Publication:
Reviving Romania's Growth and Convergence Challenges and Opportunities : A Country Economic Memorandum

Loading...
Thumbnail Image
Files in English
English PDF (6.91 MB)
364 downloads
English Text (547.61 KB)
265 downloads
Date
2013-06-21
ISSN
Published
2013-06-21
Author(s)
Editor(s)
Abstract
This Country Economic Memorandum (CEM) sets a framework for a dialogue on inclusive economic growth and income convergence in Romania. Generous Foreign Direct Investment (FDI) and other financial inflows lifted consumer demand, built up key industries, modernized wholesale trade and unleashed the movement of labor from low-productivity activities like agriculture towards high-productivity activities like manufacturing. Public and private investments in education lifted tertiary education enrollment from 12 to 23 percent. Preliminary calculations suggest that this growth was shared even after the crisis, as the income of the bottom 40 percent of the population grew by 5.5 percent on average during the 2000-2011 periods, a pace slightly above the 4.8 percent growth in the income of all households and the 4.1 percent average growth. Achievements notwithstanding, there is little room for complacency. The report discusses the immediate constraints to economic growth in areas where the short-term pay-off is high rather than covering all potential sources of growth for Romania. Although these are only the initial steps to reignite growth, the challenges of addressing each of these constraints should not be underestimated. Tackling them effectively demands a strong strategic vision, meticulous planning, and policy coordination. A significant amount of strategic communication of the benefits of the outlined reforms for the country will also be required since the roadblock to shaping and implementing these policies is likely to be vested interests, institutional inertia and lack of political consensus. In short, the crisis revealed the weakness of Romania's past growth model: it was based to a large extent on consumption and short-term capital inflows rather than on sustained productivity increases in tradable sectors and it concealed significant inefficiencies in the public sector.
Link to Data Set
Citation
World Bank. 2013. Reviving Romania's Growth and Convergence Challenges and Opportunities : A Country Economic Memorandum. © World Bank. http://hdl.handle.net/10986/16036 License: CC BY 3.0 IGO.
Associated URLs
Associated content
Report Series
Other publications in this report series
Journal
Journal Volume
Journal Issue

Related items

Showing items related by metadata.

