Romania, one country – two worlds. Economist: “It’s going in reverse rather than accelerating, the rest of the country is abandoned”

While Bucharest and Cluj have already exceeded the EU average, according to official figures, Romania also has the poorest areas in the entire union. Three renowned economists analyze for “Adevărul” the situation in Romania, the country where, according to Eurostat, live the most people exposed to the risk of poverty in the EU.

Romania’s economy has grown spectacularly in recent years, since joining the European Union in 2007. In 2006, Romania had a GDP of 97.7 billion euros, to reach 320 billion euros in 2023. The growth, otherwise impressive, however, is far from evenly distributed. The champions are cities like Bucharest, Cluj, Sibiu and Oradea, while many others still face a poverty reminiscent of another era.

Three renowned economists, one of them a sociologist, analyze for “Adevărul” the situation of Romania, a country practically torn in two. There is only one conclusion: we actually have two Romanias, but most of the country is struggling in an unenviable situation. In fact, Eurostat figures say the same thing, they show that, in addition to the fact that Romanians are the most exposed to the risk of poverty in the EU, Romania continues to have the largest gap between citizens with the highest incomes and Romanians with the lowest incomes .

Ciprian Dascălu, chief economist at BCR, is considered one of the best specialists in macro-economic forecasts. In his opinion, Romania developed unevenly for several reasons. This is how Bucharest and Cluj have already exceeded the EU average in an important chapter.

“The differences are mostly historical. The relevant discussion is that they deepened over time. And they ultimately care about the access and quality of public services. GDP per capita at purchasing power parity in Bucharest is 198% of the European Union average for 2021. Bucharest-Ilfov metropolitan area at 171%. The other metropolitan areas compared to the EU average for 2021: Cluj-Napoca 104%, Timișoara 95% Craiova 57%, Constanta 81%, Iași 62%, Galaţi 51%, Brașov 83%, Ploiesti 73%“, says Dascălu.

He also explained where the economic performances of Bucharest and Cluj come from, but also how the two came to have a higher rating than Romania.

“First of all, the previously mentioned standard of living and implicitly the possibility to collect taxes from a labor force with higher incomes, which ensures sustainability at the level of income of local budgets and lower constraints in being able to repay loans”, explains Dascălu.

Eight cities produce 80% of economic growth

The uneven development of Romania also concerns Daniel Sandu. A researcher at the German universities TU Chemnitz and Hertie School of Governance and affiliated with the European University Institute in Florence, Sandu is first and foremost a sociologist, but also an economist, and over the years he has also worked for the World Bank.

He recalls the gulf between Romania’s richest cities and the rest. “We have a magnificent difference between the big cities, the 7-8 biggest cities in Romania and the rest of the country. There is a research by the World Bank a few years ago that said that the economic growth recorded in Romania since 2007, so from the entry into the EU until 2020 or 2021, 80% of the economic growth was concentrated in these 8 localities”Sandu shows.

The fact that there are 7-8 oases of prosperity shows that economic performance can be achieved in Romania as well. On the other hand, if the other localities suffer, the fault belongs equally to the successive governments that failed to find solutions, but also to the local authorities.

“This is primarily due to the fact that there was no plan, there is never a government plan to say «We want to develop this area. So we will do some actions, a framework, a plan to develop this area»”, he says.

Practically, Romania still lacks the arguments. “It’s a way of doing things that is very atypical for the European Union and which, unfortunately, is very difficult to remove without a stronger state, with better-funded institutions and equipped with better-trained, better-paid people,” concluded Sandu.

“The rest of the country is abandoned”

Analyst Adrian Negrescu is equally categorical. He says it with subject and predicate: a part of the country is practically abandoned.

“Unfortunately, Romania is becoming economically enclaved day by day. There are poles of economic growth that represent a significant indicator related to the evolution of the economy: Bucharest, Ilfov, Cluj, Sibiu, Timișoara, even Iași. There are places where the economy is growing and including the incomes of employees are on a significant plus. But the rest of the country is abandoned. More than 80% of Romania is made up of people who live from day to day, with ridiculous salaries, with companies struggling to survive and with an economy on the ground. Romania is like a two-speed car. It is going in reverse rather than accelerating towards a positive economic evolution“, says Negrescu.

“It’s a statistical anomaly. And you know why? Because Romania is becoming more and more economically enclaved. Politicians tell us that we are doing well in terms of GDP per capita, this is what is happening in Bucharest and Cluj, but they also forget to tell us that Vaslui is the poorest county in Europe. Or that if you leave Bucharest, five minutes away you will discover areas of poor poverty, something like in the 90s”he adds.

The solutions are simple. It all starts from the fact that there is a need for large-scale investments and programs, better capitalization and access to credit for private companies and the population, and in general a coherent infrastructure investment policy.