Forecast, Organization-Coordination and Motivation in Local Public Administration Management

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The USV Annals

of Economics and
Public Administration
VOLUME 15, ISSUE 1(21), 2015
Editura Universitii tefan cel Mare din Suceava

The USV Annals of Economics and Public Administration Volume 15, Issue 1(21), 2015
EDITORIAL BOARD:
Editorinchief:CarmenNSTASE
Executiveeditor:AdrianLiviuSCUTARIU
Editors:ElenaHLACIUC,CarmenCHAOVSCHI,FlorinBOGHEAN,MarianaLUPAN,
OvidiuFlorinHURJUI,SimonaBUTA
SCIENTIFIC COMMITTEE:
AngelaALBU,tefancelMareUniversityofSuceava,Romania
PaoloANDREI,UniversityofStudiesinParma,Italy
StefanoAZZALI,UniversityofStudiesinParma,Italiy
GeorgeP.BABU,UniversityofSouthernMississippi,USA
ChristianBAUMGARTNER,InternationalFriendsofNature,Austria
GrigoreBELOSTECINIC,ASEM,Chiinu,RepublicofMoldova
IonelBOSTAN,AlexandruIoanCuzaUniversityofIai,Romania
AurelBURCIU,tefancelMareUniversityofSuceava,Romania
GheorgheCRSTEA,AcademyofEconomicStudies,Bucharest,Romania
SlobodanCEROVIC,SingidunumUniversity,Belgrade,Serbia
SimionCERTAN,StateUniversityofChiinu,RepublicofMoldova
CarmenCHAOVSCHI,tefancelMareUniversityofSuceava,Romania
LilianaELMAZI,TiranaUniversity,Albania
ManuelaRodicaGOGONEA,AcademyofEconomicStudies,Bucuresti,Romania
CristianValentinHAPENCIUC,tefancelMareUniversityofSuceava,Romania
ElenaHLACIUC,tefancelMareUniversityofSuceava,Romania
ElenaIFTIME,tefancelMareUniversityofSuceava,Romania
MarianJALENCU,StateUniversityofChiinu,RepublicofMoldova
MiikaKAJANUS,SavoniaUniversityofAppliedSciences,Iisalmi,Finland
AlunicaMORARIU,tefancelMareUniversityofSuceava,Romania
MariaMUREAN,AcademyofEconomicStudies,Bucuresti,Romania
CarmenNSTASE,tefancelMareUniversityofSuceava,Romania
AlexandruNEDELEA,tefancelMareUniversityofSuceava,Romania
IonPRACHI,ASEM,Chiinu,RepublicofMoldova
RusalimPETRI,tefancelMareUniversityofSuceava,Romania
AbrahamPIZAM,UniversityofCentralFlorida,Orlando,Florida
IonPOHOA,AlexandruIoanCuzaUniversityofIai,Romania
GabrielaPRELIPCEAN,tefancelMareUniversityofSuceava,Romania
GheorgheSANDU,tefancelMareUniversityofSuceava,Romania
PetruSANDU,ElizabethtownCollege,Pennsylvania,USA
DoruTILIUE,tefancelMareUniversityofSuceava,Romania
ViorelURCANU,ASEM,Chiinu,RepublicofMoldova
DiegoVARELAPEDREIRA,UniversityofACoruna,Spain
RzvanVIORESCU,tefancelMareUniversityofSuceava,Romania
MarianZAHARIA,PetroleumGasUniversityofPloieti,Romania
Cover design & graphic layout: Adrian Liviu SCUTARIU
Contact: ntreaga rspundere

Faculty of Economics and Public Administration asupra coninutului
tefan cel Mare University of Suceava articolelor publicate
Str. Universitii nr. 13, Corp H, Birou H105, 720229 SUCEAVA, ROMANIA revine autorilor.
Phone: (+40) 230 216147 ext. 297
E-mail: cercetare@seap.usv.ro The entire responsability
Journal web site: www.annals.seap.usv.ro for the content of the
Faculty web site: www.seap.usv.ro published articles rests
University web site: www.usv.ro with the authors.
2
The USV Annals Volume 15,
of Economics and Issue 1(21),
Public Administration 2015
CONTENTS
SECTION 1
ECONOMY, TRADE, SERVICES..6

THE ECONOMIC EFFECTS OF EMIGRATION OF YOUNG HIGHLY EDUCATED ROMANIANS.7
Dorel AILENEI
Liana BADEA
Cristina DIMA

PIGS COUNTRIES NEW CHALLENGES UNDER EUROPE 2020 STRATEGY20
VictorRomeo IONESCU

PRESSURE OF AGEING ON REGIONAL DEVELOPMENT. CHALLENGES AND LIMITS FOR THE LABOUR MARKET.29
Silvia PISIC
Valentina VASILE
Ana Maria DOBRE

INFORMATION AND KNOWLEDGE IN A GLOBAL CONTEXT39
Florina BRAN
MariaLoredana POPESCU

GENERAL CONSIDERATIONS ON INDUSTRIAL PROPERTY RIGHTS AND THE ROLE OF PATENT ADVISOR41
Gabriel I. NSTASE
Bogdan PASCU
Carmen Georgiana V. BADEA

REGIONAL DEVELOPMENT: ROMANIAS CASE49
Emilian M. DOBRESCU
DianaMihaela POCIOVLITEANU

SUSTAINABLE DEVELOPMENT OF ROMANIAN AGRICULTURE WITHIN THE CONTEXT OF EUROPEAN UNIONS
REQUIREMENTS57
Carmen Valentina RADULESCU
Ildiko IOAN

SUSTAINABLE ECONOMIC GROWTH AND ECOEFFICIENCY63
Mariana LUPAN
Angela Nicoleta COZORICI

LOOKING FOR (RE)DEFINING UNIVERSITY AUTONOMY74
Ala COTELNIC
Angela NICULITA
Petru TODOS
Romeo TURCAN
Larisa BUGAIAN
Daniela POJAR

PRIORITIES IN REGIONAL DEVELOPMENT IN ROMANIA91
Mihai POPESCU

ASPECTS OF REGIONAL COMPETITIVENESS THROUGH DYNAMIC PRICES OF PETROLEUM PRODUCTS99
Daniela ENACHESCU

THE ILLUSION OF CATCHING UP THE SOCIOECONOMIC REGIONAL GAPS105
Eugen GHIORGHITA

LANDMARKS IN THE EVOLUTION OF REGIONAL SCIENCE114
Adrian Liviu SCUTARIU
3

THE MODEL OF CROSSBORDER COOPERATION IN THE ROMANIANBULGARIAN NEIGHBOURHOOD AREA
BETWEEN DESIRE AND REALIZATION.120
Bogdan Vasile ILEANU
Daniela Luminita CONSTANTIN
Claudiu HERTELIU
Tudorel ANDREI

ANALYSIS OF ROMANIAN FISHERIES AND AQUACULTURE IN REGIONAL CONTEXT127
Mihaela NECULITA
Liliana Mihaela MOGA

COMPETITIVENESS AND INNOVATION IN THE ROMANIAN REGIONS HOW MUCH PROGRESS DURING THE
POSTACCESSION PERIOD? 133
Carmen Beatrice PAUNA
Marioara IORDAN
MihaelaNona CHILIAN

DEVELOPMENT OF CROSSBORDER AREAS. STUDY CASES REVIEW..142
Marcela LUSARCIUC

THE EUROPEAN UNION CHASING A PLURILATERAL MARKET ACCESS BY NEGOTIATING THE TISA152
Ludmila BORTA

SECTION 2
MANAGEMENT AND BUSINESS ADMINISTRATION..159

CLOUDBASED VS DESKTOPBASED PROPERTY MANAGEMENT SYSTEMS IN HOTEL..160
Mustafa GULMEZ
Edina AJANOVIC
Ismail KARAYUN

LINKING HUMAN RESOURCES STRATEGY WITH KNOWLEDGE MANAGEMENT STRATEGY TO DRIVE
MEASURABLE RESULTS..169
OtiliaMaria BORDEIANU
Simona BUTA

OPINIONS OF ECONOMIC ENTITIES FROM BRAOV AND SUCEAVA COUNTIES REGARDING THE IMPORTANCE OF
LEASE SERVICES FOR DEVELOPING THE BUSINESS ENVIRONMENT..176
Oana BRBULESCU
Cristian Valentin HAPENCIUC
AndreiAlexandru MOROAN
Mihai COSTEA

PHARMACEUTICAL COMPANIES BETWEEN CRISIS AND COMPETITIVENESS SECTORAL
DIAGNOSIS189
Mihaela BRSAN
tefni UU

A TERRITORIAL PROFILE OF PUBLIC EXPENDITURES AT LAU 2 LEVEL, FOR 20072013 PERIOD IN ROMANIA204
Cristina LINCARU
Speranta PIRCIOG
Vasilica CIUC
Draga ATANASIU
Beatrice CHIRIAC

IMPACT OF MARKETING STRATEGIES ON SACHET PRODUCTS IN BANGLADESH..214
Hossain Shahid SHOHROWARDHY
H.M. Kamrul HASSAN

4
SECTION 3
ACCOUNTING - FINANCES223

ACCOUNTING REPORTS AND BUDGET PROCESS IN THE ROMANIAN PUBLIC SECTOR BETWEEN CONVERGENCE
AND CHALLENGE224
Elena HLACIUC
Marian SOCOLIUC
Geanina MACIUCA
Antonela URSACHI

RECENT ADAPTATIONS OF THE LEGAL STANDARDS APPLIED TO TAX LIABILITIES THROUGH GOVERNMENT
ORDINANCES230
Ionel BOSTAN

ECONOMIC MEASURES DESIGNED BY INTERNATIONAL FINANCIAL INSTITUTION IN ORDER TO
MACROSTABILIZE AND TO AUGUMENT ECONOMIC RECOVERY PROCESS.233
Anca Maria PARASCHIV
Alexandru POTORAC
Ioana ENACHE

SHOULD TAX COURSES BE REQUIRED FOR ALL ROMANIAN UNIVERSITIES BUSINESS STUDENTS? THE NEW
FUTURE OF BUSINESS EDUCATION241
Kevin A. DIEHL

THE IMPACT OF THE FOREIGN CAPITAL BANKS ON ENSURING FINANCIAL STABILITY ON LONG TERM..246
Isac BORS

SECTION 4
STATISTICS, ECONOMIC INFORMATICS AND MATHEMATICS254

TERTIARY EDUCATION: WHERE TO? AN ANALYSIS AT THE REGIONAL LEVEL IN ROMANIA.255
Marian ZAHARIA
Aniela BLCESCU
Adrian NEDELCU

MASTER STUDENTS PERCEPTION ON THE CORRELATION BETWEEN ACADEMIC CURRICULA AND LABOR
MARKET REQUIREMENTS A COMPARATIVE ANALYSIS OF MASTER PROGRAMS IN ECONOMICS FROM
BUCHAREST AND SIBIU.264
Erika MARIN
Alexandra HOROBET
Lucian BELASCU

SECTION 5
LAW AND PUBLIC ADMINISTRATION270

ETHICS IN PUBLIC ADMINISTRATION. CASE STUDY ROMANIA...271
Rzvan VIORESCU
Gabriela NEMOI

FORECAST, ORGANIZATIONCOORDINATION AND MOTIVATION IN LOCAL PUBLIC ADMINISTRATION
MANAGEMENT.278
Petronela SCUTARIU

PARADIGMS REGARDING CONCERTED PRACTICES OF COMPETITION POLICY286
Gabriela NEMOI
Rzvan VIORESCU

INSTRUCIUNI UTILE PENTRU AUTORI / AUTHOR GUIDELINES ............................................292
5
SECTION 1
ECONOMY, TRADE, SERVICES
6
THE ECONOMIC EFFECTS OF EMIGRATION OF YOUNG

HIGHLY EDUCATED ROMANIANS
Professor Ph.D. Dorel AILENEI

Bucharest University of Economic Studies, Romania
dorulilenei@gmail.com

Associate Professor Ph.D. Liana BADEA
liana.nutu.badea@gmail.com

Assistant Professor Ph.D. Cristina DIMA
University Politehnica of Bucharest, Romania
cristina.visan0187@gmail.com
Abstract:
Migration is one of the oldest phenomena that accompanied the development of human society, sometimes
causing clashes between peoples, cultures and civilizations. Recent events or from a not too distant past of Europe
show that tensions created by migratory movements often have an impact on political and economic relations between
countries, cultures and religions.
The Romanian reality shows that after 1989 the resident population experienced a decline. According to the
National Institute of Statistics, in the period 1989-2012, Romania's population decreased by about 3.1 million, this
reduction being due to both migration phenomenon and negative natural increase of population. Some statistic
records also show that the extremes are usually among those who decide to emigrate. On the one hand those who are
choosing this path are individuals with low income and a low or medium level of education; on the other hand, we can
find the phenomenon of brain drain. It is alarming that among those who choose to emigrate are registered young
people able to work, this generating the problem of funding on medium and long term the social services.
Starting from such aspects, this paper aims to highlight key issues regarding the intention of emigration of
highly educated young people. Using quantitative and qualitative methods the authors of this paper aim to identify
some possible causes that may determine the highly educated youth to emigrate, evaluate some possible effects due to
this phenomenon and to find proposals to limit the negative effects of demographic decline.
Key words: migration, demographic decline, labor market, social assistance, brain drain.
JEL classification: J69, R10.
1. LITERATURE REVIEW ABOUT MIGRATION
Migration phenomenon has existed for a long time, and history is the witness. From the
theoretical standpoint, the issue of migration has been widely debated, however, it can not be
asserted that the last word has been said about it. The field is complex, with economic, social,
political, demographic and even psychological implications. As the researcher Joaquin Arango said,
it appears that the extend of the phenomenon in the last two centuries has led to new research:
Building of theories in this field is basically an issue of the 20th century and especially its last
third part. The most contributions before 1960s are now only for historical interest, exception for a
number of contributions to migration vocabulary and a special significance of a few notable
precursors (Constantinescu, 2002, p.94).
However, current achievements are based on theories from many centuries ago. Thus, the
migration issue has begun to be debated in scientific circles even before the mercantilists. The fact
is that Jean Baptiste Colbert and Thomas Mun, representatives of mercantilism, emphasized the
interdependence between migration and economic growth, highlighting the need of keeping under
control emigration from the origin country to colonies. To have a strong labor supply is one
condition which can determine a significant economic growth. Subsequently, classical school
7
highlights more nuanced the migration problem. Adam Smith, the father of economics, showed the
need for free movement of goods and people, as prerequisites for growth of wealth. (Smith, 1992).
Among liberals, the mobility issue of population has been approached by J.S. Mill, Th. Malthus,
and so on, all of these showing that a high mobility of labor provides acces to new markets.
Migration has been studied regardless of doctrinal orientation. For example, in the case of Marx, the
main factor triggering economic development, population mobility or changing all aspects of social
life is mass industrial production, therefore migration appears to be driven by industrial evolution
(Marx, 2009).
The 20th century comes with a number of dedicated migration theories. The table below
summarizes some of these, the literature proving to be really complex (table 1).
Table 1. Some references on migration in the literature

Year Researchers concerned with the study The main studied aspects
of migration
1957 D. Massey Migration can be seen as a process of self-sustaining
G. Myrdal capacity through the mechanisms which itself gives birth.
1960 O. Stark Migration can be analyzed from the perspective of

M.P. Todaro individual rational decision. This kind of person will be
J.R. Harris able to assess prospects for increasing revenues.
1962-1964 G. Becker, Th. Shults, L.A.Sjaastad Migration can be regarded as an investment process in
human capital of migrants.
1966 E.S. Lee Starting from the laws of migration discoverd by
Ravenstein in the 19th century, Lee proposed push-pull
theory of migration. It identifies four broad categories of
decision determinants for emigration: factors aasociated
with the origin area, factors associated with the destination
area, obstacles and personal factors.
1979 L. Basch, M. J. Piore Migration has to be studied as an effect of labor demand in
the secondary sectors in developed countries.
1987 D. Massey, L.P. Goldring, J. Durand Migration is analyzed in terms of capital formation
mechanism.
1989 E. Taylor, O. Stark, P. Arnold, D. Migration - family strategy directed to minimizing risks of
Massey revenues reduction by diversifying their sources of
achievement.
Source: Processings of authors
Lately, the study of migration research begins to focus on specific issues such as the
phenomenon of brain drain. The main stream of migration literature stressed that the brain drain
represents a loss of human capital (Beine, Docquier and Rapoport, 2001), producing only negative
effects on the country of origin (Wong and Yip, 1999 Bhagwati and Wilson, 1989). Another part of
the literature shows that the brain drain phenomenon brings with it a number of long-term
advantages, such as remittances sent by migrants to their countries of origin (Cinar and Docquier,
2004), additional knowledge and skills brought by persons repatriated to their country of origin
(Postel-Vinay Dos Santos, 2003), closer trade relations by creating new business networks
(Mesnard and Ravallion, 2001), increased foreign investment, etc. The literature has introduced
new concepts such as Brain Drain, Brain Gain, Brain Waste, and a sub-branch of study migration
occurred quite rapidly - "new economy brain drain" (Docquier and Rapoport, 2004).
8
2. THE MIGRATION PHENOMENON IN ROMANIA
After 1990, Romania had suffered the greatest loss of population in times of peace, in its
history. The main causes of population reduction were: international migration, family planning and
high mortality (INS, 2014).
Since 2014 the resident population of Romania registered for the first time values below 20
million. During the period 1989-2012 the resident population decreased by 3.1 million, more than
77% of its negative growth (2.4 million) being determined by emigration. By 2009 this reduction
was driven predominantly by the migration phenomenon and since 2010 by the negative natural
increase. International migration has led to an average annual reduction of Romania's population of
104,200 people in 1990-2012 (INS, 2014). The factors that led to the current situation are numerous
and fit into different categories, starting with those of economic and social nature and reaching the
psychological ones. Interesting is that recent statistics indicate that besides the known factors
leading to the current demographic decline there are some others - the increasing average age of
mother at the first birth from 23.7 years in 2000 to 26.2 years in 2012 and the decrease of the
fertility rate of a Romanian woman (according to Eurostat).
Unfortunately Romania's situation proves not to be exceptional. The estimations made by
the United Nations shows a downward trend for our country in terms of the evolution of the
population residing in Romania, as can be seen in the chart below. The three scenarios considered
by the Department of Economic and Social Affairs show that in the best situation, in 2050, our
country will have a resident population of about the same size as today, while the pessimistic
scenario suggests that people will decrease below 16 million (Fig. 2.1.).
Source: United Nations, Department of Economic and Social Affairs, World Population Prospects. The 2012
Revision, http://esa.un.org/wpp/Demographic-Profiles/pdfs/642.pdf
As shown, the trend is one of diminishing the population of Romania, an aspect of real
concern both for the evolution of the labor market and for the economic, social and political
implications. In addition, studies carried out in recent years show a propensity in the case of
Romanian youth towards finding a job abroad. According to a study conducted by the Romanian
Institute for Evaluation also Strategies, 51.6% of youth aged between 18 and 35 wish to work
abroad, and 75% of respondents with higher education in all age groups also state that they would
like to emigrate (IRES, 2013). According to data provided by the National Institute of Statistics, in
2012 the Romanians preferred the following destination countries: Italy, Spain, Germany, UK etc.
In the last years, there was observed a trend, according to which those with higher education decide
to leave the country, thus the phenomenon of brain drain gaining momentum.
Based on the situation above presented, this paper aims to identify the intention to emigrate
in 2015 of the Romanian youth with higher education.
9
3. RESEARCH REGARDING THE INTENTION TO EMIGRATE OF THE YOUNG

