Romania's Economy in the Register Dominated by Antitheses

The topic I have addressed deserves to extend, if not analyses, at least observations on contemporary Romanian economy. After the social change brought about by the events of December 1989 and the early 1990s, our economic life first endured the dangerous association between “showcase democracy” and “survival society,” along with the desired transition from a command economy to a market economy entangled with anomie. Subsequently, it recorded the salutary affirmation of the consensus command regarding integration/adherence to European/euroatlantic structures and noted, not least, the compromise of decentralization intentions within a state, on the one hand ready to govern initiative (part of the agents' initiatives), and on the other hand in no hurry to establish a competitive climate conducive to business.

In general terms, we appreciate that the type of economy associated with today’s Romania is one dominated by contradictions; as such, it can be presented in antithetical formulas. Thus, a first opposition exists between the “official” (legal) expression and the “underground” (unfiscalized) expression of the economy. Time and again, officials of the Romanian state and/or their spokespersons have drawn attention to the high level of tax evasion (often citing values of over 25% of GDP).

Then, the “Romanian economy” (local capital at “suboptimal rates”) is configured in contrast with the “economy in Romania”, predominantly represented by foreign capital and at the discretion of its owners – financial institutions, large companies, foreign states. In our country, we have the opportunity to distinguish between the a-economic/non-economic world (natural economy, subsistence, primarily linked to the rural environment) and the economic world proper (constantly changing, a world of work, immediate needs, and perpetual dissatisfaction).

Regarding economic institutions, we clearly distinguish between the policies promoted by global or regional organizations (from the IMF to EU structures) and those adopted by major internal decision-makers (BNR, Government). In addition, it is correct to mention the alternation of the “economy of ecstasy” – present during periods of growth and fueled by pro-cyclical policies – with the “economy of agony”, associated with moments of crisis, in which “downward adjustment” of incomes, based on severe fiscal or budgetary measures, “the policy of expensive money,” orchestrated by the Central Bank, and restrictive rules regarding subsidies, premiums, or state aid frequently illustrate the attempts at macro-stabilization.

Among the constants of the domestic economy in this (early) century, it is appropriate to note the very high budget deficit (having reached a high level of GDP – 6% – in 2009), the balance of payments deficit which “keeps it afloat,” the increasing level of public debt (both internal and external), the “hidden unemployment in statistics,” inflation developing values higher than those of the EU economies, but also the relatively stable exchange rate (the great success of BNR), dependence on incoming capital from abroad, the unhealthy evolution of GDP, generated at times by real estate and massive consumption booms, at others by credit and imports, plus the “renunciation”, sometimes de jure (unfavorable sales), other times de facto (concessions with low royalties, for instance), of many of the resources of the soil and subsurface.

Economic Romania in the register dominated by antitheses

ECONOMIC  Systems

Romanian Economy Caught in the Grip of Antitheses

The theme we have addressed deserves to extend, if not the analyses, at least the observations on the contemporary Romanian economy. After the social change brought about by the events of December 1989 and the early 1990s, our economic life first endured the dangerous association between "showcase democracy" and "survival society," along with the desired transition from a command economy to a market economy with anomie. Subsequently, it witnessed the salutary affirmation of consensus command regarding integration/adherence to European/ Euro-Atlantic structures and, last but not least, the compromise of decentralization intentions in a state, partly prepared to control the initiative (part of the agents' initiatives) and, on the other hand, in no hurry to establish a competitive business environment.

In general, we appreciate that the type of economy associated with present-day Romania is one dominated by contradictions; therefore, it can be presented in antithetical formulas. Thus, a first opposition exists between the "official" (licit) and the "underground" (unfiscalized) expression of the economy. More than once, Romanian state dignitaries and/or their spokespersons have drawn attention to the high level of tax evasion (often citing values of over 25% of GDP).

Then, the "Romanian economy" (domestic capital at suboptimal levels) is contrasted with "the economy in Romania," predominantly represented by foreign capital and subject to the discretion of its owners - financial institutions, large companies, foreign states. In our country, we have the opportunity to distinguish between the non-economic/economic world (subsistence, natural economy, mainly linked to rural areas) and the actual economic world (constantly changing, a world of work, immediate needs, and perpetual dissatisfaction).

As for economic institutions, we can clearly distinguish between the policies promoted by global or regional organizations (from the IMF to EU structures) and those adopted by major internal decision-makers (National Bank of Romania, Government).

Additionally, it is correct to mention the alternation between the "economy of ecstasy" - present in periods of growth and fueled by procyclical policies - and the "economy of agony," associated with crisis moments, where downward income adjustments, based on severe fiscal or budgetary measures, "tight money policy" orchestrated by the Central Bank, and restrictive rules on subsidies, grants, or state aid most frequently illustrate attempts at macrostabilization.

Among the constants of the native economy in this (early) century, it is appropriate to note the very high budget deficit (reaching a high share of GDP - 6% - in 2009), the balance of payments deficit that "keeps it hanging," the increase in public debt levels (both internal and external), the "hidden in statistics" unemployment, inflation reaching values higher than those of EU economies, but also the relatively stable exchange rate (BNR's great success), dependence on foreign capital, the unhealthy evolution of GDP, generated at times by real estate and massive consumption booms, credit and imports, and the "abandonment," sometimes de jure (disadvantageous sales), other times de facto (concessions with low royalties, for example), of many of the soil and subsurface resources.

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