Economy of Romania
Encyclopedia
Romania has a developing, upper-middle income market economy
, the 11th largest in the European Union
by total nominal GDP and the 8th largest based on purchasing power parity. Romania entered the 1990s a relatively poor country by European standards, largely a result of the failed economic policies of Nicolae Ceauşescu
in the 1970s and of the failures of privatization in Romania during the 90s, which decreased the GDP by almost 50% and ruined the industry because of corruption. However the collapse of the Communist
regime in 1989, reforms in the 2000s and its recent entry
to the European Union have led to an improved economic outlook. Romania
has experienced growth in foreign investment
with a cumulative FDI totaling more than $100 billion since 1989, and has been referred to as a "Tiger
" due to its high growth rates and rapid development. Until 2009, Romanian economic growth was among the fastest in Europe (officially 8.4% in 2008 and more than three times the EU average). The country is a regional leader in multiple fields, such as IT
and motor vehicle production, and is expected to join the Eurozone
by 2014. Bucharest
, the capital city
, is one of the largest financial and industrial centres in Eastern Europe
.
Romania was heavily affected by the global financial downturn and gross domestic product contracted by 7.2% in 2009, forcing the government
to enact harsh austerity measures and borrow heavily from the IMF. The country's economic contraction continued in 2010 at a rate of 1.2%, while the budget deficit stood at 6.6%, below the IMF-agreed target of 6.8%. Forecasts predict a recovery of 1.5-2.8% in 2011.
After World War I, the application of radical agricultural reforms and the passing of a new constitution created a democratic framework and allowed for quick economic growth (industrial production doubled between 1923–1938, despite the effects of the Great Depression
). With oil production of 7.2 million tons in 1937, Romania ranked second in Europe and seventh in the world. The oil extracted from Romania was essential for the German war campaigns. Before World War II, it was Europe's second-largest food producer. In 1938, per-capita national income reached $94, surpassing other present-day developed European countries such as Greece
($76) or Portugal
($81). However, the Romanian economy still lagged behind its Western European counterparts.
, and switched to a socialist-style command economy. During this period the country experienced rapid industrialization in an attempt to create a "multilaterally developed socialist society". Economic growth was further fueled by foreign credits in the 1970s, but this eventually led to a growing foreign debt, which peaked at $11–12 billion; the latter was largely paid off during the 1980s by implementing severe austerity measures which deprived Romanians of basic consumer goods. In 1989, before the Romanian Revolution
, Romania had a GDP of about 800 billion lei, or $53.6 billion. Around 58% of the country's gross national income came from industry, and another 15% came from agriculture. The minimum wage was 2,000 lei, or $135.
Privatization
of industry was pursued with the 1992 transfer of 30% of the shares of some 6,000 state-owned enterprises to five private ownership funds, in which each adult citizen received certificates of ownership. The remaining 70% ownership of the enterprises was transferred to a state ownership fund, with a mandate to sell off its shares at the rate of at least 10% per year. The privatization law also called for direct sale of some 30 specially selected enterprises and the sale of "assets" (i.e., commercially viable component units) of larger enterprises.
As of 2008, inflation stood at 7.8%, up from 4.8% in 2007 estimated by the BNR at coming within 6% for the year 2006 (the year-on-year CPI
, published in March 2007, is 3,66%). Also, since 2001, the economy has grown steadily at around 6-8%. Therefore, the PPP per capita GDP of Romania in 2008 was estimated to be between $12,200 and $14,064.
Financial and technical assistance continued to flow in from the U.S., European Union, other industrial nations, and international financial institutions facilitating Romania's reintegration into the world economy. The International Monetary Fund
(IMF), World Bank
(IBRD), the European Bank for Reconstruction and Development
(EBRD), and the U.S. Agency for International Development (USAID) all had programs and resident representatives in Romania. Romania also attracted foreign direct investment, which in 2008 rose to $72 billion.
Romania was the largest U.S. trading partner in Central-Eastern Europe until Ceauşescu's 1988 renunciation of Most Favored Nation (non-discriminatory) trading status, the latter of which resulted in high U.S. tariffs on Romanian products. Congress approved restoration of the MFN status effective 8 November 1993, as part of a new bilateral trade agreement. Tariffs on most Romanian products dropped to zero in February 1994 with the inclusion of Romania in the Generalized System of Preferences (GSP). Major Romanian exports to the U.S. include shoes and clothing, steel, and chemicals. Romania signed an Association Agreement with the EU in 1992 and a free trade agreement with the European Free Trade Association
(EFTA) in 1993, codifying Romania's access to European markets and creating the basic framework for further economic integration. At the Helsinki Summit in December 1999, the European Union invited Romania to formally begin accession negotiations. In 2002, the target date of 2007 was set for Romania, along with Bulgaria, for its accession efforts. This was confirmed in 2003 at the Thessaloniki Summit and then in early 2005 Romania and Bulgaria
signed the adherence treaty to EU. They formally joined the EU on January 1, 2007.
During the latter part of the Ceauşescu period, Romania earned significant credits from several Arab countries, notably Iraq, for work related to the oil industry. In August 2005, Romania agreed to forgive 43% of the US$1.7 billion debt owed by an Iraq still largely occupied by the military forces of the U.S.-led "Coalition of the Willing
", making Romania the first country outside of the Paris Club
of wealthy creditor nations to forgive Iraqi debts.
Growth in 2000-07 was supported by exports to the EU, primarily to Italy and Germany, and a strong recovery of foreign and domestic investment. Domestic demand is playing an ever more important role in underpinning growth as interest rates drop and the availability of credit cards and mortgages increases. Current account deficits of around 2% of GDP are beginning to decline as demand for Romanian products in the European Union increases. Recent accession to the EU gives further impetus and direction to structural reform. In early 2004 the government passed increases in the Value Added Tax
(VAT) and tightened eligibility for social benefits with the intention to bring the public finance gap down to 4% of GDP by 2006, but more difficult pension and healthcare reforms will have to wait until after the next elections. Privatization of the state-owned bank Banca Comercială Română
took place in 2005. Intensified restructuring among large enterprises, improvements in the financial sector, and effective use of available EU funds is expected to accelerate economic growth. However, the Romanian economy was affected by the late 2000s recession
and is expected to contract in 2009, with a slight recovery predicted in 2010.
This is to be contrasted with enormous current account deficits. Low interest rate
s guarantee availability of funds for investment and consumption. For example, a boom in the real estate market started around 2000 and has not subsided yet. At the same time annual inflation
in the economy is variable and during recent years (2003–2008) has seen a low of 2.3% and high of 7.8%.
Most importantly, this poses a threat to the country's accession to the Eurozone. The Romanian government
plans for the euro
to replace the leu
in 2012. However, experts predict that this might happen as late as in 2014. From a political point of view, there is a trade-off between Romania's economic growth and the stability required for early accession to the monetary union. Romania's per-capita PPP
GDP is still only about a 40% of the EU average, while the country's nominal GDP per capita is about 25% of the EU average.
In the winter of 2004 the government introduced a flat tax
of 16% that was introduced on January 1, 2005. This is done in hope for higher GDP growth and greater tax collection rates. The reform, which some called a "revolution" in taxation, was met with mild discussions and some protests by affected working classes. Romania subsequently enjoyed the lowest fiscal burden in the European Union, until Bulgaria also switched to a flat tax of 10% in 2007.
The accession of Romania to the European Union has given the Union access to the Black Sea
.
, oil
, natural gas
, hydro
, nuclear
and wind
), a substantial, if aging, manufacturing base and opportunities for expanded development in tourism on the Black Sea and in the mountains.
for 2008 is $71.8 billion dollars, which represents 35.9% from the GDP estimated at $200 billion in 2008 according to the Ministry of Finance. National budget is increasing rapidly about 8 billion dollars each year for the interval of time 2005-2009. The national defense budget is around 2.38% of the GDP and it is estimated at US$ 4.78 billion for 2008.