ROMANIANS WITH HIGHER EDUCATION
Starting from the need to identify migration intentions of Romanian youth with higher
education, we conducted a pilot survey. Thus, during March-April 2015 was distributed a
questionnaire containing 18 questions on the intention of Romanian young people to emigrate in the
short term. The sample consisted of 199 respondents, all of them being students at some of the most
prestigious universities in the country: Bucharest Polytechnic University (with a total of 25,382
students as of academic year 2013-2014) and Bucharest University of Economic Studies (with a
total of 23,678 students as of academic year 2013-2014). In a first phase, we needed to develop a
pilot survey in order to track the tendencies of young economists and engineers, and based on their
responses to determine trends and elements needed to expand this research to other groups of young
people with higher education.
Of the total number of questions included in the survey, there have been selected only a few
for presenting some relevant determined issues.
The first part of the questionnaire concerned respondents' opinion on the phenomenon of
migration. Thus, the statement "You consider the freedom of movement of Romanian citizens in all
EU area as the highest win since the Revolution", the majority (51%) of the respondents said that
they are totally agree or strongly agree. Only 4% of the respondents were classified in total
disagreement, as can be seen in Figure 3.1.
Source: Authors processing based on the results of research carried out during March-April 2015.
Given that most of the respondents were represented by people born after 90s, who did not
have the opportunity to live in the communist regime, but to whom the communist period was
presented as one characterized by the deprivation of the Fundamental Rights of the citizen, it is not
surprising that freedom of movement within the European area is perceived as a fundamental right.
This is reinforced by the results in the case of the second claim, which seeks to highlight the extent
to which social and legislative plan (bounded by the right of free movement) is complemented by
the development opportunities generated by the existence of this right (You consider the freedom
of movement of Romanian citizens in all EU area as a chance for the development of Romanian
society).
10
Source: Authors processing based on the results of research carried out during March-April 2015
About 58% of young surveyed students consider the free movement of Romanian citizens in
the EU a chance for the development of Romanian society ("Totally agree" or "Strongly agree")
(Fig. 3.2). They take into account the possibilities for the personal, social and professional
development that emigration can offer. If 58% of respondents consider free movement of the
Romanian citizens in the Community as a great opportunity for the development of Romanian
society, it is noted that a similar percentage of people consider this as being a great win.
Emigration is usually associated by young people with so-called "recipe for success" and
success, most often is viewed through the prism of the existence of a well-paid job. Therefore,
whenever discussing migration, labor market cannot be regarded otherwise than closely connected
with the phenomenon of migration. For the third statement "Given the above, you consider
emigration of the Romanians into the EU a normal movement within the unique labor market in the
EU, 52.76% of the respondents considered themselves as being totally agree and strongly agree,
considering thereby generated labor market fluctuations as being normal (Fig. 3.3.).
Undoubtedly obtaining the right of free movement caused an intensified emigration in the
case of the citizens of a country where the need for expressions of freedom and other economic
opportunities was so stringent that the results were clearly seen in its demographic evolution. The
problem in this situation is related to how will succeed the labor market in Romania to rebalance
11
itself in the context of labor supply reduction. The way it will stabilize will impact on a number of
other macroeconomic variables that are influenced by the labor market, such as social security
budget, unemployment, low consumption, investment, etc.
Given that the Romanian citizens, who are working abroad, have the chance to improve
their standard of living and frequently resort to sending significant amounts of money to their
relatives in the country, we asked a question to determine the perception of migration as a
phenomenon that leads to an improvement of living standards ("Given the above, you consider
emigration of Romanians into The EU a chance for of Romanian citizens to improve their standard
of living").
Compared with only 8% of respondents who have the perception that emigration does not
lead to improving the living standards, 68% of respondents say their leaving for a foreign country
will bring a better life for sure, while 24% tend to agree with the statement that emigration will lead
to higher standards of living (Fig. 3.4.). The perspective covers both Romanians who have left the
country to seek a favorable environment for personal development and better living standards, but
also Romanians who remained in the country and who are receiving financial support from abroad,
support that can be used for different purposes and that is reflected in the microeconomic level and
at global level.
Many times a certain type of behavior draws the same type of conducts. Building on the
success that emigrated friends and relatives have obtained, many of those who remained in their
home country can question themselves to imitate the behavior of those who have decided to
emigrate. To see if there are incentives that can lead to faster the decision making to emigrate, there
was formulated the question "Do you have relatives / acquaintances who have moved to another
country and if so, where?".
12
Fig. 3.5. Do you have relatives / acquaintances who have moved to another country and if so,
where?
First, the results point out the high percentage of people who have relatives left in another
country (84% of those who responded), as can be seen in Fig. 3.5. Of these, 36% have relatives in
Italy, 34% in Spain, 31% in the UK and in Germany 25% of the individuals have relatives or
acquaintances. These are the countries with which Romania has intense commercial exchanges and
in the case of Spain and Italy, the language is not an impediment, as both are countries of Latin
origin. Italy and Spain, the countries of the first two places, present a lot of cultural similarities,
which may explain why they have attracted a significant percentage of emigrants coming from
Romania.
Starting from the mirage provided by foreign lands and from the positive experience gained
by acquaintances or relatives with immigrant status, 76.38% of the people questioned respond
affirmatively to the question "Have you ever thought to emigrate?". Only 23.62% say that they
never thought to emigrate, as shown in Fig. 3.6.
Fig. 3.6. Have you ever thought to emigrate?

It is interesting to note that although only 58% of respondents largely agree that emigration
is a chance for the development of Romanian society, a considerable share of 76.38% of
respondents have sought to emigrate. These results can be interpreted to mean that those who want
to emigrate do not necessarily believe in a Romanian society development, but rather see
emigration as an improvement in their personal situation and in their living standards (68% of
respondents consider emigration as a chance to improve the standard of living).
13
Fig. 3.7. To what extent it is considered that the emigration is a chance for the society
development and for the improvement of the living standards?
Of the respondents who are "strongly agree" that free movement in the EU is a development
opportunity of the country (37%), a major percentage (27%) is "totally agree" that free movement
means improving living standards (Fig. 3.7).
The last two questions of the above were analyzed using a graphical correlation between
their answers (Fig. 3.8.).
Of the total of 84% of people who have relatives / acquaintances who have gone abroad,
67% have thought to emigrate and only 17% have considered this option. Of the 16% of
respondents who do not have relatives living abroad, a major percentage was also thought to leave
Romania. The result shows a general desire to emigrate among youth in Romania, which may
generate an overall imbalance of the entire society if the subject is not treated with the utmost
attention.
When asked "To what extent do you think you could have a better standard of living in
another country?", 84% of respondents believe that their departure could bring a better life (Fig.
3.9.).
14
Fig. 3.9. To what extent do you think you could have a better standard of living in another
country?
There is an overwhelming percentage of people who have thought to emigrate (76%) and an
even higher percentage of people who felt that they could have a better life in another country in a
large and very large extent (84%). The difference is represented by people who, although are aware
of the chances to raise the standard of living settling in another country, did not thought to emigrate.
The latter represents a very stable category form the demographic perspective.
Beyond the mirage of offered by foreign lands, there are several factors on which public
policies might focus in order to keep young people in the country. To the question "What would be
the reasons why you choose to stay in Romania?", 92% of respondents indicate family and friends,
as shown in Fig. 3.10.
Fig. 3.10. What would be the reasons for which you choose to stay in Romania?
On the second place is to be found a 16% of the respondents, which indicate the patriotism
as a reason for not leaving the natal country. 10% of respondents stated that they would not
emigrate because do not master a foreign language, while 8% range from the unfortunate
experience of acquaintances. The high percentage of those who decide to stay in the country for
their family and friends highlights a culture of a people attached to others. From this point of view,
in order to reduce the migration phenomenon, the state should develop a set of policies that
emphasize the importance of family in society and that raise the living standards of their members.
When asked "What country would you choose in the situation you decide to emigrate?", the
young people had more possibilities to reply, which included EU countries and a further
embodiment response to those who have other preferences than EU.
15
Fig. 3.11. What country would you choose in the situation you decide to emigrate?
The responses show that students, future economists and engineers prefer western countries,
especially the UK and Germany (Fig. 11). Italy is not preferred by Romanian young people with
higher education, although it is among the countries where they have relatives / acquaintances,
which shows that the "snowball effect" does not operate in any situation.
Fig. 3.12. What are the reasons for which you choose to emigrate?
Among the reasons that would cause Romanian students to work abroad, the prevailing ones
are related to wage earnings, the matching between the graduated studies and the occupied job, a
better health and educational system and a "cleaner" political environment. Majority of respondents
would emigrate for a higher salary (74%) and for an appropriate job (50%) (Fig.3.12.). These
responses do nothing else but to bring to the fore issues the Romanian economy is facing.
The aspirations of young people, seen here as incentives for leaving home land, show what
are the areas which dissatisfy them in Romania. Thus disparity, often highlighted in the recent
literature, between the Romanian educational system and labor market requirements, the
shortcomings of a health system already considered "sick", wages that do not allow for a decent
living are just some of the issues that any individual should face. Therefore, those who do not find a
job according to their professional training have two possibilities regarding leaving the home
country: either to look abroad for a job in which they had been trained, either to settle to work in
another area, but being paid more than would be paid in Romania in the field for which they have
been trained.
16
Fig. 3.13. What are reasons for which you would return home?
The reasons why students in the event that they decide to emigrate would return home are
largely the reasons why some of them decide to stay in the country. It's about family and friends
(80%), places and memories (42%), the desire to contribute to the modernization of Romanian
society (32%) (Fig.3.13.). These are reasons that future generations of Romanian children born
abroad will not consider so strong to want a return to the country of origin of their parents because
the sense of belonging of future generations will be increasingly reduced.
4. INSTEAD OF CONCLUSIONS
Pilot survey results can be considered a warning signal. They generally show a clear
intention of Romanian young people to emigrate. The causes are multiple, from those of a personal
nature, relating in particular to living standards, and reaching significant deficiencies in the health
and educational system, legislative and political environment etc.
Therefore, the Romanian state spending on education and health provision dealing with
young people who leave their native country can be considered losses. On one side are sometimes
amounts recovered, on the other hand, in the internal market can create a shortage of labor. One of
the sources for covering the loss of population due to migration is represented by the flow of
immigrants, who are increasingly coming more to the European Union, with the risk of cultural and
social differences. It is estimated that these flows will be increasingly greater with the development
of Romania because our country will become more attractive for foreigners seeking a country of
adoption. The trend in net inflows of immigrants in the EU is growing - from 36.000 people in 2013
to 1.360.000 persons in 2040 (European Commission, 2014).
However, following the rise of the phenomenon of emigration, the effects that occur in the
country of origin are obvious. They can be positive, and we mention here just the remittances and
know-how that people working abroad can bring nationally. Studies over time show that migration
can lead to lower the tensions on the labor market in countries with a high unemployment rate. In
addition, from migrants working in rich countries come often significant amounts in the form of
remittances, which even if they are directed to consumption, can induce a positive effect of
multiplication.
What worries are actually the negative the effects, among which may be mentioned: the
emergence of a shortage of labor force in the home country, the reduction in income to the state
budget of Romania, increasing social and political tensions, potential intensification of criminal
activities (enhancing human trafficking, drug trafficking etc.) etc.
17
Therefore, starting from the negative effects of emigration and from the dire projections on
economic and demographic future of Romania, the lack of public policies to support young
graduates who choose to stay and work in the country and the lack of investments with the purpose
of preservation the valuable human capital, can lead us to a critical situation, which will obviously
be reflected in the quality of public services, healthcare system, to the education and living
standards in general.
Therefore, tackling the problem can be done from two perspectives. A first option would be
to take sustainable actions and effective for stopping the exodus of young people. The solution of
the annual economic growth of 4-5% higher than in the developed European countries could keep a
part of the workforce, but even so the aging European population and economic growth of 2-3% in
developed countries will still absorb labor from Eastern European countries, including Romania.
Therefore, enabling the creation of well-paid jobs, corresponding to the preparedness of young
people could change the course of events.
The second option can go on the idea that migration is a mechanism for regulating the labor
market. In this case, via bilateral agreements could be made temporary migration programs between
the country of destination and country of origin (state or private environment) with the requirement
for knowledge transfer so that the relationship between the host country and the native country to
turn into one of the type win-win. Besides measures to facilitate the return of skilled migrants
would have a significant multiplier effect. Diaspora should be encouraged to promote home country
by participating in transnational networks of knowledge.
Nationally it seems that time has come to take serious measures so that economic, social and
political stability not to be affected in the future.
BIBLIOGRAPHIC REFERENCES
1. Beine, M., F. Docquier and H. Rapoport (2001), Brain Drain and economic growth: theory
and evidence, Journal of Development Economics, 64(1), pp. 275289.
2. Bhagwati, J. and J. D. Wilson (ed) (1989), Income Taxation and International Mobility,
Cambridge, MA Mitt Pres.
3. Cinar, D and F. Docquier (2004), Brain drain and Remittances: implications for the source
country, Brussels Economic Review, Vol. 47, Issue 1, pp. 103-118
4. Constantinescu M. (2002), Teorii ale migraiei internaionale, Sociologie Romneasc, nr.
3-4. Polirom, pp. 93-114.
5. Docquier, F. and Rapoport, H. (2004), Skilled migration: the perspective of developing
countries, Policy Research Working Paper Series 3382
6. Dos Santos, M.D, Postel-Vinay, F. (2003), Migration as a source of growth: The
perspective of a developing country, Journal of Population Economics, Springer, vol. 16(1),
pp. 161-175.
7. European Commission (2014), The 2015 Ageing Report. Underlying Assumptions and
Projection Methodologies, Brussels, Belgium,
http://ec.europa.eu/economy_finance/publications/european_economy/2014/pdf/ee8_en.pdF
, [accessed March 20, 2015]
8. Institutul Naional de Statistic (2014), Migraia internaional a Romniei, Bucureti,
http://www.insse.ro/cms/files/publicatii/pliante%20statistice/Migratia%20internationala%20
a%20Romaniei.pdf, [accessed February 14, 2015]
9. Lee, E.S. (1966), A Theory of Migration, Demography, 3(1), pp. 47-57,
http://links.jstor.org/sici?sici=0070-
3370%281966%293%3A1%3C47%3AATOM%3E2.0.CO%3B2-B, [accessed March 15,
2015]
10. Marx, K. (2009), Critica economiei politice. Procesul de producie al capitalului, vol.I,
Alexandria Publishing House, Suceava
18
11. Massey, D. et all (1987), Return to Atzlan: The Social Process of International Migration
from Western Mexico, University of California Press, Berkeley, US
12. Massey, D. (1990), The Social and Economic Origins of Immigration, Annals of the
American Academy of Political and Social Science, Vol. 510, pp. 60-72,
http://www.jstor.org/pss/1046794
13. Mesnard, A., Ravallion, M. (2001), Is inequality bad for business: a non-linear
microeconomic model of wealth effects on self-employment, Research working paper, WPS
no.2527.
14. Piore, M. J. (1979), Birds of Passage: Migrant Labour and Industrial Society, Cambridge,
UK: Cambridge University Press
15. Romanian Institute for Evaluation and Strategy (IRES). (2013), Perceptions and attitudes of
the Romanian population regarding working abroad, Research Report,
http://www.ires.com.ro/articol/221/perceptions-and-attitudes-of-the-romanian-population-
regarding-working-abroad, [accessed March 16, 2015 ]
16. Sjaastad, L.A. (1962), The Costs and Returns of Human Migration, The Journal of Political
Economy, no.5, Vol. 70, pp. 80-93. http://webkuliah.unimedia.ac.id
/ebook/files/human%20capital%204.pdf
17. Smith, A. (1992), Avuia naiunilor cercetare asupra naturii i cauzelor ei, Editura
Universitas, Chiinu
18. Stark, O., Taylor, E. (1989), Relative deprivation and international migration, Demography,
no. 1, vol. 26, pp. 1-14.
19. United Nations, Departament of Economic and Social Affairs, World Population Prospects.
The 2012 Revision, http://esa.un.org/wpp/Demographic-Profiles/pdfs/642.pdf, [accessed
March 24, 2015]
20. Wong, K., C. K. Yip (1999), Education, Economic Growth and Brain Drain, Journal of
Economic Dynamics Control, vol. 23 (5-6), pp. 699-796.
19
PIGS COUNTRIES NEW CHALLENGES UNDER EUROPE 2020

