The rural development: one of the most important challenges

for Romania

ANDREEA DRGOI
Senior Researcher in the Institute for World Economy
Romanian Academy
050711, Bucharest, Casa Academiei, 13 Septembrie Street no.13, 5 District
ROMANIA
andre.emanuela@gmail.com

NECULAI CRISTINA
Associate Researcher in the Empirical studies and surveys Department of
Institute for Economic Forecasting
Romanian Academy
050711, Bucharest, Casa Academiei, 13 Septembrie Street no.13, 5 District
ROMANIA
cristinaneculai@yahoo.com


Abstract: Our paper proposes to emphasize the situation of rural development in Romania, highlighting the
main opportunities and challenges brought on by the countrys accession into European Union, by taking into
consideration the results of ten foresight exercises that either focus on or are to some extent interested in rural
areas and regional development. The analysis will underline the key factors of Romanian rural development
gap comparative with other European countries. In the final section of our paper we will focus on possible
policy options for increasing the sustainability of Romanias rural development (by identifying major SWOTs)
in the context of new European vision for rural development that has two objectives: rural socio-economic
development and countryside protection.


Key words: rural development, social sustainability, economic policy, development gap, foresight analysis

This paper is supported by the Sectorial Operational Programme Human Resources Development (SOP HRD), financed
from the European Social Fund and by the Romanian Government under the contract number SOP HRD/89/1.5/S/62988


1 Introduction
The concept of rural development encompasses
all activities aimed at improving quality of life in
rural areas, to preserve natural landscape and
ensuring that the rural areas can fulfill the functions
incumbent on society, preserving both an
economic and ecological balance. According with
OECD vision on rural development[1], traditional
policies to subsidize farming have not been able to
increase the economic potential of rural areas, so it
have become necessary for the policies in the field
to focus on promoting rural development through
co-ordination across sectors, across levels of
government, and between public and private actors.
Currently, in the enlarged EU, the new philosophy
of rural development is based on the concept
of local development, which requires both
a strong rural component and an
agricultural based economy, preserving the natural
environment and assuring the social sustainability.
Sustainable development in rural area had
differed significantly in the old and new
member states since the last enlargement
(2007) until now. The current financial and
economic crisis helped emphasize these differences
and questioned the consistency of regional rural
development policies in the European Union.
After five years since the last EU enlargement,
economic and social cohesion remains one of
the key issues on the communitarian agenda.
Moreover, economic and
financial crisis "shocked" the whole structure
of European common policies and led to wide
spread debate on the correct "mix" of policies to
address economic problems that have a pronounced
social component.
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ISBN: 978-1-61804-082-4 33

This is the central message of the European
Commission Report on the measurement
of economic performance and social progress
(Stiglitz Report [2] ), published in 2009, after the
first year of economic crisis. Under this approach, a
policy of sustainable economic development must
take into account a number of additional criteria
such as quality of life, social welfare, efficiency
and energy security, environmental protection.
Presently, in the European Union, rural
development policy for 2007 - 2013 is focused on
three themes (known as "thematic axes"). These
are: improving the competitiveness of the
agricultural and forestry sector: improving the
environment and the countryside and improving the
quality of life in rural areas and encouraging
diversification of the rural economy.
A new feature for 2007 to 2013 is a greater
emphasis on coherent strategy for rural
development across the EU as a whole.
For Romania, this approach should help to
identify the areas where the use of EU support for
rural development adds the most value, make the
link with the main EU priorities (for example, those
set out under the Lisbon and Gteborg agendas)
and ensure consistency with other EU policies, in
particular those for economic cohesion and the
environment.


1.1. The importance and role of Romania for the
rural development of the enlarged European
Union
The agricultural sector of Romania, which
joined the EU in the most recent enlargement
in 2007, is currently regulated by the Common
Agricultural Policy, which governs
both the development processes of agricultural
production ("first pillar") and the
agricultural territories ("second pillar"). The impact
of integration on the Romanian agricultural
sector has two consequences: national authorities in
the field have become less independent and
production structure by industry sector
became more
standardized (losing certain specialties and
traditional products that did not meet EU standards)
but agricultural policy has acquired a character
of long-term stability, allowing for more coherent
action for the development of this sector.