Table showing selected PPP
GDPs and growth - 2007 to 2009 estimations:
Romania's Gross Domestic Product at purchasing power parity (PPP) is predicted to stand at $16,982.323 per capita in 2015, when the country is expected to join the Eurozone. If this estimation proves correct, Romania
will surpass Turkey
, Bulgaria
and Venezuela
in this aspect.
estimated that in 2002 99% of the urban and 94% of the rural population had access to electricity. In 2004, 91% of the urban and only 16% of the rural population had access to improved water supply and 94% of the urban population had access to improved sanitation. In 2007 there were about 19.5 million mobile phone users in Romania and about 7 million internet users.
The net average wage was 1,192 lei (roughly 380 USD) in March 2008, rose to 1,352 lei (430 USD) in 2009 and is expected to reach 1,819 lei (570 USD) by 2013. The income from salaries in Romania had the highest growth rate in the region during 2006. Despite recent growth Romania still has some of the lowest wages in the European Union, second only to Bulgaria
.
The leu ' onMouseout='HidePop("91513")' href="/topics/ISO_4217">ISO 4217
code RON; numeric code 946) is the currency of Romania. It is subdivided into 100 bani (singular: ban). On 1 July 2005, Romania underwent a currency reform, switching from the previous leu (ROL) to a new leu (RON). 1 RON is equal to 10,000 ROL. Romania joined the European Union on 1 January 2007 and it is expected to adopt the euro
in 2014. The leu has been among the world's top five performing currencies for much of the past two years.
. For this reason Romania must fulfill the Maastricht criteria.
1 Current EU member states that have not yet adopted the Euro, candidates and official potential candidates.
² No more than 1.5% higher than the 3 best-performing EU member states.
³ No more than 2% higher than the 3 best-performing EU member states.
4 Formal obligation for Euro adoption in the country EU Treaty of Accession
or the Framework for membership negotiations.
5 Values from May 2007 report. To be updated each year.
period. As a result, it is today a net oil and gas importer.
The pipeline network in Romania included 2,427 km for crude oil, 3,850 km for petroleum product
s, and 3,508 km for natural gas
in 2006. Several major new pipelines are planned, especially the Nabucco Pipeline
for Caspian
oilfields, the longest one in the world. Romania could cash in four billion dollars from the Constanta-Trieste pipeline
.
Romania has considerable natural resources for a country of its size, including coal
, iron
ore, copper
, chromium
, uranium
, antimony
, mercury
, gold
, barite
, borate
, celestine (strontium
), emery
, feldspar
, limestone
, magnesite
, marble
, perlite
, pumice
, pyrites (sulfur
), clay
, arable land
and hydropower
.
Romania's mineral production is adequate to supply its manufacturing output. Energy needs are also met by importing bituminous and anthracite coal and crude petroleum. In 2007 approximately 34 million tons of coal
, approximately 4,000 tons of tungsten
, 565,000 tons of iron ore, and 47,000 tons of zinc
ore were mined. Lesser amounts of copper, lead
, molybdenum
, gold, silver
, kaolin, and fluorite
also were mined.
The energy sector is dominated by state-owned companies such as Termoelectrica
, Hidroelectrica
and Nuclearelectrica
. Fossil fuels are the country's primary source of energy, followed by hydroelectric power; Romania has an estimated hydropower capacity of 36,000 GW per year. Due to dependency on oil and gas imports from Russia
, the country has placed an increasingly heavy emphasis on nuclear energy
since the 1980s. The Cernavodă Nuclear Power Plant
is currently the only one of its kind in Romania, although there are plans to build a second one in Translyvania, possibly after 2020. Wind power had an installed capacity of only 76 MW in 2008, however the country has the largest wind power potential in Southeast Europe
, with Dobruja
listed as the second best place in Europe to construct wind farms. As a result, there are currently investor connection requests for over 12,000 MW. There are also plans to build a number of solar power stations
, such as the Covaci Solar Park
, which will be one of the largest in the world.
Of the electricity generated in 2007, 13.1 percent came from nuclear plants then in operation, 41.69 percent from thermal plants (oil and coal), and 25.8 percent from hydroelectric sites.
As of 2009, there are only 280 km of motorways in use. However, there are plans to build over 1,000 km of motorways in the following years, including the Autostrada Transilvania
, which is currently the largest road-building project in Europe. The railway network
, which was significantly expanded during the Communist years, is the fourth largest in Europe.
Bucharest is the only city in Romania which as of 2009 has an underground
railway system, comprising both the Bucharest Metro
and the light rail
system managed by Regia Autonomă de Transport Bucureşti
. Although construction was planned to begin in 1941, due to geo-political factors, the Bucharest Metro was only opened in 1979. Now it is one of the most accessed systems of the Bucharest public transport network
with an average ridership of 800,000 passengers during the workweek
. In total, the network is 67 km long and has 49 stations.
is characterized by large wheat
farms. Dairy products, pork, poultry, and apple production are concentrated in the western region. Beef production is located in central Romania, while the production of fruits, vegetables, and wine ranges from central to southern Romania. Romania is a large producer of many agricultural products and is currently expanding its forestry and fishery industries. The implementation of the reforms and the Uruguay Round
of the General Agreement on Tariffs and Trade
(GATT) have resulted in reforms in the agricultural sector of the economy.
and Galati
. Fish such as herring
, crab
, lobster
, haddock
and cod
are landed at ports such as Constanta
. There has been a large scale decrease in employment in the fishing industry within Romania due to the EU's Common Fisheries Policy
, which places restrictions on the total tonnage of catch that can be landed, caused by overfishing in the Black Sea
. In tandem with the decline of sea-fishing, commercial fish farms - especially in salmon
, have increased in prominence in the rivers and lochs of the east of Romania. Inland waters are rich in fresh water fish such as salmon and trout
.
or Ukraine
. In 2004 Romania enjoyed one of the largest world market share in machine tools (5.3%). Romanian-based companies such as Dacia, Petrom
, Rompetrol
, Bitdefender
, Romstal
and Mobexpert
have expanded operations throughout the region. However, small- to medium-sized manufacturing firms form the bulk of Romania's industrial sector.
Romania's industrial output is expected to advance 9% in 2007, while agriculture output is projected to grow 12%. Final consumption is also expected to increase by 11% overall - individual consumption by 14.4% and collective consumption by 10.4%. Domestic demand is expected to go up 12.7%.
Industrial output growth was 6.9% year-on-year in December 2009, making it the highest in the EU-27 zone which averaged -1.9%.
sector, employing almost 12% of Romanians. The retail industry is mainly concentrated in a relatively small number of chain stores clustered together in shopping mall
s. In recent years the rise of big-box store
s, such as Cora (hypermarket)
(of the France) and Carrefour
(a subsidiary of the French), have led to fewer workers in this sector and a migration of retail jobs to the suburbs.
, and GDP per capita is highest in Bucharest. The following table shows the GDP (2005) per capita of the 4 counties and 2 areas, with data supplied by Eurostat
.
Bucharest and the largest cities in southern and western countries have a GDP per capita with values about double or higher than the country average. It is a significant economic difference between urban and rural areas.
s, integrated circuits, aircraft parts and other defense equipment, wheat, and automobiles. Romania's chief exports to Italy include cut diamonds, jewelry, integrated circuit
s, printing machinery, and telecommunications equipment. 2.8% of the country's GDP is derived from Agricultural activity. While Romania imports substantial quantities of grain, it is largely self-sufficient in other agricultural products and food stuffs, due to the fact that food must be regulated for sale in the Romania retail market, and hence imports almost no food products from other countries. Romania imported in 2006 food products of 2.4 billion euros, up almost 20% versus 2005, when the imports were worth slightly more than 2 billion euros. The EU is Romania's main partner in the trade with agri-food products. The exports to this destination represent 64%, and the imports from the EU countries represent 54%. Other important partners are the CEFTA countries, Turkey, Republic of Moldova and the USA. Despite a decline of the arms industry in the post-communist era, Romania is a significant exporter of military equipment, accounting for 3-4% of the world total in 2007. EU members are represented by a single official at the World Trade Organization
.