  • Publication
    Uruguay Policy Notes : Challenges and Opportunities 2010-2015
    (Washington, DC, 2010-06-22) World Bank
    The policy notes have two objectives: (i) to present the incoming government team with a menu of policy options in areas where the World Bank has local and international experience; and (ii) to provide a framework for the dialogue between the new governments and the World Bank on the new Country Partnership Strategy (CPS). As such, the discussion of these notes with the authorities was also an opportunity to undertake preliminary consultations on the Bank's support to Uruguay for 2010-2015. The themes of the notes were selected by the outgoing authorities based on ongoing and completed World Bank work, and they prioritize areas where Bank cooperation would add the most value. Uruguay's economy is small, but it has many strengths and high potential for growth and social development. The country has a long democratic tradition, a political system characterized by clear rules of the game and governability, and solid institutions at all levels. Uruguay is one of the most equitable countries in Latin America and enjoys a social peace notable in the region. Good macroeconomic management following the 2002 crisis has reduced country vulnerabilities and strengthened confidence in its institutions. These characteristics are very valuable assets for promoting foreign and domestic investment, essential to sustain the high growth achieved in recent years. Another asset is the high coverage of the education system, although education quality has recently become a challenge.
  • Publication
    Russian Economic Report, No. 24, March 2011
    (Washington, DC, 2011-03) World Bank
    Despite the recent slowdown, the underlying growth of the global economy remains solid. After a 4 percent growth in 2010, Russia's real output is expected to grow 4.4 percent in 2011, increasingly driven by domestic demand. Russia's households have absorbed the food price shock thanks to a combination of higher wages and pensions, and resort to private and public safety nets. The country emerged from the global recession with lower unemployment and poverty than feared. But global risks and uncertainties increased with the new oil shock. Although the short-term impact will be positive for Russia's export and fiscal revenues, there is no room for complacency. Macroeconomic policy should focus on the short-term objective of controlling inflation and medium-term fiscal adjustment towards long-term, sustainable level of non-oil fiscal deficit. Improving the efficiency of public expenditure to create fiscal space for productive infrastructure and strengthening the investment climate for the private sector remain among key long-term challenges. The ongoing rethinking of the government's long-term strategy and a period of high oil revenues provide an opportunity to focus on these long-term issues more forcefully than during the global crisis.
  • Publication
    Poland - Mazowieckie Public Expenditure Review Local Responses to the Global Economic Crisis
    (World Bank, 2010-04-29) World Bank
    This report examines the fiscal prospects of major units of sub-national government in the voivodship (province) of Mazowieckie and proposes a series of reforms in recurrent spending and capital investment planning. Mazowieckie, the seat of Warsaw, is the heart of the Polish economy. While Poland is weathering the current global economic downturn fairly well, the sub-national governments of Mazowieckie face considerable fiscal uncertainties. A long period of rising revenues has come to an end. At the same time, both the province and the City of Warsaw are embarked upon major programs of capital investment. While European Union (EU) funds could help finance some of these investments, there is evidence that the money from Brussels is not reaching the highest priority projects. The objective of this report is to examine how the major units of sub-national government can respond - how they can restrain the growth of deficits and allocate funds more wisely. The report is organized in four sections. The first describes the regional, macroeconomic, and institutional context of the sub-national governments. The following three sections examine the fiscal situation of Warsaw; the Voivodship, and three case study'cities.
  • Publication
    Privatization and Regulation of Transport Infrastructure in the 1990s
    (Washington, DC: World Bank, 2001-04) Estache, Antonio
    Although the link between improved infrastructure services and economic growth is uncertain, it is clear that reforms aimed at creating competition and regulating natural monopolies establish an environment conducive to private sector participation, incentives for companies to strive for efficiency savings that can ultimately be passed on to consumers, and greater provision of services (such as faster roll-out of infrastructure or innovative solutions to service delivery for customers not connected to an existing network). In determining the form that infrastructure restructuring might undertake or the design of a regulatory agency, policymakers can generally benefit from a review of the experiences of other countries. A key element of any decision making process should be a review of how the various types of reform will affect the efficiency of the sector and whether they will increase private financing of its significant investment needs.
  • Publication
    Russian Economic Report, No. 28, Autumn 2012
    (World Bank, Washington, DC, 2012-10) World Bank
    Early in the year, as the global economy was slowing and the euro area entered a recession, Russia's economy held steady. But now, as 2012 is entering its final quarter, growth is slowing. Just at a time when Russia's output levels have exceeded the pre-crisis peak, the economy is settling onto a lower trajectory, even though oil prices have stayed high. But let us start with the strong points. The economy had a good first half of the year. While growth was stalling in Europe and slowing in other emerging economies, it remained steady in Russia. Key economic indicators were near or at record levels: the current account surplus stayed high and the Central Bank of Russia added to its reserves, helping to bolster market confidence. Capital outflows, long regarded as one of the soft spots of Russia's economy, declined in the second and third quarters of 2012 from the peaks in the previous two quarters. Whereas many countries in Europe are struggling with large public debt and high fiscal deficits, Russia's federal government public debt is close to single digit and the fiscal balance is in surplus. Inflation and unemployment rates declined to their lowest level in two decades. As people's purchasing power improved and more people had jobs, fewer people were in poverty than at any time since the beginning of the economic transition. A challenging external environment and worsening sentiments among businesses and consumers translate into weak growth prospects. Excluding the crisis years of 1998 and 2009, growth in 2012 is set to decline to its lowest rate in a decade and a half. And 2013 is unlikely to look much better. The weak outlook means that strong, three-pronged policy action is essential to reinvigorate the economy. First, economic policies have to ensure stability. The recent tightening in monetary policy was an important step in this direction. Second, Russia has to build buffers against the external volatility. This means replenishing the reserve fund, moving towards inflation targeting and strengthening banking supervision. Finally, the government has to lift the growth potential of the economy. This means raising productivity and competitiveness, diversifying the economy, and improving transport connectivity, as discussed in the last section of this report, in line with its longer-term economic policy goals. Making headway on this agenda will enable Russia to lift growth above 4 percent and more.