Figure 1: The place of rural areas in Romania
comparative with the EU situation in 2007

61,60%
47,10%
58%
36,50%
56,20%
18,60%
16%
13,10%
0,00%
10,00%
20,00%
30,00%
40,00%
50,00%
60,00%
70,00%
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Romania
EU-27


Source: Authors calculation based on national
statistics
As shown in the above data, one of the
main characteristics of Romanias economy is
the importance of socio-economic development
of rural areas, which is higher than in the EU-
27. After accession, Romania has launched
Rural Development Program for the period 2007 -
2013 which replaced the SAPARD Program, which
operated in the pre-accession period. The main
objective of those post-accession development
strategies was to implement policies to
encourage rural economic and social changes
necessary for sustainable development in rural
areas.
Trough her Rural Development Strategies,
Romania has directed funds to the following
objectives: increased competitive ability of rural
households and forestry by meeting performance
and quality standards in agricultural production,
improving land management and environmental
protection and improving quality of life and social
sustainability, expanding development in rural
habitat trough diversification of economic activity.


1.2. Romanias rural development gap,
comparative with others European countries
According to an analysis recently published by
the European Commission [3], Romania is on the
last places in the implementation of her programs
for rural development from 2007 2013, using only
20% of the allocated funds, compared with the
advanced countries in the field (Luxembourg
53,8% and Ireland 54,9%). European analysts
consider that the "slow" progress of these programs
is due to difficulties related to the approval and
implementation (the excess of bureaucracy),
and poor mobilization of local actors.
According with the data from a recent DG
Agriculture Report (EU- DG Agriculture and Rural
Development Rural Development in the
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ISBN: 978-1-61804-082-4 34

European Union Statistical and Economic
Information Report, December 2010), Romania has
a very low level of diversification of non-
agricultural activities in rural area, scoring very bad
also for conservation and upgrading of the rural
heritage and training and information. Most of the
financial resources are allocated for support the
agricultural production and for direct payments.
Figure 2: Romania - financial support for rural
development per measure in the 2007-2013
programming period

Source: EU- DG Agriculture and Rural
Development Rural Development in the
European Union Statistical and Economic
Information Report, December 2010)

1.3. Major SWOTs of Romanias rural areas

Strengths: Environment and Quality of Life
Only a few strengths are highlighted in the
selected foresight cases. A major strength of rural
areas is the attractiveness of landscapes with
thriving populations of wildlife and areas for
recreation. These landscapes and wildlife
contribute to the sense of well-being and quality of
life of many people, including residents and
visitors. The second major strength relates to the
low levels of pollution in rural areas. Another
strength is that rural areas are considered
custodians of national values, traditions and rituals.

Weaknesses: Poor Infrastructure
Unfortunately, these strengths are significantly
outnumbered by the perceived weaknesses of rural
areas. The most relevant ones are associated to the
poorly developed and inefficient physical
infrastructures, especially information and
communication (ICT) infrastructure, which in most
cases is targeted at national and international
routes. However, some basic services, such as
water and electricity are not very reliable either.
Both travel distance and time required for
accessing and collecting water can be long and
existing groundwater insufficient or unsuitable. In
some rural areas, the lack of services and
communication infrastructure hinder migration and
development, thus generating a path dependency
and lock-in situation in which technological
trajectories of specific regions and localities are
historically determined by the limited research and
innovation capabilities developed by individuals
and organizations over time.
In addition, transport (bus and rail) services are
often infrequent and do not necessarily facilitate
travel to work or education. This infrastructure
deficit, together with the inability of rural
economies to develop the underlying conditions of
trust and social capital that contribute to the
presence of a knowledge-based learning economy
may exacerbate the conditions of lock-in to a
specific but not necessarily desired innovation
trajectory.

Threats: Depopulation and Economic Decline
In our analysis have been underlined several
threats. Among them are: imbalances in population
structure; rural depopulation; redundant or under-
used investments; further spread of one-off
scattered housing in the countryside, especially
holiday homes; higher servicing costs inherent in a
low rural population density; degradation of rural
and coastal landscapes; flood and coastal erosion
risks; and increasing unemployment resulting from
the decline in farming and other agriculture-related
activities.