During the first trimester of 2010, Romanian exports increased by 21%, one of the largest rates in the European Union, surpassed only by Malta
. The trade deficit currently stands at roughly 2 billion EUR, the eighth largest in the EU.
Broadband penetration rate
Individuals using computer and internet
Market economy
A market economy is an economy in which the prices of goods and services are determined in a free price system. This is often contrasted with a state-directed or planned economy. Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed...
, the 11th largest in the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
by total nominal GDP and the 8th largest based on purchasing power parity. Romania entered the 1990s a relatively poor country by European standards, largely a result of the failed economic policies of Nicolae Ceauşescu
Nicolae Ceausescu
Nicolae Ceaușescu was a Romanian Communist politician. He was General Secretary of the Romanian Communist Party from 1965 to 1989, and as such was the country's second and last Communist leader...
in the 1970s and of the failures of privatization in Romania during the 90s, which decreased the GDP by almost 50% and ruined the industry because of corruption. However the collapse of the Communist
Communist Romania
Communist Romania was the period in Romanian history when that country was a Soviet-aligned communist state in the Eastern Bloc, with the dominant role of Romanian Communist Party enshrined in its successive constitutions...
regime in 1989, reforms in the 2000s and its recent entry
2007 enlargement of the European Union
The 2007 enlargement of the European Union saw Bulgaria and Romania join the European Union on 1 January 2007. It was the latest expansion of the EU, though considered by the European Commission as part of the same wave as the 2004 enlargement of the European Union.-Negotiations:Romania was the...
to the European Union have led to an improved economic outlook. Romania
Romania
Romania is a country located at the crossroads of Central and Southeastern Europe, on the Lower Danube, within and outside the Carpathian arch, bordering on the Black Sea...
has experienced growth in foreign investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
with a cumulative FDI totaling more than $100 billion since 1989, and has been referred to as a "Tiger
Tiger Economy
A tiger economy is the economy of a country which undergoes rapid economic growth, usually accompanied by an increase in the standard of living. The term was initially used for Japan, South Korea, Singapore, Hong Kong, and Taiwan , and in the 1990s it was applied to the Republic of Ireland...
" due to its high growth rates and rapid development. Until 2009, Romanian economic growth was among the fastest in Europe (officially 8.4% in 2008 and more than three times the EU average). The country is a regional leader in multiple fields, such as IT
Information technology
Information technology is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications...
and motor vehicle production, and is expected to join the Eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
by 2014. Bucharest
Bucharest
Bucharest is the capital municipality, cultural, industrial, and financial centre of Romania. It is the largest city in Romania, located in the southeast of the country, at , and lies on the banks of the Dâmbovița River....
, the capital city
Capital City
Capital City was a television show produced by Euston Films which focused on the lives of investment bankers in London living and working on the corporate trading floor for the fictional international bank Shane-Longman....
, is one of the largest financial and industrial centres in Eastern Europe
Eastern Europe
Eastern Europe is the eastern part of Europe. The term has widely disparate geopolitical, geographical, cultural and socioeconomic readings, which makes it highly context-dependent and even volatile, and there are "almost as many definitions of Eastern Europe as there are scholars of the region"...
.
Romania was heavily affected by the global financial downturn and gross domestic product contracted by 7.2% in 2009, forcing the government
Government of Romania
The Government of Romania forms one half of the country's executive branch . It is headed by the Prime-Minister, and consists of the Ministries, various subordinated institutions and agencies, and the 42 Prefectures...
to enact harsh austerity measures and borrow heavily from the IMF. The country's economic contraction continued in 2010 at a rate of 1.2%, while the budget deficit stood at 6.6%, below the IMF-agreed target of 6.8%. Forecasts predict a recovery of 1.5-2.8% in 2011.
Before World War II
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
). With oil production of 7.2 million tons in 1937, Romania ranked second in Europe and seventh in the world. The oil extracted from Romania was essential for the German war campaigns. Before World War II, it was Europe's second-largest food producer. In 1938, per-capita national income reached $94, surpassing other present-day developed European countries such as Greece
Greece
Greece , officially the Hellenic Republic , and historically Hellas or the Republic of Greece in English, is a country in southeastern Europe....
($76) or Portugal
Portugal
Portugal , officially the Portuguese Republic is a country situated in southwestern Europe on the Iberian Peninsula. Portugal is the westernmost country of Europe, and is bordered by the Atlantic Ocean to the West and South and by Spain to the North and East. The Atlantic archipelagos of the...
($81). However, the Romanian economy still lagged behind its Western European counterparts.
Economy during 1944-1989
After the Second World War, Romania became a member of the Eastern BlocEastern bloc
The term Eastern Bloc or Communist Bloc refers to the former communist states of Eastern and Central Europe, generally the Soviet Union and the countries of the Warsaw Pact...
, and switched to a socialist-style command economy. During this period the country experienced rapid industrialization in an attempt to create a "multilaterally developed socialist society". Economic growth was further fueled by foreign credits in the 1970s, but this eventually led to a growing foreign debt, which peaked at $11–12 billion; the latter was largely paid off during the 1980s by implementing severe austerity measures which deprived Romanians of basic consumer goods. In 1989, before the Romanian Revolution
Romanian Revolution of 1989
The Romanian Revolution of 1989 was a series of riots and clashes in December 1989. These were part of the Revolutions of 1989 that occurred in several Warsaw Pact countries...
, Romania had a GDP of about 800 billion lei, or $53.6 billion. Around 58% of the country's gross national income came from industry, and another 15% came from agriculture. The minimum wage was 2,000 lei, or $135.
Free market transition
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
of industry was pursued with the 1992 transfer of 30% of the shares of some 6,000 state-owned enterprises to five private ownership funds, in which each adult citizen received certificates of ownership. The remaining 70% ownership of the enterprises was transferred to a state ownership fund, with a mandate to sell off its shares at the rate of at least 10% per year. The privatization law also called for direct sale of some 30 specially selected enterprises and the sale of "assets" (i.e., commercially viable component units) of larger enterprises.
As of 2008, inflation stood at 7.8%, up from 4.8% in 2007 estimated by the BNR at coming within 6% for the year 2006 (the year-on-year CPI
Consumer price index
A consumer price index measures changes in the price level of consumer goods and services purchased by households. The CPI, in the United States is defined by the Bureau of Labor Statistics as "a measure of the average change over time in the prices paid by urban consumers for a market basket of...
, published in March 2007, is 3,66%). Also, since 2001, the economy has grown steadily at around 6-8%. Therefore, the PPP per capita GDP of Romania in 2008 was estimated to be between $12,200 and $14,064.
Financial and technical assistance continued to flow in from the U.S., European Union, other industrial nations, and international financial institutions facilitating Romania's reintegration into the world economy. The International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF), World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
(IBRD), the European Bank for Reconstruction and Development
European Bank for Reconstruction and Development
Founded in 1991, the European Bank for Reconstruction and Development uses the tools of investment to help build market economies and democracies in 30 countries from central Europe to central Asia. Its mission was to support the formerly communist countries in the process of establishing their...
(EBRD), and the U.S. Agency for International Development (USAID) all had programs and resident representatives in Romania. Romania also attracted foreign direct investment, which in 2008 rose to $72 billion.
Romania was the largest U.S. trading partner in Central-Eastern Europe until Ceauşescu's 1988 renunciation of Most Favored Nation (non-discriminatory) trading status, the latter of which resulted in high U.S. tariffs on Romanian products. Congress approved restoration of the MFN status effective 8 November 1993, as part of a new bilateral trade agreement. Tariffs on most Romanian products dropped to zero in February 1994 with the inclusion of Romania in the Generalized System of Preferences (GSP). Major Romanian exports to the U.S. include shoes and clothing, steel, and chemicals. Romania signed an Association Agreement with the EU in 1992 and a free trade agreement with the European Free Trade Association
European Free Trade Association
The European Free Trade Association or EFTA is a free trade organisation between four European countries that operates parallel to, and is linked to, the European Union . EFTA was established on 3 May 1960 as a trade bloc-alternative for European states who were either unable to, or chose not to,...