STRATEGY
VictorRomeo IONESCU
Danubius University of Galati, Faculty of Economics, Romania
romeo.v.ionescu@univdanubius.ro
Abstract:
The paper deals with the idea that Europe 2020 Strategy is a too ambitious project for many Member
States. The analysis is focused on PIGS countries. In order to demonstrate the impossibility to achieve the
Strategys goals, the analysis uses six representative economic indicators: GDP growth rate, employment, R&D
investment, gas emissions, educational attainment and risk of poverty and social exclusion. The analysis uses
regression, clusters, forecasting models and comparisons with Euro area average. The intermediate conclusion
of the paper is that PIGS countries can be analysis under a cluster approach. The final conclusion is that PIGS
countries are not able to achieve the Strategys goals in 2020, even that their socio-economic trend is positive
for almost all indicators.
The analysis and the conclusions in the paper are supported by pertinent statistic tables and diagrams, coupled
with dedicated IBM-SPSS software.
Key words: economic growth rate, R&D investment, gas emissions, educational attainment, risk of
poverty, clusters, economic forecasting.
JEL classification: E6, O5, R1.
1 INTRODUCTION
Portugal, Italy, Greece and Spain were defined under PIGS acronym in the 90s. At that
moment, it was a pejorative term, used in order to delimit those economies which were able to
create problems for the European Union.
Under the recent global crisiss impact, PIGS economies faced to great socio-economic
challenges. These challenges were higher because all these four economies are members of the
European area.
The economic recovery period was longer in these countries. Moreover, the idea of four
peripheral European Union states with the weakest economies is still available.
The Europe 2020 Strategy brought new strategic goals for the Member States, connected to
labour, R&D investment, gas emissions, educational attainment and risk of poverty and social
exclusion. These above objectives can be achieved only under a sustainable economic growth.
The analysis in the paper covers at least three steps: a comparative analysis between the
PIGS economies and Euro area average, a cluster approach as a result of a regression analysis and
forecasting of six specific indicators in the context of Europe 2020 Strategy.
The comparative analysis uses the latest official statistic data, while the regression analysis
is made under ANOVA conditions. The two-step cluster approach is based on IBM-SPSS software.
The same software will support the forecasting processes, as well.
2 RELATED WORKS
There are enough researches focused on PIGS economies started with the use of their
acronym (Vernet D., 1997).
These four economies represented a real challenge for the EU and the latter Euro area. As a
result, the adhering euphoria did not last long (Dainotto R. M., 2006).
20
The banking crisis in Ireland added the Irish economy to PIGS under the new acronym of
PIIGS. Ireland was the first Euro area state which faced to the crisis in 2007 (Krouse S., 2012).
The difficulties in passing the global crisis made the PIGS economies to be considered as
zombie economies, which are not able to recover quickly (Quiggin J., 2012).
Almost all economic analyses are focused on the debt crisis and lead to various conclusions
and proposals connected to the including of Ireland and UK in PIGS. Moreover, under a global debt
approach, USA is considered a good partner for PIGS (Sparke M., 2012).
3 PIGS COUNTRIES ECONOMIC DEVELOPMENT UNDER THE GLOBAL

CRISIS
The PIGS economies evolution is analysed using six specific indicators: GDP growth rate,
employment rate, expenditure on R&D, gas emissions, educational attainment and risk of poverty.
The latest trends in GDP growth rates are presented in Table 1(European Commission, 2014).
Table 1: GDP growth rates (%)

2012 2013 2014 2015
Euro area -0.7 -0.4 1.2 1.8
Portugal -3.2 -1.6 0.8 1.5
Italy -2.5 -1.9 0.6 1.2
Greece -6.4 -3.7 0.6 2.9
Spain -1.6 -1.2 1.0 1.7
According to Table 1, PIGS states GDP growth rates will be close to the Euro area average
at the end of 2014. The same situation will be in 2015, excepting Greece, which will achieve an
economic growth rate higher than Euro area average.
Basically, will be great disparities between the above five economic entities in 2015 (see Figure 1).
Figure 1: Real GDP growth rates disparities

Source: personal contribution using IBM-SPSS software
Figure 1 supports the idea of cluster approaching for PIGS economies. The analysis takes
into consideration two clusters. The viability of such approach is quantified in Figure 2.
The cluster quality is fair and the ratio of cluster sizes is 1. These data support the cluster approach
in Figure 2.
21
Figure 2: Real GDP growth rate under cluster analysis

Europe 2020 Strategy establishes specific targets. One of these is the employment rate and
covers population aged 20-64. Its evolution is presented in Figure 2
(http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=0&language=en&pcode=t
2020_10&tableSelection=1).
Table 2: Employment rates trend (%)

2010 2011 2012 2013
Euro area 68.8 68.4 68.1 67.7
Portugal 70.3 68.8 66.3 65.4
Italy 61.1 61.2 61.0 59.8
Greece 63.8 59.6 55.0 52.9
Spain 62.8 62.0 59.6 58.6
The employment average trend is negative during 2010-2013 in Euro area as in PIGS economies.
Greece, Spain and Italy faced to the lowest employment rates, while Portugal was close to the
average in 2013 (see Figure 3).
Figure 3: Employment rates disparities

The fair quality of the cluster and the same ratio of cluster sizes support the cluster approach
for this indicator, as for GDP growth rate.
22
Figure 4: Employment rate under cluster analysis

Another target of the Europe 2020 Strategy is that 3% of the GDP should be invested in
R&D. There are great disparities between the Euro area average and PIGS countries
2020_20&tableSelection=1) as in Table 3.
Table 3: Gross domestic expenditure on R&D (% of GDP)

2010 2011 2012 2013
Euro area 2.00 2.04 2.09 2.12
Portugal 1.53 1.46 1.37 1.36
Italy 1.22 1.21 1.26 1.25
Greece 0.60 0.67 0.69 0.78
Spain 1.35 1.32 1.27 1.24
According to Table 3, the Euro area average investment in R&D increased during 2010-
2013, while they decreased in Portugal, Italy and Spain. Greece achieved the same positive trend as
Euro area average. On the other hand, there are greater disparities related to the value of the R&D
investment between PIGS countries in 2013, as well (see Figure 5).
Figure 5: Gross domestic expenditure on R&Ds disparities

The same cluster test seems to be fair as quality and ratio sizes (see Figure 6).
Figure 6: R&D expenditure under cluster analysis

23
According to Europe 2020 Strategy, the greenhouse emissions should be reduced by 20% compared
to 1990. The trend of this indicator is presented in Table 4
Table 4: Greenhouse gas emissions (1990=100%)

2010 2011 2012 2013
Euro area 83.83 85.73 83.21 82.14
Portugal 124.10 117.70 115.74 114.87
Italy 95.39 97.25 94.87 89.72
Greece 118.02 111.73 108.97 105.71
Spain 128.57 124.41 124.41 122.48
No one of PIGS economies was able to achieve the Euro area average related to greenhouse gas
emissions in 2013 and the disparities are great (see Figure 7).
Figure 7: Gas emissions disparities

Figure 7 allows anticipating the existence of two clusters across the PIGS countries (see Figure 8).
Figure 8: Gas emissions under cluster analysis

The cluster quality is good, better than the above ones and the ratio of the cluster sizes is good
enough (1.5). As a result, the cluster assumption for PIGS economies is supported to this step of the
analysis.
According to Europe 2020 Strategy, at least 40% of 30-34 years old should have completed a
tertiary or equivalent education. At this level, the analysis selected the tertiary educational
attainment
2020_41&tableSelection=1). The statistical data are presented in Table 5.
24
Table 5: Tertiary educational attainment (%)

2010 2011 2012 2013
Euro area 33.6 34.0 34.9 35.9
Portugal 24.0 26.7 27.8 30.0
Italy 19.8 20.3 21.7 22.4
Greece 28.6 29.1 31.2 34.9
Spain 42.0 41.9 41.5 42.3
Spain achieved a higher rate than the Euro area average in 2013, while Greece was closed to that
average. On the other hand, Portugal and Italy faced to low tertiary educational attainment rates in
the same year (see Figure 9).
Tertiary educational attainment supports the cluster grouping of the PIGS economies, as in Figure
10. The cluster quality is good, while the ratio of cluster sizes increases at 3.
Figure 9: Tertiary educational attainments disparities

Figure 10: Tertiary educational attainment under cluster analysis

The last target of Europe 2020 Strategy is poverty, which should be reduced by lifting at least 20
million people out of the risk of poverty or social exclusion. According to this, the paper focuses on
people at risk of poverty as % of total population. The trend of this indicator is presented in Table 6.
Table 6: People at risk of poverty (% of total population)
2010 2011 2012 2013
Euro area 21.9 23.0 23.4 23.0
Portugal 25.3 24.4 25.3 27.4
Italy 24.5 28.2 29.9 28.4
Greece 27.7 31.0 34.6 35.7
Spain 26.7 27.7 28.2 27.3
25
Italy and Spain succeeded to achieve lower poverty rates in 2013 than in 2012, while Portugal and
Greece faced to an increase of these rates (see Figure 11).
Figure 11: Poverty risks disparities

On the other hand, all PIGS economies face to poverty rates higher than Euro area average. The
trend of this indicator leads to the same clustering conclusion (see Figure 12).
Figure 12: Poverty rate under cluster analysis

The best cluster quality in this analysis (close to 1) is doubled by a high ratio of cluster sizes
(3).
The first intermediate conclusions of the paper are the existence of great disparities between PIGS
countries related to the Europe 2020 Strategys targets and the possibility to have a cluster approach
in analyzing these countries.
4 THE VIABILITY OF EUROPE 2020 STRATEGYS TARGETS FOR PIGS

COUNTRIES
The next step of the analysis is to realize forecasts for the specific targets at 2020 horizon. In
order to do this, the paper uses a larger time-period (2003-2014) covered by official statistic data.
The forecasting is realized under ARIMA conditions. The dependent variables are the annual rates
for each indicator and the independent variable is the forecasting period. The economic growth rate
forecast in PIGS countries is presented in Figure 13.
Portugal Italy
26
Greece Spain
Figure 13: GDP forecasting (%)
According to Figure 13, only Greece will achieve positive economic growth trend, while the
other PIGS economies will face to great economic challenges until the end of 2020.
The employment rates forecasting result has to be compared to Europe 2020 Strategys goal of
75% in 2020. The employment rates forecast is presented in Figure 14.
Portugal Italy
Greece Spain
Figure 14: Employment rate forecasting (%)
Unfortunately, no PIGS economy will be able to achieve the Strategys target in 2020.
Moreover, the individual PIGS states have their own targets for 2020, which can be other than the
Euro area average of 75% (Italy 67%, Greece 70% and Spain 74%). On the other hand, Euro area as
a whole will not be able to achieve the Strategys goals in 2020.
A distinct target of the Strategy is that 3% of the GDP should be invested in R&D. All PIGS states
have individual targets less than the Strategys goal. The gross domestic expenditure on R&D
forecasting leads to the following results:
Portugal Italy
Greece Spain
Figure 15: Expenditure on R&D forecasting (%)
All PIGS countries will have a positive trend related to expenditure on R&D during 2015-
2020. Unfortunately, they will not be able to achieve their individual targets or the Euro area
average in 2020.
The same Europe 2020 Strategy stipulates that the greenhouse gas emissions should be reduced by
20% compared to 1990. Italy seems to be the only PIGS country able to achieve this target in 2020
(see Figure 16).
27
Portugal Italy
Greece Spain
Figure 16: Gas emissions forecasting (%)
At least 40% 0f 30-34 years old should have completed a tertiary or equivalent education in
2020 is probably the easiest target for PIGS countries individual targets. In order to demonstrate
this, the analysis focused on tertiary educational attainment rate forecasting (see Figure 17).
Portugal Italy
Greece Spain
Figure 17: Tertiary education attainment forecasting (%)
According to Figure 17, Italy and Greece will achieve higher values than their individual
targets, while Portugal will fall in achieving its target. On the other hand, Spain will achieve higher
values than the Euro area average in 2020.
The last target of Europe 2020 Strategy is that poverty should be reduced by lifting at least 20
million people out of the risk of poverty or social exclusion. The people at risk of poverty (% of
total population) forecasting leads to the following situation:
Portugal Italy
Greece Spain
Figure 18: Risk of poverty forecasting (%)
Only Portugal will have a positive trend in Figure 18, while the other three PIGS states will
face to an increase of the risk of poverty rate.
28
5 CONCLUSIONS
Europe 2020 Strategy represents a project with too high targets for PIGS economies. Even
that PIGS economies will achieve positive trends in expenditure on R&D, greenhouse gas emissions
and tertiary education attainment, the employment and the economic growth rates will not be able to
support the complete economic recovery in these four countries until 2020.
Unfortunately, the individual solutions and more painful economic corrections are the best solutions
for these economies, which imply high social and political costs.
6 ACKNOWLEDGEMENT
The economic analysis in this paper was realized with the support of the Research,
Education and Development Association (REDA) Romania, http://www.aced-online.ro/en/.
7 REFERENCES
1. Dainotto Roberto M. (2006), Europe (in Theory), Durham: Duke University Press, p. 2.
2. European Commission (2014), European Economic Forecast-Winter, Brussels, p. 1.
3. Krouse Sarah (2012). Investing in PIIGS: Portugal, Financial News, 19th of March.
4. Quiggin John (2012), Zombie Economics: How Dead Ideas Still Walk among Us, Princeton
University Press, p. 229.
5. Sparke Matthew (2012), Introducing Globalization: Ties, Tensions, and Uneven Integration,
John Wiley & Sons, p. 261.
6. Vernet Daniel (1997), L'Allemagne au coeur du dbat franais, Le Monde, 24th of April.
7. http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=0&language=en&p
code=t2020_10&tableSelection=1
29
PRESSURE OF AGEING ON REGIONAL DEVELOPMENT.

CHALLENGES AND LIMITS FOR THE LABOUR MARKET
Silvia PISIC
National Institute of Statistics, Romania
silvia.pisica@insse.ro

Valentina VASILE
Institute of National Economy, Romanian Academy, Romania
valentinavasile2009@gmail.com

Ana Maria DOBRE
Institute of National Economy, Romanian Academy & National Institute of Statistics, Romania
dobre.anamaria@hotmail.com
Abstract:
Using official statistics, the paper aims to contribute to regional development studies in Romania from
perspective of labour market challenges and limits and the increasing number of elderly people participating in
economic activity.
Regional level is considered for analysing the social productivity of labour in terms of GDP and employment.
The employment is analysed from the perspective of share and structure of elderly people on the labour market. In this
respect, activity rates, ageing index and economic dependency ratio are reviewed. In order to shape the determinants of
employment of elderly people, poverty measures at NUTS 2 level are figured out.
Key words: Employment, Labour Force, Social productivity of labour, Regional Development, Ageing
JEL classification: J40, R10
1. INTRODUCTION
Romania's usual resident population aged 65 and older is projected to increase from 3.3 million
persons representing 16.6% of the population in 2014 to 3.9 million persons in 2030 with a share of
21.4% of the projected population and to 4.0 million persons (31.0%) in 2060 (National Institute of
Statistics).
Table 1.Usual resident population of Romania projection for horizon 2030 and 2060
2014 2030 2060
Usual resident population, 19942.6 18107.1 13031.8
thousands persons
of which, by age groups, in %:
0-14 years 15.5 12.1 9.9
15-24 years 11.4 10.7 8.5
25-34 years 13.9 11.6 10.1
35-64 years 42.6 44.2 40.5
65 years + 16.6 21.4 31.0
Ageing Index, number of persons 106.7 177.2 311.5
65 years+ per hundred persons 0-14
years
Source: National Institute of Statistics and own calculations
The ageing of the population is driven by declines in fertility and increased longevity. The
working-age population (15-64 years) that will provide most of the income to support these people
will decrease from 67.9% in 2014 to 66.5% in 2030 and to 59.1% in 2060, while proportion of
youth population (0-14 years) is expected to decrease also from 15.5% in 2014 to only 9.9% in
30
2060. The direct and obvious consequence will be a significant increase of the pressure on central
and local governmental budgets for insuring social protection and health services for the elderly.
Moreover the population ageing will probably lead to a sharp change in the structure of the local
governmental budgets with too lower available funds for other services than the ones dedicated to
the support of elderly.
The analysis conducted in this study relies on demographic and employment statistics, as
well as on poverty measures at regional level for the period 2008-2013. As the poverty statistics at
NUTS 3 level are not available, the study will outline a regional analysis at NUTS 2 level (regions).
2. DATA ANALYSIS ON POPULATION AGEING IN ROMANIA
Romanias usual resident population is rapidly ageing, like most EU Member States. The
consequences of this process are in sight of economic and social processes, such as employment,
education, health, mobility.
The accelerated phenomenon of population ageing owes to negative natural increase rate
in the last twenty years the number of deaths exceeding increasingly the number of live births - and,
in parallel, due to the increase of life expectancy. Birth rate declining has reduced the young
population (0-14 years). Also, the extension of life expectancy has resulted in increasing the
number and proportion of elderly population (65 years and over).
Table 2. Share of elderly people in total population, NUTS 2 level

-%-
2008 2009 2010 2011 2012 2013
North-West 13.9 13.9 14.0 14.1 14.8 15.3
Center 14.0 14.0 14.1 14.1 15.2 15.6
North-East 14.5 14.5 14.5 14.3 16.1 16.3
South-East 14.8 14.8 14.9 14.8 16.4 16.7
South - Muntenia 16.7 16.7 16.7 16.7 17.4 18.1
Bucharest - Ilfov 14.3 14.1 14.1 14.0 14.0 14.1
South - West Oltenia 16.3 16.3 16.5 16.4 17.7 18.0
West 14.4 14.4 14.4 14.4 15.1 15.7
Source: Eurostat, online data code demo_r_pjangroup
The most "ageing" regions in the period under review are South - Muntenia and South -
West Oltenia, with the share of the elderly population between 16.7% and 18.1%.
Declining birth rates and mortality comedown, supported by a negative external migration marked
the share of the elderly in the total population. At the opposite pole are situated the following
regions: North-West, Center and Bucharest-Ilfov, with a share of elderly people in total population
ranked between 13.9% and 15.6%.
Ageing index (ratio between elderly and youth expressed as percentage) and old-age
dependency ratio (ratio between elderly and working-age population expressed as percentage) are
two indicators showing the dynamics of population ageing.
Figure 1. Old-age dependency ratio in Figure 2. Ageing index in Romania,