Opportunities: Environmental and Tourism
Industries
In spite of the weakness and threats, rural areas
are not always seen through dark or grey glasses.
There are also opportunities for the future of rural
areas, especially for national and regional
authorities, local and global businesses, and other
stakeholders, including citizens. For example,
wireless solutions and cable TV are cost effective
solutions capable of improving the ICT
infrastructure and connectivity for rural areas.
The increasing use of rural space for multi-
functional activities (e.g. forestry, environmental
conservation and housing) may boost employment
rates and economic growth. In addition, the
sustainable use of natural resources, such as scenic
landscapes for tourism and recreation, may
contribute to the emergence of new farmers (with
environmental management skills), who, with
appropriate assistance from European and national
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funding schemes, could remain involved in
noncompetitive businesses, take on a new profile
and image, and act as a point of attraction and
enhancement of human resources.
In this context, it should be noted that a
better use of funds for the implementation of rural
development strategies of Romania, with full
advantage of opportunities offered by the new
Common Agricultural Policy can not omit, in our
opinion, the following priority objectives:
a. reducing the share of population employed
in agriculture and providing alternative
employment and income related to the
creation of economically viable farms, by
reducing the fragmentation of the land;
b. development of infrastructure and rural
specific services that can support economic
growth in detriment of subsistence
farming as currently practiced;
c. providing alternative employment and
income for rural population (road
construction, communications).


2 Possible solutions for increasing
Romanias rural development
Recent developments in European funding
through the Common Agricultural Policy (CAP)
show predominant orientation to finance rural
development programs (until about a decade,
priority was given to financing agriculture through
direct payments to farmers and subsidies).
Significance of this new funding context is that,
through the Community budget, rural communities
can now receive money, including in the form
of state aid to support their development strategies,
for which purpose specific funding from the rural
environment can be related to regional policy
funding programs.
In Romania, there are currently, state aid
schemes to support rural development, such
as: State aid scheme for improving the product
quality in organic farming sector, state aid scheme
for producers in disadvantaged areas state aid
scheme for collecting organic waste in the livestock
sector (funded by the national budget).
Also, can be granted state aid for environmental
protection, compensation for handicaps in certain
areas, young farmers in rural areas, farmers' early
retirement or cessation of agricultural activities,
support for producer groups, encourage the
production and marketing of quality agricultural
products, providing technical assistance in
agriculture and farm restructuring in difficulty.
In this context it should be noted that unilateral
aid measures which are designed simply to improve
the financial situation of farmers, but not in any
way to contribute to the sustainable development of
rural sector, particularly aid based solely on price,
quantity, production unit or unit of the means of
production are regarded as operating aid that are
incompatible with the common market regulation.
From the perspective of the opportunities
offered by State aid policy in Romania, rural
development must be thought in terms of the future
[4], not as a solution to past problems.
For example, are preferred state aid to
boost rural development on environmental
grounds, such as state aid for the additional
costs and income losses caused by use of
environmental technologies and not the state aid
granted to ordinary farmers for agriculture
products.
They may also be beneficial for sustainable
development state aid for training forest owners
and farmers [5], aid for consultancy
services provided by third parties, including the
creation of business plans, management plans in
forestry and agriculture and feasibility studies and
participation in international competitions.


2.1. Opportunities brought on by the EU
integration for the development of rural areas
EU rural development policy provides the
tools to solve problems that affect rural economic
sustainability of the new Member States:
- Give priority to the rebuilding and
modernization of production tools in
agriculture and forestry, for this objective are
allocated 41.7% (in Bulgaria) and 45% (in
Romania) from the loans granted by the
European Agricultural Fund for Rural
Development;
- Mobilize the available funding under the
second axis of the Rural Development
Regulation, to conserve the natural
environment; this objective attracts 27.1%
of loans granted by the European
Agricultural Fund for Rural
Development in Bulgaria, and 25% in
Romania;
- Give a great importance to the "open"
economic infrastructure of rural areas and
diversification of activities in order to boost
their development (in Bulgaria and Romania,
for this purpose are allocated 31.2%
and 30% of loans from the European
Agricultural Fund for Rural Development).
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2.2. Positive trends to ensure sustainable rural
development in Romania
Romania has a significant agricultural potential,
but untapped at its best [6], both soil and climatic
conditions are favorable to agriculture, after her
land surface Romania ranks second in Central and
Eastern European countries and 7th in the EU- 27.
Romania's rural areas have multiple opportunities
related to ecotourism including authentic traditions,
natural products and beautiful landscape.
According to the EU's strategic guidelines on
rural development, various regions of
Romania have the opportunity to develop local
strategies based on measures such as: the training
of human resources in rural areas, the encouraging
of conserving traditional products and technologies
[7].
Accelerating social and economic restructuring
of rural areas may also be driven by measures
to promote development of local knowledge
by promoting the recruitment of group leaders and
technicians and dissemination of information [8],
both extremely important in the context of rural
populations low education, and, not least by
restructuring of agricultural jobs.
Other opportunities lie in complementary
sectors, such as fisheries, marine-based
aquaculture, inland aquaculture (in rivers and
lakes), renewable energy production and forestry.
The development of skills in these sectors
would add value to rural businesses related to wood
products, craft industries, country sports, and rural
tourism, for example. Finally, it is important to
emphasize that the political process of enlargement
in the European Union has brought social divides
back to the top of the European agenda, thus
creating new funding schemes and opportunities for
regional development in rural areas.


