289 

Fekete-Pali-Pista Szilveszter ...................................................................................... 289 

Dragu Ioana-Maria .................................................................................................... 289 

SUBSECTION: BANKING ................................................................................................... 297 

MODELING ROMANIAN EXCHANGE RATE EVOLUTION WITH GARCH, 

TGARCH, GARCH- IN MEAN MODELS .................................................................. 299 

Trenca Ioan ................................................................................................................. 299 

Cociuba Mihail Ioan ................................................................................................... 299 

MONEY: FROM STATISTICAL DEFINITION TO MONETARY POLICY FOR 

ADOPTING EURO. ........................................................................................................ 307 

Zăpodeanu Daniela .................................................................................................... 307 

SECTION MANAGEMENT AND MARKETING ............................................................. 313 

SUB-SECTION: ECONOMIC INFORMATICS ................................................................ 313 

TOOLS USED IN DECISION MAKING ..................................................................... 315 

Demian Horia ............................................................................................................. 315 

Bernabeu Elena Perez ................................................................................................ 315 

Abrudan Maria Madela .............................................................................................. 315

SUB-SECTION: MARKETING ........................................................................................... 321 

PUBLIC-PRIVATE PARTNERSHIP IN COMMUNITY DEVELOPMENT. THE 

CASE OF ROMANIA. CONCEPT AND MANAGEMENT. ..................................... 323 

Bibu Nicolae ............................................................................................................... 323 

Lisetchi Mihai ............................................................................................................. 323 

SUB-SECTION: MANAGEMENT ....................................................................................... 331 

ORGANIZATIONAL STRESS AND ITS IMPACT ON WORK PERFORMANCE333 

Bucurean Mirela ......................................................................................................... 333 

Costin Mădălina-Adriana ........................................................................................... 333 

ELEMENTS FOR A MODEL OF ENTREPRENEURIAL SCHOOL FOR WOMEN 

IN RURAL AREAS OF ROMANIA ............................................................................. 339 

Botezat Elena .............................................................................................................. 339 

Tarcza Teodora ........................................................................................................... 339 

HOW FUTURE MANAGERS VIEW SOCIETAL CULTURE: A CROSS- 

COUNTRY COMPARISON .......................................................................................... 347 

Catana Gheorghe Alexandru ...................................................................................... 347 

Catana Doina ............................................................................................................. 347 

EXPLANATORY ECONOMETRIC METHOD FOR THE ANALYSIS OF THE 

BEHAVIOR MANAGEMENT IN ORGANIZATIONS IN ROMANIA - GUIDE 

FOR DEVELOPING THE PILOT STUDY ................................................................. 353 

Roşca Constantin ........................................................................................................ 353 

THE NEED FOR PUBLIC DEBT MANAGEMENT IN THE CONTEXT OF 

SUSTAINABLE DEVELOPMENT WITHIN THE EUROPEAN UNION ............... 365 

Marcu Nicu ................................................................................................................. 365 

Meghișan Mădălina Georgeta .................................................................................... 365 

IMPROVING THE ECONOMIC ACTIVITIES IN THE LESS FAVOURED 

AREAS OF ROMANIA .................................................................................................. 375 

Tileagă Cosmin ........................................................................................................... 375 

Cosmescu Ioan ............................................................................................................ 375

Disertation at Academic Ceremony of Awarding 

the University of Oradea Honor Degree of Doctor Honoris 

Causa to Professor Dr. Gheorghe Zaman, 

Correspondent Member of the Romanian Academy, 

on May 27, 2011

CHALLENGES, VULNERABILITIES AND WAYS OF APPROACH IN 

ROMANIA'S EXTERNAL DEBT SUSTAINABILITY 

Zaman Gheorghe 

Correspondent Member of the Romanian Academy 

Introduction 

The notion of a country's external debt, measured by a complex system of static and dynamic indicators, 

knows a lot of approaches and opinions in the literature, more or less convergent, complementary and 

advanced in terms of factors. 

Indicators of the external public and private debt on short, medium and long term provide a snapshot of 

indebtedness of the country and are the most researched domain in the literature, including national and 

international financial bodies, which adopt a series of classification criteria of countries in terms of size 

and dynamics of external debt. 

In this study, we intend to make an analysis of the volume, dynamics and structure of the current 

Romania's foreign debt, showing the challenges for national economic policies, present and perspective, 

the internal and external vulnerabilities and ways of approaching the external debt sustainability. 

According to the definition given by UNCTAD, a sustainable foreign debt is that level of debt which: 

� allows the indebted country to pay all current and future debt service without resorting to 

restructuring or rescheduling; 

� prevents accumulation of arrears and defaults; 

� in parallel provides an acceptable level of growth in the lending country. 

Until recently, Romania was considered a country with a low external debt. Currently, the situation has 

changed, meaning that this debt, somewhat neglected in the early transition period 1 has become a serious 

threat to present and future sustainability of economic development in Romania. 

In general, external debt concerns financial and economic interests of all parties especially creditors and 

debtors, by the formula "win-win", so that, currently, some countries have surplus of balance of 

payments, usually the most developed and economically healthy, while others have deficits that, in 

extreme situations, can lead to inability to pay the debt, which means tough measures and policies, 

especially for the living standards of many generations of taxpayers. 

Chapter 1. Features of the volume, structure and dynamics of Romania's foreign debt 

Romanian cooperation with international financial institutions is not recent. If we don’t 

consider the period before 1990, we can say that the period from 1991 to 2011 saw some standby 

arrangement with the IMF which Romania has made for various reasons, the latter regarding 

the impact of international economic and financial crisis which manifested itself in Romania 

stronger and longer than in most of the developed EU countries and in some new EU member 

states. 

During 2005-2010, total external debt of Romania increased from 38.511 billion USD to 

120,436 billion, representing a proportion of 75%. In other words, there was an increase of 

about 3.12 times, this representing the macroeconomic indicator with the highest dynamic the 

result of which was to record an absolute record, unprecedented in the economic history of the 

country, in terms of the size of the indicator, and its dynamics under the circumstances in 

which the level of the country’s economic and social development of 1989 was reached in 

2003-2004, while the GDP growth was only 138.1% during 2002-2009, which leads us to 

believe that the elasticity of GDP to external debt was very low. 

1 Several studies have shown the need to pay attention to Romania's foreign debt even since the early years of 

transition (see Gh.Zaman, 1993, Datoria externă obsesia de care nu scăpăm (External debt- the obsession we 

cannot escape from), Capitalul (The Capital), June 26, pg.3). 

11

Table no.1.1 Total external debt of Romania in 2005-2010 1 

12 

billion U.S.D. 

2005 2006 2007 2008 2009 2010 2010/ 

2005 % 

In billions of U.S. dollars 

Total external debt of which: 38,5 51,7 80,2 105,7 111,8 120,4 313 

Public 14,1 13,4 14,4 16,4 27,8 37,3 265 

Loans 6,2 6,0 6,4 7,9 19,7 28,7 462 

Multilateral 6,1 5,9 6,3 7,8 19,6 28,7 470 

Bilateral 0,1 0,1 0,1 0,1 0,07 0,08 80 

Bonds 3,3 3,2 3,3 3,9 3,9 3,8 115 

Others 2 

4,5 4,2 4,6 4,5 4,2 4,7 104 

Private 23,3 37,0 64,8 88,95 83,8 82,9 356 

Short term 7,8 15,8 26,8 29,9 19,3 22,9 294 

Long term 15,6 21,3 38 59,2 64,5 60,1 385 

as a percentage of GDP 

Total external debt of which: 38,8 42,1 47,0 51,4 68,3 74,9 193 

Public 14,2 10,9 8,4 8,0 17,0 23,2 163 

Loans 6,2 4,9 3,7 3,9 12,0 17,9 289 

Multilateral 6,1 4,8 3,7 3,8 12,0 17,8 292 

Bilateral 0,1 0,1 0,1 0,1 0,0 0,1 100 

Bonds 3,3 2,6 2,0 1,9 2,4 2,4 73 

Others 2 

4,6 3,4 2,7 2,2 2,6 2,9 63 

Private 23,5 30,1 38,0 49,3 51,2 51,6 219 

Short term 7,8 12,8 15,7 14,5 11,8 14,2 182 

Long term 15,7 17,3 22,3 28,8 39,4 37,4 238 

1) End of year unless otherwise specified, 2) Include private bank debt and other public debt. 

Source: NBR, IMF data and own calculations. 

Figure no. 1. Institutional structure of the total external debt by type of institutions in 2010

Data in Table no. 1.1 and Figure no.1 

suggest some features of Romania's foreign 

debt, which can lead to some real challenges 

for present and future national economy, 

namely: 

- the highest dynamics of external debt over 

the period 2005-2010 beyond the average of 

313% for total foreign debt, there have been 

public multilateral loans, mainly due to big 

increases in 2008-2010, because of the crisis, 

followed by long-term private debt, which, 

unlike the public debt, after especially large 

increases in 2005-2008, decreased in 2010, 

when private sector lending became more 

expensive and more restrictive; 

-in terms of weight in the total external debt it 

is by far due to private external debt of 68.8% 

of which 18.3% on short term and 49.9% on 

long term. 

As for the fact that private sector is the one 

with the highest level of external 

indebtedness we shall note that there have 

been opinions stating that the private 

economic agents are free to contract external 

debt, as much as they can or will. This view, 

for the whole of sustainable economic growth 

in Romania, is totally wrong because: 

- a part of public and private debt is 

guaranteed publicly so the state is to pay if 

the private firm enters into default, a situation 

that reflects unfavourably on all taxpayers; 

- even the private external debt, without 

public guarantee, is relevant for the state 

because private economic collapse in case of 

default of debt payment, by the effects 

propagated (negative externalities), entails, 

directly or indirectly, negative repercussions 

on the national economy as a whole and not 

seldom does the state have to intervene, as 

was the case of the banks in difficulty in 

developed countries during the present crisis, 

when they received financial support from the 

state, investment injections, or were taken by 

the state on the ground that they were too 

large (important) to crack under the slogan 

“too big to fail”(!). 

This is therefore the first challenge in terms 

of complexity of the relation between 

13 

public and private external debt that 

requires further examining, taking into 

account the quasi-symbiotic coexistence of 

the two types of debt, and that neither the 

state nor the private firms can be indifferent 

to bankruptcy or insolvency, both of one 

and of the others, due to the acknowledged or 

disregarded, assumed or denied, relational 

context of the public-private, public-public 

and private-private partnerships. This 

challenge forces us to rather a rejection of the 

destructive competition, the market 

individualism, autarchy and selfishness 

promoted by some experts and to better 

cooperation and solidarity. 

Another conclusion that can be drawn from 

the effects of crisis and not only is that 

neither the private sector nor the public one 

are exempt from the developments of the 

"business cycle", of recessions and crises, no 

matter how much they would advocate one or 

the other. For this reason, the use of strategic 

positive sum games formula such as "winwin" 

seems to be the wisest solution. 

- The ratio of the total external debt to 

GDP gives us clues about the efficiency of 

the use of potential resource representing 

external borrowing - expressed as magnitude 

of GDP (effect) of production that reflects 

one unit of effort, which in this case is 

foreign debt. In other words, a medium and 

long term growth of external debt, faster than 

of GDP, generates doubts about the efficiency 

of the use of the borrowed money. Not vainly 

does the phrase "live a life on debt" have 

negative connotations. If in isolated cases it 

may be a way to "get through", even to be 

able to live, at the societal level such a 

generalization can only have negative effects, 

which, whether we admit it or not, practice, 

reality induce into us sooner or later. 

In connection with this aspect of the 

correlation of GDP and external debt, we 

want to mention that there are experts who 

believe that having a large foreign debt is as a 

sign of credibility, internally or externally, 

and to make efforts to pay foreign debt would 

be a "big mistake". In support of such

easoning is brought, in my opinion totally 

unconvincingly, the case of periodic 

exemptions from external debt of heavily 

indebted developing or underdeveloped 

countries that enter default as well as deleting 

the external debt of the central European 

countries that have turned from a controlled, 

centralized economy to a competitive market 

economy. These examples cannot be 

considered other than exceptions, rare cases, 

which strengthen the rule of preserving the 

ability to pay, of solvency, based on loans 

designed, managed and reimbursed 

efficiently. 

Therefore, I think that depending on the level 

and characteristics of the economic and social 

development of each country, there are 

optimal or sustainable external and 

domestic debt levels, on different time 

horizons, which only the complex, 

multidisciplinary approaches of teams of 

professionals can quantify and substantiate. 

In conclusion, it can be said that the weight of 

the total external debt or of its individual 

components in GDP, is rather determined by 

taking into account the complex internal and 

external factors acting in a national economy 

and not necessarily the systems of standard 

indicators or criteria, more or less stable over 

time and established by various bodies and 

specialists. This does not mean one should 

neglect the standard criteria and benchmarks, 

but on the contrary, to see how adequate they 

are in each peculiar case. Even the 

14 

applicability, the operational character, the 

convergence and adherence criteria of EMU 

have raised numerous objections not only of 

theoretical and methodological nature but 

mainly practical. 

The evolution of external debt of Romania 

on quarters 1-4 2010 and quarter 1, 2011 

In the last five quarters, the year 2010 and 

quarter 1-2011, Romania's total gross external 

debt increased continuously (Table no.1.2), 

which is more a cause for concern than a 

safety mark because such dynamics show that 

the effects of the crisis and the policies 

adopted to counter them so far have not 

proven to stop the urgent need to increase, at 

an unsustainable pace on the medium and 

long term, the indebtedness of the country, 

through new loans of considerable sizes, even 

if they are called "preventive" 

(precautionary). 

The largest increases were reported for longterm 

debt of the government and the banks, 

respectively 1.6 billion euro and 1.2 billion 

euro, amounts beyond the possibilities of 

reimbursement, as long as its maturities make 

short-term debt reach more and more 

overburdening levels, relatively difficult to 

honour. 

So, another challenge for the Romanian 

foreign debt sustainability would be the very 

taking of actions to stop / slow down this 

rapid dynamic of the burden of its external 

debt. 

Table no.1.2. Structure on institutional sectors, maturities and financial instruments 

T1/2010 T2/2010 T3/2010 T4/2010 T1/2011 

Mil. euro - end of 

period 

Total gross external debt 86 527,9 87 785,0 89 184,0 90 908,4 93 386,2 

I. GROSS EXTERNAL DEBT 71 484,0 72 244,8 73 209,2 74 918,8 77 179,7 

1. Government 17414,3 17 304,8 17712,8 18 394,6 20 193,7 

Short-term 1 096,0 967,0 1 232,0 1 491,0 2 217,0 

Money market instruments 1 061,0 929,0 1 132,0 1 376,0 2 141,0 

Loans 0,0 0,0 0,0 0,0 0,0 

Cash and deposits 35,0 38,0 100,0 115,0 76,0 

Long-term 16 318,3 16 337,8 16 480,8 16 903,6 17 976,7

T1/2010 T2/2010 T3/2010 T4/2010 T1/2011 

Mil. euro - end of 

period 

Bonds 3 790,2 3 544,2 2 848,3 2 863,0 3 010,8 

Loans 12 527,0 12 792,4 13 631,5 14 039,3 14 964,6 

Trade credits 1,1 1,2 1,0 1,3 1,3 

2. Monetary Authority 7 178,5 7 717,7 9 004,5 9 104,6 9 673,1 

Short-term 57,0 79,0 48,0 22,0 6,0 

Loans 0,0 0,0 0,0 0,0 0,0 

Cash and deposits 57,0 79,0 48,0 22,0 6,0 

Long-term 7 121,5 7 638,7 8 956,5 9 082,6 9 667,1 

Bonds 0,0 0,0 0,0 0,0 0,0 

Loans 7 121,5 7 638,7 8 956,5 9 082,6 9 667,1 

3. Banks 21 629,2 21 107,3 21 337,0 22 688,6 22 952,9 

Short-term 6 590,0 6 242,0 6 277,0 7 025,0 6 751,0 

Loans 327,0 555,0 574,0 1 611,0 1 798,0 

Cash and deposits 6 106,0 5 587,0 5 673,0 5 367,0 4 909,0 

Other liabilities 157,0 100,0 30,0 47,0 44,0 

Long-term 15 039,2 14 865,3 15 060,0 15 663,6 16201,9 

Bonds 183,7 120,2 146,3 125,8 130,0 

Loans 7411,9 7 460,9 7 243,7 7 310,1 7 555,8 

Other liabilities 7 443,6 7 284,2 7 670,0 8 227,7 8 516,1 

4. Other sectors 25 262,0 26 115,0 25 154,9 24 731,0 24 360,0 

Short-term 4 457,0 5 115,0 4 751,0 4 630,0 4 620,0 

Money market instruments 2,0 2,0 15,0 41,0 164,0 

Loans 3 116,0 3 264,0 3 097,0 2 956,0 3 079,0 

Trade credits 1 339,0 1 845,0 1 637,0 1 633,0 1 377,0 

Other liabilities 0,0 4,0 2,0 0,0 0,0 

Long-term 20 805,0 21 000,0 20 403,9 20 101,0 19 740,0 

Loans 20 642,5 20 841,3 20 259,9 19 989,6 19 665,1 

Trade credits 162,5 158,7 144,0 111,4 74,9 

II. INTER-COMPANY DIRECT 

INVESTMENT 

15 043,9 15 540,2 15 974,8 15 989,6 16 206,5 

- liabilities to affiliated enterprises 18,2 0,5 3,4 9,7 10,0 

- liabilities to investors ( series 15 025,7 15 539,7 

available from December 2001) 

15 971,4 15 979,9 16 196,5 

Source: NBR Data. 

The balance of chronic deficit of the 

balance of payments of Romania is another 

synthetic indicator relevant to the health of 

the economy and hence of the sustainability 

of external debt (see Table no.1.3.). The 

higher the current account deficit, the more 

difficult the financing problems. 

15 

It is noted that compared to the first quarter of 

2010, in the first quarter of 2011 Romania 

saw a favourable trend to reduce the size of 

the current account deficit. What is important 

to note is that, except for component C - 

Current transfers - that has a growing surplus 

in quarter I.2011 compared to quarter I.2010,

all other components of the current account 

balance – the trade balance, the services and 

the income – recorded negative values. 

In the first quarter of 2011 the current 

account of the balance of payments showed a 

deficit of 634 million euros, down by 58.9 

16 

percent compared with the same period of the 

previous year, due to a trade deficit reduced 

by 64.6 percent and current transfers surplus 

increase by 68.0 percent (due to net transfers 

of public administration). 

Table no.1.3. Romania’s balance of payments and foreign debt – quarter I 2011 

- million euro - 

Quarter 1 of 2010 r 

Quarter 1 of 2011 p 

CREDIT DEBIT NET CREDIT DEBIT NET 

CURRENT ACCOUNT (A + 

B + C) 

10 725 12 269 -1 544 14 164 14 798 -634 

A. Goods and services 9 273 10 839 -1 566 12 482 13 242 -760 

a. Goods (export FOB - 

import FOB) 

7 902 9 189 -1 287 11 016 11 471 -455 

b. Services 1 371 1 650 -279 1 466 1 771 -305 

- transport 396 447 -51 451 560 -109 

- tourism - travel 162 244 -82 210 283 -73 

- other services 813 959 -146 805 928 -123 

B. Income 210 622 -412 251 854 -603 

C. Current transfers 

r p 

Revised data; Provisional data; 

1 242 808 434 1 431 702 729 

Source: National Statistics Institute (INS). FOB imports are calculated based on conversion factor 

CIF / FOB of 1.0834 determined by the INS. 

The financing of the current account 

deficit in the first quarter of 2011, was made 

at a rate of 59.8 percent by non-residents' 

direct investment in Romania, which 

recorded 379 million euros 2 (compared with 

486 million euros in the first quarter of 2010), 

of which intra-group loans 3 totalled 290 

million euros and capital equity consolidated 

with the estimated net loss 89 million euros. 

Naturally, the question arises as what sources 

the current account deficit will be financed 

from, if in the foreseeable future, the balance 

of the trade balance, of services and revenues 

continues to be negative, and current transfers 

diminish. In addition, privatizable state assets 

will be increasingly less a source of free 

currency given that most of them are already 

2 Estimative data. 

3 Credits of the foreign investor to the resident firm. 

privatized without noticeable materialisation 

of the foreign currency brought about in 

public investments or other goods and 

services. 

Medium and long term external debt was 

on March 31, 2011, of 74,278 million euro 

(79.5 percent of total external debt), up by 2.5 

percent as compared with December 31, 

2010. 

Short-term external debt recorded on 

March 31, 2011, a level of 19,126 million 

euro (20.5 percent of total external debt), up 

by 3.7 percent as compared with December 

31, 2010, representing a fairly threatening 

level for Romania's capacity to pay.

Table no.1.4. Romania's foreign debt on March 31, 2011 * 

and external debt service in the first quarter of 2011 

17 

- million euro- 

External debt External debt 

service 

quarter I 2011 p 

Balance on 

31.12.2010 r 

Balance on 

31.03.2011 p 

I. External debt on medium and long-term 72 471 74 278 2 238 

1.1. Direct public debt a) 

16 022 17 129 366 

1.2. Publicly guaranteed debt b) 

1 708 1 637 61 

1.3. Publicly non-guaranteed debt 37 431 37 329 1 581 

1.4. Medium and long term deposits of 

non-residents 

8 227 8 516 167 e 

1.5. IMF loans c) 

9 083 9 667 63 

II. Short-term external debt 18 437 19 126 8685 e 

Total external debt (I + II) 90 908 93 404 10 923 

*) External debt balance is cash-based (not including accrued interest and not matured), also not 

including allocations of SDRs by the IMF. 

a) 

external loans contracted directly by PFM (Public Finance Ministry) and by local authorities 

under the legislation on public debt, including the ones under GEO no.99/2009 on ratification of 

Stand-By Agreement between Romania and IMF; b) external loans guaranteed by the PFM and the 

local authorities under the legislation on public debt; c) loans from the IMF under the Stand-By 

Arrangement with Romania, excluding the amount received from the IMF under the PFM 

Ordinance no.99/2009; e- estimated data; p - provisional data; r - revised data. 

The ratio of external debt service on medium 

and long term 4 was 17.9 percent in first 

quarter 2011, versus 33.3 percent in 2010. 

The degree of coverage 5 was 8.2 months of 

imports of goods and services on March 31, 

2011, as compared with 8.6 months on 

December 31, 2010, which shows a 

downward trend. These external debt 

sustainability indicators were not considered 

to be "warning" indicators for Romania’s case 

even though by some standards they still have 

4 External debt service ratio on medium and long 

term is calculated as the ratio between the debt 

service on medium and long term and the exports of 

goods and services. 

5 Coverage of reserves in months of imports is 

calculated as the ratio of official reserves of the NBR 

(foreign exchange + gold) at end of period to average 

monthly imports of goods and services in that period. 

degrees of "freedom" and "monetary" in the 

sense of deterioration. 

Over-consumption and loss of 

competitiveness of Romanian economy, have 

contributed in the last two decades to 

relatively large and persistent current account 

deficits and, consequently, a rapid 

accumulation of gross foreign debt. Factors 

that contributed mainly to this situation were: 

- relatively low structural competitiveness of 

the Romanian economy as a result of 

obsolete, less efficient technology and quality 

competitiveness of Romanian exports, 

- increase of unit labour costs in Romania 

compared to its growth in partner countries, 

even if it is still relatively low, 

- the appreciation of national currency even 

after Romania's EU accession in 2007,

- allocation of resources predominantly 

between the "tradable" sector, exporter of 

goods and services, and the "non-tradable" 

sector mainly oriented towards domestic 

consumption. 

At the same time, during this period, an 

adverse impact was brought by the increase in 

wages and relative prices in the sectors of 

"non-tradable" goods and public services 

(public services, services for domestic 

consumption, construction) as compared to 

the wages and prices of branches producing 

exportable goods and services (industry, 

tourism, transportation etc.). Only a small 

portion of the loss of competitiveness was 

due to higher prices and wages in the 

"tradable" sector, as compared to increases in 

Romania’s partner countries as well as to the 

nominal appreciation of the euro. 

We know that improving competitiveness is a 

necessary precondition for the export targeted 

sectors, enabling the creation of new jobs and 

the recovery of lost positions in order to 

maintain external debt to a sustainable level 

and stop the increase in the external deficits. 

In the future, trade surpluses are needed so 

that negative structural developments in the 

field of income and transfers can be 

compensated. 

The effort to recover lost competitiveness 

involves three main, interrelated directions: 

- reduction of production costs by lowering 

certain categories of wages and underserved 

profits; 

- increase of productivity and promotion of 

tradable sectors with high added value, 

intended for export which require investments 

in new technologies and equipments; 

- reduction of prices and wages in the 

country, in the "nontradable" goods and 

services sector, as compared to the "tradable", 

to motivate firms to invest and produce in this 

sector. 

18 

Chapter 2. Scenarios of the general 

framework of the sustainability of 

Romania’s public and external debt 

Although there is a whole literature dedicated 

to models and techniques of analysis and 

forecast of external debt sustainability 6 , in 

this chapter we shall present and analyze 

scenarios made by IMF experts, in 

collaboration with Romanian specialists, 

regarding: the macroeconomic frame and the 

current policies in 2008-2016 in Romania 

(Table no.2.1); the sustainability of public 

sector debt (Table no.2.2); the sustainability 

of external debt from 2008 to 2010. 

An analysis of the impact of the financial and 

economic crisis in Romania compared to 

other countries (see Table 2.1 and Annexes 1 

- 7) highlights several features of the 

evolution of Romanian economy during the 

crisis among which: 

- the stronger and longer-term impact of crisis 

in our country compared to other countries; 

- relatively modest economic, financial and 

social performances, poorer in Romania, 

compared to developed countries and to some 

new EU member states; 

- a more disadvantaged external position of 

Romania, compared to other countries, for 

most of the specific indicators. 

6 Established criteria of debt sustainability (Paris 

Club on Naples terms), for developing countries, 

based for example on the following limits: 

- rate of present value debt / exports (200-250%); 

- rate of debt service ratio / exports (20-25%); 

- rate of present value debt / tax revenue (28%); 

- the share of exports in GDP (at least 40%);• tax 

revenue / GDP (20%).

Table no.2.1. Romania: Macroeconomic framework, current policies, 2008/2016 

2008 2009 2010 2011 2012 2013 2014 2015 2016 

Est. Project. Project Project. Project. Project. Project. 

GDP and prices (annual percentage change 

Real GDP 7.3 -7.1 -1.3 1.5 4.4 4.3 4.2 4.1 4.0 

Real domestic 

demand 

7.3 -12.9 -1.0 1.2 4.3 4.5 4.4 4.2 4.1 

GDP deflator 15.2 4.1 4.5 4.7 4.3 4.6 4.9 5.1 5.2 

Domestic 

demand deflator 

14.4 4.2 3.5 4.2 4.2 4.2 4.4 4.6 4.7 

Consumer price 

index (average 

CPI) 

7.9 5.6 6.1 5.4 3.4 3.0 3.0 3.0 3.0 

Consumer price 

index (CPI, end 

of period) 

6.3 4.7 8.0 3.7 3.0 3.0 3.0 3.0 3.0 

Nominal wages 23.6 8.4 2.6 4.7 6.7 6.9 7.0 8.0 8.0 

Real exchange 

rate 

based on CPI 

-5.0 -7.5 1.9 -0.2 3.3 3.0 3.2 2.5 2.6 

Real exchange 

rate 

based on GDP 

deflator 

Monetary 

Aggregates 

(Annual 

percentage 

change) 

1.5 -8.8 0.4 -0.9 4.1 4.5 5.1 4.8 4.9 

Broad money 17.5 9.0 6.9 10.3 14.1 14.5 14.9 16.0 16.0 

Domestic credit 

Savings and 

investments 

(in% 

of GDP) 

33.7 0.9 4.7 7.7 8.7 10.4 10.9 11.4 11.8 

Foreign savings 11.6 4.2 4.2 5.0 5.1 5.2 5.2 5.1 5.0 

Gross National 

Saving 

19.7 21.1 22.2 19.5 20.1 20.8 21.5 22.0 22.7 

Government 1.5 -0.8 0.8 2.7 4.5 5.4 6.0 5.6 5.2 

Private 18.2 21.9 21.4 16.8 15.6 15.4 15.5 16.4 17.5 

Gross domestic 

investments 

31.3 25.3 26.4 24.6 25.2 26.0 26.7 27.1 27.6 

Government 6.3 6.5 7.3 7.1 7.5 8.3 8.5 7.8 7.3 

Private 

Central 

Government (in 

% of GDP) 

25.0 18.8 19.1 17.4 17.7 17.8 18.2 19.3 20.4 

Income 32.2 31.4 32.8 33.3 33.7 33.5 33.2 32.4 31.7 

19

2008 2009 2010 2011 2012 2013 2014 2015 2016 

Est. Project. Project Project. Project. Project. Project. 

Tax revenues 18.4 17.8 18.1 18.9 18.9 18.7 18.6 18.5 18.5 

Non-fiscal 

income 

3.1 2.9 3.9 3.5 3.6 3.4 3.4 3.4 3.4 

Grants 0.9 1.0 1.8 1.6 2.4 2.7 2.8 2.2 1.8 

Expenditures 37.0 38.7 39.4 37.7 36.7 36.4 35.7 34.7 33.9 

Fiscal balance -4.8 -7.3 -6.5 -4.4 -3.0 -2.9 -2.5 -2.3 -2.1 

Structural fiscal -8.5 -7.0 -4.9 -2.4 -1.6 -2.0 -2.0 -2.1 -2.1 

balance 1/ 

Gross public 

debt (direct) 

19.5 27.4 33.2 36.1 36.2 36.0 35.5 34.7 33.8 

Balance of payments (in % of GDP) 

Current Account -11.6 -4.2 -4.2 -5.0 -5.1 -5.2 -5.2 -5.1 -5.0 

Trade balance -13.8 -5.8 -4.8 -5.0 -4.7 -4.6 -4.2 -3.7 -3.2 

Balance of 

services 

0.5 -0.6 -0.6 -0.5 -0.5 -0.5 -0.4 -0.3 -0.2 

Income balance -2.7 -1.3 -1.6 -2.2 -2.3 -2.3 -2.4 -2.5 -2.6 

Balance of 

transfers 

4.3 3.5 2.8 2.8 2.3 2.1 2.0 1.8 1.7 

Capital and 

financial 

account balance 

12.8 -1.9 1.1 5.3 8.4 8.6 8.3 5.6 6.1 

Balance of direct 

foreign 

investments 

6.7 3.0 2.0 2.9 2.9 2.9 3.0 3.0 3.0 

Gross 

international 

reserves (bill. 

euro) 

28.3 30.9 36.0 40.4 43.4 44.3 45.1 44.6 47.3 

Gross 

international 

reserves (months 

of imports next 

year) 

7.8 7.4 7.8 8.0 7.8 7.2 6.7 6.1 6.1 

International 

investment 

position 

(in % of GDP) 

-49.4 -62.7 -70.8 -75.3 -72.6 -73.0 -74.2 -72.6 -69.5 

External debt 

(in% of GDP) 

51.4 68.3 74.5 78.9 75.4 70.4 65.5 61.1 58.4 

Short-term 

external debt 

(as% of GDP) 

14.7 12.4 15.4 15.9 15.3 14.8 14.2 13.7 13.3 

Export volume 

(percentage 

change) 

8.3 -5.3 24.5 7.2 7.6 8.1 8.3 8.3 8.3 

Import volume 

(percentage 

7.9 -20.9 9.0 6.7 7.5 8.5 8.4 8.3 8.3 

20

change) 

Terms of trade 

(percentage 

change) 

Nominal GDP 

(in mil. lei) 

Nominal GDP 

(in mil. Euro) 

2008 2009 2010 

Est. 

2011 

Project. 

21 

2012 

Project 

2013 

Project. 

2014 

Project. 

2015 

Project. 

2016 

Project. 

2.8 -0.4 -1.8 -0.7 0.6 0.4 0.7 1.1 1.1 

514,700 498,008 513,641 542,035 590,247 643,816 703,827 770,546 843,680 

139,666 117,558 122,062 127,237 140,658 156,307 174.317 194.107 216.339 

Source: Estimates and projects of the Romanian authorities and the IMF staff. 

1/ Real fiscal balance adjusted for the automatic effects of the internal imbalances (output gap) and external 

imbalances (absorption gap) in the fiscal position. 

The analysis of data on the economic and financial indicators in Table 2.1 highlights some 

challenging issues of major significance. 

It is that economic growth in Romania has gone from relatively high values in 2008, to sudden 

and major slumps in 2009 and 2010, the real GDP moving from a growth of 7.3% to decreases 

of -7.1% and, respectively,-1.3% for 2011, the forecast having been 1.5%. 

These large and sudden changes in amplitude indicators show a case of strong shock that 

Romania went through, with severe enough consequences on short, medium and long term. 

From these shock cases we should draw lessons in the sense that the way economic decline 

occurs is important as well and one must always be prepared. Statements of decision makers in 

Romania in September 2008, that the international financial crisis "will not have direct 

effects" on the Romanian economy, showed how far they were from the truth: 

- Projections for the years 2012-2016 show rather relatively equal annual developments, which 

of course is only a desirable perception of quite variable future developments; 

- External debt as weight in GDP increased from 51.4% in 2008 to 78.9% in 2011, and in the 

next four years until 2016 it should stay at a high level, although with a downward trend, 

without reaching the level of 2008, which means that the decline triggered by the crisis, in 

some cases, will not have been recovered even by 2016; 

- Inflation is at relatively high rates in 2008-2010 and then stays quasi-constant at an annual 

level of 3% which by far cannot be considered as a convenient (comfortable) one; 

- The ICOR (incremental capital - output ratio) shows a decrease of expected economic 

performance and efficiency which is contrary to the sustainability of external debt and the 

ability to meet external debt service. Added to this is the continuation of chronicization of the 

deficits of the trade, services and income balances, during 2011-2016; 

- The gross international reserves are expected to increase to 47.3 billion euros as compared to 

36 billion euros in 2010. The sources of growth of such reserves if they consist of new 

borrowings are not a factor of the strengthening of sustainability.

Table no.2.2 Romania: The sustainability of public sector debt (in % of GDP, unless otherwise specified) 

Current Projections Primary balance 

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 

that stabilizes 

the debt 

Public sector debt 15.4 17.5 19.5 27.4 33.2 36.1 36.2 36.0 35.5 34.7 33.8 -1.4 

o / w foreign currency denominated 7.1 6.6 6.4 15.0 20.4 24.0 21.9 18.4 15.0 11.7 10.0 

Percentage change of public sector debt -0.3 2.1 2.0 7.9 5.7 2.9 0.0 -0.1 -0.6 -0.8 -0.9 

Flows identified as debt generators (4 +7 +12) -3.0 -0.1 2.7 7.9 7.8 2.4 0.0 -0.1 -0.6 -0.8 -0.9 

Primary deficit 0.6 2.4 4.1 6.1 5.1 2.7 1.3 1.2 0.8 0.6 0.4 

Revenues and grants 32.3 32.3 32.2 31.4 32.8 33.3 33.7 33.5 33.2 32.4 31.7 

Primary expenditure 32.9 34.6 36.3 37.5 38.0 35.9 35.0 34.7 34.0 33.0 32.2 

Automatic debt dynamics -3.1 -2.3 -1.3 1.8 2.7 -0.2 -1.3 -1.3 -1.4 -1.4 -1.3 

Rate debt / income in public sector 47.6 54.2 60.7 87.4 101.0 108.6 107.3 107.7 106.9 107.0 106.4 

Gross financing need(in%) 1.8 3.9 6.3 8.4 7.2 5.4 4.7 9.1 8.1 5.6 5.0 

in bill. U.S.D. 2.2 6.7 12.8 13.8 11.6 9.0 8.7 18.5 18.2 14.0 13.6 

Scenario with key variables at their historical averages 36.1 34.2 32.5 31.0 29.6 28.4 

No policy change scenario (constant primary balance) in 2011-2016 

Key macroeconomic and fiscal assumptions 

36.1 37.5 38.8 39.9 41.0 42.1 

Real GDP growth (in percents) 7.9 6.3 7.3 -7.1 -1.3 1.5 4.4 4.2 4.2 4.1 4.0 

The nominal interest average rate for public debt (in percents) 6.1 5.8 5.2 6.0 5.3 5.5 5.1 5.1 5.0 5.2 5.3 

The real interest average rate (nominal rate minus the change in the GDP -4.5 -7.7 -10.1 1.9 0.8 0.8 0.9 0.5 0.1 0.1 0.0 

deflator, in percents) 

Nominal appreciation (increase in U.S.D. value of local currency in percents) 19.4 6.5 -16.5 0.3 -10.7 

Inflation rate (GDP deflator, in percents) 10.6 13.5 15.2 4.1 4.5 4.8 4.3 4.6 4.9 5.2 5.2 

Growth of real primary expenditures (deflated by GDP deflator, in percents) 14.8 12.0 12.4 -3.9 -0.1 -4.5 1.8 3.3 2.2 1.0 1.5 

Primary deficit 0.6 2.4 4.1 6.1 5.1 2.7 1.3 1.2 0.8 0.6 0.4 

Source: IMF 

22

Table 2.2 shows that the weight of public 

debt in GDP that increased from 15.4% 

in 2006 to 33.2% in 2011, will increase up 

to 36.2% in 2013, then coming back to 

33,8% in 2016. Similarly will the need of 

gross financing increase which also is not 

a favourable tendency either. 

The nominal interest average rate on 

public debt will stay at over 5%, which 

23 

will strike the debt burden and the 

possibilities of reducing it. 

The inflation rate is not closer to its level 

in other EU countries either, which means 

slow evolution of nominal convergence. 

But what draws particular attention is the 

rate debt/income that shows an increasing 

trend during 2010-2013, which means 

poor performance of the economic policy 

mix. 

Table no.2.3. Romania: the framework of the sustainability of external debt, 2006- 

2016 (in percents of GDP, unless otherwise specified) 

Current Projections Current 

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 account 

without 

interests 

that 

stabilize 

the debt 

External debt 42.1 47.0 51.4 68.3 74.5 78.9 75.4 70.4 65.5 61.1 68.3 -7,2 

Changes in external debt 3.3 4.9 4.4 16.9 6.2 4.4 -3.5 -5.0 -4.9 -4.4 -2.7 

Identified external debt generating flows -5.4 -1.4 0.5 10.4 -0.4 -0.5 -2.2 -2.3 -1.9 0.2 0.2 

Current account deficit, excl. Interest 9.2 

payments 

12.2 10.1 2.4 1.8 2.7 . 3.0 3.3 3.4 3.6 3.6 

Deficit in goods and services balance 12.0 14.0 13.2 6.1 5.5 5.7 5.3 5.2 4.8 4.2 3.7 

Export 32.1 29.2 30.4 30.7 36.0 37.8 37.7 37.6 37.4 37.2 37.0 

Import 44.2 43.2 43.6 36.8 41.4 43.5 43.0 42.7 42.1 41,4 40.7 

Capital inflows that do not generate debt -8.6 

(negative) 

-5.B -6.1 -3.4 -2.6 -4.4 -4.2 -4.7 -4.4 -2.5 -2.6 

Automatic debt dynamics -6.0 -7.6 -3.6 11.4 0.4 1.2 -1.0 -0.9 -0.9 -0.9 -0.8 

The contribution of nominal interest rate 1.2 1.2 1.5 1.8 2.5 2.3 2.1 2.0 1.8 1.5 1.4 

Contribution of real GDP growth -2.5 -2.1 -3.1 4.3 0.8 -1.1 -3.1 -2.9 -2.7 -2.4 -2.2 

Contribution of price and exchange rate -4.7 

changes 

-7.0 -2.0 5.3 -2.9 

Residues, including gross foreign assets 8.8 

change 

6.3 4.0 6.5 6.5 4.5 -1.4 -2.6 -2.9 -4.6 -2.9 

External debt ratio of exports (in percents) 131.0 160.7 169.0 222.2 207.1 208.6 199.6 187.3 175.3 164.1 157.5 

Gross external financing need (bill.euro) 21.7 35.9 46.2 34.9 32.5 34.4 40.2 49,8 52.1 51.8 53.9 

In percentage of GDP 22.2 28.8 33.1 29.7 26.6 26.9 28.4 31.6 29.7 26.5 24.8 

Scenario with key variables at their 

historical averages 

Key macroeconomic assumptions 

78.9 77.0 74.1 71.2 66.4 63.4 

Real GDP growth (in percents) 7.9 6.3 7.3 -7.1 -1.2 1.5 4.4 4.3 4.2 4.1 4.0 

GDP deflator in euros (percentage 13.8 19.8 4.4 -9.4 4.4 3.4 5.9 6.6 7.0 6.9 7.1 

changes) 

Nominal interest rate (in percents) 3.8 3.7 3.6 2.9 3.7 3.3 3.0 2.9 2.8 2.6 2.5 

Export growth (euro in percents) 19.3 15.9 16.6 -14.9 20.6 10.3 10.4 10.6 10.9 10.9 10.9 

Imports growth (euro in percents) 25.2 24.7 13.2 -28.9 15.9 10.2 9.4 10.4 10.0 9.5 9.5 

Current account balance, excluding interest -9.2 

payments 

-12.2 -10.1 -2.4 -1.8 -2.7 -3.0 -3.3 -3.4 -3.6 -3.6 

Net capital inflows that do not generate 8.6 

debt 

5.8 6.1 3.4 2.6 4.4 4.2 4,7 4.4 2.5 2.6 

Source: IMF

The analysis of external debt indicators 

(Table no.2.3) highlights several issues 

challenging the level of sustainability and its 

impact factors, namely: 

- ratio of external debt to GDP has increased 

by 2011 then following decreases, weaker at 

first, then more consistent, stabilising at 

relatively high levels, especially if we 

consider Romania's ability to pay; 

- the rate external debt / exports increases, 

resulting in a relatively weak capacity of 

export to be a source of external debt 

disbursement. 

24 

Chapter 3. External debt vulnerabilities 

As previously mentioned, a country's external 

debt is not only a chance for potential 

beneficial effects, favourable and 

unfavourable as well, if the management and 

the administration are not effective and do 

not take into account risks, vulnerabilities, 

weaknesses, especially regarding medium 

and long terms and conditions of repayment 

and provision of sources of funding. 

According to our calculations (G. Georgescu 

and Gheorghe Zaman) in 2009, Romania's 

external debt sustainability indicators, on 

medium and long term, showed a trend of 

deterioration compared to previous years 

(Table no.3.1.) versus limit criteria 

conventionally stipulated in the literature and 

international financial practice. 

Table no.3.1. Romania's external debt sustainability indicators, on medium and long 

term, between 2000 and 2009 

Indicators 2000 2006 2007 2008 2009 Maximum 

limit 

External debt / GDP 23,9 29,2 31,1 37,9 56,0 50,0 

External debt / Export 72,7 91,2 105,5 122,0 181,9 150,0 

External debt / Foreign 65,3 73,9 83,5 97,0 149,5 100,0 

exchange incomes 

Foreign exchange reserves / 

External debt 

54,2 80,0 70,6 54,6 47,2 50,0 * 

External debt service / Foreign 

exchange incomes 

15,0 15,8 16,3 22,7 26,0 20,0 

External debt service / Exports 16,7 19,4 20,5 28,5 31,7 30,0 

External debt service / Foreign 

exchange reserves 

42,3 26,6 27,6 42,8 36,9 40,0 

Foreign exchange reserves / 12,9 23,4 22,0 20,7 26,4 25,0 * 

GDP 

* minimum threshold 

Source: Own calculations based on data from NBR and from the National Commission for Prognosis. 

Moreover, for a series of indicators of 

external debt sustainability, Romania 

exceeded "fault rates" in 2009, which lowers 

its country rating and hinders its access to 

international capital markets. 

% 

Although the IMF, by the recipes it 

recommends to countries that resort to 

foreign loans, focuses highly on fiscal and 

monetary policies, the specialists, for 

example prof. Calvo G., emphasize that these

policies have not proved effective, requiring 

complementary actions of structural policies 

that should help reducing the external 

financial vulnerabilities, especially in 

economies suffering from high incidence of 

bank loans in freely convertible currencies. 

For this reason, and also because of the 

effects of the crisis, proposals have been 

made to create an emerging markets fund, 

as the IMF is the "lender of last resort", 

which ought to have lent to emerging 

economies under specific conditions and 

more conveniently so they can cope with 

external shocks, with the probability of 

sudden stop of loans and with the price 

volatility of the capital inflows. 

IMF believes that the emerging European 

economies during crisis saw large external 

imbalances, the causes varying from one 

country to another. However, some 

similarities can be specified, namely: strong 

capital flows in the non-tradable sector 7 that 

registered a huge increase in price and wage, 

which eroded competitiveness as capital 

flows boosted mostly the offer (supply) and 

the imports rather than the exports, and these 

contributed to major changes and, ultimately, 

non-sustainability of the positions of net 

foreign assets. 

Financial integration has played a critical role 

allowing the funding of the imbalances while 

the lack of institutions and the lack of the 

"national" approaches to resolve the crisis 

have prevented the private sector and the 

markets from playing a bigger role. 

With the banking problems being tackled and 

solved at national level, the problems of 

banks and of sovereign debt in the euro area 

peripheral countries amplified each other. As 

the financial costs in the private sector 

depended to a growing extent on the national 

origin of the borrower, the financial 

integration was "disintegrated" acting in 

directions opposite from its objectives. 

7 Sector "nontradable" means those goods and 

services produced and consumed in the country. 

25 

The re-launching of long-term economic 

growth is the key issue in Romania. The 

growth and the convergence cannot be 

restored to their normal trajectories unless by 

increasing productivity, with which Romania 

fought hard but unsuccessfully, in the past 

two decades, even if it had a relatively large 

access to foreign capital. To enhance 

efficiency, we need better policies at national 

level, along with more effective governance 

at EU level that could strengthen these 

policies. Special attention should be given to 

the supervising of the financial system and to 

the economic integration due to their 

vulnerability. 

Multi-speed post-crisis reconstruction is 

underway with some emerging economies 

going at a higher tempo, and others, on the 

contrary, still fighting out of the crisis. 

The economic science and practices, 

following the recent crisis, were again alerted 

to the possibility to predict and take 

preventive measures against the crisis effects 

by means of early warning that could 

prevent or determine better training to cope 

with the crises and maintain the external debt 

sustainability and the economic development. 

This, especially since the economic science 

is accused to have been unable to predict 

precisely in "space and time" the economic 

crisis occurrence. The charges could be also 

brought to seismology and other sciences of 

earth physics which do not foresee the time 

and place of natural disasters. 

Overview of literature on indicators for early 

warning, sudden stops and changes of current 

account:

Authors Main messages 

Milesi Ferretti and Razin 

(1998) 

Kaminsky, Lizondo and 

Reinhart 

(1998) 

Berg, Borensztein, Milesi- 

Ferretti, Pattillo 

(1999) 

Frenkel and Calvo 

(2004) 

The weak reserves and the trade ratio (terms of trade), 

unfavourable, may trigger changes in the current account 

and currency crises 

Some indicators can announce the possibilities of currency 

crises. Early warning indicators include current account 

deficit, over-evaluation, weak growth in exports, reserves to 

the "broad money" 

Reserves / short-term debt are also early warning indicators 

of currency crises. Added to these we find the current 

account deficit, loss of reserves, weak exports and other 

early warning indicators. 

The probability of sudden stop of foreign capital increases 

the size of the current account initial deficit as a percentage 

of GDP and decreases with country’s openness. 

The current account deficit is the key indicator for the crisis. 

Edwards 

(2005) 

Mendoza and Terrones All crises in emerging economies have been associated with 

the "boom" of loans, although not all credit booms end in 

crisis. 

The vulnerabilities generated by the underperformant 

management of external debt, in 

the countries most affected by the current 

crisis in the EU (Greece, Ireland, Portugal, 

Spain, Romania), can be analyzed in terms of 

fiscal, financial and structural measures, 

which, in various proportions present 

similarities, due to the unique source of 

recipes and advice which is the International 

Monetary Fund. 

We will refer to some of the possible 

vulnerabilities of the measures taken in 

Romania for getting over the economic crisis, 

especially in terms of long-term effects. 

- The fiscal policies in Romania, to increase 

VAT from 19 to 24% and increase other 

taxes, could un-stimulate, on long term, by 

increasing prices, the demand and hence the 

supply, especially in the tradable sector 

which represents the overwhelming part of 

private economic agents. On the other hand, 

taxation of prizes and vouchers can act in the 

same direction, so additional budget revenues 

expected might be far outweighed by the 

negative externalities they generate into the 

real economy, 

- The financial-monetary policies of growth 

of the level of prudentiality, supervision, 

26 

transparency and improvement of the way of 

reporting, while, maintaining high interest 

rates for credits on short, medium and long 

term, they cannot achieve the expected goals 

of recovery and economic efficiency, 

- The structural policies related to reducing 

employment and wages in public 

administration, education, research, health 

etc. also have an adverse effect on the 

sustainable economic growth and on the 

opportunities to create funds necessary to 

finance maturing debt. 

Chapter 4. Strategic ways of approaching 

the external debt sustainability 

Public and private external debt is one of 

the most powerful economic policy tools that 

can be used effectively to stimulate economic 

growth but which, if inefficiently used, can 

cause serious damage to national economies 

on short, medium and long term. 

Governments can contract debts to finance 

new investments in human or material 

capital, to outline the country's resources to 

counteract recessions or to meet the financing 

needs resulting from exceptional 

circumstances such as natural disasters or 

financial crises.

The external debt can create a burden for 

future generations, as well as a number of 

vulnerabilities for the investment process and 

inflation, the resistance to crisis and recession 

of a country. 

Even before the classics of political 

economy, A. Smith and D. Ricardo, the 

problem of external debt was a concern of 

primary importance for economic science, 

given the potentials that it has, both positive 

and negative, for countries that receive and 

grant loans. 

Usually, governments borrow on domestic or 

external market to finance projects of long 

term development that are targeted to 

physical infrastructure (roads, bridges, 

hydroelectric plants etc.). or investment 

inclusively in the human capital. 

Governments may decide to borrow in order 

to maintain the level of current expenditures 

without increasing taxes in times of crisis and 

recession or to finance the costs caused by 

natural disasters (earthquakes, floods, 

droughts), wars etc. 

On the other hand, states resort to loans to 

help the start of the economic growth at 

higher rates so as to ensure a higher 

consumption for the population, 

redistributing resources from future 

generations to the present ones. 

According to the opinions in the literature, 

the behaviour of policy makers has a strong 

penchant for short and medium term, i.e. 

for how long a term of office usually lasts. 

Regarding indebtedness, issues concerning 

debt repayment, after this period, interest 

them less or not at all. Not to say it publicly, 

many probably think in the sense of “aprés 

moi le déluge!” 

The external indebtedness of countries with 

economies in transition has shown in over 

two decades of emergence of competitive 

market economy, that high levels of debt can 

bring a series of serious constraints on the 

behaviour of an independent monetary 

policy, especially when the debt is in hard 

currency and a monetary policy of 

accommodation can lead to devaluation of 

national currency and substantial negative 

effects (Calvo and Reinhat, 2002). 

27 

The set of recommendations (conditionalities 

accepted by governments) on the monetary 

and fiscal policies of different IMF stand-by 

arrangements and other international 

financial institutions also comprises a 

component aimed, more or less relevantly, at 

the need to promote real economy 

restructuring policies supporting sustainable 

development of the country borrowing. In 

this respect, we wish to present a viewpoint 

about the need for new approaches of the 

relationship between the sectors of industry 

and services in Romania, considering their 

role in the process of economic growth and 

the features of "tradable" / "exportable" and 

"non-tradable" goods and services. 

The problems of specialization and of 

domestic and international economic 

cooperation, of the value chains revolve 

around the strategic approach of crossconditioning 

and inter-empowering of the 

relations between economic sectors 

(primary, secondary, tertiary, and 

quaternary), avoiding, for example, trap 

pseudo-tertialization that many transitional 

economies entered into, exaggerating the role 

of the development of services predominantly 

speculative, particularly financial ones. 

More and more experts in developing 

countries consider that reducing the weight of 

manufacturing industry in GDP is a 

"worrying" phenomenon. In a report 8 by 

Michael Spence and Sandile Hatshwayo, 

submitted to the Council on Foreign 

Relations in New York, it is argued, based on 

advanced statistical and economic analyses, 

that "the American economy must find ways 

to develop employment in the "tradable" 

sector containing industries whose products 

are sold abroad." This sector, although 

comprises services, including financial ones 

is dominated by manufacturing industries, 

which in literature is called "secondary" 

sector. Getting over the recession and the 

current economic and financial crisis in most 

8 "The Evolving Structure of the American Economy 

and the Employment Challenge" by Michael Spence 

and Sandile Hatshwayo, Council of Foreign 

Relations, Working Paper, March 2011.

countries, including Romania, takes place, 

according to the opinion of several 

specialists, at the expense of the 

manufacturing sector, which show greater 

resistance to the shocks of the business cycles 

and the crises, compared with other sectors of 

the national economy, more volatile and 

vulnerable. 

Both in absolute and relative terms (as weight 

in employment) the "tradable" sector in 

Romania has declined dramatically in the two 

decades. The creation of new jobs has been 

promoted especially in the services sector so 

as we could follow the increasing trend of 

this weight manifested in developed 

economies, notwithstanding that in these 

countries the process was lengthy, without 

forcing, but with sectorial complementarities 

of efficiencies at the macroeconomic level. 

In developed countries, in absolute terms, 

manufacturing industry grew more slowly 

than services in the last two decades, which 

meant a reduction in relative weight. A major 

strategic management error in Romania was 

discouraging Romanian manufacturing 

industry, considered the result of inefficient 

socialist industrialization by decision makers, 

less or not at all savvy, who relied on the 

advantages of producing companies from 

abroad who also had the interest to expand 

their markets in the emerging Europe 

countries. Giving up the vast majority of 

manufacturing industries in Romania and 

28 

replacing them with imported products, under 

the pretext that they are better, more 

functional, better presented and packed and at 

a lower cost is, at first sight, a "beneficial" 

measure of rinsing the national economic of 

ineffective activities. Finally, it turned out to 

be counterproductive, because the most 

important branches generating and 

propagating technologic progress are in 

this sector as the most fertile and strong 

domain for R&D and technology transfer. As 

for the advantages the imported products 

have compared to local products, perhaps 

only partially (!) they were valid, but the 

negative costs are neglected (negative 

externalities), costs that they have produced 

in the entire national economy by increasing 

underemployment, destruction of man-made 

capital, export of scrap iron and negative 

impact on natural capital. If all these negative 

effects, at the macroeconomic societal level, 

are added with a minus to the benefits and the 

superiority of imported products in Romania, 

we shall conclude, not very favourably, that 

there is a "destruction" of manufacturing 

industry (deindustrialization), in favour of 

services industry which, if not strictly 

regulated by clear legal institutional basis, 

may largely encourage speculation, polluting 

consumerism, inflation, weak, unsustainable 

economic development, as happened in 2009- 

2010. 

Table no.4.1 Structure in percents of employed population, 

on the main activities of national economy in the period 1993-2009 

1993 2003 2005 2008 

-% - 

2009 

Agriculture, hunting and 

forestry 

35,2 34,7 31,9 27,5 28,7 

Fishing and pisciculture 0,1 0,1 0,1 0,1 0,1 

Industry 30,1 24,8 23,2 29,1 21,1 

Constructions 4,8 4,8 6,1 7,8 7,4 

Services 10,9 35,7 41,0 42,7 42,8 

Source: Romania’s Statistical Yearbook 1999, p.81 and 2010, p.91 

Data in the table no.4.1 show an overly large increase of the weight of services in total 

employment (about +31 percentage points) at the expense of industry (-9 pp) and agriculture (- 

6.5 pp) where a significant growth potential remains unvalued.

Table no.4.2. Contributions (%) to GDP growth on categories of resources in 2004 and 2009 

2004 2009 

Total GDP 8,5 -7,1 

Agriculture 2,2 -1,0 

Industry 1,9 -0,3 

Constructions 0,5 -1,4 

Services 3,0 -3,0 

Net taxes 0,9 -1,4 

Source: Romania’s Statistical Yearbook 2010, p.322 

The structure of GDP growth contribution on categories of resources (Table no.4.2) shows, for 

example, that in the first year of financial crisis in Romania, the services sector had the largest 

contribution (42.2%) to the GDP’s decline, which outlines their sensitivity and vulnerability, 

followed by construction sector whose unhealthy and unsustainable growth in 2008 reached 

exaggerated levels (+33% compared to 2007). Following a policy of promoting the services, 

especially those of speculative inflationist brokerage, the investment policy saw a structure that 

clearly disadvantaged the industry and the agriculture (Table no.4.3). Thus, the volume of 

investment in industry as a percentage of total investments decreased by -15.6 percentage 

points in the period 1993-2009, and in agriculture by -3 pp. 

Table no.4.3. Structure in percents of net investments, on main activities of the national 

economy during 1993-2009 

1993 2003 2005 2008 2009 

Agriculture 6,9 5,9 2,8 3,4 3,9 

Industry 49,9 37,6 33,0 31,8 34,3 

Constructions 0,2 9,6 9,6 10,9 12,2 

Services 46,9 50,3 53,9 49,6 

Source: Romania’s Statistical Yearbook 1999, 2010, p.357. 

It is noted that in 2009, it is the very investment in services that showed the largest percentage 

decline (- 4.3 pp), which highlights the sector's vulnerability to the crisis shocks and its 

inability to redress without the real support of manufacturing industries, mining and 

agriculture. 

Table no.4.4 Structure in percents of the sources of investment financing 

2003 2008 2009 

Own sources 68,7 73,0 68,1 

Domestic credit 9,2 9,7 7,4 

Foreign loans 8,4 3,6 5,3 

State and local budget 6,9 8,2 8,8 

Foreign capital 0,4 0,6 1,8 

Other sources 6,4 4,9 8,6 

Source: Romania’s Statistical Yearbook, p.357 

29 

-% -

One of the most important problems of 

Romania's getting over the crisis and entering 

the way to sustainable development is 

represented by the sources of financing the 

investments. 

The data in the table no.4.4 reveal the 

following: 

- the largest share is held by the own sources 

of the economic agents, weighing more than 

68%, which actually highlights the 

fundamental role of the own effort of the 

economy to get out of the crisis, and to which 

the other sources of funding can 

complementarily be added more or less; 

- internal loans have between 7 and 9% of 

total investment funding, which is a very 

modest weight, showing that the banks' role 

30 

in stimulating investments is still weak, 

among others due to the high interest rates 

and the reluctance that they have for medium 

and long term loans in times of economic 

turbulence; 

- investment financing from public sources 

has increased in weight in the crisis year 

2009 which shows exactly the role that state 

can have in stimulating investments as a 

factor of growth; 

- foreign capital in the period 2003-2009 had 

a very small weight in investment financing, 

which is why an exaggeration of their role in 

the sustainable growth is not very beneficial; 

- other sources of investment financing refer 

to foreign loans and grants from EU 

structural and cohesion funds that are still 

insufficiently accessed. 

Table no.4.5 Structure in percents of GDP, on categories of resources, in the years 1999, 

2004, 2005 and 2009 

- % - 

1999 2004 2005 2009 

Agriculture, forestry and 11,1 12,5 8,4 7,1 

fishing 

Industry 27,3 24,9 24,8 27,8 

Constructions 4,9 5,9 6,5 11,0 

Services 56,7 56,7 60,3 54,1 

Source: Data of the National Institute of Statistics. Own calculations, Romania’s Statistical Yearbook 

2005, p.415 

In the crisis year 2009, the weight of services and constructions in total GDP on categories of 

resources decreased by -6.2 pp and, respectively, -4.5 pp, as compared to 2005, highlighting 

their weak resistance and sustainability to the crisis shocks. 

Table no.4.6 Contribution (%) to GDP growth on categories of usages in 2004, 2005 and 

2009 

2004 2005 2009 

GDP 8,5 4,2 -7,1 

Household final consumption 9,8 7,4 -6,5 

Government's final consumption -1,0 0,2 0,1 

Fixed capital gross formation +2,4 3,4 -8,1 

Net Export -4,4 -4,5 7,5 

Changes in inventories 1,7 -2,3 -0,1 

Source: Data of the National Institute of Statistics. Own calculations, Romania’s Statistical Yearbook 

2005.

The data in Table no.4.6 emphasize that in 

the crisis year 2009, the net export, created 

in the "tradable" sector (Manufacturing) 

was the only one who contributed 

positively to GDP growth, the fixed capital 

gross formation and the individual 

consumption having a negative impact. 

The dramatic decrease in the number of 

employees in the manufacturing industry in 

Romania is a negative phenomenon which 

did not contribute at all to the development of 

the country but it rather increased its 

vulnerability and dependence, internally and 

externally. We need a radical change in the 

strategic management of sustainable growth 

of manufacturing industries, especially with 

when a new reindustrialization of 

Romanian economy is more often discussed. 

The increase in the weight of financial and 

business insurance services is only a 

"favourable" appearance that could not 

compensate for the long-term effects and the 

job losses in manufacturing industry. 

These changes on the labour market, keeping 

their proportions and features, are found in 

developed countries as well and suggest the 

influence of several common factors 

including, in the top, the technological 

change and globalization that allow 

specialization on certain goods and products 

but on different stages of production process. 

The links of the chain with the lowest added 

value are transferred in less developed 

countries or in the developing countries, 

where labour force is cheaper and the better 

paid jobs remain in the developed countries. 

If in America manufacturing industry 

declined and wages were lower, in 

commercial services, where America has a 

comparative advantage, both value added and 

employment increased. The same happened 

to non-tradable services which, by 

definition, remain where consumption occurs. 

The demand for non-tradable goods in the 

future may not continue to grow at the same 

pace as so far, considering the effects of the 

economic and financial crisis. Health, 

commerce and government services 

decreased. Therefore, government will have 

to focus on technologies that could serve to 

31 

develop the "tradable" sector (of goods and 

services exported). 

The economic structural evolution has its 

own strategic importance and may be 

affected in different effective ways, so that 

nowadays there appears as increasingly 

necessary strategy of reindustrialization of 

transitional economies, after the shock 

deindustrialization produced during 1990- 

2010. In this context, we can mention that 

Romania follows an unfavourable trend, as 

compared to the global trends, in terms of the 

drastic reduction of CDI staff and of the 

investment and expenditure in the sector 

considered, along with industry and 

agriculture as factors of sustainable, smart 

and inclusive development (UE Strategy 

2020). 

There still are many uncertainties about how 

to implement such a strategy which does not 

mean that we will not have to deal with both 

theoretical and pragmatic terms. Many 

specialists would question an industrial 

policy that promotes manufacturing industry 

as a first priority. 

As long as a low demand keeps the interest 

rates and the dollar at a low level, the 

tradable sector is likely to grow without the 

need for action (impulse) from the state. 

America remains the world's largest 

manufacturing producer. Japan and America 

have doubled the manufacturing production 

output in the period 1980-2009, and, in 

absolute terms, the manufacturing production 

output did not decline in any of the G7 

country in this period. 

The manufacturing industry with low added 

value focused in China, where labour is 

cheap, but it is not clear whether this 

structure of comparative advantage will last 

long. However, China has not neglected the 

sustainable growth of manufacturing industry 

especially of branches with high added value, 

science-intensive, using in a first phase the 

massive promotion of technological transfer 

and assimilation of the mass of products and 

equipment, followed by a phase of 

improvement in products and services 

acquired and, more importantly, a phase of 

business creativity and innovation.

Jagdish Bhagwati, professor of Columbia 

University, believes that those who favour 

stimulation of the manufacturing industry in 

the rich world suffer from the so-called 

"fetish" of processors (manufacturing fetish). 

According to Bhagwati, the fascination for 

manufacturing industry is based on the 

erroneous belief that it is more dynamic in 

terms of technology than the services. In the 

services there take place sensitive dynamic of 

technological progress as well, such as: 

logistics companies, large wholesalers, 

mobile telecommunications, innovation in 

non-financial services, genetically modified 

seeds in agriculture. However it is worth 

mentioning that these services are driven, in 

the final analysis, by the manufacturing 

sector which they serve as producers of 

"tradable" goods. The wholesale and the 

retail have benefited from huge benefits in 

recent decades, as a result of ICT 

development, whose material base can be 

found in manufacturing industry. 

Bhagwati also considers as wrong the second 

assumption of "fetishists", that manufacturing 

is more important for creating jobs than 

services. Changing the structure of 

production for manufacturing industries does 

not increase the number of jobs. The 

increasing demand for "non-tradable" 

services occurs just as strong as in the years 

before the crisis, Bhagwati says, although 

there are no solid arguments in this regard. 

On the other hand, it is unclear whether the 

demand for "tradable" services will decrease 

or not. As emerging economies become more 

developed, they will want to benefit in larger 

quantities, from all sorts of services, 

including the most sophisticated, to which the 

U.S. and Britain have comparative 

advantages. Those inclining towards the 

development of manufacturing industry on 

the grounds that it would be better to 

stimulate exports, often ignore the fact that an 

increased volume of services becomes 

exportable (traded), and that rich countries 

tend to export more than import such 

services. America and England have a 

surplus of trade balance in such services. 

Rich countries face obstacles in the 

32 

capitalization of power (their economic 

supremacy in this field). However, the trade 

in services remains, from far, relatively 

restricted, not only in emerging economies. 

Mario Monti from Bocconi University in 

Milan found that only 20% of services in EU 

have a cross-border component and that the 

efforts to liberalize services can bring more 

benefits than the exhortations to stimulate 

manufacturing industries. 

In this part of the communication I wanted to 

bring forward a major problem that the 

strategic management at the macroeconomic 

level currently faces, in terms of sustainable 

development policies, sectoral and subsectoral, 

as a result of the de-industrialization 

phenomenon at a national level in countries 

with economies in transition and of the 

defragmentation of processing industries 

under the impact of the globalization 

processes and the deepening of domestic and 

international specialization and cooperation 

in the production of goods and services that 

imply new requirements for the management 

of sustainable development in conditions of 

extensive business networks (business 

networking) whose hard core is represented 

by the multi and trans-national corporations. 

The conceptual and strategic reconsidering of 

the promotion of sustainable and competitive 

economic structure in Romania is a 

prerequisite for addressing external debt 

sustainability that requires, complementarily, 

an optimal solution of other issues as well: 

- the ratio between domestic and foreign debt 

on short, medium and long term; 

- a correlation, in time, of the increased debt 

with the repayment capacity, in order to 

avoid insolvency; 

- better negotiation of conditions for bilateral 

and multilateral lending; 

- correlation of real economy with the 

nominal, as to ensure the primacy of the 

former and the latter’s role as an important 

factor of influence, knowing that what 

remains finally is only the anthropic, sociohuman 

capital, together with the natural one, 

beyond the ephemerality of the monetary 

financial processes;

- making the policy makers accountable for 

the identifying sources of external debt 

repayment, beyond their term of office. 

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Michael Spence and Sandile Hatshwayo 

(2011) „The Evolving Structure of the 

American Economy and the 

Employment Challenge”, Council of 

Foreign Relations, Working Paper, 

March 2011 

Neumeyer P.A., Perri F., (2005), Business 

Cycles in Emerging Economies: The 

Role of Interest Rates, Journal of 

Monetary Economics 52(2): 345-380; 

Ucal M., Oksay S. (2011), The Solvency 

Ratio of External Debt (SRED) as an 

Indicator of Debt Crisis: The Case of 

Turkey, Inst.J.Eco.Res.2011, 2(1) 166- 

172, available 

online@www.ijeronline.com 

Zaman Gh., Georgescu G., (2009), 

Structural Fund Absorbtion: A New 

Challenge for Romania ?, Romanian 

Journal of Economics, nr.1, p. 136- 

154; (2010), Romania external debt 

sustainability under crisis 

circumstances, Romanian Journal of 

Economics, nr.1 (39), p 5-38; (2011) 

Sovereign Risk and Debt Sustainability 

- Warning Levels for Romania, Non- 

Linear Modelling in Economics – 

Beyond Standards Economics (Albu L. 

(editor), Editura Expert, pp.234-270; 

*** World Economic and Financial Survey, 

Regional Economic Outlook, Europe 

Strengthening the Recovery, May 11, 

IMF 2011;

Europe 1 

Real GDP growth and CPI inflation (%) in European countries 

Countries with developed 

economy 1 

34 

Annex 1 

Real GDP growth Average CPI inflation 

2009 2010 2011 2012 2009 2010 2011 2012 

-4.5 2.4 2.4 2.6 2.7 3.0 3.8 3.0 

-4.0 1.7 1.7 1.9 0.7 1.9 2.5 1.8 

Emerging economies -5.9 4.2 4.3 4.3 8.5 6.3 7.3 6.2 

European Union 1 

-4.1 1.8 1.8 2.1 0.9 2.0 2.7 1.9 

Euro area -4.1 1.7 1.6 1.8 0.3 1.6 2.3 1.7 

Austria -3.9 2.0 2.4 2.3 0.4 1.7 2.5 2.0 

Belgium -2.7 2.0 1.7 1.9 0.0 2.3 2.9 2.3 

Cyprus -1.7 1.0 1.7 2.2 0.2 2.6 3.9 2.8 

Estonia -13.9 3.1 3.3 3.7 -0.1 2.9 4.7 2.1 

Finland -8.2 3.1 3.1 2.5 1.6 1.7 3.0 2.1 

France -2.5 1.5 1.6 1.8 0.1 1.7 2.1 1.7 

Germany -4.7 3.5 2.5 2.1 0.2 1.2 2.2 1.5 

Greece -2.0 -4.5 -3.0 1.1 1.4 4.7 2.5 0.5 

Ireland -7.6 -1.0 0.5 1.9 -1.7 -1.6 0.5 0.5 

Italy -5.2 1.3 1.1 1.3 0.8 1.6 2.0 2.1 

Luxemburg -3.7 3.4 3.0 3.1 0.4 2.3 3.5 1.7 

Malta -3.4 3.6 2.5 2.2 1.8 2.0 3.0 2.6 

Nederland -3.9 1.7 1.5 1.5 1.0 0.9 2.3 2.2 

Portugal -2.5 1.4 -1.5 -0.5 -0.9 1.4 2.4 1.4 

Slovakia -4.8 4.0 3.8 4.2 0.9 0.7 3.4 2.7 

Slovenia -8.1 1.2 2.0 2.4 0.9 1.8 2.2 3.1 

Spain -3.7 -0.1 0.8 1.6 -0.2 2.0 2.6 1.5 

Other EU countries with 

advanced economies 

Czech Republic -4.1 2.3 1.7 2.9 1.0 1.5 2.0 2.0 

Denmark -5.2 2.1 2.0 2.0 1.3 2.3 2.0 2.0 

Sweden -5.3 5.5 3.8 3.5 2.0 1.9 2.0 2.0 

England 

Emerging EU economies 

-4.9 1.3 1.7 2.3 2.1 3.3 4.2 2.0 

Bulgaria -5.5 0.2 3.0 3.5 2.5 3.0 4.8 3.7 

Hungary -6.7 1.2 2.8 2.8 4.2 4.9 4.1 3.5 

Latvia -18.0 -0.3 3.3 4.0 3.3 -1.2 3.0 1.7 

Lithuania -14.7 1.3 4.6 3.8 4.4 1.2 3.1 2.9 

Poland 1.7 3.8 3.8 3.6 3.5 2.6 4.1 2.9 

Romania 

Non-EU advanced economies 

-7.1 -1.3 1.5 4.4 5.6 6.1 6.1 3.4 

Iceland -6.9 -3.5 2.3 2.9 12.0 5.4 2.6 2.6 

Israel 0.8 4.6 3.8 3.8 3.3 2.7 3.0 2.5 

Norway -1.4 0.4 2.9 2.5 2.2 2.4 1.8 2.2 

Switzerland 

Other emerging economies 

-1.9 2.6 2.4 1.8 -0.5 0.7 0.9 1.0

Real GDP growth Average CPI inflation 

2009 2010 2011 2012 2009 2010 2011 2012 

Albania 3.3 3.5 3.4 3.6 2.2 3.6 4.5 3.5 

Belarus 0.2 7.6 6.8 4.8 13.0 7.7 12.9 9.7 

Bosnia and Herzegovina -3.1 0.8 2.2 4.0 -0.4 2.1 5.0 2.5 

Croatia -5.8 -1.4 1.3 1.8 2.4 1.0 3.5 2.4 

Macedonia -0.9 0.7 3.0 3.7 -0.8 1.5 5.2 2.0 

Moldova -6.0 6.9 4.5 4.8 0.0 7.4 7.5 6.3 

Montenegro -5.7 1.1 2.0 3.5 3.4 0.5 3.1 2.0 

Russia -7.8 4.0 4.8 4.5 11.7 6.9 9.3 8.0 

Serbia -3.1 1.8 3.0 5.0 8.1 6.2 9.9 4.1 

Turkey -4.7 8.2 4.6 4.5 6.3 8.6 5.7 6.0 

Ukraine -14.8 4.2 4.5 4.9 15.9 9.4 9.2 8.3 

Memorandum 

World -0.5 5.0 4.4 4.5 2.5 3.7 4.5 3.4 

Advanced economy -3.4 3.0 2.4 2.6 0.1 1.6 2.2 1.7 

Emergent and developing 2.7 7.3 6.5 6.5 5.2 6.2 6.9 5.3 

USA -2.6 2.8 2.8 2.9 -0.3 1.6 2.2 1.6 

Japan -6.3 3.9 1.4 2.1 -1.4 -0.7 0.2 0.2 

China 9.2 10.3 9.6 9.5 -0.7 3.3 5.0 2.5 

Source: IMF, World Economic Outlook. 

1 Average weighted by GDP valued at purchasing power parity 

35

Annex 2 

Emerging Europe: GDP growth in domestic demand, exports and private consumption 

Real GDP growth Real growth of domestic Real growth of export Real growth of private 

demand 

consumption 

2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012 

Baltics 2 

-15.9 0.7 4.1 3.9 -26.2 1.6 5.0 4.1 -13.2 14.1 9.2 7.5 -20.1 -2.6 2.7 3.0 

Latvia -18.0 -0.3 3.3 4.0 -27.6 -0.9 3.0 4.3 -14.1 10.3 7.0 5.7 -24.1 -0.1 3.0 4.0 

Lithuania -14.7 1.3 4.6 3.8 -25.4 3.0 6.1 4.0 -12.7 16.3 10.5 8.5 -17.7 -4.1 2.5 2.4 

Central Europe 2 

-0.1 3.3 3.6 3.4 -3.1 2.9 3.2 3.4 -7.4 11.0 7.5 6.7 0.2 2.0 3.2 3.3 

Hungary -6.7 1.2 2.8 2.8 -10.8 -1.6 2.3 2.5 -9.6 13.9 9.3 8.7 -6.8 -2.6 1.5 2.2 

Poland 1.7 3.8 3.8 3.6 -1.0 4.0 3.4 3.7 -6.8 10.2 7.0 6.2 2.0 3.2 3.6 3.6 

Southeastern Europe-EU 2 -6.6 -0.9 1.9 4.1 -12.8 -1.9 1.0 4.0 -6.9 14.0 9.4 8.0 -9.5 -1.5 1.7 4.0 

Bulgaria -5.5 0.2 3.0 3.5 -12.7 -4.5 3.0 3.5 -11.2 16.2 9.8 7.5 -7.6 -1.2 3.6 4.0 

Romania -7.1 -1.3 1.5 4.4 -12.9 -1.0 0.3 4.2 -5.3 13.1 9.3 8.2 -10.2 -1.7 1.0 4.1 

Southeastern Europe-non- -3.0 0.8 2.5 3.6 -7.2 -3.3 1.3 3.4 -12.8 14.0 9.3 6.8 -4.2 -1.0 1.1 3.4 

EU 2 

Albania 3.3 3.5 3.4 3.6 3.1 -8.0 4.1 2.6 -1.7 29.0 1.2 7.6 6.5 -5.1 3.3 2.4 

Bosnia and Herzegovina -3.1 0.8 2.2 4.0 -6.4 -1.4 1.3 4.1 -6.2 9.7 6.0 4.8 -3.9 0.8 0.8 3.3 

Croatia -5.8 -1.4 1.3 1.8 -9.3 -5.1 0.7 2.0 -16.2 4.1 3.3 2.1 -8.5 -1.2 0.1 0.5 

Kosovo 2.9 4.0 5.5 5.2 

FYR Macedonia -0.9 0.7 3.0 3.7 -2.9 -1.1 2.4 3.8 -10.7 22.7 18.7 13.0 -3.9 1.1 2.4 3.9 

Rep. Montenegro -5.7 1.1 2.0 3.5 -16.9 -3.3 -1.2 1.2 -22.4 9.0 8.2 5.3 -13.4 6.8 -2.3 -0.1 

Serbia -3.1 1.8 3.0 5.0 -8.6 -1.2 0.9 4.8 -15.0 19.1 16.6 10.2 -2.4 -1.3 1.3 6.6 

European CIS countries 2 

-8.2 4.2 4.9 4.6 -14.4 6.5 7.6 6.1 -7.3 10.0 3.4 4.2 -5.7 3.4 7.2 6.8 

Belarus 0.2 7.6 6.8 4.8 -1.1 10.3 6.1 5.0 -9.0 5.1 13.3 4.7 0.0 8.6 6.9 6.9 

Moldova -6.0 6.9 4.5 4.8 -18.6 9.6 5.9 5.5 -12.1 12.8 7.1 9.2 -8.0 9.0 5.8 5.3 

Russia -7.8 4.0 4.8 4.5 -14.0 6.3 7.8 6.3 -4.7 10.2 2.4 3.8 -4.9 2.8 7.1 7.0 

Ukraine -14.8 4.2 4.5 4.9 -22.6 6.2 6.3 5.3 -25.1 10.4 5.9 6.7 -13.9 5.9 7.5 5.3 

Turkey -4.7 8.2 4.6 4.5 -7.2 12.2 5.3 5.1 -5.3 2.6 6.2 6.1 -2.2 7.3 6.1 5.7 

Emerging Europe 2 . 3 

-5.9 4.2 4.3 4.3 -10.9 5.8 5.6 5.2 -7.3 9.3 5.4 5.4 -4.5 3.3 5.6 5.6 

New EU member states 2 ." -3.5 2.2 3.0 3.5 -7.0 1.4 2.4 3.4 -9.0 13.0 8.3 6.8 -3.1 0.6 2.4 3.3 

Memorandum 

36

Real GDP growth Real growth of domestic Real growth of export Real growth of private 

demand 

consumption 

2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012 

Czech Republic -4.1 2.3 1.7 2.9 -3.7 1.1 1.0 2.2 -10.8 18.0 10.3 6.3 -0.2 0.4 0.9 2.3 

Estonia -13.9 3.1 3.3 3.7 -20.5 -3.8 3.5 3.7 -18.7 21.7 4.1 4.9 -18.8 -1.9 2.4 2.4 

Slovakia -4.8 4.0 3.8 4.2 -7.9 2.7 1.8 3.6 -15.9 16.4 8.5 6.6 0.3 -0.3 2.3 3.8 

Slovenia -8.1 1.2 2.0 2.4 -10.1 0.4 1.0 2.2 -17.7 7.8 6.8 5.7 -0.8 0.5 1.2 2.2 

European Union 2 ' 5 

-4.1 1.8 1.8 2.1 -4.2 1.3 1.0 1.6 -12.6 10.1 6.6 5.1 -1.7 0.8 1.2 1.6 

1 Real export of goods and services; 2 Average weighted by GDP at PPP; 3 Includes: Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Hungary, Kosovo, Latvia, 

Lithuania, Macedonia, Moldova, Montenegro Rep., Poland, Romania, Russia, Serbia, Turkey and Ukraine; 4 Includes: Bulgaria, Czech Rep., Estonia, Hungary, Latvia, 

Lithuania, Poland, Romania, Slovakia and Slovenia; 5 Includes: Austria, Belgium, Bulgaria, Czech Rep., Denmark, Estonia, Finland, France, Germany, Greece, Hungary, 

Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, Nederland, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and England. 

Source: IMF World Economic Outlook. 

37

Annex 3 

Inflation (CPI), the current account and external debt, 2009-2012 (%) 

CPI Inflation (average) CPI inflation at the end Current account balance / Total external debt / GDP 

of the period 

GDP 

2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012 

Baltics 1 

4.0 0.3 3.1 2.5 0.3 3.2 2.9 2.4 6.2 2.5 0.5 -1.2 118.2 117.4 109.6 103.0 

Latvia 3.3 -1.2 3.0 1.7 -1.4 2.4 1.9 2.3 8.6 3.6 2.6 1.5 156.3 165.2 152.0 141.2 

Lithuania 4.4 1.2 3.1 2.9 1.3 3.6 3.5 2.5 4.5 1.8 -0.9 -2.9 91.4 85.7 82.2 78.5 

Central Europe 1 

3.6 3.1 4.1 3.0 3.9 3.3 3.8 2.8 -1.8 -2.2 -2.8 -3.1 85.3 83.5 83.7 81.5 

Hungary 4.2 4.9 4.1 3.5 5.6 4.2 3.9 3.2 -0.5 1.6 1.5 0.9 153.3 143.9 140.6 131.5 

Poland 3.5 2.6 4.1 2.9 3.5 3.1 3.8 2.7 -2.2 -3.3 -3.9 -4.2 64.9 66.8 68.4 68.5 

Southeastern Europe-EU 1 

4.7 5.3 5.7 3.5 3.9 7.0 4.4 2.8 -5.5 -3.4 -4.2 -4.4 81.4 80.6 82.4 78.5 

Bulgaria 2.5 3.0 4.8 3.7 1.6 4.4 5.3 2.4 -10.0 -0.8 -1.5 -2.0 113.6 102.3 94.7 88.2 

Romania 5.6 6.1 6.1 3.4 4.8 8.0 4.0 3.0 -4.2 -4.2 -5.0 -5.2 71.8 74.2 78.7 75.6 

Southeastern Europe— , non- 3.7 3.2 6.1 3.1 3.1 5.1 4.9 3.0 -7.8 -5.7 -6.9 -6.6 78.4 78.4 73.8 72.5 

EU 1 

Albania 2.2 3.6 4.5 3.5 3.7 3.4 4.0 2.9 -14.0 -10.1 -11.2 -9.8 33.5 41.6 37.7 39.1 

Bosnia and Herzegovina -0.4 2.1 5.0 2.5 0.0 3.1 5.0 2.5 -6.9 -6.0 -6.0 -5.7 54.9 54.6 58.6 58.4 

Croatia 2.4 1.0 3.5 2.4 1.9 1.9 3.5 2.4 -5.5 -1.9 -3.6 -3.6 101.9 99.3 93.4 91.4 

Kosovo -2.4 3.5 8.2 2.1 0.1 6.6 5.6 2.0 -16.8 -17.3 -23.1 -25.6 

FYR Macedonia -0.8 1.5 5.2 2.0 -1.6 3.0 7.5 2.0 -6.4 -2.8 -4.2 -4.8 57.5 56.5 57.3 58.2 

Rep.Montenegro 3.4 0.5 3.1 2.0 1.5 0.7 3.0 1.8 -30.3 -25.6 -24.5 -22.1 97.8 100.2 99.0 97.5 

Rep.Serbia 8.1 6.2 9.9 4.1 6.6 10.3 6.0 4.0 -6.9 -7.1 -7.4 -6.6 78.7 81.6 74.0 72.8 

European CIS countries 1 

12.2 7.2 9.5 8.1 9.2 8.9 8.9 7.6 2.9 3.6 4.2 2.7 43.1 37.3 30.7 28.1 

Belarus 13.0 7.7 12.9 9.7 10.1 9.9 13.0 9.0 -13.0 -15.5 -15.7 -15.2 44.9 51.5 57.9 63.4 

Moldova 0.0 7.4 7.5 6.3 0.4 8.1 7.5 5.0 -8.5 -10.9 -11.1 -11.2 65.5 67.4 70.3 74.0 

Russia 11.7 6.9 9.3 8.0 8.8 8.8 8.5 7.5 4.1 4.9 5.6 3.9 38.6 32.3 25.5 22.6 

Ukraine 15.9 9.4 9.2 8.3 12.3 9.1 10.2 7.7 -1.5 -1.9 -3.6 -3.8 88.0 83.9 80.7 80.3 

Turkey 6.3 8.6 5.7 6.0 6.5 6.4 7.0 5.4 -2.3 -6.5 -8.0 -8.2 43.7 40.7 43.7 46.2 

Emerging Europe 1 - 2 

8.5 6.3 7.3 6.2 7.0 7.1 7.1 5.8 -0.1 -0.5 -0.3 -1.1 57.3 52.0 47.7 45.4 

New EU member states 1 - 3 

3.2 2.9 3.9 2.9 2.9 3.7 3.6 2.7 -2.0 -2.2 -2.6 -2.8 75.7 75.1 73.9 71.2 

Memorandum 

Czech Rep. 1.0 1.5 2.0 2.0 1.0 2.3 2.2 2.0 -1.1 -2.4 -1.8 -1.2 45.5 47.4 44.0 42.0 

Estonia -0.1 2.9 4.7 2.1 -1.7 5.4 3.5 2.0 4.5 3.6 3.3 3.1 125.8 117.6 100.5 95.0 

38

CPI Inflation (average) CPI inflation at the end Current account balance / Total external debt / GDP 

of the period 

GDP 

2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012 

Slovakia 0.9 0.7 3.4 2.7 0.1 1.3 3.4 2.9 -3.6 -3.4 -2.8 -2.7 71.9 72.1 70.4 67.8 

Slovenia 0.9 1.8 2.2 3.1 1.8 1.9 3.0 2.7 -1.5 -1.2 -2.0 -2.1 105.2 113.8 113.3 114.4 

European Union 1 ' 1 

0.9 2.0 2.7 1.9 1.2 2.5 2.5 1.9 -0.2 -0.1 -0.2 -0.1 

1 2 3 

Real export of goods and services; Average weighted by GDP at PPP; Includes: Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Hungary, 

Kosovo, Latvia, Lithuania, Macedonia, Moldova, Rep.Montenegro, Poland, Romania, Russia, Serbia, Turkey and Ukraine; 4 Includes: Bulgaria, Czech Rep., 

Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia; 5 Include: Austria, Belgium, Bulgaria, Czech Rep., Denmark, Estonia, Finland, 

France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, Nederland, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, 

Sweden and England. 

Source: IMF, World Economic Outlook. 

39

Annex 4 

Saving-investment balance by sectors in some European countries during 2000-2007 

(% of GDP, unless otherwise specified) 

Households Non-financial corporations Financial 

corporations 

Government Total 

S(E) I Net S(E) I Net S(E) I Net S(E) I Net S(E) I Net 

Year 2007 

Countries with surplus 10.2 6.5 3.8 12.6 11.1 1.5 1.0 0.3 0.7 2.8 1.7 1.0 26.6 19.6 7.0 

Nederland 6.9 7.5 -0.5 17.0 9.3 7.7 1.5 0.4 1.2 3.4 3.3 0.1 28.8 20.4 8.4 

Germany 11.5 6.2 5.3 11.4 10.5 0.8 0.7 0.1 0.6 2.4 1.4 1.0 26.0 18.3 7.6 

Finland 3.9 7.7 -3.7 14.9 12.5 2.5 0.7 0.3 0.4 7.6 2.5 5.1 27.1 22.9 4.2 

Austria 10.2 5.3 5.0 12.0 16.0 -4.0 2.3 0.7 1.6 2.6 1.1 1.4 27.2 23.2 4.0 

Belgium 10.0 6.7 3.3 13.6 13.7 0.0 1.3 0.8 0.6 1.7 1.6 0.1 26.7 22.8 3.9 

Countries with deficit 

40 

1 

9.0 7.7 -1.0 6.8 12.8 -2.9 1.5 0.5 0.6 2.8 3.2 -0.4 20.0 24.2 -4.2 

Italy 10.2 6.9 3.3 6.3 12.2 -5.9 1.3 0.4 0.9 2.3 2.3 0.0 20.1 21.9 -1.8 

France 10.2 7.0 3.1 7.9 11.1 -3.2 0.8 0.8 0.0 1.1 3.3 -2.2 20.0 22.2 -2.2 

Ireland 3.3 12.2 -8.8 9.3 9.8 -0.4 4.9 0.6 4.3 4.1 4.7 -0.5 21.7 27.2 -5.5 

Spain 6.9 9.7 -2.8 5.2 17.2 -12.0 2.1 0.1 2.0 6.9 4.0 2.8 21.0 31.0 -10.0 

Portugal 4.9 5.8 -0.9 5.6 13.6 -8.0 2.6 1.0 1.6 -0.5 2.4 -2.9 12.7 22.9 -10.2 

Greece 2 

-1.1 9.4 -10.5 10.7 7.2 3.5 2.0 0.3 1.7 -2.5 2.8 -5.3 9.0 19.7 -10.7 

Hard peg -6.3 4.8 -11.1 16.0 26.0 -10.0 1.3 0.1 1.1 6.0 5.4 0.6 16.9 36.3 -19.4 

Lithuania -3.2 3.9 -7.1 13.9 21.5 -7.6 1.5 0.1 1.3 3.6 5.3 -1.7 15.8 30.9 -15.1 

Estonia -0.9 8.5 -9.4 15.5 26.1 -10.6 -0.2 -0.1 -0.1 7.6 5.1 2.5 22.0 39.6 -17.7 

Latvia -3.0 5.0 -8.0 12.4 29.1 -16.7 3.0 0.0 3.0 5.7 6.3 -0.6 18.1 40.4 -22.3 

Bulgaria -14.9 3.5 -18.4 21.0 28.0 -7.0 0.7 0.4 0.3 7.6 4.9 2.7 14.3 36.8 -22.5 

Year 2000 

Countries with surplus 9.6 7.2 2.5 8.9 12.2 -3.3 1.5 0.7 0.8 2.4 2.0 0.4 22.4 22.0 0.4 

Nederland 6.9 7.0 -0.1 13.8 10.4 3.4 3.1 1.4 1.7 4.5 3.1 1.4 28.4 22.0 6.4 

Germany 10.5 7.5 2.9 6.9 12.0 -5.1 1.2 0.5 0.7 1.6 1.8 -0.2 20.2 21.8 -1.6 

Finland 4.4 6.6 -2.3 14.7 11.6 3.1 0.1 0.2 -0.1 9.3 2.4 6.8 28.5 20.9 7.6 

Austria 8.9 5.7 3.1 11.3 16.0 -4.7 2.1 1.0 1.1 1.3 1.5 -0.2 23.6 24.3 -0.7 

Belgium 10.6 5.9 4.8 12.5 13.8 -1.3 1.0 0.9 0.1 2.6 2.0 0.6 26.7 22.5 4.2 

Countries with deficit 1 

9.2 6.5 2.7 8.8 11.9 -3.1 1.2 0.6 0.6 2.0 2.9 -0.9 21.2 21.9 -0.7 

Italy 9.9 6.5 3.4 8.6 11.3 -2.8 0.8 0.6 0.3 1.3 2.3 -1.0 20.6 20.7 -0.1 

France 9.8 5.7 4.0 8.3 10.8 -2.5 1.4 0.8 0.5 2.1 3.1 -1.0 21.6 20.5 1.1

Households Non-financial corporations Financial 

corporations 

Government Total 

S(E) I Net S(E) I Net S(E) I Net S(E) I Net S(E) I Net 

Ireland 3 4.9 7.4 -2.5 9.4 8.9 0.6 2.2 0.4 1.8 3.9 4.3 -0.3 20.5 20.9 -0.4 

Spain 7.5 7.4 0.1 10.3 15.3 -5.0 1.5 0.4 1.1 3.0 3.2 -0.1 22.3 26.3 -4.0 

Portugal 7.5 8.8 -1.2 8.0 15.4 -7.4 1.7 0.7 1.0 0.5 3.7 -3.1 17.8 28.5 -10.7 

Greece 2.4 11.5 -9.1 8.3 7.8 0.6 0.7 0.4 0.3 -0.2 3.6 -3.8 11.3 23.3 -12.0 

Hard peg -1.1 2.2 -3.3 13.4 17.6 -4.2 1.8 0.7 1.1 3.1 2.6 0.5 17.2 23.0 -5.8 

Lithuania 4.5 3.7 0.9 5.6 12.5 -6.9 1.3 0.4 1.0 1.5 2.4 -0.8 13.0 18.9 -5.9 

Estonia 2.3 3.4 -1.0 16.0 21.2 -5.1 1.5 0.3 1.2 3.5 3.8 -0.3 23.4 28.7 -5.3 

Latvia 1.5 1.4 0.2 14.4 19.9 -5.5 2.7 1.1 1.6 0.2 1.4 -1.1 18.9 23.7 -4.8 

Bulgaria 4 -9.3 0.8 -10.1 18.8 19.2 -0.4 1.6 0.8 0.8 6.1 2.9 3.2 17.3 23.8 -6.5 

Changes in 2007 compared to 2000 (percentage points of GDP) 

Countries with surplus 0.6 -0.7 1.3 3.7 -1.0 4.8 -0.5 -0.4 -0.1 0.4 -0.2 0.6 4.2 -2.4 6.6 

Nederland 0.0 0.4 -0.4 3.2 -1.1 4.3 -1.6 -1.1 -0.5 -1.1 0.2 -1.3 0.4 -1.6 2.0 

Germany 1.0 -1.3 2.3 4.5 -1.4 5.9 -0.5 -0.4 -0.2 0.8 -0.3 1.2 5.8 -3.5 9.3 

Finland -0.4 1.0 -1.5 0.2 0.9 -0.6 0.5 0.1 0.5 -1.7 0.0 -1.8 -1.4 2.0 -3.4 

Austria 1.4 -0.4 1.8 0.7 0.0 0.7 0.2 -0.3 0.5 1.3 -0.4 1.6 3.6 -1.1 4.7 

Belgium -0.6 0.9 -1.5 1.2 -0.1 1.3 0.4 -0.1 0.5 -0.8 -0.3 -0.5 0.1 0.3 -0.3 

Countries with deficit 1 

-0.2 1.3 -3.7 -2.0 0.9 0.2 0.2 -0.1 0.1 0.8 0.3 0.5 -1.1 2.3 -3.5 

Italy 0.3 0.4 -0.1 -2.2 0.9 -3.2 0.5 -0.2 0.6 1.0 0.0 1.0 -0.5 1.2 -1.7 

France 0.4 1.3 -0.9 -0.4 0.3 -0.7 -0.6 -0.1 -0.5 -1.0 0.2 -1.2 -1.6 1.7 -3.3 

Ireland -1.6 4.7 -6.3 -0.1 0.9 -1.0 2.7 0.2 2.4 0.2 0.4 -0.2 1.2 6.3 -5.1 

Spain -0.6 2.3 -2.9 -5.1 1.8 -6.9 0.6 -0.3 0.9 3.8 0.9 3.0 -1.3 4.7 -6.0 

Portugal -2.6 -3.0 0.4 -2.4 -1.7 -0.6 0.9 0.3 0.6 -1.0 -1.2 0.2 -5.0 -5.6 0.6 

Greece -3.5 -2.1 -1.4 2.4 -0.5 2.9 1.2 -0.1 1.3 -2.4 -0.8 -1.5 -2.3 -3.6 1.3 

Hard peg -5.3 2.6 -7.9 2.5 8.4 -5.8 -0.5 -0.5 0.0 2.9 2.8 0.1 -0.3 13.3 -13.6 

Lithuania -7.7 0.2 -8.0 8.3 9.1 -0.8 0.1 -0.2 0.4 2.1 2.9 -0.8 2.8 12.0 -9.2 

Estonia -3.3 5.1 -8.4 -0.6 4.9 -5.5 -1.7 -0.4 -1.3 4.1 1.3 2.8 -1.4 11.0 -12.4 

Latvia -4.5 3.6 -8.1 -2.0 9.2 -11.3 0.2 -1.1 1.4 5.5 5.0 0.5 -0.8 16.7 -17.5 

Bulgaria -5.6 2.7 -8.3 2.2 8.8 -6.6 -1.0 -0.4 -0.5 1.5 2.0 -0.5 -3.0 13.0 -16.0 

Source: Eurostat IMF, World Economic Outlook database and IMF staff calculations 

1Exclusively Greece, 2 2006, 3 2002, 4 2004 

Note: E represents gross savings; I – gross investments; Net = E-I 

Country groups averages are weighted with weights of nominal GDP in 2000 and 2007. 

41

Annex 5 

Emerging Europe: evolution of public debt and the 

general government balance 

(% of GDP) 

General government balance Public debt 

2009 2010 2011 2012 2009 2010 2011 2012 

Baltics 

-8.7 -7.7 -5.8 -4.2 30.8 39.1 43.1 43.8 

Latvia -7.8 -7.9 -5.3 -1.9 32.8 39.9 42.5 41.0 

Lithuania -9.2 -7.6 -6.0 -5.5 29.6 38.7 43.5 45.4 

Central Europe 

-6.6 -7.1 -3.7 -4.2 56.7 60.8 60.7 61.3 

Hungary 

-4.3 -4.1 3.9 -4.3 78.4 80.4 76.6 76.9 

Poland -7.2 -7.9 -5.7 -4.2 50.9 55.7 56.6 57.3 

Southeastern Europe-EU 

-5.6 -5.7 -3.9 -2.6 25.8 30.5 32.8 32.8 

Bulgaria 

-0.9 -3.6 -2.6 -1.5 15.6 18.0 19.7 20.0 

Romania -7.3 -6.5 -4.4 -3.0 29.6 35.2 37.8 37.7 

Southeastern Europe-non-EU 

-4.5 -4.4 -4.5 -3.9 37.5 41.8 42.6 43.6 

Albania 

-7.5 -3.7 -4.6 -4.6 60.2 59.7 59.9 60.4 

Bosnia and Herzegovina -5.6 -4.0 -3.0 -1.9 35.4 36.9 41.4 41.4 

Croatia 

-4.1 -5.3 -6.3 -6.1 35.4 40.0 44.1 47.6 

Kosovo 

-0.7 -2.9 -3.3 -4.1 

FYR Macedonia -2.7 -2.5 -2.5 -2.2 23.9 24.8 26.8 27.4 

Rep. Montenegro 

-6.5 -3.8 -3.4 -2.5 40.7 44.1 43.1 42.2 

Serbia 

-4.3 -4.5 -4.1 -2.8 36.8 44.0 40.5 39.8 

European CIS countries 

-6.0 -3.7 -1.7 -1.8 14.3 14.1 13.3 13.8 

Belarus 

-0.7 -1.8 -1.9 -2.0 20.0 22.4 25.3 27.1 

Moldova 

-6.3 -2.5 -1.9 -0.7 31.6 29.8 30.4 32.4 

Russia 

-6.3 -3.6 -1.6 -1.7 11.0 9.9' 8.5 8.8 

Ukraine 

-6.2 -5.8 -2.8 -2.5 35.3 40.5 42.6 43.5 

Turkey 

-6.2 -3.4 -2.2 -2.0 45.5 41.7 39.4 37.6 

Emerging Europe 

-6.1 -4.5 -2.5 -2.4 29.5 30.1 29.4 29.4 

New EU member States 

Memorandum 

-6.4 -6.5 -3.9 -3.7 43.4 48.1 49.4 50.1 

Czech Republic -5.8 -4.9 -3.7 -3.6 35.4 39.6 41.7 43.4 

Estonia -2.1 0.2 -1.0 -0.7 7.2 6.6 6.3 6.0 

Slovakia -7.9 -8.2 -5.2 -3.9 35.4 42.0 45.1 46.2 

Slovenia 

-5.8 -5.7 -2.0 -3.3 35.4 37.2 42.3 44.9 

European Union 

-6.8 -6.6 -4.8 -4.0 72.3 78.2 80.6 81.8 

Source: IMF, World Economic Outlook database 

42

Annex 6 

Emerging Europe of selected indicators of financial solidity 

2007-2010 1 

% 

Income to assets Share of NPL to total loans 

2007 2008 2009 2010 Latest 2007 2008 2009 2010 Latest 

Albania 1.6 0.9 0.4 0.7 Dec. 3.4 6.6 10.5 13.9 Dec. 

Belarus 1.7 1.4 1.4 1.7 Dec. 1.9 1.7 4.2 3.5 Dec. 

Bosnia and 0.9 0.4 0.1 -0.5 Sept. 3.0 3.1 5.9 9.2 Sept. 

Herzegovina 

Bulgaria 2.4 2.1 1.1 0.9 Dec. 2.1 2.5 6.4 11.9 Dec. 

Croatia 1.6 1.6 1.1 1.2 Dec. 4.8 4.9 7.8 11.2 Dec. 

Hungary 1.2 0.8 0.7 0.1 Dec. 2.3 3.0 6.7 9.1 Dec. 