(EFTA) in 1993, codifying Romania's access to European markets and creating the basic framework for further economic integration. At the Helsinki Summit in December 1999, the European Union invited Romania to formally begin accession negotiations. In 2002, the target date of 2007 was set for Romania, along with Bulgaria, for its accession efforts. This was confirmed in 2003 at the Thessaloniki Summit and then in early 2005 Romania and Bulgaria
Bulgaria
Bulgaria , officially the Republic of Bulgaria , is a parliamentary democracy within a unitary constitutional republic in Southeast Europe. The country borders Romania to the north, Serbia and Macedonia to the west, Greece and Turkey to the south, as well as the Black Sea to the east...
signed the adherence treaty to EU. They formally joined the EU on January 1, 2007.
During the latter part of the Ceauşescu period, Romania earned significant credits from several Arab countries, notably Iraq, for work related to the oil industry. In August 2005, Romania agreed to forgive 43% of the US$1.7 billion debt owed by an Iraq still largely occupied by the military forces of the U.S.-led "Coalition of the Willing
Coalition of the willing
The term coalition of the willing is a post-1990 political phrase used to collectively describe participants in military or military-humanitarian interventions for which the United Nations Security Council cannot agree to mount a full UN peacekeeping operation...
", making Romania the first country outside of the Paris Club
Paris Club
The Paris Club is an informal group of financial officials from 19 of some of the world's biggest economies, which provides financial services such as war funding, debt restructuring, debt relief, and debt cancellation to indebted countries and their creditors...
of wealthy creditor nations to forgive Iraqi debts.
Growth in 2000-07 was supported by exports to the EU, primarily to Italy and Germany, and a strong recovery of foreign and domestic investment. Domestic demand is playing an ever more important role in underpinning growth as interest rates drop and the availability of credit cards and mortgages increases. Current account deficits of around 2% of GDP are beginning to decline as demand for Romanian products in the European Union increases. Recent accession to the EU gives further impetus and direction to structural reform. In early 2004 the government passed increases in the Value Added Tax
Value added tax
A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...
(VAT) and tightened eligibility for social benefits with the intention to bring the public finance gap down to 4% of GDP by 2006, but more difficult pension and healthcare reforms will have to wait until after the next elections. Privatization of the state-owned bank Banca Comercială Română
Banca Comerciala Româna
Banca Comercială Română , a member of Erste Group, is a universal bank serving both retail and corporate clients. BCR is the most important financial services provider in Romania, managing assets worth over EUR 16 billion. BCR is the most valuable Romanian financial brand...
took place in 2005. Intensified restructuring among large enterprises, improvements in the financial sector, and effective use of available EU funds is expected to accelerate economic growth. However, the Romanian economy was affected by the late 2000s recession
Late 2000s recession
The late-2000s recession, sometimes referred to as the Great Recession or Lesser Depression or Long Recession, is a severe ongoing global economic problem that began in December 2007 and took a particularly sharp downward turn in September 2008. The Great Recession has affected the entire world...
and is expected to contract in 2009, with a slight recovery predicted in 2010.
EU membership
On 1 January 2007 Romania entered the EU. This led to some immediate international trade liberalization, but there was no shock to the economy. The government is running annual surpluses of above 2%.This is to be contrasted with enormous current account deficits. Low interest rate
Interest rate
An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for...
s guarantee availability of funds for investment and consumption. For example, a boom in the real estate market started around 2000 and has not subsided yet. At the same time annual inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
in the economy is variable and during recent years (2003–2008) has seen a low of 2.3% and high of 7.8%.
Most importantly, this poses a threat to the country's accession to the Eurozone. The Romanian government
Government of Romania
The Government of Romania forms one half of the country's executive branch . It is headed by the Prime-Minister, and consists of the Ministries, various subordinated institutions and agencies, and the 42 Prefectures...
plans for the euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
to replace the leu
Romanian leu
The leu is the currency of Romania. It is subdivided into 100 bani . The name of the currency means "lion". On 1 July 2005, Romania underwent a currency reform, switching from the previous leu to a new leu . 1 RON is equal to 10,000 ROL...
in 2012. However, experts predict that this might happen as late as in 2014. From a political point of view, there is a trade-off between Romania's economic growth and the stability required for early accession to the monetary union. Romania's per-capita PPP
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
GDP is still only about a 40% of the EU average, while the country's nominal GDP per capita is about 25% of the EU average.
In the winter of 2004 the government introduced a flat tax
Flat tax
A flat tax is a tax system with a constant marginal tax rate. Typically the term flat tax is applied in the context of an individual or corporate income that will be taxed at one marginal rate...
of 16% that was introduced on January 1, 2005. This is done in hope for higher GDP growth and greater tax collection rates. The reform, which some called a "revolution" in taxation, was met with mild discussions and some protests by affected working classes. Romania subsequently enjoyed the lowest fiscal burden in the European Union, until Bulgaria also switched to a flat tax of 10% in 2007.
The accession of Romania to the European Union has given the Union access to the Black Sea
Black Sea
The Black Sea is bounded by Europe, Anatolia and the Caucasus and is ultimately connected to the Atlantic Ocean via the Mediterranean and the Aegean seas and various straits. The Bosphorus strait connects it to the Sea of Marmara, and the strait of the Dardanelles connects that sea to the Aegean...
.
| Member State sorted by GDP Gross domestic product Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living.... |
GDP Gross domestic product Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living.... in billion 1000000000 (number) 1,000,000,000 is the natural number following 999,999,999 and preceding 1,000,000,001.In scientific notation, it is written as 109.... s of US $ United States dollar The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies.... (2010) |
GDP % of EU (2010) |
Annual change % of GDP (2010) |
GDP per capita in PPP Purchasing power parity In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates... US $ (2008) |
Public Debt % of GDP (2010) |
Deficit % of GDP (2010) |
Inflation % Annual (2010) |
Unemp. % (2010) |
|---|---|---|---|---|---|---|---|---|
 European Union |
14,940 | 100.0% | 0.9 | 33,700 | 63.8 | |||
| 3.5 | 7.2 | |||||||
 Kingdom of Romania |
432 | 2.0% | 1.5 | 14,400 | 21.2 | -4.0 | 5 | 4.4 |
Tiger economy
In the Romanian press the Romanian economy has been referred as the "Tiger of the East." Romania is a country of considerable economic potential: over 10 million hectares of agricultural land, diverse energy sources (coalCoal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
, oil
Oil
An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils....
, natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
, hydro
Hydroelectricity
Hydroelectricity is the term referring to electricity generated by hydropower; the production of electrical power through the use of the gravitational force of falling or flowing water. It is the most widely used form of renewable energy...
, nuclear
Nuclear power
Nuclear power is the use of sustained nuclear fission to generate heat and electricity. Nuclear power plants provide about 6% of the world's energy and 13–14% of the world's electricity, with the U.S., France, and Japan together accounting for about 50% of nuclear generated electricity...
and wind
Wind power
Wind power is the conversion of wind energy into a useful form of energy, such as using wind turbines to make electricity, windmills for mechanical power, windpumps for water pumping or drainage, or sails to propel ships....
), a substantial, if aging, manufacturing base and opportunities for expanded development in tourism on the Black Sea and in the mountains.
National budget
The national budgetGovernment budget
A government budget is a legal document that is often passed by the legislature, and approved by the chief executive-or president. For example, only certain types of revenue may be imposed and collected...
for 2008 is $71.8 billion dollars, which represents 35.9% from the GDP estimated at $200 billion in 2008 according to the Ministry of Finance. National budget is increasing rapidly about 8 billion dollars each year for the interval of time 2005-2009. The national defense budget is around 2.38% of the GDP and it is estimated at US$ 4.78 billion for 2008.