31
Romania, NUTS 2 level (%) NUTS 2 level (%)
Source: Eurostat, online data code demo_r_pjangroup
The highest old age dependency ratios in 2008 were 19.3 in Bucharest-Ilfov and 23.7 in
South - West Oltenia. In 2013, in South - Muntenia were 27.1 persons 65 years and over per one
hundred persons aged 15-64 years and in Bucharest-Ilfov the burden was the lowest in Romania,
i.e. 19.4 elderly persons per one hundred working-age persons.
Ageing index ranges between 81.2% (North-East) and 118.9% (Bucharest Ilfov) in 2008. In
2013, the ranking suffered few insignificant changes. The extreme values registered were 88.7%
(North-East) and 122.1% (South-West), while in Bucharest-Ilfov the index show 105.2 persons 65
years old or over per hundred persons under age 15.
In the following we will refer to the evolution of these indicators not only for Romania but
also in comparison with the average of European Union. In the period 2008-2013, the average in
EU-27 of old-age dependency ratio constantly increased from 25.45 to 27.51 elderly persons per
one hundred working-age persons. In Romania, less elderly people to one hundred working-age
persons were found as compared to the European Union, and the growth was less accelerated, i.e.
from 22.6% to 23.9%.
The ageing index has lower values for Romania than for the average EU-27, highlighting
that in Romania are lower elderly persons per hundred young persons than in EU-27, although the
rhythm is more rapid in Romania. The EU-27 average ageing index grew from 108.3% in 2008 to
116.5% in 2013 while in Romania, from 94.5% to 103.8% during same period of time.
Figure 3. Old-age dependency ratio (%) Figure 4. Ageing index (%)
Source: Own calculations, based on Eurostat, online data code demo_r_pjangroup
In Romania, the retirement age is linked to life expectancy. Other characteristic in

Romanias public schemes for retirement is the non-penalized early retirement. Up to 5 years before
the statutory retirement age of the person can be granted. Partial early retirement is permitted for
persons who exceeded the statutory full period of social contribution with less than 8 years and is
penalized by diminishing the benefits calculated for the old age pension, by 0.75% for each month
32
of early retirement, before complying with the old-age pension criteria. (Aging report EU 2015, p.
307)
Figure 5. Median-age population, EU-27

- years -
Source: Eurostat, online data code demo_pjanind
The phenomenon of population ageing may be also illustrated through the values of median-
age. The median-age in Romania in 2013 was 40.5 years, comparing with 41.9 years, which is the
median-age for EU-27. Countries like Ireland, Cyprus and Slovakia have the lowest median-ages in
Europe in 2008, as well as in 2013, i.e. between 33 and 38 years. Meanwhile, Germany, Italy,
Bulgaria and Portugal have the highest median-age, of about 43-45 years.
3. PARTICIPATION OF THE ELDERLY PEOPLE IN ECONOMIC ACTIVITY IN

ROMANIA
In Romania, the participation in the economic activity of the elderly people was higher
(15.2%) during the financial crisis in 2008, but afterwards it declined to 11.3% in 2013.
Figure 6. Economic activity rate of Figure 7. Elderly persons participation in

elderly people in Romania, 2008-2013 economic activity, by gender, in 2013
(%) (thou persons)
Source: National institute of Statistics, Labour Force Survey
As the Figure 7 shows, elderly women were more frequent as compared to men among both
employment and economically inactive population.
The labour force participation rate for persons aged 15 years and over in Romania has a
quasi-constant value during 2008-2013. The regions with the highest activity rates are North-East
and Bucharest-Ilfov while the ones with the lowest levels are Centre and South-East. In three out of
33
eight regions, the activity rate increased in 2013 as against 2008: North-West (by 4.6 percentage
points), North_East (by 3.9 percentage points) and Bucharest-Ilfov (by 2.3 percentage points). The
highest decrease may be observed for region Centre (by -2.9 percentage points).
Gender disparities are higher in regions South-East where activity rate for men exceeds the
one for women by 22.3 percentage points (in 2013) and West (with a gap of 20.6 percentage
points). The smallest gap between men and women in terms of activity rate are met in region North-
East (11.4 percentage points) and North-West (13.9 percentage points).
Figure 8. Labour force participation for Figure 9. Labour force participation by

persons aged 15 years and over in gender for persons aged 15 years and
Romania, over in Romania, in 2013, NUTS 2 level
NUTS 2 level (%) (%)
Source: National Institute of Statistics, Tempo online code AMG155F
In the following statement an analysis based on Z-score method was conducted, on NUTS 3 level
(counties), for the year 2013. The employment rates of labour resources were grouped by Z-score
method. The analysis reveals that counties from North - East, South - East and South - Muntenia
have the lowest employment rate of labour resources. In North - West, West and Bucharest - Ilfov is
the highest rate of employment among labour resources.
Figure 10.Employment rate of labour resources in Romania, in 2013 (z-score method)
Source: National Institute of Statistics, Tempo online code FOM116A, own calculations
34
4. SOCIAL PRODUCTIVITY OF LABOUR AND POVERTY
Social productivity of labour and poverty may highlight the discrepancies between different
geographical areas with respect to economic and social development.
The social productivity of labour was computed as the ratio between GDP (million RON)
and civil employed population (persons).
Figure 11. Social productivity of labour in Romania, 2008-2012, at NUTS 2 level

- Million RON/pers -
Source: authors calculations, based on National Institute of Statistics data, Tempo online codes CON103I and
FOM103D
Given relatively modest performance of the agricultural sector in Romania, performed

mainly in the traditional way, the regions with wide agricultural sector are facing low economic
efficiency, i.e. low social productivity of labor. These regions are North-East and South-West
Oltenia.
At the opposite pole are situated the regions in which the tertiary sector (services) has a
large share in the economy. These regions (Bucharest-Ilfov and West) have a healthy economic
growth, therefore a high social productivity of labour. This is especially the case of two of the
counties (NUTS 3 level) which are composing these regions that have the largest GDP in Romania:
Bucharest and Timis.
The impact of agriculture on employment and the situation of elderly may be also
emphasized through the regional poverty indicators.
The poverty measures at NUTS 2 level could be determinants of employment. At-risk-of-
poverty rate is an indicator measuring the share of people with an equivalised disposable income
(after social transfer) below the threshold set at 60 % of the national median equivalised disposable
income. Over 2008-2013, the poorest regions in Romania are North-East (with a share between
29.5% in 2010 and 33.7% in 2012) and South-West Oltenia (with a share between 28.9% in 2011
and 37.4% in 2009). The regions with the lowest share of people at-risk-of-poverty-rate are
Bucharest-Ilfov, North-West and Center. The gap between the regions is high. Bucharest-Ilfov is
about 10 times less poor than North-East.
Table 3. At-risk-of-poverty rate in Romania, 2008-2013, at NUTS 2 level
-%-
2008 2009 2010 2011 2012 2013
Romania 23.4 22.4 21.1 22.2 22.6 22.4
North-West 18.9 18.7 14.6 20.0 15.9 15.9
Center 19.9 19.4 19.4 18.0 18.6 15.9
North-East 32.4 31.5 29.5 32.4 33.7 33.5
South-East 28.2 22.5 26.3 28.0 29.7 32.0
South - Muntenia 22.3 23.0 22.2 21.6 22.1 22.4
Bucharest - Ilfov 6.5 6.4 3.1 3.4 2.7 3.9
35
South - West Oltenia 36.9 37.4 30.7 28.9 29.9 30.1

West 15.9 15.4 17.6 18.8 20.5 22.9
Source: National Institute of Statistics, Tempo online code SAR102D
At-risk-of-poverty rate for elderly people is higher than the average, i.e. irrespective the age
group, with a gap of about 7.2 7.4 percentage points (more). During the crisis the at-risk-of-
poverty rate for elderly people was double (30.6% in 2008) as against 2013 (15.0 %).
Figure 12. At-risk-of-poverty-rate of elderly people in Romania, 2007-2013

-%-
Source: Eurostat, online data code ilc_li02
According to the 2012 Labour Force Survey ad-hoc module Transition from work to
retirement, the main reason for economically inactive persons who receive a pension to quit
working (50-69 years) is the reaching of eligibility for a pension (38.1% in Romania). Also, in
Romania, three out of ten people admit that they quit working because of own health or disability.
In EU-27 as well as in Romania, a small percentage of 50-69 years old persons quit working
because of favorable financial arrangements to leave, lost job or other job-related reasons.
Figure 13.Main reason for economically inactive persons who receive a pension to quit
working (50-69 years), 2012
-%-
Source: Eurostat, online data code lfso_12reasnot
The same ad-hoc module of Labour Force Survey reveals that for the persons receiving a
pension but continuing working the reasons consist mainly in financial reasons. Therefore, one out
of three persons in the EU-27 continues the work in order to provide sufficient personal/household
income. Meanwhile, in Romania, nine out of ten persons that receive a pension continue working
for the same financial motivation. For EU-27, another important reason is the
establishing/increasing future retirement pension entitlements and to provide sufficient
36
personal/household income. But, for Romania, the second most important reason is just to establish
or increase future retirement pension entitlements.
These differences in motivation among EU-27 and Romania appear due to the level of
economic development and mentality. In Romania, the elderly persons who are beneficiary of
pension system are continuing working because the pensions are not enough to support their
financial needs. Therefore, they are just aiming to attract new incomes and to increase their future
retirement pension entitlements.
Table 4. Main reason for persons who receive a pension to continue working, 2012
-%-
Main reason EU-27 Romania
To establish or increase future retirement pension entitlements 6.8 5.7
To provide sufficient personal/household income 37.2 90.5
To establish/increase future retirement pension entitlements and to provide 14.6 1.6
sufficient personal/household income
Non-financial reasons, e.g. work satisfaction 29.2 2.2
Source: Eurostat, online data code lfso_12staywork
CONCLUSIONS
The labour market challenges and limits in terms of elderly people participating in economic
activity have a direct impact on the regional development. The direct consequence of the trend in
the population structure of Romania will be a significant increase of the pressure on central and
local governmental budgets for insuring social protection and health services for the elderly. The
population ageing will probably lead to a sharp change in the structure of the local governmental
budgets with too lower available funds for other services than the ones dedicated to the support of
elderly.
The study concludes that regions with the highest at-risk-of-poverty rates have the lowest
social productivity of labour, hence they signal the need for economic development policies. A
special case is the one on North-East region, because it is one of poorest region, but it has the
highest labour force participation for persons aged 15 years and over and one of the lowest
employment rates of labour resources (civil employed population). In terms of economic activity,
another important remark is that the regions with wide agricultural sector are facing low economic
efficiency, i.e. low social productivity of labor. These regions are North-East and South-West
Oltenia. The regions from south (South-Muntenia and South-West Oltenia) are the most affected by
the ageing process.
REFERENCES
1. European Commission (2014), The 2015 Ageing Report, in the European Economy Series,
8/2014, ISBN 978-92-79-35351-2 (online)
2. Eurostat Database, http://ec.europa.eu/eurostat/data/database
3. Eurostat, Labour Force Survey, Ad-hoc module Transition from work to retirement,
http://ec.europa.eu/eurostat/statistics-explained/index.php/Labour_force_survey_statistics_-
_transition_from_work_to_retirement
4. Gavrilov L.A., Heuveline P. Aging of Population. In: Paul Demeny and Geoffrey
McNicoll (Eds.) The Encyclopedia of Population. New York, Macmillan Reference USA,
2003, Available at:
http://www.galegroup.com/servlet/ItemDetailServlet?region=9&imprint=000&titleCode=M
333&type=4&id=174029
37
5. National Institute of Statistics, Labour Force Survey, annual database, Tempo on-line,
http://statistici.insse.ro/shop/
6. Pisic S , Vasile V., Voineagu V., (2012), Piaa muncii ntre formal i informal, Bucharest:
Editura Expert, ISBN 978-973-619-296-9.
7. Pisic S. (coord.), Moldoveanu R., "Fora de munc n Romnia: Ocupare i omaj n
anul"(annual publication), National Institute of Statistics, 2005 2013, ISSN 1223-6446
8. Pisic S. (coord.), Postelnicu, M., Apostol, M., et al., (2012), "mbtrnirea populaiei
Romniei", Institutul Naional de Statistic, ISSN 2285-8237
Annex
Z-Score analysis for employment rate of labour resources
NUTS 2 (region) NUTS 3 (county) Z-Score NUTS 2 (region) NUTS 3 (county) Z-Score
North - East Bacau -1.81 South - East Buzau -0.01
South - East Galati -1.70 Centru Brasov 0.00
North - East Vaslui -1.39 West Hunedoara 0.05
South - Muntenia Giurgiu -1.17 South - Muntenia Arges 0.11
North - East Iasi -1.13 South - East Constanta 0.11
South - Muntenia Calarasi -1.03 North-West Maramures 0.11
South - East Tulcea -1.00 North-West Bistrita-Nasaud 0.39
North - East Suceava -0.96 North-West Satu Mare 0.40
North - East Neamt -0.89 Centru Mures 0.42
South - East Braila -0.74 Centru Harghita 0.57
South - West Oltenia Gorj -0.71 Centru Sibiu 0.76
North - East Botosani -0.68 South - West Valcea 0.77
Oltenia
South - Muntenia Ialomita -0.58 South - Muntenia Teleorman 0.79
West Caras-Severin -0.48 Bucharest - Ilfov Ilfov 0.82
South - Muntenia Prahova -0.48 North-West Salaj 0.89
South - Muntenia Dambovita -0.44 Centru Alba 1.06
South - West Oltenia Olt -0.40 West Arad 1.40
South - West Oltenia Mehedinti -0.34 North-West Bihor 1.42
South - East Vrancea -0.31 West Timis 1.60
Centru Covasna -0.18 North-West Cluj 1.67
South - West Oltenia Dolj -0.06 Bucharest - Ilfov Municipiul 3.16
Bucuresti
Source: authors calculations, based on National Institute of Statistics data, Tempo online code FOM116A
38
INFORMATION AND KNOWLEDGE IN A GLOBAL CONTEXT

Professor Ph.D. Florina BRAN
The Bucharest University of Economic Studies, Bucharest, Romnia
florinabran@yahoo.com

Assistant Professor Ph.D. MariaLoredana POPESCU
Spiru Haret University, Bucharest, Romnia
popesculrdn@yahoo.com
Abstract:
Information and knowledge are two important entities, which make up present stage of globalization, based
mostly on their dynamics. This paper is providing an overview of information and knowledge in global context,
highlighting the importance of information society that turned into knowledge society in the beginning of the 21st
century, being driven by Internet the latter, as part of globalization process. Modern economic theories recognise the
importance of information in economic process because its impact on globalization process in economy was essential,
and change the way how markets and companies work and represent the key factor of new era of economic
development. This paper presents main results from available literature about the relationship between information,
knowledge and economic theory in a global conterxt and finally explained the benefits of the knowledge economy to all
countries.
Key words: knowledge, information, global, society
JEL classification: F63
INTRODUCTION
Global policies must increase economies performances by transforming them in knowledge

based economies, which utilises knowledge an information in processes of distribution and
production.
As a result of importance of knowledge in economic growth, economists develop the
concept in more phases, which generate the actual phase of development.
The stage which assured premisses of todays developement of this concept materialised in
1990, when Yoneji Masuda defined the concept of information society as key factor of
development in post-industrial society. According to this, in the centre of post-industrial society
there are production, dissemination and utilization of information, symbolically represented by
entities of economic, scientific, technical, social, political reality, created through processes of
knowledge.
Definition of information society is related, according to specialists with development of
information, from its classical form, to of files, magnetic or electronic-optical support, databases or
data banks managed by computers, collections, documents, information registers, and
computerized, patent funds as well as information held by humans (Dobrot, 1994, pp. 86).
Knowledge represents more than information, in information society, a reality at the end of
20th century and helped it to achieve the next level into knowledge society in the beginning of the
21st century. Nowadays knowledge is a process that empowering societies, but also individuals,
improving the quality of there life.
CONTENTS
Knowledge society can be defined as the human structured organisation of society, build on
contemporary developed knowledge to give new quality of life support systems. Knowledge society
requires broadening and deepening scientific knowledge and truth on the existence, use and
management of existing knowledge under the form of technological and organizational knowledge,
39
obtaining new knowledge through innovation, an unprecedented dissemination of knowledge to all