Latvia 2.0 0.3 -3.5 -1.6 Dec. 0.8 3.6 16.4 19.0 Dec. 

Lithuania 1.7 1.0 -4.2 -0.3 Dec. 1.0 4.6 19.3 19.7 Dec. 

FYR Macedonia 1.8 1.4 0.6 0.8 Dec. 7.5 6.7 8.9 9.0 Dec. 

Moldova 3.9 3.5 -0.5 0.5 Dec. 3.7 5.2 16.4 13.3 Dec. 

Montenegro 0.7 -0.6 -0.7 -2.7 Dec. 3.2 7.2 13.5 21.0 Dec. 

Poland 1.9 1.5 0.8 1.1 Dec. 5.2 4.5 8.0 8.8 Dec. 

Romania 1.0 1.6 0.2 -0.1 Dec. 2.6 2.8 7.9 11.9 Dec. 

Russia 3.0 1.8 0.7 1.9 Dec. 2.5 3.8 9.5 8.2 Dec. 

Serbia 1.7 2.1 1.3 1.2 Sept. 11.3 15.5 17.8 Sept. 

Turkey 2.6 1.8 2.4 2.2 Dec. 3.6 3.8 5.6 3.8 Dec. 

Ukraine 1.5 1.0 -4.4 -1.5 Dec. 3.0 3.9 13.7 15.3 Dec. 

1 it refers to Global Financial Stability Report (April 2011) 

Source: IMF, Global Financial Stability Report (April 2011) 

43

Annex 7 

The main macroeconomic indicators in developing countries 

during 2009-2012 

% 

Current account balance to General government balance 

GDP 

to GDP 

2009 2010 2011 2012 2009 2010 2011 2012 

Advanced European 

economies" 

0.5 0.8 0.9 0.9 -6.3 -6.1 -4.5 -3.6 

Euro area -0.6 -0.6 0.0 0.0 -6.3 -6.1 -4.4 -3.6 

Austria 2.9 3.2 3.1 3.1 -3.5 -4.1 -3.1 -2.9 

Belgium 0.8 1.2 1.0 1.2 -6.0 -4.6 -3.9 -4.0 

Cyprus -7.5 -7.0 -8.9 -8.7 -6.0 -5.4 -4.5 -3.7 

Estonia 4.5 3.6 3.3 3.1 -2.1 0.2 -1.0 -0.7 

Finland 2.3 3.1 2.8 2.6 -2.9 -2.8 -1.2 -1.1 

France -1.9 -2.1 -2.8 -2.7 -7.6 -7.7 -6.0 -5.0 

Germany 5.0 5.3 5.1 4.6 -3.0 -3.3 -2.3 -1.5 

Greece -11.0 -10.4 -8.2 -7.1 -15.4 -9.6 -7.4 -6.2 

Ireland -3.0 -0.7 0.2 0.6 -14.4 -32.2 -10.8 -8.9 

Italy -2.1 -3.5 -3.4 -3.0 -5.3 -4.6 -4.3 -3.5 

Luxemburg 6.7 7.7 8.5 8.7 -0.7 -1.7 -1.1 -0.8 

Malta -6.9 -0.6 -1.1 -2.3 -3.7 -3.8 -2.9 -2.9 

Nederland 4.6 7.1 7.9 8.2 -5.4 -5.2 -3.8 -2.7 

Portugal -10.9 -9.9 -8.7 -8.5 -9.3 -7.3 -5.6 -5.5 

Slovakia -3.6 -3.4 -2.8 -2.7 -7.9 -8.2 -5.2 -3.9 

Slovenia -1.5 -1.2 -2.0 -2.1 -5.5 -5.2 -4.8 -4.3 

Spain 

Other EU advanced 

economies 

-5.5 -4.5 -4.8 -4.5 -11.1 -9.2 -6.2 -5.6 

Czech Rep. -1.1 -2.4 -1.8 -1.2 -5.8 -4.9 -3.7 -3.6 

Denmark 3.8 5.0 4.8 4.8 -2.8 -4.9 -3.6 -2.6 

Sweden 7.2 6.5 6.1 5.8 -0.8 -0.2 0.1 0.4 

England 

Non-EU advanced economies 

-1.7 -2.5 -2.4 -1.9 -10.3 -10.4 -8.6 -6.9 

Iceland -10.4 -8.0 1.1 2.1 -9.0 -6.8 -4.6 -1.3 

Israel 3.6 3.1 3.3 3.1 -5.6 -4.1 -3.2 -2.2 

Norway 13.1 12.9 16.3 16.0 10.4 10.9 13.0 12.7 

Switzerland 11.5 14.2 13.2 12.8 0.8 0.2 0.3 0.6 

European Union 2 

-0.2 -0.1 -0.2 -0.1 -6.8 -6.6 -4.8 -4.0 

Source: IMF, World Economic Outlook database. 

1 

Only net loans 

2 

Weighted average. General government budget weighted by PPP of GDP, current account balance in USD- 

weighted GDP 

44

Plenary session 

45

EXPERIENCES AND TENDENCIES OF DECENTRALIZATION AT REGIONAL 

LEVEL IN THE EUROPEAN UNION 

Dodescu Anca 

University of Oradea, Faculty of Economic Sciences, adodescu@uoradea.ro 

Abstrasct: Romania's integration into the European Union requires, in addition to the complex 

process of policy transfer, learning new ways to make policies characteristic to a culture of a multilevel 

governance and of partnerships. From the different levels of governance of the European 

model, the regional level ("regional governance") reflects most accurately, in our opinion, the 

complexity of reconfiguring the state's role in economy, at the beginning of this new millennium, in 

the European Union, and presents the greatest practical importance for Romania, as a new Member 

State in the European Union, as at the regional level structures are more flexible, and best practices 

more quickly assimilated. The selection of the best economic policies of regional growth and 

development, the choice of objectives from a number of competing options, the calibration of 

powers, roles, competences and responsibilities, in time and space, and the promotion of solutions 

of the win-win type require resorting to and combination of appropriate and effective tools. 

Illustrative of the new context, the policy of regional growth and development must incorporate, in 

Romania as well, more knowledge, more creativity, new combinations of skills and new areas of 

expertise. This paper presents the preliminary results of the research related to a post-doctoral 

research project: "Economic policies for regional growth and development. Challenges for 

Romania in the context of economic-financial crisis and integration into the European model", 

developed within the project "Economic scientific research, support of the welfare and human 

development in the European context", financed during 2010-2013 from the European Social Fund 

(ESF) and implemented by the National Institute of Economic Research "Costin C. Kiriţescu" of the 

Romanian Academy, from December 1, 2010, to November 30, 2012, coordinator: prof. Valeriu 

Ioan Franc, PhD. The question we intend to answer in the present stage of our research, based on 

the comparative analysis of the decentralization systems of several Member States of the European 

Union, as well as on the analysis of regional disparities existing at the European Union level and of 

the effects of economic integration, is - to what extent should the competences of the regional policy 

be concentrated in the hands of the regional authorities or of the European Union rather than to be 

left individually to the Member States so as they may develop their own regional policy? What we 

pursue in this paper, based on the analysis of experiences of decentralization of economic policy 

competences at the level of the European Union, is the identification of the regional implications of 

intermingling tendencies of decentralization, centralization, respectively supranationalization and, 

implicitly, the analysis of the manner of reconfiguration of the state’s role in economy at the 

regional level, in the context of integration into the European model. The research into the manner 

of reconfiguration of the state’s role in economy at a regional level requires a review of the 

allocative, distributive and regulatory role of the state, from a the regional perspective, the analysis 

on the one hand, of the decentralization of economic policy competences from the national to the 

regional level (e.g. national level: provision of pure public goods, such as national defence and 

centralization of fiscal policy competences in order to achieve macroeconomic stability and income 

redistribution; regional level: provision of mixed public goods, such as waste collection and 

community police), on the other hand, centralization / supranationalization of regional competences 

at the level of the European Union. 

Keywords: the role of the state in economy, decentralization, European governance, 

regionalization, regional governance. 

JEL Classification: F15, H4, H5, H7, R5 

47

The concept of decentralization 

In the broad sense of the term, 

decentralization means the transfer of 

authority or responsibility, duties or 

competences from the level of central public 

administration or central government to a 

lower level or from the public sector to the 

private sector or to non-governmental 

organizations. As defined by the World Bank, 

decentralization means “the transfer of 

authority and responsibility for public 

functions from the central government to 

intermediate and local governments or 

quasi-independent government 

organizations and/or the private sector” 

(The World Bank Group, 2011). As the 

transfer of competences always involves the 

transfer of financial and human resources as 

well, decentralization raises not only 

problems of a political, administrative nature 

but also of economic, fiscal etc. Depending 

on the predominance of one or other of these 

aspects, the literature marks the following 

forms of decentralization: administrative 

(whose sub-forms in ascending order of the 

degree of decentralization are: 

deconcentration, delegation, devolution), 

economic, fiscal and political, noting that 

these forms are obviously interrelated. If the 

transfer of competences does not exceed the 

public sector, according to the lower level to 

which the duties or powers are transferred, 

one can speak of different levels of 

decentralization - territorial, regional, local 

level etc. If the transfer of powers is from 

public to private sector or to NGOs, we talk 

about privatization and denationalization. 

The reasons why decentralization is brought 

into public debate and implemented are 

various. Widely debated in the literature, the 

reasons for decentralization can be classified, 

in our opinion, in three categories. The first 

category is related to malfunctions of the 

public administration or of the central 

government which leads to lack of response 

or low sensitivity to local needs: poor 

allocation of resources, public services absent 

48 

or defective at a local level, inequities of 

redistribution at the territorial level, 

blockages in the central decision making; 

poor planning and control of the economic 

and social activities, excessive bureaucracy, 

low efficiency, flexibility and innovativeness 

of public policies; low quality of public 

services etc. Another category of reasons for 

decentralization are crises: political crises 

(ethnic or religious conflicts, difficult postconflict 

situations, states of war etc.), or 

economic crises, implicitly fiscal, budgetary 

crises etc. Finally, reasons for 

decentralization are also represented by 

transitions from authoritarian political 

systems to democratic systems, from the 

system of commanded economy to the market 

economy etc., even the process of a state’s 

integration into the European Union (EU) is a 

form of transition. 

Whatever, though, the reasons of 

decentralization, it is widely admitted that 

politics is the driving force behind it (Eaton et 

al., 2010). The typical political objectives 

pursued in the process of decentralization are 

to increase the capacity of political response 

and to broaden participation in political, 

economic and social activities at the 

territorial, regional or local level. Whatever 

their form, size etc., decentralization requires 

a change in the institutional rules of 

distribution of resources and responsibilities 

between different levels of government, 

implicitly changes in power and authority 

and, as highlighted by Kent Eaton, Kai Kaiser 

and Paul Smoke – as always when power and 

authority are at stake – decentralization 

creates controversy and heated debate, 

regarding the justification of the need of a 

decentralization process, the objectives 

pursued, the reform involved, the possible 

disadvantages etc. (Eaton et al., 2010). 

The debate about decentralization is not new. 

In the EU, subject to our analysis, in the last 

two decades of the last century, 

decentralization was often put forward, on the

one hand, as a result of the crisis of the 

Welfare State, leading to various experiences 

of reform through decentralization, the 

transfer of competences involved being, in 

this case, of the type central-local or 

nationalization-privatization, on the other 

hand, as a consequence of the fragmentation 

of the power of the nation-state and 

reconfiguration on various levels of the 

state’s role in the economy in the context of 

the process of integration into EU (Dodescu, 

2011), further implying a transfer of powers 

of the central-regional and centralsupranational 

type. 

At present, under the economic-financial 

crisis, the reverse phenomenon of 

centralization gains ground, confirming the 

validity, on a long term, of the theories on the 

cyclicality of the degree of the state’s 

involvement in the economy (Dobrescu, 

1992), on the “pendular movement” State- 

Market or nationalization-denationalization 

(Dogan and Pelasy, 1992) or on the “political 

pendulum” that moves between the nationaltransnational-global-European 

arenas, 

depending on the relative attraction force of 

these magnetic fields (Wallace and Wallace, 

2000). 

In our opinion, as the days of the controversy 

State versus Market, in the sense of the 

“mirror approach”, have passed, so has the 

time of the polemic Centralization versus 

Decentralization. Located in the context of 

globalization and instability, the debate on 

decentralization should take into 

consideration the change of governance levels 

and “locations” (Wallace and Wallace, 2000), 

the increase of the role of the sub-national 

actors (Sharma, 2008, 2011). It is more likely 

the “time” of networks, partnerships, 

multitude of actors and interests. This trend is 

present both globally and at the EU level. As 

the World Bank showed in its reports, an 

appropriate balance of centralization and 

decentralization is essential for effective and 

efficient functioning of government. This 

49 

translates into balance in decentralization of 

functions and responsibilities, on the one 

hand, and centralization of the roles of 

coordination and supervision, on the other. 

The combination of functions resulting – 

decentralized responsibilities with centralized 

roles of coordination and monitoring – should 

allow strengthening of the institutional 

capacity at a local level and effective 

management of decentralized functions in 

partnership between local actors - local 

governments, local private enterprises, local 

NGOs etc. and central actors involved in 

planning, coordination etc. (The World Bank 

Group, 2011). Moreover, in the EU context – 

of an emphasis on the role of networks in 

developing and implementing policies, of an 

assertion of the “multi-level policy networks” 

(Börzel, 1997), unlike the traditional analysis 

of decentralization, focusing in particular on 

the political, administrative and fiscal 

dimensions, or on the provision of services, 

emphasis is on the interdependences between 

the levels concerned with decentralization, in 

particular, respectively on the 

interdependences between actors (partners, 

the parties interested and the multipliers) 

involved (European Commission, 2007). 

We next undertake is to analyse the 

reconfiguration of state’s role in economy at 

a regional level, in the economic literature 

devoted to decentralization and in the context 

of the European model, in order to identify 

the regional implications of the 

interpenetration of the tendencies of 

decentralization, centralization, respectively 

supranationalization. Consideration on how 

to reconfigure the state's role in economy at a 

regional level requires review of the state’s 

allocative, distributive and regulatory roles 

(Dodescu, 2000) from the regional 

perspective, the analysis, on the one hand, of 

the decentralization from the national to the 

regional level (e.g. national level: provision 

of pure public goods, such as national 

defence and fiscal policy and centralization of 

fiscal policy competences in order to achieve

macroeconomic stability and income 

redistribution; regional level: the provision of 

mixed public goods as for example, sewage 

collection and community police), on the 

other hand, centralization in the sense of 

supranationalization, regional competences at 

the EU level. 

The economic approach of decentralization. 

Examination of the way of reconfiguring the 

state’s allocative, distributive and the 

regulatory role in economy at regional level 

The economic literature dedicated to 

decentralization studies the impact of 

different types of decentralization on 

efficiency, equity and/or economic 

equilibrium in order to define the optimal 

level of government decentralization based on 

comparing the advantages and disadvantages 

of different solutions for decentralization. 

The economic objectives pursued in the 

process of decentralization of production, 

distribution, financing etc. of goods or 

services at regional or local level can coincide 

with political objectives typical for 

decentralization: increased political 

responsiveness and participation at the 

territorial, regional or local level. As 

remarked by Kent Eaton, Kai Kaiser and Paul 

Smoke –“fortunately, the decentralization 

may be one of those situations when politics 

and economy can serve the same purpose” 

(Eaton et al., 2010). This statement should 

not, however, lead to too high a dose of 

optimism. 

In terms of classical economic theory, the 

market is the ultimate form of 

decentralization. At the other extreme, one 

might consider that the state is automatically 

responsible for producing and distributing 

public goods or services. In practice, 

however, the market can offer often more 

efficient solutions than the state in the 

production or distribution of public goods. 

Also, local or regional solutions may be more 

effective than the central ones. On the other 

50 

hand, still in practice, if not well chosen, local 

solutions can cause loss of economies of scale 

for public services, failure in the production, 

provision of public services due to low 

administrative or technical capacity at local 

level. Clearly, we are talking here of the 

state’s allocative role and of the objective of 

efficient resources allocation. At the same 

time, by decentralization the equitable 

distribution may be affected by providing 

social services that prove inadequate or do 

not reach all those “in need”. The cause may 

be the transfer of responsibilities without 

adequate financial resources. In this case, we 

talk about the state’s distributive role and 

about the objective of social equity. Finally, 

the state’s regulatory role subordinated to the 

objective of economic equilibrium can be 

affected when, for example, the coordination 

of economic policies moves from the hands 

of central government to the hands of 

regional government and this fact deteriorates 

the credit conditions and the possibilities to 

cover budget deficits at regional level or to 

the hands of local government and this 

transfer gives way to corruption at local level. 

In terms of theory, there are some established 

principles underlying decentralization, a 

fugitive foray into their world being based on 

Stigler’s principles (1957) that the decisionmaking 

should be placed at the lowest level 

of government in accordance with the 

objective of the efficient allocation of 

resources, the degree of decentralization 

being determined by the extent of the 

economies of scale and the effects of the type 

“spill-over” (benefits-costs); on Olson’ s 

principle, characteristic to the Public Choice 

School, whereby small groups of powerful 

interests are more efficient in absorbing 

public funds (Olson, 1969), on Oates’s 

theorem of decentralization according to 

which every public service should be 

provided at that level of government that has 

control over the minimum geographic area 

able to internalize the corresponding costs 

and benefits (Oates, 1972), on the principle of

subsidiarity as set by the Maastricht Treaty 

(1992), whose purpose is to ensure that 

decisions in the EU are taken at a level as 

close to the citizens as possible. The 

theoretical perspectives according to which 

the decentralization issue is addressed are: the 

traditional fiscal federalism and The New 

Public Management - which focus their 

attention on the so-called “market failures” 

and on the ability to deliver public goods 

efficiently and equitably, the Public Choice 

School and the Economic Institutionalism - 

which focus on “government failures”, 

respectively the approach of the “network 

governance” type (Shah, 2006). 

Defining government decentralization, 

considered economically, as a process of 

transfer and distribution of state duties in the 

field of public expenditure and revenue, from 

national to local or regional level, we try to 

point out the specific aspects of 

decentralization, at a regional level, in terms 

of the three roles of the State: allocative, 

distributive and regulatory. 

a). Regional decentralization and optimal 

allocation of resources 

In what the the state’s allocative role is 

concerned, the analysis of the regional 

decentralization focuses mainly on collective 

goods (public) goods. According to the 

current acceptation regarding a democratic 

state, the number of collective goods 

produced centrally needs to decrease and to 

be restricted mainly to pure collective goods: 

army, security, foreign policy, justice etc. Not 

all collective goods, however, must be 

decentralized in the same way or at the same 

level. The state’s role (of the central 

government) and the limits of 

decentralization in ensuring the provision of 

collective goods depend, first, on the nature 

of these goods and services, on the economies 

of scale affecting the technical efficiency and 

on the extent of the spillover effects, beyond 

jurisdictional boundaries, and on the structure 

51 

of competition in producing or delivering a 

particular public good or service. Therefore, 

choosing a solution of decentralization or a 

combination of solutions such as 

decentralized - managed competition - 

privatization etc. starts from the assessment 

of the lowest level of governmental 

organization, at which the public good or 

service can be produced and delivered 

effectively, or of the most appropriate forms 

of privatization (The World Bank Group, 

2011). 

The possibilities of decentralization of 

collective goods supply depends primarily on 

their effect of overflow (spatial opening of 

their externalities), respectively on the nonrivalry 

of their consumption (the possibility 

of their being used by a large number of 

people without an additional production cost; 

a person’s consumption doesn’t reduce by 

anything the amount available for all others, 

and is therefore non-rival to the consumption 

of others), respectively non-exclusion of their 

consumption (implies that the supplier of the 

collective good is unable to exclude someone 

from the consumption of these goods 

reserving that right to those who will pay a 

price, so, once produced, the collective good 

is available to all, free of charge). While 

some collective goods are only beneficial in 

the vicinity of the geographical area of their 

place of production (local police, street 

lighting, coastal lighthouse for navigation, 

traffic lights etc.), others have a wider spatial 

opening of their externalities - regional (road 

or rail transport, postal service, 

telecommunications, higher education etc.) or 

national (national defence, justice etc.). The 

first category - local collective goods - is 

consumed exclusively at the level of a local 

community. The indivisible nature of these 

goods and their optional use create 

redistributive externalities (for example, those 

who never go out at night bear the cost of 

lighting public without having a benefit in 

exchange), but these do not go beyond local 

boundaries, existing the possibility to

"internalize" them at a local level, the 

production in an optimal quantity at the local 

community level being possible without the 

externalities affecting neighbouring 

communities. In contrast, there are national 

collective goods, whose benefits are shared 

equally among all inhabitants of a country. 

The most illustrative example is the national 

defence, for which the risks and externalities 

of a possible decentralization are obvious for 

communities not large enough to internalize 

externalities. Between the two extremes we 

can fit the regional collective goods whose 

externalities extend beyond local boundaries, 

but which are consumed unevenly. 

Decentralization of their offer is only possible 

if the region is large enough to internalize the 

effects of an overflow, with the risk of 

insufficient supply, while centralization of 

their offer involves a uniformity that neglects 

the regional differences between the tastes 

and needs of the population, causing 

allocational and redistributive externalities. 

(Atkinson and Stiglitz, 1980; Brown and 

Jackson, 1990; Weber, 1991; Black et al., 

2009). 

b). Regional decentralization and equitable 

distribution 

From the perspective of the state’s 

distributive role, regional decentralization 

should be analyzed according to its potential 

impact on the choice of domicile (emigration 

/ immigration) and on the firms’ location. If, 

for example, a regional government decides 

to operate a redistribution effort much higher 

than that of the neighbouring community, 

applying a very progressive taxation, the 

community at stake will face a phenomenon 

of emigration of people receiving an income 

higher than average to communities with 

lighter taxation coupled with an opposite 

phenomenon, the immigration of the poor. 

Similarly, there may be a phenomenon of 

delocalisation of firms. For the community 

concerned this policy will therefore have a 

boomerang effect, because it will increase its 

52 

costs and diminish its revenue at the same 

time. Consequently, the national competence 

on the redistribution plan depends on the 

level of the following parameters: the 

amplitude of the redistributive correction; the 

disparity of the redistribution efforts 

undertaken by neighbouring communities, the 

spatial mobility of economic agents. The 

reduced mobility of economic agents or the 

strong attachment of individuals or firms to a 

region can counterbalance this boomerang 

effect. Therefore, decentralization of 

redistributive policy determines, with the 

price of a greater vertical equity, a horizontal 

inequity, the decentralization chances being 

small and dependent on the spatial mobility 

of the economic agents, on the size and 

homogeneity of the regional community, in 

order to practice, within certain limits, an 

active policy of redistribution (Atkinson and 

Stiglitz, 1980; Brown and Jackson, 1990; 

Weber, 1991; Black et al., 2009). 

c). Regional decentralization and economic 

equilibrium 

From the perspective of the state’s regulatory 

role, the regional decentralization analysis 

must start from the indisputable fact that the 

economic equilibrium shows the 

characteristics of a national collective good, 

due to the spatial openness of its externalities. 

Even though their intensity varies from one 

region to another, the fluctuations in 

economic activity and the economic 

imbalances concern the national economy as 

a whole, therefore, the decentralization of the 

stabilization policy increases the risk that a 

region shall benefit from the stabilization 

effort of others without doing anything in 

exchange. On the other hand, the impact of 

regional stabilization policy is the weaker for 

the region concerned, the more open it is, the 

multiplier effect being only partial, because a 

part of the induced demand addresses a 

production made outside the region, 

respectively, the higher national capital 

mobility is, which deteriorates the conditions

of loan at a regional level and the possibilities 

to cover budget deficits (Atkinson and 

Stiglitz, 1980; Brown and Jackson, 1990; 

Weber, 1991; Black et al., 2009). 

In conclusion, the analysis of decentralization 

at a regional level in terms of the three roles 

of the state, according to the theory of fiscal 

federalism, leads to a rather simple allocation 

scheme - the distributive and regulatory role 

are preferable at a central level, the allocative 

role being shareable or possible to 

decentralize in accordance with the spatial 

openness of the externalities of collective 

goods, respectively with the characteristics of 

non-rivalry and non-exclusion of their 

consumption. 

Decentralization at the regional level in the 

EU. Trends 

The decentralization of the responsibilities of 

governments in the EU must be considered in 

the context of the fiscal federalism and of the 

subsidiarity principle, according to the 

provision of the Maastricht Treaty. The 

theory of traditional fiscal federalism 

involves an administrative organization 

structured on three levels: federal, state, local 

and, implicitly, a division of fiscal 

responsibilities between the three levels. The 

specificity of the EU - as an entity that tends 

to become a federal state is linked to adding 

the regional level to the three levels of the 

theory of traditional fiscal federalism. Thus, 

at present, in the EU there are the following 

levels of government: union, national states, 

regions, local authorities (usually counties 

and municipalities).The allocation of powers 

at the appropriate level in accordance with the 

principle of subsidiarity stipulated by the 

Treaty of Maastricht answers to criticisms 

about the many overlaps between the upper 

and lower levels and to the heterogeneity of 

the administrative arrangements from a 

Member State to another, hence a tendency of 

supranationalization of competences of the 

national states (governments) manifesting 

53 

simultaneously at the EU level, along with 

the decentralization of some of their other 

competences to lower levels (regional and 

local). The principle of subsidiarity is 

intended to ensure that decision-making in 

the European Union is as closer to the citizen 

as possible and to validate the need for action 

at community level considering the 

possibilities existing at national, regional or 

local level. According to The Treaty of 

Maastricht (Article 3b) “The Community 

shall act within the powers conferred and 

objectives assigned to it by this Treaty. In 

areas not within its exclusive competence, the 

Community shall take no action, in 

accordance with the principle of subsidiarity 

only if and insofar as the objectives of the 

proposed action cannot be achieved 

satisfactorily by the Member States, but can 

be better achieved at community level due to 

the extent or the effects of the proposed 

action.” Relative to the state’s roles in the 

context of fiscal federalism and subsidiarity 

principle, according to the provision of the 

Maastricht Treaty, the supranational 

(European) level is in charge with 

coordinating the stabilization policy, its 

management being a competence of the 

Member States, and with coordinating the 

territorial redistribution so as to ensure that 

all regions of the EU offer equal opportunities 

and uniform provisions of certain basic 

services, the Member States and the local 

communities maintaining their 

responsibilities for managing social policy 

and income redistribution to suit the 

preferences of each community (Oates, 2001; 

Majocchi, 2008). Therefore, the regulatory 

role is centralized and shared between the 

national level (management) and 

supranational (coordination), the distributive 

role is mostly centralized and shared between 

the national level (management) and 

supranational (coordination) and 

decentralized at a regional and local level, 

depending on the possibilities to meet local 

community preferences. Regarding the 

allocative role, as already noted, this is the

one that best meets the requirements of 

decentralization, depending on the 

characteristics of the collective goods, at a 

supranational level, here concentrating all 

efforts to strengthen the internal, single 

market. 

Practically, the European Union’s vision on 

the policy implementation is a decentralized 

one, of the “network” type, of a nonhierarchical 

nature, and involving subnational, 

national and supranational actors. 

Following the debates within the European 

Union, on “European governance”, starting 

from the White Paper on European 

Governance, adopted in July 2001, which 

defines clearly the five levels of governance: 

global, European, national, regional and 

local (European Commission, 2001) and 

describes the geographical decentralization of 

the EU policy and the sharing of powers and 

responsibilities of the type EU - member 

states - regions (European Commission, 

2002), continuing with the debate on the 

Future of Europe, the European Constitution 

and the Lisbon Treaty and, more recently, the 

2020 Strategy, one can clearly notice the 

increase in the capacity of supranational 

regulation along with the decentralization of 

powers of economic policy at a regional 

level, the implementation of the principle of 

subsidiarity and the emphasis of the role of 

networks in developing and implementing 

European policies (European Commission, 

2001, 2003a, 2005, 2007, 2010). 

However, beyond the complexity of the 

process of transformation of the “European 

governance” into a “network type 

governance” (Dodescu, 2011), in terms of a 

future federal state, the tendency of 

supranationalization merely means an 

increase in the EU powers, it being added 

with further performance of the three roles of 

the national state described by the public 

economy: allocative role (currently seen in 

terms of strengthening the internal market 

and in view of the federal state, including 

54 

defence, research and development and 

European transport network etc.), distributive 

role (social protection and struggle against 

poverty), the regulatory role (the 

coordination of macroeconomic policy 

aiming at stability at the Union level). With a 

view to the European federal state, the roles 

of national governments are simplified, 

comprising the legal framework, ensuring 

public order, national infrastructure, public 

administration, regional distribution, public 

loans etc., while education, health, local 

transportation and other services of local 

interest will be responsibilities of local 

governments. 

Decentralization at a regional level in the 

EU. Experiences 

In the EU states, the regional level covers 

different political and administrative realities, 

being the result of a process of 

decentralization that combines the specificity 

of organization of state power in relation to 

the territory and the historical evolution of 

that state, to the requirement imposed by the 

EU of the existence of a sub-national 

administrative level but higher than the local 

one. For the EU, the need of a regional level 

is linked, primarily, to the implementation of 

financial assistance given by the regional 

policy, secondly, to the prospect 

transformation of the EU into a federal state 

and the high degree of autonomy granted to 

this level within federalism. 

From the perspective of historical 

developments of the European states, of how 

nation-states were formed, federalism, 

however, is rather an exception than a rule, 

Switzerland, Germany (established in the 19 th 

century), Austria and Belgium (established in 

the 20 th century, in 1920, respectively in 

1993) being the only federal states in Europe. 

Most European countries were founded as 

and are up to now unitary states. Obviously, 

in the EU, the regional level enjoys the 

greatest autonomy and knows the fastest

growth within the federal states (Germany, 

Austria, Belgium) or regional (Spain, Italy 

and, in some parts of the territory, in Great 

Britain and Portugal) - intermediate structures 

between the federal and unitary state. For the 

opposite, the regional level has a reduced 

autonomy, existing only for administrative 

reasons or as a response to the need of 

implementing the EU regional policy within 

the unitary states (France, Netherlands, 

Greece, Ireland etc.). 

The administrative-territorial structure of the 

EU Member States is extremely 

heterogeneous and comprises generally a 

local level (towns, villages) and two main 

regional levels structured, organized and 

named differently from country to country, 

for example, “Lander” and “Kreise” in 

Germany, “Regions” and “Departaments” in 

France, “Standard regions” and “Counties” in 

the UK, “Regioni” and “Provincie” in Italy 

etc. The launch of the regional policy of the 

EC in 1975 met the impossibility of 

comparative assessment of the economic 

situation in different regions as a basis for 

Community intervention to correct regional 

imbalances. Therefore, to ensure comparable 

statistics at European level, the EU has 

developed and regulated The Nomenclature 

of Territorial Units for Statistics (NUTS) 

(European Commission, 2003), a standard of 

geographical coding regarding subdivisions 

of the States defined for statistical purposes, 

instrumental in the mechanism of allocation 

of structural funds. NUTS establishes in each 

Member State at least three hierarchical 

levels: NUTS 1 (“Gewesten / Regions” in 

Belgium, “Länder” in Germany, 

“Continente”, “Região dos Açores”, “Região 

da Madeira” in Portugal, “Scotland, Wales, 

Northern Ireland”, “Government Office 

Regions of England” in the UK), NUTS 2 

(“Provincies / Provinces” in Belgium, 

“Regierungsbezirke” in Germany, 

“Periferies” in Greece, “Comundidades y 

ciudades autónomas” in Spain, “Régions” in 

France, “Regions” in Ireland, “Regioni” in 

55 

Italy, “Provincies” in the Netherlands, 

“Länder” in Austria), NUTS 3 

(“Arrondissements” in Belgium, 

“Amtskommuner” in Denmark; “Kreise / 

kreisfreie Städte” in Germany, “Nomoi” in 

Greece, “Provincias” in Spain, 

“Départements” in France, “Regional 

authority regions” in Ireland, “Provincie” in 

Italy, “Län” in Sweden, “Maakunnat / 

landskapen” in Finland). The heterogeneity 

continues at the level lower than NUTS 3 as 

well, of the ‘small administrative units’: 

“Gemeenten / Communes” in Belgium, 

“Kommuner” in Denmark, “Gemeinden” in 

Germany, “Demoi / Koinotites” in Greece, 

“Municipios” in Spain, “Communes” in 

France, “Counties / County boroughs” in 

Ireland, “Comuni” in Italy, “Communes” in 

Luxembourg, “Gemeenten” in the 

Netherlands, “Gemeinden” in Austria, 

“Freguesias” in Portugal, “Kunnat / 

Kommuner” in Finland, “Kommuner” in 

Sweden and “Wards” in the UK etc. 

(European Commission, 2003b, 2008, 2011). 

Therefore, for the European Union, the need 

for choosing a standard unit, as the basic unit 

for its regional policy is more than obvious. It 

was elected the development region - 

standard unit with an average size of 13,000 

square kilometres and a population of 

approximately 2.5 million inhabitants, i.e. the 

intermediate level – NUTS 2. According to 

the EC, the development region should not 

necessarily have an administrative character, 

but it was compulsorily created in all EU 

Member States in order to allow 

comparability, harmonization of regional 

statistics of member countries, performance 

of analyses at a regional level within the EU 

and elaboration of Community regional 

strategies, policies and programs. The 

competition to attract structural funds 

triggered in time, as, in fact, the EC foresaw 

initially, a tendency to amplify competition 

not so much between Member States, but 

between regions of the same state or of 

different states, led to the occurrence of new

egional actors such as associations of 

regions, independent from the national states, 

and of the phenomenon of regional lobby. At 

Community level, the emergence in 1985 of 

the Assembly of European Regions, and in 

1992, by the Treaty of Maastricht, of the 

Committee of the Regions, are clear elements 

in promoting and strengthening the status of 

regions. 

Far from being able to speak about regions as 

homogeneous entities in the EU, although the 

definition of region is not a subject of this 

paper, we shall however note the existence of 

numerous critical voices which argue that 

there still is no operational definition of 

region, from a political, juridical and 

administrative point of view, at the EU level, 

that the region is not yet and will not be any 

time soon at a general level in the EU, an 

administrative-territorial entity endowed with 

political representativeness. Therefore, at the 

EU level, the regional decentralization can be 

described better watching the process of 

regionalization, which according to the 

typology of particular State, may be linked to 

existing regions as administrative-territorial 

units or regions created as new territorial 

divisions. Analysing comparatively the 

regionalization as a process aimed at 

developing regions as entities located 

immediately below the central state and 

above the local (sub-national and supra-local) 

in the 27 EU Member States (Chirleşan, 

2007; Diez, 2006; Stănciulescu and 

Androniceanu, 2006; Androniceanu and 

Stănciulescu, 2001), we can distinguish five 

types of regionalization, as follows: 

a). Administrative regionalization (easy 

administrative decentralization - by 

deconcentration) is the type of 

regionalization resulted from the transfer by a 

state to local authorities or bodies directly 

subordinated to the central government of 

certain tasks regarding the promotion of 

regional economic development by 

mobilizing local communities and economic 

56 

organizations. In most cases, administrative 

regionalization is a response to the need to 

implement the EU regional policy. The 

administrative regionalization characterizes at 

present, at the EU level, as a rule, the unitary 

states. Among the EU15 Member States, we 

can note Greece (where 13 administrative 

regions were formed, responsible for regional 

development, led by a secretary general of 

the region assisted by an Advisory Regional 

Council consisting of representatives of local 

communities, in each administrative region 

existing a so-called House of regional 

development), Portugal (where there were 

formed five regional coordinating 

commissions responsible for the 

implementation of the regional development 

plan under the authority of government), the 

UK, except Scotland (known as a 

“centralised model” characterized rather by 

tendencies of centralizing than of 

decentralizing, the importance given to the 

regional level began to increase after the 

recognition of the political-administrative 

autonomy of Scotland, Wales and Northern 

Ireland) and Sweden (the regional level has 

rather little relevance as compared to the local 

level, traditionally very strong in the “state of 

consensus”, the administrative 

regionalization appears here under the form 

of delegating attributions of regional 

development to a district governor assisted 

by an Administration Board in which local 

interests are represented; in addition, regional 

competences include, primarily, the 

management of health services and of the 

system of education). The administrative 

decentralization also characterized the 

following New Member States: Bulgaria, 

Estonia, Latvia, Lithuania, Slovakia and 

Slovenia and knows also a great variety of 

forms. For example, in Estonia there is only 

one Estonian Regional Development Agency, 

the administrative regionalization is not 

reflected by the existence of administrative 

units or administrative regions, but by the fact 

that state's regional development policy is 

implemented in the 15 districts by a

governor, in Lithuania – the policy of 

territorial planning and regional development 

is managed by a governor at the level of the 

higher administrative units of provinces / 

departments, in Slovakia there are 8 regions 

and 8 offices of regional administration 

responsible for coordinating the activity of 

the local communities in terms of regional 

development. Luxembourg falls into this 

category as a particular case; due to the small 

size of the state, the four regions created do 

not need own institutions. 

b). Regionalization by cooperation between 

existing local collectivities (average 

administrative decentralization - by 

delegation) is the type of regionalization by 

the agency of decentralized institutions within 

the local authorities, the functions of central 

government in the field of regional 

development being taken by the existing local 

collectivities. Unlike administrative 

regionalization, regionalization through 

existing local collectivities supposes effective 

transfer of competences from central 

government to the regions created as 

institutionalized forms of cooperation 

between territorial collectivities. This type of 

regionalization is limited both in terms of 

resources and of competences and 

institutions. At the EU level, this type of 

regionalization characterizes the unitary 

states – Denmark (14 provincial communes), 

Finland (20 regional councils and the socalled 

unions of communes), Ireland (8 

regional authorities and several specialized 

agencies) and – from the New Member States 

– Romania (8 development regions 

established by law, by voluntary cooperation 

of the counties, without legal personality and 

not being administrative-territorial units, a 

Regional Development Agency existing at the 

level each of them) and Hungary (originally 

there were created 8 administrative regions, 

which were abandoned in 1994, their 

functions being taken over by the provinces, 

which may cooperate voluntarily with other 

provinces through regional development 

57 

councils). There is a particular case - 

Germany, a federal state characterized by 

internal administrative regionalization at the 

level of the lands (cooperation between local 

collectivities within the lands). 

c). Regional decentralization (advanced 

administrative decentralization and average 

economic and fiscal decentralization) 

supposes the formation of regions as new 

territorial collectivities superior to the 

existing ones, whose competences regard the 

regional development. This type of 

regionalization involves changing the 

administrative organization of the territory by 

the emergence of a new territorialadministrative 

category - the region, of the 

same juridical form as the existing ones, but 

which is part of the constitutional order of a 

unitary state. This type of regionalism is 

characterized by the absence of legislative 

power, administrative competence extended 

to fields related to regional development and 

fiscal power that varies from case to case. At 

the EU level, this form of regionalization 

characterized France (“unitary state in the 

process of decentralization”, France currently 

has 25 regions, constituted as autonomous 

communities, as a result of decentralization of 

public administration and benefiting from the 

principle of free administration of local 

authorities, led by a Regional Council elected 

by universal, direct vote, the competences 

transferred to the regions following the 

decentralization process were the territorial 

planning, the professional training and the 

transportation infrastructure), Sweden 

(characterized by a strong tradition of local 

autonomy, has 20 regions, led by a regional 

government that implements the policies 

decided by the government, which have their 

own competence in managing municipal 

hospitals) and as for the New Member States 

- Poland (16 provinces, whose leader controls 

the respective local community), the Czech 

Republic (the formation, under the 

Constitution, of territorial collectivities of a 

higher level, in the form of 3 regions).

d). Political regionalization (political 

decentralization or the so-called “regional 

autonomy”) adds legislative power to the 

regional decentralization. The regions have 

legislative power exercised by a regional 

assembly and in order to exercise 

competences an executive body is 

constituted, which has the features of a 

regional government. The competences of the 

region are much broader in this case and are 

defined and guaranteed by the Constitution of 

the unitary state. The regions are not 

countries and do not have a Constitution and 

usually do not participate in the exercise of 

legislative national power by their own 

representation. This type of regionalization 

affects the state’s structures. In the EU, it is 

characteristic to the so-called regional states - 

characterizing the whole territory in Spain 

(the right of autonomy of the regions is 

recognized and guaranteed by the Spanish 

Constitution – the state’s structure is based on 

the indissoluble unity of the Spanish nation 

and also on the recognition and guarantee of 

the right of the regions’ autonomy), Italy 

(under the Constitution of Italy, the Italian 

Republic, unique and indivisible, recognizes, 

at the same time, the autonomy of the regions 

by adapting legislative principles and 

methods to the requirements of autonomy and 

decentralization, the regions have the power 

to adopt primary legislation and enjoy 

financial autonomy) or only certain parts of 

the territory in the UK (Scotland in particular) 

and Portugal (the islands). This type of 

regionalization does not characterize, 

currently, any of the New Member States. 

e). Regionalization by federal authorities 

(federalization) is characteristic to the federal 

states, which were born as unions of states, 

therefore, the regions, in this case, are states, 

political entities, which have a series of 

regional and ethnic features. Unlike political 

regionalization characterized by an 

asymmetry of institutions and competences, 

the federal state supposes equality in the 

rights of the member states. At the EU level, 

58 

this form of regionalization characterizes 

Germany, Austria and Belgium. While the 

building of the modern state in Germany and 

Austria was done through federalism, in 

Belgium regionalism led to the federalization 

of the state, in order to allow the formation of 

a structure that shall ensure greater autonomy 

to the component units (the case of Flanders), 

which will progressively accede to the quality 

of a state. The model of federalism that 

characterizes Germany is called cooperative 

federalism in which power is distributed 

among three levels: federal, statal (Länder) 

and local (regions, cities and communes), the 

relations between these levels being relations 

of cooperation dominated by the idea of 

“administrative intermingling” of tasks and 

competences. From a fiscal point of view, all 

territorial levels participate to the tax 

collection to the extent to which they are also 

responsible for the expenses. As in Germany, 

in Austria the lands benefit from more 

competences and resources, their main 

function being the implementation of public 

policies, with the distribution of competences 

between the federation and the lands and the 

strengthening of the lands’ position being 

permanently debated. 

Obviously, this last form of regionalization, 

due to its high level of decentralization and 

territorial autonomy, answers better, in terms 

of functionality and stability, to the 

complexity of European governance, the 

functional adaptations on levels 

(supranational - federal - state - regional - 

local) are more easily absorbed by the federal 

structures. This leads, however, to a series of 

wrong approaches, the federalism being 

considered an expression of regionalization or 

a response to regionalism as opposite to the 

Nation-State. The main concern in the EU is 

that the combination of federalism and 

regionalization affects the territorial 

integrity.

Conclusions and future concerns 

What we aimed at in the start of this approach 

- a comparative analysis of the experiences 

and tendencies of decentralization at a 

regional level in the EU - led us to formulate 

the following conclusions: 

� In the EU countries, the regional level 

covers various political and 

administrative realities, being the result 

of a process of decentralization that 

combines the specificity of the 

organization of the state’s power in 

relation to the territory and the historical 

evolution of that state with the European 

Union’s requirement, that of the 

existence of an administrative level 

inferior to the national level but higher 

than the local one. 

� The regional decentralization, typical to 

France, and embraced by Poland and the 

Czech Republic, from the New Member 

States, is an exception rather than a rule 

in the EU. 

� At the EU level, the regional 

decentralization can best be described 

following the process of regionalization 

which, depending on the typology of a 

certain state, may be related to the 

regions existing as administrativeterritorial 

units or to the regions created 

as new territorial divisions. 

� The most common type of 

regionalization in the EU27 is the 

administrative regionalization (Greece, 

Portugal, United Kingdom except 

Scotland, Sweden, Bulgaria, Estonia, 

Latvia, Lithuania, Slovakia, Slovenia), 

followed by the regionalization through 

existing local collectivities (Denmark, 

Finland, Ireland, Romania and 

Hungary), which represent rather 

functional responses to the EU’s 

requirements in order to allow 

absorption of funds allocated under the 

regional policy. 

� The more advanced forms of 

regionalization - regionalization by 

federal authorities and political 

59 

regionalization - characterize only 7 

Member States of the EU: Germany, 

Austria, Belgium, Spain and Italy, 

Portugal (for the islands) and United 

Kingdom (for Scotland). 

� The relationship federalism - 

regionalization responds better to the 

European governance of the network 

type and of the multi-level type. 

� The expansion of regionalization in the 

EU is favoured by its approach as an 

opportunity of regional development and 

the blockages of regionalization are 

related to its approach as a threat for the 

territorial integrity. 

Consequently, our future research efforts will 

focus on identifying and analyzing in detail 

some models of best practices that have 

proven effective in the EU for the regional 

growth and development. 

Acknowledgments: 

The paper presents research results afferent to 

the post-doctoral research project: "Economic 

policies for regional growth and 

development. Challenges for Romania in the 

context of economic-financial crisis and 

integration into the European model", 

developed within the project "Economic 

scientific research, support of the welfare and 

human development in the European 

context", financed during 2010-2013 from the 

European Social Fund (ESF) and 

implemented by the National Institute of 

Economic Research "Costin C. Kiriţescu" of 

the Romanian Academy, from December 1, 

2010, to November 30, 2012, coordinator: 

prof. Valeriu Ioan Franc, PhD. 

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A NEW THINKING FOR A NEW WORLD. REPRESENTATIONS FROM 

ECONOMY 

Negucioiu Aurel 

”Dimitrie Cantemir” Christian University, Bucharest, Faculty of Economics, Cluj-Napoca 

An incursion, even a succinct one, incomplete, in the universal history, in the world economic 

history and not in the least in the real world gives more and more “credit” to the idea according to 

which the movement is the main form of existence – working and evolution – of the society, 

economy, and of all the structures they are made of. 

Movement means first of all change, transformation. Its “propellant”, its internal cause is 

represented, in our opinion, by the unity and interaction of opposites. The changes, the 

transformations taking place in society and in its economy have direct or indirect authors the 

human beings who, using their minds, “leaven bread” and express at the beginning through 

thinking, the objectives that are going to complete or lessen reality. The positive changes and 

transformations that the people operate renew the world. 

For more than half of a century, the humankind has been in a vast and very complex process of 

transformation, changes with innovative character. In other words, a process of building a new 

world. Hence, the need to create a new thinking. “A new thinking for a new world”. Making a halt 

in the field of economics – theory, science and practice – we are trying to bring to attention to those 

interested a few considerations concerning the truth value of some paradigms in the theoretical 

circuit, including their degree of rationality or irrationality. 

Key words: capital, industrial capital, commercial capital, financial capital, human capital, social 

capital, microeconomics, mezoeconomics, macroeconomics, national economy, mondial economy, 

mondoeconomy, world economy, economic development, eco-economic development, ecoeconomics, 

economic system, ecologic system, ecosystem, ecosoceco system, economic culture, 

community, society, knowledge based society, knowledge based economy, economic paradox, social 

paradox, scientific paradox, economic risk, economic chaos, economic disorder, uncertainty, 

economic truth, economic transition, economic society, international society, post-capitalist society, 

digital economy, real economy, virtual economy, symbolical economy, market, rift, discontinuance. 

1. Instead of introduction 

> 

– Ralph Waldo Emerson – 

> 

– Ian Amos Comenius – 

> 

63 

– Eugeniu Speranţia – 

> 

– Mark Twain – 

> 

– Heraclitus – 

enemies as in all other domains. The peculiar 

nature of the materials it deals with, summons 

as foes into the field of battle the most 

violent, mean and malignant passions […] the 

Furies of private interest >> 

– Karl Marx – 

> 

– G.W.Hegel – 

forget that in reality there are not only these 

processes which, through their content and 

consequences are positive, but also processes 

and actions which connect us, such us 

imbalance, disorganization, destabilization 

and others. 

Through the processes mentioned which give 

content and shape to movement and change is 

done the passing from past, to present and 

then to future or what means the passing from 

old to new in the real world and the world of 

ideas on it. Getting here we state that the new 

is not always superior, better, more beautiful, 

more efficient and necessarily more valuable 

than the old that it has replaced. This 

paradigm is available both for action and for 

thought. 

The truth is that our earthly world that we are 

considering among us is changing, is 

transforming, therefore it is renewing itself 

with a speed many times unnoticeable, on 

larger and larger and more and more 

profound surfaces. The technical base of the 

capitalist society economy has climbed the 

stairs of progress with a speed that increased 

together with time. The simple labour 

mechanization gave way to complex 

mechanization and this, in its turn, was more 

and more passed by automation in different 

forms and higher and higher performances. 

The science has come down from the , ahs transformed into an 

endogenous factor of production, of man’s 

activity in general, has merged with the other 

factors of production in a more and more 

complete scientific and technical revolution 

which, for several years, has had a striking 

world character. Also, world like are the 

communication and information revolution. 

Currently, a harder and harder to pronounce 

„word”, that is a more and more significant 

role goes to the invisible revolution whose 

units of measurement start with the phrase 

– nanosecond, nanometre or 

nano-millimetre. 

Related to these changes in the running and 

evolution of the capitalist economy, the 

industrial capital crowned as a „king”, 

65 

„emperor” or „president” – was deposed and 

replaced with the financial capital and 

nowadays the trend pushing to this „high” 

rank the human capital is stronger and 

stronger. 

The of the 

changes having taken place in the last 25-30 

years in the contemporary world that our 

planet includes in its columns, the collapse of 

the old colonial system, the collapse of the 

socialist systems of economy and 

government, the formation of the third world, 

the expansion of the market economy through 

the orientation towards it of many of the 

socialist countries. A special part of this 

periodic table of elements includes by 

nominalization the cyclic, national, 

international and world economic crises, the 

financial crises within the same borders, the 

energetic, demographic crisis, the increasing 

economic and social inequalities among the 

world countries, the government and 

administration crises, the crises of science, 

education, culture, the increasing 

deterioration of domestic and international 

relations. And the things do not stop here. 

They do not merely exhaust the entire 

assembly of the changes having taken place 

and of those in progress. 

2.1. World and thinking 

The title of our lines was inspired by the wellknown 

titan of economic thinking Charles 

Handy who inscribed on the three books 

translated into Romanian, too, the following 

postulate-message: (1) 

Here, a new or a relatively new problem 

arises, that is the ratio or better said the ratios 

between world and thinking, between the new 

world and the new thinking. 

Without lingering too much on this problem, 

yet it is an extremely important and 

contemporary problem for the scientific 

theory of knowledge (for epistemology), we 

will mention the following reasons: 

1. The concept of in its 

most general and comprehensible

meaning subsumes and expresses 

according to dictionaries “everything 

that exists in reality (material world, 

the world of things), universe, 

cosmos”. It means that thinking – 

regarded as process and result (the 

world of thoughts) constitutes an 

important component of the world 

considering the meaning mentioned 

above. 

2. Therefore, the new thinking is an 

essential component of the new 

world. 

3. The thinking (the knowledge) has 

an especially complex structure, 

containing several subdivisions or 

components. Karl R. Popper 

distinguishes the following worlds or 

universes:

Another aspect – the second in our 

enumeration – consists in the 

irrefutable fact that thinking foresees 

and precedes more and more of the 

movements, therefore changes, 

transformations of different 

components of the planet Earth’s 

system and, for many times, not only 

this. 

To represent and ease the comprehension of 

this truth, we will further refer to the process 

of labour or production of goods which is 

specific to human kind, quoting Karl Marx : 

”a spider conducts operations that resemble 

those of a weaver, and a bee puts to shame 

many an architect in the construction of her 

cells. But what distinguishes the worst 

architect from the best of bees is this, that the 

architect raises his structure in imagination 

before he erects it in reality. At the end of 

every labour-process, we get a result that 

already existed in the imagination of the 

labourer at its commencement. He not only 

effects a change of form in the material on 

which he works, but he also realises a 

purpose of his own that gives the law to his 

modus operandi, and to which he must 

subordinate his will. And this subordination 

is no mere momentary act. Besides the 

exertion of the bodily organs, the process 

demands that, during the whole operation, the 

workman’s will be steadily in consonance 

with his purpose. (4) 

The history of earthly world, the history of 

human kind history mentioned in its pages 

that, in time, the role and importance of 

thinking has increased in more and more 

pronounced rhythms. Presently, the role of 

forerunner and notary of the evolution of 

society and economy on the steps of progress’ 

historical ladder is being acknowledged. 

Moreover. There are savants stating with 

observable arguments that science and 

education must develop in more accelerated 

rhythms than the other structures of 

contemporary society. 

And something else, too. A third aspect of the 

ratios between the real world and new 

67 

thinking is the expansion and thoroughgoing 

study of the processes of thinking’s 

rethinking. Thinking is being rethought and, 

therefore, it is renewing and re-renewing and 

the patrimony of thoughts is getting richer 

both quantitatively and qualitatively. The 

value and the use value (utility), in other 

words the cognitive value and the applicative 

value of the new thoughts/ideas, enrich the 

world’s fortune, the intellectual and material 

potential increases too, and, together with it, 

the possibilities, conditions of enriching and 

beautifying the style and way of living and 

those of levelling the standard living are 

amplified. 

The truth is that the material forces and things 

can be destroyed only with material forces, 

but the ideas, new ideas have a considerable 

influence from the moment they have been 

understood and entered the world. ”If we 

watch history form a larger perspective, it 

seems that the most influential people in the 

last 100 years – Charles Handy writes – were 

not Hitler or Churchill, Stalin or Gorbatchev, 

but Freud, Marx and Einstein, people who did 

not change anything except the way in which 

we think, but this thing has changed 

everything. Francis Crick is not today a name 

known by everybody, but he is the one who, 

together with James Watson and Maurice 

Wilking, discovered the genetic code, the 

DNA, creating, thus, the science of 

microbiology and biotechnology industry that 

so much of our economic future might 

depend so much on.” (5) 

3. Eco-economy - A new branch of 

contemporary thinking (knowledge) 

The tree of knowledge, of science (thinking) 

was completed at the end of the 20th century 

with a new branch. Its name is eco-economy. 

It is under construction, enlargement and 

thorough study of its own object of study – 

the real eco-economy – the birth of this new 

branch of science about nature, society and 

economy, its ontological status, its anatomicmorphological 

structure, its functioning and 

evolution mechanism, its categories,

principles and laws governing the movement 

of this economic-social-ecological megasystem, 

the order and disorder coexisting or 

succeeding, the mutual reports existing 

among the constituent parts of the megasystem 

as well as between the latter and each 

component, in part; and last, but not least, 

among the ecosoceco systemic structure and 

other systems existing in the universe. 

A radiography even insufficiently detailed of 

the national economies shows that these exist, 

function, and evolve in a multiple 

environment: social-national and 

international, in an international economic 

environment, to which the political, cultural, 

and moral environment are added. 

The mutual reports between economy and the 

surrounding natural environment were born 

together with the human society and its 

economy. They multiplied, diversified, and 

changed structurally and qualitatively 

together with and as the human society and 

surrounding nature evolved. 

The interactions between man (people) and 

nature, the multitude of relations and 

correlations in which these interactions took 

shape, manifested and still manifest 

themselves gave content to these new 

branches and sub-branches of scientific 

knowledge and some specific genres of 

human activities. The itself 

designates and underlines three fundamental 

activities: labour, work and action, each of 

them corresponding to (6) Underlying the significance of 

each component of this 

Hannah wrote ”Labour is that activity which 

corresponds to the biological process of the 

human body, whose spontaneous growth, 

metabolism, and eventual decay are bound to 

the vital necessities produced and fed into the 

life process by labour. The human condition 

of labour is life itself.“ (7) 

"Labour is the activity corresponding to the 

unnatural character of the human existence, 

which is not imprinted in and whose death is 

not compensated by the perpetual cycle of 

68 

species life. Labour provides an 

world of objects, entirely 

different from any natural environment. 

Within the borders of this artificial world, 

each individual life finds shelter, while the 

world itself is meant to last longer and exceed 

all individual lives. The human condition of 

work means belonging to the world.” (8) 

"Action, the only activity that actually takes 

place between people without the mediation 

of objects or matter, corresponds to the 

human condition of plurality, that men, not 

the Man, live on earth and pollute the world. 

Although all aspects of the human condition 

are specifically the condition - not just a sin 

qua non conditio but also conditio per quam - 

to any political life.” (9) 

"The earth is just the quintessence of the 

human condition and as far as we know, the 

worldly nature is the only one in the universe 

that can provide human beings with a living 

environment where they can move and 

breathe effortless and without using artificial 

means. The artificial of the man-made world 

separates the human existence from any pure 

animal environment, but life itself is outside 

the artificial world and through life man 

remains related to all other living organisms.” 

(10) 

Above all, the labour, the production of 

material goods necessary to meet needs, 

interests, desires and human goals 

represented, still represents and will represent 

a system of relationships, a process between 

men and nature, a process in which people 

cooperating in a certain way and exchanging 

activities, intercede, regulate and control 

through their own activity the exchange of 

substances, of matter and energy between 

them and nature. Therefore the process of 

production and reproduction of material 

goods necessary for human living and society 

is, in a sense, the dialectical unity of a system 

of relationships - relationships that are 

established between people and relationships 

taking place between people, society and 

natural environment. The multiple interaction 

between man (humans), society and its

economy on one hand and the nature 

surrounding them on the other hand, is a real 

component of the universe where we are, one 

of its mega-systems. 

4. Economy and ecology - Autonomy, 

identity, differences and unity 

4.1. Economy and ecology 

Undoubtedly, the real economy (the real 

economic system) and the real ecosystem (the 

real ecological system or the natural 

environment) as component parts of the 

objective - material reality have their own 

ontological status and thus their movement - 

functioning and evolution are mainly 

governed by the laws of the universe and by 

its own laws (specific laws). These 

components have their relative autonomy and 

independence. The real economy includes in 

its structure and content the assembly of all 

productive forces, the assembly of the 

relationships is established between people 

and the framework of the economic activity. 

The two assemblies - the productive forces 

and economic relations - seen in their unit 

and interaction - form what experts call the 

mode of production or the economic system in 

the extensive meaning of the term. In its turn, 

the global ecological system stands for the 

biocenosis and biotope assembly. These 

systems have the self-creation, selfpreservation 

and self-progress ability by 

means of their own mechanisms. It is not 

accidental that the two systems – the 

ecological system and the economic system – 

represent the objective of some distinct 

branches of science, the environmental 

science and economics. The simple 

observation of reality shows that the 

ecological system and the economic system 

are not separated from each other by 

insurmountable borders and walls. And even 

more. There are not few situations where the 

economic and the ecological, more precisely 

parts of the economic constitute components 

of the ecological and vice versa, parts of the 

ecological represent components of the 

economic. The ecological is economic and 

69 

the economic is environmentally friendly. 

Meaning what? There are not few situations 

where the economic and the ecological, more 

precisely parts of the economic constitute 

components of the ecological and vice versa, 

parts of the ecological represent components 

of the economic. The ecological is economic 

and the economic is environmentally friendly. 

Meaning what? Meaning what? It is simply 

like that: people like all living things belong 

to nature, to the real ecosystem. And not only 

that. As many scholars argue the man is the 

highest product of nature. At the same time 

labour force represents the most important 

factor of production, one of the most 

important forms of capital – the human 

capital. The human capacity to work, the 

labour has always been one of the most 

important economic assets: under certain 

conditions it - labour - was a commodity and 

thus subject to the provisions, to the salepurchase 

transactions. It is again the man, 

regarded as subject and actor of the economic 

life to get some other economic codeterminations 

as well, depending on the 

place he occupied and the role he fulfilled 

within the economic system. Thus, he was, is 

and will be the owner or non-proprietor, 

manufacturer, distributor, dealer, customer, 

creditor or debtor, or more at the same time, 

supplier, seller or buyer of goods| he is an 

agriculture farmer industrialist and / or small 

craftsman. 

Yet, the process of reproduction and 

perpetuation of human beings is also, as it can 

be easily understood, a complex biological, 

economic, social and cultural process. (11) 

Simultaneously, other parts of nature become 

real elements of the economy at the moment 

and provided that they enter the economic 

cycle, the real economic flows. 

The wood (tree) cut from a natural forest 

becomes raw material for the furniture 

manufacturing factory as well as for the pulp 

or paper manufacturer. The wood meant for 

home heating is a non random economic asset 

for consumption. It is also the case of other 

component parts of nature: coal, oil, natural

gas extracted and put into use as capital 

goods or consumer goods. The land itself is 

and is becoming part of the economy as a 

means of work, object of labour and material 

requirement of performing the production 

process. And it is not only that. The land 

gives every man and 

ongoing space for his actions. (12) The facts 

stated before are true to reality, and 

consequently they are truths - relative and not 

absolute truths, partial and not total truths. 

Why? Because the ecological and economic 

identity is neither absolute nor complete it is 

only partial and relative. Among them there 

were, there are and there will always exist 

numerous differences. To illustrate this truth 

Jacques Bonnet mentioned conurbations, 

techno-polls (techno polis), scientific and 

technological parks, teleports, innovation 

centres, business and commercial parks, 

industrial areas, highways advanced countries 

like streaking through the heavens surface 

rivers and streams. To these, the nominal 

economy, the symbolic economy, the entire 

set of activities, relationships and financial 

flows with flows of scientific, political, 

cultural, economic, electronic money flows, 

which together with the flows of scientific, 

political, cultural, economic information, with 

flows of electronic money, constituting what 

scientists have called 

and managing object - 

material goods respectively, other object 

goods - and people in motion. (13) 

4.2. Ecology and economics – two sides of 

the same coin 

At the risk of repeating we note that . And 

even more. According to the authors of the 

book metaphorically 

consider, “Ecology and economy- are two 

sides of same coin. Here the currency is 

OIKOS, our planet is the Earth, the cradle of 

the whole life. Ecology studies the 

correlations between the Earth and all its 

70 

inhabitants, economy strives to manage these 

relationships. As science, namely as a branch 

of science, ecology has existed for more than 

a century or so and during this period it 

produced revelations that enable economists 

to manage the planet better than they and 

their disciples did before in the business 

world.” (14) Indeed, ecology and economy 

have, etymologically speaking, a common 

root - oikos. Economy has its etymological 

roots in the Greek oikonomia composed of 

oikos = house, household, city and nomos = 

law. The roots of ecology as a branch of the 

scientific knowledge, as a science, are also 

two Greek words - oikos in the sense above 

mentioned and logos = science, speech, 

lecture, order. 

The root is also present in the name 

of both sides of the coin: eco-nomy și ecology. 

Both the ecological and the economic 

are, by structure and content, through their 

configuration and mechanisms – systemic 

compositions, in short systems holding their 

own status.The ecological system and the 

economic system. By joining the concept 

to we get the 

concept of which subsumes, 

focuses and expresses itself and expresses, for 

most scientists, if not for all of them, the 

ecologic system. The meaning benefits of 

triple significance legitimacy: etymological, 

historical and logical-scientific. 

subsumes and expresses the main content of 

the Greek oikos - so what is common to both 

ecological and economic, so the identical in 

them. No doubt, the works here as well. Nevertheless, 

semantically and scientifically, the notion 

could be also translated, in 

our view, as both the concept of ecological 

system and as the economic system. (15) 

5. The mega-system in 

reality and in thought 

It is now increasingly recognized that the 

economy and natural environment are two 

systemic compositions, two organic systems 

that are organically and indestructibly related

to each other and just as indestructibly and 

organically integrated with each other in a 

new more elevated and superior composition 

of existence and movement-operation and 

development. We have given, we do not 

know how rigorously the name of megasystem 

– the eco-eco mega-system. 

The concept of mega-system, eco-eco, as well 

as the concept of ecological system, 

economic system or system in general has 

two main meanings: the real eco-eco megasystem 

- a structure of a slice of reality, in our 

case the real eco-eco mega-system (real 

economy) that exists objectively, 

independently of the will and conscience of 

human beings. In this determination the real 

eco-eco mega-system at one point became the 

object of scientific knowledge, a branch of 

science. This means that it existed before 

scientific knowledge, and it was and will be 

throughout knowledge and it will be in the 

future as part of reality and as object of the 

scientific knowledge. The second meaning of 

the eco-eco mega-system is of a theoretical 

eco-eco system, product (construction) of the 

human mind, which through knowledge, 

takes possession of the real intellectual ecoeco 

system. In our view, the theoretical ecoeco 

mega-system represents a reflection with 

the help of thinking, a copy, a photograph of 

the real eco-eco mega-system, a shadow of it. 

out of which and with the 

help of which they build this mega-system 

are, generally speaking, the same from and to 

which the human mind constructs them. 

Basically these are thoughts, 

words, terms or concepts, categories, ideas, 

paradigms and even pre-paradigmatic 

constructions, principles and objective laws 

that generate movement- functioning of 

ecological economy, its growth and 

development. The level and scope of the 

scientific knowledge of real eco-economy, of 

the real eco-eco mega-system are given by 

the degree of concordance of the theoretical 

mega-system with the real mega-system but 

however high this level, or extended in 

length, width and depth the knowledge 

71 

acquired, the two systems are not and never 

can get to be identical. They are and will 

always be different. No matter how successful 

a photo would be it is not identical with the 

photographed object. No matter how tight the 

link between an object and its shadow is, 

however they denote different realities, even 

if they share some similarities. As complete 

as a map of a geo-economic determined space 

could be, and as numerous and useful the 

information it provides may prove, it is not 

identical with the reality, with the spaces they 

depict. The map and the respective space 

remain different things. The map of a country 

as individualized object can be reproduced in 

hundreds and thousands of copies, which is 

impossible with the represented geoeconomic 

space. 

Here is the place to mention that due to the 

fact that the real natural environment, the real 

economy and eco-economy (the eco-eco 

mega-system) stand for a very diverse reality 

and they are in a process of continuous 

diversification. As a result, experts have 

spoken on and speak about local ecoeconomy, 

regional eco-economy, national 

eco-economy, international, and lately, 

especially of global or world eco-economy. 

Simultaneously, it has been spoken especially 

of European, American, etc. economic 

models. Lately it is about the U.S. economic 

model, Canadian model, the German and the 

French ones, the economic models of the 

Northern European countries, the Japanese 

model, the Chinese one etc. In order to 

enlarge the image of models we also add 

numerous sets of models of growth and 

economic, social etc. development as well, 

which were quite frequently 

according to their . Currently of growth and development was 

completed, generally speaking, with another 

box – the box of eco-economic models, the 

models of economy based on following the 

ecological principles. It is beyond any doubt 

that the names of most of the investigated 

models were correct and have their origins

ooted in the reality of our universe. It is not 

less true that the realities that concepts and 

models considered have proved to be highly 

dynamic. This circumstance began to weaken 

over time, to reduce the correlation between a 

concept, a paradigm, one model or another 

and the reality that it subsumed or expressed 

and wanted at a certain time. To make it 

easier to understand, we mention that the 

increasing, extending and deepening of the 

globalization processes of socio-economic 

life have imposed and still impose not only 

the completion or alteration of some 

concepts, categories, idea and paradigms, but 

they have sharpened the need to find some 

new concepts, ideas, solutions for the 

nomination and solving the new global issues. 

And let us not forget that one of the largest 

and most complicated cases of globalization 

is the very globalization of the economy. 

Most, if not all major problems of 

contemporary world are the global problems. 

6. Challenges, challenges, and challenges 

again 

6.1. Setting the theoretical conceptual 

system 

The emergence of the science of ecoeconomy 

is, in our view, a real leap in the 

progress of the human knowledge. Its 

importance is not simply the emergence of 

new branches, apparently, extremely, 

extremely vigorous in the great tree of 

knowledge and in the structure of the new 

thinking. As we understand things, the 

emergence of this new branch of science 

amounts to "a genuine gap" in the strong and 

durable wall of knowledge. It means the 

lighting of torches that already lights a 

until recently left in darkness. 

Now the respective is 

and taken in possession, at 

least partly, by mankind. Consequently, the 

powers of man and mankind increase as 

knowledge, science have always meant, mean 

now and will mean in future more light, 

safety and power. 

72 

Like other branches of science, eco-economy 

did not appear suddenly and in a perfect form 

from the very beginning, with an anatomicmorphological 

structure completely cohesive 

and fully matured by matching and linking 

thought with action, thinking with experience, 

phenomenon with essence, form with content, 

confirming, legitimizing true thoughts and 

ideas, denying false conceptual construction, 

discovering and correcting its own mistakes, 

the eco-economy science will be able 

its own its own 

language and eventually its own theoretical 

system. This is the first and one of the biggest 

challenges, its own open starting 

with its birth and having no end. Let us not 

forget that the science of eco-economy but will never say its 

last word. It is always absent. The struggle 

with this challenge is not easy at all, as it may 

seem at first sight. 

On the contrary, it is permanent, difficult, and 

full of bigger or smaller surprises. In other 

words it is a system of equations with a huge 

number of unknowns. Many factors are 

positive, negative and potentially neutral 

putting their striking stamp on the process as 

well as on the final outcome. For illustration 

only, here we mention the following factors: 

- The philosophy that combatants – 

researchers rely on, thus accept, support and 

promote; 

- The methodological position the researchers 

of eco-economy lie on; 

- The degree of arming of the combatants 

with the advanced opportunities of having 

access to information and their processing 

and interpretation capabilities of the stock of 

information - ; 

- The discrepancies, sometimes important 

and very important, between reality and 

appearance, the thickness and density of 

appearance; 

-- The differences and inconsistencies 

between what is seen and what is not seen; 

- The complexity of the ever widening of the 

reality of past world and of the world of

present realities. And do not forget that 

although the present is extremely small in 

duration, as reality it is a composition that 

combines components of the old world and 

new world, that the interaction between them 

can take the form of struggle, of mutual 

rejection, of mutual rejection, of 

collaboration, cooperation and many other 

forms. 

- The subjective charge, be it large or small, 

still present in the personality of the 

combatants (researchers); 

- Other factors whose number by far exceeds 

the number of above mentioned. 

6.2. The place and role of the real ecologic 

and of the real economic within the real ecoeco 

mega-system 

As already mentioned, the eco-economy, the 

eco-eco mega-system represents the unity and 

interaction between economy and the natural 

environment. The true knowledge and the 

more complex understanding requires further 

clarification of the place that each of the two 

components occupies and of the role that the 

two fulfil within the mega-system. 

This challenge is particularly topical also 

because of knowledge, of the 

means of knowledge and interpretation of the 

mega-system continues to be divided into 

different areas. 

The most vivid, most heated controversy take 

place between environmentalists and 

economists. There is a very successful 

description and presentation of the dialogue 

that occurs between these researchers in the 

famous book by Lester Brown – Ecoeconomy 

(16). According to him: 

- Environmentalists consider economy as 

being part of the environmental system; 

- Economists consider the environment as 

part of the economy; 

- Environmentalists are the first ones 

concerned with the limits of the natural 

environment, of the finite character of the 

planet and of resources; 

Economists tend not to recognize such 

constraints; 

73 

- Environmentalists, following the signs of 

nature, think in terms of cycles; 

- Economists prove a rather linear or 

curvilinear thinking; 

- Economists have great confidence in the 

market; 

- Environmentalists often fail to accurately 

assess the market. 

Noting the variety of the opinions, in this case 

of the ecologists and of the economists, and 

especially of their divergent character, we put 

the following questions: Who is right? Who is 

closer to the truth and to reality? In our view, 

the mentioned opinions contain a number of 

ideas and paradigms that can be the core of 

some credible answers, that resisting in front 

of all the questions acquire the value of truth 

and can be considered authentic knowledge in 

the heritage of the eco-economy. 

Analyzing as carefully as we can “the 

dialogue” or more correctly “the dialogues”, 

we detached and we retained the following 

views: 

a) Although the real economic system 

has its own identity and functioning 

and ontological status, its 

interdependence with the natural 

environment is neither total nor 

absolute but only partial and relative. 

b) Between the surrounding nature and 

the real economy there are a lot of 

mutual relations of interdependence, 

dependence, and interdependence. 

They are in a continuous interaction. 

The environment influences in a 

multilateral way the real economy. In 

turn, the society and the economy 

have created their own artificial 

environments that have been 

implemented in the structure of the 

natural environment. 

c) The identity relationships, 

dependence and interdependence 

existing between the two 

compositions have generated a new 

composition, having a superior 

organization, existence, operation, 

and evolution. This composition 

represents an authentic mega-system 

that we call the ecoeco mega-system 

– in fact, the real economy. 

d) The ecoeco mega-system is a 

contradictory composition, a unity of 

opposites that presume each other 

and are linked to each other. The two 

main opposites of the eco-economy 

74 

are and will remain the ecology and 

the economy. 

e) The divergence of opinions “the 

ecology of the environment is 

broader than the economy; the 

economy is part of the surrounding 

nature” and the opinion according to 

which the economy is more 

comprehensive; it includes nature in 

its structure and its content. Who is 

right? Which of the two opinions is 

closer to the truth? The truth is that 

the economy exists, functions and 

develops within the surrounding 

nature’s system. Moreover, the 

economy will exist, it will be able to 

function and to develop normally 

only as long as the surrounding 

nature will support it, only as long as 

the material support of the economy 

will resist. 

f) It is difficult to establish the 

boundary between ecology and 

economy. In this respect, the obstacle 

is represented by the identity 

elements awakened in both systems. 

The human being is, in the same 

time, an essential component both in 

ecology, as a biological human 

being, as well as in the economy, as 

workforce, capital, production factor, 

economic actor, etc. 

g) The human being and the human 

beings play a paradoxical role in the 

ambient environment “Biologically 

speaking, says Barry Commoner – 

people are part of the ambient 

system, like the elements of a whole. 

However, the economic society is 

made in order to exploit the 

environment as a whole, to produce 

wealth. Our paradoxical role that we 

play in the ambient environment as 

participants and as explorers distorts 

our picture of it.” (17) 

Over the years, especially in the developed 

countries of the world, people have built an 

artificial environment through their activity

that continues to create a sensation and an 

impression that because of this environment, 

whose engine is considered to be the 

machineries, people have got rid of their 

dependence on the natural environment. 

Error, illusion, delusion. Why? At least for 

the following reasons: 

- “The living creatures are composed 

almost exclusively of the same four 

elements: hydrogen, oxygen, carbon, 

and nitrogen – four elements that 

originally formed the initial 

atmosphere of the Earth.” (18) 

- The source of life is represented by 

“the thin air, water and soil of the 

earth and the sun rays that bathe it”. 

(19) 

- The natural environment “is one 

living machinery, huge and very 

complex, that constitutes a thin 

dynamic layer on the surface of the 

Earth and every human activity 

depends on the perfect state and good 

functioning of this mechanism”. (20) 

- And “no economic system can be 

considered to be solid if its 

functioning seriously violates the 

principles of ecology” (21) 

h) The crucial and the decisive factor in 

the ecoeco mega-system, in other 

words within the eco-economy is 

planet Earth (the environment). The 

limits of the economy’s growth and 

development are given by the 

planet’s limits to support both the 

economic growth and development. 

And the most important thing – an 

economy tolerated by the 

environment and also on long term, 

sustainable and viable in 

concordance with the principles of 

ecology compatible with the 

principles of ecology compatible 

with the environment, which Lester 

Brown called eco-economy, that is 

ecological or green economy. 

i) The human being’s domination over 

the nature. Preoccupied by the “well- 

75 

being” in general, Rene Descartes 

argued that people should become, 

by the help of the science and 

technology, “possessing masters of 

the nature”. “As soon as they have 

possessed some general notions of 

physics, tested in some difficult 

cases, we noticed, he said, how far 

they could take us and how different 

they were in comparison with the 

principles used so far. I considered 

that I could not keep them secret 

without making a sin against the law 

that forces us to contribute, as much 

as we could to the general wellbeing: 

they showed me that it was 

possible to reach valuable knowledge 

for life and instead of that 

speculative philosophy that was 

taught in schools, in order to find a 

practical one, by which to know the 

power and action of fire, water, air, 

stars, sky and of all the things that 

surrounded us, as well as we knew 

different jobs, we could use them in 

the same way for all our objectives 

thus, becoming masters and 

possessors of nature.”(22) 

Paradoxically, for a long time, people 

believed and unfortunately they still do 

nowadays, that one of the essential 

criteria of the economic and social 

development is the degree of possession, 

the degree of domination of the human 

beings upon nature. Moreover, the 

extremely accelerated development of the 

science, technology, informatics and 

communication, the astonishing growth 

in speed of the means of transport, and 

especially the rapidity with which 

information flows, practically the death 

of space and time, the manufacturing of 

some products having the same 

characteristics of the ones made by 

nature, as well as the production of some 

products (goods) that cannot be found in 

the nature and such other remarkable 

progresses that induced to many human

eings the illusion of acquisition, the 

conquest of an absolute and total 

independence towards nature and its 

forms. Therefore, the human being has 

conquest the nature, and its economy 

represents that “body’ that is in our 

planetary center in the form of a central 

axis, around which all the other systems 

spin around. The human being considers 

itself the planet’s lord almighty, totally 

independent from it. Again mistake, 

illusion and delusion. How can be a 

human being totally independent of 

nature, when this is an organic element of 

the planet Earth. How can the human 

being believe that there is an absolute 

independence when its entire real 

economy is based on nature, substance, 

substance, energy and force of nature? 

Such an understanding of reality, 

illusions and myths generated by the 

mentioned mistakes has introduced “bad 

elements” in the attitudes and behaviors 

of the human beings. Therefore, for most 

of the economic actors, as well as among 

the representatives of the economic 

theory, what mattered and really matters 

primarily is the gain, the maximum profit 

and because of these their economic 

domination and not just economic, their 

domination upon some elements (parts) 

of nature had and unfortunately still have 

a colonial, usurper and destructive 

character. 

j) The economy is self-destructive 

The human society along with its 

economy, exists and moves, functions 

and develops in time and space. The 

second half of the twentieth century is 

known as being rich in economical 

progresses. Among these, we mention “ 

an unprecedented global economic 

growth, of commerce and of international 

investments (…) the global economy has 

increased seven times since 1950, the 

global income has increased from 6 

billion $ in goods and services to 43 

billion $ in 2000, raising living standards 

76 

at unbelievable levels.” (23) During this 

fragment of history, in the advanced 

world, there was a society of welfare, 

frequently called “consumer society”. 

Also during this period, the technical and 

scientific revolution has clearly stated its 

dimension in the geographically, its 

intensity and depth often exceeding most 

impressive imaginations. The IT and 

communicational revolution has made, 

according to some inspired expressions, 

“for time and space to disappear”. It is 

worth mentioning, the thawing of the 

international economic relationships, the 

international economic integration and 

not least, there could be seen clear signs 

of globalization in the economic and 

social life. This is the way the world 

looks like, seen in its economic mirror. 

Willing to complete the image of Planet 

Earth, we have turned to the green mirror 

and this is what we have noticed: the 

same economic increase and 

development has been presented as being 

the product of burning huge materials of 

cheap fossil fuels, which contributed a lot 

to climate destabilization. 

Simultaneously, this mirror has presented 

waves of intense heat, storms and more 

devastating tornadoes, ice caps are 

melting, the higher sea levels, and 

restricting land surface, even in the 

context in which the planet’s population 

is growing. (24) 

So, two mirrors, two images and beyond 

them two states. AS Lester Brown 

Noticed “while the economists see 

explosive economic indicators, the 

ecologists see an economy that 

deteriorates climate with unpredictable 

consequences. The economy follows the 

way of self-destruction. Moreover, the 

mutual relationships between the two 

elements of the ecoeco are seriously 

deteriorated and thus, the dangers that are 

threatening more and more the state (the 

functioning and evolution) of the entire 

planet. The most eloquent form of the

ecology’s and of the eco-economy’s selfdestruction 

is the crises in which they are 

struggling. 

k) The challenge of challenges – the 

conversion of the economy in ecoeconomy 

The science of economy has a lot of 

challenges. In our opinion, a complete 

inventory is impossible to be done. The 

“Mendeleev-like” picture of the 

economic sciences’ challenges will 

always be completed with new blocks 

and new “elements”. But it will always 

remain open. This is the case with all the 

branches of science. The history of 

science, of all its branches, tells us and 

proves to us the fact that the science has 

the first word but it does not have the last 

word. Acknowledging this truth, we 

sought to find a challenge of challenges 

among the ones already identified in the 

private economy as reality and as a 

science. This is “the conversion of 

economy in eco-economy”. This was 

stated by Lester brown who noticed the 

fact that “the conversion of the economy 

in an eco-economy represents an 

extraordinary challenge. There is no 

precedent in the action of transforming an 

economy based mainly on the market 

forces in an economy formed on the 

principles of ecology” (25) 

Why is this conversion necessary? Lester 

Brown considers that “today’s global 

economy has been formulated by the market 

forces and not by the principles of ecology. 

Unfortunately, due to failure in reflecting 

total costs of the goods and services, the 

market provides information that mislead the 

decisive economic factors at all levels. This 

aspect has created a distorted economy, 

which is in conflict with the ecosystem of the 

planet – an economy that destroys its own 

natural support systems.” (26) 

“The market does not recognize the ecologic 

concepts of tolerable production and does not 

respect the balance of nature.” (27) 

According to Lester Brown, “An economy is 

77 

an economy that satisfies our demands 

without destroying the perspectives of the 

future generations to fulfil their needs, as the 

Brundtland Committee has underlined 15 

years ago.” (28) 

Following these ideas, Lester Brown notices: 

There have been enough records regarding 

the fact that, gradually, our global economy 

undermines itself on several levels. If we 

want for the economic progress to continue, 

we have only the small chance of 

systematically restructure the global 

economy, in order to make it bearable for the 

environment.” (29) 

These truths are undoubtedly confirmed by 

the ecologic crises, by the deep cracks of the 

correlations between the economy’s structural 

links as well as between the different 

components of the planet Earth, plus the 

serious contradictions between economy and 

nature. And we must not forget the fact that 

all or almost all these phenomena and 

realities have their source in the models of 

economic and social growth and development 

that have become more and more not only unecological 

but also against ecology. 

7. In search for a better world 

The people regarded as living human beings , 

and not only they, are obviously and 

constantly concerned with the improvement 

of their situation (state). Mentioning this 

general feature of the living, Karl R. Popper 

noticed that “Everything that is living is in 

search for a better world. The people, the 

animals, the plants and even the unicellular 

organisms are continuously active. Even in 

sleep the body actively maintains that certain 

state of sleep, actively defends itself of what 

is disturbing, of the environment. Any 

organism is continuously preoccupied with 

finding solutions. And the solutions appear 

from the evaluation of its state and of its 

environment, trying to improve them. The 

attempt to solve them, often proves to be 

wrong, leading to worsening. Then, other 

solving attempts, other test movements 

follow. Thus, along with life – even from the

unicellular organisms, something extremely 

new appears (something that has never been 

before: problems and active attempts to solve 

them evaluations, values, trial and error) 

(30) 

The actors implied in solving the problems 

are researchers, finders, discoverers. The 

activity, the anxiety or the curiosity that is 

given by the research are essential elements 

for life, for everlasting hope, for search, 

evaluation, finding, for learning, for value 

creation, for improvements, but also for the 

everlasting mistake, as well as for nonvalues’ 

realization. The items listed are 

part of life. 

Karl Popper believes that “the bodies 

searching for a better world find invent and 

change new environments. They build nests, 

dams, mountains, but their creation with the 

most significant consequences is obviously 

the reshaping the earth’s atmosphere by 

enriching it with oxygen; in turn, a 

consequence of discovering the fact that 

sunlight can serve as food. Discovering this 

inexhaustible source of food and of the 

multiple methods of capturing sunlight, has 

created flora. And the prediction for the 

planet as a food source created fauna. We 

have created ourselves by inventing our 

specific human language "(31) and 

influencing our mind and thought with it. The 

instinct, the intuition and the science 

(knowledge) have constituted and are still 

constituting the main elements of the search 

for a better world. The sentences uttered by 

people represent “the main instrument with 

which they can describe their states.” 

Reaching this point we have to mention the 

fact that the sentences help people express 

objectively the truth discovered by human 

knowledge. Mainly in the sciences of nature – 

“the search for truth is connected to 

everything that is good and impressive of 

what life created in search for a better life.” 

(32) 

But the reality also shows us that people, 

searching for a better world, have committed 

many errors, sometimes big ones. The saying 

78 

that “everything that is alive commits errors” 

is true. As K. Popper underlined, “it is 

obviously impossible to anticipate all the 

unwanted consequences of our actions. The 

science of nature is our biggest hope here: the 

method is to correct the mistakes.” (33) In 

this way of understanding the problem, it is 

obvious that the expansion and the deepening 

of the scientific knowledge, by which the 

society and the human beings take intellectual 

control over a growing field of reality 

represents and will represent the most 

probable way to follow in order to achieve 

big successes. In our opinion, the science, the 

knowledge is the compass that help people to 

orient and to lead its ship on the stormy 

waves of time. We like to believe that our 

words, even if they are not rigorous and 

exact, are somehow close to the truth. 

Towards the end of the 20 th century, the 

science and the scientific knowledge has 

recorded remarkable progresses, and 

according to some appreciations during this 

period lived approximately 90% of all the 

scientists who have ever existed on Earth. We 

also like to notice the fact that presently the 

human beings, the contemporary world 

acknowledge an invisible revolution in 

informatics and communications, whose main 

unit is “nano”. These powerful engines and 

forces push the human beings in a society 

based on scientific knowledge. However, in 

spite of these realities, the present society and 

its economy have much more problems than 

in any other past period, problems having no 

answers, no solutions. Paradoxically, the 

progress of the scientific knowledge 

discovers and creates new and new problems 

that are waiting to be solved.

8. A free market or another type of 

market? 

A brief foray into the history of the economic 

thinking convinces us easily that since the 

modern age, the economists have given the 

market a special role. In other words, the 

market has captured more and more the 

attention of the economists. For Adam Smith 

the market represents the regulator of the 

labor division. Its volume determines the 

level reached by the division, this process, 

this accelerator of production. Moreover, the 

market is the place where “the invisible 

hand”, the offer and the demand intermingle 

and are balanced automatically on the market, 

through prices. Simon de Sismondi considered 

that the mass consumers, their demands, the 

proportions of their consumption and of their 

incomes – all these form the market for which 

every single producer works. Raymonde 

Barre defines the market as being a “network 

of relationships between the agents who make 

the shift, that are rigorously communicated 

through certain means.” According to him, 

the market consists of distinct economic 

centers, linked together by means of 

exchange networks, joined by a network of 

forces. These centers are production centers, 

supply of production factors and of goods. 

They are linked by a functional solidarity that 

comes out from the necessity of their interest 

in developing the economic activity. For 

Michel Didier “the market is a social 

institution.” For him, “the market appears as 

an overall means of communication, by 

which sellers and buyers inform each other 

about products and prices before transactions 

are done. The markets are communication 

networks.” 

J. Bremond and A. Gélédan write in the 

Economic and Social Dictionary that “the 

market is the place where the offers of the 

sellers meet the demands of the buyers, being 

adjusted at a certain price. The market is thus, 

a way of confronting demand with offer in 

order to make a change of products, services 

or capitals.” 

79 

A quite remarkable definition, at least for us, 

belongs to the Polish economist Oskar Lange. 

He noticed that “the market is the first 

ordinator put in the service of man, a selfregulating 

machinery ensuring the balance of 

the economic activities..” (34) D’Avenal 

noticed in the language of his era, of the 

honest liberalism: „Even in the situation 

when nothing id free in a state, the price of 

the things remains free and would not be 

enslaved to anyone. The price of silver, land, 

labour, the prices of all the goods and 

services have never ceased being free; no 

legal constriction, no agreement between 

people have enslaved them.” (35) 

In Fernand Braudel's opinion "These 

considerations implicitly admit that the 

market that is not directed by anyone, it is the 

mechanism driving the whole economy. The 

economic development in Europe, and even 

in the world, would be the development of a 

market economy that has constantly increased 

its area, including in its rational order more 

and more people, more and more economic 

communications, close and remote, which 

tend to create, all together, a unity of the 

world." (36) 

Still, what are the status and the condition of 

the market in the nowadays world? A 

comprehensive answer fully argued by 

confirmed facts and thus legitimized, not by 

questionable opinions sometimes even 

refuted by reality, does not fit in the pages of 

a communication no matter how extensive it 

might be. Therefore, we will limit ourselves 

to not more than a summary, yet as 

comprehensive as possible, insisting on the 

following: 

- Market - conceptually, its anatomicalmorphological 

structure, the forms (types), 

the way of operation and development, its 

place and its role in the contemporary 

economy continue to be the subject of 

extensive and lively theoretical, 

methodological and practical confrontations. 

- Trying to summarize, a group, of course 

relative, we believe that on the large field of 

confrontations about market one can

generally distinguish two trends, two 

approaches, namely: a) classical and 

contemporary liberal approach and b) nonliberal 

approach with its subdivisions as well 

as the former. 

- In the liberal approach, the market is a 

general mechanism, self-regulating; it is 

comprehensive and accomplishes, performs 

and assures in itself, through the spontaneous 

action, the efficient allocation of resources, of 

production factors, orients the economic 

movement according to the individual needs 

and interests of the economic actors, while 

ensuring the maintenance of balance between 

the links of the social division of labour, 

between supply and demand. The economic 

basis of the market economy is formed by the 

private ownership of means of production, the 

fundament of autonomy and independence of 

actors and therefore the base of the freedom 

of thought and movement of production 

factors, goods, capital and economic actors. 

- The most important constitutive 

of the market and its mechanism are: profit, 

demand, offer, the interplay between demand 

and offer, free competition and price. 

- This free market is by definition a pure and 

perfect market and ensures also pure and 

perfect functioning of the free market 

economy. 

- According to the second approach, the 

market is indeed the most important 

mechanism of operation and development of 

economic life. The advocates and the 

supporters of this way of understanding the 

market and the market economy believe, 

however, that the market economy and the 

free market economy are not the same thing. 

The two concepts are not identical and should 

not be confused. Saying these and referring to 

the era we live in, we feel the need to add that 

in the debates that take place, it is often not 

said what is a confirmed truth, and, for 

various reasons, some truth containing 

paradigms are premeditatedly similar. As an 

example we can here mention a work, 

remarkable in our opinion, which presents a 

80 

total of 23 things we are NOT told about 

capitalism. (37) 

To exemplify, we shall present in a summary 

the main ideas contained in Chapter 1 of the 

book, entitled: "There is no free market" 

"What you are said" 

"Markets should be free. If governments 

dictate what market actors can and cannot do, 

the resources cannot get where they would be 

most effectively used. If they cannot do what 

they consider profitable, people lose their 

desire to invest and innovate. Thus, if the 

government limits or sets a threshold for 

rents, the owners lose their desire to maintain 

the properties and build new ones. Or if the 

government imposes a restriction on the types 

of financial products that can be sold, then the 

contracting parties, which could have 

benefited from innovative transactions that 

could meet their specific needs, would not be 

able to obtain the potential gain from a free 

contact. People need to be "free to choose" as 

said by the title of a famous book written by 

the prophet of the free market, Milton 

Friedman." (38) 

"What you are not said" 

"The free market does not exist. Each market 

has certain rules and limitations that restrict 

freedom of choice. A market seems to be free 

only as we accept unconditionally the default 

restrictions, which we can no longer see. 

There cannot be defined how a 

market is. The definition is a political one. 

The usual statement of the free market 

economists, that they try to defend the market 

from political interference, is rather false. The 

government is always involved, and the free 

market advocates are politically motivated as 

much as anyone. The first step to 

understanding capitalism is overcoming the 

myth that there objectively is a . 

The paradigmatic assumption, that nowadays 

there is no, and can never be, such thing as a 

pure and perfect free market, all-comprising 

and all-knowing, omnipotent, regulated by 

nothing and fully unregulated or deregulated, 

directed by nothing and completely

undirected but totally spontaneous, expresses 

a truth confirmed. 

And yet apparently there is something more 

that needs to be said. Okay, okay - there is no 

free market, but what is there? In our opinion 

there is a market or, as Maurice Allais writes, 

a markets economy. (39) 

A short journey through the history of 

economic thinking provides us with no little 

evidence - arguments that show convincingly 

that the market and the market economy are, 

as mentioned, much older than the capitalist 

market economy. The same journey provides 

unequivocal evidence showing that the 

presence of free competition – a fundamental 

element of the free market economy-, has 

never been comprehensive, but for a short 

period of time it was dominant especially in 

England and that it committed suicide 

according to the expression of K. Marx. The 

place of the morphological-anatomical 

atomized structure of the economic actors, of 

the capitalist economy, has changed due to 

objective economic laws – concentration 

(accumulation of capital, concentration of 

production), centralization of capital and 

production, of economic activity in general, 

competition law, uneven development – have 

generated a new form of capital, the 

monopolist capital, which personified itself as 

a specific type of economic actor – the 

monopoly in various forms: cartel, syndicate, 

trust, concern, corporation, etc. At this stage, 

competition itself has changed both its 

content and its forms of expression. 

Basically, at a growing scale, free 

competition gave way to monopolistic 

competition; full competition - pure and 

perfect - became imperfect competition, etc. 

At the same time, the mechanisms, the means 

and the methods of action have changed. This 

very thing made the subject of research of 

political economy become richer and more 

complex. The new economic reality could not 

fail to attract the attention of the 

representatives of this branch of science and 

not only. For illustration we mention that in 

1933 two relevant works were published: the 

81 

book of the economist Joan Robinson, 

Professor at the Faculty of Economics in 

Cambridge University, entitled "The 

economics of imperfect competition" and, 

again in Cambridge, but in the United States 

this time, E.H. Chamberlain's work, entitled 

"The theory of the monopolistic competition". 

Also for illustration, we add the name of JM 

Keynes and several of his works, of which the 

most important, for its content and cognitive, 

methodological and applicative value, is "The 

General Theory of Employment, Interest and 

Money" (1936). 

Keynes's thinking and that of his followers, in 

fact Keynes's model was in a sense and the theoretical basis 

of operation and evolution of the Western 

economy and society after World War II until 

the early ‘70s of the twentieth century. The 

name given to this society is . The world economic crisis of 

1973-1975 interrupted the way of the 

industrial consumer society. The same crisis, 

specifically the way it was addressed, 

understood and explained, constituted a clear 

rejection of Keynes thinking and a powerful 

return of neoclassical liberalism. Keynes's 

theory and the policies that had been inspired 

by it were brought to the culprits 

. In this context, two schools of 

thinking were set up. First, there was a new - 

and final - attempt to make a synthesis 

between the neoclassical and the Keynesian 

analyses, synthesis performed differently than 

the first. Its authors were led by the French economist 

Edmond Malinvaud. This current of thinking 

believes that imbalances and long-term 

unemployment are possible in a world where 

prices and wages are flexible, but it considers 

that these phenomena are caused by an 

insufficiency of global demand - Keynesian 

unemployment and an insufficiency of offer - 

classic unemployment. 

The second trend is the ultra-liberalism 

(Hayek - the foremost representative), the 

monetarism or perhaps more accurately, the 

monetarisms (whose no.1 representative is

Milton Friedman), plus the neoclassical 

economics (foremost representatives being 

Robert Lucas, Thomas Sargent and Neil 

Wallace) 

The third monetarist trend is the supply-side 

economics of (Arthur Laffer at the forefront 

of followers). (40) 

of neoclassical liberalism 

was an apparent victory and on short term 

only. The end of the first decade of the third 

millennium saw a complex and deep 

economic and financial crisis, a crisis of 

governance and administration, as well, 

which, in their interaction, resulted in a deep 

rift in the operation and development of 

economic, financial-monetary and social life 

of the current world. 

This crisis, more accurately the assembly of 

crises, that swept our world, closes a period 

and represents a milestone and a starting 

point in the human history, a main sign of the 

renewal of society and its great structures. 

Economically, the crisis developed as soon as 

in 2008 contradicted many paradigms of 

liberal and especially neo-liberal thinking and 

several steps of orientation and political 

action of a neoclassical-liberal nature. "The 

global economy lies in ruins. Although 

unprecedented fiscal and monetary aid 

prevented the financial collapse in 2008 from 

triggering complete destruction of the world 

economy, the global crash of 2008 remains 

the second largest economic crisis after the 

Great Depression."(41) 

It has now become much more visible that the 

notions, the concepts of free competition, free 

market economy, pure and perfect 

competition, all-comprising market and allknowing 

market, perfect market, totally 

spontaneous economic movement and others 

of the same arsenal are worthless cognitively 

and practically, and therefore false, and 

circulate in the big world as counterfeit coins 

or other fake things. 

Simultaneously, the crisis confirmed a whole 

range of paradigms from the Keynesist and 

neokeynesist (postkeynesist) thinking arsenal 

and practical orientation, considered, until 

82 

recently, and in many cases even now, as 

lacking authentic cognitive and applicative 

value. And it does not stop here. Why? 

Because the new economy, being born now, 

necessarily requires a new economic 

thinking, as well. 

Notes 

(1) Handy Charles, Epoca Irațiunii, Editura 

Codex, 2007; Pelerina Goală, Editura Codex, 

2007; Elefantul și Puricele, Editura Codex, 

2007. 

(2) Popper R. Karl, Filosofie socială și 

filosofia științei. Antologie editată de David 

Miller, Editura Trei, Bucharest, 2000, p. 60. 

(3) Op.cit., pag. 62. 

(4) Marx K., Capitalul, vol. I, in: Marx, 

Engels, Opere vol. 23, Editura Politică, 

Bucharest, 1966, p.191 (emphasis added by 

author AN). 

(5) Handy Charles, Epoca Irațiunii. O 

gândire nouă pentru o lume nouă , Editura 

Codex, Bucharest, 2007, p. 23 (emphasis 

added by author AN). 

(6) Arendt Hannah, Condiția umană, Ed. 

Casa Cărții de Știință, Cluj-Napoca, 2007, 

p.13 (emphasis added by author AN). 

(7) Idem (6) (emphasis added by author AN). 



(10) Arendt Hannah, Op. Cit., p. 8 (emphasis 


(11) Negucioiu Aurel, Petrescu Dacinia 

Crina, Introducere în eco-economie, Ed. 

Fundației pentru Studii Studii Europene, 

Cluj-Napoca, 2006, p.35. 


Crina, Op. Cit., pp.25-36. 

(13) Bonnet Jaques, Marile metropole 

mondiale, Ed. Institutul European, Iași, 2000, 

p. 209. 

(14) Bryant Herman, Mehrtens Susan, Al 

patrulea val, Ed. Antet, pp.108-109 

(emphasis added by author AN). 


Crina, Op. Cit., p.37 (emphasis added by 

author AN).

(16) Brown Lester, Eco-economia. Crearea 

unei economii pentru planeta noastră, Ed. 

Tehnică, Bucharest, 2001, pp.1-5 (emphasis 


(17) Commoner Barry, Cercul care se 

închide, Ed. Politică, Bucharest, 1989, p.11 


(18) Commoner Barry, Op. Cit, p.21. 




(22) Decartes René, Discurs despre metoda 

de a ne conduce bine națiunea și a căuta 

adevărul în științe, Ed. Academiei Române, 

Bucharest, 1990, p.146 (emphasis added by 

author AN). 

(23) Brown Lester, Op. Cit., p.2. 

(24) Brown Lester, Op. Cit., p.3. 

(25) Brown Lester, Op. Cit., p.89 (emphasis 


(26) Ibidem (25), p.86 (emphasis added by 

author AN). 

(27) Ibidem (26). 

(28) Ibidem (26). 

(29) Ibidem (26), p.89 (emphasis added by 

author AN). 

(30) Popper R. Karl, În căutarea unei lumi 

mai bune, Ed. Humanitas, Bucharest, 1987, 

p.5 (emphasis added by author AN). 

(31) Popper R. Karl, Op. cit., p.6 (emphasis 


(32) Op.cit., p.6. 

(33) Op.cit., p.6 (emphasis added by author 

AN). 

(34) After Fernand Braudel, Jocurile 

schimbului, vol. 1, Ed. Meridiane, Bucharest, 

1985, p.267. 

(35) After Op. cit. (34), p.267 (emphasis 


83 

(36) Fernand Braudel, Op. cit., p.267 


(37) Chang Ha-Joon, 23 de lucruri care nu și 

se spun despre capitalism. "O demistificare 

strălucită a unor mituri ale capitalismului" 

(John Gray, The Observer). 

“Disciple of Stephen Stiglitz and one of the 

most iconoclastic economists of these times, 

Ha-Joon Chang removes some of the myths of 

capitalism and of the world we live in, 

including the myth of the free market or that 

technology is the way to progress for 

everyone. One by one, the principles of 

economic doctrines received for granted are 

presented in the historical context of 

formations, before becoming self-evident. 

Globalization does not make the world richer. 

Poor countries prove more entrepreneurial 

spirit than the rich ones. Better paid managers 

do not get better results. Based on the actual 

data, this book about money, equality, 

freedom and greed proves that free market 

does not only work against people, but it is 

also an inefficient way to manage the 

economy” (second cover of the book). 