Economic growth
GDP growth reached 8.3% in 2006 according to the statistical office of the Romania (the year-to-year growth amounted to unexpected 9.8% in the 3rd quarter of 2006 and stayed high at 9.5% year-to-year change in the 4th quarter of 2006), and 8.0% in 2007.Table showing selected PPP
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
GDPs and growth - 2007 to 2009 estimations:
| Year | GDP in billions of USD PPP |
% GDP Growth |
|---|---|---|
| 2007 | 264 | +8 |
| 2008 | 290.411 | +7.8 |
| 2009 | 269 | -7.2 |
| 2010 | 262 (est.) | -2.5 |
| 2011 | 265 (est.) | 1.5 |
Romania's Gross Domestic Product at purchasing power parity (PPP) is predicted to stand at $16,982.323 per capita in 2015, when the country is expected to join the Eurozone. If this estimation proves correct, Romania
Romania
Romania is a country located at the crossroads of Central and Southeastern Europe, on the Lower Danube, within and outside the Carpathian arch, bordering on the Black Sea...
will surpass Turkey
Turkey
Turkey , known officially as the Republic of Turkey , is a Eurasian country located in Western Asia and in East Thrace in Southeastern Europe...
, Bulgaria
Bulgaria
Bulgaria , officially the Republic of Bulgaria , is a parliamentary democracy within a unitary constitutional republic in Southeast Europe. The country borders Romania to the north, Serbia and Macedonia to the west, Greece and Turkey to the south, as well as the Black Sea to the east...
and Venezuela
Venezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
in this aspect.
Growing middle class
Romania has growing middle and upper classes with relatively high per capita incomes. World BankWorld Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
estimated that in 2002 99% of the urban and 94% of the rural population had access to electricity. In 2004, 91% of the urban and only 16% of the rural population had access to improved water supply and 94% of the urban population had access to improved sanitation. In 2007 there were about 19.5 million mobile phone users in Romania and about 7 million internet users.
The net average wage was 1,192 lei (roughly 380 USD) in March 2008, rose to 1,352 lei (430 USD) in 2009 and is expected to reach 1,819 lei (570 USD) by 2013. The income from salaries in Romania had the highest growth rate in the region during 2006. Despite recent growth Romania still has some of the lowest wages in the European Union, second only to Bulgaria
Bulgaria
Bulgaria , officially the Republic of Bulgaria , is a parliamentary democracy within a unitary constitutional republic in Southeast Europe. The country borders Romania to the north, Serbia and Macedonia to the west, Greece and Turkey to the south, as well as the Black Sea to the east...
.
Currency
ISO 4217
ISO 4217 is a standard published by the International Standards Organization, which delineates currency designators, country codes , and references to minor units in three tables:* Table A.1 – Current currency & funds code list...
code RON; numeric code 946) is the currency of Romania. It is subdivided into 100 bani (singular: ban). On 1 July 2005, Romania underwent a currency reform, switching from the previous leu (ROL) to a new leu (RON). 1 RON is equal to 10,000 ROL. Romania joined the European Union on 1 January 2007 and it is expected to adopt the euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
in 2014. The leu has been among the world's top five performing currencies for much of the past two years.
The fulfillment of the Maastricht criteria
Romania, as a member state of the European Union is liable for the adoption of the common European currency, the EuroEuro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
. For this reason Romania must fulfill the Maastricht criteria.
| Convergence criteria | Obligation to adopt 4 | | Target date | Euro coins Euro coins There are eight euro coin denominations, ranging from one cent to two euros . The coins first came into use in 2002. They have a common reverse, portraying a map of Europe, but each country in the eurozone has its own design on the obverse, which means that each coin has a variety of different... design |
||||||
|---|---|---|---|---|---|---|---|---|---|
| Country 1 | |Inflation rate Inflation rate In economics, the inflation rate is a measure of inflation, the rate of increase of a price index . It is the percentage rate of change in price level over time. The rate of decrease in the purchasing power of money is approximately equal.The inflation rate is used to calculate the real interest... ² | Government Government Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized... finances | ERM II European Exchange Rate Mechanism The European Exchange Rate Mechanism, ERM, was a system introduced by the European Community in March 1979, as part of the European Monetary System , to reduce exchange rate variability and achieve monetary stability in Europe, in preparation for Economic and Monetary Union and the introduction of... membership | Interest rate Interest rate An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender. For example, a small company borrows capital from a bank to buy new assets for their business, and in return the lender receives interest at a predetermined interest rate for... ³ | recommended by the Commission European Commission The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union.... |
||||
| annual government Government Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized... deficit to GDP Gross domestic product Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living.... | gross government debt Government debt Government debt is money owed by a central government. In the US, "government debt" may also refer to the debt of a municipal or local government... to GDP Gross domestic product Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living.... |
||||||||
| Reference value 5 | max 3.0% | max. 3% | max. 60% | min. 2 years | max 6.4% | NA | NA | NA | NA |
| 2014–2015 | NA | in progress Romanian euro coins The Romanian government has announced plans to join the eurozone by 2015. Currently, the leu is not yet part of ERM II but plans to join after 2012. The president of the ECB said in June 2007, that "Romania has a lot of homework to do ..... |
|||||||
1 Current EU member states that have not yet adopted the Euro, candidates and official potential candidates.
² No more than 1.5% higher than the 3 best-performing EU member states.
³ No more than 2% higher than the 3 best-performing EU member states.
4 Formal obligation for Euro adoption in the country EU Treaty of Accession
Treaty of Accession
The Treaty of Accession can refer to the following treaties of the European Union:*Treaty of Accession 2005*Treaty of Accession 2003The following Acts of Accession:*Acts of Accession of Denmark, Ireland and the United Kingdom, signed on 22 January 1972...
or the Framework for membership negotiations.
5 Values from May 2007 report. To be updated each year.
Natural resources
Romania is an oil producer, but the current level of production isn't enough to make the country self-sufficient. Although at one time it was Europe's largest producer of oil, most of its reserves were used and squandered during the Nicolae CeauşescuNicolae Ceausescu
Nicolae Ceaușescu was a Romanian Communist politician. He was General Secretary of the Romanian Communist Party from 1965 to 1989, and as such was the country's second and last Communist leader...
period. As a result, it is today a net oil and gas importer.
The pipeline network in Romania included 2,427 km for crude oil, 3,850 km for petroleum product
Petroleum product
Petroleum products are useful materials derived from crude oil as it is processed in oil refineries.According to crude oil composition and demand, refineries can produce different shares of petroleum products. The largest share of oil products is used as energy carriers: various grades of fuel...
s, and 3,508 km for natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
in 2006. Several major new pipelines are planned, especially the Nabucco Pipeline
Nabucco Pipeline
The Nabucco pipeline is a proposed natural gas pipeline from Erzurum in Turkey to Baumgarten an der March in Austria diversifying natural gas suppliers and delivery routes for Europe. The pipeline attempts to lessen European dependence on Russian energy...
for Caspian
Caspian Sea
The Caspian Sea is the largest enclosed body of water on Earth by area, variously classed as the world's largest lake or a full-fledged sea. The sea has a surface area of and a volume of...
oilfields, the longest one in the world. Romania could cash in four billion dollars from the Constanta-Trieste pipeline
Pan-European Pipeline
The Pan-European Oil Pipeline is a proposed oil pipeline from Constanţa in Romania via Serbia and Croatia to Rijeka and from there through Slovenia to Trieste in Italy. The aim of the pipeline is to bypass Turkish straits in the transportation of Russian and Caspian oil to Central Europe...
.
Romania has considerable natural resources for a country of its size, including coal
Carbon
Carbon is the chemical element with symbol C and atomic number 6. As a member of group 14 on the periodic table, it is nonmetallic and tetravalent—making four electrons available to form covalent chemical bonds...
, iron
Iron
Iron is a chemical element with the symbol Fe and atomic number 26. It is a metal in the first transition series. It is the most common element forming the planet Earth as a whole, forming much of Earth's outer and inner core. It is the fourth most common element in the Earth's crust...
ore, copper
Copper
Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...
, chromium
Chromium
Chromium is a chemical element which has the symbol Cr and atomic number 24. It is the first element in Group 6. It is a steely-gray, lustrous, hard metal that takes a high polish and has a high melting point. It is also odorless, tasteless, and malleable...