citizens by new media, using mainly internet. Internet represents the key factor that improves
substantial the access to information but also turn information into knowledge.
Development of information and communication technology represented a revolution to the
global social-economic level, generating increasing economic performances of developed countries,
which invest in new technologies. Internet became the agent of change in economic but also in
social life, people are nowadays more interconnected economically, within markets, but also
socially, and we assist to an increase interest for social ideas.
That is practically the second phase in development of the concept, generated by the
economic need of development, in the context of an increasing population and also of energetic
consumptions.
The new economy (economy + internet), or knowledge economy is part of the knowledge
society, marking the moment when the innovation process becomes crucial to create new products
and services. Innovation in knowledge society aims to improve productivity, not only in relation to
classic labour productivity and capital productivity but also in relation to energy resources and
natural materials, and with environmental protection.
In that context, knowledge society is the solution for development of human society in the
frame of sustainable development. Knowledge is helping us to measure sustainability, in the global
context of increasing production and also the demand for resources, safeguarding biodiversity and
ecosystem.
Therefore, the new economy requires fostering creation and development of innovative
companies having their own knowledge structure.
Knowledge society is both a global system and a factor of globalization. The notion of
knowledge society tries to make a synthesis of developments from globalized economic space in the
last decades, especially in research, innovation, education, training, all of these based on the use of
information technology (IT) and communication technology (ICT).
A characteristic of knowledge society is the volume of knowledge and its increased rhythm
of development and also the fact communities become more powerful through information. It is
estimated volume of knowledge doubles every five years and must be managed for the benefit of
society, because this type of society includes not only economy and technology, but also the system
of organization of human beings, where there is a new division of labour, a new way to produce
through easy access to extensive and interdisciplinary knowledge that makes simple knowledge an
economic resource, a commodity traded on the global market (by the means of patents, market
information, consulting, training, etc.).
Industry of knowledge is a result of both types of societies defined above, developed in a
fast rhythm in the last few decades and whose results have been materialized into microelectronics,
biotechnology, new materials with special properties, telecommunications, civil and military
aircraft, robots, computers, space technology etc. The support of this knowledge industry is
represented by research and (infrastructure) development, global flow of information and
knowledge and, above all, existence of (over)qualified staff. The second key component is trade
with knowledge and disseminating it at global level, for the benefit of investments in knowledge
industry.
In the world of knowledge society, information and knowledge are put up by organised
human activity (i.e. by private companies, governments, alliances of countries). Human capital is
crucial in knowledge society and generates the information that appears in education based on
innovation, research and development entities involved in the industry of knowledge, supported by
all logistics needed to enhance information and knowledge, consisting of databases, trade patents,
licenses and technologies, flow of information and knowledge, internet.
Focusing on knowledge, innovation, human intelligence in the heart of the concept of
knowledge society or new economy, means it will develop a new concept of intellectual capital,
which includes human capital, structural capital and relational capital, all together forming
intangible assets. This intellectual capital (Baker, 1994, pp. 217) forms the invisible wealth of a
40
nation, its software, a true engine of development, role that Winston Churchill intuited, an in a
speech given at Harvard University in 1943, when he stated The empires of the future are true
empires of the mind (Suciu, 2008, pp. 242-287).
Later, Gary Becker, in the 40s, developed the concept of human capital, considering it as
one of the decisive competitive advantage of nations (Baker, 1994, pp. 217). Human capital is the
one that transforming information and gives knowledge a meaning in the knowledge-based society.
The access of human capital to information makes it to turn information into knowledge and
this process is related with its own intelligence. But human capital needs development and
affirmation of an efficient infrastructure (management capabilities, advanced technological
processes, information systems, intellectual property, etc.), valuable relationships established by
other organizations, companies, individuals, etc., components that form the capital of social
relations (relational capital). As prerequisites, human capital requires, among others, an advanced
training educational system, a stimulating internal and an external environment.
INFORMATION SOCIETY AND KNOWLEDGE
Understanding knowledge at country level is reflected also in their development stages.

Developed countries, with easier access to markets increase their economic performances. On the
other hand, the poor developed countries remain isolated from this point of view, without access to
the latest information and progresses in science, culture and economy. We have also the case of
emerging countries national policies are focusing on research and development sector, and it
becomes evident at global level. They understand that research and development represent the
source of knowledge. If the end of end of 20th century was dominated of US, EU and Japan on the
market of global research, the long domination was eroded by emerging countries. Asias share in
global spending for research and development increased from 27% to 32% from 2002 to 2007,
being especially driven by China, India, South Korea, as UNESCO reports in 2010.
Analysing the period 2002-2008, Americas share in the Thomson Reuters science citation
index - best-known database of research publications - fell from 30.9% to 27.7%. Meanwhile, the
number of Chinese publications recorded in the same index has doubled. Brazils experience is
similar. Research and development expenditures increased strongly in the last decade, at global
level, from 790 billion to 1.1 trillion dollars, respectively an increase of 45%.
Information society brought the advantage of research and development findings that do not
remain within the borders where they appear. Knowledge becomes a public asset for which national
borders have low relevance. They are present in all fields of activity, being facilitated by means of
information transmittance. The effects can be found at multiple levels and appear under various
forms.
The shift of economic structure from resources, processes, products and materials
distribution systems, towards resources, processes, products and symbolic distribution systems
means, in other words, an economy that relies more on converting information and knowledge than
on converting material goods. According to European institutions, knowledge society is required to
substitute natural capital (non-renewable, such as ores), and man-made capital (physical capital,
financial assets) with human capital and social capital (inexhaustible resources). The social capital
(of social relations) is defined as a set of values and informal norms shared by members of a group
that foster cooperation among them (Fukuyama, 1999, pp. 10).
At conceptual level, Nicolas Georgescu-Roegen (1996) introduced the notion of entropy and
neg-entropy in the economic process. The ratio of these may be similar to the ratio in conventional
economy based mainly on non-renewable resources, hard economy and in new economy based on
knowledge, soft economy. An interesting development of the concept of neg-entropy (the software
side of it) belongs to a Romanian specialist in this field, PhD Professor Paul Bran. In his opinion,
neg-entropy is a contribution to forming value-added products and services, therefore adding
knowledge in the production factors is justified.
41
Through knowledge (neg-entropy), the human factor is brought into the centre of economic
activity, contributing, for example in Japan, to 80% of national wealth, 60% in the US and 20% in
Australia and Canada. Rates of investment income directed towards development of human
resources, in the context of IT and ICT, are more than two times higher than those directed towards
investments in factories, production equipment. Economic growth rate is three times higher in
countries where knowledge attributes are present, than in those where knowledge is generated more
difficulty (by their own participation or by purchase).
The market gains other dimensions in case of trading intangible assets (principles,
management methods, software, etc.). Global partnerships are set up either among companies, or
among employees of the same company, which can reside in any part of the world, depending on
the parent company. Such activities are organized in the fields of marketing, consultancy for
industrial design, financial services, research in engineering, agriculture.
If knowledge industry sectors are ranked based on the volume of expenses for research and
development, then 8 sectors receive 80% of the total expenditure for research and development in
developed countries, namely: pharmaceutical products, electronics, computers and office
equipment, aerospace industry, vehicles, electrical machinery and instruments (medical,
measurement, optical, photography, clock).
The specialization degree of a country in products of modern knowledge can be assessed by
the number of invention patents registered in that country, or at the European Patent Office or at
United States Patent and Trademark Office. Companies, corporations in the industrial field have
their own research and development activities and by foreign subsidiaries they extend their
influence on the market of patents, evaluation of knowledge potential of the host country and any
potential turning into value.
Human capital formation, component of the knowledge society is not only the product of the
national training systems or activities of companies, corporations, academic environment. The
competitive advantage brought in developed countries, including South Asia, is linked to human
resources capital. Those societies started with generating a knowledge-based state of mind, mixed
with investments and a motivational environment generated outputs that represented key factors in
their countries development.
Globalization of knowledge boosts knowledge output the pilar for the emergence of
knowledge society. As effect of globalization, it may include migration of experts from abroad,
through various forms of association (from collaboration to recruiting, brain theft, immigration,
scholarships awarded to exceptional pupils and students). There are also countries with certain
vocation in the field of knowledge. India, for example, provides a lot of experts to the globalized
space of knowledge.
CONCLUSIONS
This paper wants to prove knowledge society is a tool that could improve living standards
inclusively, because it empowers not only individuals but also societies people becomes more
interconnected, with more access to global socio-economic dynamics. In developed countries,
easier access to markets increases their economic performances. On the other hand, the
underdeveloped countries remain isolated from this point of view, without access to latest
information and progress in science, culture and economy. Information and communication
technologies act in two different directions, encouraging development of society.
First direction is a better communication about products, services and culture; second
direction is the fact it represents the key which gives access to information. According to those
assumptions, we can conclude both directions can be used, on one hand, to break borders between
countries and generations and to accomplish globalisation both of economy and of human society,
on the other hand. For example, 7.5% of the EU companies patents are converted into products into
their US subsidiaries and 11% of US patents come from subsidiaries of US corporations located in
Europe, EU-US technology flows forming three quarters of the international technology flows.
42
Knowledge brings an organisational structure of information, divided on certain criteria and

with specific proprieties which require specific support systems. In fact knowledge, more than
information, improve quality of life, supporting individuals in their activities but also in their
decisions. The problem of modern individual is invasion of knowledge, also quantitative and
qualitative, but knowledge society gives it the solution to organise those information, in
systematization and management of available knowledge, taking in consideration specific
proprieties and processes.
Another future topic that could highlight in the future the importance of knowledge is its
relation with the sustainable development, because according to specialists global context of
knowledge helps us to measure economic but also environmental performance.
In the global context, analysing model of knowledge based economies, where knowledge
was the key factor on their development, combined with others inputs ( capital, labour), and is
generating the competitive advantage regarding the produce goods and services on the global
market. Knowledge generates also increased productivity and competition on the global market,
state of affairs individuals can only benefit from.
BIBLIOGRAPHY
1. Becker, G. (1994), Comportamentul uman - o abordare economic, Editura AII,

Bucureti, p. 217.
2. Bran, F., ( Coordonator) (2012), Globalizarea.Manifestri i reacii, Editura
Economic, Bucureti
3. Bran, P. (2010), Managementul prin valoare, Editura Universitar, Bucureti
4. Dobrot N. (1994), Dicionar de economie, Editura Economic, Bucureti, p. 86
5. Fukuyama F. (1999), The great disruption. Human and Natural Reconstruction of
Social Order, The Free Press, New York
6. Georgescu-Roegen, N. (1996), Legea entropiei i procesul economic, Editura Expert,
Bucureti
7. Suciu, M.C. (2008), Activele intangibile i capitalul intelectual - factori-cheie i
convergeni, in Convergena economic, Iancu Aurel coord., Editura Academiei
Romne, Bucureti, pp. 242-287
8. http://europa.eu./int/infonnation-society/index-fr.htm
9.
43
GENERAL CONSIDERATIONS ON INDUSTRIAL PROPERTY

RIGHTS AND THE ROLE OF PATENT ADVISOR
Associate professor Ph.D. Gabriel I. NSTASE
Dimitrie Cantemir Christian University, Bucharest, Romania
gabriel.i.nastase2013@gmail.com

Ph.D. Student Bogdan PASCU
The Bucharest University of Economic Studies, Bucharest, Romania

Ph.D. Student Carmen Georgiana V. BADEA
The Bucharest University of Economic Studies, Bucharest, Romania
Abstract:
Patent advisor must have extensive experience in industrial property activity in order to analyse together with
the inventor of all aspects related to the invention, both during drafting documentation and during its review by the
Office of Inventions, and then, throughout the period of validity of the patent.
Key words: research, development, innovation, patent, patent advisor, technology transfer, recovery.
JEL classification: K11, K42, O34
INTRODUCTION
Valuable and useful technical solutions, the result of creative work, need legal protection on
the territory of a country or by its prospects of marketing, in other states too. Scientific and
technical creative activity involves a series of concrete actions related to inventions law of that
country, but especially to the way in which technical solutions are analysed in view of selecting
patentable elements and drafting documentation for patent application for the Office of Inventions.
A basic document in this sense is the description of invention that represents the main
element, embodying all technical creation of the inventor (Nstase, 2013). This document should be
written according to the rules issued by the Office for Inventions of a country, must present clearly
and precisely the elements of the invention and, especially, contain a chapter of claims including all
new patentable elements so as to not allow a third person (natural or legal) to develop a so-called
"bypass" patent.
CONTENTS
A well written description of the invention, with novelty claims filled in, shall avoid during
the term of the patent application and then during the patent life (in case of granting the patent), a
number of complications. We consider both pre-screening process and substantive examination, and
also in case of disputes on novelty elements, in case of infringement of rights, or for license
invalidation or in other situations relating to a patent. And as always in life, the inventor must have
an advisor, a support and counsellor in this activity to protect his invention.
And this is more as in general inventors are thinkers in the technical field and sometimes with
less knowledge and less practice in industrial property protection legislation. This need to support
the inventor has determined the occurrence of patent advisor, or as it is called in some countries
patent agent who is the first advisor to the inventor. This should have a solid technical background
and be well acquainted with the laws of inventions.
Patent advisor must have extensive experience in industrial property activity in order to
analyse together with the inventor of all aspects related to the invention, both during drafting
documentation and during its review by the Office of Inventions, and then, throughout the period of
44
validity of the invention patent. This paper presents the entire flow necessary for obtaining an
invention patent, since the emergence and development of the invention, the preliminary
submission to the Office of the invention, the patent application being examined and the validity of
the patent.
This paper presents also comments on special circumstances occurred either because of
provisions of national law on inventions, or by other causes. At the same time, it highlights the role
of patent advisor involvement as first counsellor of the inventor and patent owner. Apart from
drafting clear and complete description of the technical solution, patent advisor is one that, from
the beginning, throughout the flow of patenting shall consult with the inventor or patent applicant
on how would be best to exploit the invention.
If marketing shall be abroad, it is also the patent advisor who is aware of international
regulations and conventions to which Romania is a party, and shall analyse the patent procedure
abroad, the number of countries on which territory the technical solution should be protected and
shall decide how the technical solution to be protected with minimum expenditure from the
inventor. In the same time, the patent advisor is someone who, as shown in the paper, must
support the inventor or patent owner to draw up the contract of sale of the invention, whether it is
sold partially, totally or on limited periods.
In case of disputes or during the examination, the patent advisor is the one who, together
with the inventor or invention owner will explore all aspects of these processes and will produce a
response as required by law and in the same time, very well technically substantiated.
This paper includes and exemplifies these activities of patent advisors, that we believe
represent new elements in our country, as this specialty is relatively recent. A patent advisor must
be, in some cases, the counsellor of inventor or invention owner. These cases generally refer to
paternity disputes, compulsory licenses, etc. or litigation between the parties that shall be heard in a
legislative body.
In other words, a patent advisor must be a lawyer representing the client and pleading in
court.
This work will be the guide, first for inventors, indicating how a technical solution should be
analysed and especially on how to deal with different situations arising during the life of a patent. It
must also be a guide for those working in the field of industrial property as direct "advisors" to
inventors - patent advisors - and indicate their optimum way to be followed for complete
protection of the invention and for the best possible marketing thereof.
In our country the law regulates inventions and inventions issue is completed and cleared by
the Application Regulations of the Law on invention patents.
The paper uses the patent advisor name instead of industrial property advisor in order to
emphasise that the work is limited only to advisors activities and tasks in protecting inventions,
which is only part of industrial property protection.
The concept of property is quite large and is discussed in detail in the science of law, but we
will use a few items to decide on the concept of industrial property, which includes the invention
too. A direct link is between the concepts of property and owner, which is the rightful owner of
material and intellectual assets.
The owner has the exclusive right to use such property without authorization of someone else
and has the right to sell or leave as inheritance to his successors. Such material assets may be
household goods, animals, cars, land, houses etc.
These achievements are the result of intellectual effort of the expert in that field of activity.
Here the notion of property indicates the ownership of work created, its real author, the one who
made it, no matter whom the right is transferred to, on one way or another, in order to exploit it or
turn it into value.
These achievements are not limited to art, painting, music, literature, and art but also to
technical field, where the creator can provide new solutions to eliminate all or part of existing gaps
in global state of the art, in a particular field.
Thus, two main branches of intellectual property are outlined, namely:
45
- Literary and artistic property;