(38) Chang Ha-Joon ,Op.cit., p.19 (emphasis 


(39) Allais Maurice, L’Europe face a son 

avenir: que faire?, Editions Clement Juglar, 

Editions Robert Lafont, 1991, especially note 

18, p.142. 

(40) Valier Jaques, Scurtă istorie a gândirii 

economice de la Aristotel până azi, Ed. 

Campania, Bucharest, pp. 122-132 (emphasis 


(41) Chang Ha-Joon, Op.Cit., p.13.

CONTINUING INTERNATIONAL TRADE LIBERALIZATION IN THE 

FINANCIAL CRISIS CONTEXT 

Berinde Mihai 

University of Oradea, Economic Sciences Department 

Abstract: This research paper is based on an assessment of the effects of the recent financial crisis 

on the international trade and the way states and international organizations acted in this context. 

The importance of this research topic consists in identifying the way the international trade 

liberalization process has been affected by the financial crisis and the way anti-crisis measures 

deviated from the basic rules agreed under the aegis of WTO/GATT. 

The intended purpose of the paper is to conduct a substantive assessment of undertaken actions by 

the various states aimed to mitigate crisis impact on anti-dumping investigations and measures. 

Precisely, it was assayed whether the international financial crisis has been an opportunity for 

WTO member states to plainly intervene in the economy and give up the commitments they made in 

the context of multilateral commercial negotiations. Considering the international, regional and 

national effects of the crisis the topic has been copiously elaborated on by economics literature. A 

number of anti-crisis measures were presented encouraging massive intervention in the economy, as 

well as actions, particularly of International Organizations according to which measures could be 

taken without deviating from globally agreed mechanisms and principles. In order to be able to find 

out which of these two options prevailed in actions undertaken by the states the types of 

international, regional or national anti-crisis measures were selected. Positions voiced by the 

World Trade Organization, United Nations Conference on Trade and Development (UNCTAD), 

European Union are rendered. 

To answer the question about the way it has been responded in order to mitigate crisis effects, 

adopted anti-crisis measures were inventoried and their deviation from international rules was 

assessed. 

One of the indicators used in the assessment of anti-crisis measures is the progress of the antidumping 

investigations and measures notified to WTO in the past 9 years for which data were 

available (2003-2009). The relevance of this period lies in the fact that it includes 5 pre-crisis years 

and 2 years when it was strongly evident. 

It was found that the number of anti-crisis investigations and measures has not seen significant 

increases during the crisis period. Moreover, it has been found that states have shown a certain 

amount of flexibility in construing application of certain international principles rather than 

relinquishing them. 

It is thereby demonstrated that the international trade liberalization process continues without 

major disruptions by the financial crisis. This gives confidence to states and business environment 

with respect to predictability of international trade developments. 

The paper has significant added value brought about by both literature processing and 

interpretation and the author’s experience in international trade negotiations. The very election of 

the indicator pertaining to anti-dumping investigations and measures was based on the fact that 

changing trade defence mechanisms into protectionist mechanisms often stands for prevailing 

immediate crisis resolution. 

Keywords: financial crisis, anti-dumping investigations and measures, trade liberalization, state 

aid, preferential trade systems 

JEL Classification codes: F13, F15 

85

I. Introduction 

The topic of this paper is directly related to 

the financial crisis effects on international 

trade liberalization. It aims to identify the 

way anti-crisis measures affected 

international trade negotiations in view of 

trade liberalization, successful performance 

of preferential trade systems, as well as 

negotiation and implementation of regional 

integration agreements. 

Trade liberalization has seen various 

approaches. In many instances it has been 

regarded as detrimental to economic 

development, protectionist theories 

attempting to maintain the need to increase 

borderline protection by various tariff, nontariff 

or para-tariff measures resulting in 

reduced cooperation and isolation of 

protected economies. In these circumstances, 

international trade liberalization has been 

accepted as a solution to encourage economic 

development. 

Right after the Second World War, 

international trade liberalization panned out 

and the General Agreement on Tariffs and 

Trade (GATT) was negotiated in order to 

serve as a general framework for the 

liberalization process. 

At the time, the matter of creating the World 

Trade Organization was brought up for 

discussion as a third pillar of the world 

economy along with the International 

Monetary Fund and the International Bank 

for Reconstruction and Development. Failure 

to fully understand the liberalization process 

as well as the absence from negotiations of 

some important states did not enable creation 

of this organization. Participating countries 

did not forsake the idea of creating such an 

organization and eventually, it was 

established under the Marrakech Agreement 

signed upon the finalization of multilateral 

trade negotiations within Uruguay Round. On 

this occasion, multilateral agreements were 

also renegotiated and complemented which 

allow member states to intervene in parallel 

with the liberalization process, by trade 

defence measures, based on well established 

86 

internationally agreed rules (agreements 

concerning anti-dumping measures, 

compensatory taxes, safeguard measures, and 

restrictive measures by reason of major 

imbalances in the balance of payments). 

Hence, it ensues that the liberalization 

process cannot and should not be seen as 

being apt to exclude its regulation. These are 

two processes going ahead together and 

ensure beneficial effects for economic 

development. International trade 

liberalization deepened via the multilateral 

negotiation rounds amongst which Uruguay 

Round has been the most complex and 

important. 

Another means of trade liberalization consists 

in the international application of customs 

preference systems apt to increase 

commercial competitiveness of products 

coming from developing countries in the 

world market. Thus, the General Preference 

System (GSP) was defined which provides 

facilities for developing countries in their 

relations with developed countries. Likewise, 

developing countries defined the General 

System of Trade Preferences (GSTP) and the 

Protocol of 16 (P-16) which should enable 

trade liberalization among these countries. 

Aware of the need to deepen the liberalization 

process, GATT contracting parties accepting 

defining in article XXIV of GATT the 

possibility to negotiate regional integration 

agreements and requirements they have to 

meet in order to be internationally 

recognized. These agreements proliferated 

over the past decades, while contributing 

significantly in trade liberalization. 

During the period when the financial crisis 

worsened, a number of protectionist theories 

emerged aimed at resorting to trade defence 

measures more frequently. There were other 

theories which maintained giving up during 

this period any trade defence measures that 

might adversely affect international trade. 

Practice has demonstrated that effects of the 

financial crisis cannot be stopped by 

measures which deviate from multilaterally 

negotiated rules.

II. Literature review 

Albeit the crisis was active only three years 

ago, economics literature attached major 

importance to this phenomenon given its 

implications on world economy. In this 

context papers published under the aegis of 

OECD, IMF, World Bank and European 

Commission are relevant. Moreover, the way 

anti-dumping investigations and measures in 

international trade were or were not 

encouraged by the crisis occurrence is tackled 

in various papers and periodical reports 

published by WTO/GATT. 

Once the crisis has settled into, its effects 

were analyzed by all international and 

regional organizations, and by each 

individual state, as well. 

Thus, at international level the three 

organizations that form the world economy 

pillars approached the crisis from various 

perspectives, i.e. 

- World Trade Organization (WTO) and 

UNCTAD focused their efforts on 

inventorying all anti-crisis measures adopted 

in the various countries and on assessing 

crisis impact on the international trade. 

- International Monetary Fund (IMF) and 

World Bank were more interested in the 

effects of the financial crisis and measures 

which might be taken in the banking sector in 

order to straighten out the situation. 

At regional level, several „actors” (EU, 

EFTA, MERCOSUR) were involved in 

adopting measures seen as required and 

timely in addressing the problems created by 

the crisis. 

At the same time, states got greater freedom 

to act, within their competencies, for the 

adoption of measures which should support 

national economies. Due to such increased 

freedom, the risk inherently arised that states 

invoke the crisis so as to adopt measures that 

wouldn’t have been allowed in normal 

circumstances due to their categorization as 

prohibited protectionist measures. 

It becomes increasingly obvious that one 

cannot consider addressing the crisis if 

87 

globalization and regionalization elements in 

the world economy are ignored. An 

individual solution cannot exist in the context 

of crisis extension at international level. 

III. Research methodology 

Research started from the assessment of the 

way the financial crisis affected the economic 

sector resulting in: direct investments 

reduction due to lower profit rates in the 

circumstances of higher credit costs, shrunk 

international market due to high commercial 

credit costs, reduced trade financing 

possibilities required to guarantee export 

credits and for measures apt to ensure 

promotion of exports; potential increased 

trade defence measures. 

The reason of this approach is determined by 

the wish to find positive responses which, by 

the various anti-crisis measures, the states 

gave to the need to mitigate their impact on 

their economies. 

The specific element of the research in this 

paper consists in assessing the profile of the 

number of anti-dumping investigations and 

measures notified by WTO/GATT member 

states. Thus, a period of 5 pre-crisis years 

(2003 – 2007) and 2 years of active crisis 

(2008 – 2009) have been considered. In the 

absence of final data for the full year 2010, 

first quarter data have been projected over the 

whole year so that a complete picture of the 

crisis effects on trade defence measures 

should exist. 

The relevance of this assessment consists in 

the fact that it provides a clear picture of the 

way states acted in the crisis period and of 

whether they turned anti-dumping measures 

from the trade defence category into 

excessive protection ones. 

IV. Research results 

Based on the two research aspects described 

in the previous chapter, key results are given 

below. Hence, in the context of anti-crisis 

measures the European Union has not 

deviated from international principles, acting 

in such a manner that:

a)funds allocated by states for banks and 

companies should be treated as state aid 

whom the applicable rules in this area should 

be applied. However, flexibility is accepted in 

applying such rules (reduction of state aid 

authorization period from 90 days to 24 

hours; time limited state aids granted by 

reason of economic crisis, correct sizing of 

state aids and their periodical monitoring 

followed by stoppage when crisis factors are 

no longer active; granted state aids should not 

deviate from community principles and 

should be associated with restructuring and 

viability processes, as well as technology 

modernization programs). 

b)export subsidizing measures should not 

represent deviations from principles set out 

within WTO; 

c)import surtax introduction or higher 

customs duties should be linked with WTO 

accepted circumstances. 

It can easily be noticed that these measures 

do not stand for a deviation from international 

rules and do not encourage primary 

protectionism by plain administrative 

interventions in the economy. 

Furthermore, the World Trade Organization 

sent out several messages concerning anticrisis 

measures, such as: 

a)the need to inventory all commercial 

character measures adopted by contracting 

parties and candidate states; 

b)substantiation of anti-crisis measures in 

consideration of mechanisms and legal 

instruments agreed multilaterally; 

c)avoid that adopted anti-crisis measures 

should represent more or less disguised forms 

of increasing protectionism. 

These messages are based on the fact that 

trade liberalization is not the root of problems 

created by the current crisis but rather a 

solution for them. 

Data processed by the author with respect to 

anti-dumping investigations and measures 

revealed the followings: 

A. Anti-dumping investigations opened by 

GATT Contracting Parties: 

88 

a)The average annual number of antidumping 

investigations in 2003-2009 is in the 

range of over 200 cases. Although data are 

available only for 2010 first quarter, by way 

of projections one can assume that there will 

be no significant deviations for this year 

either. Thence, it has been found that no 

major changes existed at the level of 

investigations during the active crisis years 

against pre-crisis years; 

b)Main countries which opened most antidumping 

investigations during the active 

crisis period were: India (86), Argentina (47), 

USA (36), EU (34), China (31), Turkey and 

Pakistan (29); 

c)Among countries undergoing anti-dumping 

investigations in 2008 and 2009 the 

followings stand out: China (153), USA (22), 

Thailand (21), Brazil (14) and EU (10); 

Sectors undergoing anti-dumping 

investigations during 2008-2009 were: metals 

and metal articles (110); petrochemicals (81); 

textiles and textile articles (59); resins, 

plastics and rubber materials (52); electrical 

machinery and equipment (37) 

B. With respect to actually adopted antidumping 

measures: 

a)The average annual number of adopted 

measures during 2004-2009 ranges between 

138-159 cases. 

b)By projecting data available for 6 months 

in 2010 the number of adopted measures will 

not be significantly different for 2010; 

c)Main countries which adopted antidumping 

measures during 2008-2009 were: 

India (61), USA (38), Brazil (27), EU (24), 

Argentina (21), Turkey (20); 

d)Among countries undergoing anti-dumping 

measures during 2009-2009 are: China (108), 

South Korea (15), Thailand (14), Indonesia 

(13), USA (12) and India (10); 

e)Key product groups covered by antidumping 

measures during 2008-2009 were: 

Chemicals and petrochemicals (61), metals 

and metal articles (57), textiles and textile 

products (39), resins, plastics and rubber 

articles (38), electric machinery and 

equipment (35).

It is most obvious that during the crisis period 

we do not see any upsurge in anti-dumping 

investigations and adopted measures. It was 

therefore preferred to continue trade 

liberalization and avoid primary 

protectionism involving relinquishment of 

89 

rules required for the normal development of 

the liberalization process. 

Below is a diagram of the key groups of 

goods undergoing anti-dumping 

investigations and measures adopted during 

2008-2009: 

Diagram 1. Profile of anti-dumping investigations and measures by groups of products 

(2008-2009) 

110 

57 

Metals and 

metal articles 

81 

Source: WTO data processed by the author 

From the diagram above it results that key 

sectors exposed to both anti-dumping 

investigations and measures are the same, 

while the crisis did not have any role in 

stimulating such measures in other areas than 

the ones considered as sensitive. 

V. Conclusions 

Since international trade was no root of the 

financial crisis but rather a solution to 

mitigate its impact on world economy, this 

paper highlights the following factual aspects: 

- trade liberalization in observance of 

requirements set out in GATT/WTO has not 

been essentially affected by the crisis. Thus, 

Uruguay Round resulted objectives have not 

been jeopardized or abandoned, customs 

preference systems have not undergone 

61 

Chemicals and 

petrochemicals 

Anti-dumping investigations 

Anti-dumping measures 

59 

39 

Textiles and 

textile products 

52 

38 

Resins, 

plastics and 

rubber articles 

changes and neither have they been 

relinquished, while internationally negotiated 

regional integration agreements continued to 

exist and operate in normal conditions; 

- the international financial crisis has not 

determined the European Union and the other 

Contracting Parties to give up their own rules 

in the matter of state aid but rather a more 

flexible attitude was noted which resulted in 

reduced authorization aid request 

examination periods which were sufficiently 

important during this period, particularly to 

the benefit of the banking system. Moreover, 

objectives and aid granting requirements have 

not seen any changes determined by the 

crisis; 

- multilaterally set out rules in the matter of 

anti-dumping investigations and measures 

37 

35 

Electric 

machinery and 

equipment

continued to be enforced without easier 

access of the same, nor turning them into 

protectionist measures. We do not see any 

massive increase of cases where it would 

have been resorted to such investigations nor 

any dramatic changes concerning affected 

economic sectors by anti-dumping 

investigations and measures. It is evident that 

Contracting Parties took WTO messages into 

consideration to the effect that in adopting 

crisis effects containment measures those 

measures that do not deviate from 

multilaterally agreed principles and rules 

should be selected. It is also evident that it 

has been preferred to continue international 

trade liberalization and by no means use plain 

administrative interventions in the economy 

and excessive primary protection of the same. 

- the crisis has not significantly affected 

products considered as sensitive from the 

perspective of anti-dumping investigations 

and measures. 

VI. Bibliography 

1.Brian Keeley, Patrick Love. Les essentiels 

de l'OCDE. De la crise à la reprise. Causes, 

déroulement et conséquences de la Grande 

Récession. Éditions OCDE, ISBN: 

9789264079427, 2011 

2.European Central Bank. Report on the 

lessons learned from the financial crisis with 

regard to the functioning of European 

financial market infrastructures. ISBN: 978- 

92-899-0626-5, 2010 

3.European Commission, EUROSTAT. EU27 

international trade in services declined in 

2009 following the onset of the global 

financial crisis. ISSN: 1977-0316, 2010 

90 

4.European Commission, EUROSTAT. Key 

figures on European business with a special 

feature on the recession, ISBN: 978-92-79- 

15243-6, 2010 

5.European Commission. Handbook on 

community rules for State aid to SMEs. 

Including temporary State aid measures to 

support access to finance in the current 

financial and economic crisis. ISBN: 978-92- 

79-12267-5, 2009 

6.European Commission. Economic crisis in 

Europe. Causes, consequences and responses. 

ISBN: 978-92-79-11368-0, 2009 

7.Giurgiu, Adriana, An Overview of the 

General Evolution of the Romanian Foreign 

Trade after 1989, while Trying to join the EU 

(I), „Analele Universităţii din Oradea – 

Secţiunea Ştiinţe Economice – Tom XIX, 

2010”, No. 1, pp. 53-58 

8.Giurgiu, Adriana, An Overview of the 

General Evolution of the Romanian Foreign 

Trade after 1989, while Trying to join the EU 

(II), „Analele Universităţii din Oradea – 

Secţiunea Ştiinţe Economice – Tom XIX, 

2010”, No. 2, pp. 100-106 

9.International Monetary Fund. World 

Economic Outlook, April 2011. 'Tensions 

from the Two-Speed Recovery. 

Unemployment, Commodities, and Capital 

Flows. ISBN 978-1-61635-059-8, 2011 

10.OCDE. La crise financière. Réforme et 

stratégies de sortie. Éditions OCDE, ISBN: 

9789264073043, 2010 

11.World Trade Organization. Anti-dumping 

Gateway. Accessed April 20, 2011 

http://www.wto.org/english/tratop_e/adp_e/a 

dp_e.html

EUROPEAN AUSTERITY WITHOUT GROWTH? EUROPEAN GROWTH 

WITHOUT EUROPEAN DEMOCRACY?HOW EUROPEAN CITIZENS CAN 

REVIVE THE EUROPEAN PROJECT AND DEFEAT EUROSCEPTICISM 

Montani Guido 

University of Pavia, International Political Economy 

The European project is facing a crisis. Citizens no longer understand what the EU is about. Young 

people and the new ruling class have forgotten the clear message of the European project launched 

just after the Second World War “No wars ever again among Europeans.” The founding fathers of 

the European Union are mentioned in history textbooks, but today Europe is felt as an irritating 

bureaucracy. In Europe, peace and economic stability are considered as a natural state, a gift from 

above. Why keep a useless EU alive? 

The state of the European Union is swiftly degenerating. In almost all the member states, the anti- 

European forces are gaining ground. Populism is not a new ideology and is not necessarily 

European: let’s recall Peronism. In today’s Europe populism is the new manifestation of 

nationalism. In Italy the Lega Nord is in Berlusconi’s eurosceptic government. In France, the 

National Front is endangering UMP’s hegemony. In Belgium the rows between the Flemish and the 

Walloons threatens the state’s unity. In the Netherlands, Hungary, the Czech Republic, Austria and 

Finland, populist forces are either in the government or strongly influencing the government. 

National-populism is different from the nationalism of the past. De Gaulle’s nationalism was an 

ideology founded on the “grandeur” of France’s history and on a certain idea of Europe, which 

was “l’Europe de patrie”, a kind of European unity accepting French leadership in world politics. 

Today national-populism is a form of micro-nationalism: it opposes the European project but 

without having a serious alternative. This is why populism is dangerous. Its real goal is not only the 

breaking down of the European Union but also the disintegration of the old nation states into 

micro-ethnic states, as what happened in former Yugoslavia. 

European populism and euroscepticism are 

two faces of the same coin. Democratic pro- 

European parties cannot fight them 

successfully in the nation-states. Both are the 

product of the crisis of the European project. 

The crisis started at the end of the Cold War, 

because the European Union leaders failed to 

exploit the favourable occasion of the 

enlargement to complete the project of the 

founding fathers. We can recall a certain 

number of lost occasions. The Maastricht 

Treaty was an unsatisfactory compromise: a 

Monetary Union without an Economic Union 

and Political Union. The European 

Convention worked out a Treaty-Constitution 

without establishing a European government. 

Moreover it did not change the unanimity rule 

for the ratification process, even though the 

principle of the double majority of citizens 

and states was granted in the constitutional 

91 

draft-project. So, when the French and the 

Dutch rejected the Treaty-Constitution with a 

referendum, nobody noticed that a “minority” 

of citizens voted against it, while a “majority” 

had already approved the Treaty-Constitution. 

Now we have the Lisbon Treaty, which is 

considered a substitute of the Treaty- 

Constitution. Meanwhile the political 

atmosphere has changed. The old generation 

of people who experienced the tragedy of the 

world war is no longer involved. The new 

ruling class is grappling with new problems: 

international terrorism, the difficulties 

concerning the enlargement, immigration, the 

challenges of global economy, the 

increasingly difficult Atlantic partnership, the 

inability of Europe to spur growth. 

In this new political environment the 

European Union is considered as a set of 

institutions useful for national governments,

ut not for a long-term project which is worth 

achieving, the “first assises de la Fédération 

Européenne” as was stated in the Schuman 

Declaration. Moreover, the relative power 

between France and Germany – the old 

engine of European unity – has changed 

dramatically. After the War, France was the 

only European state capable of taking the 

initiative to unite Europe and it did. Now, 

after its national unification, Germany is 

looking for a new world status, both from the 

economic and the political point of view, as 

its ambition to enter the UN Security Council 

shows. So, slowly but resolutely, the Franco- 

German engine of European integration has 

turned into a kind of directoire. Since the 

Lisbon Treaty did not solve the problem of 

the European government, France and 

Germany started to talk about the need for 

“European governance”, which according to 

Mr. Sarkozy and Mrs Merkel should be 

nothing but the European Council, where the 

main decisions concerning foreign policy and 

finances, are taken unanimously. The 

outcome of this project is that, when the 

financial crisis burst, the Franco-German 

directoire took the leadership, imposing 

intergovernmental solutions, outside the 

traditional “institutional triangle”: the 

European Parliament, the Council of 

Ministers and the Commission. According to 

the Treaty, these institutions must decide on 

the basis of the communitarian method: the 

European Parliament and the Council of 

Ministers co-legislate and the Commission 

executes (in such a case the Commission 

becomes the “government” of the Union). On 

the contrary, the directoire excludes the 

European Parliament almost completely from 

the decision-making process. 

As far as the financial crisis is concerned, 

without entering into a pedantic account of 

the decisions taken, suffice it to say that the 

problem was thus conceived: how much 

should the virtuous states of the Union pay in 

order to avoid the failure of the vicious states, 

the so-called PIGS? In order to do that, the 

European Stability Mechanism (ESM) was 

92 

established, thanks to a change in the Treaty, 

so that the finances put in the ESM will 

always be under the control of national 

governments. This mechanism, together with 

the European semester, should increase the 

respect of the rules of national fiscal policies 

and guarantee the necessary austerity. It is an 

improvement of the old Growth and Stability 

Pact (GSP). But it will also perpetuate 

conflicts among national governments. On 

the contrary, a solution in line with the 

European spirit, not requiring a change in the 

Treaty, was easily available: it would have 

sufficed to agree to an increase in the 

European budget (as much as the ESM) 

providing new “own resources” to the 

European Union. The Monetary Union is the 

institution which provides a crucial European 

public good: monetary stability. If the 

Monetary Union is in danger, because of 

mismanagement in some state, this state 

should comply with the rules agreed upon, 

but all European citizens, whatever their 

nationality, should contribute to rescue of the 

Monetary Union. 

The directoire scheme is not only inefficient, 

since it produces weak and provisional 

solutions to European problems, but also 

unstable, because when the economy is 

concerned, Germany takes the leadership, but 

when the problem requires a military 

engagement – as has happened with 

Qaddafi’s Libya – France takes the 

leadership; it is undemocratic, because it 

discriminates small countries and excludes 

the European Parliament (therefore the 

citizens) from the decision making process: 

can European citizens or the European 

Parliament dismiss the directoire?; it is 

harmful, because it would feed the wrong 

belief that the EU is only an additional 

instrument for national governments and that 

greater political unity is not necessary. To 

conclude, the intergovernmental method and 

the will to establish a European directoire are 

the true causes of euroscepticism, the revival 

of nationalism and the rise of populist 

movements in Europe.

* * * 

In spite of the EU crisis, the European project 

is not dead. The present ruling class is unable 

to have a “vision” for the future of the 

European Union, but luckily the original 

institutions created by Europe’s fathers are 

wiser. Jean Monnet said: “the life of the 

Institutions is longer than the life of men, and 

for this reason institutions can, if they are 

well planned, accumulate and hand down 

wisdom to several generations.” This is the 

case of the European Parliament, an 

institution already conceived with the ECSC. 

After its election by universal suffrage, in 

1979, the European Parliament has become 

the only legitimate institution representing the 

will of European citizens. In fact, since 1979, 

on the occasion of every change in the Treaty, 

the European Parliament was able to increase 

its power. Now, with the Lisbon Treaty, it 

also has the constitutional power to start the 

reform of the Treaty. Some recent events 

show that the European Parliament feels 

awkward with the increasing lordliness of 

national governments. It is worth recalling 

three recent initiatives. 

A group of 97 MEPs, members of the EPP, 

the Greens, the ALDE, and the S&D, has 

created the “Spinelli Group” – a network 

open to contributions of civil society – on the 

basis of a “Manifesto” which states: 

“Unfortunately, whereas the formidable 

challenges of a manifold crisis demand 

common responses, drawn at least at 

European level, too many politicians fall 

tempted to believing in national salvation 

only. In time of interdependence and a 

globalised world, clinging to national 

sovereignties and intergovernmentalism is not 

only warfare against the European spirit; it is 

but an addiction to political impotence. … 

Nationalism is an ideology of the past. Our 

goal is a federal and post-national Europe, a 

Europe of the citizens.” For the time being, 

the Spinelli Group has organised public 

debates on the occasion of European Council, 

93 

proposing a “Shadow Council” as an 

alternative to the national governments point 

of view. Of course, its aim is to gain a wider 

consensus in the European Parliament and in 

the public opinion in order to relaunch the 

institutional reform of the European Union. 

The second initiative is the reform of the 

electoral system for the European Parliament. 

The Constitutional Commission of the EP has 

already approved, on April 2011, the proposal 

of the federalist MEP Andrew Duff, to set 

aside 25 seats for candidates elected through 

pan-European lists presented by European 

political parties, starting with the next 

elections in 2014. This transnational 

constituency will oblige European parties to 

present prominent political personalities, well 

known all over Europe, and with the chance 

of becoming President of the European 

Commission, if he/she is elected and if 

his/her party or the coalition of parties obtain 

the majority of voters. Every elector will have 

two votes: one for the national list and one for 

the transnational list. According to Duff: 

“MEPs from all the main party groups have 

reached a strong consensus on the need to 

reform Parliament. Under the proposed 

scheme, the next European elections in 2014 

will take on a genuine European dimension. 

The opportunity of using a second vote for 

transnational MEPs should galvanise voters 

who have come to recognise that national 

political parties no longer work to sustain 

European integration in an efficient or 

democratic way.” 

The third initiative was taken by three MEPs 

– Jutta Haug (S&D), Alain Lamassoure (EPP) 

and Guy Verhofstadt (ALDE) – who 

launched the proposal “Europe for Growth. 

For a Radical Change in Financing the EU”. 

Lamassoure is also the President of the 

Budget Commission of the EP: this proposal 

should be considered as the necessary 

complement to the austerity plan of the 

Council. If the European economy is not able 

to grow, to create jobs and to compete in the 

global market, the austerity plan is certainly 

doomed to failure. As we have already

noticed, at Maastricht the decision to create 

an Economic and Monetary Union (EMU) 

was made, but the reality is that only the M 

leg of the plan was built, the E leg was 

forgotten. Today we have one European 

currency for 17 member states, but 17 

national financial policies. This asymmetric 

economic governance does not work, as the 

crisis of the sovereign debts has shown. The 

problem is: is an autonomous financial policy 

for the EU possible? In fact, the EU has its 

own budget, but its size is only of 1% of GDP 

and a great part of it is devoted to agricultural 

policy; moreover it is practically financed by 

national resources only. The result is that 

each state requires the “net return” from its 

payments to the EU, so that at the end of 

worn out debates among national ministers 

the European budget becomes an external 

support to national budgets. The crucial role 

of the European budget, which should be to 

provide European public goods, which are not 

feasible at a nationional level, is completely 

denied. 

“Europe for Growth” proposes two 

ambitious goals. The first is to end the system 

of national contributions, going back to the 

original idea of genuine European resources. 

The present budget of the EU can be totally 

financed by 1% of VAT, a carbon tax and, if 

necessary, by a financial transaction tax. The 

second goal is a public investment plan, 

financed entirely by Project Bonds issued by 

the EIB. The main reason for such a plan is 

that “in the last three decades the public 

investment ratio in the eurozone has declined 

by more than 1% of GDP. This trend has 

contributed significantly to making the 

eurozone a low-growth area. This trend 

should be reversed. This can be done by a 

new programme of project bond issues aimed 

at raising the public investment ratio in the 

eurozone by 1% of GDP. Since the eurozone 

GDP amounts to approximately €10 trillion, 

this means that the new yearly Euro project 

bond issue of €100 billion aimed at financing 

public investments should be undertaken.” 

94 

One should notice that the size of this plan is 

three times the Delors Plan of 1993. 

The three initiatives are crucial to change the 

outcome and the meaning of the next 

European elections in 2014. Since 1979 the 

turnout has continuously declined from one 

election to the other. The explanation is 

simple. Since there is not a clear European 

policy at stake and there is not a European 

government the citizens can choose, the 

European elections turn out to be a 

summation of national elections. The 

European Parliament is not considered a 

crucial institution for the future of the 

European citizens and, in effect, the European 

Council, i.e. national governments, takes the 

main decisions. But, if the citizens can 

choose, in the European constituency, a 

European leader who can also become 

President of the European Commission, and if 

the main European parties include a Plan for 

European growth, more public investments 

and more jobs in their programme, citizens 

could find a real interest in participating in 

the European elections. In such a case the 

newly elected European Parliament must 

keep the commitment made before the 

electors. A growth policy cannot be carried 

out without the active support of the citizens, 

civil society organisations, political parties 

and trade unions; in short, a European growth 

policy is impossible without European 

democracy. 

* * * 

The participation of citizens in the European 

project cannot be limited to European 

elections. In a democratic community citizens 

debate public issues daily and either support 

or blame their political parties and their 

government. But do a European public space 

and a European people exist? The fact that 

eurosceptics were of the opinion that a 

European public space and a European demos 

did not exist significantly affected the debate 

on the European Constitution. Now, the 

Lisbon Treaty offers the opportunity to

overcome that criticism. One million citizens 

can take the initiative in inviting the 

European Commission “to submit any 

appropriate proposal on matters where 

citizens consider that a legal act of the Union 

is required.” Of course, also eurosceptic 

forces can exploit the European Citizens’ 

Initiative (ECI). Indeed every ECI will spur 

useful public debates in the EU and provoke a 

reply from political parties and European 

institutions. In any case, the ECI can be 

exploited for fostering European political 

unity. For instance, an ECI could invite the 

Commission to provide all the legal acts 

necessary to implement the proposal of 

“Europe for Growth.” This initiative can be 

supported not only by the main European 

parties, but also by trade unions, European 

95 

business associations, local governments, 

civil society organisations and countless 

citizens. 

In 1989, many citizens gathered together in 

the squares of Eastern European countries to 

claim democratic regimes. Today, Arabian 

citizens are protesting and fighting against 

their dictators. Every people should find their 

way and their means to affirm or to put 

forward more democracy. In the EU there is 

no dictator to be fought. The enemy of 

European democracy is intergovernmentalism 

with its ideological base: euroscepticism. If 

the proposed ECI is successful, eurosceptics 

will stop talking about the non-existence of a 

European demos and the way for 

transforming the EU into a true supranational 

democracy will be open.

ACCOUNTING FOR SUSTAINABILITY: WHAT NEXT? A RESEARCH 

AGENDA 

Cunningham M. Gary 

Jönköping International Business School Jönköping, Sweden 

Arne Fagerström 

Jönköping International Business School Jönköping Sweden 

Lars G. Hassel 

Åbo Akademi University Åbo, Finland 

Abstract: This working paper responds to increasing calls for more and different forms of 

accounting research involvement in accounting for sustainability. It seeks to provide background, 

clarify the accounting research issues, and suggest research methods. The background analysis 

indicates that accounting for sustainability must go beyond supplemental reporting of ecological 

and social information to include such emerging issues as integrated reporting of sustainability 

information along with financial reporting. Additional emerging issues are needs of users of 

sustainability reports, auditing and other assurance of sustainability information, and sustainability 

implications of financial failure, accounting and auditing failures, and lack of enforcement. 

Analysis of integrated reporting against traditional financial accounting theory concepts of the 

purpose of financial reporting and the postulates of going concern, reporting entity, monetary unit, 

and time period, indicates a need for substantial changes in the traditional financial accounting 

model if sustainability issues are to be integrated. The agenda concludes with five research issues 

and methods: 

- An accounting research framework for sustainability using general systems theory 

approaches that have been useful for similar emerging issues. 

- Reporting of sustainability information which has been the focus of most research to date, 

and the emerging important topic of integrated reporting. 

- Users of sustainable information, their uses and perceived needs, an area that has been 

largely neglected in research to date. 

- Auditing and assurance issues that are taking on greater importance as more users 

demand assurance for sustainability information. Issues include standards to be used and 

users’ expectations and reactions. 

- Financial distress and sustainability consequences of accounting and enforcement 

failures that are just now being recognized as sustainability issues. 

Keywords: accounting for sustainability, integrated reporting, needs of users, audit, assurance 

JEL codes: M41, O16, M42 

1. Introduction 

In recent months, calls for more accounting 

involvement in sustainability issues have 

become stronger, more frequent, and more 

urgent. As discussed below, though, there is 

no common notion of sustainability, 

especially in an accounting context. For this 

research agenda, we tentatively, as a starting 

point, draw upon the classic economist Sir 

John Hicks who developed the concept of 

consumption being what would leave a 

97 

person as well off at the end of the period as 

at the beginning of the period. Our working 

notion of sustainability is that a sustainable 

entity is one that is as well off at the end of a 

period as at the beginning with respect to use 

of all resources: e.g. environmental, human, 

ecological, social, financial, and 

technological. 

Much of the previous research has used the 

definition of sustainability developed by 

Buntland (1987) over 25 years ago for the

World Commission of Environment and 

Development of the United Nations. 

Buntland’s definition focuses on sustainable 

development ensuring that it meets current 

needs without sacrificing needs of future 

generations (quoted and cited by Kasperiet, 

2011). Buntdland’s definition while 

innovative and ground-breaking for the time, 

can be seen as somewhat obsolete for the 

current era of research into accounting for 

sustainability. Among other things, it focuses 

on external sustainability, i.e. sustainability of 

ecological and social systems, while the 

current focus of research into accounting for 

sustainability is on sustainability of an entity, 

usually sustainability. As the research agenda 

progresses, especially with the development 

of a research framework, a more 

comprehensive definition of sustainability is 

expected. 

Despite no common notion, the terms 

“sustainability” and “accountability”, usually 

in environmental and social contexts, are 

being used widely. New journals are being 

launched to publish research exclusively or 

primarily on accounting for sustainability, 

e.g. Social and Environmental Accountability 

Journal and Sustainability Accounting, 

Management, and Policy Journal. A recent 

major international academic accounting 

conference of the International Association 

for Accounting Education & Research 

(IAAER) held in Singapore in November, 

2010, featured panel discussions of 

practitioners and academics that called clearly 

for more involvement of academics to do 

research in accounting for sustainability, 

notably in auditing, but also in other 

accounting roles. At another recent 

international academic accounting 

conference, Asian Pacific Conference on 

International Accounting Issues held in 

Australia in November 2010, a speaker from 

a governmental pension fund agency in 

Australia was somewhat critical of academic 

accountants’ lack of involvement in 

accounting for sustainability; she indicated 

that if the academic accountants did not get 

98 

more involved soon, some other groups 

would. 

Thomas L. Friedman, a New York Times 

columnist and award-winning author, in his 

recent book on sustainability, Hot Flat and 

Crowded, Release 2.0 (2009), has explicitly 

used accounting terminology (discussed in 

more detail below) to describe inadequacies 

of current accounting practice for 

sustainability. Major international businessoriented 

newspapers write about essentially 

the same issues. Dedicated research in 

sustainable investing has been ongoing for 

some five years. Notably, the Sustainability 

Investment Research Platform (SIRP) 

(www.sirp.se) in Sweden has been a world 

leader in such research. It is now recognized 

by SIRP and others that accounting for 

sustainability is the ongoing next major 

research area. 

The Principles of Responsible Investment 

(PRI) Academic Network of the UN 

(http://academic.unpri.org/), among other 

things, publishes the RI Digest of academic 

research articles in sustainability. 

Increasingly, the RI digest has been 

reviewing accounting research articles, 

notably about disclosures, e.g. Solomon and 

Solomon, (2006), reported and reviewed in 

December 2010. The Centre for Social and 

Environmental Accounting Research, 

Accountability, Transparency, Sustainability 

(CSEAR) (http://www.standrews.ac.uk/~csearweb/) 

has been created 

at the University of St. Andrews in the UK to 

provide information resources, sponsor 

workshops, and other activities to help 

researchers and scholars exploring social, 

environmental, and sustainability accounting, 

auditing and reporting and related topics. 

In the immediate Middle Eastern 

revolutionary activity, the terms 

“sustainable”, “accountability”, 

“transparency”, and the like are being spoken 

casually and loosely. The Kuwait Fund in its 

paid advertisements touts investments in 

sustainable ventures. News commentators 

talk about sustainable regimes as opposed to

stable regimes. Opposition protestors demand 

transparency and accountability. It is 

obviously much too soon to develop research 

implications for accounting for sustainability 

for these activities. Nonetheless, the 

increasing use of the jargon of accounting for 

sustainability cannot be ignored. 

One of the major issues in accounting for 

sustainability it is the lack of a common 

notion of accounting roles in sustainability, 

nor even what constitutes sustainability in an 

accounting context. The various notions of 

sustainability and accounting for 

sustainability, while not conflicting, and 

indeed complementary, reflect a need for a 

more detailed accounting research agenda to 

identify research issues, establish more 

precise concepts, definitions, and notions to 

provide near-term future directions. This 

paper and the agenda it presents are intended 

to represent a first step in that direction by 

giving structure to identifying and discussing 

specific groups of research issues for 

accounting for sustainability, along with 

possible methodologies and data sources. The 

remainder of this paper is organized as 

follows: 

Section 2 presents background 

information underlying the groups of 

research issues that are indentified. 

Section 3 analyzes issues in 

accounting for sustainability with 

respect to traditional accounting 

practice, notably the four postulates 

of accounting. 

Section 4 Presents specific research 

issue along with research methods 

and sources. Some of these issues are 

better developed than others. 

Section 5 gives a concluding 

discussion including identifying 

contributions of the research. 

2.0. Background 

During the past few years, many accounting 

academics, and indeed many accounting 

practitioners, have viewed sustainability 

almost exclusively as representing 

99 

environmental, i.e. ecological, and sometimes 

social issues, and sustainability reporting as 

telling how ‘green’ and socially responsible a 

company has been. This view of 

sustainability reflects a common view 

developed over 25 years ago by the 

Brundtland commission of the United Nations 

(UN) that sustainability is meeting needs of 

current generations without sacrificing future 

generations’ needs (Brundtland 1987). A 

large number of academic publications 

reflects this view (e.g. Adams 2010, Gray 

2010, and sources cited by them). Panelists at 

the IAAER conference (2010), however, were 

clear that current approaches to sustainability 

reporting are too narrow and inadequate for 

many reasons; especially the notion of 

accounting for sustainability is much broader 

than mere environmental (ecological) and 

social reporting and the role of accounting 

involvement must be much broader to include 

such activities as risk assessment and 

providing assurance including auditing. 

It is now widely recognized, but not well 

documented in academic publications, that 

sustainability goes beyond mere 

environmental (ecological) and social issues, 

and includes sustainability of an enterprise as 

a business involving production, sales, and 

marketing, as well as being sustainable 

financially, legally, and in other similar ways. 

Poor environmental (ecological) and social 

performance can indeed lead to unsustainable 

business activity as evidenced by such 

phenomena as consumer boycotts of some 

large retail enterprises that were viewed as 

selling products made by suppliers using 

child labor and other socially and 

environmentally unacceptable practices. 

Users of financial information consistently 

indicate a desire to have more information to 

allow them to assess sustainability and risk 

related to sustainability. Thomas L. Friedman 

(2009), the award winning author mentioned 

in the introduction, links both financial 

sustainability in the recent financial crisis and 

environmental sustainability as being part of 

the same phenomenon: inadequate accounting

that does not adequately consider risk: If the 

true risks involved in these subprime 

mortgages or default insurance had been 

priced into these products, they would never 

have been rated the way they were. Investors 

would have been much more wary and 

demanded much higher yields before buying 

them, which would have forced the mortgage 

brokers to be more careful in deciding to 

whom to give these mortgages and the banks 

to be more careful in choosing which ones to 

bundle. (Friedman 2009, pg. 15). 

While pricing of products might be viewed as 

a marketing issue, under IFRS and accounting 

standards of most industrialized countries, 

valuation of the cost of the products sold and 

the inventory of buyers would require an 

adequate risk assessment to measure amounts 

in financial statements of both sellers and 

buyers. Furthermore, the principle of going 

concern applies to all valuations in financial 

statements and underpricing of financial risk 

raises serious issues of going concern. The 

going concern principle is essentially the 

same as sustainability when making financial 

accounting valuations. (Going concern issues 

are discussed in more detail shortly.) As a 

result, sustainability failures in the recent 

financial crisis related to inadequate pricing 

of risk in products are indeed issues of 

accounting for sustainability. Then, when 

writing about environmental issues discussing 

a 2005 report of the Millennium Ecosystem 

Assessment of the United Nations, Friedman 

comments: 

Yet because most nations do not put a price 

on [the natural resources consumed] they too 

are ‘underpriced’ and therefore 

overexploited—with the profits privatized 

and the losses socialized. (Friedman 2009 pg. 

25) 

Then quoting the World Wild Life Fund’s 

Living Planet 2008 Report: 

‘The world is currently struggling with the 

consequences of over-valuing its financial 

assets, but a more fundamental crisis looms 

ahead—an ecological credit crunch caused by 

undervaluing the environmental assets that 

100 

are the basis of all life and prosperity.’ 

(Friedman 2009 pg. 25). 

Under current accounting standards, the value 

of ecological resources used would not 

normally be used to measure product prices 

or report values in financial reports; thus 

Friedman seems to advocate a new 

accounting paradigm for accounting for 

sustainability that incorporates use of 

environmental and social resources in 

accounting measurements. In both of these 

situations, as well as throughout the book, 

Friedman, a well read, literate, and articulate 

writer, but a non-accountant, uses accounting 

terminology to link both financial and 

ecological sustainability failures and attribute 

the cause of both to the same phenomenon, 

underpricing of assets and products sold due 

to failure to consider sustainability risk. 

Similar calls for a new accounting model to 

incorporate external costs have been made by 

others, e.g. the Accounting for Sustainability 

Group (2006) and Epstein (2008). 

Recent attention to so-called integrated 

reporting has come from the Accounting for 

Sustainability Project 

(www.accountingforsustainability.org) 

among other places. As discussed in more 

detail shortly, this project includes initiatives 

of the International Integrated Reporting 

Committee (IIRC) 

(http://www.integratedreporting.org/) to 

develop a new reporting model that will 

better reflect the interconnected impact of 

financial, environmental, social and 

governance factors. There is, however, no 

common notion of what constitutes integrated 

reporting. Many believe that ‘integrated’ is 

merely including environmental and social 

information along with financial information, 

while others view ‘integrated’ as 

incorporating sustainability factors within 

accounting measurements. 

3.0. Accounting for sustainability with 

Respect to Traditional Accounting 

When environmental (ecological), social, and 

other social issues reporting are viewed from

the perspective of accounting for 

sustainability, many issues emerge that have 

not yet been addressed and now need to be 

examined from the perspective of traditional 

accounting and financial reporting practice. 

3.1. Integrated reporting 

The recent call for integrated reporting 

involves reporting sustainability issues in 

parallel with financial reports, incorporating 

sustainability issues in accounting 

measurements in financial reports, or both. 

Many inconsistencies arise, though, that have 

not been considered and should be analyzed 

along with respect to traditional financial 

reporting theory and concepts. Among the 

inconsistencies that arise, in Anglo-Saxon 

countries, the purpose of financial reporting is 

expressed as assessing the likelihood and 

timing of future cash flows, thus implying 

that accounting measurements should be 

ultimately related to cash flow. The theory 

adds, though that future cash flows are best 

assessed by accrual accounting. Many of the 

suggestions about including sustainability 

into accounting measurements would not 

involve direct future cash flows, such as use 

of environmental resources, unless for 

circumstances when a carbon tax or carbon 

permits might be assessed. Therefore, it 

would be very difficult to include such 

measurements without changing a major 

aspect of traditional financial reporting theory 

that exists in most countries. Also, the 

conceptual framework of the IFRS, US 

GAAP, and similar concepts of accounting 

principles in many countries contain the 

following four fundamental postulates, 

although these concepts predate both IFRS 

and the US GAAP conceptual frameworks, 

and terminology varies. 

-Going concern 

-Reporting entity 

-Monetary unit 

-Time period 

The going concern concept assumes that an 

entity will be in business for the foreseeable 

future and will be able to realize its assets and 

101 

complete its obligations. This concept affects 

valuation bases for measurements of many 

items on financial reports. It is also the basis 

for auditors’ reports on financial statements. 

Sustainability is essentially the same concept 

as going concern because lack of 

sustainability implies lack of a going concern, 

and a sustainable entity must necessarily be a 

going concern. As discussed in more detail 

shortly, well-known going-concern failures 

such as Enron and sub-prime mortgage 

collapses have resulted massive social costs 

and clearly represent lack of sustainability. 

The reporting entity concept defines 

the entity for which financial reports are 

prepared. Traditionally, financial reports are 

prepared for an economic entity, usually 

defined in legal terms as being a consolidated 

group in which one dominant entity controls 

of the group. With integrated financial 

reporting, the appropriate reporting entity for 

sustainability reporting may differ 

considerably from the reporting entity for 

financial reporting purposes. As two 

examples: First, recent publicity about retail 

companies that sell clothes made by child 

labor, and similar situations in other 

industries, indicate that transparent and 

informative reporting should include the 

entire supply chain in an entity’s 

sustainability reporting. Second, as has been 

discussed recently, the environmental impact 

of a company’s products is also a significant 

element to be considered in assessing a 

company’s sustainability so the reporting 

entity for integrated reporting might consider 

customers or other users of a company’s 

products. 

Traditional financial reporting is based on 

monetary units in which all non-monetary 

items are reported as an equivalent monetary 

amount. Almost all environmental and social 

information in reports to date are in narrative 

non-monetary terms. Under some notions of 

integrated reporting, environmental and social 

information would be incorporated into 

accounting measurements. Also as discussed 

above, Friedman (2009) and others imply a

new accounting in which environmental risk, 

which included financial risk, is incorporated 

into product pricing. Under the costs attach 

principle of traditional financial accounting, 

costs are included in product prices and 

similar measurements if there is a payment 

(or similar actual use of resources owned); 

there has been no measurement method to 

incorporate use of “free” environmental 

resources nor potentially damaging 

environmental resources through emissions of 

such things as carbon dioxide and other 

greenhouse gases. Carbon trading schemes 

are in their earliest stages of development in 

Europe and some other places, but so far no 

accounting measurement has been proposed 

to include the cost of carbon emission 

purchases into products and similar 

accounting measurements. Figge and Hahn 

(2004) in their Advance project have 

developed the Advance Model (see also 

http://advance-project.org) in which, among 

other things, sustainable value added is 

computed in monetary terms for various types 

of emissions. These sustainable values, 

though, are not incorporated into accounting 

measurements, but could conceivably be 

reported in integrated reports. Sustainable 

values as now computed are more suitable for 

management control and management 

accounting purposes. 

Under the time period concept, traditional 

financial reporting is based on specific time 

periods, almost always one year, based on 

perceived users’ needs for timely information 

covering discreet time periods of optimal 

length to make meaningful decisions. Two 

approaches have traditionally been used 

although with variations among countries: 

First the revenue-expense approach measures 

revenues earned during a year to derive a 

profit for the year; assets and liabilities are 

residuals. Second, the asset-liability approach 

measures assets and liabilities at the end and 

the beginning and of a year, subtracting the 

difference as profit for the year divided into 

revenues and expenses. The asset-liability 

approach has been adopted by IFRS and US 

102 

GAAP, but the revenue-expense approach 

remains in some countries, notably Finland. 

The asset-liability approach is clearly more 

compatible with sustainability accounting as 

indicated in the introduction because it 

focuses on consumption of resources that 

would leave a company as sustainable at the 

beginning as at the end. Nonetheless, both 

approaches are problematic for integrated 

reporting because of the rigid notion of 

financial reporting that occurs in annual 

increments. Many issues of sustainability 

relate to long term consequences for the 

environment, for example from past 

environmental damage as in the oil fields of 

Nigeria and coal mining regions of the U.S, 

and damage from emissions over the life 

cycle of products like automobiles. 

3.2. Auditing and other assurance 

The panel discussion at the IAAER 

conference (November 2010) clearly 

contained a call for accounting researchers to 

be involved in additional roles in accounting 

for sustainability, notably auditing. Users of 

financial information, notably investors, it is 

claimed, need, almost demand, increasing 

levels of assurance on sustainability 

information, notably assurance of information 

in management commentaries and 

environmental reports. The anecdotal 

statements claim that investors require such 

assurance in order to make proper risk 

assessments of sustainability, especially 

because of documented false environmental 

statements presented in annual reports. In the 

Massey Coal case in the US, as part of a legal 

settlement, Massey agreed to provide audited 

statements of workplace safety and 

protections of the environment (Harris 2011). 

The call for more auditor assurance of 

environmental reports is also reflected in 

personal interviews with international 

accounting firms. Some countries, e.g. 

Sweden, allow auditors to offer both positive 

and negative assurance on environmental 

reports, i.e. positive assurance in which 

auditors examine evidence as in a financial

audit and give a professional opinion about its 

reliability, and negative assurance in which 

the auditor states there is no reason to suspect 

the information is not reliable. Companies 

choose to provide environmental and social 

information, it is claimed, to obtain 

reputational benefits not necessarily related to 

risk. Assurance, if any, would be used to 

achieve greater reputational benefits; few 

companies are willing to pay for positive 

assurance because of limited perceived 

benefits. Calls for greater assurance 

of sustainability information, however 

defined, are based on anecdotes, assertion, 

conjecture, etc. It seems fairly certain, 

though, that interests of investors and 

creditors in assessing sustainability risk in 

making decisions have been largely ignored 

and are just now being realized. As a result 

there is a current need for accounting research 

to assess investors’ and creditors’ perceived 

needs for assured sustainability information, 

how they use it, market reaction to the 

information, etc. 

3.3. Financial failures, Reporting and 

Auditing failures, and Enforcement 

Yet another set of accounting-forsustainability 

situations within the past few 

years are the well-known financial 

sustainability failures and near failures of 

companies like Enron, WorldCom, Parmalat, 

and Ahold and financial institution failures in 

due to sub-prime mortgages. These financial 

sustainability failures resulted not only in 

investor and creditor losses but also massive 

losses for society and are clearly social and 

environmental sustainability issues as well. 

The sustainability failures were directly 

related to non-compliance with accounting 

standards, audit failures, and enforcement 

failures. In addition, the going concern 

concept implies financial sustainability and 

these organizations clearly were not going 

concerns. While there have been extensive 

research and publication about the highprofile 

cases, little research has been 

conducted in the context of accounting for 

103 

sustainability. Research has shown, however, 

continued lack of compliance with accounting 

standards and apparent lack of enforcement, 

especially in Europe (e.g. Carrara et al. 2010; 

Fagerström et al. 2009, 2007a, 2007b). It is 

also recognized that lack of adequate 

enforcement of accounting standards within 

in the EU is contributing to lack of reliability 

of published accounting reports and thus the 

ability of users of financial reports to assess 

sustainability risks. As widely reported in the 

business media, in October 2010, the 

European Commission announced its 

intention to examine compliance with 

accounting standards, the role of auditors, and 

enforcement. It is too soon to assess the 

consequences of this action by the European 

Commission, but it is clearly an issue within 

accounting for sustainability. 

4. Research Issues 

With the analysis above of accounting for 

sustainability in the context of traditional 

accounting theory and practice, and recent 

events, this agenda now develops some 

specific research issues along with research 

methods and data sources. 

4.1. A Research Framework for Accounting 

for Sustainability 

A conceptual framework to guide researchers 

and practitioners in accounting for 

sustainability is an essential first step in this 

research agenda because of various notions of 

sustainability and the roles of accounting in 

accounting for sustainability that exist at the 

moment, and lack of a common language. 

Such frameworks have been successful in 

guiding emerging areas of accounting 

research in the past. In the 1970s, as the 

phenomena of multinational companies 

became sufficiently large to warrant ongoing 

accounting research, a seminal study, An 

Accounting Research Framework for 

Multinational Enterprises (Cunningham 

1978) facilitated accounting research for 

multinational enterprises for coming decades. 

A similar but less elaborate framework also

facilitated research into accounting research 

for performance reporting and accountability 

in governmental entities (Cunningham and 

Harris 2005) when this issue emerged as an 

issue for accounting research. Such a 

framework in accounting for sustainability 

would, among other things, identify, explore, 

and analyze systematically: 

-Various notions of sustainability to 

assess which ones represent roles for 

accounting, and to what extent. 

-Groups and individuals who have or 

potentially could have an 

involvement in accounting for 

sustainability, including Assistant 

Lecturers of reports; users of such 

information, e.g. banks and 

investment analysts; assurers of such 

information, i.e. auditors or similar 

groups; regulators; other 

organizations, e.g. the United 

Nations and its PRI academic 

network, who have taken a direct 

interest and action in the issue; and 

policy makers such as the European 

Commission. 

-Different forms and levels of 

accountability, e.g. financial 

reporting and assurance thereof; 

integrated reporting of financial and 

other sustainability accounting 

information; reporting sustainability 

information outside the financial 

reports and assurance thereof; 

incorporating sustainability risk and 

use of resources in accounting 

measurements; other elements of 

accountability for sustainability 

risks; managerial accounting; 

management control systems; etc. 

-Identifying and describing various 

notions of a sustainable entity that 

would be the object of 

accountability. 

-Matching the interests of groups and 

individuals with regard to 

sustainability with different forms 

and levels of accountability. 

104 

-Developing a common language to 

discuss and guide future research. 

Similar to An Accounting Research 

Framework for Multinational Enterprises 

(Cunningham 1978, pg. 1), this research 

framework seeks to facilitate continuing 

research in accounting for sustainability by 

describing in detail gaps in current 

knowledge, specific issues that require 

research, factors that should be considered 

when conducting the research, and suggesting 

research approaches. One important aspect is 

to identify failures in past research and means 

to overcome the failures. It also provides a 

common taxonomy and language for 

continuing research. Following Cunningham 

(1976, pp. 31-61) and sources cited by him, 

this part of the research agenda uses a general 

systems theory approach as the primary 

methodological and analytical tool (described 

in more detail shortly). General systems 

theory is especially well suited to develop 

conceptual frameworks in business contexts 

and especially for accounting research 

because it allows researchers to explore such 

relevant aspects as: 

-The scope of the agenda and which systems 

are included in this scope. 

-System boundaries, i.e. what is included in a 

system and what remains outside in the 

environment. It is important to note (as 

discussed below) that the word 

“environment” has a different meaning 

than is commonly used in the literature on 

accounting for sustainability so far. For this 

framework, boundary considerations are 

important for such issues as defining 

sustainability in accounting contexts; what is 

inside systems of accounting for 

sustainability, and what remains outside in 

the environment; and whether sustainability 

reporting and financial reporting are separate 

systems or can become integrated into a 

single reporting system. 

-System regulation and control. For this 

framework, regulation and control factors 

deal not only with such obvious issues as 

standards and enforcement, but also what

type of outputs from accounting for 

sustainability are to be produced and for 

whom. 

4.1.1. Methodology 

This part of the research agenda uses the 

general systems methodology discussed in 

Cunningham (1978 Chapter two). General 

systems theory is not a theory per se but 

instead an approach to guide analysis and 

development of more specific research 

approaches. It is also a first step in grounded 

theory approaches which represent back and 

forth analyses of a system and its 

environment to build a theory. 

-Under general systems theory, each system 

is viewed as part of a larger system and each 

system can be viewed as having one or more 

subsystems. The issue is to identify the 

system of interest for the research issue at 

hand, and the boundaries of that system. 

Thus, the system of interest can be defined in 

different ways for different research 

purposes. As discussed above, from a 

sustainability perspective, the system of 

interest can include a company and its supply 

chain as well as users of its products during 

the product life cycle. In defining the 

boundary of the system of interest, everything 

that remains outside the boundary is 

considered to be the environment. As noted 

above, this definition of “environment” is 

different from the term “environment” 

used in the research literature to date 

which typically views environment as 

representing ecological resources. Among 

other things, the analysis considers properties 

of the system of interest, properties of 

subsystems, and properties of the 

environment, including influences of each on 

the other. 

Other important aspects of general systems 

theory are the notions of regulation and 

control. Control is generally defined as 

setting expectations, monitoring outcomes 

against those expectations, and taking actions 

if necessary to make necessary changes to 

achieve desired outcomes. Thus control 

105 

typically occurs outside a system in the 

environment, depending on how the boundary 

between a system and its environment is 

defined. Regulation represents activities and 

subsystems designed within a system to 

achieve the desired outcomes somewhat 

automatically without explicit intervention. 

Notions of what constitutes regulation and 

control differ depending on how the system 

of interest and the environment is defined. 

The concepts of regulation and control have 

obvious implications for accounting for 

sustainability. One example is establishing 

standards for sustainability reporting, a 

control function, and the steps taken by an 

entity to assure compliance with standards. 

4.2. Reporting Sustainability Information 

In some countries, e.g. Sweden, a form of 

integrated reporting is required for certain 

companies, e.g. those with state ownership, 

following the triple bottom line of the Global 

Reporting Initiative (GRI) 

(www.globalreporting.org/Home). In 

addition, several other companies have been 

voluntarily reporting environmental and 

social information for some years. Recent 

attention to so-called integrated reporting has 

come from the Accounting for Sustainability 

Project 

(www.accountingforsustainability.org). This 

project includes initiatives of the International 

Integrated Reporting Committee (IIRC) 

(http://www.integratedreporting.org/) to 

develop a new reporting model that will 

better reflect the interconnected impact of 

financial, environmental, social and 

governance factors. The IIRC includes, 

among others, representatives from the major 

international accounting firms, securities 

exchanges, the Financial Accounting 

Standards Board (FASB) of the US, and the 

International Accounting Standards Board 

(IASB). As mentioned above, though, there 

is, however, no common notion of what 

constitutes integrated reporting. 

Also as mentioned above, anecdotally, 

companies report such so-called sustainability

information and sometimes seek assurance of 

such to achieve reputational benefits. 

Research is needed to identify what type of 

reputational benefits companies expect to 

achieve. A further issue is 

establishing standards for sustainability 

reporting. The Global Reporting Initiative 

(GRI) (www.globalreporting.org/Home), a 

network-based organization based in the 

Netherlands, provides standards for voluntary 

reporting of supplemental sustainability 

disclosures. GRI reporting standards are 

required in Sweden for the companies that are 

required to report the so-called triple bottom 

line. The IIRC as part of the UN PRI is also 

establishing reporting standards. Research 

could be useful to determine the criteria by 

which companies, accounting firms and 

others choose reporting standards. 

4.2.1. Research Methods 

The primary research methods for this set of 

issues would be content analysis and field 

studies. With respect to content analysis, 

because of different notions of what 

represents integrated reporting, it would be 

useful to examine actual reports under the 

different approaches to learn differences and 

their impacts. Content analysis might also be 

used to examine reports of different 

companies that use different types of 

reporting standards to assess different 

impacts. A further analysis of the groups 

promulgating the standards to determine their 

intentions and desired results can be useful. 

Such content analyses can be complimented 

by field studies of the companies that 

currently report sustainability information to 

determine the difficulty or ease of 

implementation and extent of compliance. 

Field studies represent a form of grounded 

theory in which researchers engage with the 

field to discover phenomena of interest to be 

used to develop a theory. Field studies by 

Fagerström et al. (2009, 2007a, 2007b) have 

examined similar issues in implementation 

and compliance with reporting standards and 

provide a model for this research agenda. 

106 

Field studies can be useful to assess the 

reputational benefits companies attempt to 

achieve from reporting environmental and 

social information. Field study research by 

Cunningham and Harris (2005) on a similar 

topic about performance reporting of 

governmental entities was a significant 

contribution to accountability research for 

such entities and can also be used as a model 

in this research. 

4.3. Users of Sustainability Information. 

As mentioned in the background, research 

and discussion in accounting for 

sustainability so far have almost exclusively 

focused on companies that prepare and 

present sustainability information. There is 

very recent recognition that the needs of users 

of the information must be considered as 

well. The research framework for accounting 

for sustainability as described in 4.1 would 

necessarily address some of these issues. 

Research is also needed to address directly 

users’ perceived needs and reactions to them. 

Anecdotal evidence suggests that financial 

analysts, one major user group, routinely 

discard supplemental environmental 

disclosures. Instead, anecdotally, analysts 

want information that allows assessment of 

risk. Somewhat contradictory prior research 

has shown that financial analysts, do consider 

sustainability risk information when making 

recommendations to their clients (H. Nilsson, 

et al. 2008). Other research reported by the 

SIRP (www.sirp.se) indicates a market 

reaction to sustainability risk under certain 

situations thus suggesting that some users of 

sustainability information do use such 

information. Research is needed not only to 

assess whether sustainability risk information 

is desired and used, but the form in which 

sustainability risk incorporated in accounting 

reports, e.g. in integrated reports, in product 

prices according to as suggested by Friedman 

(2009), and in other accounting 

measurements.

4.3.1. Research methods 

Field study research methods similar to those 

discussed above (Fagerström et al. 2009, 

2007a, 2007b) are useful to learn more about 

potential users of integrated reports, what 

they expect, different formats they prefer, and 

similar items. The primary research method 

for this issue could be experimental research 

along the lines used by Baker and 

Cunningham (1993) when assessing the 

perceptions of bankers about different sets of 

assurance standards on their loan decisions is 

a model for this analysis. With respect to 

experiments, persons in each treatment group 

would be a priori viewed as essentially 

identical and making the same types of 

decisions following the approach of 

Cunningham and Baker (1992). In their 

study, subjects of experiments were attending 

training and education classes sponsored by a 

professional bankers’ association; the 

association supported the type of research and 

virtually all participants voluntarily chose to 

participate. The subjects for this and similar 

issues in this research agenda could be 

similar, not necessarily in educational classes, 

but groups of professionals who use reports 

of sustainability information. In addition, or 

alternatively, students could be used as 

surrogates for users of sustainability 

accounting information. Numerous 

accounting-related experiments using 

students as surrogates have been conducted 

and published by Michael Shields and 

Graeme Harrison, among others; these studies 

are too numerous to cite here, but can be 

readily located and examined. Similarly, 

experimental studies in sustainability under 

the auspices of the SIRP (www.sirp.se) have 

used students as surrogates for professionals 

who use sustainability information. These 

studies cite evidence that students perform as 

well as actual subjects in these types of 

experiments. 

107 

4.4. Auditing and Other Assurance of 

Sustainability Information 

As mentioned in the introduction, 

background, and discussions above, a major 

emerging issue is the extent to which users of 

sustainability information expect assurance; 

at what level, negative or positive; and in 

what form, supplemental or incorporated in 

financial measurements. A further issue 

within this agenda issue is establishing both 

standards for sustainability reporting and 

standards against which assurance is given. 

As mentioned above, the Global Reporting 

Initiative (GRI), a network-based 

organization based in the Netherlands, 

provides standards for voluntary reporting of 

supplemental sustainability disclosures. The 

IIRC as part of the UN PRI is also 

establishing reporting standards. For 

assurance, as one example, major accounting 

firms in Sweden use assurance standards 

published by Föreneningen Auktoriserade 

Revisorer (FAR) (www.far.se) in FAR 

RevR6 

(http://www.far.se/pls/portal/docs/PAGE/FA 

R_2010/FAR_TYCKER/INFORMATIONS 

MATERIAL/GRANSKNINGAVHALLBAR 

HETSREDOVISNING.PDF), although use of 

such standards is apparently voluntary. FAR 

RevR6 is taken from (essentially a translation 

of) the International Standard on Assurance 

Engagements 3000 (ISAE 3000) 

(http://www.accountability21.net/uploadedFil 

es/Issues/ISAE_3000.pdf) developed in the 

Netherlands. A competing set of assurance 

standards, though, has been developed by 

AccountAbility 

(http://www.accountability.org/) in its 

AA1000 AS. Despite the organization’s claim 

of wide-spread acceptance, there is no 

indication that such standards are used in 

Nordic countries. Yet another set of standards 

is incorporated in the Greenhouse Gas 

Protocol Initiative 

(http://www.ghgprotocol.org/). 

These sets of assurance standards, while not 

always in direct competition because they 

relate to different types of sustainability

information, overlap sufficiently to create 

uncertainty and complexity in accountants’ 

roles of providing assurance. Because of 

multiple sets of standards for both reporting 

and assurance, yet another set of issues to be 

addressed in this research agenda is the 

criteria by which companies and 

organizations providing assurance voluntarily 

choose standards to use in reporting and in 

assurance engagements. When sustainability 

information is included in accounting 

measurements, e.g. pricing products to 

include external resource costs and including 

sustainability risk in financial products, 

additional issues of reporting standards and 

assurance standards are presented. Similar 

issues are presented in integrated reporting 

when environmental and social concerns 

would be included in accounting 

measurements. Current accounting standards 

in almost every country, including Nordic 

countries, do not permit such accounting 

measurements; likewise auditing standards 

for such measurements are not available. 


The previous research by Baker and 

Cunningham (1993) discussed above, is an 

ideal model for the type of research on 

assurance levels in this research agenda. In 

that experiment, bank loan officers were 

asked to make decisions based on financial 

statements prepared using, among other 

things, different levels of audit assurance and 

different accounting standards. Field 

studies like Fagerström et al. (2009, 2007a, 

2007b) and Cunningham and Harris (2005) 

are a grounded theory approach useful 

models to examine auditors’ perceptions of 

different levels of assurance and standards. 

4.5. Financial Distress, Non-compliance 

with Financial Reporting Standards, and 

Lack of Enforcement 

Despite the fact that past financial failures, 

notably Enron and sub-prime mortgage 

crises, have resulted in massive social costs, 

there is only recent recognition that financial 

108 

distress, often related to failure to consider 

different types of sustainability risk, noncompliance 

with financial reporting 

standards, and enforcement of accounting 

standards, is an issue of accounting for 

sustainability. As discussed in the 

introduction and background, though, 

Friedman (2009) views ecological risk and 

financial distress to be integrally related 

through inadequate accounting for risks. Even 

though financial and other sustainability risks 

are recently receiving attention, the going 

concern concept has been an essential 

concept in financial reporting and auditing for 

many years. Research would be useful to 

assess the extent to which users of financial 

information, notably banks, investment 

analysts, and financial analysts, view the link 

between financial distress risk and ecological 

risk as being integrally related as does 

Friedman (2009). 

Non-compliance with financial reporting 

standards has been an accounting research 

topic for at least the last 10 years in which 

wide-spread non-compliance was discovered, 

and by implication apparent lack of 

enforcement (e.g. Carrara, et al. 2010, 

Fagerström et al. 2009, 2007a, 2007b; and 

sources cited by them). Such research, 

though, focused on detecting non-compliance 

without implications for sustainability. As 

indicated in these studies, non-compliance 

with accounting standards and lack of 

enforcement are readily apparent and should 

be apparent to users of financial reports. 

Research could assess the impact on apparent 

non-compliance with accounting standards on 

users of the information, notably bankers and 

bank investment analysts. 

A very recent study by the publishers of the 

Asset 4 data base has indicated that 

companies that report sustainable information 

also have abnormal returns, suggesting that 

investors and/or analysts do not consider 

sustainability information in their decisions. 

By implication, failure to consider 

sustainability risk could lead to abnormally 

low returns or loss through financial failure.

Research is useful to assess any relation of 

negative or lack of reported sustainability 

information on low returns or failure. 


This line of research could follow an 

approach by Baboukardos (2011, 2010). The 

research would involve content analysis of 

publicly listed European companies to 

identify lack of compliance. Examination of 

stock market reaction to the lack of 

compliance and other faulty financial 

information could then use the well-known 

value relevance model and other well known 

models that assess market reactions to 

accounting information. Among others 

outputs, the well known measurement of 

Tobin’s Q gives an indicator of risk. Similar 

research methods can be used to assess the 

value relevance of negative sustainability 

information. In addition, the well known 

bankruptcy prediction models can be used to 

assess the ability of negative sustainability 

information to signal financial failure. The 

existence of the Asset 4 data base now 

facilitates research methods using large 

samples and more sophisticated quantitative 

methods. 

5.0. Concluding discussion 

This purpose of this paper has been to give 

structure to the diverse, disjointed area of 

research into accounting for sustainability, 

providing background, including identifying 

research issues, and possible research 

methods. In introduction and background 

discussions, it was apparent that the focus to 

date on reporting environmental, i.e. 

ecological, and sometimes social and 

governance information is narrow and 

inadequate. Instead, new additional research 

areas are emerging and some traditional 

research areas are taking on new perspectives. 

These include: 

- A call for integrated reporting that 

integrates environmental (ecological), 

social, and governance information along 

with financial reports. Differing notions of 

109 

what represents integration exist, 

however. 

- Interests of users of sustainability 

information, including integrated reports, 

must be considered. 

- Calls for expanded roles of auditors and 

other assurers. 

- Expanding research issues of financial 

failures, accounting and auditing failures, 

and lack of enforcement to recognize an 

essential sustainability component. 

After presenting background, the paper 

analyzes the emerging issues against 

traditional accounting concepts, notably the 

postulates of going concern, entity, monetary 

unit and time period, the paper identified 

many research issues that need to be resolved. 

These were presented in five sets of research 

issues for accounting for sustainability 

In the process, the paper presented 

background material and then identified five 

sets of research issues in accounting for 

sustainability along with methods and data 

sources for each: 

- An accounting research framework for 

sustainability to be based on similar 

frameworks for other emerging 

accounting research issues using general 

systems theory approaches. This 

framework identifies systems of interest 

and the environment and necessarily 

challenges the traditional notions of 

reporting entity and time period, among 

others. 

- Reporting of sustainability information 

which has been the focus of most research 

to date, and the emerging important topic 

of integrated reporting. The analysis 

challenges entity, monetary unit, and time 

period concepts as well as addresses 

which standards are to be used and how to 

incorporate environmental and social 

issues into accounting measurements. 

- Users of sustainable information, their 

uses and perceived needs. This is an area 

that has been largely neglected in research 

to date. Research using field studies and

experiments is needed to assess users’ 

needs and expectations. 

- Auditing and assurance issues that are 

taking on greater importance as more 

users demand assurance for the 

sustainability information. Issues of which 

standards to be used can be explored and 

experiments would be used to assess 

users’ expectations and how they react to 

different types and levels of assurance. 

- Financial distress and sustainability 

consequences of accounting and 

enforcement failures that are just now 

being recognized as sustainability issues. 

Research using traditional market 

methods, notably the value relevance 

model and bankruptcy prediction models 

This agenda while ambitious gives definite 

structure and clearly indicates a substantial 

change in traditional view of accounting, 

reporting, and auditing in a new era of 

sustainability. 

References: 

Publications 

1. Adams, Carol (2010), “Editorial”, 

Sustainability Accounting, Management and 

Policy Journal, Vol. 1, No. 1, pp. 5-9 

2. Baboukardos, Diogenes (2011 

forthcoming), “Transparency in Fair Value 

Accounting under IFRS: An Examination of 

Greek Listed Companies’ Level of 

Compliance with IFRS Goodwill Disclosure 

Requirements”, in The Economies of Balkan 

and Eastern Europe Countries in the changed 

world. Newcastle upon Tyne, UK: Cambridge 

Scholars Publishing. 

3. Baboukardos Diogenes (2010), “Does 

Transparency Affect Relevance? Evidence 

from Goodwill Disclosures of Listed 

Companies on Athens Stock Exchange”, 

Working Paper, Jönköping International 

School of Business, Jönköping, Sweden. 

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112

LE DYNAMISME DES TPE ET PME ET L'ÉVOLUTION DE L'ÉCONOMIE 

ROUMAINE 

Jubénot Marie-Noëlle 

Université de Reims Champagne-Ardenne, France 

Marc de la Ville fromoit, Université de Reims Champagne-Ardenne, France 

Abstract: The Entrepreneurship concept has its roots in the mid-1970s, it is getting really important 

much later in the 1990s (Hernandez, 2010). The entrepreneur is at the heart of regional 

development as an engine of growth. It concerns the creation of enterprises, but also management, 

business development and networking. The aim of our research is to characterize the private sector 

development in Romania since the beginning of the transition to define the role of SMBs in the 

dynamics of development, identify the current weaknesses of the private sector and propose 

solutions. For our study, we used several previous studies on the characterization of the Romanian 

economy since the beginning of the transition. We also used recent data from the Ministry of 

Economy. We also used the large literature on entrepreneurship and business networks. The 

characterization of the Romanian economy is obtained by comparison with countries in the area but 

also some data from highly industrialized countries or countries of the south. Each transition is 

experiencing its own economic development based on its specific history and choices in terms of 

economic and social policies. According to our research, the private sector is characterized by an 

increase in the number of businesses created, but the density of firms per capita is still low 

compared to other countries in the area. On the other hand, companies are mostly micro 

(businesses without employees to create their own jobs) or small (less than 9 employees). This 

demonstrates a real dynamism in business creation. However, the creation of many SMBs may not 

be an end in itself. Entreprises have to develop in order to face competition and to achieve 

economies of scale, or they can even join or create their networks. 

Keywords: Micro, small and medium enterprises (MSMEs), transition, clusters 

Classification JEL: M20, P20 

Abstract: L’économie de l’entrepreneuriat trouve ses racines dans le milieu des années 1970, mais 

connaît son essor dans les années 1990. Elle place l’entrepreneur au cœur du développement des 

territoires comme moteur de la croissance. Elle concerne la création d’entreprises mais aussi le 

management, le développement des entreprises et les réseaux. L'objectif de notre recherche est de 

caractériser le développement du secteur privé en Roumanie depuis le début de la transition afin de 

définir la place des TPE/PME dans la dynamique de développement, de déceler les faiblesses actuelles 

du secteur privé et de proposer des solutions. Pour notre étude, nous avons utilisé plusieurs travaux 

antérieurs concernant la caractérisation de la l'économie roumaine depuis le début de la transition. Nous 

avons aussi utilisé des données récentes provenant du ministère de l'économie. Nous avons également 

fait appel à la nombreuse littérature concernant l'entrepreneuriat et les réseaux d'entreprises. La 

caractérisation de l'économie roumaine s'obtient par comparaison avec des pays de la zone mais aussi 

quelques données provenant de pays très industrialisés ou encore des pays du sud. Chaque pays en 

transition connaît sa propre évolution économique en fonction de son histoire spécifique et de ses choix 

en termes de politiques économique et sociale. Selon nos recherches, le secteur privé se caractérise par 

une augmentation croissante du nombre d'entreprises créées, cependant la densité des entreprises par 

habitants est encore peu élevée par rapport à d'autres pays de la zone. D'autre part, les entreprises sont 

pour la plupart des micros (entreprises sans salariés permettant de créer son propre emploi) ou de 

petites entreprises (moins de 9 salariés). Ce qui témoigne d'un dynamisme réel dans la création 

d'entreprise. Cependant, la création de nombreuses TPE/ PME ne peut être une fin en soi. Les 

entreprises ont vocations à se développer ou à s'associer pour faire face à la concurrence et pour 

réaliser des économies d'échelle. 

Mots-clé : TPE/PME, transition, densité, réseaux 

113

Introduction : 

L'objectif de cette article est d'évaluer les 

forces et les faiblesses du secteur privé 

roumain. La démarche est la suivante : nous 

rappellerons dans une première partie les 

problèmes qui se sont posés pour la 

Roumanie au début de la période de 

transition, notamment les types et les causes 

des retards qui sont apparus par rapport à 

d'autres pays de la région. Dans une seconde 

partie, nous traiterons principalement des 

attentes et des difficultés liées à la 

privatisation de l'économie roumaine. Puis 

nous nous attarderons dans une troisième 

partie sur la structure du secteur privé 

114 

roumain aujourd'hui. Face aux insuffisances 

constatées, la constitution de réseaux 

d'entreprises peut permettre de palier aux 

insuffisances du secteur privé. 

I - Le processus de la transition 

Au début de la période de transition la 

Roumanie a pris un peu de retard dans le 

processus de libéralisation économique, 

contrairement à la Hongrie, la Pologne et 

dans une moindre mesure la 

Tchécoslovaquie, comme l'indique le tableau 

suivant : 

Tableau 1 : Indices de libéralisation* 

1989 1990 1991 1992 1993 1994 1995 1996 1997 Cumul 

89-97 

politique de 

stabilisation 

Bulgarie 0,13 0,19 0,62 0,66 0,66 0,64 0,58 0,65 0,79 4,92 01/02/91 

Hongrie 0,34 0,57 0,74 0,78 0,82 0,86 0,9 0,9 0,93 6,84 01/03/90 

Pologne 0,24 0,68 0,72 0,82 0,82 0,86 0,89 0,89 0,89 6,81 01/01/90 

Roumanie 0 0,22 0,36 0,45 0,58 0,68 0,71 0,72 0,75 4,47 01/01/93 

Slovaquie 0 0,16 0,79 0,86 0,83 0,83 0,86 0,86 0,86 6,05 01/01/91 

Tchéquie 0 0,16 0,79 0,86 0,9 0,90 0,93 0,93 0,93 6,4 01/01/91 

Moldavie 0,04 0,04 0,1 0,38 0,51 0,55 0,68 0,75 0,75 3,8 01/09/93 

* L’indice de libéralisation compris de 0 à1 est une moyenne de trois indices séparés : la libéralisation des marchés 

domestiques (pondération de 0,3) ; la libéralisation du commerce extérieur (0,3) ; la privatisation et la réforme 

bancaire (0,4). La somme des indices annuels depuis 1989 est un indicateur de l’étendue des réformes. 

Source : De Melo Martha, Denizer Cevdet, Gelb Alan, « Patterns of Transition from Plan to Market », The World 

Bank Economic Review, Vol. 10, n° 3, pp.397-424. In : World Economic Outlook, World Bank, 2000. 

Le tableau suivant nous donne une évaluation du niveau actuel de libéralisation pour certaines 

économies en transition : 

Private 

sector 

share/GDP 

Large-scale 

privatisation 

Tableau 2 :État de la réforme en 2010 

Small-scale 

privatisation 

Price 

liberalisation 

Trade 

and foreign 

exchange 

Competition 

policy 

Overall 

infrastructure 

reform 

Bulgaria 75 % « 4 » « 4 » « 4+ » « 4+ » « 3 » « 3 » 

Croatia 70 % « 3+ » « 4+ » « 4 » « 4+ » « 3 » « 3 »

Private 

sector 

share/GDP 

Large-scale 

privatisation 

Small-scale 

privatisation 

Price 

liberalisation 

115 

Trade 

and foreign 

exchange 

Competition 

policy 

Overall 

infrastructure 

reform 

Hungary 80 % « 4 » « 4+ » « 4+ » « 4+ » « 3+ » « 4- » 

Moldova 65 % « 3 » « 4 » « 4 » « 4+ » « 2+ » « 2+ » 

Poland 75 % « 4-↑ » « 4+ » « 4+ » « 4+ » « 3+ » « 3+ » 

Romania 70 % « 4- » « 4- » « 4+ » « 4+ » « 3↑ » « 3+ » 

Slovak 

Rep. 

80 % « 4 » « 4+ » « 4+ » « 4+ » « 3+ » « 3+ » 

Slovenia 70 % « 3 » « 4+ » « 4 » « 4+ » « 3- » « 3 » 

Source : Transition Report 2010, European Bank for Reconstruction and Development 

The transition indicators range from 1 to 4+, with 1 representing little or no change from a rigid centrally 

planned economy and 4+ representing the standards of an industrialised market economy. 

↑ and ↓ arrows indicate a change from the previous year. One arrow indicates a movement of one point (from 4 

to 4+, for example). Up arrows indicate upgrades, down arrows indicate downgrades. 

Les rapports de 1997 et 2000 de la la 

Commission Européenne soulignaient que le 

processus de restructuration et de 

privatisation avaient pris du retard et 

manquait de transparence, retardant ainsi 

l'émergence d'un secteur privé dynamique et 

compétitif et que les problèmes de la 

corruption et du marché noir devaient être 

résolus. Depuis, la Roumanie a développé 

une politique industrielle considérée 

conforme aux principes communautaires. La 

Roumanie a adopté une série d'initiatives en 

faveur du développement des petites et 

moyennes entreprises (PME), notamment : la 

participation au programme pluriannuel pour 

les entreprises, l'adhésion depuis 2002 à la 

charte européenne des petites entreprises, 

l'adoption en 2004 d'une loi sur les incitations 

à la création et au développement de PME, la 

simplification et l'amélioration des 

procédures administratives, la création d'un 

Fonds de garantie... Néanmoins, cette 

politique reste contrainte par certaines 

faiblesses structurelles. 

II - Les conditions de la privatisation 

Le développement du secteur privé peut se 

réaliser de deux façons concomitantes : la 

privatisation des entreprises d'état et la 

stimulation de l'entrepreneuriat privé. Les 

grandes entreprises d’État privatisées ont été 

peu favorables en général à l'instauration des 

nouvelles règles de marché, à la 

transformation des structures productives. 

Elles ont eut plutôt tendance à résister aux 

modifications et exploiter leurs situations de 

monopoles. En revanche, la création 

d'entreprise et l'entrepreneuriat jouent un rôle 

moteur dans le domaine de l’innovation. Le 

nombre de création d'entreprises ne cesse de 

croître en Roumanie depuis le début de la 

transition, comme indiqué ci-dessous :

Taille des 

entreprises 

Tableau 3 : Evolution des TPE et PME en Roumanie, 1999-2005 

1999 2000 2001 2002 2003 2004 2005 

Micro 294.597 279.893 280.448 285.207 313.485 358.242 477.969 

Petite 25.987 29.417 31.249 32.010 34.883 36.080 39.721 

Moyenne 6.102 6.864 7.455 7.989 8.342 8.674 8.576 

Total 326.686 316.174 319.152 325.206 356.710 402.996 526.318 

Source : Neault (2007) 

Cependant, la densité des TPE/PME.de 24,3 

pour 1000 habitants fin 2005, contre 54 à 

l'ouest de l'Europe (Neault, 2007), est 

insuffisante. Or pour Chandan, Mumtaz, et 

Parkash (2009), la croissance et le 

développement des PME permettent dans les 

pays pauvres ou émergents d'atténuer la 

pauvreté et la promouvoir les exportations. 

Les PME auraient joué un rôle crucial dans le 

développement de pays tels que Taiwan. 

Dans les pays développés, la promotion des 

PME serait l'un des moyens de booster 

l'activité. Certaines études définissent les 

PME à partir du nombre de salariés, d'autres 

en fonction de l'ampleur de l'activité. 

116 

Pour Nuno Castel-Branco (2003), les 

différences de la structure de la dynamique 

sociale et économique entre secteurs 

impliquent des politiques de promotion des 

PME différenciées. Les politiques pro-PME 

peuvent viser, entre autres, la mobilisation du 

secteur informel, la création d'emploi, la 

meilleure allocation des capitaux nationaux et 

l'innovation technologique. 

III - Dynamisme des TPE/PME en 

Roumanie 

Depuis le début de la transition, l'économie 

roumaine s'est beaucoup privatisée. Selon la 

classification d'Eurostat en micro-, petites, 

moyennes et grandes entreprises en fonction 

du nombre de salariés, la plupart des 

entreprises sont des micro-entreprises 

Tableau 5 : Structure des entreprises actives par taille et par secteur, en 2008 

Types d'entreprise : Micro 

0 - 9 

salariés 

petites 

10 - 49 

salariés 

moyennes 

50 - 249 

salariés 

grandes 

250 salariés et 

plus 

Industrie et construction 78,60% 15,70% 4,70% 1,00% 

Commerce 

services 

et autres 

92,30% 6,60% 1,00% 0,10% 

Sources : Institul National deStatistica (INSSE), ROMANIA 

En France et au Japon, la part des TPE/PME 

est très élevée, elle est respectivement de 97 

% et 99%,, mais avec densité d'entreprise 

beaucoup plus importante. L'auto-emploi, 

pour faire face au chômage et à la précarité, 

explique en partie le phénomène de la micro 

entreprise. Mais, pour Nuno Castel-Branco 

(2003), la TPE/PME ne peut être une fin en 

soi. La nature de l'accumulation capitaliste est 

d'éviter la concurrence grâce à 

l'accroissement de la taille de l'entreprise au 

moyen par exemple des fusions et

acquisitions, ou de l'extension interne via 

l'investissement. Mais, une autre stratégie, 

celle de favoriser les interactions interentreprises 

(M. Perry, 1999) par un 

développement horizontal (association de 

petites structures complémentaires) permet 

de palier à la petite taille des entreprises. 

Plusieurs types de réseaux d’entreprises : les 

districts industriels, les milieux innovateurs, 

les grappes d’entreprises (clusters) ont 

émergé depuis une vingtaine d’années, avec 

le modèle des districts italiens. 

La Roumanie tente d'intégrer cette dimension. 

Elle a participé, par exemple, au projet 

européen OMNI-NET (Opto-Micro-Nano 

Innovative Network Exploiting 

Transversality) coordonné par Opticsvalley 

(le réseau des acteurs de l'optique, de 

l'électronique et du logiciel en Ile de France) 

de décembre 2005 à mai 2008, dans le cadre 

du programme « Europe Innova » de la 

Commission européenne. L’objectif principal 

du projet était de favoriser le développement 

de coopérations entre 6 réseaux européens 

dans les domaines de l'optique, de la microélectronique 

et des nanotechnologies, et de 

lancer des coopérations technologiques au 

niveau européen. 

La mobilisation des acteurs publics, comme 

privés, dans la mise en place de réseaux est 

jugée essentielle afin de donner aux 

entreprises l'accès à de nouveaux marchés, à 

des équipements, ressources ou 

infrastructures, … Le phénomène cluster est 

présent dans de nombreux pays occidentaux 

mais aussi au Sud (Brésil et Inde notamment). 

Les entreprises ne pourront bien tirer leur 

épingle du jeu relativement à la 

mondialisation qu’en se positionnant ainsi au 

cœur des réseaux, qui sont une source 

d’innovation. 

117 

Conclusion : 

Le secteur privé connait un véritable 

dynamisme caractérisé par l'évolution 

positive du nombre de créations d'entreprise 

ainsi que la mise en place de politiques 

industrielles favorables aux entreprises. 

Cependant, la Roumanie souffre encore d'un 

retard par rapport à d'autres pays en transition 

de la région, tels que la Hongrie ou la 

Pologne. Le secteur privé souffre de la très 

petite taille des entreprises et surtout de la 

faiblesse de la densité des entreprises par 

rapport au nombre d'habitants. Outre la 

poursuite nécessaire des efforts de la 

Roumanie pour renforcer son secteur 

productif, le développement de réseaux 

d'entreprises peut s'avérer être une solution 

intéressante pour renforcer le dynamisme 

économique. 

Références 

Amit Raphael, Klapper Leora, Guillén Mauro 

F. and Quesada Juan Manuel (2007), World 

Bank Policy Research Working Paper, 

No.4313. 

Brown David, Earle John and Lup Dana ( 

2004), “What Makes Small Firms Grow? 

Evidence from Romania”, The Institute for 

the Study of Labor(IZA) , Discussion Paper 

No. 1343; Upjohn Institute Staff Working 

Paper, No. 03-94, October. 

Chandan Lal Rohra, Mumtaz Junejo, Parkash 

Lal (2009), « Impact of SMEs Business on 

Foreign Exchange Earnings of Pakistan 

Through Export from Sindh », Australian 

Journal of Basic and Applied Sciences, 3(2): 

1113-1121, 2009. 

European Bank for Reconstruction and 

Development (2010) Transition Report. 

Hernandez Emile-Michel (2010), 

L'entrepreneur une approche par les 

compétences, éd. : ems management et 

société, 223 pages juin 

Imai Masayuki (2007), « Crise, redressement 

économique et perspective d'adhésion à l'UE : 

le cas de la Bulgarie », Cahiers de 

l'Association Tiers-Monde, N°22-2007.

Kermadec Claire de (2006), « Le commerce 

de détail en Europe : diversité et convergence 

des tissus commerciaux », INSEE. 

Labaronne Daniel (1997 ), « Les lenteurs de 

la privatisation en Roumanie. Une analyse du 

comportement des acteurs publics », Revue 

d'études comparatives Est-Ouest, Vol. 28, No 

28-1, pp101-128. 

Loomets Piret and Venesaar Urve (2006), 

« The Role of Entrepreneurship in Economic 

Development and Implications for SME 

Policy in Estonia », Paper presented to the 

14th Nordic Conference on Small Business 

Research, May 11-13, Stockholm, Sweden. 

Neault Emilia (2007), « Market research: 

Assessment of the organizational 

development process implementation within 

Romanian SMEs », www.soluk.org/files/SMEsRomania%20- 

%20Emilia%20Neault.doc. 

Perry Martin (1999), Small firms and 

Network Economies, Routledge. 

Petrosyan Anna and Szabó Antal (2006), 

« Small and medium-sized enterprises in the 

Caucasian countries in transition », Asia 

Europe Journal, Vol. 5, No 1, pp 115-132. 

118 

Russu Corneliu ( 2006), « La Contribution 

des Investissements Étrangers à la 

Restructuration Industrielle en Roumanie », 

Institutul Naţional de Cercetări Economice, 

Centrul de Economia Industriei şi Serviciilor, 

Calea 13, Septembrie Nr.13, Sector 5, 

Bucureşti Vol. LVIII, No. 2/2006, pp 1-8. 

Shelburne Robert C. ( 2007), the economic 

situation and outlook in mid-2007 for the 

UNECE economies - Europe, North America 

and the CIS, United Nations Economic 

Commission for Europe, Geneva, Switerland, 

dicussion paper series, No. 2007.3, June 

2007. 

United Nations Economic Commission for 

Europe, Geneva, Switerland (2005), Some 

aspects of recent trade developments in 

south-east Europe, discussion paper series, 

No. 2005.6 December. 

Wild Gérard (2001), Economie de la 

transition : le dossier, CEPII No 2001 – 08, 

Octobre. 

Nuno Castel-Branco Carlos(2003) « A 

Critique of SME-led Approaches to 

Economic Development », May.

A QUALITATIVE RESEARCH REGARDING THE MARKETING 

COMMUNICATION TOOLS USED IN THE ONLINE ENVIRONMENT 

Pop Nicolae Alexandru 

Academia de Studii Economice Bucureşti, Facultatea de Marketing 

Acatrinei Carmen 

Academia de Studii Economice Bucureşti, Facultatea de Administrarea Afacerilor, cu predare în limbi 

străine 

Abstract: Starting from the meaning of the communication process in marketing, the authors try to 

identify its role in assuring the continuity of the management process in what concerns the 

relationships between all the partners of the company, on the long term. An emphasis is made on the 

role of online communication and its tools in relationship marketing. In order to validate some of 

the mentioned ideas the authors have chosen to undertake a qualitative marketing research among 

the managers of some Romanian tourism companies. The qualitative part of the study had as 

purpose the identification of the main tools which form the basis of the communication with the 

beneficiaries of the touristic services, of the way in which the companies use the online 

communication tools for attracting, keeping and developing the long term relationships with their 

customers in the virtual environment. The following tools have been analyzed: websites, email 

marketing campaigns, e-newsletters, online advertising, search engines, sponsored links, blogs, RSS 

feed, social networks, forums, online discussion groups, portals, infomediaries and instant 

messaging. The chosen investigation method was the selective survey, the research technique – 

explorative interrogation and the research instrument – semi structured detailed interview, based 

on a conversation guide. 

A very important fact is the classification resulted after the respondents were requested to mention 

the most efficient tools for attracting customers and for maintaining the relationships with them. 

Although the notoriety of the online marketing tools is high, there are some tools that are known by 

definition, but are not used at all or are not used correctly; or are not known by definition, but are 

used in practice. 

The authors contributed by validating a performing methodology of qualitative research, a study 

which will open new ways and means for making the online communication tools used for touristic 

services in Romania more operational. It is to be mentioned that the chosen domain of application 

has not yet been researched within the national literature. 

The qualitative research results will form the basis for a quantitative study among the consumers of 

touristic services in order to identify their opinion in what concerns the usage of online marketing 

tools by the tourism companies in maintaining the relationships with them. 

Keywords: Relationship Marketing, CRM, Online Marketing Communication, Market Research 

JEL Classification: M31 

Introduction 

The new communication media have 

registered an exponential development among 

the delivery - reception methods of the 

information between people. Marketing 

which is viewed as the analysis and action on 

the market has not remained immune to the 

major challenges determined by the 

119 

occurrence and development of the virtual 

communication – based on the internet 

applications. The strategic vision, that marks 

the evolution of contemporary marketing, 

assures a long term relationship between the 

companies and their market (Pop 2006: 36). 

The efficient administration of the companies 

moves the central focus of the marketing

action towards assuring the continuity and 

administration, on a long term basis, of the 

relationship with all the partners involved in 

this process. 

Having as target to make this activity 

continuous and bivalent, the company assures 

the success of the messages it wants to send 

and receive. In the modern business 

environment the online interaction has 

different multiple advantages starting from 

smaller costs, time efficiency for the 

participants, a secure transaction framework 

and a friendly communication environment. 

The knowledge and most important the usage 

of the online communication tools in what 

concerns the management of the relationships 

with all the stakeholders of a company must 

be monitored permanently by using the 

marketing research means. 

Marketing communication facilitated by 

the online tools 

The literature referring to the new marketing 

communication tools is one of the most 

developed in the field. A large number of the 

analyzed aspects start from the 

communication mechanism and concentrate 

over the management of this process 

according to the particularities that the digital 

economy imposes over the speed of 

transmission, delivery and responses of the 

recipients to the messages with which they 

are “overwhelmed”. As a consequence, the 

term of online marketing is defined more 

clearly (Meyerson and Scarborough 2008), 

which not only covers the communication 

area, but also focuses on it. The major 

changes that affected the technological, 

legislative, social and economic environment 

(Smith and Taylor 2004: 216 and next) 

generate an entirely new face of the 

communication act. 

The Romanian reader can benefit of a 

systematic approach of the marketing aspect 

in the digital era by having access to the 

translated reference books in the field, such 

as Kotler et al. or Gay et al. (Kotler, Jian and 

Maesincee 2009; Gay, Charlesworth and 

120 

Esen 2009). It is requested to diminish the 

role of internet into communication due to the 

fact that this remains mainly a 

communication method in which”... the value 

is represented by the message not the nature 

of the transmission” (Gay, Charlesworth and 

Esen 2009: 389). The customization, the 

distribution of the message or the access at 

request of the user, makes it easier for the 

message to be personalized. This fact 

transforms the new tools of online 

communication in real relationship marketing 

tools, the later having as purpose a long term 

relationship between all the stakeholders and 

the products, services or brands of an offering 

company (Gummesson 2008: 36-40). 

Relationship marketing, in its turn, also faced 

at the beginning of this millennium new 

developments creating a real interface for a 

highly anticipated field, the one of the 

demand holder’s reactions - representing the 

network marketing (Schebesch, Pop and 

Pelău 2010: 37-45; Bruhn and Koehler 2010; 

Roullet and Droulers 2010). All these 

developments reflect a significant change of 

the relationship between the participants in 

the selling and buying acts, their 

transformation from receivers and senders in 

partners in the process satisfying the of 

needs. The implication of the consumers in 

the production and distribution of the tangible 

goods and services, which satisfy their needs, 

becomes an important step in the entire 

process. Communication no longer belongs 

only to the one that offers, it sometimes even 

takes place without involving that person, 

having unexpected effects on the act of 

selling and purchasing (Trusov, Bucklin and 

Pauwels 2009: 90-102). 

Once the global coordinates of the online 

strategy are settled, it is necessary to carefully 

select the communication and promotion 

tools because the moment a user accesses a 

company’s website, he / she can be an actual 

or a potential customer. 

The online marketing mix (Adler 2010: 14) 

includes plenty of components and requires 

the following steps: planning, implementation

and control. During the planning phase there 

are established the tools that will be used and 

the channels through which they will become 

operational. The most well known and used 

tools are the: websites, emails, e-newsletters, 

search engines, sponsored links, blogs, RSS 

feds, social networks, forums and online 

discussion groups, portals, infomediaries and 

instant messaging (Pantea and Vegheş 2008: 

202). The implementation phase presumes 

that, once the tools have been chosen, 

decisions related to the design, characteristics 

and frequency of use must be taken. During 

the final part, the control, the marketing 

activities are monitored carefully, interfering 

if necessary. During this step the results can 

be partially measured, and if necessary, the 

instrument can be withdrawn. Finally, the 

results will be measured and conclusions will 

be drawn for future actions. 

Methodological notes 

In order to validate some of the ideas 

mentioned above, it has been chosen the 

organisation, development and interpretation 

of the results of a qualitative research among 

the managers of tourism companies from 

Romania. The term of tourism company will 

be used from now on in order to refer to any 

travel agency / tour operator or touristic 

services provider, no matter if it is a hotel 

network (national or international), hotel, 

guesthouse, transport company (national or 

international), air travel company, railway or 

maritime company. The touristic services 

represent one of the services’ domains that 

are well fitted for the introduction and 

generalization of the online marketing 

communication tools. The qualitative part of 

the research has focused on identifying the 

major tools that form the communication 

basis with the consumers of touristic services; 

the method in which the tourism companies 

from Bucharest use them or intend to use 

them in the future and on stating hypotheses 

regarding the way in which the potential 

customers are attracted and how the 

relationship with them is maintained. 

121 

The four objectives of the research (O1-O4) 

have focused on identifying the major virtual 

tools that the travel agencies use in order to 

attract potential customers, on the 

communication with the former or actual 

consumers of touristic services, on 

identifying the way in which the respective 

companies use the online tools and also on 

the reasons they are chosen for identifying 

their usage. The researched online marketing 

tools were the following: website, e-mail 

marketing campaigns, e-newsletter, online 

advertising, research engines, sponsored 

links, blogs, social networks, forums, online 

discussion groups, portals, infomediaries and 

instant messaging. 

The chosen investigation method was the 

selective survey, the research technique – 

explorative interrogation and the research 

instrument – semi structured detailed 

interview, based on a conversation guide (Pop 

2001: 86-87; Cătoiu et al. 2002: 207). The 

period when the research took place was 7-25 

February 2011. 

The main hypotheses of the research: 

H1. The companies operating on the tourism 

market in Romania use virtual marketing 

tools in order to attract potential customers 

and to maintain the relationship with the 

present clients. 

H2. The majority of online marketing tools 

are known and used more and more by the 

companies operating on the tourism market in 

Romania, implicitly by their managers. 

H3. The tourism companies use / combine 

certain online marketing tools in order to 

attract potential customers to their websites 

and also some online marketing tools for 

maintaining and developing the relationship 

with them, the majority of the respondents 

being satisfied with the results obtained after 

using the tools. 

H4. In the future, the marketing strategy of 

the tourism companies will also include 

online actions for attracting customers and for 

maintaining the relationships with them. 

It has been achieved the interviewing of 18 

representatives of tourism companies (10

epresentatives of travel agencies, 4 hotel 

representatives, 3 from transportation 

companies and one airline company 

representative), these companies have an 

updated website and the headquarters in (or 

also in) Bucharest. 

The interview had an average length of 40 

minutes. The registration of the answers 

given by the respondents has been done by 

recording on magnetic tape, in case of 16 

companies, the rest expressing their will to 

answer in writing to the questions from the 

interview guide. 

The working tools that have been used to 

analyze and interpret the data obtained from 

the interviews are: content analysis (Bardin 

1977: 43 și next), semantic differentiation 

(Cătoiu et al., 2002: 152-154) and Likert 

scale (Plăiaş et al. 2008: 361-363). 