, uranium
Uranium
Uranium is a silvery-white metallic chemical element in the actinide series of the periodic table, with atomic number 92. It is assigned the chemical symbol U. A uranium atom has 92 protons and 92 electrons, of which 6 are valence electrons...
, antimony
Antimony
Antimony is a toxic chemical element with the symbol Sb and an atomic number of 51. A lustrous grey metalloid, it is found in nature mainly as the sulfide mineral stibnite...
, mercury
Mercury (element)
Mercury is a chemical element with the symbol Hg and atomic number 80. It is also known as quicksilver or hydrargyrum...
, gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
, barite
Barite
Baryte, or barite, is a mineral consisting of barium sulfate. The baryte group consists of baryte, celestine, anglesite and anhydrite. Baryte itself is generally white or colorless, and is the main source of barium...
, borate
Borate
Borates are chemical compounds which contain oxoanions of boron in oxidation state +3. The simplest borate ion, BO33−, has a trigonal planar structure. Other borates are made up of trigonal BO3 or tetrahedral BO4 structural units, sharing oxygen atoms...
, celestine (strontium
Strontium
Strontium is a chemical element with the symbol Sr and the atomic number 38. An alkaline earth metal, strontium is a soft silver-white or yellowish metallic element that is highly reactive chemically. The metal turns yellow when exposed to air. It occurs naturally in the minerals celestine and...
), emery
Emery (mineral)
Emery is a very hard rock type used to make abrasive powder. It largely consists of the mineral corundum , mixed with other species such as the iron-bearing spinels hercynite and magnetite, and also rutile...
, feldspar
Feldspar
Feldspars are a group of rock-forming tectosilicate minerals which make up as much as 60% of the Earth's crust....
, limestone
Limestone
Limestone is a sedimentary rock composed largely of the minerals calcite and aragonite, which are different crystal forms of calcium carbonate . Many limestones are composed from skeletal fragments of marine organisms such as coral or foraminifera....
, magnesite
Magnesite
Magnesite is magnesium carbonate, MgCO3. Iron substitutes for magnesium with a complete solution series with siderite, FeCO3. Calcium, manganese, cobalt, and nickel may also occur in small amounts...
, marble
Marble
Marble is a metamorphic rock composed of recrystallized carbonate minerals, most commonly calcite or dolomite.Geologists use the term "marble" to refer to metamorphosed limestone; however stonemasons use the term more broadly to encompass unmetamorphosed limestone.Marble is commonly used for...
, perlite
Perlite
Perlite is an amorphous volcanic glass that has a relatively high water content, typically formed by the hydration of obsidian. It occurs naturally and has the unusual property of greatly expanding when heated sufficiently...
, pumice
Pumice
Pumice is a textural term for a volcanic rock that is a solidified frothy lava typically created when super-heated, highly pressurized rock is violently ejected from a volcano. It can be formed when lava and water are mixed. This unusual formation is due to the simultaneous actions of rapid...
, pyrites (sulfur
Sulfur
Sulfur or sulphur is the chemical element with atomic number 16. In the periodic table it is represented by the symbol S. It is an abundant, multivalent non-metal. Under normal conditions, sulfur atoms form cyclic octatomic molecules with chemical formula S8. Elemental sulfur is a bright yellow...
), clay
Clay
Clay is a general term including many combinations of one or more clay minerals with traces of metal oxides and organic matter. Geologic clay deposits are mostly composed of phyllosilicate minerals containing variable amounts of water trapped in the mineral structure.- Formation :Clay minerals...
, arable land
Arable land
In geography and agriculture, arable land is land that can be used for growing crops. It includes all land under temporary crops , temporary meadows for mowing or pasture, land under market and kitchen gardens and land temporarily fallow...
and hydropower
Hydropower
Hydropower, hydraulic power, hydrokinetic power or water power is power that is derived from the force or energy of falling water, which may be harnessed for useful purposes. Since ancient times, hydropower has been used for irrigation and the operation of various mechanical devices, such as...
.
Romania's mineral production is adequate to supply its manufacturing output. Energy needs are also met by importing bituminous and anthracite coal and crude petroleum. In 2007 approximately 34 million tons of coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
, approximately 4,000 tons of tungsten
Tungsten
Tungsten , also known as wolfram , is a chemical element with the chemical symbol W and atomic number 74.A hard, rare metal under standard conditions when uncombined, tungsten is found naturally on Earth only in chemical compounds. It was identified as a new element in 1781, and first isolated as...
, 565,000 tons of iron ore, and 47,000 tons of zinc
Zinc
Zinc , or spelter , is a metallic chemical element; it has the symbol Zn and atomic number 30. It is the first element in group 12 of the periodic table. Zinc is, in some respects, chemically similar to magnesium, because its ion is of similar size and its only common oxidation state is +2...
ore were mined. Lesser amounts of copper, lead
Lead
Lead is a main-group element in the carbon group with the symbol Pb and atomic number 82. Lead is a soft, malleable poor metal. It is also counted as one of the heavy metals. Metallic lead has a bluish-white color after being freshly cut, but it soon tarnishes to a dull grayish color when exposed...
, molybdenum
Molybdenum
Molybdenum , is a Group 6 chemical element with the symbol Mo and atomic number 42. The name is from Neo-Latin Molybdaenum, from Ancient Greek , meaning lead, itself proposed as a loanword from Anatolian Luvian and Lydian languages, since its ores were confused with lead ores...
, gold, silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
, kaolin, and fluorite
Fluorite
Fluorite is a halide mineral composed of calcium fluoride, CaF2. It is an isometric mineral with a cubic habit, though octahedral and more complex isometric forms are not uncommon...
also were mined.
Energy
Termoelectrica
Termoelectrica is a Romanian state-owned company, its shares being held by the Ministry of Economy and Commerce which has as main objective power generation with thermal power plants....
, Hidroelectrica
Hidroelectrica
Hidroelectrica is a state-owned company, its shares being held by the Ministry of Economy, Commerce and Business Environment which has as main objective power generation and services by using hydropower resources in Romania....
and Nuclearelectrica
Nuclearelectrica
Nuclearelectrica is a state-owned company, its shares being held by the Ministry of Economy and Commerce, which has as main objective power generation with the only nuclear power plant in Romania....
. Fossil fuels are the country's primary source of energy, followed by hydroelectric power; Romania has an estimated hydropower capacity of 36,000 GW per year. Due to dependency on oil and gas imports from Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
, the country has placed an increasingly heavy emphasis on nuclear energy
Nuclear power
Nuclear power is the use of sustained nuclear fission to generate heat and electricity. Nuclear power plants provide about 6% of the world's energy and 13–14% of the world's electricity, with the U.S., France, and Japan together accounting for about 50% of nuclear generated electricity...
since the 1980s. The Cernavodă Nuclear Power Plant
Cernavoda Nuclear Power Plant
The Nuclear Power Plant in Cernavodă is the only nuclear power plant in Romania. It produces around 20% of the country's electricity. It uses CANDU reactor technology from AECL, using heavy water produced at Drobeta-Turnu Severin as its neutron moderator and water from the Danube – Black Sea Canal...
is currently the only one of its kind in Romania, although there are plans to build a second one in Translyvania, possibly after 2020. Wind power had an installed capacity of only 76 MW in 2008, however the country has the largest wind power potential in Southeast Europe
Southeast Europe
Southeast Europe or Southeastern Europe is a relatively recent political designation for the states of the Balkans. Writers such as Maria Todorova and Vesna Goldsworthy have suggested the use of the term Southeastern Europe to replace the word Balkans for the region, to minimize potential...
, with Dobruja
Dobruja
Dobruja is a historical region shared by Bulgaria and Romania, located between the lower Danube river and the Black Sea, including the Danube Delta, Romanian coast and the northernmost part of the Bulgarian coast...
listed as the second best place in Europe to construct wind farms. As a result, there are currently investor connection requests for over 12,000 MW. There are also plans to build a number of solar power stations
Photovoltaic power station
The following page lists photovoltaic power stations that are larger than 25 MW in current net capacity. Solar photovoltaic cells convert sunlight into electricity and many solar photovoltaic power stations have been built, mainly in Europe...