- Industrial property.
In literary and artistic property are included all work in this area, regardless of the mode or
form of its expression. Examples would be books and other writings, lectures, musical,
choreographic works, dramatic works, achievements in the video field such as cinema, television
works, photography, applied art, paintings, sculptures and more. In the field of literature can be
included translations or other transformation of literary works and literary collections.
Protection of these creations or copyright is governed by the laws of the respective countries
and refers to the fact that, in general, certain uses of works are considered illegal if they are made
without the authorization of the copyright owner.
Examples of copyright infringement can be mentioned: copying or reproduction of works of
art without the author's consent, development of films adapted from literary or musical work, the
right to translate literary works and others.
Protection of these achievements is done both by legislative provisions of those countries and
international conventions such as the Berne Convention for the Protection of Literary and Artistic
Works, signed on 9th of April 1886 has been revised successively which over the years, being in
force at present.
Romania is a member of the Convention and it is good to note that in accordance with the
provisions of this Convention each of the member countries shall be granted the same copyright
protection to nationals, in accordance with the law of each country. The Convention establishes the
duration of copyright protection and contains special provisions for developing countries.
Industrial property
As mentioned previously, industrial property is part of the Intellectual Property and includes
within its sphere, in the first place the invention that will still be the main subject of this paper.
Also, at Paris Convention for the Protection of Industrial Property it was considered that part of
the industrial property objects beside the inventions are also utility models, industrial designs and
models, trademarks, factory marks and service marks, commercial denomination, indications of
origin and original denominations, as well as repression of unfair competition, and by the treaty of
Washington DC on 26th of May 1989, in the field of industrial property was also integrated the
Protection of Integrated Circuit Topography.
Patentable invention
The invention is considered as the main engine of science and technology development and
is the one containing the most advanced notions of human intelligence, representing the main link
to the introduction of technical progress in economic and social life. It is generally observed that in
countries with highly developed industry, the number of inventions is particularly high as compared
with other countries, such as those under development, where the number of inventions is lower,
being directly correlated with the degree of technical development.
It is necessary for an inventor to have a rich experience and a better knowledge of
specialized issues in the field. These two conditions allow a specialist with inventive spirit, to
achieve truly new and valuable things and not to work for things that were already done by others,
before him. Therefore, the work of invention is a particularly laborious one and generally requires
many hours of hard work by the inventor.
The concept of the invention has been defined somewhat differently by the laws of states
and therefore we seek to outline the elements contained within the sphere of this concept.
Thus, in 1979 the World Intellectual Property Organization (WIPO) has developed a model
of law for inventions in developing countries, not mandatory, where invention was defined as a
solution of an inventor, that applied, allows approaching a specific problem in the field of technics.
Japanese law, which is considered as compared to other countries, superior to the laws in the
field of inventions, defines invention as very advanced creation in technical field, by which a law of
nature is used.
46
It is appropriate to point out that national legislation of 1974 on inventions and innovations
defined inventions as a "scientific or technical creation," presenting novelty and progress over the
prior stage of world technics, which has not been patented or made public in the country or
abroad, represents a technical solution and can be applied to solve problems in the economy,
science, health care, national defence or any area of economic and social life.
Finally, the current law defines a patentable invention as new solution, result of an
inventive activity which is susceptible of industrial application.
In this definition, we observe an approach to the definition proposed by WIPO.
The invention as object of industrial property is protected by invention patent, called in
other countries as patent. It should be emphasized that sometimes instead of the invention the object
of industrial property is presented as the invention patent. It should be understood that the patent is
only a document, issued by the Office of Inventions in most countries, in the name of the
government of the country for the establishment of an invention protection.
The fact that the invention is object of industrial property and not the invention patent,
which is only a document, is highlighted by the majority of the laws on invention of different
countries, including law on inventions in our country (Condratov and Hapenciuc, 2012).
The defining elements of an invention, disclosed in the various definitions of the invention
mentioned in the laws of some countries, can be materialized by some elements that are found in all
laws.
Thus, a first element is the novelty at the world level. This means that by the time the patent
application to the Office of Inventions nobody else has published a technical solution similar to that
for the patent (Mehlig Sweet and Eterovic Maggio, 2015). By making public a technical solution
means either the publication of a patent application for a similar solution before or the publication
in a magazine or in any other publication or presentation in an exhibition or television or even in a
case study news. Therefore, it is recommended that for a new technical solution, to submit as
quickly as possible the documentation at the Office of Inventions to protect it by a patent.
Therefore it is clear that the date until which the novelty condition of a technical solution is
the date the patent application was filed with the Office of Inventions.
However, there is a situation when the date by which the novelty of technical solutions is
examined, for those who demanded protection through an invention patent, to be prior to
submission at the Office of Inventions, i.e. the date of filing the application.
This solution is governed by the Paris Convention to which our country is a party of. Thus,
an innovation patent was requested for a technical solution at an Office of Inventions of a country
member of the Paris Convention and then within 12 months a patent for the same technical solution
was requested at another Office invention of another country, member of the Paris Convention, in
the request indicating the priority of the first filing, the research and technical documentation will
be made at the second office only until the first filing is considered as deposit legally constituted.
Thus, no technical solution that became public between the date of the deposit and the
second deposit cannot be regarded as destructive of novelty for the second, because date of
depositing is considered the date of first depositing.
Moreover, if in this period between the establishment of the first depositing in the first
country and the establishment of the second deposit in a second country invoking the first
depositing in the second country, a third party requests a patent for a technical solution similar to
the application submitted before the end of the second deposit that was set as priority, this request
will be rejected, because according to the priority given by the provisions of the Paris Convention,
to which priority is claimed, the date of depositing the two patent applications is the date of first
depositing.
These situations will give rise to many analyses in this paper, analyses directly related to the
activity of the patent advisor.
Inventions patents granted for technical solutions generally fall into two groups, namely:
product patents and process patents. For example, a patent for a product may refer to an extraction
pump or a new chemical substance, and the patent for the process relating to a process for the
47
manufacture (for example, of a chemical substance). Often, we find patent relating to a process and
device or a new material and process for its manufacture.
In fact, when asking for a patent for a new product, it is mandatory to indicate the
manufacturing process of this product.
In general, both the product and the manufacturing process being new, the patent is granted
for both product and process.
If an inventor will create later a new manufacturing process of the product in terms of purity
or higher simplifying the technological process, he or she will be granted the patent only for the
process that is new, the product is no longer new, as it was done previously and is no longer a
novelty.
A second condition found in the laws of other countries, as well as in inventions legislation
of our country is that the technical solution to present progress in relation to the known solutions
worldwide in the field. In some cases this condition is called inventive step or as Japanese calls it, a
"more advanced technical idea".
This notion of "more advanced" is met also in the case indicated by World Intellectual
Property Organization (WIPO) above.
Let us consider then why in some laws of invention, as is the case of our country, it is
specified only "new solution resulted from an inventive activity and that is susceptible of industrial
application". If we analyse this text, we observe that the element of technical progress is contained
in the concept of "inventive activity", meaning a better solution than that found in the prior known
technics. This is not merely because it is new, but by the fact that it embodies the inventive spirit. If
this notion is reinforced by the fact that a new solution must have industrial application, technical
progress is evident.
CONCLUSIONS
In the examination of the application for invention patents many cases were encountered
when, although the technical solution itself was new, meaning unprecedented in bibliographic
materials, it did not have an industrial application, or the product obtained for example by a new
process had lower characteristics of the product obtained by the method already known, inferiority
embodied by the degree of purity, reliability or other conditions of existence of a competitive
product on the market.
From here, the applicative value of an invention begins to take shape, whose industrial
applicability presents far superior characteristics. Surely, by competition with other technical
solutions that will meet the best conditions, there will be the most sought after in the market by
manufacturers.
New technical solutions, patentable, must solve effectively problems that were created,
generating technical, economic effects and other of effects in order to justify intellectual and
material efforts made to obtain them.
BIBLIOGRAPHY
1. Condratov, I., Hapenciuc, C.V. (2012), Study regarding the use of multimedia technologies
in tourism sector of Suceava county, Revista de turism, 14 (14), pp. 60-65.
2. Mehlig Sweet, C., Eterovic, D.S. (2015), Do stronger intellectual property rights increase
innovation?, World Development, 66, pp. 665-677.
3. Nstase, I. G., Loren, A. (2008), Managementul inovrii. Inventatori i consilieri de
brevete, Editura AGIR, Bucureti
4. Nstase, I.G. (2013), Innovation and industrial property rights, Quality Access to Success,
14, S3, pp.101-109.
5. www.wipo.int
48
REGIONAL DEVELOPMENT: ROMANIAS CASE

Prof. Ph.D. Emilian M. DOBRESCU
Institute of National Economy, Romania
dobrescu@acad.ro

Assoc. Prof. Ph.D. DianaMihaela POCIOVLITEANU
Constantin Brancui University of TarguJiu, Romania
diana.pociovalisteanu@gmail.com
Abstract:
Regional development is a concept aimed at boosting and diversifying economic activity, stimulating
investment, contributing to the judicious use of human resources and quality of life. Could be applied to regional
development policy were set eight development regions, which comprise all over Romania. Each development area
includes several counties. Developing regions are not administrative units not having legal personality, being the
result of an agreement between the county and local councils.
Key words: regional development, region development, regional development policy
JEL classification: R00, R11,R58
1. GENERAL CONTEXT
In a centralized economy, the undervaluation and underestimation of the importance of

the space factor in the economic calculation resulted in an extensive growth of the productive
potential and the concentration of the heavy industry in a few large enterprises located mainly in
the large urban areas, the environmental protection being completely neglected. The number of
active population in the agricultural area artificially lowered being attracted by the industrial
activities in the urban areas. The broad phenomenon of migration of the population from rural to
urban areas caused serious social disruption and a huge pressure on the cities in the process of
industrialization.
Looking back at this situation, it was appreciated that the excessive emphasis placed on reducing
disparities at any price, to which was added an investment policy based mainly on the
availability of labor force, represented one of the causes of diminishing economic growth during
the ninth decade of the past century. The growth rate of industrial production in the
underdeveloped traditional counties of Romania over those two decades was impressive. In these
less developed areas of the country there were registered production increased a dozen times. In
the 80s less developed counties were obliged to achieve an overall level of production per
inhabitant equal to the national average. This massive reallocation of resources led eventually to
the slowdown of the economic growth process. It is interesting to note that despite the forced
industrialization process and economic growth thus induces, traditionally poor counties of the
country (Botoani, Vaslui, Maramure, Bistria-Nsud, Dolj, Olt, Giurgiu, Teleorman)
continued to be affected by the population migration phenomena, which registered high levels
throughout the entire period of the 70s and 80s.
With such an evolution, Romania has ended up in a situation unique in the economic
landscape of central European countries. The negative consequences of this failed economic
policy promoted by the unique party were felt from the early 70s; they have worsened in the
80s and were amplified after the 1990s. The harmful consequences are sensed even today when,
practically, almost all the counties are facing economic, especially industrial restructuring.
49
2. CONSIDERATIONS ABOUT INTER-REGIONAL DISPARITIES
The actual situation continues to reflect the artificial conditions created during the
communist regime. If we compare the situation of Romania with the EU members, or with the
countries with market economies, it is observed that the level of inter-regional disparities in the case
of Romania is lowered. Thus, in the process of building on the map of these regions resulted in
the end the creation of areas with a homogenous level of development. The only notable exceptions
are represented by the regions of Bucureti-Ilfov, relatively developed as compared with the others
and the North Eastern which is the least developed region economically and socially. Thus, while
the average level of GDP per inhabitant in Romania is up to 22% of the European region, the
reaches only 38% (at purchasing power parity), while the Northeast region only 20% of average
Europe. In relative terms, this is similar to that seen in Greece, Portugal and Spain in the early 90s:
a report of the discrepancy between the most developed and the least developed and a low
difference in percentage terms than the European average. It is important to note that outside the
Bucharest-Ilfov and Northeast that are exceptions, all other regions of Romania presents similar
income levels in the context of a slightly higher level of development of the western part of the
country, compared with the east.
An ad-hoc map of the regional disparities in Romania allows the spatial localization of the
poverty and of the under development, in two main areas of the country: the North East, that
practically includes in full the historical region of Moldavia, and the south, respectively the most
expanded agricultural area of the country the Romanian Plain. Unlike these two areas, the West
and the Center of the country are outlined as being the richer and more developed areas, from the
standpoint of both the income in the populations households and of the technical - social
equipments and facilities and of the economical potential. Besides the general and global
disparities, the analytics have shown a series of details, symptomatic for the tipology of the
problems specific to different areas. As main conclusions, we can recall the following:
The counties with the lowest standard of living are located in the two main areas of poverty :
first, in a particularly critical situation, is situated in the North - East of Moldavia and it includes the
counties of Botoani and Vaslui, and the second one in the southern plain area of the country and it
comprises the counties of Teleorman, Giurgiu, Clrai and Ialomia. In regards to Botoani and
Ialomia, we can say these two counties are characterized by a general state of poverty, with scarce
financial resources and high levels of infant mortality, migration and unemployment. The counties
in the South, especially Clrai, Giurgiu and Teleorman are typical examples of cultural scarcity,
according to sociologists, defined by low education and high infant mortality rate caused by poor
sanitary conditions.
The underdevelopment of infrastructure and the poverty in the households are revealed by
several typical cases, such as the one in Gorj county, characterized by a low level of development
(technical and social). Next we find the situation of Hunedoara and Constana, where the low
standard of living in the households finds itself in contracst with the high level of economical
acvities, emphasized through specific indicators.
The study around regional disparities and their evolution must be sustained also by an
analysis of the changes that occured within the occupational structure of the population and in the
sphere of entrepreneurship. These evaluations bring new aspects and significance in order to better
understand regional disparities. The main correlation between economical behaviors and social
aspects is represented by the decrease of job availability in the industry. The number of employees
in the industrial area was reduced with more than 50% of the overall decrease recorded on the
economy.
Over 45% of the companies registered in Romania are located in the 8 most developed
counties, totalling 30% of the whole population. Higher values of unemployment are registered in
the counties with lower development and a high rate of decrease in number of the people who work
in the industry ((Bistria-Nsud, Botoani, Tulcea, Vaslui etc.). In terms of spatial distribution, we
can notice a classification of the spatial distribution , registering major differences between the East
50
and the South and the central and West area. Most of the poorly- developed counties are located in
Moldavia and Muntenia, while the majority of the advanced ones are to be found in Transilvania
and Banat. The historical regions of Oltenia and Maramure are characterized by an average level
of development. One of the regions least developed is around the capital, except for the strongly
industralized and urbanized area of Prahova county.
Regional disparities reach remarcable values for certain indicators, emphasizing the
differences between the economical, social, technical procurement or even the overall standard of
living. The most dynamic changes were distinguished among the indicators illustrating both the
infrastructire and the socio-demographic categories. Economic indicators were described as having
a general downfall in the past 11 years, while the ones highlighting the standard of living have
increased for most of the poulation within the same period of time. The positive, most dynamic
changes could be seen in the the growing number of owned cars and telephone subscrptions. The
urbanization level, expressed as percentage of urban population in total population of a county
remained relatively constant, indicating there has been no major displacement from the rural to the
urban areas, nor vice-versa.
The most relevant downsize in development has registered in the counties of Mehedini,
Cara-Severin and Hunedoara, while Brila, Dmbovia and Ialomia have undergone a certain
growth. The maximum of stability has been acquired by both the developed regions (Sibiu, Braov,
Cluj and Timi) and the less-developed ones (Giurgiu, Botoani, Vaslui, Clrai, Teleorman).
Regional dynamics in Romania can be portrayed as experiencing increased economical disparities
given there has been a general decline in the national economy. Regional changes have evolved
following different models in terms of household resources, infrastructure or economical structure.
The production of industrial enterprises has suffered the most critical downfall, proving these
structures had the least capacity to adapt to changes in the market economy. The speed of the
economic reform is the one to ultimately influence the growth, faster or slower, of regional
disparities.
Taking into consideration the progress Romania has achieved in adopting the community
acquis and its institutional, real implementation on the ground, given its policy to support the less
developed regions that are part of the Member States or acceding, the European Commission has
decided give assistance in implementing the EU regional policy in our country. Beginning with
2001, Romania should receive annually, for 6 years, 100 million euro from the EU, through
programs of regional development. According to the estimations done by the EU, the future egional
development programs could help create approx. 50.000 new workplaces, especially in the private
sector, particularly sustained by the EU. The governments contribution to conducting future
programs, in partnership with the European Union will be 25% of the total EU funds.
Of the 449 projects approved for funding in the last 5 years, 261 are for developing the
local initiative (over 12 million euro in funds), 107 projects address human resource training (3,4
million euro) and 81 are focused in tourism (3,6 million euro). 74% of these projects will take place
in the urban environment, but what is significant is that 118 projects address the rural communities
and have a total 5,4 million euro allocated, which translates into approx. 2,700 new workplaces. By
the end of 2001 there have also been held investments with financial support from the EU, with 8,6
million euro dedicated to developing the local industry, tourism and human resources, sectors in
which approx. 3,500 new workplaces will be created and 4,300 people will benefit from training.
Supporting regional development in Central European states to the EU has clear grounds,
meaning that any acceding countries must come close to the average level of regional development
of the EU Member States. We appreciate, however, that the effects of regional policy in this field
are still far from the best and the expected, the institutional mechanisms being still unknown or
applied at large scale, and the selection of programs being the least objective, due to strong
implications of subjective factors.
Beginning with 2001, Ministry of Development and Prognosis has developed and the
Government of Romania has approved by resolution the proposal regarding the concentration of
PHARE 2001 a component of economical and social cohesion and the co-funding from the
51
state budget in 11 areas of industrial restructuring with economical growth potential. The
population in these areas represents approximately a third of the whole population of Romania.
According to PHARE regulations, from the cities belonging to the 11 areas there have been
selected, prioritarily, those projects of investment in the public and private sector that are falling
under the national regional development priorities according to the National Development Plan,
priorities also agreed by the Europeam Commission : development of small and medium-sized
enterprises, local and regional infrastructure, social services and tourism development.
The criteria recommended by the European Commission which are found on the basis of the
region identification are the following : existence of areas - geographically concentrated - with
enterprises in difficulty for different reasons (closure, restructuring, privatization), with high
unemployment and serious social problems, problems of environmental pollution, but as well ones
that have the potential for growth.
Targeting PHARE funds, structural and cohesion funds of the EU, in the established areas
sustains and completes the general program of development undergone by Romania, together with
the measures taken from January 2001 for improving the business environment - by providing
incentives for small and medium enterprises, development and modernization of infrastructure,
accelerating privatization, intensifying social protection.
3. STRATEGIC PRINCIPLES AND OBJECTIVES OF THE REGIONAL

DEVELOPMENT
According to the medium-term National Development Strategy of Romania, approved in the