Main results obtained and their 

implications 

The presentation of the main results, obtained 

after analyzing and processing the data, will 

be done taking into account the objectives 

and hypothesis that formed the basis of the 

research: 

O1. Identification of the relational means and 

tools used by the travel agencies and touristic 

services providers from Romania to relate 

with their customers; 

In case of the majority of the respondents 

there have been noticed different views in the 

answers and the main problem raised by all 

was referring to the effects of the actual 

economical-financial crisis on the economy, 

which brought major changes in the strategy 

of the companies and in the way they are 

allocating the afferent communication budget. 

All the interviewed tourism companies have a 

website where they present their offers, the 

details referring to the touristic services they 

provide; the website being unanimously 

considered very important for attracting 

customers. Other means of attracting 

customers mentioned by the company 

representatives were the commercial 

messages sent by email to the database with 

122 

customers (natural or legal persons), the 

company newsletters, the sponsored links and 

also the presence of the company on social 

networks. 

After attracting customers, the majority of 

companies consider important to retain these 

customers, keeping and developing the 

relationship, which they have with these 

people who benefitted from their offered 

services. One tool mentioned by all 

companies as being used in order to relate 

with the customers was the newsletter, which 

helps them inform the customers regarding 

the new offers, promotions, projects or new 

events, contests or surveys. The databases for 

the newsletters are made mostly by legal 

persons, being harder to create a database 

with natural persons. In this category, the 

companies have also mentioned sending 

emails with a commercial content, the 

presence on the social networks or the 

presence of a chat window on the website 

which gives the customer the possibility to 

contact directly a company representative. 

Based on these answers, H1 hypothesis is 

validated. 

O2. Identification of the degree to which the 

online marketing tools are known and used by 

the representatives of tourism companies for 

relating with the customers; 

To a very high proportion all the company 

representatives have stated that they know all 

the online marketing tools. A few of them 

stated that they do not know for sure what 

means email marketing and the difference 

between this tool and the newsletter; RSS 

feed is rather known by its name rather than 

the way it is used; the instant messaging was 

another unclear topic for some and this is 

why there were mentioned examples such as 

“Yahoo Messenger”, “Skype”, the chat 

window, etc. The H2 hypothesis is shown as 

being true. 

O3. Determine how travel agencies use 

online marketing tools and the degree of 

satisfaction obtained after their employment; 

The respondents were asked how and for 

what purpose they use each of the online

marketing tools. Based on the answers there 

can seen an alignment of the views regarding 

the purpose and the usage methods of the 

online tools: the website is in general the first 

contact of an internet user, potential or 

present customer, with the company, in the 

virtual environment; this is why it is very 

important to manage it correctly and to keep 

it functioning in a proper way, the website 

being used for presenting the company, its 

offers and important news; email marketing 

and e-newsletters: these two concepts have 

been confused a lot by the representatives 

during the interviews, in terms of their 

purpose and of the way they are used; thus 

based on the answers of the respondents, we 

can state the fact that there is a disaccord 

between the theoretic definition of the 

concepts and their practical use by the 

tourism companies; though both tools have 

been recognized by the company 

representatives as being used for attracting 

customers and also for maintaining the 

relationship with them; search engines: all 

the respondents consider vital for their 

company to be shown among the first results 

after generating a search, their website to 

appear on the first pages of the search engines 

after the customers introduce some key terms; 

sponsored links: all their users (one third of 

the respondents) declared themselves to be 

very satisfied with the number of viewers 

attracted to the website by the sponsored links 

that appear mostly on the search engines; 

blogs: the providers of tourism services do 

not have company blogs, but intend to use 

this tool in the future; RSS feed: none of the 

respondents mentioned this tool among the 

ones their company is using; social networks: 

no matter if it was a travel agency or a 

touristic services provider, all of the 

respondents acknowledged the growing 

importance of the social networks; forums 

and online discussion groups: none of the 

participating companies has an integrated 

forum in the company’s website, only one 

third of the respondent companies offer their 

customers the possibility to add comments on 

123 

their websites; portals and infomediaries: 

only of few of the company representatives 

that stated their opinion believe that these 

tools can help in attracting customers, but less 

for maintaining the relationship; instant 

messaging: all the company representatives 

that use instant messaging stated that they use 

this tool for attracting new customers and for 

maintaining the relationship with them, 

though only approximately 30% of the 

customers who have benefitted from touristic 

services contact the company afterwards. 

All the company representatives declared 

themselves satisfied and very satisfied of the 

results obtained after using online marketing 

tools in order to attract customers or maintain 

the relationship with them; hypothesis H3 is 

confirmed. 

O4. Identification of the companies’ future 

steps / strategies in terms of the relationship 

with their customers; 

The same as it was until now, in the future the 

marketing strategies will have as a core 

concept the customer and all the company’s 

actions will take place around him. Managing 

the relationships with the customers will be a 

mix between the attraction and loyalty 

methods using traditional tools, the well 

established online ones and also the “new” 

online tools (social networks, blogs which 

might be used to interact with the customers). 

Hypothesis H4 is validated, the respondents 

being certain about their need to maintain the 

relationship with the customers in the online 

environment, without ignoring or substituting 

the offline actions. 

Conclusions, limits and future directions of 

research 

As a result of the interviews it has been 

established that from the online marketing 

tools presented to the respondents, only three 

of them are used just for attracting customers 

(the search engines, the online advertising 

and the sponsored links), the others being 

used in the same time for attracting 

customers and maintaining or developing the 

relationship with them (website, email

marketing, e-newsletter, blog, RSS feed, 

social networks, forums, online discussion 

groups, portals, infomediaries and instant 

messaging). Of a major importance is the 

classification resulted after the respondents 

were requested to mention the most efficient 

tools for customer attraction and maintenance 

of the relationship with them. As a result, the 

most efficient online marketing tools for 

attracting customers are: company’s website, 

search engines, sponsored links, enewsletters, 

email marketing, social 

networks, online advertising; and for 

maintaining the relationship with the 

customers: the website, e-newsletters, email 

marketing, social networks and instant 

messaging. 

Despite the fact that the notoriety of the 

online marketing tools is high, there are some 

tools that are not known as a concept, that are 

not used at all or not used properly; or are 

known as a concept, but used in a wrong 

manner in practice. Though the term of 

infomediaries is specific for the tourism 

market, the ones in the business do not know 

its definition, but they know how it works. 

The term of instant messaging was also not 

very clear, being necessary to give examples; 

RSS feed tool is known better by name rather 

than implementation. The biggest problem is 

the confusion that appeared during the 

interviews between two tools highly used by 

the companies, email marketing and enewsletter. 

The difference between these two 

concepts was presented in a previous work of 

the authors (Pantea and Pop 2010: 738-739). 

The exploratory research is recommended in 

case it is wanted the better understanding of a 

certain phenomenon, in comparison with the 

descriptive or causal research which is chosen 

for testing specific hypotheses or for studying 

the differences between variables (Malhotra 

and Briks 2007: 201 and next). The limits of 

the present qualitative research are 

represented by the fact that it had an 

exploratory character aiming to understand 

what happens inside the studied field and to 

124 

study the social phenomena without “explicit 

outcomes” (Schutt 2009: 344 and next). 

The results of the present qualitative research 

will form the basis for a quantitative study 

among the consumers in order to determine 

their opinion related to the way the online 

marketing tools are used by the tourism 

companies. 

This article is a result of the project 

“Doctoral Program and PhD Students in 

the education research and innovation 

triangle”. This project is co funded by 

European Social Fund through The Sectorial 

Operational Programme for Human 

Resources Development 2007-2013, 

coordinated by The Bucharest Academy of 

Economic Studies. 

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126

Section International Business and European Integration: 

Sub-section: International Business

THE IMPACT OF THE CRISIS ON THE QUALITY OF LIFE AND SOLUTIONS 

TO REDUCE THE CRISIS EFFECTS. CASE STUDY: ROMANIA 

Meşter Liana 

University of Oradea, Faculty of Economic Sciences 

Bugnar Nicoleta 


Fora Andreea 


Abstract: The economic crisis creates a series of consequences such as loss of jobs, reducing 

wages, insecurity of the population, reducing standard of living, material hardships, low selfconfidence 

and hope for the better, illnesses, altered human relationships, social protests, ever 

greater scale strikes, in other words, deterioration of the economic environment. 

This paper aims to identify possible solutions to improve the effects of the crisis on the quality of 

life, based on figures from surveys conducted by research firms and the possible correlations to be 

made between these dates, without attempting to consider that these solutions are unique or the 

best. The main indicators considered for identifying the negative aspects of the crisis among the 

population are: the evolution of unemployment, changes in gross domestic product or wage 

developments in the economy and the share of expenditure linked to the basic needs out of the 

income earned. Regarding the possible solutions to reduce the population crisis, they are closely 

related to the credit and monetary policy, and also to the budgetary policy. 

Under the impact of the economic crisis, the business environment in Romania has suffered. Sub 

impactul crizei economice, mediul de afaceri din Romania a avut de suferit. Since most investments 

in 2008 were of foreign origin, the fact that this crisis has affected Romania as well did not surprise 

anyone. Nowadays Romania's business climate is characterized by lack of direct foreign 

investments and self funding sources whereas the population declares itself in a large proportion – 

more than 50% - to be affected by the crisis (1). 

Effects of the crisis can also be observed in the evolution of consumers’ behavior who fearing 

layoffs and declining revenue, not only turned to buying the same products or to purchase cheaper 

products, but also to reducing the amount of the purchased products.The quality of social life is 

essential and strongly related to stimulating economic activity.Satisfaction felt by the consumer will 

determine the level of consumption and will influence and ultimately decide the supply level. An 

adequate economic policy in Romania to restore the balance between supply and demand in the 

market may induce a state of economic recovery. This should be the objective of anti-crisis policies. 

Keywords: crisis, quality of life, unemployment rate, gross domestic product, wages rate, social 

conditions of life, economic environment 

JEL: F41, F41, J17 

1. The quality of life in the current crisis 

The direct impact of the crisis on the 

population leads to altered social conditions 

of life. A social indicator for the economic 

crisis assessment is the evolution of the 

unemployment rate. Given the systemic 

nature of the global economy, the problems 

the U.S. economy was confronted with were 

129 

felt and widespread in Europe and, of course, 

on other continents as well. If in 2007, the 

improvement of the economic conditions, 

those of the labour market included, resulted 

in an employment rate of the labour force at 

European level of 68% and a decrease in the 

unemployment rate up to 7% unemployment 

rate, in 2009 the unemployment rate 

increased by 2.2 percent, reaching 11% in

2010, and the employment rate decreased by 

2.5% in the EU. 

Another relevant indicator is the evolution of 

the gross domestic product. In 2009 as 

compared to the year 2008, the GDP 

decreased by 4.1% for the euro area and by 

4.3% on average for the 27 European 

countries. 

Inevitably, the economic crisis effects were 

felt in Romania as well. Studies have shown 

that, given the global recession, the number 

of bankruptcy cases has increased 

significantly up to the half of the year 2009. 

In Romania, for instance, the number of 

bankruptcies increased by 27% during 2008- 

2009, although 2008 had been a record year 

in this respect - for companies in Romania 

bankruptcies nearly doubled in 2008 

compared to 2007 and most of them were in 

the trade. Moreover, there are a number of 

sectors affected strongly by bankruptcy: 

trade, distribution, wood and wood products 

manufacture (412 cases), transport (causes: 

the increase of fuel prices, which led to the 

insolvency of small carriers) construction, 

textile, manufacturing, hospitality sector 

(causes: poor competitiveness, lack of 

qualified personnel, poor management 

strategy) the catering and automotive 

industry, the areas with the lowest risk, 

where they recorded the fewest cases of 

insolvency, are producing and supplying 

electricity and heat, water and gas, 

metallurgy, financial intermediation , 

telecommunications and IT. For example, in 

Romania since 2008, the number of 

payments made under conditions of 

insolvency has increased the production 

twice and three times that of wholesale and 

retail trade, construction and only in the 

construction industry were recorded 10 or 

more payments in circumstances of 

insolvency. 

In Romania, the crisis in the construction 

sector has caused problems to companies in 

the wood industry, leading to lower orders 

and financial difficulties among companies 

in the forest administration. The annual 

130 

review of working time evolution also 

revealed that the length of the workweek 

reflected a clear distinction among the 27: 

only 13 of the EU countries had working 

weeks longer than the EU average. The 

longer working week was recorded in 

Romania, where full time employees were 

working, on average, about 41.8 hours a 

week. 

Regarding the evolution of wages between 

2008 and 2007, all EU countries have 

recorded increases in average wages agreed 

in collective agreements. However, the surge 

in inflation rate has reduced the wages rise 

set in the collective agreements, from 3.6% 

in 2007 to 1.3% in 2008 in real terms. In 

countries where real wages have still 

continued to grow (and for Romania), 

increases were much lower in 2008 than in 

2007. 

It is obvious that there are differences and 

similarities between Member States in 

Europe. Yet the satisfaction levels vary 

significantly among social groups: people 

with higher incomes, better health status, 

secure jobs and higher levels of education 

are generally more satisfied with their lives. 

Although Bulgaria and Romania have a 

similar GDP per capita, the level of 

satisfaction in Romania is much higher than 

in Bulgaria. Consequently, there is no 

proportional relationship between national 

income and level of satisfaction. 70% of EU 

citizens have a dwelling, and nearly half of 

them hold it definitively, without any 

mortgage or loan. The proportion of people 

with home ownership is much higher in 

countries of Central and Eastern Europe 

where, on average, 74% of citizens have 

total ownership of the housing, the highest 

proportion being recorded in Romania (87%) 

-this high percentage of ownership does not 

translate into a higher quality of housing. 

The recession of 2008 has fundamentally 

changed the living conditions of many 

European citizens, causing for Romania a 

decline of the possibilities to provide the 

basic needs: adequate warming of the house,

an annual holiday, new furniture to replace 

old furniture, a meal that includes meat, 

chicken or fish every other day, new clothes 

and means of taking care of guests at home a 

meal that includes meat, chicken or fish 

every other day, new clothes and means of 

taking care of guests at home - from 30% in 

2007 to 26% in 2009, significant differences 

being perceived throughout the country as 

well: 25% of the poorest people lack four of 

six items, while a percentage of 25% of the 

wealthiest citizens t lack only one element. 

In Turkey, the Former Yugoslav Republic of 

Macedonia, Bulgaria, Romania, Hungary, 

Lithuania, Slovakia and Latvia, 25% of the 

richest people suffer from many 

131 

shortcomings than the poorest 25% in 

Denmark, Sweden, Luxembourg and the 

Netherlands. 

There is an obvious downward trend in 

Europe from 2007 to 2009 in nearly all states 

regarding the satisfaction with the level of 

living. In Romania, this trend is sudden, the 

largest decline in satisfaction with the level 

of living were recorded among people of 65 

or more who have suffered the greatest 

decrease in quality of life in general as a 

result of the fall in the purchasing power of 

pensions. 

Regarding the evolution of the number of 

jobs, it is shown in the following table (table 

no. 1): 

Table no. 1 Jobs lost and created by sectors in 2009-2010 

Fields of activity Nr. jobs lost / created 

Automobile production -70377 

Financial intermediation -57417 

Public administration and defence -46802 

Trade -44621 

Machinery and equipment production -42545 

Post and telecommunications -35452 

Metallurgy -23770 

Road transport -22712 

Electric equipment production -21358 

Food and drink production -20466 

Financial intermediation 6215 

Computer and related activities 6470 

Coal Mining 7650 

Other economic activities 8592 

Post and telecommunications 8860 

Electricity, gas and hot water supply 11510 

Automobile production 12744 

Public administration and defence 13999 

Hotels and restaurants 22220 

Retail 47157 

Source: adapted from http://www.eurofound.europa.eu/pubdocs/2010/16/ro/1/EF1016RO.pdf. 

The Romanian economy has lost more than 

370,000 jobs over the last year. In late 2009, 

the number of employees had fallen from 

4.73 million jobs to 4.36 million. 40% of the 

jobs lost in 2009 belonged to the 

construction and industry field. At the end of 

2009, the number of employees fell from 

4.73 million jobs to 4.36 million. 40% of the 

jobs lost in 2009 and belonged to the 

construction industry. After 2005, over a

third of the new jobs have been created by 

the state, and personnel costs incurred by 

public money have doubled the budget. The 

fact is that the missing 370,000 jobs by the 

end of 2009 equal the number of jobs created 

in five years of economic boom. 

2. Anti-crisis solutions: 

There are a number of protectionist measures 

to be found in the specialized literature 

meant to diminish the effects of the crisis. - 

In his book Après la démocratie, Emmanuel 

Todd (2), considers that when confronted 

with the "brutality" of the crisis and of the 

unemployment rise, more and more people 

were in favour of the strengthening of 

protectionist measures, starting with a form 

of "European protectionism "done in the 

name of" a necessary correspondence 

between economic and social spaces. " This 

solution is proposed taking into account the 

fact that rising wages will encourage 

consumers to absorb more of the market 

offered, resulting therefore in real 

possibilities of production relaunching. 

Michel Aglietta (3) believes that, given the 

current crisis, the adoption of protectionist 

measures could be a factor that deepens the 

crisis and brings along the risk of damaging 

relations between states, this claim is based 

on the fact that a concerted international 

action is absolutely necessary for successful 

implementation of existing measures to halt 

the crisis. Even if the European 

protectionism helped the economies of 

European countries in fighting against the 

international market, there are factors that 

hinder the adoption and implementation of 

protectionist measures in the EU domestic 

policy, factors resulting from the differences 

between the economic development of EU 

countries. 

Michel Aglietta believes that Europe has 

been profoundly affected during this period 

of crisis (4) because of the absence of a 

robust and well-based industrial policy, and 

also due to the promotion of a clear policy 

against competition coming from outside the 

132 

EU. In this context, the research and 

development policies remain the national 

ones, generating an unnecessary competition 

between companies from different EU 

countries, a process also exacerbated by 

political sensitivities between countries; EU 

holds its own responsibility because it 

supported the fight for the dominant position 

in the EU through protectionist measures 

against other areas, America, Asia, this 

European protectionism preventing firms 

from moving towards the development of 

extra-European activities. – 

Referring to the book written by Emmanuel 

Todd, Daniel Bensaïd asks in his article 

"Keynes et après? (5) "to protect? whom 

and against whom? If Europe started by 

adopting social measures of convergence in 

terms of jobs, income, social protection, 

labour rights, harmonization of taxation, then 

Europe might legitimize the adoption of 

protective measures and not the interests of 

selfish industrialists and those in the 

financial environment whom it favours." 

Europe could help the developed countries in 

supporting the joint development through 

agreements with less developed countries in 

terms of migration, technical cooperation, 

fair trade. Without these measures, he 

believes, the protectionism of the rich would 

have negative consequences upon these 

developing countries as main effects. 

One of the measures put forward in order to 

reduce the impact of the crises upon the 

European Union countries, is a European 

economic recovery plan (6), which has 

proposed to come not only with supporting 

solutions for EU countries, but also practical 

help in this regard. 

Thus, the plan devised at the European level 

aims at using all available means and 

instruments of action at EU and national 

level; it is a plan meant ultimately to lead to 

economic growth and creating jobs by means 

of the objectives to promote economic 

recovery and that lead, ultimately, to 

economic growth and creating jobs.

The strategic objectives of the Recovery 

Plan were: 

- stimulate demand and consumer 

confidence; 

- harmonization of market conditions with 

the requirements in terms of competitiveness 

by stimulating economic growth and new 

jobs; 

- stimulate economic activity without 

affecting the environment security. 

To achieve these objectives, there were 

proposed concrete measures that can be 

implemented in the economies of EU 

countries with the aid provided by EU 

institutions. 

The monetary and credit policy - is vital 

when in crisis and must be managed 

carefully by the bank that carries it out - the 

European Central Bank ECB. In this respect, 

the ECB has created a drop in euro zone 

interest rates to stabilize the markets by 

lending money to supply banks with cash to 

help their clients. Similarly, the European 

Investment Bank EIB will increase by about 

15 billion its annual interventions in the EU 

countries' economies by providing loans to 

positively influence and lead these national 

economy out of recession whereas the 

European Bank for Reconstruction and 

Development will help the new Member 

States with 500 million per year to get out of 

recession and to start the economic recovery. 

Budget policy – within the national budgets 

for 2009, and then for 2010 there were 

measures to be taken requiring an amount of 

approx. 170 billion or 1.2% of GDP at EU 

level so as to produce positive effects, and, 

if possible, long term ones: to boost 

purchasing power of consumers by 

improving the functionality of market 

adoption of emergency measures to 

strengthen the link between wage-fixing 

mechanism and the evolution of 

productivity, employment policy supporting 

and facilitating labour market transitions, 

reducing administrative costs. 

For blurring effects of the crisis on global 

business environment, the Government 

133 

Strategy for improving the business 

environment 2010-2011 proposes a number 

of measures to be implemented with minimal 

cost: restoring flows of foreign capital, 

promoting responsible business conduct, 

reduce trade costs and providing national 

consulting firms to solve the crisis. 

The government provides a series of actions 

aimed at: 

- improving the dialogue by creating publicprivate 

consultations designed to ensure 

greater transparency in the regulations; 

- supporting the business environment by 

encouraging freelance professions; 

- developing the cooperation with 

specialized departments of the central 

government institutions. 

The EU has published recommendations in 

individual reports on each Member State to 

achieve the objectives of the annual package 

"Lisbon". These recommendations have as a 

major priority the protection of the European 

citizens regarding the consequences of the 

financial crisis and the implementation of 

several policies such as integration, 

retraining, valuation of professional 

competencies, especially in what the 

licensed unemployed workers are concerned. 

Conclusions: 

Many economists, coming from different 

socio-cultural spaces, aim at finding further 

reforms for getting out the crisis. Their 

dilemma lies in the fact that I cannot answer 

exactly to what extent the preservation of 

capitalist structures, as they were promoted 

through the writings of the interwar 

reformers can still be possible under current 

conditions. For Romania, the confidence in 

overcoming the crisis is still, the lowest in 

Europe. However, the direction is positive: 

in 2011 the population confidence index 

measured by the Consumer Confidence 

Barometer for the European Commission has 

recorded an average increase compared to 

the average of the year 2010, reaching -46 to 

-54, showing the Romanians more optimistic 

especially at the beginning of the year.

References 

1. *** Mednet Marketing Research 

Center. 

2. Todd, Emmanuel. Après la 

démocratie, Paris, Editura Gallimard, 

2008 

3. Aglietta, Michel. Quelle réforme du 

système monétaire international ? 

article published in « Alternatives 

Économiques » magazine, Hors-série 

poche, nr. 43bis, April, 2010, pg. 172 

134 

4. Aglietta, Michel. Quelle réforme du 

système monétaire international ?. 

article published in « Alternatives 

Économiques » magazine, Hors-série 

poche, nr. 43bis, April, 2010, pg.174 

5. Bensaïd, Daniel. Keynes et après ?, 

published in «Contretemps», nr. 4, 

March, 2010 

6. «Un plan européen pour la relance 

économique», strategic report, 2009, 

Luxembourg.

Section: International Business and European Integration 

Sub-section: EU Sustainable Economic Development and 

Competitiveness

POVERTY AND LIVING. ROMA POOR NEIGHBORHOODS IN ROMANIA AND 

HUNGARY 

Olah Gheorghe 

University of Oradea 

Olah Șerban 

Univerisity of Oradea 

Flora Gavril 

Christian Partium University of Oradea 

Szekedi Levente 

Christian Partium University of Oradea 

The first part of our paper is a theoretical debate of the most important research results concerning 

the Roma population in Romania and Hungary, while in the second part we proceed to the 

interpretation of our own empirical research data. 

Methodologically, our research is based on sociological survey. Data concerning sociooccupational 

characteristics of Roma communities have been collected by means of a questionnaire 

based survey of active aged Roma population from Oradea and neighbouiring rural localities in 

Romania and Hungary (Oşorhei, Ineu de Criş, Biharkeresztes, Told). 

The paper concludes with policy reccommendations aimed at the members of the target group. 

This paper presents the outcome of an euroregional 

comparative research conducted in 

2010 in two neighboring border areas: Bihor 

(Romania) and Hajdu-Bihar (Hungary), 

financed by a grant awarded by the European 

Regional Development Fund. The first part of 

the paper includes a theoretical overview of 

the most important research results 

concerning the Roma population in Romania 

and Hungary, while in the second part we 

proceed to the analysis of our own empirical 

research data. Methodologically, our research 

is based on the sociological survey. Data 

concerning socio-occupational characteristics 

of Roma communities have been collected by 

means of a questionnaire based survey of 

active aged Roma population from Oradea 

and neighboring rural localities in Romania 

and Hungary (Oşorhei, Ineu de Criş, 

Biharkeresztes, Told). Due to the fact that 

data set is very large and complex we will 

focus on data concerning living conditions in 

poor neighborhoods. 

137 

1.1. Introduction 

The Roma (or Gypsies) are a unique minority 

in Europe. Unlike other ethnic groups, they 

have no historical homeland and live in 

almost all countries in Europe and Central 

Asia. The origin of the Roma in Europe is 

widely debated. Historical documents 

indicate that Roma have migrated in waves 

from northern India to Europe between the 9 th 

and the 14 th century. On the other hand, 

historical studies show that the Roma were 

very much persecuted by the majority from 

the very beginning of their arrival in Europe. 

The measures taken against them ranged from 

hanging, drowning, reddening with iron, 

imprisonment, enslavement, deportation. The 

Western Europeans were more drastic in their 

measures against the Roma than the more 

permitting Turks, who invaded the South- 

East and parts of Central Europe 9 . Perhaps 

this explains even in today Europe a greater 

9 Fraser, Angus, 2010, Țiganii, Editura Humanitas, 

București, p. 190

concentration of Roma in the Cenral and 

Eastern European countries. 

Roma is an extremely diverse population with 

multiple subgroups based on language, 

history, religion and different occupations. 

While in some countries Roma are nomadic, 

most of them in Central and Eastern Europe 

have become sedentary – some of them in the 

days of the Ottoman rule and others in the 

socialist period. 10 

Estimating the size of the Roma population is 

a complicated issue. Census data are intensely 

disputed as many Roma do not identify 

themselves as Roma in surveys. On the other 

hand, the official figures, the results of the 

population censuses are contradicted by other 

studies which aimed to estimate the number 

of Roma population 11 . Some estimates show 

that the number of Roma increased up to 6 

and 9 percent in Bulgaria, Macedonia, 

Slovakia and Romania. These percentages 

may increase for the foreseeable future 

because of the difference between fertility 

rates in populations of Roma and non-Roma. 

Romania has the largest Roma population in 

Europe, estimated figures ranging from 1 to 2 

millions. A large Roma population (between 

400,000 and 1 million) lives in Hungary, 

Bulgaria, Slovakia, Turkey and Serbia. The 

largest population of Roma in Western 

Europe is in Spain (about 630,000), France 

(310,000), Germany (70,000) and Italy 

(130,000). In total between 7 and 9 million 

Roma live in Europe - a population equal to 

that of Sweden or Austria. 12 

The Roma population in Romania and 

Hungary has some special characteristics 

compared to other minorities. By tradition, it 

10 Ringold, Dena, Orenstein, Mitchell, Wilkens, 

Erika,2003, Roma in an Expanding Europe. 

Breaking the Poverty Cycle, The World Bank, p.1 

11 Preoteasa, Ana Maria, 2003, Prezentarea unei 

cercetări internaționale cu privire la starea 

romilor în Europa Centrală și de Est, in Calitatea 

Vieții, XIV, no.2, p.265 


Erika, 2003, Roma in an Expanding Europe. 

Breaking the Poverty Cycle, The World Bank, p.1 

138 

is a population with a low social status, 

typical object of comparison as the poorest 

category of population and strongly exposed 

to discrimination and social exclusion. To 

these one should add other features, such as 

failure of modernity or difficulties of 

identifying the exact size of the Roma 

population. 13 

Historically, the Roma population had a 

disadvantaged position over the centuries. 

While by the end of the XIX th century, Roma 

were slaves on the estates of Romanian or 

Hungarian nobles (Transylvania), in the last 

two centuries, this population has 

experienced a period of emancipation, have 

been offered equal rights with the majority 

population and small land plots. In the 

socialist period the situation of Roma 

populations improved to some extent. These 

policies resulted in a relative improvement of 

their education level and the beginning of 

their involvement in the formal economy. 

However, the price they paid was forced 

integration and a loss of cultural specificity. 14 

The post-communist transition has caused 

many changes in the life of Roma 

communities. Some Roma even regret the 

socialist regime; even if they were not 

recognized as a national minority, the 

assimilation policies were offering them at 

least some degree material safety. In contrast, 

the post-socialist period was full of changes 

and paradoxes for Roma. On one hand, it 

allowed the recognition of Roma identity, 

politically and culturally, on the other hand, it 

emphasized the economic and social 

marginalization and rejection of this 

community. 15 

In the present context, the Roma issue is not a 

simple one. Several economic and social 

factors are combined here; while the ethnic 

dimension of the problems can not be 

13 Voicu, Mălina( coordinator), 2007, Nevoi și 

resurse în comunitățile de romi, Soros Foundation 

Romania,București, 2007, p.7 

14 Ibidem 

15 Pons, Emanuelle, 1999, Țiganii din România, 

Editura Compania, București, p. 137

ignored, it stems to great extent from the 

crisis crossed by Romania and Hungary 

during the transition period, which has a 

particular effect on the Roma population. 

Viewed in economic terms, we can say that 

Roma are the poorest population in Romania 

and Hungary, perceiveing the economic 

vulnerability and social exclusion as their 

main problems. 16 The poverty level of this 

ethnic group is a combinated outcome of 

several factors. As Marian Preda stated, 

poverty can be considered only a specific 

dimension of social exclusion, the financial 

one 17 . Other forms of exclusion are also 

involved: exclusion from the democratic and 

legal system, labor market exclusion, 

exclusion from the state welfare system, 

exclusion from the family and community 

system. 

According to recent research, the causal 

factors seem to have mainly an individual 

determination and to a certain extent, a 

cultural one, pointing to self-exclusion 18 . The 

economic vulnerability of Roma is thus 

caused by a complex of factors such as low 

educational and vocational training, the 

precarious position on the labor market, the 

great number of children in Roma families, 

their discrimination by the majority group 

and the involvement in the informal 

economy. One can speak of a vicious circle in 

the case of the Roma. Being poor in the vast 

majority, they do not have the resources to 

complete their educational and professional 

training. Many of them not having jobs, they 

get involved in the informal economy, or 

immigrate to western countries. 

1.2. Roma in the sociological literature 

The sociological literature on the problems of 

the Roma community is rich. The research 

16 Voicu, Mălina( coordinator), 2007, Nevoi și 

resurse în comunitățile de romi, Soros Foundation 

Romania,București, p.7 

17 Preda, Marian, 2002, Politica socială românească 

între sărăcie și globalizare, Editura Polirom, Iaşi, p. 

101 

18 Ibidem, p. 168 

139 

developed on the Roma communities is 

achieved both by quantitative and qualitative 

methods. Both approaches appear to have 

pros and cons. Quantitative methods are 

useful to illustrate comparisons between the 

populations of Roma and non-Roma, both at 

a national and a European level. On the other 

hand, information on Roma can not be 

regarded as the most reliable data and they 

are also difficult to be obtained. Due to 

statistical problems related to ethnic selfidentification, 

the quantitative research has 

serious limitations. However, the quantitative 

data provide possibilities for comparative 

analyses of welfare measures that can 

improve the elaboration and implementation 

of social policies. 

While quantitative research shows that Roma 

poverty is distinct, it does not provide an 

adequate basis for understanding the specific 

dynamics circumscribing Roma economic 

vulnerability. In this field of study, qualitative 

research might have a higher effectiveness in 

identifying social processes, mechanisms and 

relationships between variables that are 

difficult to be emphasised by using 

exclusively quantitative methods. Qualitative 

research, however, has also certain 

disadvantages. It tends to focus on just one 

specific issue, focusing on a limited number 

of factors. That is why a combination of 

quantitative and qualitative methods can 

provide a complementary set of perspectives 

leading to a better understanding of social 

problems and policies. 19 

A remarkable comparative research project 

on the Roma community in six Central and 

Eastern European Countries (Hungary, 

Bulgaria, Slovakia, Poland, Russia and 

Romania), both quantitative and qualitative, 

has been conducted between 1999 and 2000, 

coordinated by Ivan Szelenyi (Yale 


Erika,2003, Roma in an Expanding Europe. 

Breaking the Poverty Cycle,The World Bank, p.4

University). 20 Some interesting 

methodological conclusions for the study of 

Roma communities have been drawn. During 

one year, the researchers analyzed between 

10,000 and 19,000 Roma households. In the 

same time a questionnaire was applied on an 

oversample of Roma in Bulgaria, Hungary, 

Poland and Romania. The researchers have 

also made some qualitative studies of 

communities in extreme poverty in these 

countries. 

In 1993 people in all countries experience a 

similar deterioration in living standards 

compared to 1988. Since 2000 the trend is a 

decrease of the poverty in countries that have 

implemented more rigorous liberal reforms, 

for instance Hungary and Poland, as well as 

in countries with slow progress to the model 

of liberal capitalism. 21 

The study revealed that transnational 

differences are as important as the ethnic 

differences. For example, Roma in Hungary 

are slightly poorer than non-Roma in 

Bulgaria. In all the countries, Roma are 

overrepresented in the poorest deciles of 

population. However, most of the very poor 

people consist of non-Roma. There is also a 

significant category of Roma who has a good 

enough standard of living in all the countries 

mentioned. The conclusion of the researchers 

is that the Roma who have successfully 

maintained the traditions were more likely to 

avoid the trap of poverty than those 

assimilated to the fringes of society. 

One of the most quoted qualitative studies in 

the international literature studying the Roma 

is the English anthropologist Michael 

Stewart’s, presented in “The Time of the 

Gypsies” (1997), a remarkable social 

ethnography of the Roma in the Hungarian 

town of Harangos, located at north of 

Budapest, a survey using the method of 

participatory observation. The English 

anthropologist developed the research 

20 One outcome of this research is a work entitled 

Poverty, Ethnicity and Gender in Transitional 

Society (2002). 

21 Ibidem, p.9 

140 

through a field work conducted during 18 

months between the years 1984 and 1985. 

During this period he lived with his wife and 

children in an area called “The third class” in 

a Roma neighborhood of the town, a town 

where, according to a census of that time, 

around 1000 Roma lived. 

Until 1989 the official communist policy was 

to integrate the Roma in the “leading” class, 

the communist working class. However, 

Roma have found ways to maintain their own 

identity. Michael Stewart's book examines the 

refusal of Roma to abandon their lifestyle and 

accept assimilation to the majority 

population. Forget, Michael Stewart warns us 

early in the book, about the carefree freedom 

of caravans and campfires. These men lived 

hard and brutal sometimes. They dreamed of 

richness gained through gambling and 

stealing horses, but in reality were poor as a 

church mouse. They lived in ghettos, but their 

names and law argued that the Roma are 

working people, often working for low wages 

in industry and collective farms. And despite 

the marginal position and sufferings they 

endured they preserved the dignity and the 

joy of being Roma. 22 

Michael Stewart's book describes the 

cultivation, celebration and reinvention of the 

cultural difference and diversity of some 

people deemed by their superiors too stupid 

and uncivilized to have their own culture. 

Since the beginning of the Second World War 

there were two dramatic ways to solve the 

“gypsy problem”. Between 1941 and 1945, 

the Nazis exterminated about 500,000 Roma 

in their effort to clear the “degenerated” and 

“antisocial”way of life. Between 1957 and 

1989, said Stewart, a different type of anti- 

Gypsy campaign took place in the Eastern 

Europe. Nobody was made prisoner, left to 

die alone. Repression and discrimination did 

not exist in the plan of the communist 

reformers. But the final goal was strikingly 

similar to the fascist one, the Gypsies 

22 Michael Stewart,1997, The Time of the Gypsies, 

Westview Press, Colorado, p. 1

disappearance. The East European 

communists’ task in 1957, says the English 

anthropologist, was really Herculean: the 

cultural assimilation of millions of people 

who had suffered discrimination for 

centuries. The former Yugoslavia being 

partially an exception, Gypsies had been 

subjected to a systematic campaign of 

assimilation. Czechoslovakia, Poland, Soviet 

Union, Romania and Hungary pursued almost 

identical policies. 23 

The English anthropologist notes, however, 

that, ironically, far from being assimilated in 

the working class, the problems associated 

with the Gypsies became larger as the 

campaign of assimilation continued. Stewart 

noted that in the Hungary of the period the 

research was held, the Gypsy issue was given 

greater importance than ever, since the 1930s. 

Two sources led to this attitude. First there 

was a dramatic gap between the theory of 

social inclusion and the reality of increasing 

social differentiation. The Communists told 

to the non-Roma that they had done much to 

improve the lives of Roma and their 

disappearance could be expected soon. But 

there was little evidence in this case. Two: the 

policies reproducted in a new form the old 

ideas about gypsies being “others”. The 

economic and social system entered into 

crisis in 1980s, the Gypsies otherness became 

clearer and more ominous. 

The Romanian literature on the Roma issues 

is related especially to the researches carried 

out by the Institute for Quality of Life in 

Bucharest. 24 The work coordinated by Elena 

23 Ibidem, p.5 

24 After 1990, a number of research papers on this 

area appeared: Cătălin Zamfir and Elena Zamfir, 

Gypsies between worry and neglect (1993), Cătălin 

Zamfir and Marian Preda, Roma in Romania (2002), 

Marian Preda, Romanian social policy between 

poverty and globalization (2002), Manuela 

Stănculescu and Ionica Berevoiescu, Poor as a 

church mouse, looking for another life (2004). In the 

work A new challenge: the social development 

(2006), coordinated by Cătălin Zamfir and Laura 

Stoica, there is a chapter signed by the sociologist 

141 

and Cătălin Zamfir, Gypsies between worry 

and neglect (1993) can be regarded as the 

first and perhaps the most extensive analysis 

of the problems of Roma in Romania, based 

on a quantitative research on a representative 

sample of Roma households. In this book a 

number of issues concerning the Roma are 

considered, such as housing, education, 

professions and occupations, family and 

living conditions of the children. 

Nine features are invoked - social-economic 

trends of the Roma population - which have 

an overwhelming effect on their their 

opportunities: decreased access to jobs 

offered by the modern economy, labor market 

niches that Roma have a special access 

(traditional professions, businesses on their 

own, unskilled jobs), precarious and uncertain 

nature of many economic resources 

traditionally exploited by the Roma, marginal 

or even deviant exploitation of the 

community, increasing crime, its organized 

character and violence, antagonizing relations 

between the majority population and Roma 

population, the number of children, poor 

housing conditions and migration to cities 

and the risk of “pockets” of poverty and 

chronic juvenile with a strong ethnic coloring. 

The conclusion of the whole analysis is that 

the Roma population faces serious social and 

economic crisis. The traditional life strategies 

provide only the chance of survival in this 

crisis, but not for its overcoming. 

1.3. Living in poor areas 

The analysis of the poor areas as living 

spaces is an integral part of any discourse on 

new poverty and its focus on clearly defined 

territories. To validate an area as poor 

assumes the presence of deprivation 

concerning the housing and the prevalence of 

precarious living conditions. In this regard, 

the poor areas are described as areas with no 

or poorly equipped facilities, poor natural 

environment, the house in an advanced state 

Mihai Surdu on school segregation and schools with 

Roma students.

of degradation and poorly provided with 

urban facilities. The specific phenomena for 

the poor areas are housing insecurity and 

overcrowded housing. 25 

There are several important analyses on 

living in poor areas in the international 

literature. In the West sociologists are 

primarily concerned with the poor areas of 

the urban, often called ghetto or banlieue. As 

William Wilson, an African-American 

sociologist considers, the concentration of 

black people in the ghetto is the result of the 

reduced access to employment and 

socialization. European sociologists such as 

Loic Wacquant, are adding another element, 

namely the already mentioned stigmatization 

of people living in poor areas of large urban 

agglomerations. The Dutch researcher Eva 

van Kempen also mentions a fourth factor, 

the limited access to social rights 26 . 

In connection with the topic discussed, there 

is a recently completed European project 

coordinated by Ronald Van Kempen, a Dutch 

urban geographer at the University of 

Utrecht, entitled Large Housing Estates in 

Europe: Good Practices and New Visions for 

Sustainable Cities and Neighborhoods. The 

main objectives of this project (which 

includes case studies in cities in Hungary) 

were to identify the social and economic 

changes that took place in the social world of 

the blocks built after the Second World War 

and the development of some items which 

proved to be important in the success or 

failure of the social policies applied to the 

areas of blocks 27 . The researchers concluded 

25 Stănculescu, ManuelaSofia, Berevoescu, Ionica, 

2004, Sărac lipit,caut altă viață!, Editura Nemira, 

București, p.128 

26 Van Kempen, Eva, în Marcuse, Peter și Van 

Kempen, Ronald, 2002, Of States and Cities, 

Oxford University Press, p.245 

27 Murie, Alan, Siedow-Knorr, Thomas, Van 

Kempen, Ronald, 2003, Large Housing Estates in 

Europe.General Developments and Theoretical 

Backgrounds, Utrecht University, p.11 

142 

that these areas of blocks concentrate people 

with modest incomes and a low stock of 

social cultural and political capital. The block 

areas are also characterized by a higher rate 

of unemployment and crime and a higher 

level of social exclusion. Although the 

researchers found that the block areas are in a 

state of failing all over Europe, there are also 

situations where deprivation, bad construction 

and management do not result in revocation. 

Second, East-West differences are noticed in 

terms of social cohesion and solidarity of the 

inhabitants of the blocks in the projects of 

rehabilitation of buildings and layout of the 

green spaces surrounding these buildings. 

With regard to housing problems in the poor 

areas of Romania (most papers on this topic 

focusing on the housing problems of Roma 

communities), I should mention the work of 

researchers like Cătălin and Elena Zamfir 

(1993), Cătălin Zamfir and Marian Preda ( 

2002), Manuela Stănculescu and Ionica 

Berevoescu (2004), Cătălin Berescu and 

Mariana Celac (2006) or Cosima Rughiniş 

(2008). The main issues considered by these 

works are: poor housing, housing density, 

documents of the buildings and land 

ownership and access to utilities. The main 

findings of the authors are the significant 

differences between the statuses of Roma and 

non-Roma, and also the significant 

differences between rural and urban areas, the 

Roma living in the rural environment having 

poor living conditions. We will see to what 

extent some of these findings could be 

verified on the cases studied by us in Bihor 

and Hajdu Bihar. 

1.4. Roma in Bihor and Hajdu-Bihar 

1.4.1 Bihor County 

Bihor County is the third in Romania 

according to the percentage of the Roma per 

population (5.01%), after Mureş County 

(6.96%) and Sălaj County (5.01%). There are 

around 30,200 Roma in Bihor County. Most 

of them live in Oradea, 6,000 to a total of 

206,000 inhabitants. The most concentrated 

Roma communities are in Săcuieni (3,700),

Tinca (2,500), Diosig (1,500), Batăr (1,500), 

Sânmartin (1,070), Aleşd (1,000), Suplacu de 

Barcău (900) and Ineu (850). 

Roma, statistically a minority, are 89% of 

those who abandon school in Bihor County 

and, according to police estimations, 8 of 10 

offences are committed by Roma. Only 10% 

of the Roma are employed and only 50% of 

them have an identity card. These are some 

statistical data which illustrate a dramatic 

reality of this minority. As in the other parts 

of Romania, the problems the Roma have to 

face in Bihor are the low level of education, 

the dropout, the precarious position on the 

labor market, living and health problems. 

In recent years, two qualitative studies have 

been conducted on the Roma in Bihor: The 

first study (Olah, 2004) focused especially 

on the dropout, stressed that education is a 

major factor for the modernization of the 

Roma’s life, maybe the decisive factor, and 

that the low level of education is strongly 

correlated with the precarious integration of 

the Roma on the labor market and with the 

juvenile delinquency. An important 

conclusion of the study is that Roma elite 

with high education should be the solution for 

the change of the dramatic situation of the 

Roma communities 28 . The second study 

(Olah-Baltatescu 2008) focused on the 

problems of the Roma in Oradea 29 . The data 

analysis confirmed that the problems of the 

Roma are related to: 

- improper conditions of living 

- extreme poverty 

- the precarious health (especially contagious 

diseases like TBC) 

28 Olah, Șerban, 2009, The School Dropout in Bihor 

county. A Qualitative Approach , Revista 

Universitara de Sociologie, Craiova, Romania, Year 

VI, nr.1(11), p.101 

29 Olah, Șerban, Băltățescu, Sergiu, 2008, Nevoi şi 

servicii sociale în comunităţile de romi. Studiu 

calitativ în municipiul Oradea in Revista de 

Asistență socială (nr.3-4), București, ISSN 1583- 

0698,p.34 

143 

- lack of professional training, the precarious 

position on the labor market, low incomes 

due to the lack of professional training 

- the precarious education. 

The initiative of the Romanian Government 

in 2000-2004 to create some special places 

for the students of the Roma communities 

seems to be efficient. There is also needed a 

more active involvement of the NGOs, Town 

Halls, leaders of the Roma communities. 

The main reasons of the dropout in Bihor are: 

poverty, low level of education of the parents 

in the Roma community, the parents’ lack of 

interest for school problems, family life 

disorganization, the tradition in the Roma 

community, the wrong attitude of some 

teachers towards some pupils, especially 

Roma, the low number of school 

psychologists in the schools of Bihor and the 

friends of the pupil. 

Both mentioned research papers are 

underlining the necessity of continuing the 

social projects for the Roma, developing the 

NGOs which carry out such projects and 

forming the elite of the Roma community 

who will support the disadvantaged 

communities by involving them in such 

projects. 

1.4.2. Hajdu-Bihar County 

In Hajdu-Bihar, 10 836 persons declared 

Roma identity at the latest census (in 2001), 

comprising 5,7 % of the total Roma 

population of Hungary. The share of Roma 

within the county’s total population is 2 %. 

However, the number of those who live a 

specific Roma way of life is much higher. A 

nationwide representative survey conducted 

by the Hungarian Statistical Office in 2003 

found that in Hajdu-Bihor county 44 200 

persons (8, 2% of the total population) are 

assigned a Roma (Gypsy) identity by their 

immediate neighborhood. According to this 

indicator, Hajdu-Bihor is the county with the 

fifth largest Roma population in Hungary. 

The Roma population of Hajdu –Bihor 

country is confronting to a large extent with

the same problems as their co-ethnics at the 

other side of the border: 

- Comparatively very high rates of fertility 

combined with high rates of mortality, which 

results in a rather young age structure 

compared to that of the county’s total 

population 

- Much lower educational level than the 

county average 

- Extremely reduced level of economic 

activity/employment 

A survey of 200 Roma families conducted by 

the Department of Sociology at the 

University of Debrecen 30 found that the rate 

of Roma employment is six times lower (in 

case of female population seven times lower) 

compared to the general rate of employment. 

Most of the Roma subjects questioned during 

the survey expressed their desire to work, but 

complained of lack of job opportunities. 

Beyond this general image, however, a rather 

perceptible generation-related differentiation 

has been observed. Members of the middle 

aged generation who had been occupied in 

economic activities during communist times 

are more likely to be employed today as well, 

compared to the members of the new 

generation socialized after 1989, who tend to 

prefer social benefits instead of work. Most 

of them never had any legal job. 

As far as perception of the employers’ 

attitudes is concerned, 72% of the 

respondents said they never experienced any 

discrimination while looking for a workplace, 

however 26% of those questioned indicated 

that they were not hired due their belonging 

to the Roma population. Among the surveyed 

families 40% have some links with 

agriculture: 18% is cultivating a piece of 

land, 10 % are occupied with livestockfarming, 

and 12 % are doing both. In the case 

they would receive free of charge agricultural 

30 Beres, Csaba, 2004, A Hajdu-Bihar megyeben 

elo Roma lakossag helyzete. 

http://www.romaweb.hu/doc.../szociologiai_tanulma 

ny_hbm.doc 

144 

land for personal use from the local 

government, 25% declared that they would 

not cultivate it, but 72 % said that they would. 

(41% would produce only for personal use, 

31% even for the market) 

The survey found that in the preceding month 

10% of the respondents had some income 

originating from occasional, usually 

agricultural work. One working day in the 

local agriculture is normally 10 hours long, 

and the per diem payment stands at 3000 

forints (approximately 12 euros). Persons 

belonging to the poorest strata of Roma 

population, most of who also suffer of 

various illnesses, cannot access even this 

rather modest work opportunity. 

On the other hand, the results of research 

show that in certain conditions occasional 

work might also become a resource of 

upward social mobility. For example, in one 

rural locality (Bagamer), 50 Roma workers 

employed in agriculture on day to day basis 

managed to learn how to produce horseradish, 

and subsequently used this knowledge 

in order to start their own small farms, in 

pieces of land bought from or lent by local 

inhabitants. A social land-lease program by 

the county authorities encouraged Roma 

communities to start agricultural initiatives 

(such as poppy seeds cultivating or goat – 

breeding) in other localities as well. Some of 

these endeavors proved successful, but others 

failed, mainly due to the lack of Roma 

agricultural tradition and business skills. In 

order to maximize the outcome of these 

programs, members of the Debrecen 

University research team suggested that as a 

first step it would be more beneficial and 

sustainable to focus on producing for family 

consume, rather than for the market. 

1.5. Quantitative Data Analysis 

How satisfied are Roma with their life? Is the 

quality of life of Roma in Hungary higher 

than that in Romania? Which is the quality of 

Roma living in the two countries? What is the 

relationship between the Roma and various 

items of labor? Which is the level of

education and occupational training? What 

work experience they have in the formal 

economy? What incomes do they have? How 

healthy they are? How religious they are? 

These are only a few of the starting questions 

of a quantitative research conducted between 

January 10 to March 7, 2010 in several urban 

and rural areas in Romania and Hungary. The 

research is an integral part of a cross-border 

project called Roma Employment, funded by 

the European Regional Development Fund. 31 

This project analyses the integration of the 

Roma into the labor market in Romania and 

Hungary and includes both a research 

component (data collection, a test of 

occupational skills, applying a questionnaire, 

conducting focus groups) and practical 

activities such as organizing two job fairs for 

Roma (Oradea and Biharkeresztes). 

The quantitative research aimed at collecting 

data on quality of Roma life in settlements 

with a high density of people belonging to 

this category: Oradea, Osorhei, Ineu de Cris 

in Romania and Biharkeresztes and Told in 

Hungary. It should also be noted that in most 

of these places Roma live in neighborhoods 

where they are the majority. We have to 

mention that interpretation of our research 

data is based on comparative analysis of two 

samples of Roma, one from Romania(Bihor 

county) and another from Hungary(Hajdu- 

Bihar county). The sampling method used is 

the non-probabilistic one and involves the 

snowball principle. Only persons able to work 

and who are seeking employment, aged 

between 18 and 55, were selected. In total, a 

number of 322 subjects answered to the 

questions. 

As collected data are numerous and 

extremely complex, in thi paper we focus 

only on those related to living conditions. We 

aim to realize the presentation and analysis of 

the full set of quantitative and qualitative data 

in a volume dedicated to the study of Roma in 

Romania and Hungary. 

31 

145 

In our research we will test several 

hypotheses which we shall mention below. 

H1. There are significant differences between 

the housing conditions of Roma in Romania 

and Hungary. 

H2. There is a significant relationship 

between satisfaction with life and satisfaction 

with housing. 

H3: There is a direct link between satisfaction 

with housing and income. 

H4: There is a direct link between the size of 

dwelling and income. 

H5: There is a negative correlation between 

the number of persons in the household and 

the income. 

1.5.1. Satisfaction with life 

How satisfied are Roma with their life? What 

are the determinants of the satisfaction with 

life? The research results drawn from the 

research samples in Romania and Hungary 

are shown in the tables below.

40 

30 

Count 50 

20 

10 

0 

… 

foarte satisfacut 

Table 1. Satisfaction with life at the Hungarian Roma 

13,86% 

satisfacut 

42,57% 

oarecum 

satisfacut 

cat sunteti de multumit cu viata in prezent 

146 

37,62% 

nesatisfacut 

4,95% 

nici satsifacut, 

nici nesatisfacut 

0,99% 

99

30,0% 

20,0% 

Percent 40,0% 

10,0% 

0,0% 

Table 2. Satisfaction with life at the Romanian Roma 

7,21% 

foarte 

satisfacut 

17,57% 

satisfacut 

18,47% 

oarecum 

satisfacut 

cat sunteti de multumit cu viata in prezent 

147 

31,98% 

nesatisfacut 

17,12% 

nici satsifacut, 

nici nesatisfacut 

7,66% 

99

We can see in the two tables that on the one hand, the share of very satisfied in Romania is 

higher (7. 21% vs 0%) and also the percentage of those dissatisfied is lower (31. 98% 

compared to 37. 62%). Is this happening because of a higher quality of life or the effect of 

other factors? We will give an answer along the way. 

1.5.2 The economic vulnerability of the Roma 

A first step we need to make is to see the perception of the Roma on poverty. 

50,0% 

40,0% 

30,0% 

Percent 60,0% 

20,0% 

10,0% 

0,0% 

30,69% 

nu ne ajung nici 

pentru a putea 

trai 

Table 3. Income poverty (Roma in Hungary) 

59,41% 

ne ajung doar 

sa supravietuim 

fara a putea sa 

cumparam ceva 

mai bun sau sa 

strangem ceva 

bani 

6,93% 

reusim sa 

strangem ceva 

bani sau sa 

cumparam ceva 

mai bu, dar cu 

economii si 

sacrificii 

Gândindu-va la veniturile totale ale familiei, puteti spune ca va ajung sau 

nu? 

148 

0,99% 

ne ajung destul 

de bine pentru 

ceea ce avem 

nevoie 

0,99% 

9 

0,99% 

99

40,0% 

30,0% 

Percent 50,0% 

20,0% 

10,0% 

0,0% 

Table 4. Income poverty (Roma in Romania) 

39,19% 

nu ne ajung nici pentru a putea 

trai 

ne ajung doar sa supravietuim 

fara a putea sa cumparam 

ceva mai bun sau sa strangem 

ceva bani 

49,10% 

Gândindu-va la veniturile totale ale familiei, puteti spune ca va ajung sau… 

Comparing the two tables, we can see that the Roma in both countries perceive themselves 

poor and very poor. If we observe the first two items, the percentages are quit similar in the two 

countries (about 88. 29% in Romania compared to 90% in Hungary). If we take items 3 and 4 

however, the situation is more favorable for the Roma in Hungary (8%) compared to 2. 25% 

for the Roma in Romania. 

149 

reusim sa strangem ceva bani 

sau sa cumparam ceva mai 

bu, dar cu economii si sacrificii 

0,90% 

ne ajung destul de bine pentru 

ceea ce avem nevoie 

1,35% 

9,46% 

99

1.5.3. Housing conditions 

A first step towards interpreting the above mentioned surprising situation is to inquire about 

the living conditions in the two countries. How satisfied are the Roma with their home? Here 

are the data from Hungary. 

Table. 5 Satisfaction with housing at Roma in Hungary 

30 

20 

Count 40 

10 

0 

2,97% 

foarte nemultumit 

4,95% 

nemultumit 

36,63% 

nici multumit, nici 

nemultumit 

multumirea cu locuinta 

A question to be raised is how the satisfaction with life is associated with the satisfaction with 

housing. The regression model applied to the data from Hungary proves a significant 

combination, but not a strong link between the two variables, as will appear in the data 

presented in the annex 1. 

150 

28,71% 

multumit 

24,75% 

foarte multumit 

1,98% 

99

25,0% 

20,0% 

15,0% 

Percent 

10,0% 

5,0% 

0,0% 

Table 6. Satisfaction with housing at Roma in Romania 

0,90% 

0 

19,82% 

foarte 

nemultumit 

13,51% 

nemultumit 

We can notice in the two graphics, on the one 

hand, that the percentage of satisfied and very 

satisfied is higher in Hungary (26. 71% and 

24. 79%) compared to Romania (18. 47% and 

20. 27%, and secondly that the percentage of 

dissatisfied and very dissatisfied is much 

higher in Romania (19. 82% and 13. 5%) 

compared with those in Hungary (4. 95%, 

respectively 2. 97%). Perhaps this is due to 

issues such as housing density, housing size, 

number of rooms and the materials the houses 

are made of. 

One of our assumptions is related to the direct 

link between satisfaction with life and 

satisfaction with housing. Making a 

regression analysis on the data from 

Romania, we can see that the association 

between the two variables is significant and, 

nici multumit, 

nici 

nemultumit 

Satisfacția cu locuința 

151 

18,02% 

20,27% 

multumit 

18,47% 

foarte 

multumit 

9,01% 

as shown by the data in the table below, the 

correlation between the two variables is over 

0.79, so it is quite strong. The comparison 

between the two regression analysis (the 

Romanian and Hungarian cases) shows a 

stronger association between the data from 

Romania than in those from Hungary. 

In most studies the income seems to be the 

best predictor of satisfaction with life, so it 

would be interesting to have a look at the 

results of the regression model between the 

income and the satisfaction with 

life(annex3).The correlation coefficient 

(r=0,99) proves a very strong link between 

these two variables.On the other hand the 

regression model between the income and 

satisfaction with housing (a significant 

combination and a very strong connection) 

99

proves that in the case of Hungary, the 

income variable is a better predictor of life 

satisfaction than the satisfaction with 

housing(annex5). 

Applying the same regression analysis for 

Romania, we notice a significant association 

and a stronger link (although the values are 

very close) than that between satisfaction 

with housing and satisfaction with life. The 

differences that arise between the situation in 

Romania and Hungary are likely due to 

differences in income between the Roma in 

the two countries, but also to the way the 

Roma minority relates to their neighbors. The 

data presented in this paper show us that the 

Roma in Romania live in neighborhoods with 

Roma majority, while the Roma in Hungary 

live in ethnically rather mixed areas. 

50 

40 

30 

Count 60 

20 

10 

0 

152 

Further we proceeded to test the link 

between housing and income satisfactionin 

Romania (annex 6). The data demonstrate a 

significant association between the two 

variables and also a strong connection. This 

assumption/hypothesis is valid for 

Hungary.The data demonstrate a significant 

association between the two variables and 

also a strong connection, in the case of 

Romania. So, this hypothesis is valid for 

Romania, too. We note in the case of 

Romania a stronger value of the correlation 

coefficient, but the difference from the 

coefficient of Hungary is too small (0. 813 vs. 

0. 701) for giving rise to any interpretation. 

An important item in many inquiries about 

housing in poor areas is the state of dwelling 

ownership. 

Table. 7 State of ownership of dwelling (Roma in Hungary) 

0,99% 

platesc chirie 

la proprietar 

0,99% 


la consiliul 

local 

51,49% 

sunt 

proprietar 

41,58% 

locuiesc la o 

ruda 

2,97% 

locuiesc la o 

persoana 

care nu imi 

este ruda 

cine este proprietarul locuintei actuale 

0,99% 

alta situatie 

0,99% 

99

40,0% 

30,0% 

Percent 50,0% 

20,0% 

10,0% 

0,0% 

Table 8 State of ownership of dwelling (Roma in Romania) 

0,90% 


la proprietar 

30,18% 


la consiliul 

local 

41,44% 

sunt 

proprietar 

cine este proprietarul locuintei actuale 

153 

16,67% 

locuiesc la o 

ruda 

… 

locuiesc la o 

persoana 

care nu imi 

este ruda 

4,05% 

alta situatie 

6,76% 

99

When comparing the two situations, we can notice some aspects. First, in Romania there are several cases in which they pay rent to the 

City Council (30. 18%) compared to a very small percentage, 0. 99% in Hungary. The percentage of those who are owners is more 

favorable for Hungary, 51. 49% compared to 41. 44% in Romania, while in Hungary there are many more cases when the family lives at a 

relative, 41. 58%, and when the family lives at persons who are not relatives, 2.97%, compared to Roma in Romania (16. 67% and 0%). 

Table 9. The materials the houses of the Roma are made of (in Hungary) 

40 

Count 60 

20 

0 

60,40% 

caramida 

… 

beton 

34,65% 

vaioaga 

… 

paianta 

Din ce material e construita locuinta dumneavoastra? 

154 

… 

lemn 

… 

alt material 

3,96% 

9 

0,99% 

99

40,0% 

30,0% 

Percent 50,0% 

20,0% 

10,0% 

0,0% 

Table 10. The materials the houses of the Roma are made of (in Romania) 

36,04% 

caramida 

2,70% 

beton 

42,34% 

vaioaga 

Din ce material e construita locuinta dumneavoastra? 

155 

0,45% 

paianta 

8,56% 

lemn 

2,70% 

alt material 

7,21% 

99

We can see in the two graphs that the Roma in Hungary have more modern houses, built mostly of brick (60. 40%) and a smaller 

proportion of adobe (34. 65%), while the dwellings of the Bihor County Roma are mainly made of adobe (42. 34%), brick (36. 04%), but 

also other materials (wood-8. 56%, concrete 2.7%, half-timber work 0. 45%). 

Table. 11 How many people live in your home? (Roma in Hungary) 

156

Table 12. How many people live in your home? (Roma in Romania) 

We can notice in the two tables that housing density is higher in Romania than in Hungary, as in the case of 6-7 or more than 7 persons in 

the household, the share of cases in Romania (33. 33% and 12. 61%) being higher than in Hungary (27. 72% respectively 5. 94%). On the 

other hand, for 1 or 2-3 persons in a house, the situation in Hungary is comparatively better (8. 91% and 20. 79%) than in Romania (0. 45% 

respectively 13. 5%). These data should be added to those on the dwelling area, number of rooms and facilities. 

157

Table 13. The size of the Roma dwelling in Hungary 

158

50,0% 

40,0% 

30,0% 

20,0% 

10,0% 

0,0% 

42,34% 

Table 14. The size of the Roma dwelling in Romania 

26,13% 

sub 30 de intre 31 si 

metri 40 m2 

patrati 

16,67% 

intre 41 si 

50 m2 

3,15% 

intre 51 si 

60 m2 

Care este mărimea aproximativă a locuinței? 

159 

2,25% 

intre 61 si 

80 m2 

0,90% 

intre 81 si 

100 m2 

0,45% 

peste 100 

m2 

0,90% 

9 

7,21% 

99

We can notice in these two tables that while in Romania the housing size is mainly under 60 sq.m., the prevailing housing area is over 60 

sq.m. in Hungary.It seems that the size of housing is a significant indicator of the gap which separates housing conditions and more 

generally the civilizational integration levels of the Roma living in the two countries. 

Table 15. How many rooms does your dwelling have? (Hungarian Roma) 

160

Table 16. How many rooms does your dwelling have? (Romanian Roma) 

Again the difference is very high between the two samples. A share of 44.4% of Hungarian Roma live in houses with three rooms or more, 

while the corresponding percentage in the Romanian sample is only 13.4%. However, the situation is rather different in the case of houses 

with one or two rooms (79% of Roma in Romania and 64.4% in Hungary). 

According to the results of regression analysis in both countries there is a significant link between the housing size and income and also 

between the number of persons in the dwelling and the income(annexes 7 to 10). This outcome denotes the frequent occurrence of 

161

multiple disadvantaging factors(such as precarious living conditions, high number of family members living in small size dwellings and 

extremely low level of income). 

40 

Count 60 

20 

0 

Table 17. Dwellings with bathroom facilities (Hungarian Roma) 

5,94% 

baie in casa, wc in 

curte 

69,31% 

baie + wc in casa 

fara baie, wc 

propriu in curtea 

casei 

Locuinta dumneavoastra este dotata cu grup sanitar? 

162 

21,78% 

1,98% 

fara baie, wc in 

folosinta comuna 

0,99% 

99

40,0% 

30,0% 

Percent 50,0% 

20,0% 

10,0% 

0,0% 

Table 18. Dwellings with bathroom facilities (Romanian Roma) 

8,11% 

baie in casa, wc in 

curte 

40,09% 

baie + wc in casa 

fara baie, wc 

propriu in curtea 

casei 

Locuinta dumneavoastra este dotata cu grup sanitar? 

The two tables show very clearly that the Roma in Hungary have better living conditions than those from Romania. If we compare those 

with the best conditions, i.ee with bathroom and toilet in the house, the weights of the two samples are 69.31% in Hungary and 40.09% in 

Romania. If we compare instead those with the worst conditions, in other words those who do not have a bathroom in the house and a toilet 

in common usage, the corresponding values are 14.86% in Romania, respectively 1.99% in Hungary. 

Another important housing facility is the home kitchen. The following two tables illustrate the situation in the two cases. 

163 

30,18% 

14,86% 

fara baie, wc in 


6,76% 

99

80 

60 

Count 100 

40 

20 

0 

98,02% 

in casa 

Table 19. Kitchen in the house (Hungarian Roma) 

… 

separat de casa 

nu are bucatarie 

acoperita 

Locuinta dumneavoastra are bucatarie? 

164 

… 

… 

bucatarie cu 


1,98% 

99

50,0% 

40,0% 

30,0% 

Percent 60,0% 

20,0% 

10,0% 

0,0% 

59,46% 

in casa 

Table 20. Kitchen in the house (Romanian Roma) 

7,66% 

separat de casa 

nu are bucatarie 

acoperita 

Locuinta dumneavoastra are bucatarie? 

165 

24,77% 

0,90% 

bucatarie cu 


7,21% 

99

Comparing the situation in the two contries, some important differences occur again. Thus, if 98.02% of Roma households in Hungary 

have a kitchen in the house, this is happening only in 59. 46% of Roma in Romania. Instead we have here a percentage of 7.66% of cases 

in which the kitchen is separated from the house, 24.77% have a not covered kitchen and even a small percentage (0. 90%) use common 

kitchen with other families in town. 

Table 21. Is there current water in the household you actually live? (Roma in Hungary) 

40 

Count 60 

20 

0 

69,31% 

conducta de apa 

in casa 

6,93% 

conducta de apa 

in curte 

… 

fantana in curte 

In locuinta in care traiti in prezent exista apa 

166 

22,77% 

apa in fata curtii 

la mai putin de 

100 de metri 

… 


la mai mult de 

100 de metri 

0,99% 

99

Table 22. Is there current water in the household you actually live? (Roma in Romania) 

40,0% 

30,0% 

Percent 50,0% 

20,0% 

10,0% 

0,0% 

43,69% 

conducta de 

apa in casa 

1,35% 

conducta de 

apa in curte 

9,91% 

fantana in curte 

In locuinta in care traiti in prezent exista apa 

167 

15,32% 


la mai putin de 

100 de metri 

21,62% 


la mai mult de 

100 de metri 

8,11% 

99

In terms of water use in the home, there are are also significant differences between the two 

cases. Thus, in Hungary 69.31% compared to 43.69% in Romania are endowed with water 

pipe in the house. 9.91% have a fountain/well in the courtyard in Romania compared to zero 

percent in Hungary. 15.32% of the Roma households in the Romanian sample are using the 

water source in the front of the courtyard at less than 100 meters compared to 22.7% in the 

Hungarian sample. 21.62% of the Roma households in the Romanian sample have water in the 

front of the courtyard at more than 100 meters compared to 0% in the Hungarian sample. 

Again, big differences appear between the two cases. 

1.5.5. The poverty of the neighborhood 

The Roma of the samples selected from the two countries live, in most cases, in poor 

neighborhoods compared with the majority. In our survey we inquire about the perception of 

the Roma on the neighborhoods in which their dwellings are. 

Table 23. The perception of the poverty of the neighborhood (Hungarian Roma) 

30 

20 

Count 40 

10 

0 

23,76% 

toata lumea sau aproape toata 

lumea este saraca 

28,71% 

majoritatea oamenilor sunt 

saraci 

exista in egala masura oameni 

care sunt si oameni care nu 

sunt saraci 

36,63% 

7,92% 

majoritatea nu sunt saraci 

Care din urmatoarele afirmatii descrie cartierul in care locuiti in prezent? 

168 

nimeni sau aproape nimeni nu 

este sarac 

… 

0,99% 

9 

1,98% 

99

Table 24. The perception of the poverty of the neighborhood (Romanian Roma) 

50,0% 

40,0% 

30,0% 

Percent 60,0% 

20,0% 

10,0% 

0,0% 

54,50% 

toata lumea sau 

aproape toata 

lumea este 

saraca 

27,93% 

majoritatea 

oamenilor sunt 

saraci 

exista in egala 

masura oameni 

care sunt si 

oameni care nu 

sunt saraci 

Care din urmatoarele afirmatii descrie cartierul in care locuiti in prezent? 

It can be clearly seen that the perceived level of poverty is much higher in the Roma 

neighborhoods in Romania compared to that in Hungary. If we take the first two items 

(Everybody or almost everybody is poor and Most of the people are poor), their percentage is 

definitely higher for Romania, 82.4%, compared to 52.4% for Hungary. As far as item 4 is 

concerned (Most of them are not poor), we notice that the relevant percentage is lower in 

Romania (1.80%), than in Hungary(7.92%). 

To have a better idea about the neighborhood of the Roma households, let’s see who the 

neighbors of the subjects of our sample are (Roma or non-Roma neighbors). 

169 

7,21% 

1,80% 

majoritatea nu 

sunt saraci 

0,90% 

nimeni sau 

aproape nimeni 

nu este sarac 

7,66% 

99

30 

20 

Count 40 

10 

0 

Table 25. Who are the neighbors of the Roma? (Hungarian Roma) 

33,66% 

traiesc numai sau 

aproape numai 

familii rome 

19,80% 


masura familii rome 

si nerome 

exista cateva familii 

rome dar majoritatea 

sunt nerome 

Ce persoane traiesc in zona din vecinatatea casei dumneavoastra? 

170 

32,67% 

11,88% 

nu sunt familii rome 

in apropiere 

1,98% 

99

80,0% 

60,0% 

Percent 100,0% 

40,0% 

20,0% 

0,0% 

Table 26. Who are the neighbors of the Roma? (Romanian Roma) 

82,88% 

traiesc numai sau 

aproape numai 

familii rome 

8,56% 


masura familii rome 

si nerome 

Ce persoane traiesc in zona din vecinatatea casei dumneavoastra? 

Although the localities were selected by Romanian and Hungarian experts on the criterion of 

poverty and occurence of social problems of the Roma communities, we can notice differences 

in the ethnic composition of the neighborhoods. In Romania, the Roma tend to live in compact 

areas with Roma majority population (82.88%), while in Hungary the percentage is only 

33.66%. However if we take items 3 and 4, the situation is clearly different for the two 

countries (44.55% in Hungary and 1.35% in Romania). 

171 

0,45% 

exista cateva familii 

rome dar 

majoritatea sunt 

nerome 

0,90% 

nu sunt familii rome 

in apropiere 

7,21% 

99

50,0% 

40,0% 

30,0% 

Percent 60,0% 

20,0% 

10,0% 

0,0% 

Table 27. Satisfaction with the neighborhood ( Roma from Hungary) 

8,91% 

foarte 

nemultumit 

10,89% 

nemultumit 

51,49% 

nici multumit, nici 

nemultumit 

multumirea cu cartierul 

172 

18,81% 

multumit 

7,92% 

foarte multumit 

1,98% 

99

20,0% 

15,0% 

Percent 25,0% 

10,0% 

5,0% 

0,0% 

Table 28. Satisfaction with the neighborhood ( Roma from Romania) 

0,45% 

0 

22,97% 

foarte 

nemultumit 

15,77% 

nemultumit 

17,57% 

nici 

multumit, 

nici 

nemultumit 

multumirea cu cartierul 

Concerning the satisfaction with the neighborhood, we notice again that the percentage of those 

very dissatisfied and dissatisfied is much higher(almost twice as high)in Romania than in 

Hungary (about 38.77% compared to almost 20%).It is interesting to notice that the percentage 

of those satisfied and very satisfied is greater in Romania (around 33.79% compared to almost 

27%). 

173 

16,67% 

multumit 

17,12% 

foarte 

multumit 

0,45% 

32 

9,01% 

99

1.5. Conclusions 

Analyzing the data on the Roma communities 

living in Romania and Hungary, we can find 

some significant differences. Even if Roma in 

Romania are more satisfied with their life, 

perhaps as the consequence of their more 

traditional life outlook, but also due to the 

ethnic composition of their neighbourhood, 

the Roma living in Hungary seem to be more 

satisfied with their dwellings. In terms of 

most objective indicators (ownership status, 

building materials, the number of rooms, the 

number of persons in the household, the 

hygiene, the posession of bathroom, toilet, 

kitchen, heating), Roma in Hungary are 

living in comparatively better conditions. 

In contrast with their co-ethnics from 

Romania, Hungarian Roma live in 

neighborhoods that include both Roma and 

non-Roma, an aspect that has a great 

importance in their integration into society. 

Although according to Michael Stewart they 

resisted assimilation during socialism, our 

data demonstrate that today they seem to be 

much closer to the civilizational level of the 

larger society than ever before. It is worth to 

mention that they define themselves mostly 

as Hungarian Roma („magyar cigany”), 

unlike Roma from Romania, who mainly 

identify with their traditional community 

belonging (neamuri). The higher level of 

integration of Roma in Hungary is also 

proved by the attachment of most of them to 

the mainstream churches, while in case of 

Romania the influence of Neo-Protestant 

religious communities is much higher among 

the Roma population. 

One indicator of integration is the one related 

to housing quality. From this point of view 

too, Roma in Hungary are socially more 

integrated than the Roma in Romania. Their 

dwellings indicate a serious lag compared 

both to the Roma in Hungary, but also to the 

majority group. Roma in Romania seem to be 

much more traditional if we analyze all these 

indicators of housing quality. 

In terms of differences between localities, 

they are more pronounced in Romania, 

174 

where, according to our data, the community 

of Osorhei seems to be the poorest, having 

worse conditions not only compared to 

Oradea, but also to Ineu de Cris. Relatively 

small differences can be noticed in Hungary, 

between the communities of Biharkeresztes 

and Told, may be due to geographical 

proximity and to the fact that Told is a rural 

community while Biharkeresztes became a 

town only recently, still having mostly semirural 

community features. 

Housing is an important indicator of the 

quality of life, influencing the health status, 

the participation in education and perhaps to 

some extent also the level of integration into 

the formal economy. For the development of 

the quality of housing, a more active 

involvement of the Government and of the 

local authorities, as well as the involvement 

of NGOs and Roma leaders is needed, even if 

the home’s quality primarily depends on the 

income level of each family, and that is a 

problem in each case. 

It is true that the same issue depends also on 

the neighborhood. If Roma see that the 

neighbors are poor and do not make efforts to 

improve their living conditions, they are 

tempted to do the same. If instead their 

neighbours belong to another ethnic group 

and Roma see that they have higher living 

conditions, this may also be an incentive for 

Roma. This fact is influencing to a large 

extent the difference between housing 

conditions of Roma in Hungary compared 

with those from Romania. Roma in Romania 

live in compact areas with a high density of 

social problems and a serious shortage of 

modernity. Perhaps a solution would be that 

Roma in Romania live in ethnically mixed 

neighborhoods or areas. Roma in Romania 

are isolated, marginalized, segregated 

compared to other ethnic groups both in terms 

of housing, participation in education or 

integration into the formal economy. On the 

other hand, there is also a dissociating 

mechanism probably related to their 

traditional values.

Probably long-term solutions would be largescale 

investments in educational and also 

social economy programs, which could 

promote a better integration into the formal 

economy and to the successfull securing of 

sustainable sources of income leading to 

better housing and civilizational conditions as 

well. 

Bibliography: 

1. Beres, Csaba, 2004, A Hajdu-Bihar 

megyeben elo Roma lakossag helyzete. 

http://www.romaweb.hu/doc.../szociologiai_t 

anulmany_hbm.doc 

2. Fraser, Angus, 2010, Țiganii, Editura 

Humanitas, București 

3. Marcuse, Peter și Van Kempen, Ronald, 

2002, Of States and Cities, Oxford University 

Press 

4. Murie, Alan, Siedow-Knorr, Thomas, Van 

Kempen, Ronald, 2003, Large Housing 

Estates in Europe.General Developments and 

Theoretical Backgrounds, Utrecht University 

5. Olah, Șerban, 2009, The School Dropout in 

Bihor county. A Qualitative Approach, 

Revista Universitara de Sociologie, Craiova, 

Romania, Year VI, nr.1(11) 

6. Olah, Șerban, Băltățescu, Sergiu, 2008, 

Nevoi şi servicii sociale în comunităţile de 

romi. Studiu calitativ în municipiul Oradea in 

175 

Revista de Asistență socială (nr.3-4), 

București 

7. Pons, Emanuelle, 1999,Ţiganii din 

România, Editura Compania, Bucureşti 

8. Preda, Marian, 2002, Politica socială 

românească între sărăcie şi globalizare, 

Editura Polirom, Iaşi 

9. Preoteasa, Ana Maria,2003, Prezentarea 

unei cercetări internaţionale cu privire la 

starea romilor în Europa Centrală şi de Est, în 

Calitatea Vieţii,XIV, nr.2 

10. Ringold, Dena, Orenstein, Mitchell, 

Wilkens, Erika, 2003, Roma in an Expanding 

Europe. Breaking the Poverty Cycle, 2003, 

The World Bank 

11. Stănculescu, ManuelaSofia, Berevoescu, 

Ionica, 2004, Sărac lipit, caut altă viață!, 

Editura Nemira, București 

12. Stewart,Michael, 1997, The Time of the 

Gypsies, Westview Press, Colorado 

13. Szelenyi, Ivan, 2002, Poverty, Ethnicithy 

and Gender in Transitional Societies, 

Akademiai Kiado, Budapest 

14. Voicu, Mălina( coordonator),2007, Nevoi 

şi resurse în comunităţile de romi, Fundaţia 

Soros România,Bucureşti 

15. Zamfir,Cătălin, Zamfir,Elena 

1993,Ţiganii între îngrijorare şi ignorare, 

Editura Alternative, Bucureşti

ANNEXES 

Annex 1. Simple regression analysis between satisfaction with housing and 

satisfaction with life (for Hungary) 

Model Summary 

Adjusted R Std. Error of 

Model R R Square Square the Estimate 

1 ,696(a) ,485 ,479 6,891 

a Predictors: (Constant), Satisfaction with housing 

ANOVA(b) 

Model 

Sum of 

Squares df Mean Square F Sig. 

1 Regression 4419,361 1 4419,361 93,063 ,000(a) 

Residual 4701,312 99 47,488 

Total 9120,673 100 

a Predictors: (Constant), Satisfac tion with housing 

b Dependent Variable: how satisfied are you with your present life 

Coefficients(a) 

Unstandardized 

Coefficients 

Model 

B Std. Error Beta B Std. Error 

1 (Constant) 1,518 ,743 2,042 ,044 

176 

Standardized 

Coefficients t Sig. 

Satisfaction with housing ,497 ,051 ,696 9,647 ,000 

a Dependent Variable: how satisfied are you with your present life 

Annex 2. Simple regression analysis between satisfaction with housing and satisfaction 

with life (for Romania) 

Model Summary 



1 ,795(a) ,632 ,630 15,515 

a Predictors: (Constant), Satisfaction with housing

ANOVA(b) 

Model 



1 Regression 90903,165 1 90903,165 377,662 ,000(a) 

Residual 52954,006 220 240,700 

Total 143857,171 221 

a Predictors: (Constant), Satisfaction with housing 




Coefficients 

Model 


1 (Constant) 2,118 1,131 1,872 ,062 

177 

Standardized 


Satisfaction with housing ,735 ,038 ,795 19,434 ,000 


Annex 3. Simple regression model between income and satisfaction with life (for 

Hungary) 

Model Summary 



1 ,990(a) ,981 ,980 1,336 

a Predictors: (Constant), Thinking about the total family income, can you say that it is enough or not? 

ANOVA(b) 

Model 



1 Regression 8944,003 1 8944,003 5011,926 ,000(a) 

Residual 176,670 99 1,785 

Total 9120,673 100 


b Dependent Variable: how satisfied are you with your present life



Coefficients 

Model 


1 (Constant) 1,549 ,138 11,190 ,000 

Thinking about the total 

family income, can you 

say that it is enough or 

not? 


178 

Standardized 


,974 ,014 ,990 70,795 ,000 

Annex 4. Simple regression model between income and satisfaction with life (for 

Romania) 

Model Summary 



1 ,829(a) ,688 ,686 14,292 


ANOVA(b) 

Model 



1 Regression 98920,358 1 98920,358 484,291 ,000(a) 

Residual 44936,813 220 204,258 

Total 143857,171 221 





Coefficients 

Standardized 


Model 


1 (Constant) 2,682 1,026 2,614 ,010 




not? 


,740 ,034 ,829 22,007 ,000

Annex 5. Simple regression between income and satisfaction with housing (for Hungary) 

Model Summary 



1 ,701(a) ,491 ,486 9,596 

a Predictors: (Constant), Thinking about the total family income, can you say that it is enough 

or not? 

ANOVA(b) 

Model 



1 Regression 8791,698 1 8791,698 95,468 ,000(a) 

Residual 9116,996 99 92,091 

Total 17908,693 100 

a Predictors: (Constant), Thinking about the total family income, can you say that it is enough or not?b 

Dependent Variable: satisfaction with housing 



Coefficients 

179 

Standardized 


Model 


1 (Constant) 


2,860 ,994 2,876 ,005 



not? 

,965 ,099 ,701 9,771 ,000 

a Dependent Variable: satisfaction with housing 

Annex 6. Simple regression between income and satisfaction with 

housing (for Romania) 

Model Summary 



1 ,813(a) ,662 ,660 16,079 

a Predictors: (Constant), Thinking about the total family income, can you say that it is enough or not?

ANOVA(b) 

Model 



1 Regression 111217,744 1 111217,744 430,183 ,000(a) 

Residual 56877,918 220 258,536 

Total 168095,662 221 


Dependent Variable: satisfaction with housing 



Coefficients 

Model 


1 (Constant) 3,167 1,154 2,744 ,007 




not? 

a Dependent Variable: satisfaction with housing 

180 

Standardized 


,785 ,038 ,813 20,741 ,000 

Annex 7. The regression model for the relationship between housing size and 

income (Roma in Hungary) 

Model Summary 



1 ,698(a) ,488 ,483 9,474 


ANOVA(b) 

Model 



1 Regression 8464,729 1 8464,729 94,299 ,000(a) 

Residual 8886,717 99 89,765 

Total 17351,446 100 


b Dependent Variable: which is the approximate area of the dwelling?



Coefficients 

181 

Standardized 


Model 


1 (Constant) 


4,703 ,982 4,790 ,000 



not? 

,947 ,098 ,698 9,711 ,000 

a Dependent Variable: which is the approximate area of the dwelling? 

These tables show a significant association and also a strong relationship. 

Annex 8. The regression model for the relationship between the number of the persons in 

the dwelling and income (Roma in Hungary) 

Model Summary 



1 ,991(a) ,981 ,981 1,322 


ANOVA(b) 

Model 



1 Regression 9058,863 1 9058,863 5184,618 ,000(a) 

Residual 172,978 99 1,747 

Total 9231,842 100 


b Dependent Variable: How many persons live in your house? 



Coefficients 

Standardized 


Model 


1 (Constant) 


1,205 ,137 8,796 ,000 



not? 

,980 ,014 ,991 72,004 ,000 

a Dependent Variable: How many persons live in your house?

Annex 9. The regression model for the relationship between housing size and income 

(Roma in Romania) 

Model Summary 



1 ,800(a) ,641 ,639 15,124 


ANOVA(b) 

Model 



1 Regression 89746,698 1 89746,698 392,372 ,000(a) 

Residual 50320,261 220 228,728 

Total 140066,959 221 


Dependent Variable: which is the approximate area of the dwelling? 



Coefficients 

Model 


1 (Constant) 1,355 1,086 1,248 ,213 




not? 

a Dependent Variable: which is the approximate area of the dwelling? 

182 

Standardized 


,705 ,036 ,800 19,808 ,000 

Annex 10. The regression model for the relationship between the number of the persons 

in the dwelling and income (Roma in Romania) 

Model Summary 



1 ,862(a) ,743 ,742 12,589 

a Predictors: (Constant), Thinking about the total family income, can you say that it is enough or not?

ANOVA(b) 

Model 



1 Regression 100782,651 1 100782,651 635,916 ,000(a) 

Residual 34866,520 220 158,484 

Total 135649,171 221 


b Dependent Variable: How many persons live in your house? 



Coefficients 

Model 


1 (Constant) 2,274 ,904 2,516 ,013 




not? 

a Dependent Variable: How many persons live in your house? 

183 

Standardized 


,747 ,030 ,862 25,217 ,000

184

UTILISATION OF BENCHMARKING TECHNIQUES FOR FUNDAMENTING 

DEVELOPMENT STRATEGIES IN THE MANUFACTURING INDUSTRY IN 

ROMANIA 

Rujan Ovidiu 

Academy of Economic Studies Faculty of International Business and Economics 

Ţarţavulea Ramona Iulia 


Vasilescu Felician 


Geambaşu Cristina Venera 

Academy of Economic Studies Faculty of Accounting and Management Information Systems 

Abstract: Benchmarking is a method used to measure the products, services and processes in comparison to an 

entity recognized as a leader in terms of performance of its operations. Used in the years 1970-1980 in the 

strategic management of the company currently has proven to be increasingly useful in many areas, including 

in international analysis models. In the European Union benchmarking indicators are used especially in the 

digital economy and as perspective indicators for 2011-2015 (Eurostat, Database). 

In the introduction we present and define forms of benchmarking, as well as a number of specific terms, which 

contribute to a better understanding of the content of this scientific work. Time series are used to highlight 

advances in labor productivity in EU countries, and the analysis is particularized for two countries: Romania 

and Germany. Quantitative data were collected from the source Eurostat website. 

A comprehensive indicator at macroeconomic level is resource productivity, representing GDP in relation with 

domestic consumption of material (DCM). DCM measures the amount of materials used directly by an 

economy. It is presented in tabular form for all European Union countries and Switzerland, as evolving over a 

period of eight years. 

Benchmarking method is used to highlight some differences (gaps) between EU countries regarding 

productivity and particularly the one between Germany and Romania is highlighted, concerning the 

performance of manufacturing industries. It is expected that this gap will diminish. The gap was highlighted by 

relevant graphics and interpretations. The second part of the paper focuses on comparative analysis of factors 

productivity using the production function. We analyze labor and capital productivity and other factors that 

determine the level of production. For highlighting the contribution of the labour factor we used the number of 

hours worked, considering that it reflects the analyzed phenomenon more realistically. For highlighting the 

contribution of capital factor we used as an indicator the capital stock in euros, available for Germany in the 

Eurostat database, and for Romania in the Statistical Yearbook 2009, expressed in RON, as comparable prices 

and then converted into euros at the average rate calculated by the NBR . The results for the entire 

manufacturing industry represent the basis for further expansion of benchmarking to the main components of 

this industry, especially automobile building, transportation vechicules, furniture, clothing, leather chemical, 

etc.., providing a scientific basis to fundament the economic policies including commercial ones. 

Keywords: benchmarking, labor productivity, resource productivity, capital productivity, sustainable 

development strategy 

JEL Codes: F15 - Economic Integration, F31 - Foreign Exchange, L6 - Industry Studies: Manufacturing 

1. Introduction: Characteristics of 

benchmarking 

Benchmarking - a process that aims at 

seeking solutions to enhance the 

performance of the organization, based on 

the best methods and procedures of the 

185 

industry. Setting business goals based on 

optimal methods and procedures existing in 

the industry are an important factor in the 

success of business strategy. 

Benchmarking techniques were originally 

developed in strategic management in order

to identify aspects through which one can 

compare an organization with similar 

organizations, even though they may 

function in a different industry or have a 

different target group of customers. In 

addition, benchmarking can be a valuable 

tool to identify areas, systems or processes 

that need improvement, which can take the 

form of a continuous development or of a 

dramatic change as business process 

reengineering. 

There are several types of benchmarking, the 

most common being: - Technical 

benchmarking - involves identifying 

products and services capability, especially 

in comparison with similar products and 

services of leading competitors, market 

leaders, using a scale of 1-4 (4 being the best 

score) to quantify properties of products and 

services from your organization. If input data 

about products and services are difficult to 

obtain, they may be regarded as 

inappropriate to be competitive. 

- Competitive benchmarking - involves a 

quantification of the main attributes, 

functions or values associated with products 

or services, so you can make a comparison 

between them and those of market leader 

(Sherman and Zhu, 2006) 

- Functional benchmarking – represents 

using benchmarking methods to compare a 

particular business function in two or more 

companies (Lerna and Price, 1995). Camp 

(1989) defines it as a particular function 

comparison with best practices in that area. 

Our aim is to conduct a study on industries 

in different countries using benchmarking. 

The research methodology consists of 

preparing the statistical series for a period 

long enough to show realistically the 

phenomena investigated, on productivity in 

EU member states and highlighting 

indicators of efficiency in manufacturing 

production in Romania and Germany. The 

indicators were estimated using the Cobb- 

Douglas function of production for the 

manufacturing industry in the two countries, 

186 

using data according to CAEN Rev.1.1 

(including 2008). 

2. Literature review 

The International Association Global 

Benchmarking Network (GBN) is joining 

private and public institutions, non-profit or 

research organizations which have expertise 

in benchmarking. The role of this association 

is to share knowledge and capabilities in the 

field of benchmarking through exchange of 

experience between its members and 

promoting the best practices identified. 

Through the association's members, who are 

from different parts of the globe, the 

association keeps in touch with the current 

stage of development in the field of 

benchmarking and enhances the 

development of this branch of study. 

In order to use benchmarking techniques it is 

essential to have a common understanding of 

specific terminology, which enable experts 

to express their ideas in a concise manner. In 

this respect GBN association has developed 

a glossary of terms. For a better 

understanding of this research paper, we 

considered necessary to present a selection 

of some relevant terms from the glossary of 

benchmarking terms, as it follows: 

- Benchmarking Gap - represents the 

difference in performance between an 

activity conducted at a company and the 

same activity at other competitors on the 

market. 

- Benchmarking of sectors - compares 

performance of two sectors, the purposes of 

comparison being to take best practices from 

one sector, and applies them to the weakest 

sector on that particular criterion. 

- The productivity of capital - is an 

economic indicator of productivity, which 

measures the level of output (in euro or 

dollar) made for each euro/dollar invested in 

fixed assets. - Core competence - a 

company's strategic capability, which gives 

them a market advantage. - Productivity 

Benchmarking - provides companies with a 

systematic method to compile indicators of

economic growth in order to create a table of 

economic productivity used to identify 

activities and processes which do not add 

value, but represent an additional cost. 

Another important concept that will be used 

in the proposed research is that of labor 

productivity. The generally accepted 

definition of labor productivity is quantity of 

production obtained per unit of labor, which 

can be represented by the number of hours 

worked, number of employed persons 

(employees and other categories) or number 

of employees. The version which takes into 

account the number of hours worked is the 

most used, reflecting more realistic the 

phenomenon analyzed. The labor 

productivity determined using the number of 

employees, it is easier to calculate, but the 

quality of results is more modest. (Bolstorff 

and Rosenbaum, 2003) 

Labor productivity can be determined for 

different representations of economic 

performance: total production or gross value 

added. We opted for the last presented 

expression of performance. Statistical data 

show significant differences between 

countries on this indicator. 

3. Research Methodology 

The research objective is to realize a 

comparative study between the performance 

of industries in different countries, and we 

chose Romania and Germany in particular. 

The research methodology consists in taking 

187 

the benchmarking method, and apply it in 

research of industry performance, comparing 

different countries of the European Union (to 

complete the picture of the studied 

phenomenon, we introduced the comparisons 

also Switzerland). We sought to highlight 

indicators of manufacturing production 

efficiency in Romania, taking specific 

indicators in Germany as point of reference. 

It should be noted from the very beginning 

that, during 2000 - 2007 (2008), for which 

we had available statistics provided by 

Eurostat, Romania has a notable gap 

compared with Germany. 

4. Comparative analysis of labor 

productivity 

Regardless of the calculation method (see 

Literature review), labor productivity is only 

a partial measure of productivity, showing 

the cumulative effect of several factors: 

mainly capital and intermediate 

consumption, and technological and 

organizational efficiency, economies of scale 

or potential growth in utilization of 

production capacity. A comprehensive 

indicator at macroeconomic level is resource 

productivity, representing GDP in relation 

with domestic consumption of material 

(DCM). DCM measures the amount of 

materials used directly by an economy. In 

table 1, this indicator is presented for the EU 

members and Switzerland for the year 2007 

compared with 2000.

Table 1: Resource productivity in the years 2000 and 2007 in EU countries and Switzerland 

(EUR per kg) 

2000 2007 2000 2007 

UE 27 1,21 1,3 Lithuania 0,44 0,43 

UE 15 1,4 1,57 Luxemburg 2,78 4,32 

Belgium 1,32 1,47 Hungary 0,45 0,6 

Bulgaria 0,13 0,14 Malta 3 2,14 

Czech Republic 0,33 0,42 Holland 2,16 2,6 

Denmark 1,28 1,24 Austria 1,41 1,4 

Germany 1,41 1,71 Poland 0,32 0,38 

Estonia 0,32 0,27 Portugal 0,66 0,62 

Ireland 0,63 0,66 Romania 0,18 0,14 

Greece 0,88 0,98 Slovenia 0,48 0,46 

Spain 0,93 0,9 Slovakia 0,4 0,49 

France 1,64 1,8 Finland 0,76 0,79 

Italy 1,25 1,6 Sweden 1,71 1,79 

Cyprus 0,66 0,64 United Kingdom 2,11 2,54 

Letonia 0,24 0,31 Switzerland 3,05 3,36 

Data source: Eurostat, Statistics, Sustainable Consumption and Production 

We observe that the pursued indicator values 

are dispersed (from 0.13 Bulgaria, 4.32 

Luxemburg), for 18 out of 28 countries 

(including Switzerland) the value of 

indicators has increased, most important 

being in Luxembourg, United Kingdom, 

Switzerland, Germany and Italy; for other 10 

countries the value of the indicator has 

decreased, highlighting a diminish of 

efficiency in resources utilization. 

188 

To emphasize the important differences 

between countries on the resource 

productivity and its changes over time, we 

presented in chart 1 a upwards ranking of 

countries by indicator values in 2007, based 

on data in Table 1. 

It appears that both the EU 27 and EU 15 

increased in resource productivity, and 

former socialist countries, now EU members, 

without exception, are at levels below the 

EU 27 average. 

Figure 1: Comparison between the productivity of resources in 27 EU countries (and 

Switzerland) and Romania in 2000-2007 

Source: Based on data from Eurostat Statistics, Sustainable Consumption and Production

Romania, as well as Bulgaria, is experiencing an amazingly low level of this indicator and, 

unlike Bulgaria, has recorded a decrease in time. Figure 1 shows a comparison between the 

evolution in time of the indicator in Romania and the European Union average. 

1,5 

1 

0,5 

0 

Figure 2: Comparison between the average productivity of resources in EU 27 countries and 

Romania during 2000-2007 

Source: Based on the data from Eurostat, Statistics, Sustainable Consumption and Production 

5. Capital productivity and capital stock 

Capital productivity index shows the 

economic result (gross value added) produced 

by a certain amount of immobile productive 

capital. 

To measure the capital stock involved in a 

production process, literature and empirical 

analysis recommends several methods: 

- The flow of productive services provided by 

an asset in the production process; 

- Gross stock of capital obtained by 

cumulating the investment flow, adjusted by 

the rate of removal from service of capital 

goods. 

- The net stock of capital obtained by 

correcting the gross stock capital with the loss 

of productive capacity. 

Given the availability of statistical data, we 

used the gross stock of capital to estimate the 

coefficients for the production function. In 

the process of estimating the production 

function coefficients, we have highlighted the 

contribution of other factors, besides labor 

and capital. 

Multifactor productivity (MPF) allows the 

identification of distinct contributions of 

labor, capital, intermediate consumption and 

technology/efficiency to the final production. 

This contribution is shown by indicator PMF 

UE 27 România 

2000 2001 2002 2003 2004 2005 2006 2007 

189 

- KLEMS (capital-labor-energy-materialsservices), 

considered to be the most 

comprehensive measure of efficiency at 

industry level, calculated only for 25 

countries from the EU, Romania and Bulgaria 

being excepted. 

6. Results of the research and conclusions 

For econometric estimation of production 

function coefficients for the manufacturing 

industry in the two countries, we used 

statistical data about gross value added (VA), 

the number of hours worked (HEMP) and 

gross capital stock (KGFCF) from the 

Eurostat database for Germany and the 

corresponding data of the same variables in 

the Statistical Yearbook of Romania 2009. 

Variables were converted from RON to euro 

for Romania, using the average annual 

exchange rate, published by the BNR. Before 

2000, the exchange rate seemed to distort the 

value sizes studied, so we decided to limit the 

time series data to the period 2000-2007, 

although statistics provide data since 1995. 

The production function has the following 

expression: 

Y = A * L α * K β , where Y, L and k are 

respectively VA, HEMP and KGFCF and the 

exponents are elasticities of output

(production) to input (production factors). A 

expresses the contribution of other factors, 

besides labor and capital. The values 

190 

estimated using multiple regression are 

summarized in Table 2. 

Table 2: Estimated coefficients for the production function related to the manufacturing 

industry in Romania and Germany for the period 2000-2007. 

A α β 

Germany 19,04085387 0,857702548 0,146318628 

Romania 0,581636175 0,052085522 0,972634345 

Source: made by author based on econometric calculations 

In Germany the elasticity of production to 

labor is 0.86, that means work contributed 

decisevely to the increase of production in the 

period studied, while in Romania it is close to 

zero. Coefficient A shows the effect of 

technical refinements, organizational, etc. 

over production growth: it is high in Germany 

and low in Romania. Unlike labor factor, 

capital factor has had a remarkable 

contribution to increasing the production in 

Romania (although this increase was modest). 

We provide those interested many useful 

statistical data series concerning the 

investigated theme. 

We believe that the elements outlined above 

can represent the base for analysis for all 

Romanian manufacturing industries because 

the comparison of them with several leaders 

of the world economy can represent the 

scientific fundament necessary for 

elaboration of economic policies. 

7. Bibliography 

Books 

1. Jack B. Revelle 's Quality Essentials: A 

Reference Guide from A to Z, ASQ Quality 

Press, 2004, pages 8-9. 

2. Bogan, Christopher E., English, Michael J. 

Benchmarking for Best Practices: Winning 

through Innovative Adaptation, New York: 

McGraw-Hill, 1994, ISBN 0070063753 

3. Bolstorff, Peter Rosenbaum, Robert, 

Supply Chain Excellence: A Handbook for 

Dramatic Improvement Using the SCOR 

Model, USA: AMACOM, 2003 

4. Zhu, Joe, Quantitative models for 

Performance Evaluation and Benchmarking: 

Data Development Analysis with 

Spreadsheets and Dea Excel Solver, Boston: 

Kluwer Academic Publishers, 2003 

Articles 

1. Camp R.C. 1993, A Bible for 

benchmarking, by Xerox. Financial Executive 

(July / August), pp 23-27. 

2. Sherman, David H., Zhu, Joe, 

Benchmarking to Seek Lower-Cost High- 

Quality Service with Data Envelopment 

Analysis: Evidence from the U.S. bank 

application 

Web sites: 

1.How to Use Benchmarking in Business, 

accesed 20 April 2011, 

http://management.about.com/cs/benchmarki 

ng/a/Benchmarking.htm 

2.Benchmarking - Past, Present and Future, 

accesed 24 April 2011, 

http://www.benchnet.com/bppf2003e.cfm 

3.Strategy – benchmarking, accesed 24 April 

2011, 

http://tutor2u.net/business/strategy/benchmar 

king.htm

Section Economics and Business Administration 

Sub-section: Business Administration

192

THE BRAND EQUITY OF TOURISTIC DESTINATIONS – THE MEANING OF 

THE VALUE 

Ban Olimpia 

University of Oradea Faculty of Economics science 

Popa Luminiţa 


Silaghi Simona 


Abstract: In today’s global economy, each place competes with other places for economic benefits. 

Destination has become a product that has to be promoted and sold in the most advantageous 

terms. The work bellow is an analysis of “brand equity” concept for touristic destinations, as 

found in the specific literature. Destination brands differ from product brands, major distinction 

being given by their stability/ instability. Brands of products are stable; this constant is maintained 

by the use of quality standards. Even in case of services, situation can be controlled, as quality 

standards could be perpetuated by a franchise system. Destinations are not depending on a single 

person, who decides, but a variety of them, economic agents, businesses, institutions and local 

population that can create/print form and structure changes of the destination. 

The concept de brand equity applied for touristic destinations, is something relatively recent. The 

dimensions of a brand for touristic destinations are: awareness, image, loyalty, quality and value. 