2.3. Four major policy options
First, government leadership is vital for rural
development. This leadership may be a response to
economic or social pressures but aims at solving
specific problems (e.g. upgrading infrastructures,
allowing business clusters to expand into adjacent
farmland, or supporting residential construction)
and promoting a sustainable rural economy where
enterprises will be commercially competitive
without damaging the environment.

Second, the rural economy should promote a
more competitive agriculture and food industry,
with increased emphasis on multi-functionality of
agri-rural areas. In so doing, regional and national
authorities would need to develop more adequate
spatial planning instruments.
Third, in terms of employment policy, regional
governments should launch plans to secure and
stabilize employment for at least one member of
every rural household. In addition, employment for
rural youth should ideally be available in their
regions.
Fourth, both the public and private sectors need
to invest in the development of the so-called social
infrastructure, that is, the promotion of new skills
and talents leading to the formation of thriving
multicultural communities and more developed
regional institutional capacity. In other words, new
capabilities and competences for managers and
employees in the private and public sectors would
help rural citizens to become (a) more
entrepreneurs, (b) more adaptive to changes, and
(c) more capable of anticipating and overcoming
risks.


3 Conclusions
In the post - accession period, the rural
areas of Romania are confronted with
profound changes and newly created tensions that
challenge the extremely fragile balance of their
development.
In solving these problems is necessary to seize
all the benefits taking into account all aspects
of economic and social environment. In other
words, along with agricultural issues it is necessary
to be analyzed all other aspects of rural life, in
order to create the appropriate strategies for an
integrated economic environment and a good
quality of life in rural areas. Rural sector
development in Romania should be encouraged by
supporting agricultural communities to provide
European citizens with quality food, valuable and
diverse products in a sustainable manner with the
respect of environmental compliance and public
health regulations.
Generally, in the literature [9], it is considerate that
the government and citizens should make together
the decisions about public services in the rural
areas. However, our research conclusion is that the
role of innovation and public management tools
regarding co-design and co-delivery can improve
service delivery in rural regions. In addition, to co-
production, such approach explores the benefits of
incorporating long-term planning (futures thinking)
and rebalancing the rural-urban relationships in
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designing services (vis--vis place based approach
to policy design).
Also, the national rural development strategies
of Romania should promote more competitive,
efficient use of resources to generate economic
growth in a sustainable manner, by taking into
consideration the analyzed SWOTs. The reader
should take into consideration that the proposed
policy options result from a review of ten foresight
exercises that either focus on or are to some extent
interested in rural areas and regional development.
Many trends could have been further elaborated
to complement the SWOTs. However, for reasons
of space, only the most relevant ones have been
considered. In any case, these trends and SWOTs
are only some of the many elements contributing to
the complexity of rural systems from Romania,
which are continuously affected by regional,
national, European and global trends.

References:

[1] OECD - Agricultural policies and rural
development, 2011
[2] Joseph E. Stiglitz, Amartya Sen and Jean Paul
Fitoussi(2009) Report by the Commission on
the Measurement of Economic Performance
and Social Progress (The Stiglitz Report),
Paris.
[3] European Commission Ensuring good
management of rural development
programmes 2007 -2013, Brussels 28.08.2011.
[4] Vincze, Maria (2000), Regional and
rural development. Ideas and practices.
University Press Publishing House Cluj, Cluj-
Napoca.
[5] Ciutacu C., Luminita Chivu - Romania and the
European model of agriculture and rural
development, CIDE, economic issues,
no.31/2002, Bucharest.
[6] Chivu, Luminita, Ciutacu C.; Franc V.-
I., Constantine M. - The competitiveness
of agriculture and EU integration, ESEN 2,
CIDE Tender no. 24/2002, Bucharest.
[7] Puia, I., Sorana, V., (2001), Agroecology
and ecodevelopment, Academic Press
Publishing House, Cluj-Napoca.
[8] Bara Simona, Moldovan Minodora - Role
of institutions in development of agriculture
and the countryside, IEA, CIDE, Economic
Issues, no. 33/1998.
[9] OECD Strategies to Improve Rural Service
Delivery, 19 April 2010


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