, such as the Covaci Solar Park
Covaci Solar Park
Covaci Solar Park, which will be one of the world’s largest thin-film photovoltaic power system, is being built on a 60 ha plot of land to the north of Timişoara in Romania. The power plant will be a 35-megawatt solar power system using state-of-the-art thin film technology, and should be finished...
, which will be one of the largest in the world.
Of the electricity generated in 2007, 13.1 percent came from nuclear plants then in operation, 41.69 percent from thermal plants (oil and coal), and 25.8 percent from hydroelectric sites.
Physical infrastructure
The volume of traffic in Romania, especially goods transportation, has increased in recent years due to its strategic location in South-East Europe. In the past few decades, much of the freight traffic shifted from rail to road. A further strong increase of traffic is expected in the future.As of 2009, there are only 280 km of motorways in use. However, there are plans to build over 1,000 km of motorways in the following years, including the Autostrada Transilvania
A3 (Romania)
A3 Transylvania Motorway or Autostrada Transilvania is a motorway currently being constructed in Romania. It will be a four-lane, 588-kilometer motorway, stretching northwest from Bucharest to Oradea. The motorway will connect the cities of Bucharest, Ploieşti, Braşov, Făgăraş, Sighişoara, Târgu...
, which is currently the largest road-building project in Europe. The railway network
Caile Ferate Române
Căile Ferate Române is the official designation of the state railway carrier of Romania. Romania has a railway network of of which are electrified and the total track length is . The network is significantly interconnected with other European railway networks, providing pan-European passenger...
, which was significantly expanded during the Communist years, is the fourth largest in Europe.
Bucharest is the only city in Romania which as of 2009 has an underground
Rapid transit
A rapid transit, underground, subway, elevated railway, metro or metropolitan railway system is an electric passenger railway in an urban area with a high capacity and frequency, and grade separation from other traffic. Rapid transit systems are typically located either in underground tunnels or on...
railway system, comprising both the Bucharest Metro
Bucharest Metro
The Bucharest Metro is an underground urban railway network that serves the capital of Romania, Bucharest. The network is run by Metrorex. It is one of the most accessed systems of the Bucharest public transport network with a ridership of 177.23 million passengers in 2010...
and the light rail
Light rail
Light rail or light rail transit is a form of urban rail public transportation that generally has a lower capacity and lower speed than heavy rail and metro systems, but higher capacity and higher speed than traditional street-running tram systems...
system managed by Regia Autonomă de Transport Bucureşti
Regia Autonoma de Transport Bucuresti
Regia Autonomă de Transport Bucureşti is a public transport operator in Bucharest, Romania. It operates a complex network of buses, trams and trolleybuses – in fact, all public transport except the Bucharest Metro, which is managed by Metrorex...
. Although construction was planned to begin in 1941, due to geo-political factors, the Bucharest Metro was only opened in 1979. Now it is one of the most accessed systems of the Bucharest public transport network
Transport in Bucharest
Bucharest has the largest transport network in Romania, and one of the largest in Europe. The Bucharest transport network is made up of a metro network and a surface transport network...
with an average ridership of 800,000 passengers during the workweek
Workweek
The workweek and weekend are those complementary parts of the week devoted to labour and rest respectively. The legal working week , or workweek , is the part of the seven-day week devoted to labor. In most Western countries it is Monday to Friday. The weekend comprises the two traditionally...
. In total, the network is 67 km long and has 49 stations.
Agriculture
Agriculture employs about 29% of the population (one of the highest rates in Europe), and contributes about 8.1% of GDP. The BărăganBaragan Plain
The Bărăgan Plain is a steppe plain in south-eastern Romania. It makes up much of the eastern part of the Wallachian Plain. The region is known for its black soil and a rich humus, and is mostly a cereal-growing area....
is characterized by large wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
farms. Dairy products, pork, poultry, and apple production are concentrated in the western region. Beef production is located in central Romania, while the production of fruits, vegetables, and wine ranges from central to southern Romania. Romania is a large producer of many agricultural products and is currently expanding its forestry and fishery industries. The implementation of the reforms and the Uruguay Round
Uruguay Round
The Uruguay Round was the 8th round of Multilateral trade negotiations conducted within the framework of the General Agreement on Tariffs and Trade , spanning from 1986-1994 and embracing 123 countries as “contracting parties”. The Round transformed the GATT into the World Trade Organization...
of the General Agreement on Tariffs and Trade
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...
(GATT) have resulted in reforms in the agricultural sector of the economy.
Fishing
Fishing is an economic mainstay in parts of the East of Romania and along the Black Sea coast, with important fish markets in places such as ConstantaConstanta
Constanța is the oldest extant city in Romania, founded around 600 BC. The city is located in the Dobruja region of Romania, on the Black Sea coast. It is the capital of Constanța County and the largest city in the region....
and Galati
Galati
Galați is a city and municipality in Romania, the capital of Galați County. Located in the historical region of Moldavia, in the close vicinity of Brăila, Galați is the largest port and sea port on the Danube River and the second largest Romanian port....
. Fish such as herring
Herring
Herring is an oily fish of the genus Clupea, found in the shallow, temperate waters of the North Pacific and the North Atlantic oceans, including the Baltic Sea. Three species of Clupea are recognized. The main taxa, the Atlantic herring and the Pacific herring may each be divided into subspecies...
, crab
Crab
True crabs are decapod crustaceans of the infraorder Brachyura, which typically have a very short projecting "tail" , or where the reduced abdomen is entirely hidden under the thorax...
, lobster
Lobster
Clawed lobsters comprise a family of large marine crustaceans. Highly prized as seafood, lobsters are economically important, and are often one of the most profitable commodities in coastal areas they populate.Though several groups of crustaceans are known as lobsters, the clawed lobsters are most...
, haddock
Haddock
The haddock , also known as the offshore hake, is a marine fish distributed on both sides of the North Atlantic. Haddock is a popular food fish and is widely fished commercially....
and cod
Cod
Cod is the common name for genus Gadus, belonging to the family Gadidae, and is also used in the common name for various other fishes. Cod is a popular food with a mild flavor, low fat content and a dense, flaky white flesh. Cod livers are processed to make cod liver oil, an important source of...
are landed at ports such as Constanta
Constanta
Constanța is the oldest extant city in Romania, founded around 600 BC. The city is located in the Dobruja region of Romania, on the Black Sea coast. It is the capital of Constanța County and the largest city in the region....
. There has been a large scale decrease in employment in the fishing industry within Romania due to the EU's Common Fisheries Policy
Common Fisheries Policy
The Common Fisheries Policy is the fisheries policy of the European Union . It sets quotas for which member states are allowed to catch what amounts of each type of fish, as well as encouraging the fishing industry by various market interventions...
, which places restrictions on the total tonnage of catch that can be landed, caused by overfishing in the Black Sea
Black Sea
The Black Sea is bounded by Europe, Anatolia and the Caucasus and is ultimately connected to the Atlantic Ocean via the Mediterranean and the Aegean seas and various straits. The Bosphorus strait connects it to the Sea of Marmara, and the strait of the Dardanelles connects that sea to the Aegean...
. In tandem with the decline of sea-fishing, commercial fish farms - especially in salmon
Salmon
Salmon is the common name for several species of fish in the family Salmonidae. Several other fish in the same family are called trout; the difference is often said to be that salmon migrate and trout are resident, but this distinction does not strictly hold true...
, have increased in prominence in the rivers and lochs of the east of Romania. Inland waters are rich in fresh water fish such as salmon and trout
Trout
Trout is the name for a number of species of freshwater and saltwater fish belonging to the Salmoninae subfamily of the family Salmonidae. Salmon belong to the same family as trout. Most salmon species spend almost all their lives in salt water...
.