All these dimensions build the branding equity of a destination. There is interdependency, between 

quality, image, loyalty and value. In order to determine the perception in regards to the quality of 

tourism services in Romania, in 2010 a comprehensive study was done among the inhabitants of 

Oradea city. Through this study we have pursued several objectives: to assess the importance of 

service characteristics, performance evaluation of tourism services in Romania, tourism personnel 

evaluation, in terms of evaluation and performance, perception of the quality-price ratio for 

Romania, compared with other tourist destinations. We call on the exploratory study conducted, as 

the value of the dimension- destination of the brand equity is given by the price-quality ratio. Using 

an explorative study on the market of Oradea city, it was highlighted the connection between 

perception of touristic services, estimation price-quality (value) and the loyalty potential of the 

foreign clients in proportion with the Romanian tourists, consumers of the Romanian touristic 

products. 

Keywords: brand equity, destination, tourism, survey, Oradea 

Code JEL: M21, M31 

1. Introduction in the „brand equity” of a 

destination: 

In relatively recent works, branding was 

treated as an essential subject (Aaker 1996), 

(Aaker and Joachimsthaler 2000), (Kania 

2001). Modern branding appeared in the 

XIXth century and includes legal instruments 

as: logos, campaigns, identity systems, 

personality and the links between them. In 

tourism, branding is understood as being 

193 

“(…) a unique combination of product 

characteristics and added values, both 

functional and non-functional, which have 

taken on a relevant meaning which is 

inextricably linked to the brand, awarnesses 

of wich might be conscious or 

intuitive.(Morgan 1998: 140)” 

Destination branding is even more recent. 

Among the first books that were exlusively 

dedicated to this subject, we mention 

Destination Branding (Morgan, Pritchard and

oger Pride:2002), and also the published 

works in special number of the Journal of 

Brand Management (Hall:2002), (Harrison: 

2002) and (Morgan, Pritchard and Piggott: 

2002). When talking about touristic 

destinations, brand equity is still a vague 

concept. The theoretical delimitation of this 

subject is still subject of changes. Brand 

equity is the process of not only establishing 

the characteristic of a brand, but also 

establishing the value of that characteristic. It 

comes from the financial evaluation literature 

of the 1990s (Barwise 1993). Aaker and 

Joachimsthaler (Aaker and Joachimsthaler 

2000), both had an important contribution to 

the theoretical substantiation of brand equity. 

They launched the idea that the value of a 

brand is given by the: awareness of the brand, 

perceived quality of the brand, brand 

associations and loyalty for the brand. 

Hankinson completed the theory of brand 

value, by adding the concept of brand 

network, where the destination brand has four 

functions: (1) as a communicator, when the 

brand “represents a mark of ownership, and a 

means of product differentiation manifested 

in legally protected names, logos, and 

trademarks”; (2) as a perceptible entity 

“which appeal to the consumer senses, 

reasons, and emotions; (3) “brands as value 

enhancers,” that leads to the concept of brand 

equity; and (4) “brands as relationships, 

where the brand is built with personality and 

establishes a form of relationship with the 

consumer. (Hankinson 2004: 110–111), 

(Blain, Stuard and Ritchie 2005: 329). 

Using the brand is one of the primary forms 

of product differentiation. The question is to 

what extent branding as part of marketing 

strategy can be used to create brand equity for 

a touristic destination that is not yet known, 

virtually the same time seeking notoriety and 

differentiation. There are opinions that say 

that this is possible. ( Room 1992:13–21) 

For a consumer, brand evaluation is simple. 

Brand equity value is given by the difference 

in price between a generic product and an 

equivalent one that “has a name”. This 

194 

reference to generic products is increasingly 

difficult, as almost all generic products do not 

exist anymore. In regards to the touristic 

destinations, the brand equity evaluation 

method requires changes, as the comparison 

“on the shelves of a store” is not possible. In 

case of tourism destinations, the indicators 

used for assessing brand equity is: the number 

of tourists who choose a destination, the 

volume of expenditure made in that 

destination and the length of stay. 

2. The dimensions of tourism destination 

brand 

The experiential factor marks a significant 

difference between products and destinations. 

A destination cannot be tried, seen before 

purchase and consumption, therefore the idea 

of having a guarantee is excluded. The 

touristic product of a destination product is 

experiential by nature and it differs for each 

customer because of the internalization of the 

experience. 

Novelty is essential to differentiate 

destinations. Tourist trip requires differences 

between place of residence and destination, 

among other destinations and chosen 

destination. This is why, in many promotional 

messages, the novelty is found even in the 

title or slogan. (Pride 2007) 

A destination must be different from many 

points of view to worth the time and the 

money, but the novelty cannot be simply 

declared, it must be demonstrated -”novelty 

cannot simply declared, it must brand 

equityearned” (Cai, Gartner and Munar 

2009: 54) 

Novelty given by the destination is 

recognized in the perception of the consumers 

- consumers must be aware of the differences 

between their residency and other 

destinations. 

The dimensions of “destination brand” are 

different than the product brand, although 

mainly follows the same steps. Theorists and 

practitioners support the idea that places are 

being branded the same as products and

services are. Kotler extended the concept of 

brand from products to destinations. 

Konecnik and Gartner (Konecnik and Gartner 

2007: 400–421) have proposed four 

dimensions that can be applied to 

destinations: awareness, loyalty, image and 

quality. Tasci, Gartner and So (Tasci, 

Gartner and So 2007) have added another 

one, the value, which we consider to be 

appropriate. 

Different consumer segments evaluate each 

of these dimensions in different and 

significant ways. 

• Awareness is an essential dimension of the 

brand. It is the first step in building brand 

equity. A place can be known in a certain 

context before it can be considered a potential 

destination. Goodall (Goodall 1993) 

identified four levels of awareness of a place: 

knowledge, familiarity, top of mind and 

dominant. Dominant has here the meaning of 

the spotlight for various reasons, it is what is 

called a "hot spot" and may be positive or 

negative in nature. 

• The image is the dimension that attracted 

the most attention of researchers, there are a 

considerable number of articles on this 

subject. Initially it was thought that the image 

can substitute for the other dimensions of the 

brand, but this opinion has remained isolated. 

The roots of the brand are reflected in the 

destination image studies initiated since the 

1970s (Hunt 1975) 

Creating a brand does not mean branding, 

though it’s the base of the brand-building. 

Building the image is one step closer to the 

brand, but what still lacks is the brand 

identity. (Cai 2002) 

Loyalty is given by repeat visit or repeat 

purchase. 

• Quality is a subjective term, but can be 

operationalized through a series of scales. As 

an independent dimension (and not subject to 

image), it has been studied by many 

researchers (Fick and Ritchie 1991); 

(Murphy, Pritchard and Smith 2000). Quality 

is assessed from consumer’s perspective, in 

fact the quality perception is evaluated. 

195 

Quality is a key dimension of brand equity of 

a product and maintaining it is mandatory, 

this rule extends to the tourism destination as 

well. Establishing and maintaining a quality 

level for a destination requires controlling all 

products and services “supplied” by the 

destination and this is something very 

difficult to realize. On a tourist destination, 

the quality can be ensured only in regards to 

the common objectives such as museums, 

reservations etc. but it is perceived in regards 

to accommodations and individual services. 

The brand is a guarantee of quality (of a 

certain quality). Consumers expect and are 

willing to pay extra for the peace of mind that 

a brand is providing them. "At the Same 

Time, visitors can also expect to pay a 

premium for this assurance of quality and 

reduction of perceived risk.” (Blain, Stuarda 

and Ritchie 2005: 330) 

• The brand equity value is the most recently 

studied dimension and is seen as part of 

quality, reflected in the price paid for a 

product. The importance of price in the 

evaluation of BE was recognized by several 

researchers (Echtner and Ritchie 1993). 

However the price is not synonymous with 

quality. Value does not refer to quality or 

price, as much as it refers to favorable or notfavorable 

price-quality ratio. For example, a 

services package can be seen as valuable, not 

at the expense of the high quality services, 

but at the expense of quality-price ratio. 

Consumer segments related to mass tourism 

focus more on value, understood as “fair 

value for the money”. 

Operationalizing the dimensions by a scale of 

measurement is a necessary precondition in 

order to isolate the dimensions of the 

destination. 

3.Research methodology and results 

The research was conducted in two stages: 

March-April 2010 and March-April 2011. 

The first phase was conducted in March-April 

2010 on a sample of 1060 people from the 

population of Oradea city. The sampling 

method chosen was the stratification method

(with a margin of error of 3%) and the used 

criteria was the age. After the criteria the 

distribution was chosen, as follows: 150 

people aged 18-24 years, 234 people aged 25- 

34 years, 208 people aged between 35-44 

years, 192 people aged 45-54 years, 152 

people aged between 55-64 years, 124 

persons aged between 65-80 years. There 

were investigated persons who benefited of 

accommodation at least once during the 

period 2007 - until the time of the survey. 

The purpose of the research was to 

investigate Oradea`s population level of 

satisfaction in regards to the quality of 

tourist/guest services and the quality of 

tourism personnel services in Romania, and 

the results were presented in the paper “Guest 

services quality assesment in tourism, using 

an attributes scale” (Ban and Popa 2010) 

The second stage of the research was 

conducted between March-April 2011 on a 

sample of 62 people, consisting of foreign 

tourists present in Oradea and the 

surrounding area, therefore active consumers 

of tourism services in Romania. The 

distribution of the sample, based on age 

criteria is as follows: four persons aged 

15% 1% 

31% 

very high 

high 

53% 

medium 

low 

196 

between 18-24 years, 6 persons aged between 

25-34 years, 20 people aged between 35-44 

years, 22 people aged between 45-54 years, 

eight persons aged 55-64 years, two persons 

aged 65-80 years. 

The investigation on the price level 

perception of Oradea`s population, has 

produced the following results: more than 

half (52.6%) believe that the level of prices 

in Romanian tourism is high, while a 

percentage of 31.1% believe that the prices 

are prohibitively high. Summing up the 

percentages, 83.7% believe that the level of 

prices in Romanian tourism exceed far 

beyond what consumers are willing to pay. 

Only a percentage of 14.7% believe that 

prices are right, at a medium level, while only 

1.6% of the respondents believe the 

Romanian tourism prices are low. 

Unlike the Romanian people, a percentage of 

64.5% of the foreign tourists consider that the 

prices of tourism services in Romania are at a 

medium level and only 25.8% consider that 

the prices are at a high level. No foreign 

tourist investigated in this research 

considered that the price level is very high. 

(produced by the authors) 

Figure 1 (a) Opinions of Oradea`s population in regards to the prices of tourism services 

(b) Views of foreign tourists in regards to the prices of tourism services in Romania 

Any assessment of cost is directly or 

indirectly in relation to the perceived value of 

the product.Regarding the option for their 

10% 0% 

64% 

26% 

very high 

high 

medium 

low 

future vacation destination, it is not surprising 

the relatively small percentage of those who 

chose Romania, but the fact that the values

ecorded for Oradea’s population and foreign 

tourists are close. The premise was that many 

more Romanians would choose Romania. 

By using the SPSS software, was verified the 

type of link that exists between the desire of 

the foreign tourists to return to Romania 

(loyalty required by the brand equity) and 

78% 

78% 

22% 

197 

their evaluation of the quality of tourism 

services in Romania. A positive correlation 

was identified, with a very high level of 

significance, which supports the idea that the 

choice of a tourism destination is based on 

the perceived quality of tourism services of 

that particular destination. 


Figure No. 2 (a) Opinions of Oradea `s population on future holiday destination choice 

(b) views of foreign tourists iin regards to their next holiday destination choice 

120 

100 

80 

60 

40 

20 

0 

22% 

in Romania 

out of Romania 

in Romania 

out Romania 


Figure 3. Oradea inhabitants’ opinions in regards to the quality of tourism services in 

Romania and of foreign tourists’ opinions on the quality of tourism services in Romania 

4. Conclusions 

The increase of the brand equity of a 

destination is a natural goal. The dimensions 

of the brand of a tourism destination are: 

awareness, image, loyalty, quality and value. 

These dimensions are building the brand 

equity of a destination. Between quality, 

84% 

foreign tourists romanian tourists 

16% 

in Romania 

out of Romania 

very high 

high 

medium 

low 

very low 

image, loyalty and value there is 

interdependence. 

The exploratory study performed on Oradea’s 

market highlighted the link between 

perceived quality of tourism services, “value 

for money” assessment of tourism services 

(the value) and the potential of customers’

loyalty. The results of the study conducted on 

foreign tourists have shown that a perception 

of high or very high quality of services is 

directly related to the option of visiting 

Romania and hence a perception of a medium 

or low quality of tourism services is related to 

the intention of choosing another destination. 

The percentage of those who wish to return to 

Romania is low, only 16%. 

The perception of poor quality tourism 

services is also related to the big picture, as 

the countries in Central and Eastern Europe 

are associated with inconsistent quality, poor 

service of bad quality, poor quality of 

accommodation (Hall, 1999). 

The effort of changing the reality of tourism 

services in Romania has to be supported by 

the effort of changing the image-umbrella of 

an entire geographic region. 

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200

THE TOURISM BARRIERS OF THE DISABLED IN ROMANIA 

Băbăiță Carmen Mihaela 

University of the West Timisoara, Faculty of Economics and Business Administration 

Nagy Andrea 

University of the West Timisoara, Faculty of Economics and Business Administration 

Filep Adrian Viorel 

University of the West Timisoara 

Faculty of Economics and Business Administration 

Abstract: This article seeks to address a very sensitive issue in Romania, the disabled tourism. The 

natural question is whether tourism can respond and meet the needs of such people. Internationally, 

the researches in detail about tourism for people with disabilities are limited in this direction, and 

those who exist are focused more on lack of physical access to certain services in the hotel units. 

As for the problems (barriers) that a person with disabilities may face when seeking to participate 

in the act of travel there were found numerous internal and external barriers in trying to participate 

in tourism activities 

The study seeks to identify how normal people behave towards people with disabilities and aims to 

demonstrate the existence of correlations between the responses of the interviewees, which would 

lead to the presentation as close to the truth as possible of the results from the sample (section), 

transposed over the population from which the sample belongs and also lead to finding conclusions 

on which there could be made several proposals. 

Keywords: tourism, disability, social tourism, attitude, internal and external barries 

Cod JEL: M10, L83 

1.Introduction 

Tourism in its current form appeared only in 

the XIX th However, some social historians say that 

tourism has emerged a few decades earlier, 

with the opening of camps for disadvantaged 

century. Actions related to social children, as well as the opening of the 

tourism began in 1936, when the twentieth century, youth hostels. The 

International Labour Organization (ILO) emergence of hostels and bed & breakfast 

agreed that the on access to paid leave accommodation system occurred in the late 

should be done by tourism (Convention nineteenth century. At that time, most tourist 

No.52.). In essence, this agreement has also facilities where the ones in the private sector 

been mentioned in the Universal or belonging to other organizations willing 

Declaration of Human Rights in 1948, to improve tourist access to a much larger 

stating that “everyone has the right to rest number of people and making a profit. 

and leisure, including reasonable limitation After the Second World War ended some 

of working hours and periodic holidays with social policies were implemented in several 

pay”. 

countries as subsidies for private housing, 

Thus we can say that tourism has emerged as their renovation, modernization of 

a social practice due to the ethical demands equipment and infrastructure, and as well as 

of the representatives of employees, aid to the population. Also, many 

justifying the legitimacy of a specific right, associations have been created under 

so thus the right to travel, as an extension of different unions, travelling families , work 

the right to work, to rest and to take paid councils, etc. all had as main objectives 

leave. 

social development and expanding social 

tourism. 

201

2. Disabled tourism 

This article seeks to address a very sensitive 

issue in Romania, the disabled tourism. 

According to the 448 / 6 December 2006 law 

, people with disabilities are those people 

who, because of physical illness, mental or 

sensory impairments, lack skills that prevent 

them from caring out normal daily 

activities, requiring protective measures in 

support of recovery and social inclusion. 

The natural question is whether tourism can 

respond and meet the needs of such people. 

Internationally, the researches in detail about 

tourism for people with disabilities are 

limited in this direction, and those who exist 

are focused more on lack of physical access 

to certain services in the hotel units. 

Very few studies have been published 

concerning the issue of tourism and people 

with disabilities (Burnett & Baker, 2001, 

Darcy, 1998, 2002). Some academics 

specialized on tourism were concern with 

this problems in the late 1980s and early 

1990s (Smith,1987; Muloin, 1992), Smith's 

work being one of the few works published 

in a major tourism publication. Since then, 

academics in the field of tourism have been 

silent on this subject. Also referring to the 

disabilities literature which is characterized 

by the lack of consideration of those issues, 

identify one or two studies. Various studies 

are as well illustrated by the Canadian 

Tourism Commission (1997), Nurnett and 

Baker's work (2001 ) in the U.S.. 

The broad spectrum of disability problem 

has become a field of study since the early 

50.. Typically, these studies and debates 

related to persons with disabilities ,in orbit 

around the social model of disability, 

emerged in Britain in 1976 from the activity 

against segregation by the Physically Unfit 

Union . 

Disability is a generic term for diseases or 

disabilities, activity limitations and 

participation restrictions as defined in the 

international classification of functioning, 

and health disability adopted and approved 

202 

by the World Health Organization to show 

the negative aspect of individual context 

interaction (Law 448 / 6 December. 2006, 

Art. 5, pct.16). 

Researchers Hugh and Paterson (1997) say 

that the company creates an environment 

that does not take into account the needs of 

those with disabilities. They tried to make a 

clear distinction between those with 

impaired and those with disabilities. Such 

disorders refer to the normal functioning of 

the individual caused by mental or sensory 

dysfunctions and disability is the loss or 

limitation of opportunities to live normally 

in society on an equal level with others due 

to physical barriers. The fact is however that 

until nowadays a social model for people 

with disabilities wasn't treated in tourism 

literature. 

3. OBSTACLES IN ACCESS OF THE 

PEOPLE WITH DISABILITIES 

As for the problems (barriers) that a person 

with disabilities may face when seeking to 

participate in the act of travel there were 

found numerous internal and external 

barriers in trying to participate in tourism 

activities . These barriers can be classified 

as: 

Internal barriers are obstacles that must be 

overcome before a person becomes active in 

terms of tourism and that the individual has 

the greatest control over these barriers. In 

this way people with disabilities should be 

helped through institutionalization at the 

recovery units. For example in Romania this 

aid is extremely small as about 3.62% of 

people benefit from institutionalization 

External barriers - which may inhibit their 

journey, they may limit the options or reduce 

satisfaction. This category includes: 

architectural barriers such as stairs, toilet 

accessibility, accommodation, and 

environmental barriers difficult paths, tree 

roots or other obstructions outside, means of 

transport, especially the local variety of 

means of transport, which includes cars, 

buses and taxis ; laws and regulations that

prohibit the people with disabilities to bring 

necessary equipment with them, 

communication difficulties both at home and 

at the receiving person, negative attitudes 

from service providers and incorrect 

information. Tourists with a disability must 

consider that foreign travel agencies must 

break down these barriers. 

In 2002, Darcy reveals that attitudes 

towards individuals with disabilities, and 

research undertaken on this market segment, 

in particular, have evolved significantly in 

the last 25 years. Originally attitudes, 

regarding disability were conceptualized in a 

framework of personal tragedy, concentrated 

on individual helplessness. The person was 

treated as an unfortunate victim. Since then, 

the emergence of political movements for 

the rights of persons with disabilities have 

changed the overall impression of personal 

tragedy, to disability as a form of social 

oppression. 

The way in which disability is 

conceptualized and natural attitudes have a 

profound effect on society and people with 

disabilities. First of all, attitude influences 

individual behavior regarding people with 

disabilities Understanding disability as an" 

abnormality" of a person rather than a social 

failure, it outlines behaviors that lead to 

isolation and marginalization. In many cases, 

certain behaviors are not intentional but 

rather are rooted in social practices "nondisabled". 

Second, attitudes form public 

opinions, attitudes which influence social 

and public policies, resource allocation and 

access to education, transportation, jobs, etc.. 

Finally, prevailing attitudes influence the 

perception of people with disabilities of 

themselves . 

4. RESEARCH DIRECTIONS 

The study seeks to identify how normal 

people behave towards people with 

disabilities and aims to demonstrate the 

existence of correlations between the 

responses of the interviewees, which would 

lead to the presentation as close to the truth 

203 

as possible of the results from the sample 

(section), transposed over the population 

from which the sample belongs and also lead 

to finding conclusions on which there could 

be made several proposals. 

Between the specific objectives we find: 

knowledge or the social prerequisites, 

psychological and cultural of the 

interviewees; discovering the causes that 

lead to negative feelings, on people with 

disabilities, eliminate the causes, proposed 

ways of intervention and trying to change the 

behavior of the normal people. 

Knowing the psychological assumptions 

helps determine the way people act, 

understand the personal points view and also 

allows the identification of certain measures 

by which those with disabilities could be 

integrated and accepted in society. 

Discovering the causes which lead in 

forming an opinion regarding people with 

disabilities could be one of the most 

important secondary objective, this objective 

is important because it may act directly on 

the case and not on the effect that results. 

Finally the directions of intervention in 

modifying behavior of the normal people 

towards people with disabilities should be 

materialized at the end of the present study. 

The modeling of the behavior occurs when 

the stimuli are identified, the basic 

behavioral processes are analyzed, the 

explanatory variables of behavior and 

behavioral response. 

5. RESULTS INTERPRETATION 

The research was conducted on the basis of a 

questionnaire. Sample size was 100 people 

chosen randomly. The sample was 

structured: 40% of them are under 24 years, 

20% of people are between 25-30 years old, 

8% of people between 31-35 years old , 14% 

between 36-45 years and the rest, 18% are 

people over 45 years. Of these 62% were 

women and 38% were male. Regarding the 

marital status of respondents 44% aren't 

married, 34% are married and the rest belong

to other categories (divorced, widowed or 

living with partner). 

The study was conducted by distributing 

questionnaires in urban areas, in Timisoara, 

and 62% of the respondents have completed 

either a college, a university or a postgraduate 

study, while 32% are high school 

graduates. We can say that the education 

level has a major influence in assessing the 

behavior of people with disabilities, in the 

knowledge that education is directly 

proportional to the positive responses in 

terms of acceptance, understanding and 

helping these people with disabilities. This 

can be observed from the study because the 

question of concerning "helping people with 

disabilities", 94% of the respondents would 

be willing to help such a person and 72% of 

them, have done it already. 

Regarding the attitudes of normal people 

towards people with disabilities in society, it 

is found that the opinions of those people are 

divided. On a scale containing five possible 

answers: from compassion, mercy, 

acceptance, restraint, and indifference it is 

found that compared to the normal version of 

acceptance chosen by 34% of respondents, 

there is a balance between compassion and 

restraint (16% of the responses for each 

question) and an imbalance between 

compassion and indifference, they have 

chosen 32% and 2% of respondents (an 

insignificant percentage). Because according 

to the glossary "compassion" is associated 

with a sense of understanding and sympathy 

to the suffering and misery concerning 

someone; positive feelings total overall 82% 

of responses , a sign that these people are 

understood and are given support from 

individuals. 

Regarding the people's situation in Romania, 

it is not a very good one because the 

perception to the human rights of persons 

with disabilities knows negative aspects. To 

analyze the situation of peoples with 

disabilities in Romania there were developed 

three questions: 

204 

1. "Do you think that there are 

respected the human rights of 

people with disabilities in 

Romania?": 68% consider that the 

right are not respected, 22% said 

yes and 10% of them do not know or 

are not interested. 

2. "Do you consider that people with 

disabilities should receive certain 

gratuities?": 84%, have replied yes 

and 16% said that they do not. 

3. "Should programs against 

discrimination of the disabled, be 

introduced in schools?'': 62% said 

yes, 16% said no and 22% believe 

that these things must be learned at 

home. 

In conclusion, the Romanian society does 

not help people with disabilities in Romania 

and the fundamental rights are not respected. 

In principle these people would be helped by 

the state through the granting of gratuities 

and benefits. What is crucial is that programs 

against discrimination of the disabled should 

be introduced in schools, because it is known 

that the children's education must contain 

rules that causes them to act ethically and 

morally towards these people. 

When asked "What do you think the 

integration of disabled people in society", the 

answers "very important " and "Important" 

occupy the largest share of responses 54% 

and 28%. We can say that 82% of the 

respondents believes that integration of 

persons with disabilities in society is 

extremely important and agree with this 

point of view, and consider that such people 

should not be marginalized. 

Also on the problem in terms of employment 

chances of people with disabilities. In this 

sense 78% of people with normal capacity to 

work, inform that employers are reluctant in 

hiring these people. 80% of those surveyed 

said they have colleagues at work with 

disabilities and that there are no cooperation 

or social issues, but there exists a significant 

number of people who would not agree to 

collaborate at work with them, which is

concerning because 14% of them answered 

like this 

Regarding the participation of disabled 

people to the act of tourism, individuals 

answers were hopeful because even if, as the 

disabled are not accepted at work, the 

situation is different in a hotel, 92% of 

respondents would not be disturbed by the 

presence of people with disabilities in a hotel 

where they were individually penned. 

When asked "What do you think about 

tourism products for people with 

disabilities?" being an open question, 

respondents were able to freely choose their 

answers without being restricted by answers. 

The answers to the questions above are 

different and presented in a special way by 

each interviewee. The most frequent 

response was "I have not heard about such 

products for people with disabilities" Those 

who have heard and know these products are 

of the opinion that the number of products is 

very small compared to the number of 

people with disabilities, and that these 

products are not known even by the 

recipients, and are difficult to obtain even if 

you belong in that category disabled. The 

most important thing about these products is 

that it gives people with disabilities the 

opportunity to socialize and integrate into 

the society. 

Another view of respondents: state 

organizations, regional and local ones do not 

offer aid to the disabled. 

Regarding the promotion of these products, 

media channels do not consider this as an 

important fact and do not promote them 

because they do not obtain financial benefits. 

Existing channels that promote such 

products are local ones but of no national 

importance. 

Other opinions say that those people with 

disabilities should receive such products 

irrespective of destination, travel time or 

means of transport chosen, thus a social 

development of tourism and also building 

access roads and other facilities absolutely 

205 

necessary for each hotel , motel, resort, 

tourist destination. 

6. CONCLUSIONS AND PROPOSALS 

Surrounded by negative attitudes, people 

with disabilities can internalize negative 

beliefs and attitudes. It is recognized that the 

nature and severity of disability can affect 

the scope of activities to which a person can 

participate, but may also influence how the 

tourist experience is formed. 

After analyzing the data we can say that 

people with disabilities are accepted in 

society by all other categories of people by 

supporting the integration process, 

respondents have the opinion that this 

process is of great importance and that it 

should exist in any modern society; besides 

the fact that the states must be required to 

provide the disabled and give certain 

financial gratuities and psychosocial help. 

Most people have the opinion that people 

with disabilities and people with disabilities 

face difficulties in finding jobs, qualified or 

unqualified. Their problems are accentuated 

and supported by the reluctance of 

employers, higher health costs and other 

types of insurances. In addition to these 

serious problems, these people are refused at 

interviews because of their condition. 

Although 86% of respondents would not be 

''bothered'' to work with people with 

disabilities that is not reflected in obtaining a 

job, from the individuals concerned. 

Granting help to such a person is a fairly 

widespread phenomenon in Romania, as 

reflected by the number of responses, which 

shows a great solidarity among people 

belonging to all social categories and more 

than 10% of respondents have in their 

families people with disabilities and face 

with all the problems that such a person may 

have. 

The most important person's perspective 

refers to introducing these special programs 

against discrimination for people with 

disabilities in schools. These programs lead 

to changes in behavior and attitudes towards

people with disabilities and disabled. 

Through these programs there are removed 

barriers of communication, the emphasis is 

on socialization and integration, on giving 

unconditional aid and late but not least social 

acceptance of each people. 

The attitude of respondents should be 

improved and may even reach some 

collaborations, events, games and excursions 

for all people (including people with 

disabilities). These events have a crucial role 

in changing the negative aspects and 

strengthen the already existing ones. 

Facilities for disabled people, should be 

necessarily placed in any institution, means 

of transportation, hotels, resort, and other 

accommodations and tourist destinations, 

etc. These facilities could be regulated by 

laws, governmental decisions and a 

supervision is required. 

Tourism products for people with disabilities 

should be promoted on the channels known 

by the public, the number of products should 

cover as much of the total number of 

recipients. This can be done by organizing 

cyclical products or circuit ones so that in 

the course of two years all disabled people 

would enjoy a product of this kind. 

206 

Bibliography 

1. Buruiana, G., (2009), Macroeconomic 

Policies in tourism, Editura Uranus, 

Bucuresti 

2. Burnett, J., and H. Bender-Baker, 

(2001), Assessing the Travel-related 

Behaviors of the Mobility-disabled 

Consumer, Journal of Travel Research 

40:4–11. 

3. Darcy, S., (1998), Anxiety to Access: 

Tourism Patterns and Experiences of 

Disabled New, South Wales People with 

a Physical Disability. Sydney: Tourism 

New South Wales. 

4. Darcy, S., (2002), Marginalised 

Participation: Physical Disability, High 

Support Needs and Tourism, Journal of 

Hospitality and Tourism Management 

9:61–72. 

5. Matthew Kwai-sang Yau, Bob 

McKercher, Tanya L. Packer, (2004), 

Traveling with a Disability, More than 

an Access Issue, Annals of Tourism 

Research, Vol. 31, No. 4, pp. 946–960 

6. Muloin, S., (1992), Wilderness Access 

for Persons with a Disability. In 

Ecotourism, G. Harper and B. Weiler, 

eds., pp. 20–25. 

7. Smith, R., (1987), Leisure of Tourist 

with a Disability: Barriers to Travel. 

Annals of Tourism

START-UP FINANCING SOURCES: DOES GENDER MATTER? SOME 

EVIDENCE FOR EU AND ROMANIA 

Bădulescu Alina 

University of Oradea Faculty of Economic Sciences 

Abstract: Although financial resources are very important in SMEs in general, and for start-ups in 

particular, many entrepreneurs face numerous restrictions in finding sources for start-up financing. 

The present article aims to investigate the similarities or differences in start-up financing sources 

due to gender issues, otherwise to investigate if female entrepreneurs use (or have access) different 

financial sources in the early stage of their business. 

As reported by the literature, access to finance is one of the most important issues for SMEs and 

nascent entrepreneurs. Moreover, among the main financial issues, the first one is the access to 

start-up finance (Schwartz, 1976; Carter and Cannon, 1992; Johnson and Storey, 1993; Koper, 

1993; Van Auken et al, 1993; Carter and Rosa, 1998, FOBS survey 2005). In all sectors, women use 

for starting up businesses substantially less capital then men. Women encounter, more then men, 

credibility problems when dealing with bankers. This problem causes important effects concerning 

the performance, survival and growth of women-run businesses. 

The present research focuses on revealing how male and female entrepreneurs face and solve the 

problem of start-up financing sources. The methodology is based on using the dataset “Enterprises 

managed by the founder - broken down by gender of the entrepreneur”, available in EUROSTAT 

database. The data selected refers to the start-up financing sources available for European Union 

and Romania, regarding activities included in NACE: Industry and services excluding public 

administration and management activities of holding companies and 2005 as time of reference. The 

data were used to make some comparison between: male versus female entrepreneurs in EU; male 

versus female entrepreneurs in Romania; EU entrepreneurs versus Romanian entrepreneurs. 

The main findings reveal that there are no significant differences between men and women 

concerning the start-up financing sources. The main sources are the internal ones: own fund and 

savings (ranging from 82% to 92%), and financial assistance from family and friend (ranging from 

25% to 34%), both for male and female entrepreneurs, both for EU as an aggregate and Romania. 

Among the external sources, bank loans are the most important: they have been indicated by 17% of 

the females (EU) and 19% of the males, about 10 times more than the other external sources 

together: capital contributions from other enterprises and venture capital. There are no significant 

gender differences in EU case, and also there are not in the case of Romania. Apparently, gender 

does not matter about sources used for start-up financing. The most significant difference concerns 

the financial support from public authorities as financial source. The number of female 

entrepreneurs indicating financial support from public authorities as a source for start-up financing 

represents 6.18% in EU, versus 0.17% in Romania (36 times less in Romania than the EU average), 

while for men the figures are 4.85% in EU versus 0.30% in Romania (16 times less in Romania). 

This gap brings again in front of policy responsible the imperative of financially supporting nascent 

entrepreneurs, as the key to sustainable economic growth. 

Keywords: entrepreneurship, women entrepreneurship, financial sources for business start-up 

JEL code: M13 

207

Introduction 

Entrepreneurship is widely considered as a 

driving force of economic growth, job 

creation and promoting innovations, and thus, 

an important focus of economic policies. As a 

result, the number and incidence of SMEs in 

the national economies are increasing 

constantly. Nevertheless, fostering 

entrepreneurship needs providing fair access 

to financing. Unfortunately, the access to 

finance is mentioned as one of the most 

important barriers (Hughes and Storey, 1994) 

and in the case of female entrepreneurs, the 

situation is even worse. 

In this paper we are going to investigate the 

differences (if there are any) between female 

entrepreneurs and male entrepreneurs with 

respect to the sources of start-up financing, 

for EU and Romanian case. The paper is 

organised as follows: in the first part, we 

make a brief review of the literature; in the 

second part we present the methodology used, 

in the third part we emphasize the main 

results, and finally we conclude. 

1. A brief review of the literature 

Start up financing is a major problem for the 

nascent entrepreneurs, as banks, the most 

important lending supplier, are reluctant to 

involve in SMEs financing, for reason related 

to asymmetrical information - adverse 

selection and moral hazard. The financial 

problem is a constant of the entire life-cycle 

of the SME, but researches showed that the 

first stage of existence (from idea to start up 

and then, first steps to development) is more 

affected by financial restriction then 

following stages. Especially in the so-called 

“valley of death” stage, the problems are very 

serious and most starting entrepreneurs use 

their own savings, family and business angels 

support (see Badulescu and Badulescu 2010). 

Theoretical explanations of the prevalence of 

the internal finance (personal savings or 

retained earnings) in the SMEs case are 

confirmed by recent European Barometer on 

Entrepreneurship (EC, 2009). According to 

this, across all EU Member States, a majority 

208 

of interviewees agreed that it was difficult to 

start one’s own business due to a lack of 

available financial support. In Greece, 

Bulgaria, Latvia, Slovakia, Spain and 

Romania, 90% or more of the respondents 

agreed (strongly agreed and agreed) with that 

statement. At the bottom of the ranking, 

people in Finland, Austria and the 

Netherlands agreed with the statement on a 

proportion of less than two-thirds (56%- 

63%). 

Female entrepreneurs, more than males, face 

start-up financial difficulties. Start up finance 

is one of the most cited problems in the case 

of women entrepreneurs. For example, the 

most important problems facing women 

entrepreneurs are – in the opinion of the 

specialist agencies cited by CEEDR 2000 – as 

follows: 

-Start up finance (indicated by more than 

25% as a major problem); 

-Finance for growth (indicated by more than 

20% as a major problem); 

-Discrimination by finance providers 

(indicated by more than 15% as a major 

problem). All of these are related to the 

access to finance. 

Among the four areas of finance identified as 

posing problems for women by Carter, S. 

(2000) and then Carter, Anderson and Shaw 

(2001), the first one is access to start-up 

finance (Schwartz, 1976; Carter and Cannon, 

1992; Johnson and Storey, 1993; Koper, 

1993; Van Auken et al, 1993; Carter and 

Rosa, 1998, FOBS survey 2005). Irrespective 

of sector and location, women start in 

business with only one-third the amount of 

capital used by men. Women are more likely 

to encounter credibility problems when 

dealing with bankers. It is difficult to raise 

start-up finance. Some studies have shown 

links between low start-up capital and 

subsequent poor performance. Female 

entrepreneurs use substantially less capital at 

start-up than male owners, although intrasectoral 

similarities demonstrate that gender 

was only one of a number of variables 

affecting the business financing process

(Carter S. and Rosa P. 1998). The majority of 

women business owners have had to rely to a 

significant extent on self-generated finance 

during the start-up period of their business. 

Whilst many small businesses face 

difficulties in accessing the finance that they 

need (particularly at start-up), organizations 

specialising in providing support for female 

entrepreneurs clearly feel that this is one area 

where their clients face greater difficulties 

than their male counterparts. Shaw, Carter 

and Brierton (2001) have found research that 

suggests women face more difficulty when 

seeking finance to set up and grow their 

business. They note that women use only one 

third of the starting capital that men do, 

irrespective of sector; on-going growth 

finance may be less available for female 

owned firms than it is for male enterprises, 

largely due to women’s difficulty in 

penetrating informal financial networks. 

More women-owned businesses, for example, 

used family savings, household income, 

inheritance, grants and friends as sources of 

business finance. ”In fact, Carter and 

Anderson (2001) found that women’s 

personal savings constitute between 80% and 

99% of initial capitalisation, compared to 

men where the figure is between 30% and 

59%. Although this may seem admirable it 

can often have a negative effect on the 

business (Sannikova 2007). 

Using a panel of 2000 Dutch start-ups 

(1994), Verheul and Thurik (2001, p. 14 ) 

found out that „female entrepreneurs have a 

smaller amount of start-up capital than their 

male counterparts, but that they do not 

significantly differ with respect to the 

composition of financial capital”. Women 

starts up their business with less capital than 

men, and this can be attributed to a direct 

effect („gender effect”: men and women 

having the same characteristics but different 

with respect to the way of financing their 

businesses) and to an indirect effect („the 

female profile”: differences related to 

business type, management and 

experience)(Verheul and Thurik, 2001). 

209 

Smaller financial resources to start up 

business leads unfortunately to less business 

performance and growth (Welter et al. 2006). 

2.Methodology 

Aiming to reveal the similarities or 

differences between female and male 

entrepreneurs’ start-up financing sources, in 

EU and Romania, we used the dataset 

“Enterprises managed by the founder - 

broken down by gender of the entrepreneur”, 

available in Eurostat database. We select 

from this database the data regarding the 

start-up financing source available for 

European Union (aggregate changing 

according to countries available) and 

Romania. Available data refers to NACE: 

Industry and services excluding public 

administration and management activities of 

holding companies and to the year 2005. 

First, we select the data for the EU, broken by 

the gender of the founder and manager of the 

firm and search to arrange the sources for 

start-up financing starting with the most 

important, e.g. more nominated by the 

respondents. Second, we did the same thing 

for the data available for Romania, sorting 

them by relevance. Third, we tried to make 

some comparison between: 

-Male versus female entrepreneurs in EU 

-Male versus female entrepreneurs in 

Romania 

-EU entrepreneurs versus Romanian 

entrepreneurs. 

3.Discussion and results 

As the literature reported, and according to 

expectations, the main source for start-up 

financing used by women nascent 

entrepreneurs in EU are the own funds and 

savings. More than 4 out of 5 cited own funds 

and savings as a source for start-up financing, 

followed by the financial assistance from 

family and friends, reported by 3 out of ten 

women entrepreneurs. Far from these internal 

sources, the external sources are barely 

mentioned. Even we approach bank loans 

together - with and without collateral – they

are mentioned by only 1 out of 6 of the 

respondents. If we approach separately bank 

loans without and with collateral, the third 

source appears to be The financial support 

from public authorities (mentioned by 6% of 

Sources of financing - total 

Own funds or savings 

Financial assistance from family or friends 

Bank loan with collateral 

Financial support from public authorities 

Bank loan without collateral 

Capital contribution from other enterprises 

Venture capital 

210 

the respondents). Capital contributions from 

other enterprises and venture capital are 

nominated by only 1.34% of the women 

entrepreneurs. The complete picture is shown 

below: 

Chart 1. Sources for start-up financing, NACE industry and services, EU, males and 

females, 2005 

Source: based on Eurostat database 

Basically, the same ranking applies for men 

entrepreneurs. Own fund and savings, and 

financial assistance from family and friends 

are the first two sources for start-up 

financing. Own funds and savings are 

mentioned by 87% of the men (even more 

than the 82% in the case of women), while 

financial assistance from family and friends is 

mentioned by 25% of the men (less than the 

30% indicated by women). This little 

difference can be attributed to the fact that 

men may have (or may consider that!) more 

personal money than women, so essentially 

the same money are, for men, own fund, and 

for women, family’s money. It may be also 

an indication of the less effective networking 

in the case of women (explaining why 

financial assistance from friend is less 

important than in men’s case. And also, do 

not forget that women have more women 

friends (with less financial resources) and 

94971 

77853 

60821 

28928 

27698 

10354 

11785 

5867 

17597 

5452 

3374 

746 

2037 

520 

210799 

242951 

0 100000 200000 300000 

Males Females 

men have more men friends. Bank loans with 

collateral are the third financing source. 

Together, bank loans (without and with 

collateral) are indicated by 18.64% of men 

(versus 16.64% of women). Financial support 

from public authorities (mentioned by 4.85%) 

and capital contributions from other 

enterprises and venture capital (mentioned by 

2.23% of the respondents) are still marginal 

sources. 

In the case of Romanian entrepreneurs, the 

picture is mainly similar, as expected. The 

main source is, far from the others, own funds 

or savings, indicated as financing sources by 

90% of the female entrepreneurs and even 

more by male entrepreneurs. The second 

source is financial assistance from family and 

friends (indicated by 1 out of 3 entrepreneurs, 

males and females). Bank loans are indicated 

by 7% of the Romanian female entrepreneurs, 

and 9.24% of the Romanian male

entrepreneurs (for comparison, bank loans 

have been indicated by 17-19% in EU case). 


and venture capital are almost not used as 

start-up financial sources. Financial support 

Sources of financing - total 

Own funds or savings 

Financial assistance from family or friends 

Bank loan with collateral 

Bank loan without collateral 

Venture capital 


Financial support from public authorities 

211 

from public authorities is effectively nonexistent, 

with 0.17% of the females and 

0.30% of the male entrepreneurs indicating as 

a start-up financial source. 

Chart 2. Sources for start-up financing, NACE industry and services, Romania, males and 

females, 2005 

Source: based on Eurostat database 

4.Conclusions and further implications 

Main sources for start-up financing remain 

internal sources: own fund and savings, and 

financial assistance from family and friend, 

both for male and female entrepreneurs, both 

for EU as an aggregate and Romania, a new 

member state and still developing economy. 

Regarding the external sources, bank loans 

are the most important: they have been 

indicated by 17% of the females (EU) and 

19% of the males, about 10 times more than 

the other external sources together: capital 

17831 

16075 

11078 

5792 

1130 

648 

1529 

615 

82 

38 

304 

37 

96 

30 

29568 

32251 

0 10000 20000 30000 40000 

Males Females 

contributions from other enterprises and 

venture capital. There are no significant 

gender differences in EU case, and also there 

are not in the case of Romania. Apparently, 

gender does not matter about sources used for 

start-up financing. The access to external 

financial sources is restricted for 

entrepreneurs of both genders: only 1 of 6 

nascent entrepreneurs has access to them. The 

complete picture and comparison are shown 

in Table 1.

Table 1. Sources for start-up financing: males versus females, Romania versus EU (2005) 

Source for start-up financing Indicated 

by … % 

of the 

females 

(EU) 

212 

Indicated 

by … % 


females 

(RO) 

Indicated 

by … % 


males 

(EU) 

Indicate 

d by … 

% of 

the 

males 

(RO) 

Own funds or savings 81.98 90.15 86.77 91.68 

Financial assistance from family or 

friends 

30.46 32.48 25.03 34.35 

Bank loan without collateral 5.74 3.45 7.24 4.74 

Bank loan with collateral 10.9 3.63 11.4 3.50 

Capital contribution from other 0.79 0.21 1.39 0.94 

enterprises 

Venture capital 0.55 0.21 0.84 0.25 

Financial support from public authorities 6.18 0.17 4.85 0.30 

More than gender seems to matter the 

development stage and/or public involvement 

in policies and programmes fostering 

entrepreneurship. The most significant 

difference revealed by the data is related to 

the financial support from public authorities. 

The number of female entrepreneurs 

indicating financial support from public 

authorities as a source for start-up financing 

represents 6.18% in EU, versus 0.17% in 

Romania (36 times less in Romania than the 

EU average), while for men the figures are 

4.85% in EU versus 0.30% in Romania (16 

times less in Romania). Probably the gap is 

even bigger now, after implementing 

numerous European programmes in fostering 

women entrepreneurship. 

After all, if gender does not matter, there 

other things that matters: entrepreneurship 

policies! 

Some further research can be carried out 

regarding other things that matter: economic 

sector can be one, so different NACE in the 

EU database are to be studied further. And 

further policies should be enforced to 

promote, foster and support (financially 

included!) entrepreneurship, as an important 

key to economic growing and social progress. 

References: 

1.Carter S. and Cannon T. 1992. Women as 

Entrepreneurs, London: Academic Press 

2.Carter S. and Rosa P. 1998.‘The financing 

of male- and female-owned businesses’, in: 

Entrepreneurship and Regional Development, 

10(3), 225-241 

3.Carter, S. 2000. “Gender and Enterprise”, 

in: Carter S. and Jones Evans D. (eds), 

Enterprise and Small Business: Principles, 

Practice and Policy, Addison Wesley 

4.Carter S and Anderson S.2001. On the 

move: Women and men business owners in 

the United Kingdom, Washington DC: 

NFWBO and IBM, p. 5 

5.European Commission 2000. Young 

Entrepreneurs, Women Entrepreneurs, Ethnic 

Minority Entrepreneurs and Co-ntrepreneurs 

in the European Union and Central and 

Eastern Europe, Final Report to the European 

Commission, Centre For Enterprise And 

Economic Development Research (CEEDR), 

Middlesex University Business School, UK, 

http://Ec.Europa.Eu/Enterprise/Policies/Sme/ 

Files/Craft/Craft- 

Studies/Documents/Completereport_En.Pdf

6.European Commission 2009 . Flash 

Eurobarometer Entrepreneurship in the EU 

and beyond. A survey in the U, EFTA 

countries, Croatia, Turkey, the US, Japan, 

South Korea and China. Analytical report 

Fieldwork: December 2009, p. 76 

7.Hughes, A. and D. J. Storey. 1994, Finance 

and the Small Firm, London and New York: 

Routledge. 

8.Greene, Patricia G.; Hart, Myra M.; 

Gatewood, Elizabeth J.; Brush, Candida G.; 

Carter, Nancy M. 2003. Women 

Entrepreneurs: Moving Front and Center: An 

Overview of Research and Theory, 

http://usasbe.org/knowledge/whitepapers/gree 

ne2003.pdf 

213 

9.Sannikova, E. 2007. Regulatory 

Impediments to Enterprise Development: 

Mobilizing Women's Economic Potential, 

International Conference on Reducing 

Barriers to Entrepreneurship and Encouraging 

Enterprise Development: Policy Options, 18- 

19 June 2007 

10.Shaw, E., Carter, S. and Brierton, J. 2001. 

Unequal Entrepreneurs: Why female 

enterprise is an uphill business, The Industrial 

Society 

11.Verheul, I. and Thurok, R. 2001. “Start- 

Up Capital: Does Gender Matter?” Small 

Business Economics 16: 329–345 

12.Welter, F., D. Smallbone and N. Isakova. 

2006. Enterprising Women in Transition 

Economies, (eds), Aldershot, Ashgate

Sub-section: Economics

COMPETITIVENESS - GROWTH FACTOR. POINT OF VIEW ON THE 

SITUATION IN ROMANIA 

Cismaș Laura 

The West University of Timisoara, Faculty of Economics and Business Administration 

Bucur Oana Nicoleta 


Pitorac Ruxandra Ioana 


Abstract: This paper considers the issue of competitiveness of national economy, making specific 

reference to the economic situation of Romania in the year 2010. 

The diversity of views on approaches to competitiveness in the literature requires consultation of 

reports prepared by prestigious international forums and organizations, using relevant indicators 

and economic variables. 

Keywords: Competitiveness, economic growth, productivity, economic environment, economic 

efficiency. 

JEL Codes: F43, O47 


Competitiveness means the way in which 

nations and the economic environment given 

all powers to achieve its prosperity. 

Competitiveness study allows "the possibility 

of comparing the performance achieved, and 

future growth potential" (Spataru) of the 

company and the economic environment. 

Analyzing the structure and dynamics of the 

competitive system is also an element of 

absolute completion of analysis and relevant 

government decisions targeting companies 

involved in production activity (Airoldi, 

Brunetti and Coda in 2005: 322), all aimed at 

raising environmental performance national 

economy. 

In economics, competitiveness is identified as 

the main active element in the procurement 

and delivery performance during the 

competition, the organization the role of 'the 

situation is in better position as compared to 

its competitor for the "defeat" for the 

purposes of reporting gave a performance 

criterion and followed by all competitors 

(Voiculescu 2001: 6). 

217 

2. Defining the level of competitiveness 

based approach 

The concept can be approached at 

mondoeconomic, macroeconomic and 

microeconomic level. In that respect this 

industry experts opinions on the definition 

depending on the level of approach: 

- "Global competitiveness is a matter of 

economics that analyzes the facts and policies 

that shape a nation's ability to create and 

maintain an environment conducive to 

supporting and achieving better value for 

their enterprises and prosperity of its 

people"(World Competitiveness Yearbook). 

- "Competitiveness is defined as that set of 

factors, policies and institutions that 

determine the current level of productivity of 

a country. Productivity determines both the 

welfare of an economy at a time, and its 

growth potential in the future. Empirical 

research has shown that developing a 

knowledge-based economy is one of the key 

factors enhancing the competitiveness of an 

economy"(Imbrescu and Băbăiţă).

- "The competitiveness of markets, refers to 

the degree to which individual firms have the 

power to influence market prices or terms on 

which their product is sold. The individual 

firm has less power to influence the market 

on selling their product, the more competitive 

is the market" (Lipsei and Chrystal 1999: 252 

). 

- “The level at which it generates is the 

microeconomic competitiveness. A country 

becomes competitive when you manage to 

build that environment that allows each 

company to become effective added value, to 

be able to survive or develop in any national 

economic environment, especially 

internationally. The level at which it 

maintains and strengthens the 

competitiveness of the macro. The country 

maintains or improves its profitability 

internationally when it decides to apply the 

set of economic policies necessary to 

stimulate the achieving optimum expansion at 

the micro level”(Spataru). 

Creating a competitive system is an important 

issue and a policy of “Washington 

Consensus” for economic growth in 

developing states (Baumol, Litan and 

Schramm 2009: 52). 

Representation of the competitive system, the 

example of a competitive economic market 

can be achieved only by extensive 

competition model representation. 

Competitive system structure: the 

competition extended) is a necessary 

condition of existence and developing a real 

competitive. 

The four pillars of the macroeconomic level 

the competitive system are newcomers 

(especially entrepreneurs), customers 

(consumers), suppliers and manufacturers of 

goods substitutable (those who have the 

ability to conduct marketing pressures). 

If new entrants can affect competition by 

larger volumes of production and reducing 

unit costs through a variety of products, 

manufacturers of substitutable products or 

services will be the source of uncertainty for 

new entrants if the price / benefit will be one 

218 

of those consumers’ expectations accordingly 

have propensities for such goods. 

Providers will become competitive in 

particular by focusing on service quality and 

price of services and clients, through 

negotiation and price elasticity will be the 

most important word to say. 

The competitiveness suggests safety, 

efficiency, quality, high productivity, 

adaptability, successful, modern 

management, superior products, low cost. 

In the battle for new markets, firms need to 

emphasize their strengths to gain the ground 

to competitors. Also they have to defend 

these benefits, known and recognized by 

constant efforts and also to know and accept 

that are the strengths of its competitors. At 

the same time, significantly increase the 

interest and effort to obtain business benefits 

both the domestic and international market. 

Competitive or competitive ability is just that 

part on which power and economic strength 

of the economic conditions of a market 

economy. Therefore, development of 

competitiveness, acquiring and maintaining 

competitive advantage and effective use of 

the factors influencing it, is the main goal 

toward which all economic agents. 

3. Implications of competitive markets in 

the growth states 

The contemporary world has undergone a 

series of connections between markets and 

increasing competitiveness of the country's 

economic performance in the economic 

environment runs its business. In this respect 

shows experts in the field: "To be effective, 

must include an economic and profitable 

business based on competitive (...) the true 

economic substance produced by them, their 

profitability depends on economic strength 

and level to live the great country"(Verboncu 

and Zalman 2005:41). 

The competitiveness of a country is assessed 

by its capacity (Gavrila 2009: 131): 

- to export 

- to attract FDI

- to harness resources and increase real per 

capita GDP 

- prices were more positive than those of 

competitors, the offer is characterized by 

quality, diversity and timeliness 

A national economy is competitive in the 

long term, they ensure the sustainable 

increase of welfare and population dynamics 

due to the high overall productivity of factors 

of production. 

It is clear that the competitiveness of an 

economy depends decisively on the business 

environment, businesses are the engine of 

economic growth. Improve business access to 

factors of their participation in the European 

Single Market, investment in optimizing their 

industrial base, while respecting the 

principles of sustainable development is a 

critical prerequisite for the operation of the 

Romanian economy competitive. 

As described by Michael Porter in the latest 

edition (2008) of his famous works, ''About 

the competition, the competitiveness of a 

country do not relate primarily to 

macroeconomic stability, neither labor nor 

public policies, or practices management, but 

especially in productivity. A nation is 

competitive when it allows the development 

of the determinants of productivity and 

increasing productivity. 

219 

Depending on factors contributing to 

productivity, the report prepared by the 

World Economic Forum identified three 

stages in which the countries, namely: 

Stage I: The competitiveness of production 

due to factors - factor - driven (force of 

unskilled or poorly qualified natural 

resources). The economy is particularly 

competitive because of lower prices, but the 

products are less complex. However, 

assuming the presence of certain basic 

conditions are essential (institutions, 

infrastructure, macroeconomics, health and 

primary education). 

Stage II: Competitiveness by factors of 

efficiency - efficiency - driven (production 

more efficient, better quality products). 

Competitive conditions related to higher 

education and continuous training and ability 

to benefit from existing technologies. 

Stage III: The competitiveness based on 

innovation - innovation-driven (new products 

from innovative, complex production 

processes). 

The importance of individual factors, 

expressed by weight in the total contribution 

of the three pillars of competitiveness 

depends on the stage in which the country 

concerned. 

Table 1 The pillars of competitiveness (on a scale from 1 a worst - 7 the most powerful) 

Basic requirements Score Romania 

Institutions 3,7 

Infrastructure 2,7 

Macroeconomic stability 4,6 

Health and primary education 5,5 

Effciency enhancers 

Higher education and training 4,3 

Goods market effciency 4,2 

Labor market effciency 4,3 

Financial market sophistication 4,4 

Technological readiness 3,8 

Market size 4,5 

Innovation and sophistication factors 

Business sophistication 3,8 

Innovation 3,1 

Source: World Economic Forum Global Competitiveness Report 2009-2010

4. Romania's place in terms of 

competitiveness in 2010? 

According to the Romanian Institute for 

Social and Economic Research Polls - 

IRECSON, Romania is one of the last places 

among the 58 states, namely the 54th place, 

ahead of Argentina, Croatia, Ukraine and 

Venezuela. In front of us, at very short 

distance are Bulgaria (who score a 0.6% 

higher than the score of Romania) and 

Slovenia which has a spacing of 1.2 points 

from November. In the case of former 

communist countries until 1989 before we 

can see that under the current economic 

crisis, Hungary (42), Estonia (34) and Poland 

(32) have found solutions to increase 

competitiveness, Romania (54) and Czech 

Republic (29) retain their positions from 2009 

to 2010, while Bulgaria (53), Slovenia (52), 

Slovakia (49) and Lithuania (43) have 

recorded substantial decreases ranging from 

20 to 12 seats. For a better building on 

evolution, that the positions occupied in 

recent years, the Yearbook presents 

individual country specific contributory 

factors in terms of competitiveness and the 

disadvantaged. 

In 2010 Romania registered a decline in 

economic performance, ranked 32 in 2009, 

ranked 47 in 2010. Although this chapter we 

have seen a drop of 15 seats still remain 

before countries like Greece (48), Russia 

(49), Turkey (50), Estonia (52), Slovakia 

(54), Ukraine (55) Lithuania (57). Regarding 

the efficiency of government, I dropped one 

place from 2009, topped 50. Regarding 

infrastructure, I grew up 10 seats in 2010 

compared to 2009, peaking at number 43 in 

2010, and Chapter Efficiency business, grew 

13 seats, up from 56 in 2009 ranked the 49th 

place in 2010. 

Unfortunately, Romania has made significant 

gains in terms of business efficiency and 

infrastructure were not enough to increase 

competitiveness as a whole, but given that the 

economic performance and efficiency of 

government Chapter I declined, maintaining 

the position of Romania in 2010, to 2009 

220 

levels is due the first two factors. Credit 

business is beginning to strengthen in recent 

years and investment in telecommunications 

infrastructure and in research are beginning to 

become visible, helping them to contribute in 

2010 to maintain the competitiveness of 

Romania in 2009, the economic crisis. 

Strengths of the business concerns in 

particular the progress made by the Romanian 

companies in their concern for customer 

satisfaction for a proper wage service sector, 

and staff management positions, at a salary 

that is comparable to that in other EU 

countries. 

However, to further strengthen the business 

environment we need to improve some 

aspects which for 2010 is still the weak points 

in terms of competitiveness, namely: the need 

for specialists in finance raised by the need to 

increase the capacity of Romanian companies' 

adaptability to market changes the need to 

increase transparency of financial institutions 

in Romania, the stock market decline, and 

finding solutions so enterprise debts not 

restrict their ability to be competitive. 

Negative aspects (aspects of which Romania 

is ranked the lowest in the context of global 

competitiveness) in terms of economic 

performance are related to direct investment 

abroad, investments in capital markets 

abroad, receipts from tourism and real GDP 

growth. 

Even though the Chapter Efficiency sit well 

in the government's total public debt and 

collect taxes on income, weaknesses in the 

system in terms of competitiveness in 2010 

relate mostly to the lack of public contracts 

open to all bidders, the black market 

economy that does not allow and competition 

law can not stop unfair competition. 

In conclusion, overall, we assess the 

competitiveness of Romanian economy as a 

"disappointing performance." In many ways 

they are signs of competitiveness, 

competitiveness appears other way to start, 

but in most economic indicators speak for 

lags, lack of competitiveness.

Heritage Foundation and Wall Street Journal 

Index of Economic Freedom determines (S), 

assuming that economic freedom is a 

221 

precondition for prosperity of individuals and 

in turn a key driver for competitiveness. 

Source: Index of Economic Freedom, Heritage Foundation, 2010 

Chart no. 1 Rating States of Europe according to ILE 

According to the results of this study, the 

2010 edition, Romania is the 63rd country 

in the world in terms of economic freedom, 

and ranked 28th in Europe. 

The Heritage analysis, Romania has 

achieved a 64.2 index points above the 

global average. After comparing the first 

countries in Europe, according to each 

indicator of economic freedom, Romania 

has high scores for: free trade, fiscal 

freedom, government spending, and 

significantly lower scores than the best 

countries in Europe obtained if : property 

rights and freedom from corruption, as 

these areas are necessary for developing 

solutions. 

Results of the study conducted by the 

Heritage Foundation shows that Romania's 

economy is moving towards a greater 

economic freedom index. 


For Romania, economic competitiveness is 

a major component of national 

development strategy for 2007-2013. For 

this purpose a special program was 

developed (Sectoral Operational 

Programme ‘Increasing of Economic 

Competitiveness ‘’SOP) in accordance 

with the Lisbon strategy on improving the 

economic competitiveness of the European 

Union. 

In full accordance with the conduct of the 

Commission’s proposals for 

Competitiveness and Innovation 

Framework 2007-2013, the priorities of 

Romania’s competitiveness strategy, which 

take into account and take into account the 

guidelines proposed by the Commission for 

Cohesion Policy 2007 – 2013, are: 

- Improving access to emergency market, 

capital, technology businesses, especially 

small and medium enterprises;

- Developing knowledge-based economy: 

including the promotion of innovation and 

development of a competitive; 

- Improve energy efficiency and use 

renewable energy. 

Competitiveness, although often studied in 

recent decades even in Romania, remains a 

qualitative concept, draw conclusions on 

the competitive status is rather the depth of 

analysis, the information behind it, the 

evaluator’s experience and, not least, 

points of view that makes analysis. 

Acknowledgements: 

1. This article is the result of the project 

POSDRU/88/1.5./S/55287 "Doctoral 

Programme in Economics at the European 

Standards Knowledge (DOESEC). This 

project is co-funded by the European 

Social Fund Through the Sectoral 

Operational Human Resources 

Development Programme for 2007-2013, 

coordinated by The Bucharest Academy of 

Economic Studies in partnership with West 

University of Timisoara. 

2. "This work was partially funded by 

contract 

POSDRU/CPP107/DMI1.5/S/78421, 

strategic project ID 78 421 (2010), cofinanced 

by European Social Fund - Invest 

in People, by Human Resources 

Development Operational Programme 

2007-2013". 

222 

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Mondiale – World Competitiveness Yearbook)

DYNAMICS ECONOMIC DISPARITIES IN NORTH-WEST REGION OF 

ROMANIA 

Florea Adrian 

University of Oradea Faculty of Economics 

Abstract: Even though over the years has enjoyed wide media coverage, with highlighted aspects, 

discrepancies and inequalities of economic potential between different regions of the world, or even 

parts of the same countries always remained topical. Difficulties arising from these differences were 

always felt, extremely painful by humans. 

Analyzing distinctly, participation of each county to the GDP of the Northwest Region and the 

composition of all indicators, we can identify significant discrepancies between counties, regions 

and municipalities. This is one of the reasons that led us trying to identify the causes that generated 

the current situation. From the perspective of the contribution of each county in the Northwest 

Region to Region's domestic product composition, the first place is taken by Cluj county 32.3%, 

followed by Bihor with 24.3%, Maramures, with 14.9% Satu-Mare, 12.1%, Bistrita-Nasaud, 9.1% 

and 7.2% Salaj. Consulting of the Regional Operational Programme 2007-2013 indicates that the 

poorest areas in the Northwest Region are in Maramures and Bistrita-Nasaud. 

An important part of the active population of North-West Region was employed in public 

enterprises and an increase of unemployment in the counties of Salaj, Satu Mare and Maramures 

became predictable, imminent amid restructuring of public enterprises with losses. Studies of 

employed population by sectors of the economy, shows a high rate of population employed in 

services in the counties of Cluj and Bihor and high employment in agriculture on other four 

counties. In a modern market economy, services are most concentrated labors, and how the 

workforce is distributed in the Northwest region also shows an imbalance. How Northwest Region 

is participating in international economic cycle has major effects on the population's living 

standards. Relevant for the inter-district disparities analysis is the human and agents behavior 

analysis and the savings and loan relationships. How people behave in these ratios in each county 

tells us much about their economic profile. 

Attenuation of long distance gaps in the Northwest region remains a very complex problem, 

attempts to decrease it, is bringing into question, not infrequently contradictory 

strategies. Supporting the few remaining state-owned enterprises in the region could lead to a 

revival of activity, attracting attention of foreign investors can thus lead to recovery of much of the 

labor resources of the Region. Expansion and modernization of transport and distribution networks 

would provide a further chance to faster development of the North-West by exploiting the growing 

regional economic resources available, enhancing economic relations both intra and extra 

regional. 

But we can not fail to mention the part state should play in orchestrating these measures. Despite 

the independence of regions, they are subordinated to the central administration, and strategic 

investment policy depends to an overwhelming extent of it. Only by linking effective measures at 

national, regional and local level will alleviate the sustainable economic gaps. 

Keywords: disparities, restructuring, reforms, investments, consequences 

JEL: E01, E24, J11, R12, W24 

223

The issue of disparities and inequalities of the 

economic potential existing between different 

regions of the world or even between regions 

of the same countries always remained valid, 

despite the fact that over time it has received 

wide media coverage. Difficulties arising 

from these differences were always felt 

particularly painful by humans. 

Currently, the economy is characterized by an 

increased mobility of all its components, and 

economic disparities have begun to worry 

more and more economic researchers. As a 

result, simply finding the economic 

disparities is not satisfying anyone anymore. 

Maybe that's why people who believe that it 

is necessary to identify the necessity to 

maintain and deepen the gaps identified cases 

depending on the particularities and 

specificities of each area. It must also 

decipher their consequences, because they are 

not limited to the current period, but 

designing, influencing economic relations on 

a longer period. In the spirit of the statement 

we want to present an analysis by 

geographical regions, North-West of 

Romania. Among the envisaged objectives 

we include: identifying the causes of 

economic disparities emphasis of inter-county 

geographic area North West of Romania, 

which are the economic effects of these interdistrict 

disparities 

According to information provided by the 

Regional Development North West Agency, 

the North-West region (northern 

Transylvania) is close to European markets, 

with good road access, rail and air has a 

strategic geographical position, being the 

gateway to Romania from the European 

Union and Ukraine. Even if the region is 

crossed by 7 European roads, has peripheral 

position over the European transport 

corridors, the connection with eminent poles 

in the neighborhood, with other regions is 

still difficult. According to the same sources, 

224 

the North-West of Romania has an area of 

34,159 km ² representing 14.3% of the total 

area of the country. Part of this region are the 

counties: Bihor, Bistrita-Nasaud, Cluj, 

Maramures, Satu Mare and Salaj having a 

population of 2,744,914 (14.32% of the total 

population of the country) and has an average 

density of 80.1 inhabitants per square 

kilometer. For that is the number of 

administrative-territorial units (421), 

distributed as follows: 42 cities including 15 

municipalities, 398 communes and 1823 

villages. 

Analyzing separately each county 

participating in the formation of regional 

GDP and the composition of the indicators, 

we can identify significant discrepancies 

between counties, regions and 

municipalities. This is one of the reasons that 

led us trying to identify the causes that 

generated the current situation. 

From the perspective of contribution each 

county has in North-West Region’s domestic 

product formation, first place is taken by Cluj 

county with 32.3%, followed by Bihar with 

24.3%, Maramures, with 14.9% Satu-Mare, 

12.1%, Bistrita-Nasaud, 9.1% and 7.2% Salaj. 

Consulting of the Regional Operational 

Programme 2007-2013 indicates that the 

poorest areas in the Northwest Region are in 

Maramures and Bistrita-Nasaud. Here were 

identified most areas of industrial 

decline. Intra-regional differences are closely 

related to the degree of industrialization, the 

counties most powerful and industrialized 

early - Cluj and Bihor - having a high 

proportion of the employed population 

(44.5% and 45.7%), while less counties and 

later industrial - Satu Mare and Bistrita- 

Nasaud - have lower weights (39.6% and 

38.0%). Un-industrialization has led to a 

restricted job use in industry in counties of 

North-west, but with large differences from 

one area to another.

Table 1 Unemployment in North-West 

2007 2008 2009 2010 

Bihor 2,4 3 5,8 5,8 

Bistriţa 2,4 2,8 8,2 6,3 

Cluj 3 2,9 6,3 4,9 

Maramureş 3,4 3,7 6,4 6 

Satu Mare 2,6 3 6 6,3 

Sălaj 4,4 5,5 10,3 8,2 

Made by author based on information found on the website: 

http://www.insse.ro/cms/rw/pages/buletinStatJud.ro.do 

An important part of the active population of 

North-West Region was employed in public 

enterprises and an increase of unemployment 

in the counties of Salaj, Satu Mare and 

Maramures became predictable, imminent 

amid restructuring of public enterprises with 

losses. Other areas in decline are: the Apuseni 

Mountains and the northern mountain area. 

Mining sector restructurations has affected 

this sector and led to massive layoffs in the 

area of Baia Mare-Borsa-Viseu. 

A lower number of unemployed in Cluj and 

Bihor to the major foreign investment, which 

have diminished, even partially, the effects of 

industry restructuring. North-West has 

attracted a relatively high number of firms 

with foreign participation, sometimes 

grouped in clusters (eg major foreign 

investors in Bihor County - primarily 

producers of technological equipment). But 

we can observe that they are generally SMEs, 

who often work as subcontractors or contract 

work or operate based on business ties, 

traditional Western Europe. It should be 

noted that SMEs present in the Northwest 

region of the country accounts for 15% of the 

national total. The existence of foreign 

investors to operate in the same field at the 

same time can create both advantages and 

disadvantages. On Bihor ‘s labor market 

multinationals had a visible contribution to 

the unemployment rate and the constant 

increase in demand for qualified manpower, 

services development. 

Studies of employed population by sectors of 

the economy, shows a high rate of population 

225 

employed in services in counties of Cluj and 

Bihor and high employment in agriculture on 

other four counties. In a modern market 

economy, services are most concentrated 

labors, and how the workforce is distributed 

in the Northwest region also shows an 

imbalance. Counties in which the 

employment of labor resources is higher in 

services, like Cluj and Bihor, also raises the 

level of economic development compared to 

other counties. 

The presence, quite shy, of industrial parks in 

the Northwest Region counties, and also their 

unequal distribution in the Region, is 

supplying the gaps. We notice the early 

existence in Cluj County of three industrial 

parks: Tetarom1 Cluj-Napoca, Cluj Napoca 

Tetrarom2 , Dej ARC Park, which attracted 

investments of hundreds of millions of 

euros. A significant impact on the local 

economy has the making of the industrial 

park of the Finnish giant Nokia (Tetrarom3), 

Nokia investment reaching half billion 

euros. Existence in Bihor county of those two 

industrial parks, one located in Oradea and 

one in the west of the county, between 

Oradea and the border with Hungary, has 

created a domino-type effect, attracting other 

foreign investors and companies. So Shin 

Heung Precision ofKorea, U.S. Plexus that 

made investments of over EUR 20 million 

and a Canadian company that produces 

equipment (Celestica) made an investment of 

over 84 million, those 3 assuring to employ 

over 3,000 people. In other county we could 

see 25 million euros invested by the French

company Michellin in a tire factory in Zalau, 

the Natuzzi Italian corporation in a furniture 

manufacturing facility in Baia-Mare in the 

amount of 40 million euros in Satu Mare 

Schemmer German company has invested 10 

million euros in the production of tubes for 

cable protection, and in Bistrita-Nasaud a 

germany company Leoni Wyring System’s 

presence is noted, producing automotive 

wiring, but also companies with Italian 

capital such as Tesitura, Italtextil and Storia, 

active in textiles field. In all counties in the 

Table 2 Average monthly wage 

Salariaţi 

(raportat la totalul 

populaţiei) (%) 

226 

region, except Bistrita-Nasaud, industrial 

parks have been established. 

The top foreign investors in the county of 

Cluj is the leader of the Region, and placing 

their capital where conditions exist for 

achieving higher returns. All these elements 

lead to the development of the labor market, 

bringing financial resources, significantly 

reducing the unemployment rate, while 

generating an increase in GDP per inhabitant 

(Table 2). 

Salariul 

mediu net 

lunar(euro) 

PIB 

(pe cap de locuitor) 

Bihor 27,3 249 5550 

Bistriţa 19,2 261 4712 

Cluj 28,5 345 7100 

Maramureş 17,8 235 4090 

Satu Mare 19,5 259 4459 

Sălaj 17,6 265 4337 

Source: National Commission for Prognosis http://www.cnp.ro/ro/prognoze 

In the Northwest Region, we noted important 

differences between the counties both in 

terms of number of employees compared to 

the total population, the net average wage, 

and GDP per inhabitants. A cause of this 

situation may be the preference of investors 

to place capital in more developed counties, 

such as Cluj, at the expense of others. 

Another effect of the existence of gaps in the 

North West is population migration. If the 

external migration is already well known, 

became a phenomenon very carefully studied 

by the European institutions, migration 

between counties in the Region being 

seriously considered, to my knowledge, until 

now. 

Relevant inter-district disparities analysis is 

to analyze the behavior of the population and 

the savings and loan relationships.How 

people behave in these ratios in each county 

tells us much about their economic profile. 

The information presented in the table 3, 

allows us to identify different behaviors for 

each of the counties residents regarding loans 

and deposits. As expected, most of the loans 

(in absolute value) are in the county of Cluj, 

followed in order by Bihor, Maramures, Satu 

Mare and Bistrita-Nasaud. Perhaps more 

relevant is the percentage of outstanding 

loans, Cluj and Satu Mare, where only 9.8% 

and 9.1% of total loans, Bistrita-Nasaud most 

delicate position having 18.2% of total loans, 

while the values of Bihor and 

Maramures 13.2% and 11% standing in the 

middle somewhere. 

Following the structure of loans, it is noted 

that in the Maramures home credits do not 

exceed 31.7% of total loans to the public. The 

explanation could be given by the fact that a 

large number of Maramures people are 

working abroad, money they send being used 

primarily to create new residential areas, so 

the necessary credits for this area is

smaller. Cluj in turn, has the highest share of 

housing credits in total loans, approximately 

42.44%, this being due to increased 

development of the area in recent years, the 

number of students who chose Cluj as the city 

of residence after graduation, relatively high 

price of real estate in this area compared to 

other areas as well as greater employment and 

income more consistent work performed by 

227 

residents in the area. Bistrita, Satu Mare and 

Bihor have comparative value of real estate 

loans in total loans ratio, with values ranging 

between 34% and 36%, remarkable being the 

fact that in absolute value Bihor is ranked 

second after Cluj with a double value total 

loans and real estate compared to the other 

counties. 

Table 3 Information on credit report in the Northwest Region (mil. RON) 

Total 

credite 

Lei şi 

valută 

Total 

restante 

Lei şi 

valută 

Total 

credite 

populatie 

Lei şi 

valută 

Total 

credite 

locuinte 

Lei şi 

valută 

Total 

depozite la 

termen lei şi 

valută 

Bihor 6071.9 1788.5 2575.8 645.3 2395.8 

Bistriţa 2135.5 809 1170.2 290.3 1026.7 

Cluj 9197.8 862.8 4694.9 1574.7 5583.6 

Maramureş 3107.9 264.5 1445.1 305 1524.9 

Satu Mare 2632.1 193.1 1099.4 266.5 1040.1 

Source: BNR – Territorial structure of non-bank loans and customer deposits 

http://www.bnr.ro/Indicatori-agregati-privind-institutiile-de-credit-3368.aspx 

Attenuation of long distance gaps in the 

Northwest region remains a very complex 

problem, attempts to decrease it, is bringing 

into question, not infrequently contradictory 

strategies. Supporting the few remaining 

state-owned enterprises in the region could 

lead to a revival of activity, attracting 

attention of foreign investors can thus lead to 

recovery of much of the labor resources of 

the Region.The level of resource utilization 

services sector should also be carefully 

considered. 

Expansion and modernization of transport 

and distribution networks would provide a 

further chance to faster development of the 

North-West by exploiting the growing 

regional economic resources available, 

intensifying economic relations both intra and 

extra regional. 

But we can not fail to mention the part state 

should play in orchestrating these 

measures. Despite the independence of 

regions, they are subordinated to the central 

administration, and strategic investment 

policy depends to an overwhelming extent of 

it. Only by linking effective measures at 

national, regional and local level will 

alleviate the sustainable economic gaps. 

References: 

1. Dascălu, Maria Nicoleta and Cârstea, 

Gheorghe. Autonomie locală și dezvoltare 

regională. București: Economica, 2009 

2. Fometescu, Casiana and Coșea, Mircea . 

Dezvoltarea economică regională a României 

în condițiile integrării în Uniunea Europeană. 

București: Economica, 2008 

3. Idu, Pompilia and Bal, Ana. Politica de 

dezvoltare regionala a Uniunii Europene : 

Implicațiile aplicării ei in Romania. 

București: Economica, 2009 

4. Agenția de dezvoltare regională Nord-vest. 

Accessed May 1, 2011. www.nord-vest.ro 

5. Oficiul național al Registrului Comerțului. 

Accessed April 30, 2011. http://www.onrc.ro/ 

6. Banca Națională a României. Accessed 22 

aprilie, 2011. www.bnr.ro

7. Bugetul anual al Județului Sălaj. Accessed 

April 29, 2011. 

http://www.zalausj.ro/ro/informatii/buget201 

1.pdf?PHPSESSID=1cjlcooc5mijip9eapnd3uf 

6j6 

8. Institutul Național de Statistică al 

României. Accessed April 29, 2011. 

http://www.insse.ro/cms/rw/pages/index.ro.d 

o 

9. Județul Satu-mare - centralizator investiții. 

Accessed April 29, 2011. http://www.satu- 

228 

mare.ro/fisiere/buget/2011/centraliz_2011_in 

vestitii.pdf 

10. Comisia Națională de Prognoză. 

Accessed April 30, 2011. http://www.cnp.ro/ 

11. Situația investitorilor în Parcul Industrial 

Eurobussines. Accessed April, 12 2011. 

http://www.oradea.ro/parcul-industrialeurobusiness-oradea/situatia-investitorilor-inparcul-industrial

ABOUT OTHER KIND OF PRODUCTIVITY AND GROWTH (HOMO-SAPIENS 

TO HOMO-OECONOMICUS) 

Jivan Alexandru 

Universitatea de Vest din Timişoara Facultatea de Economie şi de Administrare a Afacerilor 

Abstract: Part of a larger research, this paper ranges among the matter of ideas confrontation 

concerning the causes of the economic crises and those keys to be passed. Paper aims at finding 

and praising the defining elements of our economy, in the purpose of better understanding the 

nowadays crisis, and at presenting certain conceptually different approaches. In this purpose, 

analytical presentations are focussed on the specific realities of the economic life that are in 

position in the last centuries, which are considered to be favouring the arriving to the critical states 

in the last years and to be promoting those maintaining, or which allow explaining certain effects 

and tendencies. 

The approach is made from the angle of the nature of the productivity that is had in view and 

highlighted in the market regulating mechanisms, and of the due growth. The paper is grounded on 

important analysis on the matter (including anterior researches of the author), but their dimensions 

does not allow their presentation in the abstract. Analysis starts from interpreting the very 

nowadays crisis, from different sites concerning the core (general) causes, by correlating with 

certain features of the industrialized consuming society. More recent references are made in the 

literature on the matter. Modern western economy is defined from the angle of focussing on 

material-quantitative productivity and growth. Analysis tries to explain certain effects concerning 

this kind of focus. Interesting effects and tendencies are noticed, that miss to the traditional 

approaches. Further on an opposed theoretic model is discussed. This is built and developed inside 

the service economy (on the case of two conceptually similar approaches, came from two different 

sources of economic thought in the field; original contributions of the author are involved). 

Adequately to the knowledge society, this last one is considered more favourable for homo sapiens, 

at least once the visible effects of the last two hundred years model are revealed, which are 

dominated by homo oeconomicus. This reference model being set up, a short foray is intuitively 

made in the perspectives of humanity on long run and on very long time, in the supposed maintain 

of the present economic model. In all those presentations and analyses, connections are made with 

other papers on the matter, in the purpose of more profound study. 

The conclusions concern the practical possibility of the model opposed to the industrialist economic 

crisis. The details highlighted from the analysis of the conceptual comparison between models and 

prospections bring, in the final, at proposing solutions, grounded on fundamental requirements on 

the line of humanity’s values, with didactic addressing to the young generation. The elements of 

contribution of the author are underlined in the presented matter. 

Keywords: productivity, modern growth, economic crisis, knowledge society, service economy 

JEL: A13, H49, I25 


The nowadays crisis looks like a systemic 

crisis of the whole life of humans that was 

(and still is) approached in the modern 

tidiness, just like in the times of 

industrialization. 

229 

It looks like humanity arrived to the limits of 

a way of living that proved itself to be 

destructive for the planet and for the living of 

our own species on a very long time. 

That what is certain is that, for Romania, the 

crisis is total: Romanian scientific research 

rather does no more exists, that we are

integrated in Europe on positions of a 

marginal country, that Romanians are 

importing the most of the apples and potatoes 

they eat, that our country is in enormous debt 

to the foreign banks, that the Romanian 

education lost all its chances to come back to 

the performances it had two decades ago, that 

the health of the population is under the 

impact of certain decisions of the same (and 

rather generalized) principle of elimination 

(and not of construction) etc. 

For the analysis of Romania’s economy can 

be invoked the exceptional book of Marius 

Băcescu and Dionysius Fota (Băcescu and 

Fota, 2009). 

In this paper we will bring the discussion 

mainly in the field of service economy: this 

was that what made possible the necessity of 

approaching productivity, efficiency and 

growth in widened horizons to be seen. It 

happened in the postmodern epoch, when the 

traditional view was replaced, by taking into 

account certain social aspects and other, more 

than the monetary narrow economic. For a 

Short Literature Review, please also see the 

chapter no. 4. 

2. The crisis of the world as a capitalist 

extensity spread 

In opposition with the well-known growing 

intensity by industrial means, that is usual 

and preached in the theories concerning the 

modern world, the consuming society meant 

rather a simple spread of a model – the 

capitalist one – as Issac Johsua shown 

(Johsua, 2006). In the chapter 7 „« Nouvelle 

économie » ou l'utopie du capital”, the author 

we cited spokes about “over-accumulation” 

of capital, meaning accumulating it in a 

rhythm that the economy cannot support, on a 

long run, the profit ratio anticipated by those 

who supply the funds. The financial capital of 

the world brought us in crisis, sais Issac 

Johsua. This research, published before the 

nowadays crisis, spokes about the generating 

conditions of what followed – as we have all 

seen. “The crisis of «the new economy» was 

not surmounted, but only stocked in the 

230 

accumulated lack of equilibrium”, sais the 

author at pp. 240. The superficial character, 

from the economic point of view (founded on 

“moment solutions”, having beneficial results 

in the short run, but generating spread effects, 

including in the long run, aggravating effects) 

is exceptionally synthesised when Johsua 

shows that, in critical situations, “America 

rescued itself just as it lived: on credit. The 

pick up again was so realised, not by reducing 

certain anterior dysfunctions of the American 

economy, but contrary, starting from them, by 

increasing them.” (pp. 243). 

The central goal on the market (and the 

criterion of “selection” by “competition”) is 

the gain, found in computed productivity. The 

method consists in cheating models of 

economy, by evading its genuine roles of tool 

for covering people’s needs; and, by this, the 

economy is preached like a goal by itself; the 

slogans of liberty and of “fair competition” in 

the economy, but the economy that is 

producing those which are really necessary 

(economy that was dominant two-three 

centuries ago) is let in the outside of the 

efficiency: there is else that the market 

acknowledge and admits as rewarding and 

moneymaking; i.e. the gains are from 

winning in the “fair” competition, including 

the intense exploitation of the natural 

reserves, speculation etc. 

A main result is that primary needs, as food, 

and flu and tuberculosis cure) are abandoned 

to the market laws, at a subsistence level: 

they are maintained in this way in the 

”poverty trap” (this matter is developed in our 

paper Jivan, 2008). 

The existence of mass poverty also annulates 

or maintains to a minimal level the qualitative 

improving trends – which should be 

correlated with the increase in the price. The 

price increases very much, for relatively low 

improvements, for strictly opulent 

improvements, for advertising and mostly for 

good indicators established by the rate 

agencies (which are private firms and have 

private interests too); quality decreases for

the low price levels – having as a unique 

alternative the total give-up to those supplies. 

Prices are judged not in function of the 

quantities, but according to percentages of the 

revenues allocated to those buys. So, the 

situation (the current, given situation), of the 

existence of significant revenues above the 

fundamental needs (which can receive the 

most varied destinations, it is too little in the 

direction of improving or increasing 

alimentation) generates this marginal state of 

agriculture in the capitals beholders’ 

economic action options. The issue of 

sponsoring agriculture is a mechanism which 

is external to the market, from outside the 

free competition, which tries to correct a 

situation (fair from the market logics point of 

view), which risks leading to a dangerous 

diminishing of the agriculture weight in the 

entrepreneurs’ options. 

The suppliers remain attracted – according to 

the market criteria, as well – by the luxury 

consumptions segment. Disequilibrium at the 

individuals’ level results (Jivan, 2008). The 

optimizing system does no longer work, as 

well as the self-regulating mechanisms. A 

waste of values, of resources, of efforts result; 

this generates inflation. 

3. Usual perceptions, including in the 

periods of crisis 

It was shown (Jivan, 2010) how, in the 

traditional (classical) economic model, profit 

and interest are usually seen as varying with 

capital amount, economic growth being 

generated by material investment, which is 

about quantitative growth of tools, machines, 

money and other forms of capital 

employment for production which generates 

quantitative growth of production. But the 

economic growth can be better generated by 

growing returns: productivity and the quality 

of being lucrative are given by innovation, 

information, knowledge, science, brains, 

including the results of human capital 

formation and education; growth is varying 

with inter-relational growth and with 

intellectual factor. (Jivan, 1995). 

231 

The usual angle of approach and level of 

analysis is that of the accountants’ books, as 

well as the source of data; but in the 

accountancy books of business, the place of 

such services may be less important than the 

place industry takes, even if the genuine 

essential generation of things has another 

logics (from Jivan, 2009). The understanding 

of the economists must go above the 

businessmen’s reasoning. 

Such a wrong approach is also in certain 

government policies concerning education 

and scientific research. Unfortunately they let 

us see the state of our country. 

We discussed the materialist fallacy 

(classical, or Marxist); it is a big mistake to 

see mostly the expenditures in services (and 

blame them all as a whole), because of their 

immateriality – proving lack of 

understanding. We have also seen the 

consumption fallacy (Keynesian). They are as 

fallacious as any other exaggerations, like any 

speculating production, aiming exclusively to 

gain, with no respect for its environment 

(Mother Nature, social, moral environment). 

Any activity can be destructive (Jivan, 2010). 

But at aggregate economy scale (national, 

world-wide), useful performances are mutual, 

mostly, one way or another, at least by the 

mediation of the generalized market (see here 

our synthesis on the market as global 

servicing, in Jivan 1996). 

Knowledge society implies an opened minded 

view and an interdisciplinary vision, which 

are superior to the narrow economic 

approach, including the care for the social 

problem, for the planetary environment and 

such like, among which moral-institutional 

aspects are also important. Even production 

and consume are replaced with “functioning” 

and with the creation of utility; and the place 

of immaterial activities is really central. 

The choice between ways should not be a 

dilemma: the best permanent answer is 

aureea mediocritas, the equilibrium and 

avoiding any extreme and narrow view. 

4. An opposite model

On the line of research opened by service 

economy, observations, critics and proposals 

were made at micro as well as macroeconomic 

levels. Between those many 

research, we mention here only these realized 

by Jean-Claude Delaunay, Jean Gadrey (like 

particularly Delaunay, Gadrey, 1987 and 

Gadrey, 1992 and others), Jacques de Bandt 

(De Bandt, 1991), Orio Giarini (particularly 

Giarini, Stahel, 1993 and Giarini and 

Lauberge, 1997), André Barcet, Joel 

Bonnamy and many other authors 

(particularly the papers in Revue d'Economie 

Industrielle - no. 43, 1988). 

Jean Gadrey (Gadrey, 2010) criticizes the 

industrialized economy, speaking (at pp. 88) 

about the “double dictatorship”, (i) of the 

world markets (that are not regulated) and (ii) 

of the agricultural “liberal-productivist” 

politics. He requires a more complex analysis 

of the productivity of an industrialized 

production process: not just the growing 

productivity of the modern tools and 

machines, but also the time of work 

consumed for their fabrication should 

supplementary be recorded as a cost; a cost 

that should not be ignored. He also proposes 

the deduction of the estimated value of the 

big damages involved by industrialized and 

chemical production (including in food) and 

long distances transport: those damages 

should diminish the pretended growth that 

modern industrialized productions pretend 

realize. 

Gadrey argues (pp 85-86) that the usual 

theory of growth and productivity is 

interested only by the quantitative aspects, 

making no difference between an output that 

is protective for Mother Nature, not-polluting, 

ecologic, on one hand, and an output based 

on big consumes and waste of energy and less 

healthy for humans or even worse. 

Gadrey spokes about the fact that an investing 

economic activity and a consuming one are 

considered to be „equivalent” in the 

numerical usual analyzes. There is a 

comparison made by quantitative criteria, 

232 

with no respect to the qualitative and more 

profound aspects. 

All those critics and recommendations are 

revealing critical aspects of the usual 

productivity and growth models. In contrast 

with the usual (growing, industrialist) model, 

he proposes, in his large-hearted approach, a 

new one, using a “new type” of progress, the 

true progress, profound, not just superficially 

quantitative and not only on the short run. 

Another approach is that of servicity, 

proposed like an extension or even a rebuff to 

productivity, at The 9th Seminar on the 

Service Economy (PROGRES – Programme 

of Research in the Economics of Services, 

A.S.E.C) in Geneva, September, 6 th -7 th , 

1993. Firstly included in a paper published in 

the review of Services World Forum (Jivan, 

1993), the concept was later developed in 

other papers and books. The concept of 

servicity is grounded on the point of view in 

the modern marketing optics and on service 

economics. 

The concept we call servicity would mean 

exactly the effective intrinsic productivity, 

the effects of human activity consisting in 

generating general and absolute plusses. It is 

in opposition with computed productivity, 

generating palpable concrete plus to the 

concerned individual, therefore relatively to a 

specific economic agent (with no concern 

with the rest of the world, with the ensemble) 

Such approaches prepared the conceptual 

field for the European requirements of 

knowledge society and knowledge based 

economy, of more seriously taking into 

account the natural and social environment. 

Ulterior, the ideas were developed, and 

between the most recent exemplificative 

research we mention those on innovation, 

productivity and performance, of Faïz Gallouj 

(Gadrey and Gallouj, 2002, Gallouj and 

Djellal, 2010), Faridah Djellal (Djellal and 

Gallouj, 2008) and others. 

As concerns the matter of indicators, between 

the preoccupations in the field, we limit us to 

mention only about the important European 

project known (shortly) under the name of

Stiglitz – one of the two big Nobel Laureates 

economists who are mastering, together with 

Amartya Sen, those research, to what work 

numerous and other big specialists. 

5. Long term prospects of humanity 

Mankind should see that, in business practice, 

the narrow pursuing of the goals of profit 

(and calculated productivity growth) and the 

interest and gaining principles, brought us in 

the position of buying the water from stores 

(please see the developments of the matter in 

Jivan, 2011), and there already are first signs 

of buying also the air (another vital genuine 

resource) on the market in a foreseeable 

future. The bear conditions for life are 

sacrificed for gaining more money. In these 

conditions, mankind should apply another 

widening of horizons, like Marshall made 

(please also see our Jivan, 2011, where from 

is the presentation here): the impact of the 

activity of people on the environment, the 

impact on Mother Nature and, implicitly on 

its own future (on a longer time that market 

can appropriately manage) should be 

considered. 

Humans can already see that the most 

important must be the entire existent (the 

notions of Nicholas Georgescu-Roegen can 

be used or Gheorghe Popescu’s „the Joint 

Living Whole”, in Popescu, 2006), including 

the environment, and the utility and costs, for 

it, of the output, of the whole economic 

activity and of any human act. People should 

no more use only the individualist approach, 

and should take into account not only the 

economic actors (both buyer and seller), but 

also the others, directly involved and not 

involved, present and not present, the entire 

environment of the persons directly decisive 

in the trade, from the most comprehensive 

point of view: in the space as well as in the 

time dimensions. It includes the whole human 

society, Mother Nature, the Planet, the notyet-born 

generations. And it takes into 

account different means and fields of action 

in the human society. 

233 

Centuries of industrialism and market 

domination passed and the effects of the 

market values (determined by short and 

medium interests and regulated on the long 

run only by mercantile criterion – costs, gain 

and profit) become to let be seen the planet 

destruction. 

In such a widened approach, firstly the 

economic science (and, by time, all humans) 

should take into account the costs and effects 

for all the parts of the reality that are affected, 

even if they are active or passive parts, even 

if they wanted or wanted not to participate to 

the processes of humans’ economy, even if 

they were not warned or they did not know at 

least that they are involved in the economic 

process and effects, even if they are present 

or not yet born. 

Furthering what Marshall made, we could 

surpassed the strictly economic angle of 

perceiving reality, which proved already to be 

also too narrow: we should introduce a third 

category of time, for having a more complete 

comprehension of events, in space and also in 

the historic view. The short run and long run 

must be completed with the very long term, 

proving the historical capacity of perception 

of our human species. In the post-modern 

understanding of realities, humans must 

already have the clear-sightedness to accept 

that if the same way of living is persistently 

pursued, no chance will remain. 

Georgescu-Roegen hardly tried to teach us 

about another kind of economics we should 

study, learn, teach and apply, but he was 

marginalized (Georgescu-Roegen, 2009) – 

may be precisely because of this attitude.

6. What can we, still, make? 

In despite of the usual principles of 

competition (invocate also by the economic 

traditionalist approach – still dominant), the 

special human (superior to the strict 

economic and short run) principles are 

surviving, (even in poorness or in societies 

what are week from the economic point of 

view), like also a big enough number of their 

bearers and preachers. Their extension and 

spreading is not an exception, but a tendency, 

mostly in the knowledge society: it is and 

should be consistent with it. 

The mercantile values represent just a tool 

and must remain a tool. In our times, homosapiens 

must now show his superior 

knowledge and thinking: superior and much 

more widen than the simple economic one. 

And must teach and widen the mind of homooeconomicus 

too. This is the fight of our 

times. The task is in the field of learning and 

of teaching the young generations, not in the 

spirit of private speculation, but in the team 

spirit of work, care and concern for the whole 

environment, as a common good for living. A 

superior rationality must be put in. 

The economic functioning can be oriented on 

realizing the general well-being and on 

attending the interests of the whole human 

society, exactly and just by a well-considered 

and well-settled legislation – which points out 

the optimizing valences of the market 

mechanisms. (Jivan, 2009). 

Science has the new task of knowing how and 

when the market mechanisms act in an 

improving direction: “how and when” means 

the legal conditions requested (that society 

should settle). A superior outlook upon the 

final (compensated) results of the efforts and 

effects of any human activities is necessary. 

Efficiency should not be no more narrowly 

limited by the economic criteria, but should 

concern the best for the person, for the 

society, for the world, balanced between the 

present and the future. Taking into account 

the disequilibrium we spoke about, we 

propose analytical studies concerning a 

certain criteria system in the matter. 

234 

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Romanian). Bucharest: Universitară 

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et prix. Paris: Economica Pulishing House, 

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Need Food? A Few Reflections on the Market 

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translated in English by Adina Popovici), 

Caiete de drept Internaţional, Anul VI 

(2008): 153-158. 

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236

THE POTENTIAL OF FEMALE ENTREPRENEURSHIP AS A REGIONAL 

GROWTH AND DEVELOPMENT ENGINE IN THE WESTERN ROMANIA 

Pop Cohuț Ioana 


Abstract: Starting from the objectives, activities, and the results of the empirical, quantitative, and 

qualitative research carried out in the AntrES project (AntrES - Project acronym "Entrepreneurship 

and Equal Opportunities. A new school for women entrepreneurship" – Antreprenoriatul şi 

egalitatea de şanse. Un nou model de şcoală antreprenorială pentru femei), during the two years of 

implementation, in the Western Romania referring to the new businesses start up; business 

development; the motivation and difficulties of female entrepreneurs and potentially enterprising 

women; of their perceptions regarding the need for entrepreneurship education, the role of female 

entrepreneurship promotion and the impact of the successful models on new businesses start up – 

this paper presents directions of action meant to emphasize and support the potential of the female 

entrepreneurship in Romania, as a regional growth and development engine. 

Keywords: women entrepreneurship, new businesses start up, regional development 

JEL Codes: B54, H81, M13, M21, R11, R28, R53, R58 

REL Codes: 13C, 14D, 14 K, 16H , 18F, 18G, 20J 

The potential of female entrepreneurship – 

as a research subject 

The analysis of the potential of female 

entrepreneurship in Romania starts from the 

premise that encouraging and supporting new 

businesses is one of the most important 

economic and social activities due to the 

impact on economic growth, innovation, job 

creation and the rise of living standards 

(Brush Candida et al., 2007). The literature in 

the field shows that women play an important 

role in the economic activity in many of the 

world’s economies (Minitti et al., 2005, apud 

Brush Candida et al., 2007). According to 

Global Entrepreneurship Monitor (GEM, 

Reynols et al., 2003), women represent 33% 

of the total of those initiating a business, with 

variations from a country to another 

according to cultural factors, natural and 

industrial resources together with the policies 

meant to stimulate the entrepreneurship and 

the attitude and faith in the female 

entrepreneurship. Although the number of 

business women is increasing, the rate of 

female self-employment is systematically 

237 

lower than that of men (Schimidt and Parker, 

2003, apud Brindley Clare, 2007). 

For Romania, studies show that for all the 

development regions, the most important 

problems in stimulating the spirit of female 

entrepreneurship are the low density of 

SMEs, the limited entrepreneurial culture, the 

reduced entrepreneurial spirit, especially 

among women and mainly in the rural area, 

the lack of programmes promoting 

entrepreneurship, especially female 

entrepreneurship, the lack of programmes 

supporting self-employment initiatives. 

Taking into consideration these aspects, our 

research is trying to emphasise that through 

measures educating the entrepreneurial 

culture among women – as a determining 

factor of self-employment, the percentage of 

those setting up a business may increase 

significantly with a direct impact on the 

regional development. In our opinion, this 

aspect is significant, taking into account that 

we are referring to a single measure – that of 

educating and motivating the female 

entrepreneurial spirit which can, correlated

with measures supporting the access to 

financing, improving the social assistance 

system and especially supporting children’s 

raise and education (Brindley Clare, 2007), 

lifelong learning (Drumond, 2004), 

supporting the development of the business 

(Brindley Clare, 2007), promoting the female 

entrepreneurship by successful business 

women, promoting good practices, determine 

the significant increase of this objective, 

underlying the still unexploited potential of 

Romanian female entrepreneurship. 

Objectives and directions of action – aspects 

regarding the research methodology 

Taking into consideration these premises, our 

research was delineated on at least three 

directions, of those mentioned above, that is: 

- to ensure the female entrepreneurial 

education for the support of new business 

start up; 

- to support the development of already 

initiated businesses; 

- to promote and motivate the female 

entrepreneurship. 

Our three objectives could be materialised by 

implementing the project “Entrepreneurship 

and Equality of Chances. An Inter-regional 

Model of Entrepreneurial School for 

Women” (acronym AntrES), implemented in 

the North-Western and Western Regions of 

Romania (counties Maramureş, Satu Mare, 

Bihor, Arad, Timiş, Caraş-Severin) 32 , which 

had as objectives, among others: 

- to provide training in order to acquire 

capabilities in the field of business start 

up; to provide training in the field of 

entrepreneurial culture formation and 

promotion, in order to improve the 

level of knowledge regarding a 

successful business initiation, 

organization, and working; 

- to provide training for women in the 

field of business administration and 

development and to favour the 

improvement of the entrepreneurial 

32 For more information, see www.antres.ro 

238 

spirit within the SMEs having women 

as managers or administrators; 

- to promote and stimulate the 

entrepreneurial spirit among women so 

that they can behave as active 

entrepreneurs; to promote active 

learning, lifelong learning, including 

the e-learning methods and techniques; 

to promote the competition spirit by 

organizing contests and awarding the 

best business plans. 

AntrES project addressed a number of 1800 

women of the six counties situated along the 

Romanian Western border, grouped into three 

target groups. The first target group is made 

up of 288 women, SME managers, wishing to 

develop their business, from the counties 

situated along the Romanian Western border 

(Maramureş, Satu-Mare, Bihor, Arad, Timiş, 

Caraş-Severin). It concerns, at the level of 

each county, a number of 48 women 

managers who have been trained in the town 

where they work, as it follows: 24 at the 

territorial centre situated in the county capital 

city and 24 at the level of local centres (6 for 

each of the 4 local centres in each county), 

respectively a total of 288 women in all 6 

counties. For this target group the project had 

in view the improvement of the intra- and 

entrepreneurial managerial skills in order to 

develop the existing business, to optimally 

use the opportunities existing on the market, 

the success factors increasing competitivity, 

the management and marketing strategies etc. 

and the promotion of the adaptability, with 

effects on the performance, stability of SMEs 

and the employment level. The second target 

group is made up of 1440 women wishing to 

start up their own business, in the counties 

situated along the Western Romanian border 

(Maramureş, Satu-Mare, Bihor, Arad, Timiş, 

Caraş-Severin). It concerns, at the level of 

each county, a number of 240 women, trained 

where they live, as it follows: 24 at the 

territorial centre situated in the county capital 

city and 72 at the level of local centres (18 for 

each of the 4 local centres in each county), 

144 at the level of rural centres (12 for each

of the 12 rural centres in each county), 

respectively a total of 1440 women from all 

the 6 counties. For this target group the 

project had in view the formation of 

entrepreneurial culture, the increase of the 

ability to transform business ideas into actual 

actions, by providing the necessary 

information regarding the business 

environment and the local existing 

opportunities, the drawing up of a business 

plan, the organization and carry out of a 

successful business etc. and by services 

supporting the initiation of a business, having 

as effect the generation of an increased 

number of businesses, both in the urban and 

in the rural areas. The third target group is 

made up of 72 women, last year students in 

Economics who have been trained to become 

coordinators in the entrepreneurial field and 

who currently have a job as rural 

coordinators in the project. It concerns, at 

the level of each county, a number of 12 

women, selected from in the partner 

university centres, respectively a total of 72 

coordinators at the level of the 6 six counties. 

