World Bank2013-10-022013-10-022013-06-21https://hdl.handle.net/10986/16036This 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.en-USCC BY 3.0 IGOACCOUNTABILITYAGGREGATE DEMANDAGRICULTURAL PRODUCTIONAGRICULTUREARABLE LANDARREARSASSET MANAGEMENTAUDITINGAUDITSAUTOMOBILEAUTONOMYBANK CAPITALIZATIONBANK LOANSBANKING SECTORBANKING SECTORSBANKING SYSTEMBANKRUPTCYBANKSBENCHMARKINGBENCHMARKSBOARDS OF DIRECTORSBONDSBORROWING COSTSBORROWING REQUIREMENTBUDGETINGBUSBUS SERVICESCAPITAL FLOWSCAPITAL INFLOWSCARCIVIL SERVICECOMPARATIVE ADVANTAGESCOMPETITIVENESSCONSOLIDATIONCONSUMERSCORPORATE GOVERNANCECOST OF CAPITALCOST OF TRANSPORTCPICREDIT GROWTHCURRENCYDEBTDEBT MANAGEMENTDEFICITSDEREGULATIONDEVELOPMENT STRATEGYDISPOSABLE INCOMEDRAINAGEECONOMIC ACTIVITYECONOMIC BOOMECONOMIC COOPERATIONECONOMIC GROWTHECONOMIC POLICIESECONOMIC SIZEECONOMIC STRUCTUREENTREPRENEURSHIPEQUIPMENTEXCHANGE RATEEXPENDITUREEXPORT GROWTHEXPORTEREXPORTSEXTERNAL DEBTEXTERNALITIESFINANCIAL CRISISFINANCIAL INFORMATIONFINANCIAL INSTITUTIONSFINANCIAL MANAGEMENTFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL SECTORFINANCIAL SECTOR INDICATORSFINANCING SOURCESFISCAL BURDENFISCAL DEFICITFISCAL DEFICITSFISCAL DISCIPLINEFISCAL POLICIESFISCAL POLICYFISHINGFOREIGN DIRECT INVESTMENTFREIGHTFREIGHT TRANSPORTFUELGAS PRICESGAS SECTORGDPGDP PER CAPITAGOVERNMENT BORROWINGGOVERNMENT INVOLVEMENTGROSS DOMESTIC PRODUCTGROSS MARGINGROSS VALUEGROWTH POTENTIALGROWTH RATEHOLDINGHOUSINGHUMAN CAPITALHUMAN RESOURCEHUMAN RESOURCE MANAGEMENTHUMAN RESOURCESIMPLEMENTATION STRATEGIESIMPLICIT TAXINFLATIONINFORMATION SYSTEMSINFORMATION TECHNOLOGYINFRASTRUCTURE INVESTMENTINSTITUTIONAL INVESTORSINTEREST RATEINTERNATIONAL FINANCIAL INSTITUTIONSINTERNATIONAL STANDARDSINVESTINGINVESTMENT SPENDINGLABOR FORCELABOR MARKETLABOR MARKETSLABOR PRODUCTIVITYLAND TITLINGLAWSLEGISLATIONLEVEL PLAYING FIELDLIVING STANDARDSLOCAL CURRENCYLOCAL GOVERNMENTSMACROECONOMIC CONDITIONSMACROECONOMIC MANAGEMENTMACROECONOMIC POLICIESMACROECONOMIC POLICYMACROECONOMIC STABILITYMARKET ACCESSMARKET INTEGRATIONMARKET LIBERALIZATIONMARKET PRICESMARKET REGULATORSMATURITIESMIGRATIONMINISTRIES OF FINANCEMINISTRY OF TRANSPORTMOBILITYMONETARY FUNDMONETARY POLICIESMOTORWAYSNATIONAL BANKNONPERFORMING LOANSNPLOILOPPORTUNITY COSTPARTIAL PRIVATIZATIONPASSENGER SERVICEPASSENGERSPAYMENT SYSTEMPENALTIESPENSIONPOLICY DECISIONSPOLICY MAKERSPOLICY RESPONSEPRICE STABILITYPRIVATE CAPITALPRIVATE CONSUMPTIONPRIVATE INVESTMENTSPRODUCTIVITY GROWTHPRODUCTIVITY INCREASESPROFITABILITYPRUDENTIAL REGULATIONSPUBLIC DEBTPUBLIC EXPENDITURESPUBLIC FINANCEPUBLIC FINANCESPUBLIC GOODSPUBLIC INVESTMENTPUBLIC INVESTMENTSPUBLIC OFFERINGPUBLIC OFFERINGSPUBLIC POLICYPUBLIC ROADSPUBLIC SPENDINGPURCHASING POWERQUALITY STANDARDSRAILRAIL INFRASTRUCTURERAIL NETWORKRAIL SERVICERAIL SERVICESRAIL TRANSPORTRAILROADSRAILWAYRAILWAYSREAL EXCHANGE RATEREAL GDPREGULATORY FRAMEWORKRESIDENTIAL CONSUMERSRESOURCE ALLOCATIONRESOURCE MANAGEMENTRETURNRISK AVERSIONROADROUTESRURAL ROADSSAFETYSAFETY NETSAFETY NETSSAVINGSSEWAGESHAREHOLDERSHAREHOLDERSSHORT MATURITIESSHORT-TERM CAPITALSOFT BUDGET CONSTRAINTSSTATE ENTERPRISESSTOCK EXCHANGESTOCK MARKETSTRATEGIC INVESTORSSTRUCTURAL CHANGESUSTAINABLE GROWTHTAXTAX ADMINISTRATIONTAX COLLECTIONTAX RATESTAX REVENUESTAXATIONTOLLTOTAL DEBTTRADE DEFICITTRADINGTRAINSTRANSPARENCYTRANSPORTTRANSPORT INFRASTRUCTURETRANSPORT NETWORKTRANSPORT POLICYTRANSPORT SECTORTREASURYTREATYUNEMPLOYMENTUNEMPLOYMENT RATEUNEMPLOYMENT RATESURBANIZATIONVALUE ADDEDWAGESWorld Bank10.1596/16036