Industry
Romania has been successful in developing its industrial sector in recent years. Industry and construction accounted for 32% of gross domestic product (GDP) in 2003, a comparatively large share even without taking into account related services. The sector employed 26.4% of the workforce. Romania excels in the production of automobiles, machine tools, and chemicals. Motor vehicle production tripled in the 2000s, but still lags behind neighbouring countries such as HungaryHungary
Hungary , officially the Republic of Hungary , is a landlocked country in Central Europe. It is situated in the Carpathian Basin and is bordered by Slovakia to the north, Ukraine and Romania to the east, Serbia and Croatia to the south, Slovenia to the southwest and Austria to the west. The...
or Ukraine
Ukraine
Ukraine is a country in Eastern Europe. It has an area of 603,628 km², making it the second largest contiguous country on the European continent, after Russia...
. In 2004 Romania enjoyed one of the largest world market share in machine tools (5.3%). Romanian-based companies such as Dacia, Petrom
Petrom
Petrom is a Romanian oil company, the largest corporation in Romania and the largest gas and oil producer in Eastern Europe operating in several countries:*Romania - largest company;*Moldova - 2nd largest company, 31% market share;...
, Rompetrol
Rompetrol
The Rompetrol Group N.V. , is a Romanian oil company, that operates in many countries throughout Europe:unclear what "market share": refining? downstream? extraction? well services?*Romania - 2nd largest oil company, 40% market share...
, Bitdefender
BitDefender
BitDefender is an antivirus software suite developed by Romania-based software company Softwin. It was launched in November 2001, and is currently in its 15 build version...
, Romstal
Romstal
Romstal is the biggest sanitaryware distributor in Romania and one of the largest in Eastern Europe with 200 stores in Romania, Moldova, Ukraine, Italy, Bulgaria, Russia and Serbia....
and Mobexpert
Mobexpert
Mobexpert is the largest furniture and accessories distributor in Romania and one of the largest 12 furniture companies in Europe.-History:The company was founded in 1993 by Dan and Camelia Şucu...
have expanded operations throughout the region. However, small- to medium-sized manufacturing firms form the bulk of Romania's industrial sector.
Romania's industrial output is expected to advance 9% in 2007, while agriculture output is projected to grow 12%. Final consumption is also expected to increase by 11% overall - individual consumption by 14.4% and collective consumption by 10.4%. Domestic demand is expected to go up 12.7%.
Industrial output growth was 6.9% year-on-year in December 2009, making it the highest in the EU-27 zone which averaged -1.9%.
Services
In 2003 service sector constituted 55% of gross domestic product (GDP), and the sector employed 51.3% of the workforce. The subcomponents of services are financial, renting, and business activities (20.5%); trade, hotels and restaurants, and transport (18%); and other service activities (21.7%). The service sector in Romania has expanded in recent years, employing some 47% of Romanians and accounting for slightly more than half of GDP. The largest employer is the retailRetail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
sector, employing almost 12% of Romanians. The retail industry is mainly concentrated in a relatively small number of chain stores clustered together in shopping mall
Shopping mall
A shopping mall, shopping centre, shopping arcade, shopping precinct or simply mall is one or more buildings forming a complex of shops representing merchandisers, with interconnecting walkways enabling visitors to easily walk from unit to unit, along with a parking area — a modern, indoor version...
s. In recent years the rise of big-box store
Big-box store
A big-box store is a physically large retail establishment, usually part of a chain. The term sometimes also refers, by extension, to the company that operates the store...
s, such as Cora (hypermarket)
Cora (hypermarket)
Cora is a retail group based in Belgium which owns several supermarket and hypermarket chains internationally. Formed in 1974, the corporation's brands include Match, Profi, Truffaut, Ecomax, Animalis, Sovena and Houra, as well as Cora-branded hypermarkets....
(of the France) and Carrefour
Carrefour
Carrefour S.A. is an international hypermarket chain headquartered in Levallois-Perret, France. It is one of the largest hypermarket chains in the world...
(a subsidiary of the French), have led to fewer workers in this sector and a migration of retail jobs to the suburbs.
Regional variation
The strength of the Romanian economy varies from region to region. GDPGross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
, and GDP per capita is highest in Bucharest. The following table shows the GDP (2005) per capita of the 4 counties and 2 areas, with data supplied by Eurostat
Eurostat
Eurostat is a Directorate-General of the European Commission located in Luxembourg. Its main responsibilities are to provide the European Union with statistical information at European level and to promote the integration of statistical methods across the Member States of the European Union,...
.
| Rank | Place | GDP per capita in dollars |
|---|---|---|
| 1 | Bucharest Bucharest Bucharest is the capital municipality, cultural, industrial, and financial centre of Romania. It is the largest city in Romania, located in the southeast of the country, at , and lies on the banks of the Dâmbovița River.... |
27,344 |
| 2 | Cluj Cluj County Cluj ; is a county of Romania, in Transylvania, with the capital city at Cluj-Napoca.-Demographics:In 2007, it had a population of 692,316 and a population density of 104/km².*Romanians – 80%*Hungarians – 17.5%*Roma – 2.5%-Geography:... |
26,934 |
| 3 | Timiş Timis County Timiș , , Banat Bulgarian: ) is a county of western Romania, in the historical region Banat, with the county seat at Timișoara. It is the largest county in Romania in terms of land area.... |
25,121 |
| 4 | Braşov Brasov County Brașov ; ) is a county of Romania, in Transylvania, with the capital city at Brașov. The county incorporates within its boundaries most of the Medieval "lands" Burzenland and Făgăraș Land.-Demographics:... |
24,788 |
| 5 | Constanţa Constanta County Constanța is the name of a county in the Dobruja region of Romania. Its capital city is also named Constanța.-Demographics:In 2002, it had a population of 715,151 and the population density was 101/km². The degree of urbanization is much higher than the Romanian average. In recent years the... |
24,696 |
Bucharest and the largest cities in southern and western countries have a GDP per capita with values about double or higher than the country average. It is a significant economic difference between urban and rural areas.
Foreign trade
Italy is Romania's largest trading partner; two-way trade totalled some $22.6 billion in 2007. The principal exports from Italy to Romania include computerComputer
A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...
s, integrated circuits, aircraft parts and other defense equipment, wheat, and automobiles. Romania's chief exports to Italy include cut diamonds, jewelry, integrated circuit
Integrated circuit
An integrated circuit or monolithic integrated circuit is an electronic circuit manufactured by the patterned diffusion of trace elements into the surface of a thin substrate of semiconductor material...
s, printing machinery, and telecommunications equipment. 2.8% of the country's GDP is derived from Agricultural activity. While Romania imports substantial quantities of grain, it is largely self-sufficient in other agricultural products and food stuffs, due to the fact that food must be regulated for sale in the Romania retail market, and hence imports almost no food products from other countries. Romania imported in 2006 food products of 2.4 billion euros, up almost 20% versus 2005, when the imports were worth slightly more than 2 billion euros. The EU is Romania's main partner in the trade with agri-food products. The exports to this destination represent 64%, and the imports from the EU countries represent 54%. Other important partners are the CEFTA countries, Turkey, Republic of Moldova and the USA. Despite a decline of the arms industry in the post-communist era, Romania is a significant exporter of military equipment, accounting for 3-4% of the world total in 2007. EU members are represented by a single official at the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
.
During the first trimester of 2010, Romanian exports increased by 21%, one of the largest rates in the European Union, surpassed only by Malta
Malta
Malta , officially known as the Republic of Malta , is a Southern European country consisting of an archipelago situated in the centre of the Mediterranean, south of Sicily, east of Tunisia and north of Libya, with Gibraltar to the west and Alexandria to the east.Malta covers just over in...
. The trade deficit currently stands at roughly 2 billion EUR, the eighth largest in the EU.
Miscellaneous data
Households with access to fixed and mobile telephone access- landline telephone - 46% (2009)
- mobile telephone - 72% (2009)
Broadband penetration rate
- 13% (2010)
Individuals using computer and internet
- computer - 44% (2009)
- internet - 37% (2009)