For this target group the project had in view 

the acquisition of the coordinator skills in the 

field of business start up, the increase of these 

people’s capacity to become promoters of 

entrepreneurship, as well as the increase of 

the awareness and promotion of the positive 

attitude to entrepreneurial culture and to offer 

services supporting the start up of a business. 

Research study and results 

To reach the three objectives mentioned 

previously, the activities carried out in the six 

counties in the implementation area on three 

levels: territorial, local, and rural, were 

channelled on the following directions: 

1. The organization of courses in the 

Entrepreneurial school for women, Start 

up of Business – courses attended by a 

total number of 1512 women; the impact 

of these training activities in the 

entrepreneurial field on women wishing 

to start up their own business can be seen 

in the openness regarding the training 

239 

activities, the avowal of the need for 

entrepreneurial education and counselling 

“The courses of Entrepreneurial School 

have been for me the first encounter with 

economic theory... I have acquired a 

theoretical basis which, collocated with 

the already existing practice, form a solid 

basis for the business I want to start up.” 

(Meluţ Corina, Oradea, Bihor); “... this 

course represented an important 

opportunity being provided with all the 

latest necessary information in order to 

start up a business. The form of 

presenting the information was clear, 

concise, and mostly accessible... the 

project team has had the highest 

contribution ... which provided the 

necessary counselling, during the entire 

learning process ... the knowledge 

acquired here will represent an 

important support in my future business. 

((Roiban Roxana, Timişoara, Timiş); “... 

to accumulate new knowledge, to deepen 

new concepts, to better assess the 

qualities a female entrepreneur needs 

and, with the help of the business plan, to 

evaluate the business we wish to start up 

... it has greatly facilitated the 

communication and interconnection 

among us...” (Vărguţa Marta, Arad, 

Arad); the opportunity of training 

activities for personal development “It 

has been an opportunity which helped us 

to make n important step for my 

professional development. I have 

discovered managerial qualities that I 

did not know I had .... (Tanko Erika, Satu 

Mare, Maramureş). 

2. The organization of courses at the 

Entrepreneurial school for women, 

Business Development – courses attended 

by a total number of 288 women 

managers of the six counties. The impact 

of the training activities on the women 

managers is also significant: personal 

development: “.... it helped me rediscover 

myself and develop professionally. These 

courses have taught me how to present

myself professionally, my knowledge and 

experience acquired through practice” 

(Dăncescu Livia, Oradea, Bihor); the 

opportunity to meet successful women 

managers and to share the experience and 

difficulties of running a business “...the 

experts invited shared aspects from their 

own successful experience, which has 

been beneficial for me.” (Anton 

Maricica, Timişoara, Timiş); the desire 

to improve, motivation and reciprocal 

encouragement “....I have had the 

opportunity to learn new things, which 

are of real help to me both in running 

the business that I currently have and in 

assessing the business I want to set up. 

The use of action learning method 

allowed us to discuss with the other 

business women about the achievements 

and hardships we had encountered when 

running our businesses, to share our 

common experiences to the women 

wishing to start up a business ....” (Taşcă 

Carmen, Arad, Arad); “...the theoretical 

part and the practical studies, too ... have 

helped me involve and motivate the 

partners through a positive control of the 

business, each trying to understand that 

that the performance of a firm is not only 

revenues but other factors such as 

financial control factors, employees and 

generally the performance of the entire 

activity”. (Azap Mihaela, Reşiţa, Caraş 

Severin); “... women were poorly 

represented in the business environment, 

stimulating and encouraging through this 

course the women’s initiative regarding 

the development and initiation of their 

own businesses in order to acquire 

financial independence and to bravely 

enter the business world ...” (Laza 

Doina, Satu Mare, Satu Mare). 

The integration of the Action Learning [1] 

method in the AntrES Entrepreneurial 

School, for both categories of courses – 

Business Start up and Business Development, 

had in view the achievement of the objectives 

proposed beyond the simple supply of a set of 

240 

knowledge for the initiation, development or 

support of the business, by determining the 

change based on learning, in the real meaning 

of the word. The use of the action learning 

method “with and from the others”, by 

forming mixed sets (groups) – made up of 

women of all the three target groups: women 

managers of their own business wishing to 

develop it, women wishing to start up their 

own business and last year students in 

Economics, who have been trained and have 

become coordinators in the field of 

entrepreneurship; therefore, women with and 

without any entrepreneurial experience, in 

different stages of knowledge and 

understanding of entrepreneurship. Within 

these sets, women have been encouraged to 

discuss freely, based on the subjects 

suggested by the course book and 

applications, and also from the perspective of 

their own experience, being stimulated to 

share their own problems and to mutually 

give advice to each other, to ask and answer, 

being an inspiration for the others, mutually 

motivating, learning from each other. In 

completing and stimulating the use of this 

method, an external expert, preferably a wellknown 

woman entrepreneur or a woman with 

well-known professional capabilities was 

invited for the subject tackled, at the level of 

that particular city or village, willing to share 

with the course participants her success story 

or her own experience in the field. 

3. The organization of the contest “My 

Business Plan”, where all the 1800 

trained women participated. The contest 

“My Business Plan!” was organized on 

three levels, in order to evaluate, select, 

emphasize, promote, and award the best 

Business plans made by the course 

attendants trained in the project. The 

contest was open to all the participants to 

the training activities from the target 

groups of the project, that is a total 

number of 1800 women. It took place in 

2010 in three phases, thus: 1st Phase – 

Levels: territorial – selection / interregional 

– prize award; 2nd Phase –

Levels: local – selection / territorial – 

prize award; 3rd Phase – Levels: rural – 

selection / territorial – prize award. Each 

of the phases of the contest “ My 

Business Plan!” had 2 stages: 

� Highlighting the business plans – a 

stage where all the business plans 

entered the competition, business 

plans made by the women selected in 

the target group in the 

Entrepreneurial school for women, a 

stage in which, after the Evaluation 

Commissions evaluated the business 

plans, 50% of the business plans 

from the urban areas were 

highlighted and 30% from the rural 

areas. The highlighting of the 

business plans was made by giving 

diplomas. The business plans have 

been promoted on the site of the 

project www.antres.ro in the section 

AntrES Winners – The Presentation 

Catalogue of the Winners, 1st, 2nd 

and 3rd Phase 33 , and through massmedia 

during the actions meant to 

ensure the visibility of the project, 

information and advertising 

regarding the project. As a result of 

this stage, a total number of 724 

women from the three target groups 

of the project were highlighted and 

promoted, 387 from the urban area 

and 337 from the rural area, as well 

as the business plans made by them 

at the Entrepreneurial school for 

women. 

� Awarding the business plans, a stage 

where only the business plans 

recommended in the previous stage 

participated. After the contest at this 

level, out of the 724 business plans 

33 See www.antres.ro, Catalogue of AntrES Winners 

1st phase – territorial level selection / inter-regional 

level prize award; Catalogue of AntrES Winners 2nd 

phase – local level – selection / territorial level – 

prize award, Catalogue of AntrES Winners 3rd 

phase - rural level – selection / local level – prize 

award. 

241 

highlighted and promoted, a total 

number of 408 business plans were 

recommended to be awarded. These 

plans entered the 2nd phase of 

evaluation, after which 111 women 

wishing to start up their own 

business were awarded, with 

minimum amounts necessary to 

initiate the business (amounts 

ranging between 1000 and 2000 lei). 

The impact of organizing this contest and the 

activity to promote the female 

entrepreneurship have determined then 

increase of the motivation among women 

wishing to start up a business, which has 

determined the setting up of total number of 

180 businesses in the six counties where the 

project was implemented. 

Taking into account the demonstrated impact 

on the female entrepreneurship of 

entrepreneurial education, of the models, of 

the learning from the other’s experience, 

success or mistakes, by using the Action 

Learning method , mainly characterised by 

Learning with and from the others, the 

AntrES Entrepreneurial School had in view – 

and we believe it succeeded – to help the 

women mangers to better understand their 

business, to develop it and to become real 

entrepreneurs, the women wishing to start up 

their own business to give them the necessary 

courage and force to attract and mobilize 

resources in order to become entrepreneurs, 

and the young coordinators in the field of 

entrepreneurship to transform them into 

promoters of entrepreneurship from 

conviction and not from necessity. 

This paper represents an attempt to contribute 

to the increase of awareness of the 

entrepreneurial potential in the Western 

Romania and not only, the encouragement of 

female entrepreneurship, an instrument to 

disseminate knowledge, information and 

practical experience resulted from this 

project. 

Acknowledgments:

This paper was made in the project 

“Entrepreneurship and the Equality of 

Chances. An Inter-regional Model of Women 

School of Entrepreneurship” (acronym 

AntrES), a strategic project co-financed by 

the Social European Fund, Sectoral 

Operational Programme Human Resources 

Development 2007-2013, “Investing in 

people!”, Priority Axis 3 “Increasing 

adaptability of workers and enterprises”, 

Major Intervention Domain 3. 1 “Promoting 

entrepreneurial culture”, Contract: 

POSDRU/9I/3.1/S/5 (grant value 

12,500,104,00 lei), which took place between 

5.01.2009 - 5.01.2011 under the coordination 

of the Faculty of Economics, University of 

Oradea, in partnership with: West University 

of Timişoara; “Aurel Vlaicu” University, 

Arad; North University of Baia-Mare; 

“Eftimie Murgu” University, Reşiţa; 

Commercial Academy of Satu Mare; 

Management Scientific Society of Romania 

and The National Agency for Equal 

Opportunities between Women and Men; 

website: www.antres.ro. 

242 

Notes: 

1. According to the Action Learning method 

(“Learning with and through action”), the 

difference between to know and to understand 

is the following: to know means to be capable 

of doing it; to understand means to be 

capable of changing the reality that you 

understood. Learning means Progress, which 

in its turn represents our capacity to produce 

the Change into better. The use of the Action 

Learning method starts from the premise, 

widely accepted in the literature, that 

entrepreneurship is learnt to a higher extent 

through informal or non-formal means than 

through the formal education system. 

Bibliography: 

1. Brindley Clare, Women and New Business 

Creation, Breaking Down the Risk Barriers, 

in Carter M. Nancy; Henry Colette; Cinneide 

O Barra; Johnston Kate (Eds.) - Female 

Entrepreneurship – Implication for 

education, training and policy, Routledge 

Taylor & Francis Group, London and New 

York, Routledge Advances in Management 

and Business Studies collection, New York, 

2007; 

2. Brush G. Candida; Carter Nancy; 

Gatewood Elizabeth, Green Patricia, Hart 

Myra, Enhancing women’s financial strategy 

for growth, in Carter M. Nancy; Henry 

Colette; Cinneide O Barra; Johnston Kate 

(Eds.) - Female Entrepreneurship – 

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London and New York, Routledge Advances 

in Management and Business Studies 

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Taylor & Francis Group, London and New

York, Routledge Advances in Management 

and Business Studies collection, New York, 

2007; 

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Premiantele AntrES. Studii de caz pentru 

analiza antreprenoriatului feminin în context 

regional şi local, Vol. I – Vol. II, ISBN: 978- 

606-10-0343-3, University of Oradea 


6. Dodescu, A. (coord.), Barker, A., Brihan, 

A., Giurgiu A. (2004) Ghid practic Action 

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A. (2004) Un nou model de şcoală 

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and others (2003), Global Entrepreneurship 

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244

TOURISM'S CHANGING FACE: NEW AGE TOURISM VERSUS OLD TOURISM 

Stănciulescu Gabriela Cecilia 

The Bucharest Academy of Economic Studies, Romania 

Molnar Elisabeta 


Bunghez Magdalena 


Abstract: Times are changing and so are the demands and expectations of the 'new' traveller, the 

search for different experiences, different adventures, different lifestyles has paved the way for this 

concept called the 'new tourism' Attention is being turned to exploring new frontiers or daring to go 

where traditional thought did not allow. 

"New" tourists however, are increasingly being seen to be environmentally sensitive, displaying 

respect for the culture of host nations and looking to experience and learn rather than merely stand 

back and gaze. "New" tourists are participators not spectators. Things that would never appear on 

the list of the "mass" tourist such as adventure, getting of the beaten track and mingling with the 

locals are now the foundations of the new tourist experiences. 

Responding to the shift in market dynamics towards a "New" style of tourist, a number of initiatives 

have or are likely to fuel the growth of experiential tourism, these include: network tourism 

initiatives; the development of interpretive highways; the explosion of interpretive centers;the latest 

trend towards regional base camps. A new era has arrived, and a new kind of tourism is 

emerging, sustainable, environmentally and socially responsible, and characterized by flexibility 

and choice. A new type of tourist is driving it: more educated, experienced, independent, 

conservation-minded, respectful of cultures, and insistent on value for money. Typically these 

tourists are turning away from travel and prefer to have a high level of involvement in the 

organisation of their trip. 

Key words: old tourism,new tourism, market, changes, strategies 

Introduction 

Until 19th century, travel for recreation was 

only undertaken by the elite. With the advent 

of rail, mass travel was available for the first 

time and destinations such as Brighton, UK 

and Coney Island, NY developed. Status was 

then defined by the mode of travel. In 20th 

century status was revealed by the nature of 

the destinations. Travel and tourism has been 

going on since time immemorial, and for the 

'twentieth century tourist, the world has 

become one large department store of 

countrysides and cities'. By 21st century, 

travel became a new economy - tourism - 

available to all with enough money. 

The focus in the tourism industry has shifted 

from air travel, overnights, meals and so on to 

total experiences or fantasy worlds associated 

245 

with specific. This new tourism phenomenon 

is not only influenced by economic factors 

but also by new cultures and a new 

generation of tourists. In tourism, the 

different destinations compete worldwide 

through globalisation. The paradigm shift 

from mass tourism (also known as Fordian 

Tourism), which was the norm for more than 

three decades, no longer suffices to achieve 

competitiveness in tourism enterprises and 

regions. A new paradigm, or new tourism, is 

gathering momentum owing to its ability to 

face prevailing circumstances. 

Modern information and communication 

technology development in symbiosis with 

the transformation of tourism demand gave 

rise to a new tourism. This paradigm shift is 

not easy to define but is indicative of a new

type of tourist who wants a new or different 

product. The new tourists are more 

experienced, more educated, more "green", 

more flexible, more independent, more 

quality-conscious and "harder to please" than 

ever before. Furthermore, they are well read 

and know what they want and where they 

want to go The different approach of the 

new tourist's creates a demand for new 

products. The small, medium and micro 

entrepreneurs within the tourism industry are 

dependent on major tourism developments. It 

is essential role of these small entrepreneurs 

be increased to deal with the changing 

demands of the new tourists. In Canada, 20% 

of the population is truly entrepreneurial 

while in South Africa the role of 

entrepreneurs is still extremely small. Only 

about 4% of the South African population is 

truly entrepreneurial. 

What is New Tourism? 

New Tourism is characterised mainly by 

supersegmentation of demand, the need for 

flexibility of supply and distribution, and 

achieving profitability through diagonal 

integration and subsequent system economies 

and integrated values, instead of economies 

of scale. This paradigm permits the tourism 

industry to offer products adapted to the 

increasingly complex and diverse needs of 

demand, while being competitive with the old 

standardized products. These markets of 

experience have become global, affecting the 

demand as well as the supply side of the 

tourism industry. The tourism industry has 

undergone profound changes, which have 

been categorized by Poon (1993) in the 

following groups: (a) new consumers, (b) 

new technologies, (c) new forms of 

production, (d) new management styles, and 

(e) new prevailing circumstances. As result of 

the super segmentation of demand there is a 

very strong need for in-depth knowledge of 

the market in order to identify the clusters of 

consumer traits and needs. This knowledge 

will enable the tourism enterprises to develop 

those products that will give a greater 

246 

competitive edge, and to place them on the 

market using efficient methods of 

communication and distribution. Flexibility is 

also a very relevant factor since it can assist 

the enterprise in adapting to the new demand 

requirements. This factor is relevant in 

several areas: flexibility in the organisation 

and in the production and distribution of 

tourism products; flexibility in reservation, 

purchasing and payment systems; and 

flexibility in ways in which the tourism 

product is consumed. New technologies are 

fundamental in this respect and, in particular, 

in the expansion and development of new 

systems of tourism information. Diagonal 

integration is the final basic element. 

Compared with vertical and horizontal 

integration, which characterise the massstandardised 

production paradigm, this is a 

process by which the tourism enterprise can 

develop and compete not only in one activity, 

but also within a wider framework, seeking 

profitability on the basis of system 

economies, obtaining synergies between 

different products and offering services well 

integrated in the value systems of consumers. 

Key shifts in global tourism market trends are 

as follows: 

In the long term, the average standard of 

living in western developed countries will 

increase, as will the amount of discretionary 

money available for travel; 

Rising affluence will bring with it increases 

in the amount of free time available. Longer 

weekends and increased paid holidays have 

helped to stimulate expansion in attraction 

visitation; 

There is a shift in emphasis from passive fun 

to active learning; 

Activity or special interest holidays are likely 

to gain at the expense of conventional 

sightseeing, visiting and other passive 

experiences; 

There is growing concern about the impact of 

modern industry, including tourism, on the 

physical and social environment; 

There is growing awareness of risks to 

personal health and safety;

Leisure time will be used more actively, for 

mental development as well as physical 

exercise; 

People aged 45 to 64 years of age will be 

growing significantly in number to the year 

2010. In the United States alone, this age 

group is forecasted to grow by 31% by the 

year 2000; 

The potential visitor of the future will be: 

older, more affluent; more demanding; more 

247 

thoughtful and discriminating; and more 

active physically and mentally; 

Timeframes for decision-making windows 

will be smaller. Hence, one-stop-shopping for 

all-inclusive packages will continue to be 

appealing; and 

Consumers will increasingly seek low impact 

tourism facilities, consistent with 

environmental values and the desire not to 

contribute to negative impacts.

The New Tourist 

The travelling consumer of today (let alone in 

the future) is very different from any other 

time in history. The most successful 

businesses in the travel industry are those that 

respond to the challenge through the use of 

technology, innovative marketing programs, 

better training of staff and by developing a 

closeness and understanding of its 

customers/guests. The differences in travel 

patterns in the next century will be more 

related to what consumers are seeking in a 

travel experience than in how they travel. 

Today's traveller, the well-heeled or footloose 

back-packer, is usually informed, educated, 

and more often than not, fully aware of what 

he or she wants from their travels. For them 

the optimisation of time and money is the key 

and they prepare for their trip by researching 

their destination through the Web and the 

experiences of friends and fellow travellers. 

Mass media has responded to this shift and 

further fuelled the search for experiences 

through the promotion of a vast range of 

lifestyle/adventure programs which have 

evolved more recently into experiential 

248 

voyeuristic docu-dramas referred to as reality 

programmes. Attention is being turned to 

exploring new frontiers or daring to go where 

traditional thought did not allow. 

In Tourism, Technology and Competitive 

Strategies, author Auliana Poon speaks about 

the changes in consumer behaviour and 

values which are the critical driving forces for 

the new tourism. The new tourist is 

experienced, more flexible, independent, 

quality conscious and harder to please. 

"New" tourists however, are increasingly 

being seen to be environmentally sensitive, 

displaying respect for the culture of host 

nations and looking to experience and learn 

rather than merely stand back and gaze. 

"New" tourists are participators not 

spectators. Things that would never appear on 

the list of the "mass" tourist such as 

adventure, getting of the beaten track and 

mingling with the locals are now the 

foundations of the new tourist experiences. 

Typically these tourists are turning away 

from travel and prefer to have a high level of 

involvement in the organisation of their trip. 

Comparison of Old and New Tourists 

New Tourists 

Search for the sun => Experience something different 

Follow the masses => Want to be in charge 

Here today, gone tomorrow => See and enjoy but not destroy 

Just to show that you had been => Just for the fun of it 

Having => Being 

Superiority => Understanding 

Like attractions => Like sports 

Precautions => Adventurous 

Eat in hotel => Try local fare 

Homogeneous => Hybrid 

Source: Tourism, Technology and Competitive Strategies, Auliana Poon

Travel is no longer a novelty to the new 

tourist. Studies support what industry 

executives have been noticing for the last few 

years. People expect more out of their 

vacations than they used to and they are more 

adventuresome. Surveys done by the 

Canadian Tourism Research Institute indicate 

a high degree of interest in getaway 

vacations, ecotourism, cultural tourism and 

combining a business trip with a pleasure trip. 

Over the next ten years, tourism products and 

attractions will have to cater to visitors who 

are more demanding and discriminating, as 

well as more active and more purposeful in 

their choice of destination. There will be a 

shift in emphasis from passive fun to active 

learning, and the quality and genuineness of 

visitor experiences will be crucial to future 

success in a competitive market. An Acronym 

that is relevant to describe the 'new' tourist is 

REAL, which stands for:Rewarding 

Enriching Adventuresome Learning 

Experience. 

A key underpinning concept for REAL 

tourism is authenticity of experience, which is 

often related to the environment and culture 

and seen to be unaffected by "mass" tourism. 

The New Tourists prefer to be regarded as 

travellers and not tourists. Some specific 

points which need to be kept in mind while 

dealing with the New Tourist are: 

This type of traveller requires a completely 

different marketing approach. 

They avoid conventional glossy marketing 

mechanisms and prefer to use reliable sources 

such as word of mouth referrals, their own 

independent research and trusted 

publications; 

They desire experiences as opposed to 

products and services; 

They can be called experiential traveller s, 

they extend across all age groups and 

traditional market segments; 

249 

New Tourism for the New Tourist 

To enable new tourism attractions to stand the 

test of time and satisfy the demanding 

requirements of the evolving 'new' tourist, the 

following criteria should be applied to 

existing and proposed attractions: 

- That the attraction offers a distinct, 

unique experience that cannot easily 

be replicated by competitors; 

- That the attraction is value added 

through 'best practice' interpretation, 

which preferably utilises a 'human 

element' such as interpretive guides, 

seasoned veterans and/or local 

characters; 

- That, where possible, the experience 

is externalised within the 

natural/actual setting rather than 

internalised within a false/reproduced 

setting; 

- That the attraction offers an exciting, 

authentic, interactive and educational 

experience; 

- That 'comfort' should not 

compromise the authenticity of the 

experience; 

- That the attraction adheres to 

ecologically sustainable development 

principles; 

- That the attraction avoids the over 

reliance on technological interpretive 

devices that will become quickly 

outdated; and 

- That the attraction offers a choice in 

the form of interpretation offered. 

Responding to the shift in market dynamics 

towards a "New" style of tourist, a number of 

initiatives need to be taken so as to fuel the 

growth of experiential tourism these include: 

- Network tourism initiatives; 

- The development of interpretive 

highways; 

- The explosion of interpretive centers 

- The latest trend towards regional 

base camps.

Conclusion 

A new tourism is emerging, sustainable, 

environmentally and socially responsible, and 

characterised by flexibility and choice. A new 

type of tourist is driving it: more educated, 

experienced, independent, conservationminded, 

respectful of cultures, and insistent 

on value for money. 

Starting in the eighties and mid-eighties 

(depending on the tourism receiving region in 

question) a number of dramatic 

environmental changes occurred which 

moved the "tourism industry" much closer to 

the characteristics of the new economy. Used 

to more convenience, faster service and more 

options from his/her every-day-life the new 

tourist also insisted on more options, more 

entertainment and fun, more diversified 

sports facilities and cultural variety in his/her 

vacation. This new consumer (tourist) thereby 

has exercised pressure upon the tourism 

industry and tourism enterprises to develop 

new products, services and experiences. 

Information technology is opening up an 

astonishing array of travel and vacation 

options for this new tourist. To remain 

competitive, tourism destinations and 

industry players alike must adapt. For many, 

the challenge is to "reinvent" tourism. Market 

intelligence, innovation, and closeness to 

250 

customers have become the new imperatives. 

Thus, on the horizon of the postmodern 

landscape, a New Age of tourism is dawning: 

New Age tourism for New Age people. 

References 

1. POON, A. (1993), Tourism, technology 

and competitive strategies. 

2. VAN HOVE, N. 1996. Globalisation of 

tourism demand: the underlying factors and 

the impact on marketing strategy 

3. SAMEULSON, R.J. 1997. Globalisation 

on the march. 

4. CHRISTOPFER, C. 2003. Classic reviews 

in tourism 

5. SMERAL, E. 1998. The impact of 

globalisation on small and medium 

enterprises: new challenges for tourism 

policies in European countries 

6. KELLER, P. 1996. Globalisation and 

tourism: a facinating topic for research 

http://www.fasttrack.org/resources/news/opin 

ion_editorial/971015wp.html. 

http://www.law.indiana.edu.glsj/vol5/no1/pir 

ages.html (23.7.98) 

http://www.rgs.org/NR/rdonlyres/38EC0973- 

BC22-434B-B1A5- 

463C3B799208/0/Tourism.pdf 

http://www.ectaa.org/LinkClick.aspx?filetick 

et=y8qguk%2FjvyI%3D&tabid=103

YOUTH LABOUR MARKET. MOBILITY, CAREER DEVELOPMENT, 

INCOMES. CHALLENGES AND OPPORTUNITIES 

Vasile Valentina 

Institute of National Economy- 

Romanian Academy of Sciences 

Vasile Liviu 

Institute of National Economy- 

Romanian Academy of Sciences 

This paper presents the main characteristics of the youth labour market, with a special view on 

mobility, career development and incomes. The paper is substantiated by and continues the 

researches of the authors on the topic of labour force mobility and on the one of adaptability, 

respectively on youths’ beahviour on labour market (with particular consideration of young 

graduates) highlighting the factors that adjust choices regarding taking up a job, career 

advancement, labour motivation, professional and personal satisfaction opportunities which are 

provided by the labour market at local level, in country and abroad. Quantitative and qualitative 

indicators are presented about Romanian youths’ labour market within the European context 

during the transition period. The impact of the crisis on youths’ labour market is analysed, 

highlighting the challenges and opportunities, the particularities of the newly created jobs and 

especially the knowledge, skills and competencies requirements (KSC). The authors propose both 

the improvement of the systems of indicators for defining the potential and presence of youth on the 

labour market, the economic and social impact of external mobility of young graduates and an 

integrated scheme of policy measures for promoting adaptability and performance integration on 

Romanian labour market of youth. Particular attention is paid to presenting policy instruments for 

halting/diminishing the brain drain and brain shopping phenomena by promoting an attractive 

(professionally and monetary) supply for employment in Romania’s local economy. The authors 

succeed in highlighting the functional links between the education market (labour force supply) and 

labour market (employment demand of the business environment) underpinning the requirement of 

integrated management of labour potential in the years preceding studies’ finalization and up to the 

post-insertion years by multi-criteria analysis models and graduate career tracking programmes. 

Correlative measures are suggested for policies, procedures and monitoring instruments of youths’ 

adaptability on labour market, as alternative to external migration/mobility for labour. 

Keywords: labour market, education market, young graduate adaptability, labour mobility, career 

development 

JEL classification: J40, I20, J61, I25 


Youth employment is much more volatile 

than the one of mature labour force. Youth 

labour market is characterised by 

opportunities’ deficit for decent employment, 

diminishing jobs, employment precariousness 

(increases in the number of part-time jobs, 

temporary employment) and wages’ 

reduction. Young people are faced also with 

increased difficulties on entering the labour 

251 

market, considering that also during the 

economic expansion period there were 

already issues related to the creation of new 

jobs for them. The lack of employment 

perspectives in a decent job on entering the 

labour market affects/compromises their path 

on labour market and career development. 

Additionally, unemployment among young 

individuals presents specific vulnerabilities – 

higher sensitivity to the variations of

economic activity, difficulties in creating new 

jobs for youth, longer duration of the 

unemployment period, and easier entry on the 

informal labour market, which turns into a 

true refuge, particularly for graduates. 

Experts’ estimations appreciate that an 

increase in total unemployment rate by 1 per 

cent is accompanied by an employment 

diminishment among youth of about 1.1 – 1.8 

per cents, and Romania is one of the EU 

Member States with the highest 

unemployment rate of youth and its increase 

is expected (about 3 times higher than the 

general unemployment rate). The crisis 

“generates” precarious jobs for youth, which 

are weakly remunerated very often under 

their skills’ level, triggering loss/depreciation 

of competencies, or long-term unemployment 

and discouragement, hence increased poverty 

incidence. 

Considerable numerical and structural gaps 

are present on labour market between supply 

(outcome of education for vocational 

training) and demand (job requirements on 

the national labour market), which are 

amplified in some fields by the free 

movement of labour force (attractiveness of 

some better paid jobs, not necessarily in the 

same training field), so that a significant 

deficit emerges for skilled staff in fields such 

as constructions, industry, services, including 

here health care ones, while on the European 

labour market our citizens deliver 

preponderantly low/un-skilled labour. 

On the education market, the curriculum 

adjustment and the range of skills on 

professions and fields of sciences has low 

flexibility, remaining behind as considered 

from KSCs demanded on labour market, and 

the link between school and business 

environment is erratic, punctual, or inexistent 

in most field (lack of cooperation for practice, 

internship, etc. and the system of scholarships 

provided by the business environment among 

graduates is strongly unbalanced tending to 

being inexistent). The difference between the 

demand on labour market and the supply of 

labour from among the graduates is strongly 

252 

imbalanced, in most cases a period of training 

is necessary for labour market insertion of the 

graduates (either on the job or by courses 

provided by authorised institutions for adult 

education on the LLL market, and by courses 

of the National Council for Adult Training - 

NCAT). 

In the current paper we intend to highlight the 

fault lines between the educational system 

and the labour market and to present an 

integrated system of instruments and support 

mechanisms for dynamic balancing of the 

labour demand and labour supply represented 

by the insertion of young graduates. 


Youth adaptability on labour market, their 

professional insertion and the KSCs deficit 

are issues widely debated by experts, 

particularly as outcome of the propagated 

effects on long term which they generate. 

Young people enter the labour market 

unprepared, without practical skills, their 

theoretical knowledge is either outdated or 

incomplete, and their basic competencies – 

generic and specific – are weakly developed 

(Vasile,V., 2009). The transition from school 

to active life and labour integration of youth 

represents an essential issue with a strong 

economic and social impact as it is also an 

important measurement of the external 

efficiency of the educational system (Vasile, 

L., 2011). The concerns in order to promote 

(performance) employment of youth, and the 

efforts of integrating young people on the 

local labour market were intensified during 

the period of crisis, and at EU level were 

realised a series of studies and researches of 

the various aspects regarding this issue (EU, 

2011). Additionally EU 2020, integrates in 

the development targets both young 

generation’s participation to education to a 

share of 40%, and a diminishment of early 

school leaving under 10%, which are 

performances difficult to reach by Romania 

(from 16 % in 2008 the intention is to 

increase to almost 27% in the case of the 

share of graduates of tertiary education aged

from 30-34 years and also from 15,9% in the 

same year to reduce to 11,3% the rate of early 

school leaving). At the same time, EC, by 

“Youth on the move” proposes in 2010 a 

number of 4 priorities for lowering youth 

unemployment: support for professional 

insertion and career development; support for 

youth in risk situations; promoting a support 

social network and sustaining 

entrepreneurship and self-employment. 

Increased concerns are shown also at national 

level by supporting the absorption of 

structural funds for priority objectives that 

support youth (adaptability to the labour 

market, post-doctoral studies, etc.), as well as 

by developing topical surveys (NIS, 2000, 

2009). We still can remind the topical studies 

realised by various other institutions, based 

on projects financed with domestic funds, or 

international ones, yet these provide only for 

a partial, fragmented image related to the 

issue of youths on labour market (Nicolescu, 

L 2002, Săpătoru D Caplanova A & 

Slantcheva S, 2002) 

As result, there is no relevant information 

source that would aid the education system to 

permanently adjust/adapt the educational 

profile to the requirements of the business 

environment (of the graduate career tracking 

program at national level), and the market 

allows just for punctual regulation on shortterm 

by CVT courses especially, which does 

not solve the issue of the anticipative 

character of the educational system against 

the labour demand expressed by the real 

economy. The outcomes of the survey 

repeated in 2009, associated with the reform 

measures on both markets (education and 

labour) allow for formulating some 

conclusions/partial outcomes and may 

represent milestones for defining the 

framework for improving the communication 

relationships/channels between the two 

systems/markets. Moreover, there are 

neither systematic studies nor even a 

national databank for monitoring the 

socio-professional insertion of graduates 

on labour market in the first years by 

253 

highlighting the dysfunctions in forecasting 

educational content, and an adequate 

system of indicators that would allow for 

evaluating the impact of the university 

system on the Romanian economy and 

society is non-existent, as well. Only 

fragmented studies are made at the level of 

individual universities, without an attempt of 

aggregating the outcomes. The requirement 

of such approaches and the first national 

initiatives were rendered concrete in 

developing a methodology and working 

instruments regarding monitoring studies of 

insertion on labour market for higher 

education graduates from Romania (MECT, 

2008), which were applied for the first time 

by means of a pilot project initiated within 

SOPHRD (Damian, R.M., 2011). The 

questionnaire developed on this topic is 

applied to a restricted target-group 

represented by graduates of state- and private 

higher education institutions after one year, 

and then after five years since graduation, but 

only for the universities involved in the 

implementation of the study. 

III. Youth labour market. Main 

characteristics and development 

In the context of the economic transition 

process, the labour market from Romania was 

faced with important changes, shown in the 

diminishment of the active and employed 

population, in the increased unemployment 

among young individuals and growth of longterm 

unemployment, in the limited capacity 

of the economy to create new jobs and to 

ensure stimulative work remuneration in 

accordance with performance and importance 

of supplied work, by the lack of attractiveness 

of the jobs for young graduates, particularly 

for those finishing tertiary education. As 

result, labour mobility increased especially 

external mobility of workers, and the stock of 

migrant population is estimated currently to 

total almost 4 million persons (in the 

registered and unregistered economy). 

Labour market reform and the changes in the 

human capital management model from

Romania have known a sinuous development, 

much delayed as compared with the demands 

of the economic and social environment. This 

issue was left on a secondary plane, as it was 

considered that the regulations on the other 

markets will generate the required changes to 

ensure labour market functionality. If we 

consider the requirements of an efficient 

labour market, as support for sustaining 

competitiveness, we may appreciate that the 

labour market after two decades of 

reform/adjustment and a period of economic 

growth of about 8 years: a) does not ensure 

an efficient allocation of human capital 

within the economy, nor its performance use; 

b) the remuneration system is rigid in relation 

to performance and work involvement, and 

does not stimulate to a sufficient extent the 

additional effort, in particular for the public 

sector; c) mobility on fields of activity is 

relatively low, even for common professions 

of the national economy due on one hand to 

the rigid recruitment and selection systems of 

the staff (the criterion of experience is 

defining in most cases), and on the other hand 

due to the high differences in the 

remuneration on branches and fields of 

activity (especially with respect to the 

bonuses and advantages system (bonus for 

the importance of the branch, stability bonus, 

etc.); d) opportunities’ equalities in career 

advancement and remuneration albeit 

stipulated in regulation documents and 

development strategies of human resources, 

the practice shows frequently derails thereof. 

Hence, we cannot consider efficiency and 

flexibility on labour market as support factor 

of competitiveness (the seventh pillar “labour 

market efficiency”, Global Competitiveness 

Report 2009-2010), and as positive input to 

increasing economic growth and sustainable 

human development, to retaining young 

graduates on the national labour market and 

decreasing migration propensity. 

During the entire transition period is recorded 

a diminishment in the size of labour market 

associated with higher flexibility but on the 

background of increasingly stronger de- 

254 

correlation under the quantitative and 

qualitative aspect between labour demand and 

supply, especially on the labour market 

segment specific for young graduates. Low 

concerns exist for the efficient allocation of 

labour force at local level, by stimulating 

through active measures internal mobility for 

labour. The concentration of investments in 

high-density population urban areas and the 

lack of instruments for supporting internal 

mobility for labour (living and/or transport 

conditions) triggered increasingly stronger 

decoupling under quantitative and qualitative 

aspect between demand and supply for labour 

at regional/local level. Temporary 

migration for labour is preferred by 

working-age household members, 

particularly the young individuals aged up 

to 35 years, instead of territorial mobility 

of the household or commuting. Very often 

deficits are encountered on some markets 

and labour force surplus on 

trades/professions on others, the 

differences being covered rather by 

external migration flows (emigration of 

Romanians to Western Europe, Israel or 

Canada, and immigration from the East on 

the local labour markets, especially the 

ones in Moldova and in the central region 

of the country). Unfortunately, to a large 

extent, such balances are made due to the 

informal market, the benefits being partial 

both for employees (wages but without social 

insurance), and employers (lower costs but 

without instruments for long-term incentives 

for performance and labour involvement), 

and also for the society (reduced 

contributions to social funds and unpaid 

taxes). 

The crisis period generates significant 

changes on labour market, in the opinion of 

social partners, disruptions and atypical 

developments, non-performance and actual 

restrictions in the way of economic 

turnaround. The previous economic growth is 

proven as unsustainable and the Romanian 

economy drops by more than 7% in 2009 and 

yet another about 1.5% in 2010. The

constriction of economic activity triggers 

considerable unemployment in the private 

sector but also personnel reductions in the 

public sector, but on administrative criteria of 

diminishing personnel expenditures 

(budgetary corrections are operated uniformly 

on ministries). The number of governmental 

agencies are reduced by half, yet ministerial 

structures increase, reductions are made in 

education, health care and research strictly on 

economic reasoning, without defining the 

medium- and long-term needs both for 

quality and efficient educational and health 

services, as well as for technological progress 

within the business environment, as solution 

for exiting the crisis and economic 

turnaround. The European principles of 

supporting continuing learning and 

stimulating the generation of RDI outcomes 

applicable within economy are acknowledged 

as necessary, yet unsupported in practice, 

employment is practically blocked by the 

lack of demand from the business 

environment and administrative layoffs 

within the public sector. Unemployment 

increases, the active measures on labour 

market are even more downsized (the level 

from the period of economic growth varying 

around 2% in total unemployment fund, for 

instance) and employees participation to CVT 

decreases dramatically (Romania was placed 

on the last position in the EU with a 

255 

participation to CVT courses of about 1,3% 

in the last 2 years. 

Unemployment among youngsters is higher 

than the average, about 2-3 times, and higher 

for men. Young people are predominant 

among unemployed who never worked and 

they represent a third of the long-term 

unemployed. 

The youth labour market is different as 

challenges and restrictions, being more 

vulnerable to migration “attractiveness”. 

Young individuals represent the most mobile 

segment of migrant population, especially for 

external migration. Aspirations about 

incomes and professional career and the 

relative independence from family (single, or 

without children) make them be more open 

towards jobs at longer distances, if they 

satisfy expectations. On the other hand, the 

situation of youth on labour market is 

difficult as they are regarded a vulnerable 

group: they have more difficulties in finding a 

job due to lack of working experience (in 

Romania only a small share of the young are 

employed during their university studies and 

only few, by exception, during the period of 

upper-secondary studies). In the last years, ejobs 

mobility and increasing part-time 

employment already during the period of 

study have attenuated the pressure on 

insertion unemployment rate.

ILO unemployment rate in Romania and EU, total and for the age group 15-24 years 

25 

20 

15 

10 

5 

0 

Sursa: Eurostat (2009), http://epp.eurostat.ec.europa.eu/portal. 

The youths employment model is defined by 

the following characteristics: part-time jobs, 

contracts on determined periods of time, high 

mobility from one job to another in the first 

year after finalising studies, diminished 

wages towards the legal limit for the 

graduated level of studies, dual employment, 

or only within the informal economy, low 

perspectives of access to a career in the first 

years, practical competencies and skills 

deficits triggering inclusively employment in 

inferior jobs to the training received in 

school. All these aspects define a nonperformance 

and weakly stimulating model 

for stability, career advancement and personal 

development. At an employment rate of the 

working-age population (15 to 64 years) of 

about 60% in Q3 2009, were employed 26% 

of the young individuals (15 to 24 years of 

age). The highest employment level is among 

graduates of higher education (84,6%) for the 

same period and decreases to about 45% for 

70 

65 

60 

55 

50 

45 

40 

35 

30 

25 

20 

2002 

2003 

Youths activity and employment rate, 2002-2009 

2004 

2005 

2006 

2007 

256 

EU15-ILO unemployment 

rate - total 

EU15- ILO unemployment 

rate, 15-24 years old 

RO- ILO unemployment 

rate- total 

RO- ILO unemployment 

rate, 15-24 years old 

those with the lowest training levels (NIS, 

2009). As fields, youngsters aged 15-24 years 

are employed preponderantly in 

constructions, trade, hotels and restaurants, 

and those from the age group 25-34 years of 

age in real estate transactions and trade. Men 

are best represented within all socioprofessional 

categories, partially justified also 

by the fertile life span of women and hence 

the lower share of participation to labour 

market. 

The activity rate and the employment rate for 

youths aged 15-24 years is lower than the 

national average, due to: reduced population 

cohorts (as result of demographic decline), to 

extended education period, to poor 

employment attractiveness provided by the 

market and to the national employment model 

which does not promote youth employment 

during the period of studies, save by 

exception. 

Source: Labour force in Romania – employment and unemployment– Q 2, 2009, NIS 

Consequently, the two rates are placed about 

20 pp under the general average. At the same 

2008 

2009 

Activity rate, 15-64 years 

old 

Activity rate, 15-24 years 

old 

Employment rate, 15-64 

years old

time, against the Lisbon objectives, the 

working-age population employment rate in 

2008 places Romania at a distance of 11 pp 

(70%), and for the women at a distance of 7,5 

pp (60% objective). 

Secondary education graduates have an 

employment rate varying on averages 

around the national values, the employment 

rate in the rural area being in reversed 

proportion to the education level in the case 

of pre-university levels of study, and the 

opportunities provided by the rural area 

being in (paid or unpaid) activities 

developed in agriculture. Estimates 

(CEDEFOP, 2008) show that up to the year 

2015, approximately 30% of the jobs shall 

require higher education and almost 50% at 

least upper-secondary education with a 

significant decrease of the jobs requiring a 

low skill level. Professional insertion of a 

graduate is strongly influenced by the 

attended school, the field of study, the 

economic development level of the region, 

the firms/companies in whom he/she 

effected internship or worked during 

studies, the recruitment firms where he/she 

sustained interviews, on the attended 

conferences and trainings, etc. 

Occupational guidance already during highschool 

of youngsters towards the 

40,00% 

20,00% 

0,00% 

Source: Eurostat on-line database 

257 

professional profile and choice of 

university training in relationship to the 

intended trade/profession for career 

development, correlated with gained 

aptitudes and competencies, but also with 

the demand on labour market trigger a 

higher employment rate of graduates and 

less time searching for a job 

“adequate/corresponding” to individual 

aspirations. From this perspective, 

employment opportunity is in reverse 

proportionality to the sum of self-imposed 

restrictions of the graduate. This is also the 

reason why for young individuals (15-24 de 

year) the long-term unemployment rate 

(unemployment of 6 months or over) was, 

for instance in Q3 2009 of 10,4% , and the 

incidence of long-term unemployment 

among youths of 46,9% (at an average 

unemployment rate of 6,8% per total and of 

22,3% among those aged between 15-24 

years). Women have an unemployment rate 

by approximately 30% lower as compared 

with men. However, they register an 

enrolment rate in high-school, respectively 

tertiary education significantly higher than 

the one of men, a situation which explains 

the lower employment rate which is 

specific to them (Vasile V., 2009). 

Share of the young unemployed at the half of the year 2009 

19,60% 18,30% 

România 

Media UE 

33,60% 

Spania 

28,20% 

Letonia 

24,90% 

Italia 

6,00% 

Olanda 

8,90% 9% 10,50% 

Danemarca 

Austria 

Germania 

18,20% 

Polonia

If we refer to action methods on the labour 

market, the youth is more incisive and resort 

to direct and modern methods in searching for 

a job, take more risks at an interview and the 

negotiation of working conditions and 

incomes. Between finishing school and taking 

up an activity at the first significant job, 

74.1% have searched a job using active 

methods (direct contacting of employers or of 

the decision factors responsible with hiring 

37.9%). The insertion rate of tertiary 

education graduates is lower against the 

average situation per total youth who are 

hired and particularly in the first year after 

graduation, due to the fact that an university 

graduate will search longer and have higher 

expectations with respect to the workplace – 

under the aspect of the professional profile of 

the workplace and of the provided 

remuneration level (very often much lower 

than graduates’ expectations). Even though 

the state grants tax facilities on employing 

youths (for instance, the employer will 

receive for a 12 months period the minimum 

wage on economy) due to the complementary 

conditions (including the obligation to remain 

on the job for at least 2 years) and of the high 

mobility of youths in search for the right job 

corresponding to their professional 

aspirations, the share of those resorting to 

these facilities is very low. On medium- and 

long-term, job security for youths with 

tertiary education is relatively higher, but also 

the opportunities for mobility based on 

employment advantages are more. In 

general, young graduates are considered on 

insertion on the labour market as having the 

disadvantage of lacking experience, yet the 

advantages are net superior: potentially high 

productivity, adaptability and acceptance of 

novelty, theoretic knowledge, so as to be 

considered “relatively cheap”, as lack of 

experience diminishes the level of the 

insertion wage towards the minimum legal 

limits. The hampering lack of experience can 

be relatively easily dealt away with by 

training on the job, which depending on trade 

258 

and skills level attracts lower or higher 

continuing training costs. Yet, these costs are 

absorbed on medium-term by individual 

outcomes and performance, if there is 

employment motivation. Job motivation and 

satisfaction are very important components 

for graduates and youths in general, and 

therefore they turn easier into unemployed 

and search for a relatively longer period of 

time an adequate workplace. Consequently, 

the unemployment rate for the age group 25- 

34 is closer to the average one, which leads to 

the idea that youths after graduation have a 

short period of feverishly searching a job, 

with frequent changes and alternating 

unemployment and employment periods, until 

succeeding to find a job or to migrate for 

employment outside the country. 

IV. Ways of diminishing discrepancies 

between demand and supply on youths’ 

labour market. Milestones for an 

integrated balance model for insertion 

employment 

Youths on labour market remain a 

disadvantaged group, and as risk are 

considered: a) for the society as 

unemployment on local/national market and 

their migration as brain drain/brain shopping 

lead to waste of resources due to the nonvalued 

investment in education done in the 

country and loss on medium- and long-term 

average of GDP and diminishment of natural 

increase; b) for the labour market, in event 

they fail to get employment according to their 

training profile and in a professionally and 

financially attractive job. The profile of the 

young worker is defined on a hand by 

education (knowledge and theoretic 

competencies, especially), occupational 

flexibility, availability for LLL and, on the 

other hand, the attitude (to work, job, 

professional career, status on labour market: 

employed, self-employed, etc.); geographic 

mobility. The size and balance on labour 

market are defined by the medium- and longterm 

trends: demographic decline by delays

in family grounding and in the decision to 

have children, mobility for career and 

incomes – geographic or virtual – 

employment volatility, entrepreneurship 

development and self-employment, lower 

elasticity by unemployment, increase in the 

stock of incorporated education and 

permanent updating by LLL, gender 

convergence on trades, professions, 

specialisation fields, including at managerial 

level and presence in the political life, the 

interest for developing a successful 

professional career. 

An integrated model for ensuring mobile 

balance on labour market presupposes at 

least three components: education for labour 

market as integral part of LLL, defining the 

business environment demand by means of 

KSCs and ensuring a social network of 

stimulating employment on local/national 

market. For each component a number of 

indicators for quantitative measurements can 

be defined and then weighted/adjusted with 

the qualitative variables resulting from 

dedicated surveys (graduated track survey 

and labour market for youth questionnaire). 

The selected variables were of 3 up to 6 for 

each component depending on the demanded 

training level for the job and scarcity of the 

specialists. In the case of a job for a tertiary 

education graduate, as minimum quantitative 

indicators were defined: a) for the education 

for labour market component were considered 

the number of graduates on specialties, the 

aggregated index of generic competencies 

and the KSCs index specific to the profession 

and hierarchical level of the job; b) for 

defining the labour demand within the 

business environment was considered the 

specific demand of similar jobs, workplace 

stability and the substitution index of the 

professional profile; finally, for c) social 

indicators of stimulation, at least at the 

comparative level of wages and additional 

wage packages can be considered the 

geographic indicator (defined by the 

rural/urban environment) and the local 

development level (GDP/area inhabitant or 

259 

the development lag against the national 

average). Balancing the values of aggregated 

indicators on each component indicate the 

compatibility state and attractiveness of 

employment for youths, while the imbalance 

situations points out the migration risk – brain 

drain/brain shopping or the employment 

option by substitution (another professional 

profile but for which minimum competencies 

are proven for taking up the job). The job 

experience variable non-specific to young 

graduates and the advantages of the employer 

from insertion employment are considered in 

operating selection of equivalent candidates 

(IEN, 2010). Albeit in the incipient stage of 

developing and testing on youth market, this 

algorithm allows on one hand for guiding the 

educational system to curricula adjustment 

and focusing learning outcomes on KSCs 

demanded on labour market, and on the other 

hand in guiding employers towards 

recruitment from the local market or from the 

national/international market, as well as to the 

association with the development on variants 

of employment of the e-work type for some 

trades/professions and, respectively jobs. The 

current developments and dysfunctions on the 

youth labour market, particularly during the 

period of crisis when the volatility elements 

were more prominent, support the need of 

developing ex-ante and ex-post management 

mechanisms of potential (youth) labour force 

employment by combining counselling and 

professional guidance with internship periods 

and graduate tracking management, 

employer/alumni engagement strategies, 

industrial relations development and 

stimulative wage package, LLL, career 

development model, etc.

V. Brief conclusions 

The labour market, respectively the business 

environment is more exigent in the case of 

the young labour force which enters labour 

market after graduation. Youths have more 

difficulty in finding a job corresponding both 

professionally and monetary, the reason why 

both employment fluctuations from 

employment to unemployment and viceversa, 

and longer periods of unemployment 

are an important barometer of permanent 

education system’s reform in Romania. 

Moreover, information about vocational 

training programmes or for on the job 

adjustment may provide information about 

dysfunctions and correlations’ lack between 

the education system and demand on labour 

market, while the following might be 

considered as the most significant ones: 

- Youths entering on labour market after 

graduation of secondary or tertiary education 

live preponderantly in the urban area, and 

men are more numerous; accessibility of 

higher education is better for those in the 

urban area, opportunities closer to the 

beneficiary and, very often, financial 

restrictions are the most important. 

- The shares of their employment and 

unemployment against the age group to 

which they belong has not underwent 

significant changes, just as the passage rate to 

higher education which improved but not to a 

significant share and, unfortunately, did not 

generate a proportional improvement of 

graduates’ education quality, but to the 

contrary. 

- Still the diploma is more important than 

proven skills and knowledge, in particular for 

the public sector. The business environment 

becomes gradually increasingly rigid from 

this viewpoint and requires evidence on 

hiring of professional competencies’ 

certification, and in their absence, 

employment is made on a job requiring 

inferior training and/or the knowledge deficit 

is compensated by CVT on the job. 

- The activity rate decreases, young 

individuals on one hand postpone entering the 

260 

labour market, and pursue several educational 

tertiary paths (often in completely different 

fields) or continue their studies for 

masters/doctorate or, on the other hand after 

graduation (or early leaving) are active on the 

black market, or migrate for employment in 

low skilled jobs, inferior to gained education. 

- The main reasons of early school leaving 

are still of current concern, respectively the 

high cost of schooling (especially for those 

from the rural area) and/or associated with the 

need of working for incomes (dependency on 

families with low incomes or other types of 

difficulties). An important reason of failing to 

finalise studies is represented also by the 

inefficiency of the evaluation/certification 

systems on graduation which consider 

inflexible evaluation schemes and less 

adjusted to the practical finality of education 

– knowledge verification instead of 

competencies certification, etc. 

- The lack of a flexible, coherent and 

accessible to all system for continuing 

training, including by 

certification/continuation/ and/or transition 

from the formal to the informal and nonformal 

system. 

- Another issue which is difficult to measure 

but is particularly relevant under the aspect of 

compatibility between education market and 

labour market, between the chosen profession 

and competencies for practicing this 

profession in performance conditions is 

represented by the analysis “first significant 

job” – under the aspect of professional profile 

and search duration. 

- Finally, another important aspect of 

individual performance during active life is 

represented by the informal education related 

to the behaviour on labour market and 

professional development. The example of 

parents and extended family members may 

define to a significant share the labour market 

behaviour of young graduates and their 

professional path. 

Failure to acknowledge such aspects in a 

systematic way and their analysis affect the 

feedback processes within the educational

process, maintaining dysfunctions and gaps 

between education market and labour market, 

rendered concrete, finally, by loss of human 

capital, of investments in education, loss of 

potential value added as result of nonperformance 

work or giving up work after 

graduation. The relatively high level of this 

youths’ unemployment rate emphasises the 

necessity of a closer link between the 

educational and vocational system and the 

labour market. Finalising and applying 

methodologies of monitoring young 

graduates insertion for various educational 

forms (vocational, upper-secondary, tertiary) 

is a priority, just as the development of more 

flexible and efficient systems of organising 

internship for students. Last but not least, a 

more careful analysis is expected with respect 

to the competencies which Romanian 

employers regard as important for the success 

of their companies and the adjustment of the 

educational and vocational supply to them, 

periodical update of occupational and 

vocational training standards, and of the 

educational curriculum in close dependency 

to the change dynamics on labour market. 

Bibliography 

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Graduates and Labour Market, Romanian 

Tracer Study, Strategic projects for Romanian 

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after graduation: The Role of Graduate 

Employment and Tracking Systems for 

Continuous Curricula Development and 

Quality Enhancement in Higher Education 

UNESCO –CEPES si ULBS, mai 2011Sibiu 

2. Nicolescu, L (2002) Contribution of 

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the market economy: The case of Romania In 

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Transition; 

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R project), 

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strategice si politici in Romania, teza de 

doctorat, INCE-Academia Romana, 2011 

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s/?id=212, 

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Employment, Social Affairs and Inclusion 

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munca tinere in lucrarea “Efectele crizei 

asupra pietei muncii. Mecanisme si politici 

pentru cresterea ocuparii si performanta in 

munca” (coord Vasile V) in Programul 

Evaluarea Stării Economiei Naţionale - ESEN 

2009-2010 (PF-AR) INCE/Academia 

Română – in manuscris, pe CD 

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muncă”, trt III 2000, 

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muncii, modul ad hoc la Ancheta AMIGO, tr 

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decembrie 2009 Accesul tinerilor pe piaţa 

forţei de muncă Modul ad hoc ataşat 

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gospodării (AMIGO) în trimestrul II 2009 - 

adresat tinerilor în vârstă de 15-34 ani 

11. MECT, (2008) - Ordin nr. 

6012/21.11.2008 pentru aprobarea 

Metodologiei şi a instrumentelor de lucru 

privind studiile de monitorizare a inserţiei pe 

piaţa muncii a absolvenţilor de învăţământ

superior din România 

http://www.edu.ro/index.php/articles/11137. 

12. WEF (2009) - Global Competitiveness 

report 2009-2010, 

https://members.weforum.org/pdf/GCR09/G 

CR20092010fullreport.pdf, World Economic 

262 

Forum 2009. 

http://www.weforum.org/issues/globalcompetitiveness

263

Section Finance, Banking and Accounting 

Sub-section: Finances

THE FINANCIAL CRISIS AND ITS IMPLICATIONS ON THE PUBLIC DEFICIT 

OF THE EU COUNTRIES 

Bǎtrâncea Ioan 


Bǎtrâncea Maria 

Faculty of Economics 

Bogdan Vodǎ University, Cluj-Napoca, Romania 

Nichita Ramona-Anca 


Abstract: In this paper, the authors make an analysis of the second wave of the actual World 

Financial Crisis. They present the consequences of the first wave of the World Financial Crisis, 

namely the Banking Crisis, on the EU countries public debts. 

Keywords: analysis, crisis, public debts, EU 

JEL Classification: G30 

1. European Bailout Plan 

The first wave of the global financial crisis 

consisted of a deep crisis within the 

international banking system caused by 

mortgage contracts. The devastating effects 

of this first wave were only delayed - not 

eliminated - by states interventions through 

state bailouts given to banks in difficulty. To 

mitigate the effects of this crisis, the 

European Bailout Plan was passed in 2008 

within the EU Zone, which in summary 

provided the following: 

- Any financial support had to be given on 

time and it was temporary; 

- Taxpayers interests had to be protected; 

- Remaining shareholders had to deal with 

governmental interventions; 

- Governments were free to change 

companies management when necessary; 

- Governments were entitled to changing 

banking wage policies; 

- Stipulations relating to EU Bailout Plan had 

to be followed as stated; 

- No secondary effects on other UE members 

were allowed. 

267 

Besides the bailout amount of 1465 billion 

Euros, the EU Bailout Plan also stipulated 

that bailed banks could not give dividends to 

investors until the total amount received by 

them was returned to the governments. 

Moreover, governments had the right to be 

represented on the board of directors of bailed 

banks by special observers. As a consequence 

of the above stipulations, European stock 

markets fell the very next day this plan was 

approved. 

There were also some exceptions. Many 

French banks like Credit Agricole or BNP 

Parisbas refused governmental help because 

of its interfering role in bank management. 

Other banks accepted the bailout plan, as 

following: Barclay’s (UK): 1.62 billion £; 

Royal Bank of Scotland (UK): 5 billion £; 

Fortis (The Netherlands/Belgium): 11.2 

billion €; Dexia (France/Belgium): 6.4 billion 

€; Hypo Real Estate (Germany): 35 billion €. 

This bailout given to banks by EU states was 

misunderstood by them, for several reasons, 

among which the following:

- When banks know that the state will support 

them during crises, they can afford to take 

bigger risks. 

- Without more regulation, banks are driven 

to increase their returns by taking bigger 

risks. 

- When banks gain huge amounts of money, 

they keep the profits; when banks loose, it is 

the state that pays. 

Looking back, one can see that the European 

public has discovered an interesting fact: the 

2008-2009 fiscal stimulus programs, which 

were aimed at forestalling an even greater 

crisis, generated more debts than jobs. By 

analyzing this situation, one conclusion 

arises: cheap money (through cost and high 

liquidity levels) has deepened the crisis. 

2. It’s all in the history 

Recent past history showed, on one hand, the 

financial crisis deepened the problems of 

several European countries because of the 

monetary and financial structures of the Euro 

zone. On the other hand, the crisis resulted in 

extreme shortage of liquidity for European 

banks. During 2007-2008, banks of core Euro 

zone countries (Germany, France, The 

Netherlands, Belgium) continued to lend to 

peripheral countries (Italy, Spain, Ireland, 

Greece, Portugal). Gross cross-border claims 

from core to periphery reached 1.5 trillion 

Euros in 2008, representing almost three 

times the capital of core banks. 

The European Central Bank (ECB) 

intervened, lending freely and making it 

possible for banks to start dealing with their 

weak position. Also, the ECB reaction was 

very different in 2009 when states were 

facing growing borrowing needs due to the 

crisis. The ECB watched as interest rates 

rose, financial institutions speculated against 

state debt, and state bankruptcy raised its 

head. In such a difficult financial 

environment, the Euro zone left each state to 

defend itself in the financial markets. 

When looking closer at the above mentioned 

time line, the following can be stated: The 

financial crisis has been followed by a wave 

268 

of governmental defaults on public debt 

obligations; The financial crisis has led to, or 

exacerbated, sharp economic downturns, low 

government revenues, widening government 

deficits, and high levels of debt, pushing 

many governments into default; As recovery 

from the global financial crisis begins, the 

global recession endures, at some point to the 

threat of a second wave of the crisis: 

sovereign debt crisis. 

3. Sovereign debt crises 

In a financial crisis, government spending 

increases dramatically in the attempt to 

stabilize the financial system and stimulate 

economic activity. Hence, tax revenues fall, 

fiscal surpluses turn into deficits and existing 

deficits increase. Because of the difficult 

financial situation, all sixteen members of the 

European Monetary Union (EMU) have 

violated treaty limits on allowable budget 

deficits (some more than four times). 

Moreover, the leading economies of the 

world have all seen their deficits shoot 

higher, some to record levels. 

Among all the obstacles, there is a certainty: 

when economies are contracting or even grow 

slowly, bringing these deficits back down to 

earth, the situation turns into an unenviable 

challenge. Governments have to survive by 

turning to the markets. Then those increased 

deficits turn into growing debt loads. When 

debt reaches 80 percent of the GDP threshold, 

the borrowing costs for governments start 

ticking higher and so does the market 

scrutiny. Related to this topic and in the 

attempt to warn financial markets, the IMF 

stated in 2010 that five of the top seven 

developed countries in the world would have 

debt levels exceeding 100 percent of GDP 

during the next four years. 

If deficits and debts rise and economic 

activity appears unlikely to solve fiscal 

problems, the creditworthiness of the 

government falls under intense scrutiny. 

That’s when downgrades appear. This is the 

situation many countries around the world 

had to face in 2009 and 2010, when the

sovereign debt crises burst. Greece’s 

sovereign debt rating has been downgraded to 

junk status. Spain has lost its AAA rating. UK 

could have lost its AAA status if its deficit 

would not have been addressed. Across the 

ocean, Japan’s outlook has been cut to 

negative and rating agencies have even 

warned the U.S. 

In such an environment, when investors see 

more risk, they require more return. 

Therefore, the borrowing costs for troubled 

countries rises. Then, it becomes harder to 

finance spending needs and harder to finance 

existing debt. That’s when defaults show up. 

Unless governments can demonstrate they’re 

willing to take tough steps to reign in debt, 

crisis can spread quickly. 

4. Public deficit, nowadays problem in the 

EU 

Regarding the issue of the EU public deficit, 

it must be stated that this economic 

phenomenon is accepted within the union 

until it exceeds values stated in documents 

like: Maastricht Treaty (1992); Stability and 

Growth Pact (1997). 

According to the Maastricht Treaty, countries 

have to meet several convergence criteria, 

among which the following: 

- An inflation rate no more than 1.5% higher 

than the average of the three lowest inflation 

rates of EU member states over the previous 

year; 

- Long-term interest rates must not exceed by 

more than 2% the lowest inflation rates of EU 

countries over the previous year; 

- The Member State is required to join the 

exchange-rate mechanism (ERM II) for two 

consecutive years before entering the Euro 

269 

zone and it should not have devalued its 

currency during the period; 

- A government budget deficit must not 

exceed 3% of each country’s GDP at the end 

of the preceding fiscal year; 

- A gross debt to GDP ratio must not exceed 

60% at the end of the preceding fiscal year. 

On the other hand, the Stability and Growth 

Pact (1997) provided: 

- mechanisms for multilateral surveillance 

and enforcement; 

- stated that budgetary positions should 

normally be “close to balance or in surplus”; 

- if requirements are broken, EU can apply a 

fine of 0.5 % of the GDP to its members. 

To comply with the provisions of the two 

treaties, EU members had to impose a strict 

budget discipline, because the budget 

positions of some countries pose a risk for the 

sustainability of the public finances of these 

countries and of the European Monetary 

Union (EMU) as a whole. Moreover, the 

national fiscal policies of EU members were 

strictly subordinated to the inflation target of 

the European Central Bank. Also, the national 

governments were obliged to meet rigid 

parameters and could not use fiscal policies 

freely to increase growth and employment. 

Nevertheless, since the financial meltdown 

has begun, 20 EU countries (among which all 

16 of the EMU’s members) have been guilty 

of excessive spending. During all this period, 

European governments were and still are 

struggling to rein in deficits after the worst 

downturn since World War II. The table 

below presents some data concerning the 

amount of deficits:

As it can be seen, twenty member countries 

are facing EU deadlines to get their budgets 

back in shape. They are all deemed crucial to 

economic stability and growth as the EU 

claws back from recession. A review of the 

situation in Hungary, Latvia, Lithuania and 

Malta shows all four countries have taken 

adequate steps to narrow their deficits. There 

are requests that Malta and Lithuania are 

granted another 1 and 2 years to get back in 

shape. 

Most analysts stated that in 2010 

unemployment rate in the EU would reach the 

level of 10.25% and the public deficit would 

be 7.5% of EU GDP. In 2009 budget 

shortfalls of two or three times the EU limit 

would have been unthinkable in most 

countries. Because many countries have 

exceeding deficits, the EU Commission 

proposed deadlines to reduce gaps. Here are 

some examples: 

- Hungary met its 2009 deficit target of 3.9% 

of GDP. It has until 2011 to bring its deficit 

below 3%. 

Table no. 1 Budgetary Deficit/GDP 

COUNTRY 2007 2008 2009 

Ireland 0.1 -7.3 -14.3 

Greece -5.1 -7.7 -13.6 

United Kingdom -2.8 -4.9 -11.5 

Spain 1.9 -4.1 -11.2 

Portugal -2.6 -2.8 -9.4 

Iceland 5.4 -13.5 -9.1 

Latvia -0.3 -4.1 -9 

Lithuania -1 -3.3 -8.9 

Romania -2.5 -5.4 -8.3 

France -2.7 -3.3 -7.5 

Netherlands 0.2 0.7 -5.3 

Hungary -5 -3.8 -4 

Bulgaria 0.1 1.8 -3.9 

Malta -2.2 -4.5 -3.8 

Source: Eurostat data 

270 

- Latvia ended 2009 with a deficit projected 

at just below 10% of GDP, as recommended 

by the EU. The target for 2010 was 8.5%. 

- 13 countries were given 2-5 years to 

reinstate fiscal discipline: Italy, Belgium 

(until 2012); Germany, France, Spain, 

Austria, the Netherlands, the Czech Republic, 

Slovakia, Slovenia, Portugal (until 2013); 

Ireland (until 2014); UK (until 2014-2015). 

The significant indicator for any country is 

Gross Debt to GDP Ratio, which has 

deteriorated strongly due to recession, 

stimulus, capital injection in banks, and 

reached dangerous levels in 2010 for the 

balance of European economies, as it follows: 

Greece 115%; Italy 116%; Belgium 97.2%; 

UK 78.7%; Portugal 77.4%, France 76.1%; 

Germany 72.1%; Austria 69.1%; Ireland 

64%, Finland 41.3%. Many analysts think 

that the problem in today’s Europe is due to a 

natural evolution of things and that the 

evolution of the financial crisis follows this 

pattern: over indebtedness was shifted from 

home buyers on to banks, then transferred to 

governments (e.g. the recent sovereign debt

crisis in Greece is only a natural development 

of things). 

To prevent amplification of budgetary 

problems and their propagation in the EU, the 

27 EU states have to reduce public deficit and 

have received guidelines from the EU to 

achieve this goal within 2011-2014. 

5. The situation of Greece, “Achilles Heel 

of the EU” 

Greece has accumulated high levels of debt 

during the decade before the crisis, when 

capital markets were highly liquid. As the 

crisis has unfolded, and capital markets have 

become more illiquid, Greece may no longer 

be able to roll over its maturing debt 

obligations. Some analysts have discussed the 

possibility of a Greek default. Greece has 

relied heavily on external financing for 

funding the budget. Between 2001, when it 

adopted the euro as its currency, and 2008, 

Greece’s reported budget deficits averaged 

5% per year, compared to a Euro-zone 

average of 2%. Its current account deficits 

averaged 9% per year, compared to a Eurozone 

average of 1%. 

The causes of financial crisis in Greece can 

be grouped into two categories, namely: 

- Domestic causes: high government spending 

of successive Greek governments; weak 

revenue collection; structural rigidities in 

Greece’s economy. 

- International causes: access to capital at 

low interest rates after adopting the Euro; 

weak enforcement of EU rules concerning 

debt and deficit ceilings facilitated Greece’s 

ability to accumulate high levels of external 

debt. 

To prevent the entry of Greece into collapse, 

Euro-zone countries and the International 

Monetary Fund, seeking to halt a widening 

European debt crisis that has threatened the 

stability of the Euro, agreed to extend Greece 

an unprecedented €110 billion ($147 billion) 

rescue in return for Draconian budget cuts. 

Germany, whose population has been deeply 

sceptical of a bailout, beared the largest share 

of the Euro-zone contribution, namely €22.3 

271 

billion of the total amount. The Euro-zone 

loans carry an interest rate of about 5%, 

compared to about 3% for the IMF 

contribution. Some €10 billion will be set 

aside as “bank stabilization” fund for use if 

the condition of Greek financial institutions 

worsens. 

The Greek government has promised to slash 

and then freeze public sector wages, raise sin 

taxes, increase value-added taxes, impose a 

new levy on businesses, cut pension 

payments and increase retirement ages for 

some public-sector workers. The steps are 

expected to save the state €30 billion through 

2013. Thus, the Greek government has 

adopted the following measures: 

- Public sector limit of €1,000 introduced to 

bi-annual bonus, abolished entirely for those 

earning over €3,000 a month; 

- An 8% cut on public sector allowances and 

a 3% pay cut for DEKO (public sector 

utilities) employees; 

- Limit of €800 per month to 13 th and 14 th 

monthly pension instalments; abolished for 

pensioners receiving over €2,500 a month; 

- Return of a special tax on high pensions; 

- Changes concerning laws governing lay-offs 

and overtime payment; 

- Extraordinary taxes imposed on company 

profits; 

- Increases in VAT to 23%, 11% and 5.5%. 

- 10% rise in luxury taxes and taxes on 

alcohol, cigarettes, and fuel; 

- Equalization of men and women pension 

age limits; 

- General pension age has not been changed, 

but a mechanism has been introduced to scale 

them to life expectancy changes; 

- Average retirement age for public sector 

workers has increased from 61 to 65; 

- Public-owned companies to be reduced 

from 6,000 to 2,000. 

Only the nearest future will show whether 

these harsh methods have generated the 

appropriate results. 

6. Broader implications of Greece crisis: 

Spillover Effect

During the last two years, there were several 

concerns that Greece’s crisis could spill over 

to other European countries in difficult 

economic positions, including Portugal, 

Ireland, Italy, and Spain. European authorities 

warned that debt programs in Greece and 

other high deficit countries such as Spain, 

Portugal, Ireland and even Italy may affect 

stronger European countries. Greece’s foreign 

policy focus on the region and growing trade 

volumes between neighbour countries like 

Serbia, Albania, Macedonia, Romania, 

Bulgaria and Turkey could not remain 

indifferent to the magnitude of the crisis next 

door. 

All their concerns were entirely justifiable. 

PIIGS ZONE, that is Portugal, Ireland, Italy, 

Greece, Spain, borrowed heavily during the 

credit bubble. Some argued that the spillover 

effect could appear in Europe just as it 

appeared in Asia, where investors’ herding 

behaviour contributed to the spillover of 

Asian financial crisis (1997-1998). Others 

argued the spillover hypothesis was unlikely 

to happen: the low levels of national savings 

in Greece and Portugal put these countries in 

the weakest financial position, at 7.2% of 

GDP and 10.2% of GDP respectively, 

compared to an EU average of approximately 

20%. Spain and Ireland, by contrast, were 

closer to the EU average at 19% of GDP and 

17% of GDP, respectively, putting them in a 

stronger financial position. 

Two macroeconomic indicators were 

significant for the evolution of these 

countries, namely: government expenditure as 

percent of GDP and government consolidated 

gross debt as percent of GDP. The figures for 

each country were as following: Portugal: 

spending 51%; debt 77%; Ireland: spending 

48%; debt 64%; Italy: spending 52%; debt 

116%; Greece: spending 50%; debt 116%; 

Spain: spending 46%; debt 53%. 


272 

All in all, when referring to the implications 

of the world financial crisis on the European 

public deficit, it can be stated that the bubble 

disease has spread to the whole financial 

system, making governments to bail banks 

and acquire liabilities. Although liabilities are 

necessary, borrowing more to satisfy previous 

debt obligation will only delay the problem, 

not solve it. Nowadays, it’s too early to 

measure the effectiveness of the bailout plan 

for the Euro-zone. In our view, time is the 

best solution to the debt problem. Giving it 5- 

8 years, reducing spending and increasing 

saving to pay down the debts is the most 

pragmatic way of solving it. 

8. References 

Single-author books: 

1.Lamfalussy, Alexandre. Financial Crises in 

Emerging Economies. New Haven: Yale 

University Press, 2000. 

Articles in journals: 

2.Buti, Marco, Larch, Martin. The 

Commission propsals for stronger EU 

economic governance. VoxEU, 14 th of 

October (2010). 

3.Dabrowski, Marek. Macroeconomic 

surveillance within the EU. CASE network Ebriefs, 

No. 13(2010). 

4.EFC. Lessons from the financial crisis for 

European financial stability arrangements, 

EFC High-Level Working Group on Cross- 

Border Financial Stability Arrangements. 18 th 

June(2009). 

5.European Council. Strengthening Economic 

Governance in the EU, Report of the Task 

Force to the European Council. Brussels, 21 st 

of October(2010). 

6.Monti, Mario. A new strategy for the single 

market. Report to the President of the 

European Commission. 9 th of May(2010). 

7.Wolf, Martin. The Challenges of Managing 

our Post-crisis World. Financial Times, 30 th 

of December(2009).

Subsection: Accounting

INTELLECTUAL CAPITAL REPORTING AND DISCLOSURE IN THE ANNUAL 

REPORTS OF ROMANIAN MANUFACTURING LISTED COMPANIES – 

THEORETICAL FRAMEWORK 

Bogdan Victoria 

University of Oradea, Faculty of Economics 

Balint Platon Judit 


Farcaş Mariana 


Abstract: One of the most researched topic regarding financial reporting and disclosure of today is 

the way intellectual capital or knowledge assets contributes to the improving of the quality of 

information disclosed and create or add value to business performance. Also, it is acknowledged 

that a company has access to a variety of tools for disclosing information on intellectual capital. In 

our study we have decided to investigate the concept, the measurement models and the intellectual 

capital disclosure practices using as the source of our documentation books, articles, working 

papers and online publications. So, in the first part of our research we have presented several 

points of view in respect to the concept of knowledge assets or intellectual capital and in the second 

part we have reviewed the literature on the topic highlightening several scholars opinion on 

reporting and disclosure issues. 

Keywords: knowledge, intellectual capital, reporting practices, disclosure, annual reports 

JEL codes: M41, M10, G14, D83 


In knowledge based economy value is the 

result of knowledge and information. 

Moreover, business organizations can not 

generate profits without ideas, skills talent 

and intelligence of humans. As Depres and 

Chauvel (2000) observed beside it’s 

concentration on intangibles, knowledge 

economy is characterized by networked, 

digital, virtual and extremely fast moving 

businesses, better performing, the primary 

factor of production is knowledge. The three 

pillars of knowledge economy according to 

Stewart (2001) are: 

- knowledge as the most important factor of 

production; creating value through 

knowledge economy is the process of 

creating value from information; 

- knowledge assets; intellectual capital has 

become the most important knowledge assets 

embedded in talent, skills, know-how, know- 

275 

what, relationships and other human values 

that can be used to create value; 

- adaption to knowledge economy in terms of 

adopting new business language, new 

management techniques, new corporate 

governance practices, new technologies and 

strategies and why not, new accounting. 

Studying the literature written on the topic we 

have found as Tseng and Goo (2005) 

underlined that there is a common lack of a 

clear definition that would appropriately 

describe the concept of intellectual capital. 

Also, regarding intellectual capital 

components we have found in the studied 

literature that intellectual capital is not 

detached. As Maditinos, Sevic and Tsaidiris 

(2009) pointed out several scholars grouped 

intellectual capital in four categories: human 

capital; structural capital; customer capital 

and innovation capital (Edvinsson and 

Malone, 1997; Ross et al., 1997; Stewart,

1997, Sveiby, 1997; Chen et al., 2004, Tseng 

and Goo, 2005). 

Our paper is organized as follows. The next 

section objective is to underline the 

differences between classical assets and 

knowledge based assets focusing on 

definition and recognition of intellectual 

capital. The literature review section is 

concentrated on intellectual capital 

measurement models and also reporting 

issues. In the last section we have drawn the 

conclusions and the limits of our study. 

2. From classical assets to knowledge based 

assets 

Companies, regardless of their size, in order 

to undertake their activity and create value, 

own both tangible and intangible assets. 

Buildings, work equipments and instalations, 

computers are, of course, tangible assets, and 

the ways in which these generate value for a 

company and affect performance have been 

the subject of theoretical and practical 

speculations in economic literature in past 

centuries. On the other hand, the considerable 

growth in the diversity of intangible assets 

has reoriented, in the last few decades, the 

focus of researchers from tangible to 

knowledge based assets. But, what are 

knowledge based assets? In contrast with 

tangible asssets, these are more dificult to 

identify, to clasify, to asses and highlight in 

the structures of financial situations. Yet, in a 

knowledge based economy, it is imperatively 

important to understand which activity 

generates real added value and to adapt 

contemporary financial reporting to this 

economic reality. Knowledge based assets or 

intangible assets have existed for a very long 

time. As Cohen (2008) so vividly remarked, 

the first caveman to light a fire knew that he 

held valuable information. This ability of his 

represented an intangible asset. Expanding on 

this reasoning, Cohen underscored the fact 

that the people who invented the alphabet or 

the ones who created the calendar or the 

numeral system were early inventors of 

extremely important intangible assets. It’s a 

276 

pity they did not know how to patent their 

inventions or protect their works through 

copyright (Cohen, 2008:25). It is vital to keep 

in mind that the terms of knowledge, 

intangibles and intellectual capital are usually 

used interchangeably. As Mansour et al. 

(2008) emphasize the terms of intangibles in 

accounting literature, knowledge assets by 

economist and intellectual capital in the 

management and legal literature are refer 

essentially to the same thing: a nonphysical 

claim to future benefits. Unlike the physical 

or classical assets, the knowledge assets are 

characterized by increasing return on scale. 

Return is the outcome of value generated by 

innovation (discovery), unique organizational 

designs or human resources practice 

(Mansour et al., 2008). 

An interesting point of view is of Bontis 

(1998). He emphasized that intellectual 

capital has been considered by many, defined 

by some, understood by a select few and 

formally valued by practically no one. Most 

of the literature written on intellectual capital, 

according to Bontis (1998) makes a set of 

claims that are related to the value and 

intangible nature of this resource. As Bontis 

(1998) noticed the concept of intellectual 

capital was first introduced by Kenneth 

Galbraith in 1969, who believed that 

intellectual capital was more than pure 

intellect but included “intellectual action”. It 

is the move from “having” knowledge and 

skills to “using” the knowledge and skills that 

is captured in a numerous way in the 

literature. The management literature shows 

two main streams that discuss knowledge 

assets, in opinion of Marr et al. (2004). One 

of them, taking an epistemological approach, 

interprets knowledge as an entity and 

discusses the differences between information 

and knowledge and the implications for 

knowledge management, whereas the other 

stream of literature discusses knowledge as 

an organizational asset that has to be 

managed in order to improve organizational 

performance. The later stream of research 

seeks to help managers in managing and

evaluating the company performance (Teece, 

2000; Roos et al, 1997; Stewart, 1997). In 

Marr et al. vision a major contribution 

provided by this research stream is the 

concept of intellectual capital, which help 

managers to identify and classify the 

knowledge components of an organization. 

The authors also considered that intellectual 

capital contributed to a better understanding 

of knowledge assets and was a first step 

towards a less abstract and more operative 

conceptualizing of knowledge. 

As Abeysekera (2007) noticed several authors 

have taken a long-term view in defining and 

analyzing the nature of intellectual capital, 

though their definitions have varied 

significantly (Edvinsson and Sullivan, 1996; 

Brooking, 1997; Edvinsson, 1997; Edvinsson 

and Malone, 1998; Klein, 1998; Knight, 

1999). Because in our paper we are analysing 

mainly intellectual capital reporting and 

disclosure, we are interested in the definition 

of Edvinsson and Sullivan (1996). In their 

opinion intellectual capital can be defined as 

knowledge that can be converted into value. 

Buck et al. (2001) consider that the 

expression “intellectual capital statement” 

refers to “capital”, emphasizing the 

accounting value. While some authors use the 

concept of intellectual capital while referring 

to the knowledge of a social community, such 

as an organization or professional practice 

groups (Nahapiet and Ghoshal, 1998), other 

scholars interpret intellectual capital as a 

human resource (Boudreau and Ramstad, 

1997; Liebowitz and Wright, 1999) or 

associate it with information technology 

(Davenport and Prusak, 1998). Abeysekera 

and Guthrie (2002) consider there is 

considerable ambiguity as to what constitutes 

intellectual assets, some scholars including all 

intangibles (Ross et al., 1997; Knight, 1999) 

but others do not recognize intangibles in the 

financial statements (Caddy, 2000; Edvinsson 

and Sullivan, 1996). Abeysekera and Guthrie 

(2002) also point out the fact that most of the 

definitions of intellectual capital are based on 

recognizing knowledge or intellectual assets 

277 

only. They have ignored the possibility of 

existence of intellectual liabilities in the 

concept of intellectual capital (Harvey and 

Lusch, 1999; Caddy 2000) and external 

intellectual liabilities (Dzinkowski, 2000). 

But Abeysekera (2001) suggests that if 

knowledge is well managed then value is 

added via intellectual capital and if it is badly 

managed, this may lead to intellectual 

liabilities. According to Tseng and Goo 

(2005) there is a common lack of a clear 

definition that would appropriately describe 

the concept of intellectual capital. However, 

they seem to adopt Stewart’s (1997) 

definition, also widely, recognized, that 

intellectual capital has been formalized, 

captured and enforced so as to generate an 

advanced value to the organization. 

Regarding intellectual capital components we 

have found in the studied literature that 

intellectual capital is not detached. As 

Maditinos, Sevic and Tsaidiris (2009) pointed 

out several scholars grouped intellectual 

capital in four categories: human capital; 

structural capital; customer capital and 

innovation capital (Edvinsson and Malone, 

1997; Ross et al., 1997; Stewart, 1997, 

Sveiby, 1997; Chen et al., 2004, Tseng and 

Goo, 2005). 

3. Literature review on intellectual capital 

measurement models 

As reflected in the various studies conducted 

by different scholars found in the literature, 

measuring intellectual capital is not a science 

as “exact” as mathemathics or accounting. 

According to CEN (2004) (1), there are many 

interdependencies with other activities and 

quite often the context in which value is 

created is not the same as the one in which 

some of the knowledge efforts take place. 

And as noted by Iske and Boekhoff (2001) 

value is not an “intrinsic” property of 

knowledge: the value of knowledge fully 

depends on how knowledge is being used. 

Some knowledge can have a lot of value in 

one situation but be worthless in another. As

we can see in the figure bellow, value can be added in five dimensions: 

Fig 1. 

Source: CEN (2004), European Guide to good Practice in Knowledge 

Management – Part 4: Guidelines for Measuring Knowledge Management, pg. 7 

Many approaches to the measurement of 

intellectual capital can be identified in the 

literature. In Sveiby’s (2) view 

the measuring approaches for intangibles fall 

into at least four categories of measurement 

approaches. 

Direct Intellectual Capital methods (DIC) 

estimates the value of intangible assets by 

identifying its various components. Once 

these components are identified, they can be 

directly evaluated, either individually or as an 

aggregated coefficient. Market 

Capitalization Methods (MCM) calculates 

the difference between a company's market 

capitalization and its stockholders' equity as 

the value of its intellectual capital or 

intangible assets. Return on Assets methods 

(ROA) - average pre-tax earnings of a 

company for a period of time are divided by 

the average tangible assets of the company. 

The result is a company ROA that is then 

compared with its industry average. The 

278 

difference is multiplied by the company's 

average tangible assets to calculate the 

average annual earnings from the intangibles. 

Dividing the above-average earnings by the 

company's average cost of capital or an 

interest rate, one can derive an estimate of the 

value of its intangible assets or intellectual 

capital. Scorecard Methods (SC) - the 

various components of intangible assets or 

intellectual capital are identified and 

indicators and indices are generated and 

reported in scorecards or as graphs. SC 

methods are similar to DIC methods, expect 

that no estimate is made of the value of the 

intangible assets. A composite index may or 

may not be produced. The figure bellow 

highlights the four above mentioned well 

known measurement approaches and shows 

that one may consider various facets, such as 

financial valuation, or high levels of 

evaluation that measure the effect of a 

knowledge management implementation in 

terms of macroelements or at a lower level, that is at the organizational component level.

Fig. 2 

Sourse: Karl-Erik Sveiby , Methods for Measuring Intangible Assets, 2001, updated 27.04.2010 

As we have found in the studied literature 

Skandia is considered the first large 

company to have made a truly coherent effort 

at measuring knowledge assets (Bontis 1996; 

Huseman & Goodman, 1999). In 1985 

Skandia developed the first internally 

intellectual capital report and became the first 

company to issue an intellectual capital 

addendum accompanying its traditional 

financial report to shareholders in 1994. Leif 

Edvinsson, the chief architect behind 

Skandia’s initiatives, developed a dynamic 

and holistic intellectual capital reporting 

model called the Navigator with five areas of 

focus: financial, customer, process, renewal 

and development and human capital (Bontis, 

2001). According to Edvinsson and Malone 

(1997) the new accounting taxonomy sought 

to identify the roots odf a company’s value by 

measuring hidden dynamic factors that 

underlie the visible company of buildings and 

products. As Bontis (2001) noticed Skandia’s 

value scheme contains both financial and 

non-financial building blocks that combine to 

estimate the company’s market value. This 

conceptualization achieved a balance for 

Skandia in trying to represent both financial 

and non-financial reporting, uncovering and 

279 

visualizing its intellectual capital, tying its 

strategic vision to the company’s core 

competencies reflecting knowledge sharing 

technology and knowledge assets beyond 

intellectual property and reflecting its market 

value better. 

The Intangible Assets Monitor (Sveiby, 

1997) is a method for measuring intellectual 

capital and a presentation format that displays 

a number of relevant indicators for measuring 

intellectual capital un a simple fashion. The 

choice of indicators depends on the 

organizational strategy. On the surface, the 

Intangible Assets Monitor looks similar to the 

Kaplan Norton Balanced Score Card, 

however there are significant differences. The 

Intangible Assets Monitor can be integrated 

into management information systems and it 

should be accompanied by a number of 

comments. Only a few of the suggested 

indicators should be selected and designed 

the main purpose to achieve is to get a broad 

picture. So, essentially management selects 

indicators, based on the strategic objectives of 

the firm, to measure four aspects of creating 

value from three classes of intellectual capital 

labeled: people’s competence, internal 

structure, external structure and value

creation ways are: growth, renewal, 

utilization/efficiency and risk 

reduction/stability. 

Intellectual Capital-Index is an example of 

“second generation” practices that attempt to 

consolidate all the different individual 

indicators into a single index, and to correlate 

the changes in intellectual capital with 

changes in the market (Roos et al., 1997). The 

concept of an IC-Index was first advanced by 

Goran Roos and his colleagues at Intellectual 

Capital Services Ltd., and was first used by 

Skandia in its IC supplement to the annual 

report. According to Roos et al. (1997) the 

IC-Index has several distinct features: it is an 

idiosyncratic measure; it focuses on the 

monitoring of the dynamics of IC; it is 

capable of taken into account performance 

from prior periods; it shed light on a company 

different from an external view typically 

based on an examination of physical assets; it 

is a self-correcting index meaning that if 

performance of the IC-index does not reflect 

changes of the market value of the company, 

then the choice of capital forms, weights 

and/or indicators is flawed. Like most other 

measures of tangible assets, an IC-index does 

depend on value judgements, in the choice of 

weights, indicators and even the assumption 

that intellectual capital is present and 

important in company operations. Also, Roos 

et al. (1997) argue that intellectual capital 

measurement and especially a consolidated 

measure such as the IC-index makes a larger 

part of the organization visible and open to 

valuation. 

According to Bontis et al. (1999), Economic 

Value Added (EVA) was introduce by Stern 

Stewart as a comprehensive performance 

measure that uses the variables of capital 

budgeting, financial planning, goal setting, 

performance measurement, shareholder 

communication and incentive compensation 

to account properly for all ways in which 

corporate value can be added or lost. While 

several scholars consider that economic value 

added is the net result of all managerial 

activities, Bontis et al (1999) described EVA 

280 

as providing a common language and 

benchmark for managers to discuss value 

creation and also can increase the legitimacy 

of a company in the eyes of financial markets. 

EVA is intended to offer improvements to 

market value added calculation. Similar to 

EVA, MVA method derives from the Alfred 

Marshall concept of „economic profit”. MVA 

is the difference between actual market value 

of the company (invested capital) and the 

present value of invested capital. In other 

words MVA is the difference between cash 

out or what investors could get by selling at 

the present conditions of firm and market and 

cah in or what investors contributed over the 

years from the beginning of the firm. 

Tobin’s Q ratio named Q ratio or q, is the 

market value of invested capital relative to 

assets replacement cost (Tobin, 1969). The Q 

is the ratio of the stock market value of the 

firm divided by the replacement cost of its 

assets and changes in Q provide a proxy for 

measuring effective performance or not of a 

firm’s intellectual capital. Tobin developed 

the Q ratio as a measure to help predict 

investment decision independent on 

macroeconomic factors such as interest rate. 

In Stewart’s (1997) opinion Tobin’s Q ratio 

was not developed as a measure of 

intellectual capital, but former Federal 

Reserve chairman Alan Greenspan has noted 

that high Q and market to book ratios reflect 

the value of investments in technology and 

human capital. Norton and Kaplan’s Balance 

Score Card was created to help managers to 

transform organization’s strategy into a 

reliable set of performances that will provide 

framework for a strategic measurement and 

management system (Anghel, 2008). A 

company’s performance is measured by 

indicators covering four major focus 

perspectives: financial perspective, customer 

perspective, internal process perspective and 

learning perspective (Kaplan and Norton, 

1996). Balance Score Card indicators are 

based on the strategic objectives of the firm. 

This measurement model of intangible assets 

was developed considering the ability of a

company to exploit and develop its intangible 

assets. The Value Added Intellectual 

Coefficienttm (VAIC tm ) methodology, 

developed by Ante Pulic (1998), is an 

analytical procedure designed to enable 

management, shareholders and other relevant 

stakeholders to effectively monitor and 

evaluate the efficiency of VA by a firm’s 

total resources and each major resource 

component. Pulic (1998) states the higher the 

VAIC tm coefficient, the better the efficiency 

of VA by a firm’s total resources. Formally, 

VAIC tm is a composite sum of three 

indicators: (1) Value Added Capital 

Coefficient (VACA) – indicator of VA 

efficiency of capital employed; Value Added 

Human Capital (VAHU) – indicator of VA 

efficiency of human capital; and (3) 

Structural Capital Value Added (STVA) – 

indicator of VA efficiency of structural 

capital. 

Baruch Lev’s model (1999), knowledge 

capital earnings, reveals a way to measure 

assets, intellectual eranings and knowledge 

earnings. As Lev’s describe his model in an 

interview taken by Alan Webber in 1999 (3), 

„it’s a computation that starts with what I 

call normalized earnings – a measure that’s 

based on past and future earnings...My 

approach looks at the past. Based on those 

forecast, I create an average and I call that 

average normalized earnings. From those 

normalized earnings, I then substract an 

average return on physical and financial 

assets, based on the theory that these are 

substitutable assets...when I substract from 

the total normalised earnings a reasonable 

return on the physical and financial assets I 

define what remains as the konwledge 

earnings”. Further on in the same interview 

Baruch Lev mention that technological 

capabilities index is based on measures of 

inputs, such as investment in R&D, 

investment in product development, 

investment in information systems; on 

measures of intermediate outputs, such as 

patens and trademarks; on measures of 

competitive position such as the number of 

281 

people who access a particular web site and 

on measures based on the ultimate output – 

commercialization. 

These where some of the models that over the 

past years were developed to measure 

intellectual capital or in general intangible or 

knowledge assets. 

4. Literature review on intellectual capital 

reporting practices 

Several scholars have concentrated their 

efforts toward understanding and analyzing 

intellectual capital reporting practices. For 

instance, Abeysekera and Guthrie (2006) 

identify the following categories of 

intellectual capital reporting: ratios and 

values; reporting intellectual capital via 

intellectual capital statements; theoretical 

models. Concerning reporting intellectual 

capital as ratios and values Roos et al. (1997) 

states that intellectual capital is by definition 

intangibles and therefore the only possible 

way to measure them is by proxy variables or 

indicators. Authors like Abeysekera and 

Guthrie (2006) considered that there 

techniques could be classified into two 

broader sub-categories: the firm macro level 

for inter-firm comparisons; and of measuring 

and reporting within firm level (micro) for 

interdivisional comparisons. In regard to 

reporting intellectual capital through 

intellectual capital statements, empirical 

models have been proposed to measure 

intellectual capital items (Leibowitz & 

Wright, 1999; Decker & Hoog, 2000). Some 

models used activity based costing to 

determinate cost and market value to 

determine revenue. In Abeysekera’s vision 

(2001) another conceptual approach is to 

report intellectual capital in relation to the 

“fair value” of the firm and to recognize 

intellectual revenue or intellectual expense as 

the difference of fair value between two 

periods within the traditional accounting 

system. Also, Abeysekera and Guthrie (2006) 

identified five major frameworks of 

intellectual capital reporting: structures 

holding intellectual assets, developed by

Sveiby (1997), focused on intellectual assets; 

capital holding intellectual items, that 

analysis intellectual capital in relation to 

intellectual assets (Edvinsson, 1997; 

Edvinsson and Malone, 1998; Roos et al., 

1997); assets representing intellectual capital, 

that focused on intellectual assets and was in 

Brooking (1999) interest; strategic and 

measurement root focused on the role of 

intellectual capital, that was in attention of 

Roos et al. (1997) research and a combination 

of assets and capital representing intellectual 

capital, developed by IFAC in 1998 and 

Dzinkowski (2000). 

As Abeysekera (2001) noted annual reports 

are an ideal research location for applying the 

intellectual capital framework because they 

provide a good proxy with which to measure 

the comparative positions and trends of 

intellectual capital between firms, industries 

and countries. Several papers and studies that 

we have found in the literature concerning 

intellectual capital issues has used annual 

reports as source documents to discover the 

status of intellectual capital of companies 

(Abeysekera and Guthrie, 2005; Brennan, 

2001; Guthrie and Petty, 2000; Vergauwen 

and van Alem, 2005). The value-creation 

capabilities of different organizations and 

entities are studied in the last decade by 

several authors like Edvinsson (2002), Bontis 

(2004), Tallman et al. (2004), Bonfour and 

Edvinsson (2005), Schiuma et al. (2005). 

Also, several theoretical contributions have 

underlined the strategic importance of 

intangible resources for the value creation 

capabilities, some of them tried to build 

approaches and tools more oriented towards 

project and management processes or 

analyzed the relationship between knowledge 

resources, value creation capabilities and 

competitiveness (Bontis, 2004; Bonfour and 

Edvinsson, 2005; Pulic, 2005). Lev and 

Sougiannis (1996) valued and calculated 

intangibles and then correlated those values 

with financial measures while Edvinsson 

(1997) identified the so called “hidden 

values” of a company and developed an 

282 

intellectual capital management model. Also, 

various prior studies have suggested that the 

level of intellectual capital disclosure in 

annual reports is relatively low. 

5. Conclusions and limits of the research 

As it can be understood from the above 

presented issues concerning the intellectual 

capital concept, measurement models and 

reporting practices we did not found in the 

studied literature on the topic much 

homogeneity and uniform views. Also, our 

work was a difficult one taking into account 

the very rich and diverse literature. However, 

we consider that we have synthesized the 

main or important aspects regarding the 

definition, the measurement and reporting of 

knowledge assets. But, there are a few aspects 

that were not discussed and this is surely one 

of the limits of our study. Another limit refers 

to the fact that we have not pointed out 

separately the contributions of domestic 

authors interested in this subject. 

Note 

(1) European Committee for Standardization 

(Comite Europeen de normalization), 

European Guide to good Practice in 

Knowledge Management – Part 4: Guidelines 

for Measuring Knowledge Management 

(2) 

http://www.sveiby.com/articles/IntangibleMe 

thods.htm/updated 07 April 2010 

(3) 

http://www.fastcompany.com/magazine/31/lev.html? 

page=0%2C3/download on 10.01.2011 

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G., (2009) "Intellectual Capital and 

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S., (2004) "Knowledge, clusters and 

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(2005) "Annual report IC disclosures in The 

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downloaded on 28.10.2010

Morar Ioan – Dan 


PRINCIPLES AND PROCEDURES ON FISCAL 

Abstract: Fiscal science advertise in most analytical situations, while the principles reiterated by 

specialists in the field in various specialized works 

The two components of taxation, the tax system relating to the theoretical and the practical 

procedures relating to tax are marked by frequent references and invocations of the underlying 

principles to tax. 

This paper attempts a return on equity fiscal general vision as a principle often invoked and used to 

justify tax policies, but so often violated the laws fiscality . 

Also want to emphasize the importance of devising procedures to ensure fiscal equitable treatment 

of taxpayers. 

Specific approach of this paper is based on the notion that tax equity is based on equality before tax 

and social policies of the executive that would be more effective than using the other tax 

instruments. 

I want to emphasize that if the scientific approach to justify the unequal treatment of the tax law is 

based on the various social problems of the taxpayers, then deviates from the issue of tax fairness 

justification explaining the need to promote social policies usually more attractive to taxpayers. 

Modern tax techniques are believed to be promoted especially in order to ensure an increasing level 

of high efficiency at the expense of the taxpayers obligations to ensure equality before the law tax. 

On the other hand, tax inequities reaction generates multiple recipients from the first budget plan, 

but finalities unfair measures can not quantify and no timeline for the reaction, usually not known. 

But while statistics show fluctuations in budgetary revenues and often find in literature reviews and 

analysis relevant to a connection between changes in government policies, budget execution and 

outcome. 

The effects of inequality on tax on tax procedures and budgetary revenues are difficult to quantify 

and is among others to this work. 

Providing tax equity without combining it with the principles of discrimination and neutrality in the 

tax to ensure an objective of fiscal policy. 

Keywords: fiscal science, the principles of taxation ,fiscal, tax, fiscal revenues, budget, crisis 

JEL Codes: H20 

Imposition of the theoretical principles of 

science is tax procedures such as the practical 

form of taxation, the latter being comprised 

of specific operations taxation. 

The principles, generallly, there are rules, 

customs, descriptions or definitions accepted 

in time by repeating to their individualization 

as dedicated as such time. 

How the tax is an important part of social life, 

from ancient times it was a high regulatory 

component level in different periods in the 

evolution of society. 

285 

Feeding practices are emerging as national 

budgets techniques quite late, we can say that 

the great empires like the Roman Empire, 

Byzantine Empire or state organizations 

during the later Middle Ages and especially 

in modern times have used techniques that 

have evolved time, so to speak in 

contemporary modern tax procedures and 

techniques. 

Although ways to attract financial resources 

from state treasures states or organizations 

have the same economic content, however, 

different forms from country to country while

also differed. But the great thinkers and 

especially classical political economy, Adam 

Smith precursor fails to define the rules 

governing the taxation process more objective 

to be achieved, namely in the form of 

imposing peaks. 

Maximums were imposed along the 

remaining time and raised in the special cases 

in the literature so far is talk of three groups 

of principles of taxation, namely the 

principles of fiscal efficiency, fiscal equity 

principles and principles of economic policy 

and social. 

Principles of taxation yield based on the idea 

that taxes should be placed so that it brings 

maximum revenue with minimal state 

expenditure, in other words, is characterized 

by productivity. Productivity in turn is an 

indicator that expresses the efficiency, and in 

this case is also a feature of the tax cost. 

As an indication, in general, productivity 

expresses the ratio between results and effort, 

and if taxes this indicator is the ratio between 

tax revenues and state efforts to attract them, 

in fact, tax administration costs. 

These costs are quantified and the fiscal 

system can be determined, in fact, are the 

fiscal costs of maintenance. We know that if 

indirect taxes tax procedures involve a higher 

tax payers in the process starting with 

maintenance records purchases and sales, 

continuing with the calculation of taxes, their 

declaration and of course their pay. 

The participation of contributors to the tax 

administration requires an effort on their part 

and savings from the tax authority. 

It is interesting to determine the involvement 

of taxpayers in the administration of taxes 

and how constitutional law is the imposition 

of tax by taxpayers that they were required to 

maintain records on tax and other obligations, 

such as declarations on a particular type of 

data carrier, or the obligation to submit and 

maintain certain records prior accounting and 

other information related to trim taxes 

otherwise. 