Users also downloaded

Showing related downloaded files

  • Publication
    Poverty, Prosperity, and Planet Report 2024
    (Washington, DC: World Bank, 2024-10-15) World Bank
    The Poverty, Prosperity, and Planet Report 2024 is the latest edition of the series formerly known as Poverty and Shared Prosperity. The report emphasizes that reducing poverty and increasing shared prosperity must be achieved in ways that do not come at unacceptably high costs to the environment. The current “polycrisis”—where the multiple crises of slow economic growth, increased fragility, climate risks, and heightened uncertainty have come together at the same time—makes national development strategies and international cooperation difficult. Offering the first post-Coronavirus (COVID)-19 pandemic assessment of global progress on this interlinked agenda, the report finds that global poverty reduction has resumed but at a pace slower than before the COVID-19 crisis. Nearly 700 million people worldwide live in extreme poverty with less than US$2.15 per person per day. Progress has essentially plateaued amid lower economic growth and the impacts of COVID-19 and other crises. Today, extreme poverty is concentrated mostly in Sub-Saharan Africa and fragile settings. At a higher standard more typical of upper-middle-income countries—US$6.85 per person per day—almost one-half of the world is living in poverty. The report also provides evidence that the number of countries that have high levels of income inequality has declined considerably during the past two decades, but the pace of improvements in shared prosperity has slowed, and that inequality remains high in Latin America and the Caribbean and Sub-Saharan Africa. Worldwide, people’s incomes today would need to increase fivefold on average to reach a minimum prosperity threshold of US$25 per person per day. Where there has been progress in poverty reduction and shared prosperity, there is evidence of an increasing ability of countries to manage natural hazards, but climate risks are significantly higher in the poorest settings. Nearly one in five people globally is at risk of experiencing welfare losses due to an extreme weather event from which they will struggle to recover. The interconnected issues of climate change and poverty call for a united and inclusive effort from the global community. Development cooperation stakeholders—from governments, nongovernmental organizations, and the private sector to communities and citizens acting locally in every corner of the globe—hold pivotal roles in promoting fair and sustainable transitions. By emphasizing strategies that yield multiple benefits and diligently monitoring and addressing trade-offs, we can strive toward a future that is prosperous, equitable, and resilient.
  • Publication
    Europe and Central Asia Economic Update, Fall 2024: Better Education for Stronger Growth
    (Washington, DC: World Bank, 2024-10-17) Izvorski, Ivailo; Kasyanenko, Sergiy; Lokshin, Michael M.; Torre, Iván
    Economic growth in Europe and Central Asia (ECA) is likely to moderate from 3.5 percent in 2023 to 3.3 percent this year. This is significantly weaker than the 4.1 percent average growth in 2000-19. Growth this year is driven by expansionary fiscal policies and strong private consumption. External demand is less favorable because of weak economic expansion in major trading partners, like the European Union. Growth is likely to slow further in 2025, mostly because of the easing of expansion in the Russian Federation and Turkiye. This Europe and Central Asia Economic Update calls for a major overhaul of education systems across the region, particularly higher education, to unleash the talent needed to reinvigorate growth and boost convergence with high-income countries. Universities in the region suffer from poor management, outdated curricula, and inadequate funding and infrastructure. A mismatch between graduates' skills and the skills employers are seeking leads to wasted potential and contributes to the region's brain drain. Reversing the decline in the quality of education will require prioritizing improvements in teacher training, updated curricula, and investment in educational infrastructure. In higher education, reforms are needed to consolidate university systems, integrate them with research centers, and provide reskilling opportunities for adult workers.
  • Publication
    State and Trends of Carbon Pricing 2024
    (Washington, DC: World Bank, 2024-05-21) World Bank
    This report provides an up-to-date overview of existing and emerging carbon pricing instruments around the world, including international, national, and subnational initiatives. It also investigates trends surrounding the development and implementation of carbon pricing instruments and some of the drivers seen over the past year. Specifically, this report covers carbon taxes, emissions trading systems (ETSs), and crediting mechanisms. Key topics covered in the 2024 report include uptake of ETSs and carbon taxes in low- and middle- income economies, sectoral coverage of ETSs and carbon taxes, and the use of crediting mechanisms as part of the policy mix.
  • Publication
    Supporting Youth at Risk
    (World Bank, Washington, DC, 2008) Cohan, Lorena M.; Cunningham, Wendy; Naudeau, Sophie; McGinnis, Linda
    The World Bank has produced this policy Toolkit in response to a growing demand from our government clients and partners for advice on how to create and implement effective policies for at-risk youth. The author has highlighted 22 policies (six core policies, nine promising policies, and seven general policies) that have been effective in addressing the following five key risk areas for young people around the world: (i) youth unemployment, underemployment, and lack of formal sector employment; (ii) early school leaving; (iii) risky sexual behavior leading to early childbearing and HIV/AIDS; (iv) crime and violence; and (v) substance abuse. The objective of this Toolkit is to serve as a practical guide for policy makers in middle-income countries as well as professionals working within the area of youth development on how to develop and implement an effective policy portfolio to foster healthy and positive youth development.
  • Publication
    World Development Report 1984
    (New York: Oxford University Press, 1984) World Bank
    Long-term needs and sustained effort are underlying themes in this year's report. As with most of its predecessors, it is divided into two parts. The first looks at economic performance, past and prospective. The second part is this year devoted to population - the causes and consequences of rapid population growth, its link to development, why it has slowed down in some developing countries. The two parts mirror each other: economic policy and performance in the next decade will matter for population growth in the developing countries for several decades beyond. Population policy and change in the rest of this century will set the terms for the whole of development strategy in the next. In both cases, policy changes will not yield immediate benefits, but delay will reduce the room for maneuver that policy makers will have in years to come.