Cabinet meeting from May 19th 2000, the strategic pronciples of the regional development target:
- at national level: a) promote market economy mechanisms in all regions to improve
competitiveness and achieve permanent economic improvement; b) promote the
harmonious development of spatial and localities network; c) increase the capacity of the
regions (from an institutional, financial and decision-making point of view) to sustain
their own development; d) promote sustainable development; e) create equal
opportunities in terms of access to information, research and technological development,
education and training
- at regional level : reduce disparities between regions, districts, urban rural
environments, central areas, peripheral areas etc.; b) prevent the occurrence of problem
areas; c) coordinate regional development initiatives with national priorities and EU
guidelines; d) promote differentiated policies according to regional particularities
(monofunctional areas - predominantly agricultural, mining - urban areas, natural and
built or protected areas, border areas, areas with environmental problems).
Regional development policy objectives, according to the same strategies, are: reduction of
existing regional imbalances, stimulation of balanced development, revitalization of disadvantaged
areas, prevention of new imbalances, linking regional and sectoral policies, stimulation of internal
and international interregional cooperation contributing to the economic and social progress, further
development of special, priviledged relations between Romania and the Republic of Moldavia,
strengthening the common cultural and spiritual space in accordance with the norms and values of
integration in a united Europe.
The fundamental objectives of regional policy, the institutional framework, the different
responsibilities of different institutions involved and specific instruments of regional development
policy in Romania are set by the Law no. 151/1998 regarding the regional development in Romania.
The fundamental objective of regional development policy, as formulated by the law, is set
around reducing the existing regional disparities, especially by stimulating a balanced development
and by accelerating the recovery of those areas left behind in terms of development due to
historical, geographical, economical and policitcal circumstances, as well as preventing new
disparities and regional imbalances. Another goal set by law refers to the correlation of sectoral
52
policies of the Government with local and regional initiatives and resources in order to achieve
sustainable economic, social and cultural development of the regions.
These processes of stimulating regional activities, of coordinating them with governmental
policies, of promoting inter-regional cooperation is an effort to correlate the countrys needs and the
needs of geographic regions, as well as economic and cultural.
Regional development processes are placed in the broader context of Romanias accession
to the EU and, therefore, of preparation of necessary institutional structures and capacities to
implement EU structural policy after accession
Within the regional policy promoted by Romania, an important role is the deprived areas
policy whereby the state budget supports the economic and social development of those
geographical areas whose level of development is extremely low due to due to the negative effects
of economic restructuring and massive staff layoffs. The purpose of this policy is to revitalize the
economy in those areas, by attracting investors. The massive economic decline Romania
experienced after 1990 required that the national policy of regional development no longer be
thought of only in terms of reducing regional disparities. This objective was accompanied by a
more general one, that of supporting the restructuring of regional economy.
According to the europen policy for economical and political cohesion, Romania promotes a
regional policy that has set as a long-term general goal diminishing the differences in development
between different regions of the country. On a short term, however, the regional policy should focus
on countering the negative phenomena (loss of jobs, unemployment, etc.) that appear in the
countrys economical and especially industrial restructuring process.
Territorial communities, regional and local ones have not developed sufficient capacity for
innovation and have not become more flexible in order to respond effectively to the challenge and
the national economys requirements for restructuring. Therefore, an important objective of
Romanian regional policy is to create conditions for the development of innovative capacity of
Romanian local communities, to enable them to adopt new activities that would gradually replace
the old, inefficient activities, no longer required on the market, taking into account that in the
conditions of economic globalization, the initiative and entrepreneurship are basic premises of
regional development.
Along with the concern for the economic retsructuring of the various areas, regional
development policy aims to stimulate the competitive ability of different areas by stimulating their
ability to adapt to new activities. In this sense it puts less emphasis on the regions ability to offer
and more on the quality and the conditions of the offer, for different regions to be able to accept and
develop new activities. To this end, the national policy of regional development through its main
instrument, the National Development Plan works towards a flexible planning which requires
concerted action policies on human resources training, technological development, scientific
research, the development of small and medium enterprises etc.
To this end, the national policy of regional development - through its main instrument, the
National Development Plan - work towards a flexible planning, which requires concerted action
policies on human resources training, technology development, scientific research, the development
of SMEs etc.
Flexible planning is a basic concept the national policy of regional development operates
with in the current economic conditions. Alligning the structural economic changes and the
territorial development is achieved through creating new activities in the territory. Both in terms of
exogenous development (using foreign investment) and endogenous development (own resources),
national regional development policy promoted by Romania focuses on improving the organization
of new activities, acting mainly on the physical and human dimensions of the regions and
subregions.
In this context, the main goal of the national regional development policy is to help the
regions, counties, different areas, localities, to acquire the necessary means to become able to
develop a social and cultural structure, highlighted by the quality of human resources, education
53
and training, as well as the economic infrastructure (road, rail, maritime, aviation,
telecommunications etc.) based on a modern technilogical level.
Regional policy measures are planned and promoted within the institutional framework
created by the central, regional and local authorities, in accordance with the principles promoted by
the EU : concentration, planning, subsidiarity and partnership.
Creating a regional institutional framework and institutionalizing the eight development
regions both aimed at facilitating the regional development policy. It is expected that the regional
development plans designed by the Regional Development Agencies have the ability to identify the
development priorities of regions and their resources, by creating an appropriate framework for
achieving the development goals by implementing regional programs.
Development regions in Romania have not been designed only as planning units for the
regional development policy pursued by the EU. In the same way, they are meant to promote
national policy measures for regional development.
But, as shown by the experience of other countries, regional institutional system created by
formation of macro-regions and the Regional Developemtn Agencies will achieve positive results
only in the existence of an active policy of regional development that has adequate financial
resources.
In Romania, these resources are concentrated in the National Regional Development Fund,
including internal financial resources from the state udget and European funds for regional
development.
The key problems whose resolution depends on ellaborating and implementing national
policy measures for regional development can be summarized as follows :
- Supporting the regional economic restructuring, in the market economy, have become
uncompetitive (having major structural weaknesses). We are refering to the
industrialized areas found in economic decline, unable to adapt and cope with
competition. The have high unemployment, underutilized production potential, technical
infrastructure (including buildings) in the process of deterioration. Also, big problems
are raised by areas whose economic base is largely agricultural, and which practices an
obsolete type of agriculture, inefficient due to lack of appropriate facilities.
- Stimulating the best use of the combination of endogenous potential of regions, both
natural resources and raw materials, as well as human resources to boost regional
economies
- Ensuring environmental protection. Errors resulted in the massive industrialization
period, when its influence on the environment was neglected, led to the emergence of
environmental disaster areas. At the same way, environment quality is extremely poor in
most cities, including the capital. For changing this state of things it is imperative to
know the regional distinctiveness of this phenomenon. Combating and preventing
environmental damage requires funds that are not available at regional or local level and
require national support. Create and develop an institutional infrastructure pertaining to
the market economy at regional level. One component of this infrastructure is the
banking system, the existence of commercial banks, investments etc., to direct their
funds to be used for development. It is also necessary to create a network of
organizations and institutions to accelerate stock exchange of goods. If in the system of
centralized economy the enterprises were subordinated hierarchically to the central
sector bodies (ministries), today these bodies that would effectively coordinate the
functioning of institutions at county and local levels, are missing or not fully functional.
The autonomy of enterprises and creating private enterprises highlighted the need to
create conditions for the development of regional and local chambers of commerce and.
Also, the local government is a key factor in the administrative infrastructure. They have
a role of initiator and coordinator of territorial development. Cooperation between the
institutions and authorities within tne three levels: local, regional, national, is the key to
maximum effects. Only through this cooperation can a climat beneficial throughout the
54
country appear. Regional Development Agencies play a very important part in the
regional institutional system, being the ones to effectively embody the regional
development policy.
- Also the regional market economy needs many other institutions to fulfill important
functions. Such institutions can handle consulting, marketing, training and professional
training of workers, organizing publicity activities, information etc.
4. CONCLUSIONS
The socio economical analysis of the degree and potential of development, as well as of
the existing issues, outline the following important aspects, that were taken in consideration in the
process of structuring the Romanian policy of regional development in European context. In the
process of creation and consolidation of competitive economical regional structures, there are and
need to be removed some obstacles. It is necessary to grant priority to those projects of major
importance for the economical development of the regions. It is imperative to adopt clear, fast
measures, inclusively in the case of projects of lower importance, underregionals or even local. To
be able to efficiently support the process of integration of Romania in EU and to brin gour country
closer to the west european countries, it is necessary to focus the financial support from the state
and from the European funds on a few directions of action. We estimate that the rythm of
economical increase depends on the way in which the endogenous potential of development of the
country and of each component region is conscripted, as well as on the amount of financial support
granted to the development priorities established through the National Plan of Development. The
processes regarding structural economical transformations need to be accompanied by appropriate
social protection measures.
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56
SUSTAINABLE DEVELOPMENT OF ROMANIAN AGRICULTURE

WITHIN THE CONTEXT OF EUROPEAN UNIONS
REQUIREMENTS
PhD. Associate professor Carmen Valentina RADULESCU
The Bucharest University of Economic Studies, Romania
cv_radulescu@yahoo.com
PhD. Associate professor Ildiko IOAN
The Bucharest University of Economic Studies, Romania
ildiko.ioan@yahoo.com
Abstract:
The rich natural potential for agriculture in Romania is contrasting with the low level of economic
performance. Progress toward sustainable development in rural areas depends on processes that lead to increased
valuation of the natural resources by cropping and livestock breeding, capturing more value by growing the number of
processing stages performed at national level for food production, improvements in the distribution of benefits with
special focus on rural population, harnessing the benefits of stewarding natural ecosystems that play a key role for the
overall wellbeing of the population, diversifying the structure of economic activities, and encouraging entrepreneurial
involvement. European policies of rural development are supporting most of these processes, but within the national
context there encountered specific challenges born by the low level of maturation for property relationships,
fragmentation of land ownership and cropping plots, cultural patterns that create strong resistance to change, and lack
of financial resources. The paper highlights several aspects in order to assess at what extent the Romanian agriculture
is making progress toward European requirements.
Key words: Agriculture, rural development, natural resources, value chains, ecosystem services
JEL classification: O13, O18, Q18
INTRODUCTION
The concept of sustainable development means the effect of the integrated approach to
decision-makers and policy, where environmental protection and economic development over time
are designed to be complementary and mutually dependent (Scutaru, 2013). World Commission on
Environment and Development (WCED), presented in 1987 in the report Our Common Future
known as the Brundtland Report, for the first time by Gro Harlem Brundtland, the concept of
sustainable development as being the development that follows meeting the needs of the present
without compromising the ability of future generations to meet their own needs.
Both on the short-term as well as on the long-term, sustainable communities need to consider
carefully how to value economic resources, without inducing harmful environmental effects and
threatening the cultural heritage.
Sustainable development pursues to accomplish simultaneous progress toward three
categories of goals economic, social and environmental. Economic goals include economic
growth, equity, and efficiency. Social goals are delegation, participation, social mobility, social
cohesion, and social development. Environmental goals are to maintain ecosystem integrity,
preserving the economic potential of natural resources, biodiversity conservation and mitigating
global issues such as climate change.
Agriculture, as economic sector that relies directly on the use of natural resources, is in the
forefront of the sustainability debate and should become the leader of change by promoting
innovative technologies and management. The European policy regarding agriculture and rural
development integrated many sustainability goals and its implementation is expected to have a
meaningful contribution to the development of agriculture by respecting social and environmental
restrains. At what extent this processes are occurring in Romania and which are the specific
challenges born from the features of the national countryside is questioned and discussed in order to
57
reveal real progress and to highlight sensitive areas that need more careful approach by central and
local authorities.
STRATEGIC COMPONENTS OF SUSTAINABLE DEVELOPMENT
Sustainable development embodies the vision of a society that is able to solve the major
social and environmental challenges within a continuous economic growth delivering prosperity
and wellbeing more effectively (Bran, 2014). Therefore the pillars of sustainable development,
acknowledged as the triple bottom line or people, planet profit, are economic growth, social
inclusion and equity, and environmental protection. Hence, the goals of sustainable development
could be stated as:
- Economic goals: growth, efficiency;
- Social goals: equity, participation, mobility, cohesion, social development;
- Environmental goals: lower carbon footprint, ecosystem integrity, biodiversity, healthy
environment, regeneration of natural resources.
In order to achieve these goals there are necessary important changes compared to the
current state of economic activities. These changes involve decisions made in a strategic framework
and are known as the strategic components of sustainable development, namely:
- Management of production and services;
- Resource management; and
- Change management.
Fig. 1 presents the activities involved by each strategic component.
Fig. 1 Strategic components of sustainable development

Source: Rojanschi, V., Bran, F., Grigore, F., Ioan, I. (2006). Cuantificarea dezvoltarii durabile, Bucharest: Economica.
Sustainable development means an agreement between economic growth and social and
environmental protection, detaching it from them present satisfaction and social development
perspective.
The progress toward sustainable development is far slower than the conceptual evolution.
Despite several decades since its proposal and widespread acceptance, the goals of sustainable
development are still very distant from the realities, especially in developing countries. The
Millennium Development Goals project, although ambitious and highly operation reveals that
accomplishing sustainability goals is difficult. This process was considered of common interest and
it was managed mainly by governments, at least at strategic levels. Experience proved that such
58
interventions are necessary, but will not be enough to avoid irreversible changes threatening
humankind from both social and environmental perspective.
AGRICULTURE AND SUSTAINABLE DEVELOPMENT AND THE EUROPEAN

REQUIERMENTS
The concept of sustainable development of agriculture involves many definitions, but all
must include the human dimension in addition to environmental protection. Agriculture is amongst
the most ancient human and economic activity addressing the basic need of food. Its productivity
controlled the social development for centuries by saving time for more and more diverse human
activities that underpinned knowledge development. Currently, agriculture is still a major sector
with important social impact, since in developing countries most of the population works in
agriculture. Further, the production process has a direct impact on food quality and safety triggering
other social implications by health issues. Hence, the human dimension of sustainable agriculture
implies complying with the following conditions:
- Sustainable farming technologies should be applied by farmers if these lead to less material
losses and if they have access to specific technologies;
- Consumers demanding for safe food products are able to recognize these products in order
to make an informed decision that expresses their commitment to support certain qualities of
the products and production processes.
Agriculture is closely linked to the environment, its production being delivered by
biological processes within technology driven ecological systems. Despite advancement in
technological development major resources such as soil and water remain limiting factors since
large scale production cannot be deployed without them.
Sustainable agriculture involves technological changes, but most importantly managerial
changes. Technology should maintain productivity while reducing environmental impact, while
managerial changes should improve the economic accessibility of food in a world where more than
one billion people is still suffering by hunger. Innovation created major productivity leaps, but these
were accompanied by similar growth of environmental damages. Therefore one of the dilemmas is
how to steer innovation within the limits of the people, planet, profit framework.
The progress of agriculture toward sustainability could be assessed by using a number of
indicators, out of which we selected the followings:
- The share of fixed capital used in agriculture in total fixed capital nationwide;
- The share of agriculture in total investments made investments nationwide;
- The share of agriculture in total energy consumption in the country's energy consumption.
- The share of agricultural land in the country's total land fund - higher share for agriculture
(arable, vineyards, orchards) in total land fund of the country;
- Agricultures contribution in GDP.
The European Union, as pioneer of environmental and sustainability initiatives at global
level, considers agriculture of major interest in this respect. The Common Agricultural Policy was
amongst the first strategic approaches that integrated social and environmental restrains for
intensive production. Several priorities of the rural development are clearly targeting sustainability,
while the others include sustainability goals as compulsory objectives to be accomplished with the
specific ones. For instance, the strategic goals of the rural development include sustainable
management of natural resources and mitigation of climate change to be accomplished by targeting
as priorities:
- Restoration, preservation and strengthening of ecosystems that are related to agriculture and
forestry;
- Promoting the efficient use of resources and supporting the transition toward a low carbon
emission and resilient agricultural, forestry, and food economy;
- Promotion social inclusion, poverty reduction and economic development in rural areas.
59
Farmers and rural entrepreneurs will be supported in activities such as: afforestation of
agricultural and non-agricultural land, voluntary agro-environmental commitments; voluntary
application of organic farming systems; voluntary exploitation of agricultural areas hindered by
various natural hazards.
ROMANIAS AGRICULTURE AND THE EUROPEAN SUSTAINABILITY GOALS
Romania outstands within the European agricultural economy by the high potential of its
natural resources, but also by the low level of productivity. The most fertile soils, such as
chernozem, varied structure of the agricultural land by relief and climate, richness and availability
of water resources, low level of industrial pollution are the main indicators of this potential. On the
other hand, these lands yields are far less than the ones gathered in France, Germany, Italy, Spain
etc. although a quite large proportion of the population are working in agriculture (Voicu and
Radulescu, 2015). Disparities of technological endowment, training, and inputs within an unstable
political context that failed to succeed in achieving strategic goals are pointed most frequently as
the causes of the low performance. Meanwhile, this is also interpreted as a good potential to make a
leap toward sustainability since the natural capital was less depleted than it was the case of states
where to most intensive technological solutions were applied.
In relation to the European Union, Romania is a medium-sized country with an area of almost 24
million hectares and a population of almost 20 million inhabitants. The landscape is varied, being
almost evenly divided into mountains, hills and plateaus and plains. Romania has a temperate
continental climate. More quantitative milestones are the followings:
62% of the total is land for agricultural purposes (about 15 million hectares). Out of this, 64% is
arable land used for crops such as cereals, rapeseed, sunflower, soybean, vegetables etc.,
accounting for 0.45 hectares per capita. This situates Romania as 5th in Europe; 23% of the
agricultural land is natural and semi-natural pasture; 10% grasses for fodder production; 3% is
land used for plantations, nurseries and orchards. (fig.3);
26% of the surface is represented by forest (about 6 million hectares), out of which 3% is
occupied by primary forests and secondary forests and 97% forest land;
4% of the total (about 0,8 million hectares) is occupied by surface water bodies, including the
continental shelf of the Black Sea.
2% is degraded or have very low productive potential.
6% is occupied by land used for infrastructure.
Fig. 2 The structure of Romanias territory by categories of use

Source: own representation using INS data
60
Fig. 3 The structure of Romanias agricultural land