On the other hand in case of direct taxes is 

based on a fiscal apparatus restricted 

286 

participation of taxpayers, meaning that taxes 

on buildings, land, vehicles, tax on personal 

income from independent activities carried 

out by the retained the source of rents from 

agricultural activities and other with the end 

of regulation, the unit tax on the taxpayer 

prepares the tax statement, enforceable 

document, it will be followed to the 

collection of amounts assessed. 

If the profit tax, income microenterprises, 

dividends and others taxpayer tax return and 

calculate the actual tax. And if those indirect 

taxes and direct tax authority has the right 

and obligation to control activity for each tax 

separately .In this context we can say that 

indirect taxes are more profitable than direct 

taxes. 

Tax return is influenced by the level of 

accuracy of tax law, if it allows or not or if 

you fraudulent tax evasion against the law 

even if it is located that you do not leave 

room for interpretation. If the tax is paid by 

all taxpayers who have taxable same table, it 

is characterized by universality, quality tax 

cost. 

So we know that in fact violated tax laws are 

fraudulent or are bypassed by the taxpayers, 

so that part of planned to collect tax revenues 

do not reach the collection. Level budget tax 

revenue is a function and device performance 

fiscal control, the device should be based on 

tax laws and procedures of tax control 

equivocal performance. 

The level of failures to receive is not equal to 

the degree of tax evasion primarily because 

we do not know if the planned revenues are 

well grounded and if he can not evolve as 

macroeconomic indicators once assumed the 

public budget planning. 

The most important problem of collecting the 

fraudulent evasion of taxes is an important 

topic as complicated as it is. 

In the literature often talks about avoiding the 

tax law on an escapist phenomenon without 

breaking the law, called the fraudulent 

evasion. 

In this context I put my problem reporting 

escapist content phenomenon, if we refer to

tax law, if we refer to planned tax revenues or 

the principle of universality of taxation. In the 

first case the tax law is not broken, so in 

terms of jurisdictional comparison is 

pointless. 

Reporting on planned tax revenue does not 

generate an eloquent comparison to the 

process of planning can be faulty and so the 

comparison suffering . Remains third 

comparison, the principle of imposing, this 

principle can be violated, in which, however, 

does not violate law rule than universally 

accepted. 

I personally, not breaking the law does not 

accept such employment, considering honest 

trader and indicates those interested in just 

talking about tax evasion, fraud phenomenon 

par excellence. Rinciples violation of 

universality, a principle is violated 

continually bcare fact, primarily affecting 

profitability and return on any taxation can be 

no question of tax fairness. 

A tax and cost is characterized by stability, a 

tax that must be seen as two spots of view, 

namely, the stability of the tax law and tax 

revenue stability. Stability of resistance 

translates into tax law tax law in time, which 

means that the law would be well located and 

comprises all the details required in the tax 

case. 

Cash inflows fiscal stability means that when 

tax rates change and change proceeds in the 

same way. It is said that excise taxes are 

stable so that when tax rates rise and increase 

revenues. 

If these taxes are apparently betting heavily 

on the psychological factor of about certain 

flaws in the case of alcohol and tobacco, the 

habit if auto fuel. 

Another quality of taxes, namely the 

imposition of convenience, in fact one of the 

maxims of taxation, taxation with fairness, 

certainty of imposition of taxation and 

economic qualities, put forward by Adam 

Shmith, can be considered a necessary feature 

cost taxes, and contributing to increasing the 

collection tax revenue. 

287 

Fairness is a principle of taxation often 

invoked in literature, but it seems the most 

difficult fiscal respected in practice. Fair 

treatment for all taxpayers from the tax 

authorities is a goal difficult to achieve in 

practice in tax and general appropriateness 

societate.Totusi promotion, discrimination 

and neutrality to the tax authorities may result 

in equal treatment from the tax law. 

Equality before the treasury can be absolute 

when the taxpayer owes an equal amount of 

Tax expressed in absolute terms, or may be 

relative when the taxpayer owes a relatively 

equal nsuma expressed in relative numbers, in 

percent, this is the proportional share. 

In time, when economic and social life to 

sophisticated and revenue obtained from 

various sources the question of contributory 

capacity taxpayers, taking into account their 

economic situation, their social, family, their 

health status and other variables to justify 

differential treatment to the tax authority, in 

other words one that can pay more to do. 

They rely so under the influence of leftist 

thought after the French Revolution to 

provide income tratamentulechitabil public 

increasingly larger. 

The literature talks about horizontal equity 

and vertical equity on, the evolution of the 

concept of tax fairness. 

Treatment involves horizontal comparison 

income of two or more persons get equal pay 

but from different sources, and if vertical 

equity is to compare the incomes of two or 

more different persons who earn income from 

the same source, context in which Professor 

Constantin Tulai in his” Public Finance and 

Taxation”highlights the risk of such 

comparisons, in fact beneficial to express 

report with the taxpayer, to transfer the 

emphasis on gender equality before tax 

through tax . 

Time evolution of the concept of tax equity 

reflects the intent to transfer treasury 

importance to gender equality through taxes 

or tax reports, obviously in financial 

purposes. Accepting equality through taxes, 

accept and practice invasive in terms of tax

authorities, tax policies are used exclusively 

for government. 

Of course many of our peers need 

government help because of illness, because 

of family and of course other reasons that 

they need help in different ways. In this 

context, however, we must ask ourselves 

whether such interventions for social 

purposes to be promoted through taxes or 

using other levers. 

It is obvious that if the executives involved in 

the tax account, the first result is that it 

distorts the acceptance address, that the 

official intention of the taxpayer and those 

who do not enjoy such tax benefits conferred 

will try to bypass the tax law. 

I think for social interventions can be 

promoted through other means, such as state 

social insurance systems, at other institutions 

of social protection for the taxpayer and not 

to confuse the proper push other adverse 

judgments propriety, and labor market 

competition capital and ultimately to tax 

evasion. 

On the other hand and tax procedures are 

hampered and will suffer in terms of 

efficiency and their bureaucratic 

phenomenon, by appealing to all sorts of 

supporting operations to access tax 

advantages or disadvantages for others put in 

the work of contributors. 

The third group of principles of taxation are 

those that concern economic and social 

policies. Taxes are the main source of 

288 

revenue for the state, but a tool, an effective 

lever to influence consumatori.Principiile 

taxpayers in their capacity as neutral taxation, 

the tax discrimination, lack of arbitrariness, 

impersonality and the legitimacy of taxes. 

Use taxes in their capacity as leverage 

requires diversifying financial operations tax 

procedure. 

Bibliography 

1. Mihail C. Demetrescu, „Politici economice 

şi financiare de ieri şi de azi” („Middle Age 

Financial Sociology and Finances”) 

Tipografia Federatiei Nationale Cooperatiste, 

Bucharest,1946 

2. Morar Ioan Dan, „Sistemul fiscal 

românesc.Traditie si capacitate de adaptare” 

(„Romanian Taxation System. Tradition and 

Adaptation Capacity”), Ed.Dacia, Cluj- 

Napoca, 2000; 

3. Văcărel Iulian, „Politici economice şi 

financiare de ieri şi de azi” („Financial and 

Economic Policies – Old and New”), Ed. 

Economica, Bucuresti, 1996; 

4. Constantin Tulai, „Finantele publice si 

fiscalitatea” („Public Finances and Taxation 

System”) Casa Cartii de Stiinta, Cluj- 

Napoca,2003 

5. Radu Vasile,Intre echilibru si 

recesiune,Editura Economica 1998.(Balance 

between 

recession, Economics 1998) ; 

6. Codul Fiscal ,L 571/2003, republicata 

(Code, L 571/2003, republished)

IFRS COMPLIANCE REGARDING INFORMATION DISCLOSED BY 

COMPANIES IN CONSOLIDATED FINANCIAL STATEMENTS - CASE STUDY 

ON IAS 23 BORROWING COSTS APPLICABILITY 

Tiron-Tudor Adriana 

Babeş-Bolyai University, Faculty of Economic Sciences and Business Administration 

Fekete-Pali-Pista Szilveszter 


Dragu Ioana-Maria 


Abstract: This paper concentrates on information disclosure regarding IAS 23, being included in 

accounting research field. It comprises an empirical study on the correlation between information 

published by companies in consolidated financial statements with respect to borrowing cost policies 

and a series of variables that characterize a firm. The objectives of this paper involve estimating 

and establishing an econometric model in which is assumed that disclosure index for information 

required by IAS 23 depends on certain elements in the form of country of origin, sales, total assets, 

debt ratio, solvency, ROA and ROE. International accounting literature presents a series of studies 

on the subject of compliance with IAS disclosure requirements. Similar with this paper, various 

authors considered annual reports as starting point for data gathering in their reasearch on 

disclosure phenomena. The criteria used for data gathering, processing and analysing have been 

previously used in a successful manner by important scientists who published in accounting field. 

The methodology used involves Disclosure Index computation, as well as SPSS data processing, 

analysis and interpretation. Results show that the model is valid, meaning that there is correlation 

between information disclosure with respect to IAS 23 and the analyzed variables. According to our 

estimated econometric model, most of the variables maintain a certain influence on disclosure as we 

can observe a significant correlation level between the studied elements. This research contributes 

to the development of both accounting field and international accounting literature, by studying 

borrowing costs disclosed information in relation to certain elements that best characterize the 

activity of a company. Although an empirical paper, it concentrates also on accounting practices, as 

it uses real data extracted from annual reports and consolidated financial statements. The 

importance of this research relies in its originality approach, by studying the information disclosure 

for borrowing costs that represent one of the most important accounting fields. 

Keywords: information, disclosure, borrowing costs, annual reports, correlation 

JEL Codes: C51, C53, M41 


International accounting literature contains a 

serie of studies on disclosure. The most 

recent of them, involve the analysis of 

compliance with IAS requirements. Many 

scientists have started to consider annual 

reports in their reasearch on disclosure 

phenomena. In addition, this paper uses 

certain criteria in data gathering, processing 

and analysing that have been previously used 

in a successful manner by important scientists 

289 

who published in accounting field. Regarding 

the motivation for implementing this 

research, there is a need to establish the level 

of IFRS compliance, as both recognition and 

appliance of IAS is considered to be an 

essential element in the process of accounting 

development. Further on, by analysing 

information disclosure in financial reports, 

and defining its correlation to some key 

indicators that show the financial position and 

profitability of companies, IFRS requirements

egarding information made public could 

meet progress in compliance. This study 

contributes to a better understanding of IFRS 

compliance as well as of the factors that 

influence information disclosure. 

Furthermore, international organisms from 

accounting field should supervize IAS 

acceptance and thus the process of disclosure 

is one imporant part of it. 


Nowadays is becoming more and more 

difficult to make economic forecasts whithout 

having the necessary information. Decisions 

cannot be made in the absence of information 

disclosure. Further on, in all fields there is a 

need for published information, otherwise 

negative effects of non-disclosure can appear 

(Edmiston 2011:281-320). There is evidence 

of the fact that a ’real-time reporting’ can be 

attained only through continuous evolution of 

financial reporting, in order for accounting 

standards and policies addopted by 

companies in practice to reach a common 

point (Kueppers and Sullivan 2010:292). 

International accounting literature mentions 

the benefits of improved disclosure (Lang and 

Lundholm 1993), as firms increase intensity 

of disclosure efforts before offering public 

debt and equity, and thus from compliance 

with international standards (Barry et al. 

1991). There have been many attempts to 

study the level of disclosure for mandatory 

and voluntary issues using disclosure index. 

Donna Street (Street 2001:27-35) made a 

research on factors that generate 

noncompliance, and uses regression analysis 

in order to estimate their correlation to 

information disclosure. By studying the 

information made public in annual reports, 

some sientists try in fact to underline the 

importance of disclosure for accounting and 

for the economy, in general. According to 

them, the process of disclosure assumes three 

main aspects or characteristics of the 

information to be disclosed (Hossain 2008: 

661): efficiency from economical point of 

view of disclosed information, influence of 

290 

published information on economic agents’ 

behavior, background of disclosure decision. 

Results of the study reveals that banks seldom 

choose to disclose voluntary elements; on the 

other hand, for mandatory issues, disclosure 

and transparency meets compliance. Hossain 

et al. (Hossain et al. 2009:664-667) made a 

study on corporate disclosure measurement 

for financial and non-financial companies. 

Their research is based on some analysis 

criteria, including: size of the firm given by 

turnover or sales, profitability (ROE, ROA), 

complexity of business- industry, activity 

field, country of origin, and assets. According 

to the authors, all these variables are 

supposed to influence information disclosure 

in financial reporting. In scoring of disclosure 

index, they used 0 for non disclosed and 1 for 

disclosed, which is known as the unweighted 

disclosure approach. Another research on 

disclosure concerns public listed companies 

in Malaysia (Lee 2010: 40-42) in which is 

studied the level of human resource 

information disclosed in correlation to a 

series of variables: size, industry and listing. 

The conceptual and relational SPSS analysis 

is based on information disclosed in 

companies’ annual reports. Some researchers 

intended to create models for borrowing 

costs, in order to facilitate decisions and 

secure debt (Booth 2006: 70-72). In addition, 

ROE and ROA ratio indicators are used in 

empirical research to perform comparative 

analysis for companies’ data in relation to 

borrowing costs (Bohusova and Nerudova 

2009: 35-39). Other studies on capitalization 

of borrowing costs and their disclosure 

(Chung et al. 1993: 886-893) investigate 

firms from oil and gas industry, the analysis 

revealing two types of companies: successful 

efforts that expense borrowing costs, and are 

expensed full costs which capitalize costs.

III. Research methodology 

The methodology used involves Disclosure 

Index computation, as well as SPSS data 

processing, analysis and interpretation of 

results. Data gathering implies a selection of 

companies and a detailed read through all 

their consolidated financial statements. 

Research development is being sustained by 

certain analysis criteria, such as: market 

capitalization, company profile, headquarter, 

or time period. The number of firms involved 

in the study has been elected in accordance to 

the market capitalization level corresponding 

to each one of the ten countries implied in the 

research (France, Germany, Spain, Italy, 

Poland, Austria, Romania, Hungary, Ukraine 

and Bulgaria) and the period of study 

comprises a five years’ analysis (from year 

2005 to 2009). The elements determined for 

all the 92 participating companies include: 

disclosure index, sales, total assets, gearing- 

solvency and debt rate-, ROE, ROA. 

Regarding the information disclosed by firms 

in their consolidated financial statements, the 

paper investigates the compliance with 

Disclosure Checklists of borrowing costs that 

is disclosing the accounting policy adopted 

with respect to borrowing costs, amount of 

capitalized borrowing costs and 

capitalization rate. 

291 

The function that best describes the 

econometric model can be presented as 

follows: 

DIt = ∂0 + ∂1 Sales + ∂2 TA + ∂3 DebtRatio + 

∂4 Solvency + ∂5 ROA + ∂6 ROE + ∂7 

Country (1) 

In the above function, t is the year of study 

and takes values from 2005 to 2009. 

Disclosure Index determination involved two 

stages. First of all, for each one of the three 

items to be disclosed, in the form of 

borrowing costs policy adopted by company, 

amount of capitalysed borrowing costs and 

capitalization rate, were denoted with ’1’ in 

case information for that item has been 

disclosed in the annual report, and ’0’ for the 

firm that did not publish the rspective 

information. The second step involved 

summing up the result for the three elements, 

and then dividing by three- as this was the 

maximum probability for disclosure. 

DI = ∑(di effectively presented)/ ∑( di 

all the possible cases) (2)

IV. Interpretation of results 

Table no. 1. SPSS- Descriptive statistics: Correlations 

(Source: own computations) 

Year 

2005 

Year 

2006 

Variables 

Dependent 

DI 

Variables 

Dependent 

DI 

Independent 

Sales, Total 

Assets, Debt Rate, 

Solvency, ROA, 

ROE 

Independent 

Sales, Total 



ROE 

Table no. 2. Results 

Variable Alfa T (sign.) F (sign.) Adj.R² 

Sales 5,970 0,167 4,974 0,396 

T.A. 5,353 0,159 

Debt rate 0,039 0,291 

Solvency 0,032 0,238 

ROA 0,109 0,016 

ROE -0,0013 0,019 


Sales 3,422 0,236 4,611 0,373 

Total Assets 9,253 0,188 

Debt rate -0,0057 0,039 

Solvency 0,058 0,037 

ROA -0,0023 0,411 

ROE 0,00423 0,481 

Disclosure Index 

2005 2006 2007 2008 2009 

DI 1,000 1,000 1,000 1,000 1,000 

Sales 0,102 0,076 0,073 0,132 0,076 

Total Asset 0,105 0,093 0,051 0,091 0,070 

Debt ratio -0,058 -0,185 ** -0,214 ** 0,062 0,159 * 

Solvency 0,075 0,187 ** 0,211 ** -0.073 -0,181 ** 

ROA 0,224 ** 0,024 0,115 0,003 -0,031 

ROE 0,216 ** -0,005 -0,027 0,009 -0,011 

Romania -0,545 *** -0,529 *** -0,564 *** -0,450 *** -0,432 *** 

Bulgaria 0,025 0,007 0,011 0,003 -0,034 

Hungary 0,255 * 0,305 ** 0,229 ** 0,170 * 0,147 * 

Poland 0,056 0,0015 0,024 0,006 -0,075 

Ukraine 0,031 0,008 0,013 0,003 0,130 

Spain 0,066 0,017 0,028 0,007 -0,089 

France 0,042 0,231 ** 0,263 * 0,097 0,079 

Italy -0,175 ** 0,127 0,129 -0,114 -0,080 

Germany 0,139 * 0,043 0,036 0,060 0,201 

Austria 0,052 0,014 0,022 0,139 0,092 

Significance *, for Sig ≤ 0,10 **, for Sig ≤ 0,05 ***, for Sig ≤ 0,01 

292

Year 

2007 

Year 

2008 

Year 

2009 

Variables 

Dependent 

DI 

Variables 

Dependent 

DI 

Variables 

Dependent 

DI 

Independent 

Independent 

Sales, Total 



ROE 

Independent 

Sales, Total 



ROE 

Sales, Total Assets, Debt Rate, Solvency, 

ROA, ROE 

Table no.1 presents the correlation between 

Disclosure Index and its corresponding 

variables (Sales, Total Assets, Debt ratio, 

Solvency, ROA, ROE). In analyzing the 

evolution of correlation coefficients for the 5 

years’ period (2005-2009), we consider three 

significance thresholds, of 10%, 5% and 1%. 

The results show that according to our 

estimated econometric model, most of the 

variables (Sales, Total Assets, ROE and 

ROA), maintain a strong influence on 

disclosure for year 2005, as we can observe a 

high correlation level between the studied 

elements. In addition, we can observe that in 

most of the case, Pearson Coefficient 


Sales 3,0988 0,244 4,897 0,391 

Total Assets -0,017 0,315 

Debt rate -0,0085 0,020 

Solvency 0,060 0,022 

ROA -0,0014 0,137 

ROE 0,0037 0,399 


Sales 3,982 0,105 2,683 0,217 

Total Assets -3,7 0,195 

Debt rate 0,235 0,278 

Solvency 0,331 0,244 

ROA 0,005 0,490 

ROE -0,0005 0,467 

(Source: own computations) 

293 

Variable Alfa T F Adj.R² 

(sign.) (sign.) 

Sales 1,1826 0,234 2,672 0,216 

Total 

Assets 

-0,861 0,253 

Debt rate -0,101 0,065 

Solvency -0,088 0,042 

ROA -0,443 0,385 

ROE 0,0949 0,459 

registers values that are above the 

significance levels (see Table no.1). One of 

the variables that influences disclosure index 

with respect to borrowing costs is represented 

by sales. Pearson Coefficient for sales (0,102) 

shows that the more complex the company is, 

having a high turnover, the higher the level of 

published information. This is also valid for 

the case of total asset. Its coefficient of 0,105 

demonstrates that as a firm increases its 

assets, it is also willing to publish a greater 

amount of information. On the other hand, for 

both debt ratio and solvency there is a low 

correlation level in their relation to disclosure 

index. For instance, debt rate has a negative

correlation with respect to DI, which means 

that is some of the cases (tough, few, as the 

value of -0,058 does not indicate a significant 

influence) when a company’s debt ratio 

increases, disclosure concerning borrowing 

costs has in contrast a tendency to decrease. 

Concerning ROA and ROE for year 2005, 

although they seem to be highly correlated 

with the indicator showing information 

published by firms in accordance with IAS 

23, the significance level is lower than 0,05 

(see Table no.2). For years 2006 and 2007 we 

can state that again debt ratio and solvency 

show high correlation, but similar with the 

previous year, the level of significance does 

not reach 5% (see Table no.2). The other 

variables do not register coefficients that 

should indicate a relevant influence for 

disclosed information regarding borrowing 

costs. However, there is the exception of 

Pearson’s coefficient for ROA recorded in 

2007 (0,115), that stands for a strong 

correlation between disclosure index and 

ROA for the mentioned year. The last period 

of our analysis (2008-2009) is characterized 

by some evidence of correlation- sales from 

2008 (0,132), as well as debt ratio and 

solvency, in 2009 although for the last two 

items the significance level is under 10%, 

respectively 5% (see Table no.2). Regarding 

the assumption that the country in which a 

company has it’s headquarter and where it 

has been set up has an influence politics 

adopted concerning information made public, 

the findings suggest that Romanian 

companies have similar behaviors when it 

comes to publishing information regarding 

borrowing costs. In addition, the significance 

level is lower than 1%. Further on, Bulgaria 

registers a small influence on disclosure 

index for the entire period of 5 years’ 

analysis, the maximum value being under 

0,03. Similar values for Pearson’s’ 

Coefficients are recorded for Poland and 

Spain, that present a negative correlation in 

2009 (-0,075 and -0,089). Ukraine does not 

seem to have an important influence on 

disclosure with respect to borrowing costs, 

294 

excepting year 2009 (0,130). For France, 

there is evidence for high correlation in 2006 

and 2007, but the significance level is under 

5% and 10%. In case of Italy, it seems that 

there is both positive and negative strong 

correlation. For years 2006 and 2007 the 

recorded values (0,127 and 0,129), imply that 

this country influences the firms that have 

headquarters and were set up within its 

borders, in the matter of information 

disclosure policy for IAS 23 issues. In 2008, 

Austria recorded a high degree of influence 

on its companies with respect to borrowing 

costs, while in 2009 Germany seems to also 

have a great impact on the way its firms 

publish information of IAS 23 appliance. 

Finally, regarding the relevance of the 

econometric model, according the SPSS 

analysis, the dependent variable (disclosure 

index for borrowing costs information) is 

explained through the model in a percentage 

of 39% in 2005 and 2007, 37% for 2006, 

while in 2008 and 2009 this amount decreases 

to 21%. In addition, the values for adjusted 

R² stand as evidence for the mentioned facts. 


This paper is meant to study the consistency 

of information published by companies in 

their consolidated financial reports. The 

research objective relates to the impact of 

international accounting standard IAS 23 

Borrowing Cost demands on companies’ 

accounting policies. Further on, the study 

involves estimating and establishing an 

econometric model in which is assumed that 

disclosure index for information required by 

IAS 23 depends on certain elements in the 

form of country of origin, sales, total assets, 

debt ratio, ROA and ROE. The importance of 

this research relies in its originality approach, 

by studying the information disclosure for 

borrowing costs for a 5 years’ period, starting 

with 2005, until 2009, and also by 

considering a large sample of companies 

being significantly chosen. On the whole, this 

paper is meant to bring a national and 

international contribution to the literature of

orrowing costs, as one of the most important 

accounting fields. 

Results show that the model is valid, meaning 

that there is correlation between information 

disclosure with respect to IAS 23 and the 

analyzed variables. According to our 

estimated econometric model, most of the 

variables maintain a certain influence on 

disclosure as we can observe a significant 

correlation level between the studied 

elements. Regarding the relevance of the 

econometric model, according the SPSS 

analysis, the dependent variable -disclosure 

index for borrowing costs information- is 

explained by the model, adjusted R² taking 

values between 21% and 39%. This research 

contributes to the development of both 

accounting field and international accounting 

literature, by studying borrowing costs 

disclosed information in relation to certain 

elements that best characterize the activity of 

a company. Although an empirical paper, it 

concentrates also on accounting practices, as 

it uses real data extracted from annual reports 

and consolidated financial statements. 

295 

VI. References 

Bohusova Hana, Nerudova Danuse, “IFRS and 

US GAAP Convergence in the area of 

Borrowing Costs”, International Journal of 

Business Research 9(2009): 35-39. 

Barry Marks, Benson, Earl D. and Raman K.K.. 

“The Effect of Voluntary GAAP Compliance 

and Financial Disclosure on Governmental 

Borrowing Costs”. Journal of Accounting, 

Auditing, and Finance 6(1991): 303-319. 

Booth James R. and Booth Lena Chua. “Loan 

Collateral Decisions and Corporate Borrowing 

Costs”, Journal of Money, Credit and Banking 

38(2006): 70-72. 

Chung, Kwan-Hyun, Ghicas Dimitrios, Pastena 

Victor. “Lenders’ Use of Accounting 

Information in the Oil and Gas Industry”. The 

Accounting Review 68(1993): 885-895. 

Edmiston Stuart C.. “Secrets worth keeping: 

toward a principled basis for stigmatized 

property disclosure statutes”. UCLA Law 

Review. 58(2011): 282-300. 

Hossain, M.A., Akhtaruddin, M., Yao, Lee. 

“Corporate Governance and Voluntary 

Disclosure in Corporate Annual Reports of 

Malaysian Listed Firms”. Journal of Applied 

Management Accounting Research 7(2009): 1- 

20. 

Hossain, Mohammed. “The Extent of 

Disclosure in Annual Reports of Banking 

Companies: The Case of India”. European 

Journal of Scientific Research 4 (2008): 660- 

681. 

Kueppers Robert J. and Sullivan Kristen B.. 

“How and why an independent audit matters”. 

International Journal of disclosure and 

governance 7(2010): 286-293. 

Lang, M. and Lundholm, R., ”Cross-sectional 

determinants of analyst ratings of corporate 

disclosures”, Journal of Accounting Research. 

31(1993): 246-271. 

Lee, M.H., 2010, Evaluation of Annual Reports 

on Human Resource Disclosure using content 

analysis. Unitar E-Journal. 6(2010). 

Street, Donna. “Observance of International 

Accounting Standards: Factors explaining noncompliance”. 

ACCA Research Report 74(2001): 

1-127.

Subsection: Banking

MODELING ROMANIAN EXCHANGE RATE EVOLUTION WITH GARCH, 

TGARCH, GARCH- IN MEAN MODELS 

Trenca Ioan 

Babes-Bolyai University, Faculty of Economics and Business Administration 

Cociuba Mihail Ioan 

Babes-Bolyai University, Faculty of Economics and Business Administration 

Abstract: In this paper we analyze the return of exchange rate in order to test and analyze the best 

models which are capable of forecasting accurately there evolution. We apply the GARCH family 

models on the exchange rate return in order to obtain the best models for there volatility. Financial 

time series often exhibit abnormal characteristics, such as: serial correlation, non-stationarity, 

heteroskedasticity, asymmetric and are leptokurtic. Due to these characteristics autoregressive 

models such as autoregressive (AR), moving average (MA) and autoregressive integrated movingaverage 

(ARIMA) are unable to capture the evolution of financial series, to represent the special 

characteristic of financial a hole new range of models where developed : generalized 

autoregressive conditional heteroskedasticity (GARCH), which are taking into account the 

heteroskedasticity of the errors term. The GARCH model allows for lags in the autoregressive term 

and in the variance term incorporates lags of the previous variance and also for the errors. The 

GARCH family has expanded in the last years in order to incorporate for asymmetry (Threshold 

GARCH, TGARCH) and risk (GARCH -in Mean). 

We analyze the evolution of exchange rate for: Euro/RON, dollar/RON, yen/RON, British 

pound/RON, Swiss franc/RON for a period of five years from 2005 till 2011, we observe that in the 

analyzed period there are 2 sub-periods: 2005-2007 in which the RON appreciated constantly, and 

2007-2011 in which the trend is depreciation for RON in respect to all the five currencies and the 

volatility was sensible higher than in the previous period. We obtain the returns on exchange rate 

by using the following transformation r=log(curs_t)-log(curs_t-1); the five analyzed series display 

an leptokurtic and asymmetric behavioral. Using the GARCH, TGARCH and GARCH-in Mean 

models, we explicit the evolution of volatility throw this period, choosing the best model using the 

following : minimizing the value of the sum of squared errors, Akaike and Bayesian Information 

Criterion. 

Keywords: exchange rate, GARCH, TGARCH, AIC, BIC. 

JEL Classification: G01, G21 


The evolution of Romanian exchange rate 

represent an important factor for a hole range 

of economic actors: banks, governmental 

agencies, companies and households, so the 

fluctuations of exchange rate and the ability 

to forecast her evolution is very important. 

For banks which must comply to the 

recommendation of the Basel Committee and 

which are ,usually, having open position on 

different currencies it is vital that they can 

understand and prognoses the future 

299 

exchanges rates in order to minimize the risk 

of losses; for governmental agencies 

(especially the Romanian IRS) the evolution 

of Euro/Ron is important due to the fact that 

some of the taxes are expressed in Euro; 

exchange rate fluctuation can have a great on 

companies if there debts is in foreign 

currency or if the export/import; for 

households which in Romania are in debt 

especially in foreign currency the devaluation 

of Ron can lead to bankruptcy. Over 60 

percent of loans are denominated in foreign

currency in Romania which makes our 

economy very sensitive to the fluctuations in 

exchange rates (especially Euro, dollar, yen, 

swiss franc). All of these reason makes 

important the study of exchange rates 

evolution. 

The evaluation or devaluation of currency is 

not a bad think per se, what raises difficulties 

is their volatility because in general financial 

time series, including exchange rate, often 

exhibit abnormal characteristics, such as: 

serial correlation, non-stationarity, 

heteroskedasticity, asymmetric and are 

leptokurtic. 

2. Literature review 

The theory of purchasing power parity (PPP) 

was the first which managed to explain the 

fluctuations in exchange rate values in real 

terms , but there are limits of this theory 

[Guglielmo&Luis,2010] because it cannot 

explain the volatility, the main critics brought 

to this theory being given by the reduced 

relevance of the obtained methods and the 

necessity to use large amount of data series. If 

analyzing the exchange rate evolution from a 

nominal point there are problems for the 

researchers, for eg. the structure of the data 

series on the financial markets (because these 

are generally leptokurtic, the moment of the 

order 3 of the series is much bigger than in 

the case of normal distribution), leading to an 

increase of the probability of the appearance 

of extreme phenomena, also if the series are 

stationary or there is any evidence for 

structural breaks. 

The best models used for modeling the 

volatility are the ARCH models [Engel, 

yt= Β0 + et (1) 

et | It-1 ~ N(0, ht) (2) 

ht= ά0 + ά1* e 2 t-1 , ά0 > 0, 0 ≤ ά1 < 1 (3) 

300 

1982] and then the GARCH generalization 

[Bollerslev, 1986] which lead to the 

appearance of some instruments advanced 

enough to model the financial series. The 

appearance of the GARCH models lead to a 

better understanding and a modeling of the 

evolution of the financial series, these models 

developing both in univariate and 

multivariate models [Bauwens, 2006]. The 

evolution of the Romanian exchange rate has 

been analyzed being used the GARCH 

modeling by Codirlasu [2001] on the series 

ROL/EURO and ROL/DOLAR for the period 

2000-2001, being remarked the fact that the 

series follow an asymmetric ARCH process. 

Using series available during the period 

1999-2003, Necula [2008] applies the 

GARCH and the Copula-GARCH modeling, 

concluding that the dynamic models of the 

type Copula-GARCH bring more information 

and stability concerning the obtained results. 

3. Data used and methodology 

The analyzed series are 5 currencies: Euro, 

dollar, British pound , Japanese yen and 

Swiss franc, the analyzed period is between 

January 3, 2005 and April 29, 2011, daily 

series; the date are obtained from Romanian 

National Bank official site www.bnro.ro and 

the econometrics software packaged used is 

GRETL, in order to obtain returns from the 

daily series we apply the following 

transformation: 

r = log (curst) – log (curst-1 ) . 

The ARCH models developed by 

Engel [1982] have the following 

equations:

The equation(1) expresses the series 

evolution, a following a normal distribution 

law of conditional equations (2) and (3). 

Equations 2 and 3 express the ARCH type 

models, autoregressive models with 

different time variance, residuals follow a 

normal law of 0 mean and ht variance. The 

value of ά0 and ά1 must be positive, and 

ά1 has a value between [0,1] in order to 

301 

avoid an explosive processes, also 

errors(residuals) follow a normal 

distribution law. 

ARCH models have been developed later in 

the GARCH (Generalized autoregressive 

conditional heteroskedasticity) by 

Bollerslev [1986], which bring the use of 

lags as an innovation in equation variance, 

equations in the GARCH (1,1) case are: 

yt = β0 + et (4) 

et | It-1 ~ N(0, ht) (5) 

ht = ά0 +ά1 *e 2 t-1+ β1* ht-1 , ά0 > 0, 0 ≤ ά1< 1 (6) 

It have been observed that on the financial 

markets the assets prices are influenced by 

the news (also called innovation) , so that a 

bad news generates more volatility than a 

good news. A GARCH model which treats 

ht= ά0 +ά1 e 2 t-1+γ *dt-1* e 2 t-1+β1* ht-1 (7) 

where: dt = 1 if et 0 . 

Also in order to reflect the relation between 

risk and return another models where 

proposed in order to incorporate this 

differently the bad-good news was 

proposed by Zakoian [1993] – Threshold 

GARCH. It is an asymmetric model in 

which the conditional volatility is: 

characteristics [Engle,1987], GARCH in 

mean model have the following 

characteristic: 

yt = β0 + et + θ*ht (8) 

et | It-1 ~ N(0, ht) (9) 

ht = ά0 +ά1 *e 2 t-1+ β1* ht-1 , ά0 > 0, 0 ≤ ά1< 1 (10) 

In this model as the volatility rises the 

return are rising too, this models are useful 

in order to capture the risk of the assets. 

4. Exchange rate models: GARCH, 

TGARCH and GARCH in Mean 

Using the return 

r = log (curst) – log (curst-1), 

we obtain the following evolution of the 

series:

R_DOLAR R_EURO R_FRANC R_LIRA R_YEN 

Mean -0.003560 0.002223 0.013383 -0.012068 0.010834 

Median -0.048804 -0.017661 -0.020991 -0.038889 -0.091837 

Maximum 4.434815 3.385650 5.223699 4.018345 10.80639 

Minimum -4.968370 -5.106356 -5.027989 -4.838047 -7.547544 

Std. Dev. 0.874067 0.487860 0.702979 0.746555 1.133958 

Skewness 0.277802 0.050525 0.290114 0.072925 0.678837 

Kurtosis 6.729989 16.06188 9.472018 7.815664 11.90174 

Jarque-Bera 955.2118 11460.17 2836.024 1559.066 5446.158 

Probability 0.000000 0.000000 0.000000 0.000000 0.000000 

Sum -5.739149 3.582965 21.57408 -19.45334 17.46505 

Sum Sq. 

Dev. 1230.792 383.4293 796.1225 897.8817 2071.521 

Observations 1612 1612 1612 1612 1612 

The return of the series are different from 

zero for all the return, the highest return is 

obtain for the Swiss franc 1.33% and the 

lowest for the British pound – 1.20%; from 

the 5 currency two have negative return: the 

British pound -1.20% and the American 

dollar -0.3%. The standard deviation which 

measures the risk associated with these 

currency are the highest for Yen 1.13 and the 

lowest for EURO 0.48, also all the currency 

302 

are asymmetric and leptokurtic. All the series 

where tested for stationarity using the ADF 

test and also for the ARCH effect: the series 

are stationary and the ARCH effect is present. 

The evolution of the return (Fig.1) are having 

the characteristic of an GARCH model with 

periods of high volatility followed by periods 

of low volatility, also we can observe that the 

highest volatility is in 2008-2009 when the 

financial crisis hit the markets.

Fig.1. Evolution of return 2005 -2011 

We explicit the TARCH model for dollar as being: 

Table 1. TARCH Model dollar 

Dependent Variable: R_DOLAR 

Sample (adjusted): 1/07/2005 4/29/2011 

Included observations: 1609 after adjustments 

Variable Coefficient Std. Error z-Statistic Prob. 

R_DOLAR(-1) 0.048747 0.025227 1.932310 0.0533 

R_DOLAR(-2) -0.029834 0.027110 -1.100462 0.2711 

R_DOLAR(-3) -0.046187 0.025247 -1.829397 0.0673 

Variance Equation 

C 0.009057 0.002396 3.780163 0.0002 

RESID(-1)^2 0.071693 0.009958 7.199375 0.0000 

RESID(-1)^2*(RESID(-1)

We observe that the coefficient of the 

equation are representative at the population 

level with a 95% confidence except for the 

second lag of the return. The normality of the 

estimation is analyzed throw the Durbin- 

Table 2. GARCH in Mean for dollar 

304 

Watson test which is under the critical level 

of 2. 

Using the information criterion: Akaike, 

Schwarz we have selected this model for 

being the most performant from the 

TGACRH family models. 

Dependent Variable: R_DOLAR 

Date: 05/14/11 Time: 15:35 

Sample (adjusted): 1/07/2005 4/29/2011 

GARCH = C(5) + C(6)*RESID(-1)^2 + C(7)*GARCH(-1) 

Variable Coefficient Std. Error z-Statistic Prob. 

LOG(GARCH) 0.043134 0.020789 2.074855 0.0380 

R_DOLAR(-1) 0.045477 0.025094 1.812215 0.0700 

R_DOLAR(-2) -0.033026 0.027023 -1.222125 0.2217 

R_DOLAR(-3) -0.053874 0.025031 -2.152348 0.0314 

Variance Equation 

C 0.008319 0.002410 3.452184 0.0006 

RESID(-1)^2 0.061833 0.007541 8.199630 0.0000 

GARCH(-1) 0.926816 0.008588 107.9201 0.0000 

R-squared 0.014756 Mean dependent var -0.004295 

Adjusted R-squared 0.012914 S.D. dependent var 0.874680 

S.E. of regression 0.869013 Akaike info criterion 2.351012 

Sum squared resid 1212.071 Schwarz criterion 2.374433 

Log likelihood -1884.389 Durbin-Watson stat 1.918963 

For the GARCH in Mean model we used for quantifying the risk in the mean equations after 

testing the model with a variance that the best way to integrate risk is using the logarithm of 

variance.

Fig.2 The evolution of conditional variance for dollar in a TGARC model 

5. Conclusion 

The purpose of using TGARCH and 

GARCH in Mean models is to offer a better 

understanding of the volatility which is found 

on financial markets, because financial assets 

have some abnormal characteristics, such as: 

serial correlation, non-stationarity, 

heteroskedasticity, asymmetric and are 

leptokurtic it is important to take into account 

them. GARCH asymmetric models , like 

TGARCH and GARCH in Mean, are offering 

the possibility for better forecasting on these 

assets. In this models we postulated that the 

error term is following a normal distribution : 

et | It-1 ~ N(0, ht) but there are others 

possibilities: student, Generalized Error 

Distribution, student skewed and skewed 

Generalized Error Distribution. Another 

factor which we need to take into the 

consideration is the possibility of structural 

breaks in the series. 

References 

1. Adkins Lee, Using GRETL for Principles of 

Econometrics, 2010, www.learneconometrics.com 

2. Bitca Robert et al, Proofs of the endogeneity of 

the optimum monetary zones, 2007, 

www.batca.files.wordpress.com. 

3. Bollerslev T., A conditionally heteroskedastic 

time series model for speculative prices and rates 

of return - The review of economics and statistics, 

1987 - JSTOR 

305 

4. Codirlasu Adrian, Analiza econometrica a 

volatilitatii cursului de schimb, 

http://www.dofin.ase.ro/acodirlasu/wp/dofin2001/ 

arch.pdf 

5. COTTREL, Allin, LUCHETTI, Riccardi, Gretl 

User Guide, 2010, gretl.sourceforge.net 

6. Codirlasu Adrian & Nicolae Chidesciuc, 

Applied Econometrics using Eviews 5.1, Second 

Edition, 2008, http://www.dofin.ase.ro/acodirlasu/ 

7. Engle, R.F., D.M. Lilien and R.P. Robbins, 

(1987), “Estimating Time Varying Risk Premia in 

the Term Structure: The ARCH-M Model,” 

Econometrica, 55, 391-407. 

8. Engle, RF Autoregressive conditional 

heteroscedasticity with estimates of the variance of 

United Kingdom inflation- Econometrica: Journal 

of the Econometric Society,1982- JSTOR, 

9. Guglielmo&Luis, Long Memory and Volatility 

Dynamics in the US Dollar Exchange Rate, 

2010, http://ssrn.com/abstract=1596083 

10. Gujarati Damodar, Basic Econometrics, 4th 

Edition, pg.858, 2004, Editura McGraw-Hill 

11. Hill Carter, Principles of Econometrics, pg. 

364, 3rd Edition, 2008, Editura Wiley 

12.Mugur Isarescu, “Romania - passing to euro” 

BNR , 2007, May, www.bnro.ro 

13. Necula Ciprian, Modelarea si previzionarea 

cursului de schimb, 2008, www.dofin.ase.ro 

14. www.bnro.ro 

15. www.gretl.sourceforge.net/ 


17. www.dofin.ase.ro/acodirlasu/lect/ 

18. www.reuters.ro 

19.www.learneconometrics.com/gretl.html

306

MONEY: FROM STATISTICAL DEFINITION TO MONETARY POLICY FOR 

ADOPTING EURO. 

Zăpodeanu Daniela 

University of Oradea Faculty of Economics 

Abstract: The evolution of monetary aggregates is closely related to the economic cycle, especially 

the evolution of GDP. The study aims to analyse the primary monetary aggregates (M1), the 

secondary (M2) and the tertiary (M3) in three Central and Eastern European countries: Romania, 

Bulgaria and Poland. The countries were chosen as follows: Romania and Bulgaria on the basis of 

the economic and geographical closeness and Poland as a benchmark for the first group. The data 

used are money supply, monetary aggregates: primary, secondary and tertiary, in Romania, Poland 

and Bulgaria, for the period January 2004 - March 2011, the monthly series are obtained from 

central bank websites, Poland's Central Bank and Bulgarian National Statistical Institute. The 

evolution of monetary aggregates of the three countries was compared with the Euro area and it 

was noticed a high degree of similarity between countries more developed economically as 

compared to less developed countries. From the viewpoint of optimum currency areas, it is 

necessary that the countries that adopt the Euro would respond symmetrically to external shocks 

and also have similar economic behaviour. Our study aims, in this respect, to analyse the 

components and the characteristics of the monetary aggregates, as well as the trends existing within 

them. The analysis of the correlation between monetary aggregates will show how the way in which 

the monetary mass and aggregates behave and which the sense of connection established between 

these countries is. We find that Romania and Bulgaria have a similar comportment, the correlation 

between these being the highest, we observe some differences between Romania and Bulgaria 

versus Poland. 

Keywords: Monetary Aggregate, Gross Domestic Product, Monetary policy, Euro Zone 

JEL Classification: E42, E52 

1. Introductory notions 

The evolution of monetary aggregates is 

closely related to the economic cycle, 

especially the evolution of GDP [Fagan, 

Henry, 1998]. The study aims to analyse the 

primary monetary aggregates (M1), the 

secondary (M2) and the tertiary (M3) in three 

Central and Eastern European countries: 

Romania, Bulgaria and Poland. The countries 

were chosen as follows: Romania and 

Bulgaria on the basis of the economic and 

geographical closeness, and Poland as a 

benchmark. The study aims to observe the 

similarities concerning money supply that 

exist between these countries and the 

importance of monetary aggregates as an 

instrument of monetary policy in these 

countries. Following the EU accession, these 

countries will adopt the euro, the forecasts 

307 

being: Romania - 2015, Bulgaria - 2013, 

Poland 2012 (2013); The theory of optimal 

currency areas shows how important is the 

economic synchronization for countries with 

a single currency. 

Within the Economic Monetary Union, the 

definition of monetary aggregates is stated, 

since 2007, according to the methodology of 

the European Central Bank (NBR Monthly 

Report, 2009): 

1. Narrow money supply (M1) includes 

currency in circulation (banknotes and coins) 

and deposits readily convertible into cash or 

used for payment by bank transfer called 

overnight deposits. 

2. Intermediate money supply (M2) includes 

narrow money (M1) plus time deposits with 

maturity of up to two years and adding 

deposits redeemable at a period of notice of

up to 3 months. The definition of M2 mirrors 

the interest in analyzing and monitoring a 

monetary aggregate which, apart from cash, 

includes deposits with a high degree of 

liquidity. 

3. Broad money supply (M3) comprises 

intermediate money (M2), and marketable 

instruments issued by the monetary financial 

institutions sector; money market 

instruments, especially money market fund 

shares/units and repurchase agreements are 

included in the aggregate (a high degree of 

liquidity makes these instruments close 

substitutes for deposits). 

The way of defining monetary aggregates in 

Romania and Bulgaria before the 

harmonization with the European Central 

Bank requirements was: 

- M1 - Narrow money supply, which 

comprises: currency outside the banking 

system, sight deposits (until December 1991 

time deposits of economic agents as well); 

- Quasi-money – which, together with M1, 

form M2 (broad money) and which 

comprises: household savings, term or 

restricted deposits in Lei, foreign currency 

deposits of residents. 

2. Literature Review 

The monetary union (or currency union) - 

means adopting the same currency in 

neighbouring countries or that of the most 

important commercial partner; we witness the 

dollarization in Latin America (Ecuador, 

Peru) and the euro area. For Romania an 

important significance has been given by the 

''euro zone''; now that our country is a EU 

member, it should focus on continuing the 

process of integration into European 

economic and monetary union and the next 

step is to adopt the euro. Establishing the euro 

area was a long process that had as its starting 

point the Delors report of 1989, which 

proposed a realization of monetary union in 

three steps. The benefits of achieving a 

monetary union are related to the existence of 

an optimal currency areas, optimum currency 

area is defined as a geographical region in 

308 

which the member states must use fixed 

exchange rates or a single currency, while 

there are also criteria that a country must 

satisfy to be part of an optimal currency area 

(Mundell, 1961): 

-high degree of labour mobility; 

-diversified production; 

-degree of openness of the economy; 

-symmetry of external shocks. 

From this point of view, the European Union 

is not entirely an optimum currency area, 

there are differences in labour mobility (in 

particular because of language barriers). 

However, joining an economic union and 

then a monetary union, with the 

implementation of EU acquis and the 

liberalization of the movement of labour 

force showed that the level of integration in 

the euro area is increasing (Bîtcă et al, 2007), 

and also that the euro zone economies 

become integrated as a result of monetary 

union[Baldwin, 2006 ]. 

A preliminary stage of adopting the euro is 

compliance with the provision of the 

Maastricht Treaty (1992): 

- the average inflation rate should not 

exceed with more than 1.5 percentage 

points the average of the most performant 

three members 

- the long-term interest rates should not 

exceed with more than two percentage 

points the average of the top performing 

members 

- consolidated budget deficit should be 

less than 3% of GDP 

- public debt should be below 60% of 

GDP 

- exchange rate fluctuations against the 

euro should fall within a corridor of + / - 

15% of the average level. 

Bulgaria: in 1997, as a result of excessive 

borrowing, Bulgaria became insolvent, the 

establishment of Monetary Council was 

decided in July 1997, the exchange rate level 

was fixed at 1000 leva for a German mark. 

The establishment of the Monetary Council 

has been beneficial in terms of controlling 

inflation, thus, from the peak of 1044% in

1997, the inflation was reduced to 18.7% in 

1998, 2.6% in 1999, 10.3% in 2000, 7.4% in 

2001, 5.8% in 2002 and in the EU preaccession 

period (2003-2007) it fluctuated 

between a minimum of 2.3% and a maximum 

309 

of 7.3%. Getting over the critical period, 

which was caused by entering into insolvency 

in 2000s, by structural reforms and by EU 

accession in 2007, made Bulgaria to fix its 

target of joining the euro zone as 2012. 

Fig.1 Eurozone and the use of European single currency 

(Source: http://en.wikipedia.org/wiki/Euro) 

Poland: After 2000, the Polish Central Bank 

will focus on inflation targeting, and is due to 

adopt the euro by 2014, which supposes 

compliance with ERM II requirements two 

years before acceding to the euro area. Poland 

is a success story, managing the performance 

to continue its growth even during the crisis. 

Romania: After accession to the EU, 

Romania must abide by the obligations of EU 

membership and will have to join the euro 

zone, the time horizon forecast is after 2015, 

with a period of at least two years preceding 

that, during which it will comply with the 

regulations of exchange mechanism of ERM 

II, which involves a controlled national 

currency fluctuations against the euro within 

a deviation band of +/- 15%. Romania meets 

only one of the provisions of the Maastricht 

Treaty, namely the public debt and, on the 

edge, the exchange rate fluctuation. Through 

the reforms and agreements with International 

bodies, it is aimed at the reduction of the 

budget deficit below 3%, while the central 

bank aims to control inflation, although this 

year's inflation target will be exceeded. 

3. Data used and methodology 

The data used are money supply, monetary 

aggregates: primary, secondary and tertiary, 

in Romania, Poland and Bulgaria, for the 

period January 2004 - March 2011, the 

monthly series are obtained from central bank 

websites, Poland's Central Bank and 

Bulgarian National Statistical Institute. 

To analyse the evolution of money supply 

and monetary aggregates in the three 

countries, we shall calculate the correlation 

that exists between the evolution of M1, M2 

and M3, so the correlation is defined as: 

ρ = corr (x, y) = cov (x, y) / σx σy = 

E [(X-Xm)(YYM)]/ σx σy, 

- where XM,YM represent the mean of 

X, respectively Y, 

- and σx, σy represent the mean 

squared deviation of X, respectively Y.

The analysis of the correlation between 

monetary aggregates will show how the way 

in which the monetary mass and aggregates 

behave and which the sense of connection 

established between these countries is. 

310 

4. The analysis of monetary aggregates 

(M1, M2, M3) in Romania, Bulgaria, 

Poland 

For these countries, the period analysed is 

related to two major events: 

- European Union adheration. 

- economic crisis. 

Fig.2 shows the evolution of money supply 

(M3) and primary aggregate (M1); the money 

supply in the period under analysis has a 

growth tendency, consistent with the 

economic growth witnessed by these 

countries in the pre-crisis period, except in 

the case of Bulgaria where from mid-2008 to 

2009 the money supply (M3) shrinks due to 

the decrease in GDP. 

Fig. 2. Evolution of M1, M3 in Romania, Bulgary, Poland 2004-2011 

The primary aggregate (M1) has a much more 

volatile evolution, this being also due to the 

fact that the assets constituting the aggregate 

are of the most liquid type, and thus, 

particularly sensitive to changes in economic 

climate; with Romania and Bulgaria, M1 

decreases, during 2008 for Bulgaria and the at 

beginning of 2009 for Romania, while Poland 

is the only country in which M1 growth 

continues. The evolution of money supply, 

being closely related to GDP trend, the 

conclusions drawn show that in both 

Romania and Bulgaria the money supply 

growth rate has slowed down due to the 

downturn. However, the fact the trend is 

nevertheless positive raises questions about 

monetary policies in both countries because 

the excess of money can turn into inflation.

Fig. 3. Primary component of aggregate money supply M1 in total 

In terms of the component of the money 

supply, it is seen in Fig.3 that, for both 

Romania and Bulgaria, the primary aggregate 

(most liquid) is below 45% for Romania and 

under 38% for Bulgaria, much less than in the 

pre-crisis period (over 50% for both 

countries) which shows that the economic 

crisis has manifested itself at the level of nonbank 

agents, as well, by lowering the amount 

of cash and the value of sight accounts. While 

with Romania and Bulgaria M1 is still 

decreasing, in Poland, after a period of 

decline of a similar magnitude to that in the 

other countries analysed, it recovered to 

levels comparable to those in the pre-crisis 

period. 

The correlation between the monetary 

mass and the aggregates in Romania, 

Poland and Bulgaria 

To analyse the evolution of money supply 

and monetary aggregates in the three 

countries, we calculate the correlation that 

exists between the evolution of M1, M2 and 

M3; so the correlation is defined as: 

ρ = corr (x, y) = cov (x, y) / σx σy = E [(X- 

Xm)(YYM)]/ σx σy, 

- where XM,YM represent the mean of X, 

respectively Y, 

- and σx, σy represent the mean squared 

deviation of X, respectively Y. 

311 

Table 1. Correlation matrix of Monetary 

aggregates 

M1 Pl_M1 Ro_M1 M1 

0.88 0.97 Bg_M1 

1 0.93 Pl_M1 


0.98 0.98 Bg_M2 

1 0.96 Pl_M2 


0.98 0.99 Bg_M3 

1 0.99 Pl_M3 

Based on monetary value and monetary 

aggregates M1 and M2 between January 2004 

and March 2011, their correlation matrix was 

calculated. Statistically, the correlation of the 

results of the secondary aggregate (M2) and 

the tertiary one (M3) shows a close link 

between the developments in the case of 

Romania, Bulgaria and Poland. With the 

secondary aggregate, the highest correlation 

is between Romania and Bulgaria or, 

respectively, Romania and Poland, this 

showing that the evolution of money supply 

in our country, on one hand, presents the 

features of an underdeveloped economy (such 

as Bulgaria) and, on the other hand, is similar 

to Poland - a country with a large population. 

The most noticeable differences are found 

with the primary aggregate, the highest

correlation is observed for Romania and 

Bulgaria which shows that these countries 

have been equally affected by the economic 

crisis and the behaviour of non-bank agents in 

these countries was similar, namely a 

decrease in cash holdings and short-term 

deposits. The lowest level of correlation is 

remarked between Bulgaria and Poland which 

is due to the fact that after the first effects of 

the economic crisis in Poland, the primary 

aggregate returned to levels comparable to 

the pre-crisis period, while in the case of 

Bulgaria the decline of this aggregate 

continues. 

Conclusions 

Explaining money throw the statistical 

definition of money aggregates is ,obviously 

,more than presenting the static situation of 

monetary aggregates because the level of 

them is an important objective of the 

monetary policy, the main criteria which are 

followed in determining the main 

monetary aggregates are: the efficacy of the 

aggregates to be set as an intermediate target 

for the monetary policy, the controllability 

that can be exercise by the central bank 

authority on its growth, the possibility to 

allow the monetary authority to react quickly 

entitles us to say that pursuit of monetary 

aggregates is required for fulfilling the 

criteria for euro adoption. 

The tertiary aggregates are usually more 

difficult to calculated and also are to narrow 

to supervise by the central bank so in practice 

usually its used the secondary aggregate 

targeting 

The biggest differences are found within the 

primary aggregate, the highest correlation is 

observed between Romania and Bulgaria; this 

shows that these countries have been equally 

affected by the economic crisis and the 

behaviour of non-bank agents in these 

countries was similar, namely a decrease in 

cash holdings and short-term deposits. The 

lowest level of correlation is remarked 

312 

between Bulgaria and Poland which is due to 

the fact that after the first effects of the 

economic crisis in Poland, the primary 

aggregate returned to levels comparable to 

the pre-crisis period, while in the case of 

Bulgaria the decline of this aggregate 

continues. 

Bibliography 

1. ADKINS, Lee, Using Gretl for Principles 

of Econometrics, 2009 , 

learneconometrics.org 

2. Baldwin, Richard (2006). In or Out: Does 

it Matter? An Evidence-Based Analysis of the 

Euro's Trade Effects , London: Centre for 

Economic Policy Research. ISBN 

189812891X. 

3. CERNA, Silviu, Economie monetară, 

Editura Universității de Vest, Timișoara, 

2009 

4. COTTREL, Allin, LUCHETTI, 

Riccardi, Gretl User Guide, 2010, 

gretl.sourceforge.net 

5. Damodar N. Gujarati, Basic 

Econometrics , Mcgraw-Hill; 4th edition 

(May 2002) 

6. Fagan, Gabriel, Henry, Jérôme, Long 

run money demand in the EU: Evidence for 

area-wide aggregates, Empirical Economics, 

1998, http://dx.doi.org/10.1007/BF01294419 

7. Mundell, RA - The American Economic 

Review, 1961, A theory of optimum currency 

Areas, 1961. 

8. Robert Bîtcă et al., Dovezi ale 

endogenităţii zonelor monetare optime, 

(Evidence of the endogeneity of optimum 

currency areas), 2007, 

www.batca.files.wordpress.com. 

9. ZĂPODEANU, Daniela, Politici 

Monetare, Ed. Dacia, Cluj-. Napoca, 2002 

10. www.gretl.sourceforge.net/ 


12. http://www.nbp.pl 

13. http://www.bnb.bg/ 

14. www.learneconometrics.com/gretl.html

Section Management and Marketing 

Sub-section: Economic Informatics

TOOLS USED IN DECISION MAKING 

Demian Horia 

Str. Universitatii nr 1, Faculty of Economics, University of Oradea, Romania 

Bernabeu Elena Perez 

Universitat Politecnica de Valencia, Spain 

Abrudan Maria Madela 

Str. Universitatii nr 1, Faculty of Economics, University of Oradea, Romania 

Abstract: Decision making is one of the important tasks of every manager. The process of taking 

decisions has to be based on knowledge. For optimizing this process some software solutions has 

been created. In this article we tried to summarize some of the features which exists in some 

software applications. 

Keywords: decision making, risk solver 

Introduction 

Knowledge is the main source of competitive 

advantage in the knowledge economy and 

innovation in organizations involved in the 

services sector.[1] It’s really about the 

transformation of information into useful data 

management process. We must keep in mind, 

however, that the speed with which 

information circulates, accessibility, search 

and how their storage are critical factors to be 

taken into account in streamlining decisionmaking. 

Taking into account the likelihood of 

achieving results, several models are 

developed to optimize decisions, starting 

from the classification of decisions: decisions 

in conditions of certainty, risk and 

uncertainty. The elements that distinguish 

these types of decisions is very important for 

all - managers and software developers. 

While the development of computer 

applications has raised no problems using 

established models in case of economic 

consequences known with certainty - 

ELECTRE, for example - the real challenge 

for software developers is to optimize the 

decisions of category risk and uncertainty. 

In the service sector, as in any other field of 

economics, all computer application are 

based on the distinction between definitions 

of risk and uncertainty: 

315 

-risk is present when future events 

occur with measurable probability 

-uncertainty is present when the 

likelihood of future events is 

indefinite or incalculable (Frank H. 

Knight, 1921) 

Between different algorithms used inside the 

software “Monte Carlo has become a 

standard tool of risk management” [PRO02] 

According to Michele Gambera, the accuracy 

of the results is limited by the number of 

simulated histories. The process of simulation 

will be longer when we have more data. So, 

an important issue will be how fast a 

computer program can do all the calculations. 

New technologies which were developed will 

improve the speed of the calculations. Cloud 

computing is one of this technology. If we are 

taking into consideration cloud computing, 

we have to be aware that the algorithm has to 

be done in parallel and also if there are a 

mechanism of sending and receiving subsets 

of data between these processes. Monte Carlo 

algorithm is one which can be done in 

parallel computing. 

In Monte Carlo simulation an important fact 

is the distribution which we used for our 

model. There is a lot of distribution which 

can be used like normal distribution, uniform 

distribution, triangular distribution and so on.

According to an article of S. Savage, S. 

Scholtes, and D. Zweidler “simulations 

without acceptable input distributions are like 

light bulbs without electricity”, and they 

observe very well that “Only a few people 

within an organization have the expertise to 

estimate probability distributions, and even 

fewer have the managerial authority to get 

their estimates accepted on an enterprise-wide 

basis”. One of their ideas was to manage 

probability distributions centrally and to 

replace the classical probability distributions 

with stochastic libraries a pre-generated 

random trials that approximate” stochastic 

inputs or can be the results of simulation and 

optimization models. 

ProbabilityManagement.org has presented the 

DIST Distribution String which brings to 

Monte Carlo simulation, a data structure that 

contains thousands of Monte Carlo trials. 

These trials are compressed through XML, so 

that structure can be store in the single cell of 

a spreadsheet or in a field of a data base. The 

main advantages of DIST is that it can be 

generated by experts, to represent virtually 

any type of probability distribution, and then 

Also a Model Pane which consists of four 

tabs will be displayed in the right part of the 

screen. Model tab is used for seeing the 

description for the current model which can 

be one of Optimization, Simulation or 

Decision tree. Platform tab is used for 

defining parameters for Optimization Model, 

parameters for Simulation Model or 

parameters for decision Tree Model. 

Engine tab is used for specifying engine 

which will be used in solving the problem. 

We can select from Standard GRG Nonlinear 

Engine, Standard LP/Quadratic Engine, 

316 

it can be distributed to others in a 

standardized format. 

Other important concept is to use interactive 

simulation in your model. 

Risk Solver Platform is developed by 

FrontlineSystems and is fully integrated with 

Microsoft Excel. This software can be used 

for linear and non-linear model, for 

conventional optimization, for decision tree 

model, for risk analysis and Monte Carlo 

simulation. 

“This package was also the first, and as of 

this date, the most powerful interactive Monte 

Carlo simulation package for Microsoft 

Excel. For simple simulations involving a few 

variables, it can perform 100,000 trials 

essentially instantly, as the user changes 

parameters in the model.” 

[http://probabilitymanagement.org/Software.h 

tm] 

Immediate after installation the menu of 

Excel will be improved with a ribbon with 

specific option for optimization and 

simulation, like it can be seen in the 

following figure. 

Standard Evolutionary Engine, Standard 

Interval Global Engine, Standard SOCP 

Barrier Engine, Risk Solver Engine, or we 

can let it choose automatically which engine 

to use in solving the problem. Which engine 

should we use? Their recommendation is to 

try them all, and use the one that performs 

best on your model.[RISK01] 

For every of these engine we can define some 

parameters which will be used, like Monte 

Carlo number of trials, the algorithm used for 

random number generations, number of 

iterations, Integer tolerance, Multi Start and

so on. Integer tolerance is used to stop finding 

a solution in Branch and Bound algorithm, 

when the relative difference between the best 

found solution and the best possible solution 

is less than this value. If this value is set to 

zero, the algorithm will be stopped with the 

true optimal integer solution. 

When Multistart option is set to true, methods 

for finding global solution to the problem will 

be used. 

Output tab is used for displaying the results. 

Nonlinear problems are more difficult to 

solve than linear problems. In risk solver 

platform an important advantage is that of 

using (Analyze without solving) button, 

which will help us in finding the model. If the 

nonlinear problem is convex, the global 

optimal solution will be found. 

For using this platform we have to be familiar 

with Microsoft Excel. The platform came 

with a lot of useful examples for 

optimization, simulation and simulation & 

optimization like Simple Business Plan 

Forecast Model with Uncertainty, an example 

illustrating modeling an investment fund's 

growth given uncertain return rates, an 

example illustrating modeling multi-period 

317 

Inventory problems with uncertain demand, 

an example illustrating the use of Monte- 

Carlo Simulation to estimate workforce levels 

required to meet demand, an example 

illustrating use of Monte-Carlo Simulation in 

Airline Yield Management; this example also 

shows the use of a parameterized simulation 

model to arrive at good decision policies 

under uncertainty. 

It is very important to mention that a useful 

package named Risk Solver Engine can be 

used to develop and deploy application to 

users. 

Risk Solver Platform came with a set of 

functions which can be used for defining 

optimization models and Monte Carlo 

simulation models. According to their 

documentation most of these functions will 

be used for Monte Carlo simulation models, 

or for the uncertain elements of stochastic 

optimization models. 

We have tried to solve a problem of making 

reservation to a hotel, in the following 

conditions. Our hotels have 50 rooms, and the 

price for a room is 39 EURO. In case a client 

will cancel the reservation, hotel will not 

refund the price of the first night of 

accommodation. In case the tourist will show 

up and no room will be available a 

compensation of 25% of the price of a room 

will be paid by the hotel for tourist 

accommodation in another hotel. 

In less than 5 minutes we can create a model 

of our problem based on the model which is 

defined in YieldManagementModel2.XLS 

file. The distribution of cancelation will be a 

LogNormal distribution of 5% with a 

standard deviation of 2%. For this we used 

PSILogNormal function which generates 

random number of tourist cancelations. We 

prefer this model because we can see exactly 

the evolution of simulation for each particular 

case, and we can make an idea about the 

algoritm.

For number of booking we used 

=PsiSimParam(C19:BB19) which tell to 

Solver engine that a different simulation will 

be made for each value of a cell from the 

domain C19 to BB19. We also used 

=PsiMean($C$15,C18) do define the 

expected revenue in each case of simulations. 

We also set the number of trials per 

simulation to 10000 for more accuracy. In 

less than 3 seconds on our computer we 

To solve this problem solver was simulate all 

50 cases with 10000 of situations in 0.25 

seconds. 

318 

obtain the results to our problems which 

indicate us to use 53 rooms in the process of 

making reservations. 

Another very useful thing is the displaying of 

the results which can be viewed and analyzed 

in a different window like the above on. We 

can combine multiple simulations in our 

analyzing or we can see the results for only 

one. 

The same problem can be solved if we define 

a simulation &optimization model. For this 

model we used only PSILogNormal and

PSIMean functions as it can be seen in the following figure. 

We define an maximum objective of C16, we 

put a condition that number of booking has to 

be an integer (we cannot book 5.34 rooms), 

and we also set that C11 is a variable, like it 

can be seen in the model above in the 

optimization section. Another parameters of 

the engine is 1 simulation and 1000 of trials 

per simulation. We start with button. 

Solver has found a solution in our case in 6.8 

seconds after informing us that our model 

contains uncertainity, and Risk solver 

Another interesting part of Risk Solver Platform are Decision Tree. 

319 

platform will analyze our formula to 

determine the best methods for solving it. 

Also it determine that our models is non 

linear in decision variables and cannot be 

solved by stochastic programming or robust 

optimization methods. At the end inform us 

that Branch &Bound algorithm has found the 

best of the locally optimal solutions. The 

results are 53 bookings like in the preceding 

solutions.

Conclusions 

1.Risk Solver platform can be used in solving 

different services optimization problems 

when we are working with uncertainty. 

2.SAS can be mention as a leader on risk 

management for banking. 

3.Using simulation & optimization it takes 

more time to Risk Solver Platform to solve 

our problem, but is more ease to define the 

model and to interpret the results. 

Bibliography: 

1.[SAV01] S. Savage, S. Scholtes, and D. 

Zweidler, 2006,“Probability Management, 

Part 2,” OR/MS Today, April 2006, Vol. 33, 

No. 2. 

[RISK01] Risk Solver Platform Reference 

guide- version 10.0 

[PRO01] ProbabilityManagement.org, 2011 

2.[PRO02] 

http://probabilitymanagement.org/Library/IW 

M11MarApr_MonteCarlo.pdf 

3.[BOY01] Stephen Boyd, Arpita Ghosh, and 

Alessandro Magnani- Brench and Bound 

methods – Stanford university 2003 

320 

4. Shradhanand, Amarjeet Kaur, and Dr. 

Satbir Jain. Use of fuzzy logic in software 

development. Issues in Information Systems. 

Volume VIII, No. 2, 2007 

5. Kahraman C, Fuzzy Multi-Criteria 

Decision Making.Theory and Applications 

with Recent Developments. Springer 

Science+Business Media 2008. ISBN 978-0- 

387-76812-0 

6. Gurevich G, Kliger D. and Levy O. 

Decision-making under uncertainty – A field 

study of cumulative prospect theory. Journal 

of Banking & Finance 33 (2009) 1221–1229 

7. Feng G and Mingzhe W. Route Choice 

Behavior Model with Guidance Information. 

J Transpn Sys Eng & IT, 2010, 10(6), 64−69. 

8. 

http://www.palisade.com/decisiontools_suite/ 

9. http://www.solver.com/platform/risksolver-platform.htm 

10. 

http://www.oracle.com/us/products/middlewa 

re/bus-int/crystalball/index.html

Sub-section: Marketing

PUBLIC-PRIVATE PARTNERSHIP IN COMMUNITY DEVELOPMENT. THE 

CASE OF ROMANIA. CONCEPT AND MANAGEMENT. 

Bibu Nicolae 

West University, Timisoara (Romania) 

Faculty Of Economics And Business Administration (FEAA) 

Lisetchi Mihai 

West University, Timisoara (Romania) 

Faculty Of Economics And Business Administration (FEAA) 

Abstract: The public administration has a major role in partnerships establishing and operating 

with different community actors aiming at solving specific community problems. In the process of 

identifying and solving the community problems the actions of the non-governmental organisations 

are considered as “alternatives” to the solutions of the public administration. 

The advantages of an on-going collaboration between non-governmental organisations, as relevant 

agents in the social economy, and the public authorities aiming at solving the community problems 

were identified and aknowledged by both sides representatives. The access to complementary 

resources, and implicitly, an increase in the range of actions of the partners beyond mathematical 

calculus, an increase in the credibility and public image of the partners, as well as the social benefit 

corollary to positive models established within the community, are only a few of the arguments. The 

question raised is why this type of a more consistent approach is not used in the current practices of 

solving the community issues in Romania. The following causes should be considered in response to 

this question: the lack of an associative culture at the level of all potential partners, the access to 

resources is by far too limited on behalf of any of the two parts involved, a neutral, thus, 

unrestrictive legislative environment, but at the same time, unstimulating towards an associative 

action, i.e. limited management capacities on both sides. 

From this perspectives, this paper aims at clarifying the partnership concept (definition, typology), 

the public-private partnership role in solving community problems and the management issues 

related: partners identification, negociation of the cooperation protocol, decision making process 

and resource management, assesment, etc. 

Keywords: partnership, public administration, non-governmental organizations, public-private 

partnership, partnership management. 

JEL Classification codes: L33, L38 

I. Public Administration and Partnership 

Practice 

Bringing suplementary resources represents 

the aim of the openess of the public 

institutions to public-private partnership, as 

an instrument in community problems solving 

process. This openess is a must considering 

the genuine explosion of citizens’ public 

needs coroborated with the cronic lack of 

resources any public institution has to face, 

regardless which part of the world it 

functions. 

323 

The Partnership Concept 

Assuming partnership as a governing 

principle represents, from a political point of 

view, a democratic option and, thus, has the 

significance of a political message; 

meantime, it implies an great effort to ensure 

its institutional and procedural premises and, 

by consequance, has the significance of a 

institutional development program, situation 

which brings advantages and risks 

simultanously. Among its advantages for the 

public authorities are increased public support 

for their ongoing programs, atracting

suplementary resources compared with the 

ones commonly available to public authorities 

and an increased adaptation of the public 

services to the community needs (Bancila et 

al. 2002:42). Partnership is not a purpose in 

itself, but, from a methodological point of 

view, it is a way to approach problems, while 

from a managerial point of view it is an 

instrument used in solving problems. 

Partnership is the way, formal or informal, 

through which two or more parties act 

together in order to achieve a joint goal or 

joint objectives, based on a joint plan of 

action and joint dedicated resources and 

under a joint resources and activities 

management. The specific approach through 

which resources are jointly dedicated under a 

joint management makes the difference 

between partnership and cooperation concept 

while the differences between the two words 

are difficult to notice from a semantic point 

of view. In the same respect, joint 

management makes the difference between a 

partnership and a funding relation. 

As far as it concern the decision process, in 

partnership relation, the parties must not 

necessarly have equal shares, but is important 

that they are treated as sitting on equal 

grounds because partnership can not be build 

on a subordination relation. Consequantly, in 

a partnership, the decision power can be split 

between parties evenly or proportionally with 

their contribution (Bancila et al. 2002:40). 

The partnership types can be considered 

based on diverse criteria, acting 

simultanously or independently, which 

generate a relatively complex typology 

(Bancila et al. 2002:39). Thus, from a legal 

point of view, partnerships can be formal or 

informal. When the goal is specific enough 

and achiving it is not a problem, an informal 

partnership can be established if the parties 

are similar entities, knowing each other and, 

eventually, having a cooperation history 

together. In the case of a more complexe or 

long term or if parties are different type of 

entities (NGOs and public authorities, or 

NGOs of different nationalities), partnership 

324 

tends to be formalised. Another criteria for 

partnerships classification is the type of the 

partnership goal. Thus, one can find 

representation partnerships like federations, 

unions, councils, aliances, coalitions, etc. 

together with operational partnerships which 

implies the existance of specific projects as a 

reason of the venture. Partneships can be 

established on a long or short term, with its 

own funding or attracted funding, etc. 

Meantime, it should be mentioned that 

public-private partnership, as a specific cas of 

partnership [1], may define an public 

authorities’ initiative to solve community 

problems by involving a private partners, 

either from business sector, or nonprofit 

sector. This paper is focusing on the second 

category of potential private partners. 

NGOs as Public Policy Subjects in Romania 

Coagulation and development of the 

nonprofit sector, as an alternative to the 

activity of the market and public institutions, 

creates the opportunity of an analysis of the 

public authorities-NGOs partnership 

management and, implicitly, the clarification 

of the nongovernmental organization concept. 

Comparing to the other categories of 

institutions which operate in the community, 

nonprofit nongovernmental organizations 

(commonly known as nongovernmental 

organizations - NGOs) ressamble to private 

commercial entities concerning the way they 

function, but their goals and objectives are 

focused on social needs approached through 

public interest activities, without a 

distribution of the profit (if does exist) among 

the persons involved in the activities. This 

brings NGOs closer to the logic of the public 

institutions (Andersen et al. 2010:8). There 

are many definitions on the nonprofit 

nongovernmental organization concept. 

According to the structural-functional 

definition (Salomon 1992:6), NGOs should 

meet couple of criteria: to have an 

institutional structure, to be of private nature, 

to do not share profit, to be self governed, to 

be volunteer run.

Further, the discussion is focusing on only 

some of the NGOs, more precisely, in the 

meaning of this text, nongovernmental 

organizations or nonprofit organizations are 

defined as an organizational category, formed 

by institutionalised entities, of private nature, 

dedicated to social needs, independent from 

public institutions and not interested in 

political power (i.e. political parties) or profit 

(i.e. commercial private organizations). 

In some countries, the relations between 

NGOs and public authorities have a long and 

well grounded history. For other countries, 

Romania included, relations without an 

evident political character between NGOs and 

public authorities represent a new type of 

public relations emerged in the beggining of 

the ’90ties. They were possible only when 

democratic changes in former socialist 

countries started while previously their 

governments kept all private initiatives under 

strict surveillance and administrative control 

(ICNL 2000). All the governmental 

strategies issued in Romania after 1990 

included public authorities-NGOs 

partnerships as a constant objective for all 

governments. Periodically legislative and 

institutional initiatives aimed to facilitate 

public authorities-NGOs sectoral, national 

and local consultations were announced 

(Liseţchi and Olteanu 1998:3). While the 

governmental interest for NGOs has a history 

of over 20 years, a review of the public policy 

on NGOs main hallmarks shows that actual 

period is a transitional one and Romania is 

still in a phase of institutional set up (Lisetchi 

2006:1). 

NGOs’ Evaluation by Public Authorities 

In order to evaluate the NGOs’ potential to be 

associated in the public policies elaboration, 

implementation and evaluation process, and, 

also, to apply the Romanian legal norms 

(O.G. 26/2000), it is useful for the public 

authorities to elaborate an appropriate 

methodology. Public perception on NGOs is 

an important factor in assessing this potential 

(Bancila et al. 2002:45). NGOs shows an 

325 

higher level of public trust comparing to 

authorities (FDSC 2010). Citizens’ 

appreciation for NGOs is as increased as 

they: facilitate the citizens’ participation, 

strengthen cohesion and solidarity, get 

involved in partnerships with the authorities 

and have strong local roots. NGOs seem to be 

less trustful if perceived as part of the public 

system, beneficiary and consumers of public 

resources, or if they are perceived as week or 

centred on their own goals, if these are 

different from those of the community 

(Bancila et al. 2002:45). 

Assessment Criteria of Public Policies on 

NGO 

In order to foster the possibility of evaluating 

the willingness of the public authorities to get 

involved with the non-governmental 

organizations it is necessary to employ some 

criteria to ensure a standardised assessment of 

the associative behaviour of the public 

administration towards potential community 

partners. Such criteria (Bancila et al. 

2002:45-46) are as follows: 

a) existing institutionalised structures that 

link the public authorities to the 

associative sector; 

b) exiting solution grids, accurately and 

univocally defined, such as recurrent 

institutionalized processes; 

c) applying the principle of equal 

opportunities to any non-governmental 

organisations that request assistance; 

d) applying the principle of supply and 

demand in any public administration- 

NGO relation; 

e) employing accurate selection criteria of 

the services offered by the organizations; 

f) the access of organisations to public 

services contracting within equal terms as 

other economic agents; 

g) the registration of relevant information 

regarding the organisations that perform 

their activity within the covered 

geographical area; 

h) jointly designing a job description of the 

public clerk whose attributions should

entail the relationship with the nongovernmental 

organisations; 

i) showing interest in raising the awareness 

and the sense of responsibility of the 

elected officials in relation to the 

electorate; 

II. The Partnership between Public 

Administration and Non-Governmental 

Organisations The Opportunity of a 

Partnership between Public Administration 

and NGOs 

The advantages of an on-going collaboration 

between non-governmental organisations, as 

relevant agents in the social economy, and the 

public authorities aiming at solving the 

community problems, are as follows: the 

access to complementary resources, and 

implicitly, an increase in the range of actions 

of the partners beyond mathematical calculus, 

an increase in the credibility and public image 

of the partners, as well as the social benefit 

corollary to positive models established 

within the community, etc. 

In the process of identifying and solving the 

community problems the actions of the nongovernmental 

organisations are considered as 

“alternatives” to the solutions of the public 

administration. In order to render perspicuous 

the choice of the word “alternative”, it is 

necessary to explain that communities do not 

have to choose between the development 

model brought forth by the public authorities 

and a model suggested by the organisations, 

for the very reason that organisations cannot 

launch such an offer. Only in exceptional 

circumstances can NGOs entirely solve a 

community problem. At the same time, the 

way in which NGOs take action can represent 

a model of approaching a problematic matter, 

not the only way or the best way, however, 

most definitely efficient from the perspective 

of a cost/benefit analysis. This does not mean 

that non-governmental organisations are to 

replace the public administration or that they 

are to perform the duties of the latter. The 

offer of the non-governmental organisations 

does not represent an alternative per se to the 

326 

services offered by the public institutions. 

NGOs represent an action method 

complementary to the activities of the 

administration, through which the community 

becomes responsible towards solving their 

own issues (Lisetchi 2006:1). In this context, 

the partnership can be considered a 

desirable principle of action which can be 

found, to a certain extant, in the 

organizational culture and the practice of 

some public institutions. 

Management Approach of the Public 

Administration - NGOs Partnership 

In an atempt to optimize the public 

administration-NGOs partnership, some 

specific aspects are to be considered: 

a) different resources: the authorities have the 

possibility to allocate public funds, as well as 

the capacity to issue regulations, while the 

NGOs have the possibility of accessing 

private funds, respectively, the expertise to 

solve specific issues and the capacity to 

motivate/mobilise volunteers. 

b) working method: the operation capacity of 

the authorities is limited by the attributions 

foreseen by their regulations, respectively, a 

slow reaction held back by bureaucracy and 

the propensity towards solving the general 

issues, while the NGOs are more flexible, 

faster in their reactions and the tendency to 

focus on specific problems. 

c) the organisational structure and culture: 

the authorities are larger organisations 

comprising complex structures, while NGOs 

are smaller organisations with simpler 

structures (Altman-Sauer et al. 2001:34). 

The differences can generate tension; the 

main obstacles that hinder an efficient 

relationship between the NGOs and the 

public authorities have been identified: (I) 

different perspectives of the two sides 

concerning the same matter, (II) the lack of 

understanding the peculiarity of the activity 

carried into effect by the other, (III) the 

particular economic and cultural effects of the 

community on the communication methods, 

on the spreading of the information and of the

decision-making and (IV) the power relations 

between the two parts involved (Altman- 

Sauer et al. 2001: 35-38). The common 

element that was identified by the two sides, 

i.e. the fact that it addresses the same group 

(members of the community sharing the same 

problems) and the capacity to find solutions 

for the above-mentioned obstacles, can lead 

to an advantageous cooperation between 

public administration and NGOs, that will, 

consequently, benefit the community. 

Cooperation within a public-private 

partnership is facilitated in the following 

circumstances: collaboration should focus on 

a single matter, the purposes are clearly 

stated, public participation in the process of 

solving the community problems, each 

partner should devote time and resources to 

plan the cooperation, the intentions and 

coordinates of the partnership should be 

clearly established by the two parts, the 

necessary resources for a good cooperation 

within the partnership should be accurately 

identified, assessed and allocated, 

communication should be appropriate and 

efficient, the attributions, skills and 

responsibilities of each partner should be 

specified, a decision-making system based on 

the equal status of the partners should be 

designed (Altman-Sauer et al. 2001:34-35). 

Exercising the Public Administration- 

NGOs Partnership in Romania 

If at the beginning of the last decade nongovernmental 

organisations were perceived 

as being rather anti-governmental by the 

public authorities, partnerships between them 

being exceptional, currently things have 

changed considerably with the opportunities 

offered by the European financing 

programmes prior to Romania’s accession to 

the E.U. The fact that the European Union, 

according to the financing programme, either 

imposed on the public administration the 

partnership with the non-governmental 

organisations, respectively, imposing on the 

public institutions the partnership with 

NGOs, or it granted a higher score for such 

327 

collaborations, has lead to a spectacular 

proliferation of the number of public-private 

partnerships in Romania. It is worth 

mentioning that, as a consequence, more 

funders took up this approach as part of their 

financing policies. Given this context, 

towards the end of the last decade, 

partnerships became a purpose themselves, 

being assessed inconsistently in terms of the 

management or the results of such a process. 

On the other hand, financing the projects of 

the non-governmental organisations by the 

public authorities, as a recommended practice 

by the community development theory, has 

lead to an extensive employment of the term 

partnership in the marketing discourse. 

Nevertheless, such an interpretation of the 

financing relationship between the two types 

of institutions, even if valued on first sight, is 

abusive if compared to the concept of 

partnership which entails a process of codecision 

in operating the tasks to be handled 

by the parts involved in the partnership. 

Regarding the above-mentioned issues, the 

problem raised is that the public-private 

partnership is deprived of its deep structure 

and meaning. 

To bring forth a general perspective regarding 

the practice of the public-private partnership, 

it is worth mentioning that, as in the case of 

Romania, the current legal framework allows 

the development of the relations between 

public authorities and the non-governmental 

organisations (OG 26/2000). The question 

raised is why this type of a more consistent 

approach is not used in the current practices 

of solving the community issues in Romania. 

The following causes should be considered in 

response to this question (Lisetchi 2006:20): 

the lack of an associative culture at the level 

of all potential partners, the access to 

resources is by far too limited on behalf of 

any of the two parts involved, a neutral, thus, 

unrestrictive legislative environment, but at 

the same time, unstimulating towards an 

associative action, i.e. limited management 

capacities on both sides. Concerning the issue 

of the associative culture, the GLOBE

Romania research (Bibu et al. 2008) shows 

that in relation to the obtained score for the 

cultural dimension criterion, Institutional 

Collectivism (Collectivism I), Romania is 

situated on a scale from 1 to 7 at a relatively 

low level, 3.75, in comparison with the rest of 

the world. This number outlines the degree to 

which institutional practices at the social and 

organisational level encourage and 

compensate for the collective distribution of 

the resources and the collective action. A low 

number indicates less collectivism, thus, more 

individualism in relation to the general 

interest in society. Nonetheless, the score of 

5.43 for the cultural dimension Group 

Collectivism (Collectivism II) is situated at 

a higher level on the world scale, which 

indicates that in Romania individual 

expressions of pride, loyalty and cohesion 

within smaller groups, such as the 

organisation, the family, are more recurrent. 

Romanian culture favours smaller groups and 

their interests and puts at a disadvantage the 

general interest in the society. Consequently, 

the associative factor is not favoured by the 

Romanian culture. The narrow interest of the 

group they belong to is the strongest. 

Perforce, it is necessary to clearly point out 

the common areas of the two partners in order 

to render the partnerships viable. 

In practice there are naturally more 

differences in approaching the way in which 

the authorities and NGOs relate to 

community problems. Public administration 

tends to unfold partnerships in especially in 

certain fields: unemployment, social care, 

local development, citizen-public 

administration relation, health, SMEs, 

environmental care, education, the non-profit 

associative sector, the protection of the 

disabled, tourism development, child care, 

regional development, culture (Bancila et al. 

2002:42). 

In establishing the partnership vocation of the 

NGOs, the representatives of the 

administration tend to employ, in this very 

same order, the following indicators: the 

objectives of the organisation, the target- 

328 

group, the resources of the organisation, the 

impact, the level the public participation. 

There is a considerable difference between 

this evaluation grid and the one carried into 

effect by the financing foundations (for 

example, the small amount of importance 

given to the impact), which can be explained 

through the different experience in terms of 

evaluation of an organisation and its 

programmes. 

In Romania, according to the public 

administration representatives, the following 

major obstacles stand in the way of the 

administration-NGO partnership: deficiencies 

in the functioning of the authorities 29%, 

inadequate institutional and legislative 

environment 22%, authority resources 15%, 

disfunctions in the running of the NGO 15%, 

lack of information 10% (Bancila et al. 

2002:44). In effect, it was noticed that in the 

past few years in Romania, falling beyond an 

existing theory concept and favourable 

narrative discourse, there still exists an 

unequal involvement of the two potential 

partners in the development of the 

collaboration. Naturally, there are also many 

cases of partnerships between nongovernmental 

organisations and public 

institutions, this fact being registered 

positively. The truth of the matter is that, on 

the background of the opening declarations of 

the public authorities on the common actions, 

there is a passive attitude towards this type of 

approach on behalf of most of the institutions 

(Lisetchi 2006:21-22). The initiative 

regarding the common resolution of the 

problems of public interest continues to be to 

a great extent in the hands of nongovernmental 

organisations. Needless to say, 

not all organisations can be included in our 

analysis, as well as not all public institutions 

are part of this discussion. Nuances of the 

discourse should be observed in the context 

of a reality in which not all non-governmental 

organisations should take a role in the public 

welfare, insomuch as the assertion above does 

not mean that all public institutions should 

collaborate with non-governmental

organisations in order to deal with 

community problems. NGOs are, in general, 

the ones who request the collaboration of the 

public authorities according to various 

conditions: individual priorities, willingness 

to work in a partnership, the public relations 

image of the organisation, etc. The public 

administration accepts or refuses to be 

involved in such actions. At a surface level, 

the normality of the situation described above 

cannot be refuted. The problem, though, that 

should be raised revolves around the attitude 

towards the responsibility of solving the 

community issues of the two potential 

partners. If, for the public administration, this 

type of responsibility is legally regulated, 

having a binding character, imposed, and, 

eventually, it represents the reason to be of a 

public institution, for the non-governmental 

organisations, as structures of private 

initiative, taking this kind of responsibility is 

the result of the individual willingness, 

motivated by the interest in the public welfare 

of a private group. (Lisetchi 2006:22). 

Recommendations Regarding the Public 

Administration-NGO Partnership 

The problem of the partnership between the 

public administration and the nongovernmental 

organisations represented an 

interest point for the Romanian 

nongovernmental sector even from the period 

of the first mandate of The Group for the 

Implementation of the Resolution of the NGO 

National Forum (GIR) formed in 1998. Thus, 

some general recommendations that make 

direct reference to the current discussion can 

be enlisted among the mentioned activities 

within the context of a GIR proposition 

regarding the future actions of the associative 

sector: 

a) The reinforcement of the local and central 

public administration capacities to work with 

the civil society, manifested through public 

authorities agreement procedures of the nongovernmental 

organisations as service 

providers and organisers of citizen consulting 

centres 

329 

b) Involving the citizen in the public 

decision-making on the basis of pre-arranged 

procedures 

Altman-Sauer, Henderson and Whitaker 

(2001:37-38) have a couple of 

recommendations for the two parts involved 

in the promotion of the NGO-public 

administration partnership: 

What can the non-governmental organisations 

do? 

1. Inform the relevant authorities throughout 

the year about their progress, not only in the 

case of the partnership launching or fund 

raising. 

2. Attach importance to the functioning of the 

entire community, not only to the 

organisation target group. 

3. They should be responsible and fair and 

bring proof of that to the public eye. 

4. To reinforce the trust of the public in the 

organisation by presenting a trustworthy and 

professional image. 

5. To help the community learn how to 

manage the problems that the organisation 

tries to solve and into which they have not 

gained an insight yet. 

What can the public authorities do? 

1. Diminish the frustrations, tensions and 

mistrust in the NGO. 

2. Ensure an overt management of the 

financial requests which come on behalf of 

the NGOs. 

3. Tackle the problems and needs of the 

community as being part of it, not only the 

ones of the NGOs. 

4. Recognise the potential of the NGO as a 

serious investment. 

What can the non-governmental organisations 

and the public authorities do together? 

1. Exchange information during their 

common work relations, as well as in general. 

2. To commonly use certain resources. 

3. To develop clear guidelines about each 

part’s expectations and work on this to reach 

a common balance ground.

4. To aknowledge the other part as the best 

support for dealing with the public sector 

priorities. 

Apart from the usefulness of these 

recommendations, it is foreseeable that 

carrying them into effect in the partnership 

between the public administration and the 

non-governmental organizations is done 

progressively, during a slow process 

conditioned by the common culture in 

Romania, both at an institutional and at an 

individual level. Nevertheless, their value is 

highlighted by the possibility of their use as a 

referential point towards which the 

organisational behaviour of the two types of 

institutions should be oriented, as well as 

criteria for a post-factum evaluation of the 

management and the results of the 

partnerships. 

Note: 

1. It is worth mentioning that the partnership 

typology also comprises public-public or 

private-private partnerships, apart from the 

public-private one. 

References 

1. Altman-Sauer, Lydian, Henderson, 

Margaret and Whitaker, Gordon P., 

Strengthening Relationships between Local 

Governments and Nonprofits, Vol.66, No.2, 

Winter 2001, 2001, Accessed May 12, 2011. 

http://sogpubs.unc.edu/electronicversions/pg/ 

pgwin01/article4.pdf 

2. Andersen et al., România 2010. Sectorul 

neguvernamental – profil, tendinţe, 

provocări, Bucuresti: Fundaţia pentru 

Dezvoltarea Societăţii Civile 2010 

330 

3. Bancila et al., Organizatii 

neguvernamentale, Ghid practic, Timişoara: 

editura Brumar, 2002 

4. Bibu, et al., Romanian Societal Culture: A 

culture towards Westernization?, 2008 

5. Fundatia pentru Dezvoltarea Societatii 

Civile (FDSC), Organizatiile 

neguvernamentale conteaza: bilantul a 20 de 

ani de existenta, text disponibil la: 

http://www.fdsc.ro/pagini/organizatiileneguvernamentale-conteaza.php, 

2010, 

accesat la 13 martie 2011 

6. International Center for Not-for-Profit 

Law (ICNL), Comparative Assessment of 

NGO/Government Partnership in Romania, 

2000, accessed May 12, 2011 

http://www.icnl.org/knowledge/ijnl/vol2iss3/ 

p_1.htm 

7. Mihai, Liseţchi and Ion, Olteanu, 

“Organizaţiile neguvernamentale şi conceptul 

de parteneriat”, Carte alba la Forumul 

Naţional ONG 1998, 1998 

8. Liseţchi, Mihai “Parteneriatul administratie 

publica - organizatii neguvernamentale. De la 

declaratii de intentie la politici publice” Carte 

alba la Forumul Naţional ONG, 1999 

9. Lisetchi Mihai, Model participativ de 

elaborare a unei politici publice privind ONG 

in Romania, lucrare de dizertatie elaborata in 

cadrul Masteratului de Politici Publice si 

Advocacy, Facultatea de Stiinte Politice, 

Universitatea de Vest Timisoara, 2006 

10. Ordonanţa Guvernului nr. 26/2000, 

Capitolului VIII, cu modificarile introduse de 

L 246/2005. 

11. Salomon, Lester, America’s Nonprofit 

Sector: A Primer, New York: The Foundation 

Center, 1992

Sub-section: Management

ORGANIZATIONAL STRESS AND ITS IMPACT ON WORK PERFORMANCE 

Bucurean Mirela 


Costin Mădălina-Adriana 


Abstract: Nowadays, in times of economic crisis, most managers or entrepreneurs have to cope with 

a lot of new job challenges which can easily transform into stressors. Work related stress is of 

growing concern because it has significant economic implications for the organization. Even if 

some stress is a normal part of life, excessive stress can influence one’s productivity, health and 

emotions and it has to be taken under control. When people lose confidence, they refuse to take 

responsibilities, they get quickly irritated, they are unsatisfied of their job, their performance will be 

very low and the organization will be in danger. Fortunately, most managers and entrepreneurs 

know which stress main symptoms are and have the necessary knowledge for managing and 

reducing it before it can affect employees’ daily work. 

Stress can have an impact both on the organizational welfare and on personal behavior of 

supervisors or employees, that’s why, the ability of managing it can make the difference between 

job’s success or failure. 

The purpose of this paper is to study Romanian managers and entrepreneurs from Bihor County’s 

perception regarding the stress phenomenon, if they feel that they are affected by stress, if they 

promote some methods to reduce it and if they consider that stress can influence the organizational 

performance. 

As a research method we used an online questionnaire, applied to a number of 75 managers and 

entrepreneurs that represent the target group of the project "Flexibility and performance through 

management", project financed by the European Social Fund - "Invest in people". Each participant 

had to answer a number of 35 questions regarding stress and the results will be presented in this 

paper. The main conclusion is that, even if job itself is seen as a stressor, there are other important 

factors that can produce stress such as: family problems, personal problems or social problems. 

Keywords: organizational stress, impact, managers, entrepreneurs, work performance 

Cod JEL lucrare: M54 

1. Organizational stress 

Organizational stress can be defined as an 

emotional, cognitive, behavioral and 

physiological response to the aggressive and 

harmful aspects of work, work environment 

and organizational climate. It is a condition 

characterized by feelings of helplessness in 

solving tasks. 

In other words, work-related stress is people’s 

reaction when they have to face some 

demands or special tasks that are out of their 

abilities or knowledge. 

Types of organizational stress 

333 

The main types of organizational stress can 

be considered the following (1): 

Eustress represents a positive kind of stress 

and helps people to prepare their mind and 

body for whatever is about to occur in the 

future. Eustress can develop one’s energy, 

creativity or competitive spirit and can offer 

the strength for achieving performance. 

Distress occurs when something affects one’s 

routine for a short period of time. It has a 

negative impact on people and it contains the 

following categories of stress: acute stress 

and chronic stress.

Acute stress appears when a change 

transforms one of the usual works that a 

person do. Although it seems to be an intense 

type of stress, it passes very quickly. The 

symptoms to that king of stress are: 

headaches, hypertensions, rapid heartbeat and 

stomach problems. 

Chronic stress is the most serious type of 

stress and can be very harmful for people’s 

health. It occurs when something changes the 

routine for a long period of time, from weeks 

to years. This kind of stress appears when 

facing several work or personal failures. 

2. The effects of stress on the 

entrepreneurs/managers and stress 

management 

334 

Sources, symptoms and effects of stress for 

entrepreneurs/managers 

After analyzing the causes of organizational 

stress we can distinguish between those who 

act solely on entrepreneurs or managers. 

These causes can be the following: 

- the diversity and complexity of tasks; 

- high responsibilities that require 

management positions; 

- concern for the organization’s future; 

- aware of the potential effects of a poorly 

developed decision; 

- inappropriate management style; 

- excessive centralization of authority; 

- the existence of poorly professional trained 

subordinates; 

- the extension of work program due to the 

emergence of some special situations. 

The relationship between stress sources, symptoms and diseases caused by stress for 

managers/entrepreneurs, can be graphically represented like this (Fig. no. 1): 

Figure no.1 The relationship between stress sources, symptoms and diseases caused by stress 

for managers/entrepreneurs (2) 

Adaptation by: Agrawal, Rita, Stress in life and at work, Response books, London, 2001, p. 146

Ways of managing individual stress 

There are a lot of actions that individuals can 

take in order to manage their stress level and 

to prevent them from developing into more 

serious problems. The main positive actions 

that people can take fall into three categories: 

- modification of behavior; 

- development of a healthy lifestyle; 

- alteration of mindset. 

When talking about behavior, the 

interventions that can be made are: 

- being more assertive: listen to others, 

respect others, tell others what you feel or 

need, negotiate, compromise, being selfconfidence. 

- improving time management: establish 

priorities, make a list of what must be done, 

eliminate time-wasting activities, focus on 

essentials, be able to delegate effectively, 

learn to say “no”, organize daily activities, 

make a list of targets. 

- avoid perfectionism 

- avoid getting angry over things that you 

cannot influence; 

- accept (sometimes) the errors of yourself 

and others; 

- smile and give affection; 

- practice being a good listener; 

- learn to relax; 

- learn to turn stressful life events into 

challenges for personal growth; 

- get used to take some “time out”. 

As far as healthy lifestyle is concerned, the 

main activities that people can follow are: 

- a healthy diet: alcohol taken with 

moderation, limited quantity of caffeine, 

avoid carbohydrates, eat fruits, vegetables 

and sufficient quantity of water; 

- regular exercise: reduce muscle tension, 

increase energy, maintains self-image, 

appearance and tends to control weight, helps 

to clear the mind of worrying thoughts; 

- relaxation: improve sleep patterns, 

ameliorate pain, reduces stress response, 

increase self-esteem; 

- increase leisure time and taking up hobbies. 

335 

The third area in which people can make 

interventions refers to the alteration of 

mindset, including: 

- modification of perspectives; 

- self-talk; 

- positive thinking; 

Ways of managing organizational stress 

There are a lot of strategies that can be 

applied when talking about managing 

organizational stress, such as: 

- early prevention and elimination of workrelated 

problems that can produce stress; 

- change work demands; 

- ensure that employees have the necessary 

knowledge and abilities to perform 

effectively their jobs; 

- improve constantly the technique used at 

work; 

- apply a proper management style; 

- ensure a proper work environment; 

- offer employees a stress management 

training in order to teach them ways of 

overcoming stress; 

- increase the support needed by employees; 

- ensure a good level of cooperation within 

employees; 

- clearly define disciplinary procedures; 

- establish a supportive working culture in 

order that employees feel integral to the 

organization and are motivated to achieve its 

goals; 

- offer employees the necessary support and 

information for developing their career; 

- encourage flexible work schedules; 

- try to manage the change process in a way 

that employees cannot become stressed due to 

it. 

3. Case study - aspects of stress perception of 

entrepreneurs and managers from Bihor 

County 

The proposed research was conducted by 

using the database of the project "Flexibility 

and performance through management" 

developed in partnership by the Faculty of 

Economics and Business Administration, 

University of Craiova and the Faculty of 

Economics, University of Oradea as a

partner, no of contract 

POSDRU/81/3.2/S/57620, implementation 

period: 12/02/2010 to 01/31/2012 in the 

amount of: 2,137,229 lei. 

The project's general objective is to develop 

the professional skills of general managers in 

order to prepare them to promote the 

adaptability and the introduction of new 

technologies. The specific objectives are: the 

professional training of 180 entrepreneurs and 

SMEs managers from two development 

regions in order to promote new forms of 

work organization and new technologies with 

reduced environmental impact; the increasing 

of informational level of the target group 

entrepreneurs and managers when talking 

about the necessity of introduction and the 

compliance of safety and health rules at work. 

Further the study will be referred to the target 

group of the NW - Bihor County. 

Research Methodology 

This research is a descriptive one and its aim 

is to provide an image at a certain time on the 

studied phenomenon - stress. For 

implementation of this quantitative research 

was chosen as a research method - the survey. 

For this purpose, a structured questionnaire 

was developed in two parts with 35 questions. 

336 

The target population is the target group - 

Bihor County entrepreneurs and managers, 

participants in the course of the project - 

"Flexibility and performance through 

management", project financed by the 

European Social Fund - "Invest in people". 

The database of the target group - 

entrepreneurs and managers from Bihor 

County is based on online questionnaires. 

This database has a total of 75 entries. 

The respondent’s structure 

In terms of affiliation to a business category 

entrepreneur/manager, 40% of respondents 

are entrepreneurs and 60% are managers at all 

levels within the SMEs. 

Gender structure. The share of women in the 

total number of respondents is 40%, 60% are 

men. 

Age. Taking into consideration the age in 

completed years, the situation is as follows: 

16%, 18 – 24 years, 73%, 25 – 45 years, 9%, 

45 – 54 years, 2%, 55 – 64 years. 

Regarding family status, most participants are 

married (62.8%), 34.8% are unmarried, 

0.04% being divorced. 

Stress and stress concerns 

45% of respondents work more than 48 hours 

per week. In these circumstances, it is not 

surprising that 70% of respondents believe 

they are affected by stress (Fig. no. 2). 

Figure no. 2 Working time/week in the case of managers 

and entrepreneurs from Bihor County

It follows therefore that a larger number of respondents believe they are affected by stress. 69% 

say they are concerned about stress, but only 21% say they have adopted measures to combat 

stress. Also a small number of managers (18%) say that the organization in which workers have 

been taken measures to combat stress. (Fig. no. 3)) 

Figure no. 3 Managers, entrepreneurs and organization’s attitude towards stress 

To a large extent (85%) respondents considered that work is the main source of stress in their 

lives. (Fig. no. 4) 

Figure no. 4 The main stress factors 

337

Over 65% of questioned people said they 

would continue to work even if they did not 

have any financial need. Many managers, 

however, (60%) would prefer "to work 

elsewhere." 

A minority of respondents (16%) say that 

there are situations in which stress motivate 

them to act in order to achieve something - it 

is positive stress (eustress); but the most 

common is negative stress (distress), when 

body and / or mind begin to respond 

negatively to stress agents. Over 85% of 

respondents considered that the stress level is 

much higher now as compared to five years 

ago. 


According to the conducted cross research the 

conclusions are the following: 

- entrepreneurs are more stressed than 

managers; 

- women entrepreneurs/managers are more 

stressed than men entrepreneurs/managers; 

- married entrepreneurs/managers are more 

stressed than unmarried 

entrepreneurs/managers; 

- the majority entrepreneurs/managers 

believes that stress level is much higher now 

as compared to five years ago; 

- the entrepreneurs and managers are 

concerned about stress; 

- on personal level, entrepreneurs/managers 

usually fail to take measures to combat stress; 

- within the organization are generally not 

taken measures to combat stress; 

- the situations in which stress motivate 

entrepreneurs/managers to act to achieve 

something are rare; 

338 

- entrepreneurs/managers believe that work is 

the main source of stress in their lives; 

- entrepreneurs/managers would continue to 

work even if they did not have any financial 

need; 

- most of managers would prefer "to work 

elsewhere". 

Concluding, although the work is considered 

the main source of stress, not the work itself 

is stressful, but the conditions and social 

environments in which it unfolds. 

Notes 

(1) “Types of stress – some good, some bad”, 

Accessed April 18, 2011. 

http://www.stressfocus.com/stress_focus_arti 

cle/types-of-stress.htm 

(2) Agrawal. Rita. Stress in life and at work. 

London, England: Response books Publishing 

House, 2001. 

Bibliography: 

1.Agrawal. Rita. Stress in life and at work. 

London, England: Response books Publishing 

House, 2001. 

2.Bucurean, Mirela. Antreprenoriatul si 

managementul micilor afaceri. Oradea: 

University of Oradea Publishing House, 

2009. 

3.Spiers, Carole. Tolley’s Managing Stress in 

the Workplace. London, England: LexisNexis 

Tolley Publishing House, 2003. 

4.*** “Causes and cures of stress in 

organizations”, Accessed April 21, 2011. 

5.http://statpac.org/walonick/organizationalstress.htm 

*** “Types of stress – some good, some 

bad”, Accessed April 18, 2011. 

6.http://www.stressfocus.com/stress_focus_ar 

ticle/types-of-stress.htm

ELEMENTS FOR A MODEL OF ENTREPRENEURIAL SCHOOL FOR WOMEN 

IN RURAL AREAS OF ROMANIA 

Botezat Elena 

Faculty of Economics, University of Oradea 

Tarcza Teodora 

Faculty of Economics, University of Oradea 

Abstract: Romanian mentality, especially in rural areas is deeply influenced by culture, literature 

and history of the Romanian people. This proves to be both adaptable and rooted in the old 

Romanian traditions and customs. In the last two decades, the transition from socialism to 

capitalism, modern society, the socio-economic development of the country has left strong 

impressions on the way of thought, expression and action of the Romanian people. Women in rural 

areas are no exception. As some groups of people interested in their development of socialeconomic 

scale, rural women are trying to adapt, to evolve, to overcome the barriers imposed at 

psychologically, socially and financially. 

The paper highlights the results of a survey on a sample of 979 women students in the project 

"Entrepreneurship and Equal Opportunities. An inter-regional model for women entrepreneurial 

school "(AntrES acronym), which certified mediators intention to initiate their own business.The 

results of questionnaires have provided important information about the character, ambition, 

motivation, courage, and moral support and financial support to women entrepreneurs based in 

Romania, including those in rural areas. The information obtained inetrmediul "I shattered" 7 

myths about starting a business in our country. Romanian entrepreneur spirit, women in rural areas 

in Romania is not only a manifestation of strong desire to improve living standards in financial 

terms, but rather an "effort" to improve and "beauty" of the individual, family, environment and 

society we belong! 

In developed countries, at its home, female entrepreneurship is trying to reform, to seek new 

solutions to rethink the principles, to exercise imagination, to learn. Here, in Romania standard 

behavior still predominates. Female entrepreneurs are doing what everyone else in the same 

category does. The future however belongs to those who will opt diversity, surprise, excitement, 

personalization. How could this happen in the Romanian rural environment and take place in a 

sustainable way? 

Keywords: antreprenoriat feminin, mentalitate românească, mediul rural, mituri, potenţial 

Jel code: M12, M52 

1. Continuity and change in rural Romania 

"The main feature of Romanian people is its 

gregarism, a condition imposed by the 

circumstances and traditions, no 

entrepreneurs come out from within the rural 

population, however exists a tradition of 

collective work, each aligning with what 

others do. From the perspective of the future, 

gregarism continued as such, can be fatal. 

Modern society requires individuality, 

consciousness of effort and personal 

sacrifice". (Radulescu-Motru in Maliţa C. 

M., 2010). Modernity entered the Romanian 

339 

society over 200 years, but has not 

profoundly changed economic and social life, 

especially in rural areas, the Romanian 

village. The continouos transition of 

Romanian society and especially the latter, 

the last 20 years, gave bith to a mosaic, a 

modern "type patch" without a clear dominant 

form. It is a modern trend, ie a type of 

modernity that affects only a certain part of 

society and is beneficial only to certain 

groups concerned with their economic and 

social condition. (Schifirneţ, C., 2007, 2008). 

Romanian mentality is the result of survival

in a given area, seen as a drama in time - 

paraphrase by Patrick Geddes, who proposes 

the term "survey before action", ie the need 

for building action on a synergy between 

ecology, economics, politics and 

anthropology. Data collection should blend 

with the description, explanation, observation 

integrated into a systemic research, in which 

the mentality seems to occupy a central place 

as part of a unique spiritual model, 

specifically built over time, which determine 

the motivation for use of resources on a 

territory (area, central area, region). 

Romanian mentality, especially in rural areas 

shows a great capacity for adaptation and also 

versatility, a balance between idealism and 

fear, between the initiation of large projects 

and autoassertion of certain limits. In fact, 

Romanians have all the features, static 

distributed in the population, but what is 

evident is that they change according to 

circumstances, meaning they are adaptable 

(Maliţa, M., 2010; Draghicescu, D., 1995). 

Adaptability, as a intermediate soul structure 

between Western creative ability and Oriental 

passive resignation may mean evolution, 

intelligence, finesse, suppleness, as progress 

may mean cowardice, duplicity, cunning, 

superficial. (Ralea, in Maliţa M. M., 2010). 

There seems to be more obvious what Mihail 

Ralea says in his book in 1933, Romanian 

Phenomenon, that "progress towards 

modernity will never come from autochthon 

localism, but of Europeanization". 

"Romanianism, ie, what is particularly unique 

and Romanian, is not done, yet not 

coagulated, but with a bergsonian formula, is 

yet to be done. He's still that prospect that is 

questing, endeavouring itself "said Michael 

Ralea. This emerging trend is visible in many 

Romanian villages in western Romania, with 

new and modern homes, through various 

goods and crafts exposed along the road and 

especially by many rural firms who have 

found qualified and cheaper labour force, 

lower rents, lower taxes. In addition it seems 

to be some kind of reconciliation of the 

"house" with "work", after over 20 years, 

340 

during which millions of Romanian worked 

in Europe where they have adapted, were 

integrated and learned. Sometimes by bitter 

lessons, sometimes paying a price too high. 

Some have returned and are looking to do 

something, here at home, home being a state 

of mind rather than a specific location. Rural 

community, like all other social forms, is the 

result of six components: biological, moral, 

religious, aesthetic, economic and political 

(Braileanu, T., 2000). Migration of 

Romanians abroad was primarily due to 

financial reasons, poverty. What we need to 

say at this point, however, is that it talks 

about three types of poverty: "Poverty of 

goods and money (type I), moral poverty 

(mediocrity of social feelings, of the sense of 

family, of the love of nation, love for God 

and neighbor), which is a poor type II and 

poverty type III, the one in 

knowledge"(Daniel Bell Badescu, I., 2005). 

"The dominant mentality is that of trade and 

finances, which have created, trained and 

handled a consumption society, in which the 

citizen identity has been replaced with the 

credit card. There is no falsification of the 

human essence more bitter than the 

representation of man as a seeker of silver 

pots. He looks, indeed, other treasures, which 

ensure a dignified life and by merit earned 

through effort and wise strategy ... The crisis 

revealed the weakness, which requires time 

for healing and normalization". (Maliţa, M., 

2010). 

2.The research of entrepreneurial 

intentions of women in rural areas within 

the project AntrEs 

Between January 2009 and December 2010, 

was implemented by the University of Oradea 

Faculty of Economic Sciences as coordinator, 

the project "Entrepreneurship and Equal 

Opportunities. An inter-regional 

entrepreneurial school model for women 

"(acronym AntrES) strategic project financed 

by the European Social Fund, the key area of 

intervention "Promoting an entrepreneurial 

culture". The main objective of the project

was to promote equal opportunities for 

entrepreneurship by encouraging the 

involvement of women, in general, rural 

women, especially in the initiation and 

development of their business in the context 

of sustainable development of communities in 

the counties located along the western border 

of Romania (Bihor, Timis, Arad, Maramures, 

Caras-Severin, Satu-Mare). Among the 

specific objectives were enrolled: providing 

training to acquire expertise in business 

startup; active promotion of lifelong learning, 

promoting competitive spirit by awarding the 

best business plans, dissemination of best 

practices in entrepreneurship in order to 

develop sustainable communities in the 

counties located along the western border of 

Romania. 

The study conducted between July 2010 and 

March 2011 followed the intentions of a 

number of 874 women - women business 

school graduates from rural areas of West 

Romania to start their own business. 

Data were collected through a survey at the 

beginning and end of the Module I course - 

Starting a business, conducted between July- 

September 2010 by non-directed interviews 

and by the study of documents prepared 

within the project mentioned above. 

The initial sample consisting of 979 women 

presented a series of characteristics retrieved 

synthetically as follows: average age is 35.47 

years, 74.6% are married, two-thirds live in 

households with one or two children, 66% are 

employed and 84% did not initiate any deal 

so far. 43% of the total have undergraduate 

and graduate studies, almost 60% work for 

the state (public administration or education) 

and intends to open a business in trade - 32, 

4% as expected in agriculture. 

According to the latest data, the number of 

newly established businesses by the 

entrepreneurial business school graduates at 

the rural level is 88 (10% of graduates), as 

follows: Bihor – 18, Timis - 8, Arad - 12, 

Maramureş - 29, Caras-Severin - 9, Satu 

Mare - 12. 

341 

What factors have led these graduates to take 

action to overcome their fears and leave their 

habits? And especially what are the key 

elements on which an entrepreneurial school 

for rural Romanian women must be based to 

succeed? 

In an attempt to provide a consistent answer 

to these questions, we will start from the 

results of the questionnaire analysis, 

questionnaire applied in the 72 rural centers 

of business school for women, to a total of 

979 respondents: 

- Question 1: What do you think are the 

chances to open a successful business? 12% 

of the respondents believe that the chances to 

open a successful business are high and 53% 

believe the chances are average; 

- Question 2: What are the qualities you think 

a woman needs to open a business? Choice 

number 1 was: confidence, courage, optimism 

- for 184 respondents (18.79%); intelligence, 

intellectual resources - 130 respondents 

(13.27%); will and ambition - 128 

respondents (13.07%); 

- Question 3: Which is the reason you are 

willing to start a business? Responses were: 

the need to earn more - 46%, the desire for 

fulfillment - 33%, desire to have a higher 

social and professional status - 12%; 

- Question 4: What support elements do you 

think are needed to start a business? 66.49% - 

financial and material resources, emotional 

support (family, friends, close) - 10.72%; 

- Question 5: What do you think are the areas 

in which to start a successful business? Trade 

- 335 respondents (34.21%), tourism - 210 

respondents (21.45%), other services - 118 

respondents (12.05%); 

- Question 6: How should labour be seen to 

succeed in business? A pleasure - 79%, a 

necessity - 9%, a duty - 8% non answers - 

4%; 

- Question 7: What is the factor which 

depends primarily on success in business? 

Courage / audacity - 30%; intelligence - 

lucidity - 23%; exercise capacity - 15%; 

socio-economic context - 13%; chance - 11%; 

imagination - 4%; non answers - 4%

The review of the results is shown below. 

Seven myths dispelled 

The first myth: Second hand entrepreneurs do 

not take risks! 

Reality: The entrepreneur may seem to the 

uninformed spectator strait-laced and 

conservative, but that does not mean that he is 

not prepared to engage boldly assuming 

significant risks. Like when you prepare to 

climb a high mountain, you can be fearful, 

but such a challenge puts the blood in motion 

and can generate a momentum and a huge 

effort. And something more: "the Romanian 

is more difficult to move and easier to stop. It 

does not seek immediate spectacular results, 

but other more subtle and profound ". (Maliţa, 

M., 2010). The society within us, a product of 

the spirit of our times, puts his stamp on the 

limited, strait-laced of our thinking. "We all 

live in a very narrow cage, the spirit of our 

age in which we have very little freedom of 

movement. If in different ages, people have 

thought in different ways, not because it was 

due to expanded cage, but for the fact he was 

moved from place". (Szent-Gyögyi, A., 

1981). 

Second myth: With the ability of an 

entrepreneur you have to be born! 

Reality: Man is build, as a road as long as it is 

it starts with the first kilometer. In our 

opinion, even if someone does not seem to be 

an entrepreneur, he/she can become! There 

are no few recent examples populating the 

area of knowledge that we have access. "Life 

itself is what you want it to be” (Marcus 

Aurelius). To do this you first have to believe 

(strongly). "Transformation, real change 

always occurs from the inside out ... arising 

from work which toils at the roots, operating 

on our way of thinking, on the paradigms that 

define our character and create the lens 

through which we view the world (Stephen R. 

Covey)". Romania is trying to change the 

binding data and seeks to define objectives 

and methods that allow more suitable ways to 

promote the interests, of which the first is 

survival." (Maliţa, M., 2010). 

342 

The third myth: In business you enter to make 

money! 

Reality: A professor of production 

management for a long time explains to his 

students the importance of "a job well done", 

until he was interrupted by a (bored) student 

who said (determined) ”I do not want to make 

products, I want to make money ". The 

professor (calmly) asked:" And the money for 

what?". Contrary to popular saying, money 

brings happiness. A kind of happiness. One 

direct, material that is not rejected at all, or 

even a more subtle dependent on the holder 

person, most envied (the joy of giving). 

Poverty is far from being "a card" and has 

little to do with "honesty" (almost at all). 

Therefore we advocate for "wealthy and 

honest" and not for ”poor and honest ". At the 

same time, with more conviction, we believe 

that continuing to work hard in a business 

where money is no longer a problem is 

something to be appreciated (very much). 

What is worth saying at this point is that the 

path to "having" (sparingly!) has many other 

items, ie determination. Obsession to make 

money seems to be a fairly sure way not to 

get them! 

Fourth myth: In business you have no friends! 

Reality: Is it all true that "the spirit of 

democratic capitalism, which led to 

development was to encourage individual, 

based on deep understanding that this is the 

main source of economic and social power 

(Novak, M. Ionescu Gh in Gh, 1997). But this 

is individualism? That crazy idea that "the 

world begins and ends with you", that you are 

enough? Not so, the existential model is quite 

different. Beyond having with what to live, 

you have to have something to live for. It is 

natural to pay special attention to our 

business, our goals, our ideas. But the result 

of an exclusive concentration on interests and 

selfish attitude of seeing the world as a whole 

and the people around us as tools used in our 

plans lead to counterproductive and 

disgraceful results. Key terms of today's 

economy, durability, in my view, female

entrepreneurship in rural areas of western 

Romania, refers primarily to the people! 

Fifth myth: A successful business requires a 

great idea! 

Reality: Setting up a business from such a 

conception may be a bad idea. Few 

businesses have been based on such an idea. 

In fact, some have been established simply 

based on an idea more simple, banal even 

while another group were raised from the 

ashes of failure. "the Romanian can not 

accept almost any event or program in a form 

which is given, or is required. The Romanian 

is realistic. He rates fiction, myths and 

legends he likes, but keeps his feet on the 

ground ". (Maliţa, M., 2010). We join the 

mathematician Grigore Moisil’s opinion, that 

the logic is rather a nuanced reasoning in 

which thinking is evolving in a direction that 

includes, besides true and false or dubious 

value as possible, with possible and 

necessary. 

The sixth myth: In business the most 

important thing is "to deal"! 

Reality: Our view is that the vital question for 

an entrepreneur is not : "How well am I 

doing?" Or "How can I cope?" Or even "How 

well we handle ourselves to cope 

competition?" but "How can we make things 

better tomorrow than we did today? ". The 

history of a business is written by its people 

and their work is the special "ingredient" in 

the "magic formula" that "is to grow". "The 

Romanian undertakes all the action, if it has a 

real motivation." (Maliţa, M., 2010). 

Motivation is an emotional drive type, but 

with rational arguments. More strings must 

vibrate: ambition, rewards, influence, social 

position, reputation. But beyond these events 

rather selfish comes a heavy argument: "you 

are what you know to do". 

The Seventh Myth: You have to be lucky to 

succeed in business! 

Reality: Reflecting on the essence of success, 

J. Willard Marriott, wrote in his diary: 

"Discipline is the most important thing in the 

world. Where there is no discipline, there is 

no character. And with no character, there is 

343 

no progress ... problems gives us the chance 

to grow. And usually, we get the thing for 

which we worked. If it encounters obstacles 

and overcome them, we anneal our character 

and qualities that bring success". "Long term 

success of a business organization, is 

determined by three main factors: 1. good 

planning of various activities / actions, 2. a 

better implementation of various plans / 

strategies, 3. luck or that non-chance in a 

given context. " (But the chance never comes 

to an unprepared mind – o. n.) (Harrington & 

Harrington, 2001). 

3.Preserving the essence and stimulate 

progress 

In our view, in rural areas, women have a real 

chance in the direction of setting up a 

business because "the village is the shrine 

where she took refuge and is kept living the 

manifestation of the Romanian people" 

(Dimitrie Gusti) including the preservation of 

moral values and skills necessary to create a 

complete product, in other words knowledge. 

As Professor Allen Wilson, a biologist at UC 

Berkeley who has studied closely the 

behavior of birds, knowledge creation and 

dissemination of appropriate behaviour had to 

do with three basic elements: 1. mobility (the 

ability to move freely to learn and 

experience) 2. spread within the community 

(the ability to transfer from individual to 

community building communities of best 

practice), 3. innovation (the ability to develop 

new skills to take advantage of new 

knowledge in specific environmental 

conditions) (Hjelmervike Ove R., 2001). We 

have identified the existence of these 

elements in the rural areas of western 

Romania, including examples of adaptation 

between the most interesting. Adaptation, 

defining feature is based on the characteristic 

skills: knowledge, information, experience, 

which can be put into use to create wealth 

and remain the same in any social 

environment. Efficient use of knowledge, 

skills, abilities and cultural values of rural 

women towards encouraging female

entrepreneurship depends on public 

awareness that women, who prove to be more 

vulnerable, more exposed to "insolvency" are 

much more concerned than men on what she 

spends, what she earns for food, education 

and child and family health insurance 

(Brockhaus, R. & Horwitz, P., 1986 Miniti, 

M. & Naud, W. 2010). Despite many 

obstacles in the way of Romanian rural 

female entrepreneurship, we believe that it "is 

about to get done, although is still that 

prospect that is questing, endeavouring itself" 

(Michael Ralea). 

On the basis of this statement there are three 

important aspects: 

• the existence of a potential consisting of 

knowledge, information and experience 

which can help achieve competitive products 

and services; 

• the ability of this potential to transform in a 

number of operational elements, creating 

value, to be integrated into final products; 

• grafting this potential of adaptation as a 

characteristic feature, which is a 

transformation, an adjustment, a location, a 

selection that you cannot do without having 

inside the affinity with what you choose. In 

our view, rural female entrepreneurship in 

Romania is not only something that is 

expressed in terms of improved incomes, the 

desire to avoid dependence on others or even 

better control of their lives but most of all, "a 

deed " that improves the person concerned 

and the world around them. It takes however 

a first generation of entrepreneurial skills to 

rehabilitate honest skill, science - and pride - 

to do what you do with virtue. Future will not 

mimic models but invent them! 

References 

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Bucureşti: Editura Albatros, 2000; 

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344 

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138; 

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and Innovation, Education, Research and 

Innovation, Bucureşti, Ed. comunicare.ro, 

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Bucharest: Politica Publishinghouse, 1981; 

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postcomunismului românesc, Iaşi: Editura 

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Geopolitică, nr. 1(5), an IV, (2005); 

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(EMT’10), (2010), 597-604, 

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Entrepreneurs-mentors, networks & successful 

345 

new venture development: an exploratory 

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knowledge-based economy. A process model 

for knowledge creation and sharing, Paper at 

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Management, February 8-9, Copenhagen, 

(2001); 

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the Romanians Business Potential, The 

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October, (2007); 

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Cross Cultural Approach, The Romanian 

Journal of Business Ethics, Vol. 2, April, 

(2008); 

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346

HOW FUTURE MANAGERS VIEW SOCIETAL CULTURE: A CROSS- 

COUNTRY COMPARISON 

Catana Gheorghe Alexandru 

Technical University of Cluj-Napoca 

Catana Doina 

Technical University of Cluj-Napoca 

Abstract: Our study aims at enriching the existing literature about the prospective managers view 

of an ideal societal value system and the existing cultural practices in their society. The findings 

about the students’ perception on cultural practices and their expectations about societal culture 

are helpful in imagining the societal culture in its dynamics. The research sample consists of 727 

students in business and engineering on undergraduate and graduate levels from Romania and 

Slovenia. The reason we have chosen to compare Romanian sample with the cultural profile of the 

“average” future manager from Slovenia is the scientific curiosity of finding out if there are signs 

of cultural convergence of Romania with a previous communist country, and an older member of 

European Union. In doing so, our study will hopefully broaden the body of knowledge about the 

cultural convergence (or divergence?) between the former socialist countries joining European 

Union. The theoretical and methodological foundation is rooted in GLOBE international research 

project. Our findings revealed that at practices level,Romanians perceive significant higher Power 

Distance and significant lower mean value for Uncertainty Avoidance. At the expectations level, the 

Romanians and Slovenians are very similar in the desire concerning their societies orientation 

toward In group/Family Collectivism, Assertiveness and Performance Orientation, and record 

significant differenced in all the other societal values. The fact that for all the cultural expectations 

the future managers assign different mean values than for the correspondent practices make us 

expect that they will act to change their cultural environments. Still, the cultural orientation of 

Romanian future middle managers will differ in many regards from the Slovenian sample averages. 

Keywords: societal culture, cultural practice, cultural value, Romania, Slovenia 

JEL clasification: M14, M19 


Starting from GLOBE international research 

project dealing with top and middle 

managers, GLOBE STUDENT project was 

initiated (2008) 34 , aiming at targeting future 

managers, to be recruited mostly from today’s 

students in business and engineering. One of 

its objectives is to determine the profile of 

future managers from their perceptions on 

and expectations about societal culture 

dimensions point of view. The main research 

question concerns the similarities and 

34 The project is co-ordinated by R. Lang from 

Chemnitz University of Technology. The data for 

Slovenia has been collected by D. Pucko and T. 

Cater (University of Ljubljana) 

347 

differences between the Romanians with the 

average future manager in Slovenia. The 

reason we have chosen to compare Romanian 

sample with the cultural profile of the 

“average” future manager from Slovenia is 

the scientific curiosity of finding out if there 

are signs of cultural convergence of Romania 

with a previous communist country, and an 

older member of European Union. In doing 

so, our study will hopefully broaden the body 

of knowledge about the cultural convergence 

(or divergence?) between the former socialist 

countries joining European Union. 

Specifically, we will try to answer the 

following research questions: 

1.Which are (if any) the significant 

differences between Romanian

students perceptions of current 

societal practices and those of 

students from Slovenia? 

2.How do Romanian students’ 

societal values (expectations) differ 

(if) from those of students from 

Slovenia? 

2. Theoretical background 

As known, there is no single generally 

accepted definition of societal culture 

(Chhokar et al, 2007:3). Our study shares the 

definition used by GLOBE international 

research project: “shared motives, values, 

beliefs, identities and events that result from 

common experiences of members of 

collectives and are transmitted across age 

generations” (House et al., 2002: 5). The 

GLOBE project distingwishes between 

practices (“as it is”) and values (“as it should 

be”). Values distinguishing a culture from the 

others are predictors for cultural practices, as 

well as for leadership features and behaviours 

in that culture (House et al. 2002). In all 

societies, the shared values become good 

predictors of future practices. 

GLOBE project operationalised culture in 

nine dimensions: 1) Uncertainty Avoidance; 

2) Future Orientation; 3) Power Distance; 4) 

Collectivism I (societal collectivism); 5) 

Humane Orientation; 6. Performance 

Orientation; 7) Collectivism II (in-group 

collectivism); 8) Gender Egalitarianism; 9) 

Assertiveness (House et al., 2002: 5-6). As 

the GLOBE researchers acknowledge (House 

et al., 2002: 6), the first six dimensions are 

rooted in cultural dimensions defined 

originally by Hofstede (1980), Future 

Orientation and Humane Orientation from 

Kluckholn & Strodtbeck (1961), Putnam 

348 

(1993) and McClelland (1985), while 

Performance Orientation from McClelland 

(1985). Short definitions of these cultural 

dimensions are given in GLOBE related book 

(House et all, 2004:3). 

Our research compares the cultural 

foundations of prospective managers and 

leaders in Romania and Slovenia. The 

findings about the students’ expectations 

about societal culture are helpful in imagining 

the societal culture in its dynamics. Accepting 

that values “high in centrality, pervasive, and 

supported by powerful sanctions and high 

consensus and supporters of these values hold 

positions of high prestige and authority” 

(Williams 1979: 34) are resistant to change, 

we also are aware that they change especially 

when one generation succeeds another 

(Keating et al., 2002: 637). 

3. Methodology 

GLOBE student project uses the section 1 (as 

it is) and, respectively, section 3 (as should 

be) GLOBE research Beta questionnaires 

(House et al., 2004) with some modifications 

required by the subjects’ nature (students). 

Scales in section 1 ask the students to value 

“the way our society is” (practices), while 

scales in section 3 ask the students opinion 

about “the way our society should be” 

(values) using a seven points Likert scale. 

The surveys were carried out in either 2008 

or the first half of 2009. The respondents are 

enroled at the Technical University of Cluj- 

Napoca, Babes-Bolyai University (Cluj– 

Napoca) and Petru Maior University in 

Targu-Mures (Romania) and at University of 

Ljubljana (Slovenia). Table 1 shows the joint 

sample structure of our respondents, which 

gave us usable data. 

Table 1: Sample structure 

What subject area/ study path do you study? 

Country of origin Business/ Economics Engineering Total 

Romania 166 261 427 

Slovenia 150 150 300 

TOTAL (valid answers) 316 411 727

Collected empirical data has been processed 

with SPSS 17. Descriptive statistical analysis 

was carried out separately for Romanian and 

Slovenian sample. In comparing Romanian 

sample with the Slovenian one, the 

independent samples t-test was used, with 

0.05 significance threshold. 

4. Findings 

The research findings concern: 1) differences 

between Romanian and Slovenian students’ 

perceptions of current cultural practices; 2) 

differences between Romanian and Slovenian 

349 

students’ expectations concerning societal 

values. 

4.1. Differences in perceptions: Romanian 

vs. Slovenian students 

Table 2 displays the significant differences 

between Romanian and Slovenian sample 

with respect of perceptions of societal culture 

practices, while the differences between the 

mean values of perceptions on cultural 

practices in Romania and Slovenia are 

displayed in Figure 1 

Table 2. Significant differences in cultural practices: Romania vs. Slovenia 

Cultural practice 

(“society as it is”) 

Romania Slovenia Absolut 

differences 

t-test 

(sig 2-tailed) 

Uncertainty Avoidance 3.49 4.19 - 0.70 - 11.617 (0.000) 

Future Orientation 3.44 3.79 - 0.35 - 4.659** (0.000) 

Power Distance 5.81 5.03 0.78 12.306** (0.000) 

Collectivism I 

(Institutional) 

3.78 4.04 - 0.26 - 3.920 (0.000) 

Humane Orientation 3.83 3.97 - 0.14 - 2.204 (0.028) 

Performance Orientation 3.66 4.05 - 0.39 - 5.089 (0.000) 

Collectivism II (in 5.13 5.22 (0.175) 

group) 

Gender Egalitarianism 3.99 4.13 - 0.14 - 2.427** (0.016) 

Assertiveness 3.51 4.24 - 0.73 - 

10.587**(0.000) 

95% confidence; *two independent samples; ** equal variances not assumed 

Uncertainty Avoidance 

Assertiveness 

Gender Egalitarianism 

7 

6 

5 

4 

3 

2 

1 

0 

Future Orientation 

Power Distance 

Collectivism II 

Performance Orientation 


Humane Orientation 

Romania Slovenia 

Figure 1. Differences in perception of cultural practices: Romania vs. Slovenia (mean 

scores)

T-test of differences between the mean scores 

(two independent samples) shows that the 

Romanians perceive significant higher Power 

Distance (t = 12.306; sig = 0.000) than the 

Slovenians (equal variaces not assumed). 

Significant lower mean values are recorded 

by Romanians for (decreasing order): 

Uncertainty Avoidance (t = - 11.617; sig = 

0.000), Assertiveness (t = - 10.587; sig. = 

0.000), Performance Orientation (t = - 5.089; 

sig = 0.000), Future Orientation (t = - 4.659; 

sig = 0.000), Institutional Collectivism (t = - 

3.920; sig = 0.000), Gender Egalitarianism (t 

= - 2.427; sig = 0.016) and Humane 

Orientation (t = -2.204; sig = 0.028). The lack 

350 

of significant differences for Collectivism II 

(In group/Family) might be interpreted as a 

convergence in practicing tight relationships 

within membership group in both countries. 

4.2. Differences in expectations: Romanian 

vs. Slovenian students 

The data in Table 3 summarized the 

significant differences between the most 

appreciated cultural values by the future 

managers and leaders in the Romanian and 

Slovenia and the “spider” in Figure 2 reveals 

the differences between the average score of 

cultural expectations (values) in Romania and 

Slovenia. 

Table 3. Significant differences in societal values: Romania vs. Slovenia (mean scores)* 

Cultural value 

Romania Slovenia Absolut differences t-test 

(“society as it should be”) 

(sig 2-tailed) 

Uncertainty Avoidance 5.10 4.55 0.55 9.427 (0.000) 

Future Orientation 5.23 4.74 0.49 6.781 (0.000) 

Power Distance 2.65 2.94 -0.29 - 3.737 (0.000)** 

Collectivism I (Institutional) 4.94 4.46 0.48 7.069 (0.000)** 

Humane Orientation 5.41 5.08 0.33 4.887 (0.000)** 

Performance Orientation 5.89 5.78 0.11 (0.068) 

Collectivism II (in group) 5.70 5.69 0.01 (0.824) 

Gender Egalitarianism 4.42 4.55 -0.13 - 2.384 (0.011)** 

Assertiveness 4.01 4.09 -0.08 (0.186) 

*two independent samples; ** equal variances not assumed 

Gender Egalitarianism 

Uncertainty Avoidance 

7 

Assertiveness 

Future Orientation 

5 

Collectivism II 

Performance Orientation 

3 

1 

Romania Slovenia 

Power Distance 


Humane Orientation 

Figure 2. Differences between average scores of cultural expectations: Romania vs. Slovenia

As seen, there is no (or very low) difference 

between the mean scores (p

embedded elements of management, seem to 

be more difficult to achieve (Lang/Steger 

2002), the fact that for all the cultural values 

the future managers assign different mean 

values than for the correspondent practices 

make us expect that they will act to change 

their cultural environments. Still, the cultural 

orientation of Romanian future middle 

managers will differ in many regards from the 

Slovenian sample averages. 

We are aware that our research findings have 

a few limitations, among which the 

assumption that business and engineering 

students will become a core part of the future 

population of managers. Beyond the 

limitations, we believe that our findings offer 

certain insights into relevant issues for 

researchers, academics and consultants in 

management and leadership, as well as for 

today’s practitioners, especially related to 

culture dynamics in the region. The 

dissemination of our research findings among 

active managers, researchers, academic staff 

and management consultants may contribute 

to improving the management training of 

students, as well as the management practices 

in Europe. Future research should focus on 

studying cultural practices and value systems 

in directions like possible differences in 

respondents’ relevant perceptions based on 

subjects demographic characteristics (age, 

gender, field of study, major subject etc.). In 

addition, comparisons could be making with 

other countries taking part to GLOBE student 

project. 

References 

1.Catana, Doina, Catana, Gheorghe A. “Societal 

culture dimensions: a comparison of future 

and present managers in Romania”, [2011] under 

review 

2.Chhokar, Jagdeep S., Brodbeck, Felix C., 

House, Robert J (eds.), Culture and Leadership 

Across theWorld: The GLOBE book of in-depth 

studies of 25 societies, Lawrence Erlbaum 

Associates, Publishers, New York, [2007] 

352 

3.Hofstede, Geert, Cultures consequences: 

International differences in work related values, 

Sage, London [1980] 

4.Hofstede, Geert, Cultures consequences: 

comparing values, behaviors, institutions and 

organizations across nations, Sage, London 

[2001] 

5.House, Robert.J, Javidan, Mansour, Hanges, 

Paul W, Dorfman, Peter, “Understanding cultures 

and implicit leadership theories across the globe: 

an introduction to project GLOBE”, Journal of 

World Business, 37, [2002]: 3 – 10 

6.House, Robert J., Javidan, Mansour, Dorfman, 

Peter W., Gupta, Wipin P. (eds.), Culture, 

leadership, and organizations: The GLOBE study 

of 62 societies, Thousand Oaks: Sage [2004] 

7.Keating, Mary A., Martin, Gillian, Szabo, Erna, 

“Do managers and students share the same 

perceptions of societal culture?” International 

Journal of Intercultural Relations, 26, [2002]: 633 

– 652 

8.Kluckhohn Rockwood Florence, Strodtbeck, 

Fred L., Variations in value orientations, New 

York: Harper Collins [1961] 

9.Lang, Rainhart, Steger, Thomas, “The odyssey 

of management knowledge to transforming 

societies: A critical review of a theoretical 

alternative”, Human Resource Development 

International, 5, [2002]: 279-294 

10.Luca, Adina, “Studiu despre valorile si 

comportamentul romanesc din perspectiva 

dimensiunilor culturale dupa metoda lui Geert 

Hofstede” INTERACT [2005], 

http://anatolbasarab.files.wordpress.com 

/2010/05/studiu_hofstete5.pdf, accessed March 1, 

2011 

11.McClelland, David, C., Human motivation, 

Glenview, Il: Scott, Foresman, [1985] 

12.Putnam, Robert D., Leonardi, Robert, Nanetti, 

Raffaela Y, Making democracy work, Princeton, 

N.J., Princeton University Press [1993] 

13.Williams, Robin M.Jr, Change and stability in 

values and value systems: A sociological 

perspective. Understanding human values: 

Individual and societal (ed.) Rokeach, M. New 

York: Free Press [1979] 

*** itim International, Geert Hofsted cultural 

dimensions, http://www.geert-hofstede.com, 

accessed March 10, 2011

EXPLANATORY ECONOMETRIC METHOD FOR THE ANALYSIS OF THE 

BEHAVIOR MANAGEMENT IN ORGANIZATIONS IN ROMANIA - GUIDE FOR 

DEVELOPING THE PILOT STUDY 

Research coordinator: 

Roşca Constantin 

SSMAR 

Research team: 

Roşca Doina - University of Craiova, Faculty of Horticulture 

Manolescu Adriana -Agora University of Oradea 

Roşca Adrian - University of Craiova, Faculty of Mechanics 

Dodescu Anca Otilia - University of Oradea 

Abrudan Maria Madela - University of Oradea 

Dănăiaţă Doina - West University of Timişoara 

Sîrbu Mirela -University of Craiova, Faculty of Economical Sciences 

Negulescu Cristian - “Spiru Haret” University of Craiova 

Dragomir Laurenţiu - University of Craiova, Faculty of Economical Sciences 

Judeu Viorina Maria - Agora University of Oradea 

Morariu Alunica - University “Ştefan cel Mare” Suceava 

Lukas Edit - University “Dunărea de Jos” Galaţi 

Cîrnu Doru - University ”Constantin Brâncuşi” Târgu Jiu 

Morăraşu Irina - Hight School “Carol I” Craiova 

Abstract: Our paper, entitled "Explanatory Econometric Method for the Analysis of the Behaviour 

Management in Organizations in Romania" reflects the wide opening of econometric modelling to 

quantify the Romanian management issues, representing a practical guidance on multiple recovery 

plans to fund the huge data collected as part COMOR project launched by the Scientific Society of 

Management in Romania to characterize the behaviour of managers in the Romanian economic 

organizations. Construction of these models offers possibilities for complex analysis, descriptive 

and factorial sequence of firms, counties, geographical areas, but comprehensive summary of 

studies on the macroeconomic level. Scientific knowledge through a comprehensive assessment of 

managerial behaviour in the most representative types of business organizations of all geographical 

areas of the country are, in the context of globalization, one way to prevent surprises market 

economy. Thus, the results of this exploratory research will provide economic environment, and not 

only strong argument for anticipating decisions in order to choose the best economic policies, with 

beneficial effects as conclusive and with as few undesirable implications. Research based on the 

opinions of thousands of respondents approved, processed through a variety of instruments subject 

of extensive econometric and interdisciplinary interpretation, psycho-socio-economic management, 

is a modest contribution to the affirmation of local scientific research that aim for theoretical and 

applied Romanian school of management by defining: 

- knowledge of behaviour management in all types of business organizations in Romania; 

- identifying the Romanian space dimensions of organizational culture as a reflection of the 

peculiarities of national culture and especially of the main ethnic-specific subcultures; 

- profile defining effective manager and leader of excellence in terms of character traits and their 

behaviour. 

Keywords: econometrics, management, organizational culture, descriptive analysis, factorial 

analysis. 

Coduri JEL: M12 

353

1. Preamble 

Without proposes to develop the defining 

elements of econometrics, the specific 

features of this scientific field in relation to 

statistics, mathematical statistics or in the 

preamble of our approach using econometric 

method in an exploratory research on 

behaviour management in large scale 

economic organizations Romania, makes 

some-option argument on the use of 

econometric indicators to quantify the value 

judgments of various socio-economic 

variables of our research. 

According to this, we refer to adopt the 

following key behaviours of econometrics, 

the study undertaken in this specific case, 

namely: 

- factual component that the specific area 

under investigation is a reality of 

management processes in a well defined 

geographical area: economic organizations in 

Romania as the unit of observation, that 

respondents from these organizations as units 

of sampling; 

- conceptual component of economic 

management for the dimensions of 

INPUTS 

Working levels 

- Economic 

variables 

- Social 

variables 

- variable 

value 

judgments 

Initial information 

354 

organizational culture, specific types of 

managerial behaviour different subcultures of 

the Romanian space and effective leader and 

the typology of excellence; 

- logical-formal component that we built 

quantitative models and rational behaviour on 

different sides of managerial and calling their 

methods inferential statistics (theory and 

theory tests estimate) that draw a general 

conclusion from the quantitative analysis of 

several private facts I checked the 

assumptions made in terms of management 

theory in general and human resource 

management theory in particular. 

2. The construction of econometric models 

Depending on the scale and complexity of 

research, but also the degree of deepening the 

analysis, econometric models used in 

research as set out above as shown in Fig. 1 

managerial explanatory models are composed 

of a more or less complex input variables, a 

process of transformation of probability 

distributions mathematically range of views 

expressed by the exponents, a set of variables 

leads to the result (the outputs). 

PROCESS OUTPUTS 

Psycho-social 

analysis tools 

- Central 

Tendency 

- Variation 

- Correlation 

- Tables 

- Charts 

Structures of the 

managerial 

variables 

Fig. 1 The systemic structure of the econometric model 

Conclusions 

- Cultural 

dimensions 

- Types of 

behaviour 

- Leadership 

Consequences of 

the basic 

assumptions

Building models based on the initial 

capitalization of knowledge in the context of 

econometrics integrated knowledge 

management and organizational psycho 

specific limits of investigator. 

Assumptions that formed the basis for models 

reflect the volume and quality of information 

we had about the reality investigated using 

the following input variables: 

- economic variables of the statistical units of 

observation of the firms: the field of activity 

according to CAEN code, size of 

organization based on the number of 

employees, ownership of equity; 

- social variables of the statistical unit 

surveyed (respondents): sex, age, marital 

status, level of schooling and education in 

management, the position in the 

organizational hierarchy (managers, 

performers); 

- variable value judgments, those measurable 

by designating entities beach views 

expressed, and which were assigned 

numerical values on the scale from highly 

positive (strongly agree) to highly negative 

(disagree). 

The information held in the observation data 

was processed using the managerial structure 

of the variables of a system of statistical and 

mathematical indicators consisting of: 

position indicators (weights), indicators of 

central tendency (arithmetic mean, median, 

modulus and asymmetry); indicators of 

change (amplitude variation, individual 

deviation, standard deviation, the dispersion, 

coefficient of variation); indicators 

correlation (regression coefficient, correlation 

table, the correlation chart). 

The conclusions derived through econometric 

models are logical consequences of 

assumptions underlying the inferential 

analysis process allowed the release of initial 

information content of their dormant state to 

highlight the following variables outcome 

(output): 

- dimensions of organizational culture: power 

distance, individualism-collectivism, 

355 

masculinity-femininity, uncertainty 

avoidance, future orientation (long-short); 

- types of managerial behaviour: management 

approach, work style, attitude toward change, 

policies and practices of motivation, 

organizational communication procedures 

and practices, and / or interpersonal, concern 

for performance; 

- behavioural profile of character and 

effective leader; 

- typology of excellence leader. 

3. The econometric method, basis for 

analysis 

Ultimately seeking a comprehensive and as 

accurate characterization of the different 

structures of management variables, we 

focused our approach on two lines of 

analysis: a quantitative analysis focused on 

value judgments, on the one hand by the 

statistical units of observation (firms), and 

secondly by statistical sampling units 

(respondents) and the second direction 

oriented qualitative analysis with indicators 

of variation and correlation. 

The two types of correlation analysis 

(quantitative and qualitative) we decided to 

identify and characterize managerial 

behaviour in key areas of economic activity 

across different subcultures of the Romanian 

territory and into the major temperamental 

traits of different managers and executors 

geographical areas of the country. 

To meet this requirements-goal, we adopted a 

systemic approach, whereby we develop an 

analysis stratified by different levels of 

aggregation (system elements) as follows: 

- for large enterprises at the microeconomic 

level (on request); 

- mezoeconomic level with aggregated 

counties, regions and macro-economic 

development; 

- at the macroeconomic level, with 

conclusions on the national economy.

3.1. Descriptive Analysis 

The quantitative analysis (descriptive) was 

used in structure relative sizes (weights) 

calculated as percentage ratio to the whole 

party, namely: 

part 

p % � �100 

whole 

With the help of weights, which are 

indicators of position, it is argued: 

a) representativeness of the total economic 

organizations observed, reflecting the domain 

structure of economic activity (agriculture, 

mining, manufacturing, construction, 

transport, trade, etc.), by the degree of size 

(50-100 employees, 101-250 , 251-500, over 

500 employees), by type of capital ownership 

(public, private); 

b) the reliability of judgments of value (total 

agreement, partial agreement, indecision, 

partly disagree, strongly disagree) expressed 

by respondents in different social variables 

(gender, age, education, hierarchy within the 

organization) for each item (question ) that 

characterize a specific variable Managerial 

dimensions of organizational culture, 

managerial behaviour, characteristic traits of 

leadership. 

3.2. Factorial Analysis 

Unlike the descriptive analysis, in which we 

used a single indicator, one that characterizes 

Likert Score 

5 

levels 

3 levels 

2 

levels 

356 

the position of a given quantitative variable 

(part) throughout the community studied, the 

factor analysis we made use of a true system 

of indicators with which we managed many 

sides to put out quality of managerial 

behaviour in its various aspects. 

Without abusing detail on the material we 

present a brief overview of these indicators, 

their relationships with computers and how to 

use the process to review the research, 

according to the valence of each of them. 

Thus, the system of indicators that I did not 

use the factor analysis, is composed of: 

measures of central tendency, simple 

indicators of change, synthetic indicators of 

variation, correlation indicators. 

3.2.1. Specification 

Before developing each indicator used in 

factor analysis, we make two methodological 

notes: 

1. Calculating each of the indicators that are 

part of the groups mentioned above, a process 

required to convert the numeric expression 

value judgments on a Likert-type scale. Thus, 

depending on the range of value judgments 

provided by the construction of the 

questionnaire respondents used the primary 

data collection, conversion was done on 5, 3 

or 2 levels, as in the models below: 

at ap i dp dt 

5 4 3 2 1 

a i d 

3 2 1 

yes no 

1 0 

Legend: 

at – total agreement i – indecision a – agree 

ap – partial agreement dp – partially disagree d - disagree 

dt – total disagree 

Fig. 2. Model of conversion of opinions to numerical expressions

2. To measure respondents' opinions on a 

particular variable studied, we started from 

the premise that people are honest in 

expressing their beliefs and opinions, 

however, to arrive at generalized conclusions, 

we have relied on a single question. 

Therefore, for each variable outcome 

(dimensions of organizational culture, 

behaviour management, effective leader or 

typology profile leader of excellence), the 

questionnaire applied, we have formulated a 

set of questions that allow us to establish the 

position of respondents to a variable or 

another. For example, to measure the cultural 

dimension "individualism - collectivism" 

were formulated 16 questions, or to 

characterize the size of "masculinity - 

femininity" were used six questions etc. 

3.2.2. Indicators of central tendency 

From this group of indicators have appealed 

to the mean, median and dominant module. 

These indicators, allowed us to put out the 

essential trends of the variability of responses 

to the questions in the questionnaire. Thus, 

the mean value ( x ), as a synthetic 

expression levels of individual value 

judgments embodied in a single 

representative level, which highlights the 

average scores of opinions expressed by 

respondents to each question in questionnaire 

responses from the entire range of intensely 

positive the intensely negative, was 

calculated as a weighted arithmetic mean 

formula: 

n 

� 

i� 

x � m 

xi 

fi 

1 , where : 

f 

� 

i 

i�1 

x - means medium value; 

xi – Spectrum opinions expressed on the scale 

of values (i) from 1-5; 

fi – the number of respondents, m, varying 

according to the level of aggregation: 

business, county, region developing, country. 

357 

The median (Me) is the average score 

occupying the central place statistical series 

ordered in ascending or descending, so the 

average scores of the series number of values 

which divides into two equal parts. When the 

series has an odd number of terms, the 

median score is given by the rank n 

; 

n �1 

where the series has an even number of terms, 

the median is given by the central terms of 

simple arithmetic. 

Statistics compiled for each question series 

that helps to characterize a variable result, has 

different meanings depending on the content 

and the level at which lies such analysis: 

- at the firm level, the series is comprised of 

average score of the views expressed by each 

respondent; 

- at the county level, the average score is 

made up of the views expressed by the 

average sample firm in each county; 

- development in the region, the average 

mean score of opinions expressed by counties 

comprising the region's development. 

At any level of aggregation, median 

highlights the question that was most 

meaningful significance to characterize the 

result of research variable. It is important, in 

terms of theory, construction of the 

questionnaire in future research. 

Module (Mo) or dominant frequency is the 

value that has score greater. 

Is determined using the statistical series as the 

median scores obtained by highlighting the 

tendency of respondents to a particular judge 

stated value of the spectrum: from highly 

positive to highly negative, and from total 

acceptance to total rejection. 

Asymmetry (As) is the indicator that allows 

us to know the degree of skew or non 

symmetry dimensional distribution of 

symmetry, from the position and values of the 

indicators of central tendency: mean, median 

and the module. 

Form distribution with left and right 

asymmetry can be analyzed either by using

graphical methods or calculating indicators of 

asymmetry. 

Graphical representation of statistical series 

provides a suggestive picture of the degree of 

asymmetry using, on a case by case 

frequency polygon and histogram. 

Indicators of asymmetry are expressed both 

in absolute size and in relative sizes. 

Asymmetry is calculated absolute 

relationship: 

As � x � Mo 

To make comparisons between statistical 

series resort to indicators of asymmetry 

relative. Among them, we stopped at what is 

called the asymmetry coefficients authors: 

Pearson and Yule. 

Pearson coefficient of asymmetry (Cas) is 

calculated using the formula: 

x � Mo 

� 

C as 

This coefficient can take values between -1 

and +1, as the absolute value is less than the 

Pearson coefficient, the asymmetry is smaller. 

The value of this coefficient has the following 

meanings: 

Cas = 0 symmetry means the terms of 

the series; 

Cas � 0 distinguish a left skewed 

distribution; 

Cas � 0 we deal with a distribution 

skewed to the right. 

Yule asymmetry coefficient (C'as) is 

calculated in cases where we determined the 

median statistical series (Me), using the 

formula: 

3( x � Me) 

C'as= 

Yule coefficient can take values between -3 

and + 3 and used when between three 

measures of central tendency relationship is 

verified: 

Module = Average - 3 (Average - 

Median) 

Coefficient will show a higher degree of 

symmetry as will be closer to zero. 

� 

� 

358 

3.2.3. Indicators of change 

If our research, the value judgments 

expressed by different respondents, more or 

less with each other, may be more or less 

scattered close to the average score, regarded 

as the most representative value for the 

research unit (sample taken enrolment). 

These indicators allow us to characterize the 

degree of homogeneity or opinions expressed 

in the scattering of a social group in general 

(at the company, county, geographic area, 

etc..), as well as some of its structures 

(gender, age, education, hierarchy). 

In this group of indicators of change there are 

two groups: simple indicators of change 

(amplitude variation, e.g. individual 

deviations) and synthetic indicators of 

variation (standard deviation, the dispersion, 

coefficient of variation). 

With these indicators we develop the analysis 

at different degrees of depth, allowing us to 

put some light on the qualitative side of the 

value judgments expressed by respondents. 

Amplitude variation (A) is the indicator by 

which, in-depth analysis, especially analysis 

of the company or the county, determine the 

differences between extreme values of the 

views expressed by respondents. The 

amplitude of variation is greater, the opinions 

are different, and vice versa. It is expressed in 

two forms: absolute amplitude (Aa) and 

relative amplitude (A %), relationships with 

the following calculation: 

� x � x 

A a 

max 

min 

Aa 

A% 

� �100 

x – 

x 

represents the opinions score; x – means 

value scores 

Individual deviations (di) are calculated as 

the difference between each variation 

recorded (score value judgments) and their 

arithmetic means (average score), using 

equations:

da i 

� x � x for individual absolute 

da 

deviations; d% 

� �100 

for individual 

x 

absolute deviations 

It is mainly used in the analysis at the firm 

level, and only exceptionally in the county. 

Standard deviation, standard deviation or 

standard deviation (�) is calculated as the 

average squared deviations of the score 

recorded for each item determined opinions 

characterizing variable outcome (dimensions 

of organizational culture, behaviour 

management, etc.) from their arithmetic mean 

. To this end we used the relationship: 

� � 

n 

� 

i�1 

( x � x) 

i 

� 

Thus, using this indicator consider how the 

respondents opinions vary on the scale of 

value judgments (from at to dt) calculated 

from the average of each variable result. 

Example: 

Variable result sought: Behaviour managers 

in different situations. 

Faces situational managers: 

1. Attitude towards settling tensions/conflict 

in the workplace. 

2. Attitude towards the expression of the 

performers, opinions about their work 

address. 

3. Attitude towards mistakes by employees 

during the activities. 

Number of statistical units of 

observation in Suceava County = 15 

Number of statistical sampling units 

(respondents) = 222 

Based on data from Appendix 1, Table 

present standard deviations below the mean 

score calculated from the views expressed by 

respondents to characterize both the current 

state and considered to be normal in the 

organizations surveyed. 

f 

i 

2 

f 

i 

359 

Managers' behaviour in different situational 

Analysis Symbol Current Desired 

indicators 

practice practice 

1. Average 

value 

judgments 

x 

3,727 4,183 

2. Standard 

deviation 

� 0,258 0,279 

Summary interpretation of these indicators 

leads to the following conclusions: 

1. Almost ¾ of respondents say that current 

practice managers are interested in 

maintaining a spirit of understanding and 

cooperation between employees and are 

involved as mediators between the parties 

when there are situations of tension or 

conflict, are open to collaboration in the team 

encouraging employee participation in 

solving practical service problems and is also 

tolerant of the mistakes they inadvertently 

committed during the activities. 

2. Value judgments expressed by respondents 

is quite high values clustered around (partly 

agree to strongly agree). 

3. Despite the favourable findings about the 

behaviour of managers in the three situational 

instances, the number of respondents who 

believe it would be better place, is almost 

10% higher than the existing situation (83.7% 

vs. 74.5%). 

A hierarchy of employees who desire 

signifies a strong attachment to the goals of 

the organization is working is as follows: 

- 86.3% (11.8% more than the current 

situation) believes that managers should make 

greater use of employee participation with 

solutions to solve the tasks; 

- 89% (8.1% more than the current situation) 

believes that managers should intervene more 

effectively and to ease tension or conflict 

between state employees; 

- 75.7% (7.4% more than the current 

situation) believes that managers should be 

more sympathetic to unintentional mistakes 

committed during the activities, especially by 

young people who need more support to their 

immediate bosses.

4. Even if the range of value judgments is 

somewhat higher in practice desired by 

respondents, (standard deviation 0.279 to 

0.258) shows that the average score is 12.2% 

higher than the current practice, which means 

that "total agreement", the whole scale of 

assessment is crucial. 

Dispersion or variance � 2 a variable result is 

calculated with a simple arithmetic average of 

the squared terms of statistical series which 

consists of questions score variable that is 

characterized by the relationship: 

n 

� 

� 

xi 

� x 

i 

� 

n 

1 

2 

( ) 

2 

� , where n is the number 

of items that characterize each variable 

outcome (dimension of organizational 

culture, types of managerial behaviour etc.). 

The coefficient of variation (v) is the ratio 

between the average standard deviation and 

statistical series, and shows us the degree of 

homogeneity of the collectivity of questions / 

answers that characterize a variable outcome, 

using the relation: 

� 

v� �100 

x 

The higher the coefficient of variation is close 

to zero, the variance is lower, so statistical 

collectivity is more homogeneous and the 

media has a higher level of significance. 

3.2.4. Indicators of correlation 

In our research we are dealing with direct 

factorial correlations, simple linear type, 

which led us to make use of the following 

indicators of intensity commensurate factorial 

causal links between variables symbolized by 

x1, x2 , ...., xn and the variable outcome or 

effect variable y symbolized: the correlation 

table, the graphic method and the regression 

coefficient. 

With the correlation table identifies issues 

such as: the existence and meaning of 

correlation, the shape and intensity of causal 

links. Thus, we use the correlation table 

analysis of causal links between traits of 

360 

character which designates the profile of the 

effective leader, the variables x and types of 

managerial behaviour, the variable result. So, 

for example, may reveal the correlation 

between some features of the leader, such as 

courage, self-confidence, will, its rigor on the 

one hand, his attitude toward change, on the 

other side. 

Corelograma as a graphic expression of the 

correlation, is constructed as follows: the 

abscissa scale is going to represent the values 

of variable x factorial, and the ordinate y pass 

variable values result by uniting intersection 

points of coordinates x, y, is obtained 

expressing corelograma suggestive 

correlation that we want to highlight in 

particular. 

Regression coefficient. As a method of 

econometrics, regression helps to determine 

the contribution of the factors underlying 

(causative) effect of variability phenomena. 

Since in our research are linear causal links, 

to measure the strength of correlation using 

linear function of the form: 

Yx = a +bx, where 

Yx - are theoretical variables;a - y result 

variable values are determined outside the 

influence of variable x factorial; 

b - is the regression coefficient; 

x - represents the values of x1, x2 , ...., xn 

factorial of variable x. 

The coefficients a and b is determined using 

ordinary least squares method, using 

relations: 

a y � � � represents the 

� u(x 

) , where: u(x 

) 

first order cantered factor for variable x. It 

has zero value. 

� xy 

b � , where: x - xi variants are 

2 

n� 

X 

deviations from their average 

y - yi variants are deviations from their 

average 

In our research we measure the linear 

correlation between the intensity of 

respondents‘social variables (gender, age, 

marital status, education level, the position in

the organizational hierarchy), as variable 

factors and value judgments, as a floating 

effect. Thus, we build correlation coefficients 

entering the following notation for the 

variable factor x: 

Sex: male x1, female x2 

Age: 30 years x1, 30 - 44 years x2, 

between 45 - 60 years x3, x4 over 60 years 

Education: elementary x1, x2 

environments, beyond x3 

Hierarchy: top managers x1, x2 

middle managers, managers of basic x3, x4 

performers. 

Similarly, we introduce the following 

notation for the variable y result (value 

judgments about the dimensions of 

organizational culture, types of managerial 

behaviour, effective leader profile, types of 

Excellence leader): 

Total agreement 

y1 

Partial agreement 

y2 

Indecision y3 

Partial disagree y4 

Total disagree y5 

or 

agreement y1 

indecision y2 

disagree y3 

Conclusions 

The models described in this paper is the set 

of indicators is based on an econometric 

variety of descriptive and factor analysis, 

structural and managerial behaviour in 

comparative economic organizations in 

Romania. Among them were: 

- to characterize the dimensions of 

organizational culture at all levels of 

361 

aggregation: the big companies, counties, 

regions, macro, national economy; 

- characterization of managerial behaviour in 

all types of business organizations by field of 

activity according to CAEN code, by type of 

ownership of capital, depending on their size 

as number of employees; 

- description of character and behavioural 

profile of the effective manager; 

- characterization of the leader of excellence; 

- according to various categories of 

respondents (by sex, age, education, 

hierarchy) on the various elements listed 

above characterization etc. 

These econometric models, with minimal 

possibilities for the interpretation of measured 

results are used in the study phase of the pilot 

- the example of Suceava county, to develop 

national analysis by established analytical 

team in Bucharest, Craiova, Oradea, Suceava, 

Targu Mures, Galati, Resita, Braşov most 

competent scholars with interests in 

management, sociology and organizational 

psychology, computer science, econometrics. 

Bibliography 

1. Chelcea S., Metodologia cercetării 

sociologice. Metode cantitative şi calitative 

(ediţia a III-a, revăzută şi adăugită), Editura 

Economică, Bucureşti, 2007 

1.1. Georgescu V., Econometrie, Editura 

Universitaria, Craiova, 1997 

1.2. Pecican E. S., Econometrie, Editura 

ALL, Bucureşti, 1994 

1.3. Tövissi L., Pecican E. S., Curs de calcul 

economic. Metode şi tehnici 

econometrice ale calculului economic, 

Lito ASE, Bucureşti, 1974

Item Score 

Elements of synthetic indicators of change, 

based on scores from 1 (strongly disagree) to 5 (strongly agree) 

xi 

Respondents 

fi 

xi fi xi - x (xi - x ) 2 

362 

Annex 1 

Actual practice 

(xi - x ) 2 fi 

51 4,045 222 897,95 0,318 0,101124 22,4495 

53 3,725 222 826,95 -0,02 0,004 0,0888 

64 3.412 222 757,46 -0,315 0,0992 22,0224 

Total x 

3,727 

Item Score 

xi 

* 

( � ) 

� � xi x 

n 

� 

x 

i fi 

2482,36 

2 

2 

� ; 

� � 

� 

( x � x) 

i 

� 

f 

i 

2 

f 

0, 

200724 

� � 0, 

0669 

3 

i 

� 

* 

44, 

5607 

� 

666 

0, 

258 

0, 

258 

v � �100 

� �100 

� 6, 

9% 

x 3, 

727 

� 

Respondents 

fi 

∑(x - x ) 2 

0,200724 

xi fi xi - x (xi - x ) 2 

∑(xi - x ) 2 fi 

44,5607 

Desired practice 

(xi - x ) 2 fi 

51 4, 450 222 987,90 0,267 0,071289 15,8262 

53 4,315 222 957,93 0,132 

0,002299 

0,5106 

64 3,784 222 840,05 -0,399 

0,159201 

35,3426 

Total X 

4,183 * � xi 

fi 

2785,88 

* 

∑(x - x ) 2 

0,232789 

( � ) 

� � xi x 

n 

0, 

232789 

� � 0, 

0776 

3 

( x � x) 

∑(xi - x ) 2 fi 

51,6794 

2 

2 

2 

i 

i 51, 

6794 

� ; � � 

� � 0, 

279 

� 

0, 

279 

v � �100 

� �100 

� 

x 4, 

183 

� 

Annex 2 

� 

f 

i 

6, 

67% 

f 

666

Q51 

Q53 

Q64 

Content questions to characterize the behaviour of managers in different situations 

If a state of tension or 

conflict, managers 

To impose their 

views in solving 

work tasks, 

employees 

Compared mistakes 

during their work, 

managers 

Pa work for reconciliation through 

Pd 

dialogue with those involved 

should work for reconciliation through 

dialogue 

Pa by managers are encouraged to respect 

the opinions of others 

Pd should be encouraged by managers to 

respect the opinions of others 

363 

Opinion score 

x 

4,045 

4,450 

Opinion 

score 

x 

3,725 

4,315 

Opinion score 

x 

Pa are sympathetic (tolerant) 3,412 

Pd Should be sympathetic (tolerant) 3,784

364

THE NEED FOR PUBLIC DEBT MANAGEMENT IN THE CONTEXT OF 

SUSTAINABLE DEVELOPMENT WITHIN THE EUROPEAN UNION 

Marcu Nicu 

University of Craiova, Faculty of Economics and Business Administration 

Meghișan Mădălina Georgeta 

University of Craiova, Faculty of Economics and Business Administration 

Public debt is created when the necessary resources for the socio-economic development of a state 

are greater than the opportunities that exist at that time. The destination of the necessary resources 

acquired from foreign markets can be either consumption by raising the standard of living (on short 

term) or investments in order to reduce the discrepancies in relation to the European Union through 

investments in infrastructure, jobs, human and technical capital development. 

The scientific research aims to clarify several key objectives, namely: the theoretical concept and its 

belonging in the governance politics; the dynamics of public debt in Romania and the identification 

of specific features of the indebtedness decision, the influence of the current global economic crisis 

on the Romanian economy, the analysis of Romania's public debt sustainability integrated in the 

European structures, and proposals for action in order to return as soon as possible to a positive 

economic dynamics with direct impact on people's standard of living. 

The theme of this research is contemporary in the context of the financial and economical global 

crisis and the difficulties in overcoming this period. The need to coordination the fiscal and 

budgetary policies in Romania, the awareness that the accumulation of a large public debt presents 

a threat to future generations, the increase of the tax pressure over a market that trends towards 

globalization and the impact that the aging of the population will have on the public finances 

sparked public controversy, both in the academic environment and in the media. To continuously 

borrow resources and maintain a stable level for them requires a sustainable public debt, an 

important objective of any state’s tax policy. A sustainable public debt is the result of the market 

and of the fiscal and budgetary policy decisions. 

Although the sustainability of public finances and implicitly of public debt has been an issue 

extensively debated for over a century, they currently remain vague concepts. Although, intuitively, 

it is natural to consider that a fiscal policy is sustainable if it avoids financial collapse, there is no 

generally accepted definition in terms of sustainable public debt, respectively a sustainable level of 

public debt. The methodology of this research is stressed by the large number of statistical data on 

public debt dynamics used in the analysis, relevant in this regard are the national and international 

databases: the National Bank of Romania, Ministry of Public Finances, World Bank, Euro stat, the 

statistical database of the European Commission, the database of the International Monetary Fund, 

the Organization for Economic Cooperation and Development, the normative documents consulted 

in order to ensure the terminological accuracy of the concepts, the numerous theoretical and 

empirical studies of Romanian and foreign specialists, the views and arguments of scientific 

researchers with high experience in the field. 

The personal contribution to the researched field is present throughout this work. Thus, I aimed to 

clarify some theoretical aspects of the issues addressed, of some concepts and economic notions to 

elucidate the studied phenomenon by using a large number of statistical data in order to analyses 

the dynamics of public debt in Romania, in comparison with other former communist countries and 

to formulate proposals for a long-term sustained recovery and a sustainable economic growth. 

Keywords: public debt, budget deficit, external financing, public debt management, degree of 

indebtedness, public debt service 

JEL Codes: H63 - Debt, Debt Management, Sovereign Debt 

365

I. Introduction: 

"The need for public debt management in the 

context of sustainable development within the 

European Union” presents the main 

theoretical issues related to public debt 

management and its importance in the 

effective management of public debt, over the 

objectives and risks associated with public 

debt management. Moreover, the main 

objective of public debt management is to 

ensure that the government’s need of funding 

and its payment obligations are met at the 

lowest possible cost, on medium and long 

term, consistent with a prudent degree of risk 

. The issues of public debt management often 

start from the lack of attention of decisionmakers 

regarding the benefits of a cautious 

debt management strategy and the costs of a 

weak macroeconomic management of 

excessive levels of public debt. In the first 

case, public authorities should pay attention 

to the beneficiaries resulting from the use of a 

prudent public debt management strategy and 

of public policies that are coordinated in a 

complete macroeconomic framework. In the 

second case, fiscal-budgetary policies, 

monetary policies and exchange rate policies 

that are inappropriate to the economic 

situation generate uncertainty in the financial 

markets regarding the future returns of 

investment expressed in local currency, 

which will lead investors to request higher 

risk premiums. Particularly in emerging or 

developed markets, debtors and creditors 

alike, applying long-term commitments can 

suffocate the development of financial 

markets and they can severely impede public 

debt managers’ efforts to protect the 

government from refinancing and currency 

exchange risks. 

Moreover, poorly structured public debt in 

terms of maturity, currency or the 

composition of the interest rate to which 

unfunded big liabilities are added, were 

important factors in the induction and 

propagation of the debt crisis in many 

countries over time. 

366 

The process of managing public debt 

portfolio is a priority for every government in 

order to reduce medium and long term 

exposure to risks. 

The main objective in process of public debt 

management is represented by providing for 

the governmental financing needs in terms of 

minimizing long term costs and limiting the 

risks involved. In our country, during the 

period proposed for analysis, a series of 

measures for the permanent improvement of 

the legal and institutional framework for 

public debt management were taken. These 

measures corresponded to a positive 

macroeconomic context; Romania obtained 

the best results at the beginning of the 

transition period. Analyzing the 

macroeconomic and policies - fiscal, 

budgetary, monetary, of exchange rate – one 

can see their continuous orientation towards 

public debt and budgetary deficit. The 

financing strategy for the budget deficit and 

the refinancing strategy for public debt will 

focus on contracting domestic loans by 

launching the issuance of public securities. 

Domestic public debt represents the total of 

loans contracted directly by the state or 

guaranteed by it, from the internal market, in 

order to cover fiscal deficits, by financing and 

refinancing them. Also, domestic public debt 

represents the state’s takeover of debts based 

on special laws, due to losses registered by 

some companies and state-owned banks. A 

series of public spending, financed in order to 

achieve objectives of national interest can 

also be seen as domestic public debt. The 

annual growth of external public debt (direct 

and guaranteed) was based on a rigorous 

foundation regarding the contract criteria, 

within limits that did not exceed the country's 

capacity to assure the service, respectively the 

reimbursement of capital rates, interests and 

related fees without a strict policy regarding 

the use of borrowed resources. 

An incorrect structured debt by maturity date 

is an important factor in triggering the 

economic crisis. Short and medium term 

contracted loans with variable interest rates

may expose the state budget to a high risk if 

the international capital markets have 

changed the conditions regarding the 

refinancement of these loans. International 

financial organizations, the IMF and the 

World Bank, make suggestions on 

contracting loans for the purposes of directing 

those loans towards those on long term, thus 

avoiding countries’ indebtedness on short and 

medium term. Also, an analysis of internal 

and external public debt service is presented. 


Foreign loans allow a country to invest and 

consume beyond its domestic production 

capacity and therefore, to finance the 

development of capital not only by 

mobilizing domestic savings, but also by 

drawing resources from countries with capital 

surplus. In order to define external public 

debt will start from the definition of external 

debt as the due amount in currency, at some 

point, by one country(s) to other countries 

and / or international financial institution on 

the basis of the credits received by the state 

(government), by private companies with the 

state’s guarantee and also by companies or 

individuals, that remains to be paid in a 

period longer than one year 35 . 

The internationally accepted definition of 

external debt that results from the research 

conducted by international organizations, 

which have as the main field of activity 

crediting those countries that face problems 

in providing for their financial needs, presents 

gross external debt at one point as "the total 

of contractual liabilities used and unpaid by 

residents to nonresidents and the residents' 

obligation to reimburse capital rates, with or 

without interest, or to pay interest with or 

without capital rates 36 ." 

35 Ceauşu, Iulian. Enciclopedic Managerial 

Dictionary, Vol. I. Bucharest: Academic 

Management Publishing, 2000;, p. 264. 

36 Klein, Thomas M., External Debt Management – 

An Introduction, World Bank Technical Paper 

Number 245, Washington, D.C., p. 56. 

367 

In Romania, the Law of Public Debt No. 

313/2004 defines the external governmental 

public debt as "the part of the governmental 

public debt representing all financial 

obligations of the state that derive from loans 

contracted directly or guaranteed by the state 

from nonresidents individuals or legal entities 

in Romania" 

External public debt is a key parameter to 

assess the state of public finances; it can be 

defined as a consequence of the following 

macro economical issues 37 : 

� low production capacity in relation to 

consumption, investments and public 

expenditures; 

� insufficient domestic saving, in relation 

to investments and the budgetary deficit, 

� a overly high current account deficit, 

compared with net inflows of funds (debt 

is exempted); 

� Excessive capital outflows in the form of 

direct investment or "capital leaks" 

abroad. 

Consequently, the role of external public debt 

can be seen through the following 

implications 38 : 

a) external loans allow the contracting 

country to invest and consume beyond 

its current internal possibilities and, in 

fact, to finance capital development not 

only by mobilizing domestic savings, 

but also by using the savings of 

countries with capital surplus; 

b) External loans may lead to a faster 

economic growth, enabling the financing 

of a greater volume of investments and 

the mobilization of the country’s 

available resources, giving them a more 

cautious but a more effective usage. 

c) External loans can also serve to finance 

temporary deficits of the balance of 

payments and can provide the authorities 

with the solution to avoid to taking 

37 Gaftoniuc, Simona. International Finances. 

Bucharest: Economic Publishing, 2000, p. 403. 

38 Klein, Thomas M., External Debt Management – 

An Introduction, World Bank Technical Paper 

Number 245, Washington, D.C., p. 2.

actions that could jeopardize the 

country's development program. 

III. Research Methodology. 

In order to assess the level of external public 

debt and to correlate it with the situation of 

other macroeconomic variables (these ratios 

are more conclusive than the absolute size of 

debt), a series of indicators are being used: 

- external public debt in the year 

(DPE): 

DPE � DPE � DPE , 

- d g 

- where: 

- DPEd is the external public debt of 

the state; 

- DPEg is the external public debt 

guaranteed by the state. 

- External public debt service (SDPE), 

which represents the payments due in 

order to reimburse external public 

debt, representing the mature rates in 

a period of one year (RDPE), the 

interests and the related fees as well 

as the costs of issuance and 

placement of securities (DobDPE) 3940 : 

Dob R SDPE � � ; (1) 

- DPE DPE 

- the share of external public debt in GDP: 

DPE 

- DPE/ PIB � �100 

; (2) 

PIB 

- the share of external public debt in the 

volume of exports of goods and services 

(E) 

DPE 

- DPE/ E � �100 

; (3) 

E 

- the share of interests of the existing 

external debt in GDP 

DobDPE 

- DobDPE 

� �100 

/ PIB 

; (4) 

PIB 

39 Moşteanu, Tatiana (coord.) şi colectiv, Finanţe 

publice: note de curs şi aplicaţii pentru seminar, 

Editura Universitară, Bucureşti, 2005, p. 264 

368 

- the share of the external public debt 

service in GDP: 

SDPE 

- SDPE / PIB � �100 

; (5) 

PIB 

- the share of external public debt service 

in the volume of exports of goods and 

services: 

SDPE 

- SDPE / E � �100 

; (6) 

E 

- external public debt service in the state’s 

budget expenditures (ChBS): 

SDPE 

SDPE / Ch � �100 

. (7) 

BS Ch 

IV. Results of the research 

The period 2007-2010 was characterized by 

the expression of the global financial and 

economical crisis. Although all European 

countries have been marked by different 

bubbles (the most frequent being the real 

estate bubbles), the crisis manifested 

unevenly, depending on specific conditions 

and governmental policies from each country 

and especially depending on the anti-crisis 

measures taken as a response to the crisis. 

In Romania, in comparison with developed 

countries, external public debt has been and 

continues to be the main component of public 

debt. Throughout the period, the actual public 

debt was fueled substantially by external 

loans and only to a lesser extent on the 

domestic loans, this structure being specific 

to developing countries which lack their own 

capital market capable of meeting the needs 

of the private and the public sector. The funds 

attracted were from international 

organizations (IMF, IEB) with compliance to 

the conditions imposed and in the cases 

where the government could not meet those 

conditions, it turned to private banks that 

granted loans but with a higher interest rate. 

Under the pressure of external financing of 

budgetary deficit, the authorities have 

promoted macroeconomic austerity measures, 

aimed to restrict governmental spending, 

reorganize the system of pensions paid from 

BS

public funds, the system of social benefits 

and health insurances, which had short-term 

constriction effects. 

The painful budgetary adjustments, especially 

in the field of social benefits have been 

politically legitimated by the "state reform" 

slogan and the construction of a neoliberal 

minimal state. 

In reality, this approach was not accompanied 

by an appropriate and encouraging fiscal 

recovery, especially in the field of labor 

taxation nor by a real liberalization of some 

services or the entrustment of infrastructure 

works to the market. 

An extremely important issue for fiscal and 

budgetary sustainability on long-term remains 

the reduced capacity to collect public 

revenues, which causes an additional tax 

burden on taxpayers and keeps the premises 

for structural budget deficits. In this respect, 

the areas that require special attention should 

aim to modernize the rural economy, adjust 

the tax level of properties, the taxed labor 

shortages, tax evasion and the numerous 

exceptions to the general tax regime. The 

reduced ability to collect or to generate 

additional budgetary revenues imposes on 

Romania a redefinition of the fields of state 

intervention. 

In the long term, macroeconomic policies 

should aim to achieve general economic 

balance, a medium and long-term sustainable 

economic growth with the purpose to achieve 

real convergence, whether it will be 

expressed by growth of GDP per capita, by 

reducing labor costs, by the relocation of the 

share of national economy branches in the 

generation of GDP or by the degree of 

openness of the Romanian economy. 

The draining budgetary measures taken in 

2010 have been misinterpreted as an actual 

reduction of the Romanian state’s 

intervention in the economy; they rather 

represent the only solution to reduce the 

budget deficit because of its funding 

difficulties. 

369 


For the recovery of the Central and Eastern 

European economies several groups of 

countries can be distinguished. Some 

countries have managed to contradict the 

experts forecasts, obtaining better results 

(Poland, Czech Republic), others have met 

their forecasts, those being the countries with 

the strongest economies in the EU (France, 

Germany), while others faced the collapse of 

their national economies (Greece, Spain). 

To help cushion the impact on their citizens, 

governments have implemented a variety of 

initiatives. There are three important reasons 

why the analyzed countries were affected by 

the crisis. Firstly, the dependence on the 

foreign capital inflows (the ability to attract 

foreign investments meant to develop the 

national economy) and the money sent home 

by those working abroad to support 

consumption and hence the national budget. 

For example, in Romania and Bulgaria in 

2009, the money sent home dropped by 30% - 

50% compared to 2008 levels. Secondly, a 

large part of their exports were for countries 

in the region and the euro zone, so that the 

volume of transactions fell dramatically. 

Thirdly, several of the analyzed countries had 

their national currency dependent on the Euro 

and the weakened economies had been 

strongly influenced by Euros fluctuations 

which have often suffocated the exports. 

In the case of Poland, the government used 

quickly and effectively all the European 

funds at its disposal in order to cover the 

capital withdrawals amid the international 

crisis, the current account deficit became 

stable and zloty’s fall was stopped by the 

central bank of Warsaw with the help of 

BCE, avoiding mortgage debtors’ entry into 

payment incapacity on mortgage loans 

denominated in foreign currencies. 

Although the government has contracted a 

loan through the new "flexible credit 

arrangement" of the IMF, in very favorable 

conditions, the National Bank of Poland was 

not forced to resort to these reserves. 

Although it had to postpone its accession to

the European exchange rate mechanism 

(ERM II), the Polish government initiated an 

extensive privatization program to reduce the 

budget deficit and maintain public debt below 

50% of GDP. Thus, Poland regained the 

investors’ confidence that began to return to 

their country. Because of the fact that this 

economic crisis was much longer than 

expected, the 50% threshold was exceeded 

due to the financing needs of the budget 

deficit which has increased 5 times in the 

period under review. The goal of the deficit 

was the need for co-financing the projects 

with EU grants and also the investments in 

infrastructure that is why the output from this 

EU recession will find Poland with a healthy 

economy based on sustainable development. 

Before the crisis started, Romania faced a 

high budget deficit, an overly indebted 

private sector, a real estate bubble and an 

over heated economy, Romania called on the 

help of the IMF in order to flatten the 

adjustment of internal and external 

imbalances set in motion by the global 

economic crisis. 

Because of the delay of the Government in 

adopting tough structural reform measures 

and reduce public spending, eventually to 

channel the funds at its disposal to the 

economic sectors that would really help the 

development of a sustainable economic 

development, Romania was looked at and 

cataloged by the analysts as being without an 

economic horizon. Even though the 

percentage of the public debt in the GDP is a 

reduced one (30.8% in 2010) it is alarming 

that this public debt has risen with 300% in 

the analyzed period, from the borrowed sums 

being financed the social budgets deficits, the 

Government being content with a relative 

quietness of the social strata and waiting for 

the passing of this period without major 

interventions. The measure to reduce 

budgetary spending by cutting 25% in the 

public sector did not have a macroeconomic 

result because of the useless spending made 

from the same amount. In the analyzed 

370 

period, Romania was the only country that 

had registered a decrease in productivity. 

An aspect that probably did not get enough 

attention is that the financing of the excessive 

budgetary deficits, whether is done internally 

or internationally, is not a costless action. On 

the contrary, the level of the interest rate at 

which the debt has been contracted, as well as 

its schedule are extremely important aspects 

and can become an extreme burden, as 

situations exist in which the principal of the 

debt can be compared with the interest. 

Confronted with the lack of immediate low 

cost financing, some states have even 

advanced the unorthodox solution that the 

government securities be repurchased by the 

central bank. This option can not even be 

taken into consideration, as the conditions of 

the Romania’s accession to the Monetary 

Union targets too also other dimensions of the 

nominal convergence, beside the stability of 

the public finances, as would be: inflation, the 

stability of the exchange rate, interest rates, 

which would strongly affected by such a 

decision.

Bibliography 

1. Albu, Lucian-Liviu, Pelinescu, 

Elena. Suteinability of public debt,. 

Bucharest: Romanian Centre for 

Economic Policies, 2002; 

2. Beleanu, Pavel and Anghelache, 

Gabriela. Romania’s Public Fiances. 

Bucharest: Economic Publishing, 

2005; 

3. Burada, Mihaela Alina. “ The ration 

between internal and external public 

debt“ “ Economic Tribune” 

Publishing no. 19/2004; 

4. Ceauşu, Iulian. Enciclopedic 

Managerial Dictionary, Vol. I. 

Bucharest: Academic Management 

Publishing, 2000; 

5. Gaftoniuc, Simona. International 

Finances. Bucharest: Economic 

Publishing, 2000; 

371 

6. Klein, Thomas M.. External Debt 

Management – An Introduction. 

World Bank Technical Paper 

Number 245, Washington, D.C.; 

7. Moşteanu, Tatiana. Public finances: 

notes and applications. Bucharest: 

University Publishing, 2005; 

8. *** The strategy for managing 

guvernmental public debt 2011- 

2013; 

9. *** Public debt law no. 313/2004; 

10. *** Anual reports of BNR during 

2001-2010; 

11. *** Anual reports of the Ministry of 

Public Finances regarding 

Romania’s external public debt 

during 2000-2010; 

12. *** Anual reports of the IMF from: 

1997, 2000, 2002 si 2009 

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evolution of Romania’s external 

public debt during 1990-2010 given 

by the Ministry of Public Finances

372

IMPROVING THE ECONOMIC ACTIVITIES IN THE LESS FAVOURED AREAS 

OF ROMANIA 

Tileagă Cosmin 

“Lucian Blaga” University of Sibiu 

Faculty of Economic Sciences 

Cosmescu Ioan 

“Lucian Blaga” University of Sibiu 

Faculty of Economic Sciences 

Abstract: This paper deals with finding solutions for improving the economic activities in 

Romania’s undeveloped areas, which still represent a major problem for this country’s economy. 

During 1999 and 2009, these areas were considered tax havens, due to some facilities accorded by 

the Government and the EU (headage compensatory allowances*, tax deductions, non-refundable 

funds). Many had the opportunity to invest in those regions, but no positive effect was to be seen. 

Tulcea County (Danube Delta area), coal mine regions, rural areas and the North-East area 

(Suceava and Botoşani county) are considered to be Romania’s less favoured areas. 

Keywords: less favoured areas, non-refundable funds, tax havens, economic growth, economic 

activities 

JEL clasification: E60 

Introduction 

Nowadays, every less favoured area from 

Romania represents a major problem for 

regional development, having a negative 

impact on Romania’s economy. It is proven 

that long-term growth strategies for lessfavoured 

areas require especially the 

development of infrastructure and national 

institutions, which kept those areas 

backwards. Since 1999, open trade between 

countries has been considered to stimulate the 

economic growth, both at national and 

regional level. This growth was often suppose 

to trickle down to less favoured areas. In 

other words, this was considered a process 

whereby the economic gains from economic 

growth would pass down throughout the 

entire society, eventually giving rise to 

development. 

* The objective of these schemes is to provide a 

reasonable level of income for farmers where natural 

production conditions are least favourable so as to 

conserve the countryside by the prevention of further 

depopulation of rural areas. Compensatory 

allowances are payable to farmers for the keeping of 

cattle, sheep and goats. (www.europa.eu) 

373 

People living in less-favoured areas represent 

around the globe 40% of the rural population, 

suffering from chronic poverty. In what 

Romania is concerned, a study from 2010 

reveals that closely 33% of the population of 

Romania is living with less than 200 Euros a 

month. 

Less-favoured areas are defined as „remote 

regions with limited natural resource base, 

where problemes of chronic poverty and 

resource degradation tend to be the same. In 

the same time these areas have a limited 

agriculture potential, with poor infrastructure 

and service suport”. 

However, it is necessary to distinguish the 

concept of less-favoured area with 

development potential. This area would be an 

ideal place where investment especially in 

infrastructure and tourism can be productive 

and sustainable. 

A large number of implementing directives 

comprise the current classification of the LFA 

of each European Member State into three 

types: 

-Mountain areas (rural areas around the 

Carpathian Mountains) where altitude, 

climate and slopes, reduce the chance of

investments. The major problem for this areas 

still represents the process of deforestation, 

the lack of mountain resorts, and the lack of 

infrastructure. 

-LFAs which are marked by poor soil 

conditions (especially low agricultural 

productivity), low population densities or 

even depopulation tendencies. In Romania 

Tulcea county (Danube Delta area) could be 

considered an area with a low rate of 

investments, low soil productivity mainly 

because the Danube. 

-LFAs which are related to small areas with 

specific handicaps relating to the 

environment, landscape development, low 

agricultural activity, low tourism 

development. This area in Romania may be 

found in the North-East of the territory, 

including Botoşani and Suceava county. This 

area represents a major undeveloped region 

of Romania, mainly due to migration to other 

countries or even in more developed areas of 

Romania. 

To find solutions in order to develop the less 

favoured areas, some objectives must be 

established: finding an economic balance 

between regions, finding new ways to attract 

new investors, developing agriculture, 

industry and especially tourism to enhance 

the value of the local resources, inforce the 

cooperation between the regional areas. 

Two important elements always play an 

important role for less-favoured areas: 

defected political institutions and poor 

infrastructure (poor infrastructure often 

implies a long transport duration or difficult 

communication between a LFA and other 

regions). These two elements are especially 

revelevant because of their link to the effects 

on the economic growth. Moreover, the 

political environment has a strong impact on 

the economic growth of the less-favoured 

area, meaning that in Romania the funds 

accorded by the Government to regions are 

not equally distributed. 

374 

Less-favoured mountain areas, and rural 

areas 

The less-favoured mountain areas, which 

represent aproximately 29,93% of Romania’s 

territory are the homeplace for 2.400.000 

romanians. The economic activities from 

these areas are mainly those related to the 

wood and furniture industry, agriculture and 

animal breeding. In the areas surrouding the 

Carpathian Mountains, due to the numerous 

protected areas, tourism is not welldeveloped, 

excepting the winter season when 

the winter resorts are full of tourists 

practising the winter sports. 

A major problem for this area represents the 

process of deforestation, which causes 

numerous landslips and floods. It is well 

know that there is a lack of modern woodland 

planting that affects negatively the imagine of 

this area. Once a tree is being planted, it 

needs around 40 or 50 years to grow to 

maturity. 

The forests offer important resources for the 

economy of this less-favoured area. 

Excepting wood, mushrooms, seeds, forest 

fruits, firtrees, mineral waters represent 

significant resources. 

On a short term, tourism and especially 

mountains resorts should be considered 

strong points for developing the local 

economy, especially during the winter. In 

addition, due to the speed of falling waters 

coming from the mountains, hydro-electric 

power plants could offer to this area a new 

opportunity to attract new investors, 

becoming an area stong enough to generate 

new workplaces and greater amount of 

„green-energy”. 

The less-favoured areas from the mountains 

(mainly the rural areas) in Romania are 

characterised by a scattered population and 

very low quality infrastructure – for example, 

only 33% of rural residents are connected to a 

water supply network and only 10% to a 

sewerage system, while only 10% of rural 

roads are considered of „adequate standard” 

with asphalt cover. The basic social 

infrastructure (health and education systems,

finance) is much less developed than in urban 

areas. These factors have a negative impact 

on the quality of life in the rural areas, 

increase migration, create environment 

problems, hamper economic development and 

exacerbate health. 

In what rural tourism is concerned, this 

represents a significant potential which is not 

sufficient valorised. The tourism sector in 

2009 in the rural areas, showed an increase in 

the number of accomodation structures and 

accomodation capacity. The development of 

rural tourism in rural areas depends on the 

specific of each region, agricultural products, 

ethnographic regions and folklore. It also 

depends very much on the existence and 

especially the quality of the tourist pension, 

different types of recreation activities, 

practising agriculture and in some areas 

winegrowing and animal breeding. For 

example the specific tourism for Bucovina 

(North East less favoured area) is religious 

tourism, in Maramureş it is the architecture 

and folklore, while in Transylvania the 

spotlight is the reacreational and cultural 

tourism, food and wine. The mountain and 

forestry areas in Romania ensure the 

opportunities for practising tourism, in 

particular the so called eco-tourism which 

could be an alternative income, generating in 

this way different activities that could offer 

potential development, due to the unique 

landscapes, native hospitability, wellconserved 

traditions and food. 

Noteworthy modernization, development and 

innovation are mandatory for Romania’s 

tourism, together with creating modern and 

competitive tourism products. The main 

reasons why tourism is not that well 

developed in these areas are that there is a 

lack of organisation, promotion, information 

as well as qualitatively low tourism 

infrastructure. 

The mountain and rural areas are affected by 

the significant lack of infrastructure which 

retrains both the economic development and 

the most important: the quality of life. The 

roads are the most important transportation 

375 

routes, but the quality and development of 

rural road and traffic is a long way behind the 

European standard. The undevelopment of 

the road blocks the economic growth, and 

interferes with other difficulties concerning 

the medical and educational servicies. The 

road represents the key element for the 

economic development among the fields of 

human, social and economic develpment. 

Watter supply is another key for the quality 

of life, as well as in a direct relation to the 

development of economic activities in rural 

areas. As an interesting fact in the less 

favoured areas of Romania only 33% of the 

rural inhabitans have access to the public 

water network. 

As opportunities for development it is 

important the exploitation of wood, not 

exceedind the annual operating capacity, 

exploiting accessory products (berries, herbs, 

mushrooms, pine cones), extend forestry 

product processing industry taking into 

account regional sustainable development, 

increasing mechanization of forestry products 

and create a system to record the number of 

the cutten trees. 

Attracting investors requires a modern 

infrastructure, forest road development, 

execution of simple pathways for wood 

processing machinery. In addition, the 

mechanization of woodworking would be a 

step forward in what development of 

mountain areas is concerned. 

North-East less favoured area 

The underdevelopment of this area appears to 

be correlated with rising unemployment, the 

prevalence of rural activities and failure to 

attract foreign investors. The North-East area 

is marked by the dependence on agriculture, 

and especially its proximity to other 

disadvantaged regions (Ukraine and 

Moldavia). It is the only region in the country 

with positive natural growth, the share of 

young population is high, and as positive 

aspects there is an effective education system 

in the large cities and skilled labor. 

As weakness points, the rate of poverty is

high along with the rate of migration to the 

outside region, there is a lack of openness to 

change and especially modernization, the 

crime rate is higher that in the developed 

regions. To these are added the aging 

population of the region, undeveloped spirit 

of entrepreneurship, poor business support 

infrastructure, poor implementation of 

product quality assurance system, the low 

level of industrialization of wood, insufficient 

promotion of the region's investment 

potential, lack of cooperation between 

universities and the poor quality of public 

servicies, the lack of specific knowledge in 

business development, namely the creation of 

new jobs. 

From an economic perspective, there is 

already a development of the activities related 

to the exploitation and wood processing, good 

financial banking and insurance 

infrastructure, and a large numer of 

specialists in forestry, trade and public 

servicies. The industrial structure is fragile 

mainly due to the usage of outdated 

technology, having a negative impact on 

productivity and economic efficiency. 

In terms of tourism there is a high share of 

private ownership in the tourism sector, the 

existence of spa and national cultural centers, 

along with the existence of developing the 

religious tourism (the presence of 

monasteries), mountain sports (hinking, 

skiing, paragliding), and the existence of 

traditional folklore events of the region. 

The road infrastructure is poorly developed 

between East-West areas of the region, there 

is also a low percentage of upgraded roads, 

together with the density of railway lines 

being unequal in accordance with the 

distribution of the electrified railways. 

Furthermore, the small numer of cities with 

natural gas distribution systems, 

underdeveloped telephone network in rural 

areas, poor infrastructure development for 

leisure activities and outdated water treatment 

and waste management systems, are the main 

things to be changed for developing this 

deprived area. 

376 

As geographical influence, the winter 

contributes to disadvantage the area as many 

investors fear the harshness of the winter cold 

weather (in transport, industry). 

The North-East region may become a major 

area of concern for investors, EU supporting 

less favoured areas. There is a legislative 

framework regarding the development of this 

area, providing many facilities to investors, 

including potential experienced staff for 

research. 

As opportunity, it should be taken into 

account the privatization and restructuring of 

state-owned companies, the legal framework 

of local government involvement in regional 

development is being favorable to this region. 

Aceelerating the economic recovery and 

sustainable development represents the key 

objectives to ensure the overpassing of the 

actual life condition. Development involves 

creating the necessary infrastructure to 

promote the business environment, 

supporting SME 41 s, developing 

entrepreneurship, rural development. 

In connection with development, the 

industrial potential should be reevaluated in 

order to promote existing and new branches 

of industry. Building up a business 

infrastructure should help the development of 

the profitable activities for the less-favoured 

areas, having a positive impact on the 

deprived area only with a strict control of the 

local authorities (in the occurrence of 

phantom companies without creating new 

jobs, or poorly paid) and support for access to 

new technologies, efficient and clean. 

Therefore, to ensure the development of the 

region, it is required effective cooperative 

ventures to develop effective managerial 

skills and support technology development. 

Although, being a less-favoured area with 

limited natural resources, human resource is 

considered a valuable treasure of this region. 

Investing in human resources is a priority of 

any regional development strategy. Just by 

raising the educational standards and human 

41 Small and Medium Enterprises.

esource training system, economic recovery 

could be achived, raising the standard of 

living. 

Priority strategic directions in the upcoming 

years should focus on upgrading old roads, 

upgrading rural telecommunications 

infrastructure, modernization of water 

systems, municipal waste by attracting 

European funding grants. economic growth is 

the most important indicator of the 

development of a region. In this way creating 

a competitive economy is a decisive factor in 

the evolvment of an area or industrial 

enterprise. 

There are assumptions that can form the basis 

for economic recovery, namely: 

-existence of an industrial infrastructure in 

almost all sub-branches (machine building, 

chemical, petrochemical, food, textiles, 

medicines, wood, etc.); 

-existence of a well-trained personnel. 

-existence of companies in the industry, 

which benefited from consistent and fresh 

capital. 

-dynamics of small and medium enterprises. 

Tourism development in the NE 

disadvantaged 

Tourism is a priority, and by the enhancement 

of existing targets, improving the quality of 

tourism services, responding to the actual 

requirements of customers, the image of 

tourism could be improved by creating a 

positive image of tourism in the area. 

The region presents many opportunities for 

various and complex recreational activities: 

religious-tourism, supported by the existence 

of an impressive number of churches and 

monasteries, historical monuments 

throughout the region; cultural-historical 

tourism, the existing museums, famous 

castles and a great cultural heritage and 

folklore of the region. 

For the economic progress, namely tourism, 

following investment in tourism, agrotourism 

support, upgrading roads in 

mountainous areas can sketch some results: 

-Increase the number of visitors to the North- 

377 

East region, and investing money in 

upgrading areas. 

-Increase the volume of private investment in 

tourism. 

-Increase the volume of requests for 

construction of vacation homes that bring 

additional revenue to local budgets. 

-Creating a positive image that offers 

prospects for large-scale business and 

investment. 

-Working with the media, advertising that 

will help promote the area. 

-Improving the financial situation of the 

disadvantaged population. 

-Scale applications for sponsorship grants for 

construction of new technologies in the health 

system. 

Financial facilities given to the lessfavoured 

areas. 

To assist disadvantaged areas, the Romanian 

government has proposed that by 2013, these 

areas should be given various grants and tax 

breaks to help economic development. 

For new investments made in a deprived area, 

investors can benefit from one or more of the 

following features: 

-full refund of customs duties for machinery, 

equipment, equipment, vehicles (excluding 

cars), other depreciable assets which are 

imported to carry and operate investments in 

the area, as well as raw materials, spare parts 

and / or imported components necessary to 

achieve performance in the area 

-exemption from profit tax during the lifetime 

of the deprived area 

-financing special programs, approved by 

Government Decision 

-finance companies investment projects, 

through co-participation of the state to the 

social capital 

-discounted rates for car transport, inland 

waterways and rail 

-reducing income tax by up to 50%. 

These measures taken by the Government, 

aim at equalizing currently considered 

disadvantaged areas, with already developed 

regions of Romania.

CASE STUDY: THE IMPACT OF STATE 

AID TO ROMANIA LESS-FAVOURED 

AREAS -ROMANIAN GOVERNMENT 

AND COMPETITION COUNCIL 

2000-2009 

TOTAL: 

Tax Incentives 

584 

Nonrefundable 

2. 

funds 

300.000 

250.000 

200.000 

150.000 

100.000 

50.000 

0 

378 

Regional development policy is an essential 

component of the reform process in Romania, 

mainly aimed at reducing economic and 

social imbalances accumulated, preventing 

the emergence of new imbalances and 

support the overall sustainable development 

of all regions of the country. 

Evolution of regional aid in Romania during 2000-2009 (RON) 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 

66. 384 

63. 800 

252. 017 

230. 957 

21. 060 

237. 110 

207. 568 

29. 152 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 

194. 155 

179. 476 

13. 719 

TOTAL: 

Tax Incentives 

Non-refundable funds 

The general trend of decrease in the volume of such aid by 2008 is because the vast majority of 

aid was granted as tax incentives. Since 2007, new schemes have been initiated with the 

objective of regional state aid, in full compliance with EU rules. 

Also while checking operators in June 2010 (a total of 109 from disadvantaged areas), a study 

was conducted on two questions: 

249. 353 

245. 957 

2. 098 

99. 644 

77. 391 

20. 944 

100. 948 

84. 162 

16. 655 

67. 582 

29. 080 

38. 502 

154. 226 

13. 206 

141. 020 

179. 376 

7. 130 

172. 246

1. "What are the problems faced by the society?” 

2% 

2% 5% 

3% 3% 

8% 

So it may be noted that the majority consider that there is a low demand due to the current 

crisis, followed by those who believe that there is a huge financial jam and the high prices of 

utilities. 

2. "What measures do you think the state should take in order to raise the social-economic level 

of the disadvantaged area? " 

5% 

8% 

13% 

14% 

15% 

55% 

Conclusion 

Disadvantaged areas in Romania were 

considered tax havens, the ghost business 

having prospered without bringing any 

positive aspects to the less-favoured region. A 

2010 study, conducted by Pro TV campaign, 

showed that 33% of Romanians live with a 

wage of about 200 euros per month. Between 

1998 and 2010 there were approximately 160 

cities declared disadvantaged, where many 

companies tried to move its headquarters to 

Problems of the Society 

56% 

379 

Low demand and high 

taxation 

Financial Jam 

High prices of utilities and 

raw materials 

Lack of qualified labor 

Developing the less-favoured areas 

4% 4% 3% 

Further tax incentives 

Adequate infrastructure 

Support for jobs and training 

Simplified procedure for 

accessing funds 

the enjoyment of the exemptions (about 6 

billion RON). Companies wishing to relocate 

their headquarters in these areas had no such 

development project, creating a monopoly on 

the labor market, taking advantage prodiving 

extremly low wages for people who were 

wiling to work. 

Moreover, a investor from a deprived area is 

required to engage minimum 2 employees 

residing in that area, which would lead to 

lower unemployment in the disadvantaged

egion. State aid to disadvantaged areas led 

the companies to develop diversified 

economic activity, the population has become 

more responsive to the conversion process. 

Most companies have relied exclusively on 

these grants from the government instead of 

continuing research and finding its own 

funds, tax incentives were an additional cost 

for Ministry of Public Finance, who had to 

make numerous tax inspection. For the best 

possible structural funds for the development 

of disadvantaged areas is recommended to 

promote information campaigns in both 

economic agents and local authorities. The 

authorities also need to simplify legislation 

for obtaining grants. Attracting investors 

outside the LFA can be achieved by creating 

industrial parks along with investment in 

local infrastructure. 

Linked to the yield, most traders have noticed 

a decline in profit in 2005, the period during 

which state aid stopped, increases recorded in 

2006 and 2007, followed by a period of 

declining profits, because of the decreased 

number funds granted. Migration factor (or 

even interregional migration in other 

European countries) resulted in a decrease of 

GDP especially the North-East region. 

However, there are positive signs, as 

investors obtained licenses in less-favoured 

areas, have created an estimated 44,300 new 

jobs (Source: The Competition Council in the 

year 2009), representing about 5.3% of the 

total unemployment number. 

Less-favoured areas in Romania could easily 

disappear if the political factor would not 

have direct impact on the funds granted, only 

changing legislation and eliminating regional 

bureaucracy, would lead to an improvement 

in the economic situation of each region. 

380 

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Kuyenvenhoven, A., Ruben, R., Pender, J., 

Sustainable Poverty Reduction in Lessfavoured 

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Strategies, 2007 


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resource use, 2003 

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