Source: own representation using INS data
According to the National Strategy for Sustainable Development agriculture is in a state of

decline due to unfair division of property, machinery and equipment with poor facilities, reduced
use of chemical or natural ingredients and pesticides to the drastic reduction of the irrigated area,
soil damage and lack of a functioning system of agricultural credit. Compared to other developed
countries of the European Union, food consumption in Romania is declining for meat, milk, eggs,
fish and certain vegetables and fruits, but instead shows an increase in cereal products.
The progress toward the ambitious sustainability goals of the European Union is fostered by
a far reaching program designed by EU institutions and adapted to the local characteristics of
agriculture and rural area. This is the National Program for Rural Development that faces now the
second financial stage covering the period of 2014-2020. According to this program the goals to be
achieved are expressed in terms of competitiveness, resources, and people and society (Hapenciuc
et al., 2012).
Competitiveness is to be accomplished by strengthening research, technological
development and innovation; improving access to information and communication technologies and
the use and quality; improving the competitiveness of SMEs, the agricultural sector and fisheries
and aquaculture sector. Regarding the first thematic objective, financial support will be granted for
the analysis and research in agro-food and forestry fields by formation of groups operating in the
European Innovation Partnership Agricultural Productivity and Sustainability, made up of farmers,
foresters, researchers, consultants, companies, etc. So in this way are supported pilot projects, new
product development, practice, processes and technologies, transfer of good practices.
With respect to improving the competitiveness of SMEs, the agricultural sector and fisheries
and aquaculture sector there will be supported the investments for processing and marketing of
agricultural products from the companies that process raw materials and aquaculture production by
investing in processing fishery and aquaculture products (Pilato, 2014).
The resource related goals envisage:
- Supporting the transition to a low-carbon economy in all sectors;
- Promoting climate change adaptation, prevention and risk management;
- Protecting environment and promoting efficient use of resources.
There are financed investments in agricultural holdings and bio-fuel production, and
investment in achieving biomass and other renewable energy types, with farmers beneficiaries or
other undertakings.
Protection of the environment and promoting resource efficiency will be accomplished by
investments for reducing energy consumption in the agro-food sector. This component is divided
into:
- Promoting employment and supporting labour mobility;
- Promoting social inclusion and mitigating poverty by investments in education, skill
development and lifelong learning.
There is also the European Union Programme for Employment and Social Innovation which
supports financially the practice of reform ideas and to develop best practices to scale up as helping
61
to accomplish the Europe 2020 goals. European programs support training for improving the
correspondence between skill needs and productivity toward increased social inclusion.
CONCLUSIONS
The patterns of the economic interactions are to be changed by applying the measures
designed for supporting sustainable development. All sectors of economy will undergo changes
although some of them will be more transformed than others (Nastase and Kajanus, 2009).
Agriculture is one of the sectors that will fall in the first category due to its close relationship with
the natural processes that control the regeneration of the resources. The transformations will occur
in technology, management, but mainly in economy since the most important limitation of food
availability is not the physical access, but the economic one.
Romanias agriculture could be amongst the most productive ones in Europe if the status of
the natural resources is to be considered. In fact, however, Romanias agriculture is low performing
and fails to be attractive for strategic investors (Hapenciuc et al., 2014). The European focus on
both social inclusion and environmental protection created opportunities to harness the drawbacks
of transition that reduced the chemical inputs and the environmental impact of intensive agricultural
technologies.
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1. Bran, F. (2014). Entropy based strategies for the valuation of natural resources, Quality
Access to Success, 15 (S1), pp. 25-31.
2. Hapenciuc, C.V., Morosan, A.A., Crudu, E. (2012). Factors that influence the absorbtion
of European funds, in C. Bratianu, G. Bratucu, D. Lixandroiu at al. (eds) Business excellence
challenges during the economic crisis, 1, pp.225-229.
3. Hapenciuc, C.V., Stanciu, P., Morosan, A.A. (2014). The economic impact of the
SAPARD programme on the tourism supply in Suceava county, Amfiteatru economic, 16 (8),
pp.1327-1339.
4. Nastase, C., Kajanus, M. (2009). The impact of the global crisis on SME and
entrepreneurship behaviour Romania and Finland cases, Amfiteatru Economic, 11 (25), pp.751-
763.
5. Pilato, M. (2014). Structural policies and funding priority in regional development of the
European Union, Quality Access to Success, 15 (S1), pp. 146-153.
6. Rojanschi, V., Bran, F., Grigore, F., Ioan, I. (2006). Cuantificarea dezvoltarii durabile,
Bucharest: Economica.
7. Scutaru, L. (2013). Economic development versus sustainable development, Ecoforum,
2 (1), pp.35-40.
8. Voicu, R., Radulescu, C.V. (2015). Improving agricultural productivity and possible
implications in the relations of this branch with the natural environment, Quality Access to
Success, 16 (S1), pp. 17-22.
9. * * * (2008). National Strategy for Sustainable Development Horizon 2013-2020-
2030, Ministry of Environment, Waters and Forests.
10. * * * (2014). National Program for Rural Development 2014-2020, Ministry of
Agriculture and Rural Development.
62
SUSTAINABLE ECONOMIC GROWTH AND ECO-EFFICIENCY

Associate Professor PhD Mariana LUPAN
'Stefan cel Mare' University of Suceava, Romania
marianal@seap.usv.ro

Lecturer PhD Angela Nicoleta COZORICI
'Stefan cel Mare' University of Suceava, Romania
angelac@seap.usv.ro
Abstract:
The current economic and social contexts have brought forth the issues regarding growth and sustainability.
The concept of growth has always been linked to an increase in consumption levels, and this inevitably led to pressures
on the environment and on the resources that support human activity. Given these circumstances, the question whether
we can avoid an environmental disaster while maintaining economic growth, has become more stringent.
We chose to approach this aspect by examining the concept of eco-efficiency, a concept that embodies aspects
of both economic efficiency and environmental efficiency. Eco-efficiency can be regarded as the effectiveness with
which resources are used in order to create products and services that satisfy human needs. Based on this idea, the last
decade has produced an increasing number of studies on eco-efficiency and how it can be measured and implemented
in the production of goods and services, but also in the field regarding demand patterns.
An analysis regarding the aspects of eco-efficiency at the macro level of the Romanian economy is in line with
the current environmental concerns, thus I have chosen to cover these questions, as well as the evolution of the locale
economy towards a more sustainable development. The outcome of the examined aspects shows that, in spite of an
increase in eco-efficiency levels, energy and material consumption and emissions have increased. This raises the
question if measuring economic and environmental efficiency by reporting to the GDP value is becoming obsolete and
if there is a need to revaluate eco-efficiency indicators in order to measure the transition to a greener and more
sustainable development from different points of view.
Key words: sustainability, eco-efficiency, economic growth, environmental efficiency, sustainable

development
JEL classification: O13, F43, F55
1. INTRODUCTION
From the historical point of view, the concept of economic growth has always been closely
linked to the growth of the consumption levels, and this fact has led to unprecedented pressure for
on the environment and on the resources that are available to the modern world. During the post-
war period, when there were numerous approaches to the concept of the economic growth
(economic progress, technical and scientific revolution, organization and management of the labour
factor), the natural resources were seen as free goods (with zero costs and in unlimited quantities).
Thus, acting in the spirit of the theories and models of economic growth in that period, the world
countries, especially the economically powerful countries, have created the conditions for entering
into the crisis of this model of economic growth. In these circumstances, since the 1970s, there has
arisen the question whether the measurement of the economic growth, strictly in terms of GDP,
should be replaced by a "balanced" economy, operating within the limits of growth, naturally
imposed by the environment.
However, "growth arrest" did not win the political support, and in the 80s there has appeared
the concept of exploring the idea of decoupling the economic growth from the negative
consequences on the environment and to combine the long term environmental sustainability with
the need for economic growth.
Given this paradigm, for maintaining the world economic growth same time avoiding the
production of an ecological disaster is appropriate to amend the current concepts and values, to
change the structures, to relocate the economy and life, a profound modification of the current mode
63
of goods consumption is necessary, in an attempt to build a sustainable society. One of the concepts
that incorporate these factors is the eco-efficiency concept which has its roots in the concept of
sustainable development, its primary objective being the sustainable use of the natural resources.
The global natural capital is limited and exhaustible, and the use of resources in a more
effective way that does not endanger the environment and the welfare of the next generations is
proving to be an imperative requirement under the conditions of the current global crisis which
threatens not only the economy and the financial world, but also calls in question the future of all
systems which form the modern world.
There is therefore a question mark on the efficiency with which the resources are used, on
the profitability and sustainability of production, and the concept of eco-efficiency is the
increasingly seen as an answer to this problem.
2. ASPECTS REGARDING THE SUSTAINABLE DEVELOPMENT AND THE

ECONOMIC EFFICIENCY
The concept of sustainability was launched by the report "Our Common Future" of the
Brundtland commission and defines the sustainable development as being "that sort of development
that tries to meet the needs and aspirations of the present without compromising the ability to
satisfy those from the future" (The Brundtland Commission, 1897). The sustainable development
can be seen as a process of improving the opportunities that allow the man, as an individual, but
also the communities, to ensure the coverage of needs, aspirations and the full potential for a
prolonged period of time, while maintaining the sustainability of the environmental systems.
The eco-efficient development encompass all the human activities as an integral part of
nature, the term referring to two essential and intensely debated aspects in the current economic and
social context: development and sustainability. In terms of sustainability, this not only solves the
current difficulties of the economy, but also immunizes it. The sustainable development requires a
continuous adaptation of society and economy, in order to allow a better management of the present
and future crisis, being perceived as an opportunity, a solution for us to no longer face such
problems in the future.
The concept of eco-efficiency aims to maintain a balance in business, being "located"
between the term of ecology and profitable operations. Simply, it is about doing more with less and
being environmentally responsible, aspect that allows the environment exploitation without
affecting its regenerative capacity.
The first author who discussed and analysed the fundamental paradigm of the development
in the light of eco-efficiency is Nicolae Georgescu-Roegen. In his paper The Entropy Law and
Economic Process, the author highlights the fact that during the economic processes the material
degradation occurs, and this cannot be used in future economic activities. From this perspective, the
author says, the world economy must respect the overall environmental limits regarding the load
capacity of the ecosystems, the setting of the biological and geodynamic cycles, the balance of the
climate system, limits that are being considered by Roegen as already achieved. (Roegen, 1971)
In terms of defining the concept, the eco-efficiency has received a number of definitions,
among which the most notable is the one given by WBCSD (World Business Council for
Sustainable Development) which states that the eco-efficient development is achieved through the
production of goods and services at competitive prices that satisfy the human needs and bring
quality to life, but at the same time, these reduce the environmental impact up to a level at least
equal to the capacity of resource sustainability given by the planet Earth. (WBCSD, 2000).
According to the OECD, the eco-efficiency expresses the efficiency with which the
ecological resources are being used in order to meet the human needs, such inclusion may be
expressed as the ratio between output and input, the output representing the value of goods and
services produced by a company, a sector, or by the economy as a whole, and the input representing
the sum of the environmental pressures on the environment that the company, the sector or the
economy generates in order to produce those goods and services.
64
The European Environment Agency addresses the eco-efficiency as a strategy aimed at de-
coupling resource use and pollutant release from economic activity, in order to achieve "more
welfare with less use of nature" (EEA, 1999). The Eco-efficiency therefore requires changes in
production and consumption patterns that lead to the sustainable use of resources and natural
capital.
The complexity of the concept, but also the possibility of approaching it from several points
of view has led to eco-efficiency transformation from a pure theoretical notion into a management
philosophy and an "instrument" that is available to companies and states in order to reduce their
ecological footprint and to become more responsible towards the environment and society.
3. KEY ELEMENTS OF ECO-EFFICIENCY
Reason of the need to protect the environment, but also to increase the economic
performance, the eco-efficiency is a management concept of the production factors that is based on
the economic use of technology in order to reduce the resource consumption and the impact on
ecosystems, of the man-made products and services.
The Eco-efficiency calls for companies and states to assume the responsibility that they have
towards the environment and society and to rethink the economic activity through innovation and
competitiveness. In order to highlight the eco-efficient businesses and companies, WBCSD has
identified a series of elements that demonstrates this quality (WBCSD, 2000):
Reducing material intensity use;
Reducing energy intensity use;
Reducing dispersion of toxic substances;
Enhancing recyclability;
Maximizing the use of renewables;
Extending product and service durability;
Increasing service intensity and quality.
The seven elements identified by the WBCSD, can be further grouped into three categories
of objectives relating to eco-efficiency, namely (WBCSD, 2000):
Reducing the consumption of resource;
Reducing the impact on nature;
Increasing product or service value.
By reducing the resource consumption in the production of goods and services, there is
intended to minimize the energy use, the raw materials, the water and the land resources as well as
the increase of the recycling capacity and of the products and services sustainability. Reducing the
environmental impact results in the reduction of the pollutants in air and water emissions, the
reduction of waste dispersion and of toxic substances, but also it will favour the sustainable use of
renewable resources. In this way it can be supported an efficient economic growth with the
possibility of reducing the bills on the use of energy, water and raw material, which represents a
sustainable development strategy at both micro and macro levels.
There is also a fourth goal in addressing business in terms of eco-efficiency, namely
implementing an Environmental Management System integrated in the company's general
management system which can ensure that sustainability-related risks and opportunities are
identified and managed accordingly.
4. SHORTCOMINGS OF ECO-EFFICIENCY CONCEPT
One of the main problems that arises when questioning the concept of eco-efficiency is the
one which emphasizes that fact that in addition to an overall strategy of increasing the eco-
efficiency and encouraging sustainable development, a sufficiency strategy is also necessary
(Stanciu, 2006). This strategy would require not only setting some limits for various types of
pollution or stimulating more effective the consumption and production patterns, but should limit
65
the amount of the consumed natural resources. Thus, the term of eco-efficiency is not
comprehensive enough in order to determine the unsustainable consumption trends and how one
could intervene in order to reduce these trends, and the assessment of eco-efficiency by simply
measuring the improvement of value per impact can lead to an increase in the impact of the activity
against the environment.
It is necessary to deepen the concept and to define some indicators that show the total level
of the resource consumption as well as the intensity of key resource use, such as energy, water, raw
materials and the earth, in sectors of the economy that are experiencing the greatest demand (food
production, consumption of goods and services, transportation, house building).
An obstacle to the sustainable development is represented by the costs. Every organization
aim to a sustainable development, but growth requires investment. Global market demand for
products, services and more "green" processes is constantly expanding. However, many green
solutions are costly in financial terms, compared to the conventional alternatives, particularly in
terms of expected future capital costs, and most investments, even those that clearly reduce the long
term costs such as the energy efficiency, require a previous additional investment (Zenghelis,
2012).
5. THE EVOLUTION OF THE ECO-EFFICIENCY IN THE ROMANIAN

ECONOMY
At governmental level, the sustainable development can be seen as the ability of a

macroeconomic system to achieve a balance between the economic, social and environmental
dimensions, in the development process, optimizing the economic and social profits without
prejudicing the corresponding potential of the benefits for the future generations (Pop, 2007).
Although originally the concept of the eco-efficiency was introduced in order to measure the
efficiency with which the companies are using the resources, at the present time, it is used to assess
the evolution at the macroeconomic level and the impact that an economy has on the progress in the
environmental issues. Measuring the eco-efficiency at macroeconomic level relies mostly on using
as an economic indicator the GDP correlated with the pressures on the environment; here it is most
of the time about the levels of the utilisation of energy, water and materials, the levels of emissions
of greenhouse gases and waste generation rates.
For a coherent analysis regarding the level and the evolution of the Romanian economy eco-
efficiency, we consider that it is necessary to analyse the energy efficiency issues that Romania is
facing. In order to highlight the natural and energy resources there are followed two main goals:
reducing consumption and using as effectively as possible the natural resources with the help of the
economic processing technology (reducing waste and pollution) and using the alternative energy
sources. Thus, from the analysis of the available data we can say that the energy intensity of the
Romanian economy together with the emissions of greenhouse gases have constantly decreased in
the recent years and energy imports decreased to 18.6% of the total energy consumption, Romania
being on the 3rd place at EU level regarding the energy independency (EuroStat, 2014). One
advantage for the environment is that the renewable energy has come to replace about 20% of the
primary energy production (Figure no. 2), thus reducing the consumption of the non-renewable
resources.
66
Figure no 1. Energy dependency

Source: EuroStat, Sustainable Development Indicators, 2014
Figure no. 2. Primary energy production

Source: EuroStat, Sustainable Development Indicators, 2014
Figure no. 3. Total emissions of greenhouse gases (CO equivalent - kilotons)

Source: EuroStat, Sustainable Development Indicators
67
Figure no. 4. The energy intensity of the Romanian economy

Source: Sustainable Development Indicators, 2014
Furthermore, according to the EuroStat statistics, Romania's economy is ranked on the

second place at European level in terms of energy intensity of the economy (Bulgaria being on the
1st place) and is far from reaching the European average of the economic energy intensity (Table
no. 1)
Table no. 1. The energy intensity of the Romanian economy

2004 2005 2006 2007 2008 2009 2010 20011 2012 2013
EU 28 166,9 164,9 159,3 152,0 151,0 149,0 151,7 143,9 143,4 141,6
Bulgaria 866,2 849,4 823,5 759,9 711,7 661,4 668,8 705,5 669,9 610,6
Romania 515,9 491,3 471,4 441,5 409,9 387,4 394,6 393,7 378,9 334,7
Source: EuroStat, 2014
In order to identify issues regarding the environment and the energy consumption, but also
in order to find solutions to deal with these issues at European level, there has been developed the
package "Energy - Climate Change" as part the Europe 2020 strategy This sets a number of targets
for 2020, also known as the "20-20-20 Objectives", covering the aspects of pollutant emissions and
renewable energy, whilst establishing the following targets (Europe 2020):
Reducing greenhouse gas (GHG) emissions by at least 20 % compared to base year
1990;
increasing to 20% the share of the renewable energy sources in the overall EU energy
consumption as well as reaching a target of 10% biofuels in the transport energy
consumption;
reducing at 20% the energy consumption by increasing the energy efficiency.
The European Commission proposes that these EU goals to be transposed into national
targets and trajectories in order to ensure that each Member State tailors this strategy to specific
national situation. Thus, as obligation assumed in its capacity as EU member state, Romania has
aligned with these requirements concerning the energy sector efficiency and the national targets of
the Europe 2020 strategy as well as the current values of Romania, all these are summarized in the
following table.
68
Table no. 2. National targets Europe 2020

Europe 2020 objectives Energy and Romania 2020
Current values
climate change target value
Reducing greenhouse gas (GHG) emissions
20% 56,55%
by at least 20 % compared to base year 1990
23,3% (including biofuel
Increasing the share of renewable energy to consumption)
24%
20% 22,2% (ignoring biofuel
consumption)
Increasing energy efficiency and
decrease energy consumption by 19% 17,3%
20%
Source:http://ec.europa.eu/europe2020/pdf/nd/nrp2012_romania_en.pdf
6. APPLICATION OF ECO-EFFICIENCY INDICATORS AT THE MACRO

LEVEL (COMPARISON ROMANIA/EU 28)
While in the private sector the eco-efficiency becomes a more useful tool of products and
services valorisation, with a low environmental impact, adopting a system for measuring the
effectiveness with which a state consumes the resources, it becomes essential in the current
economic and environmental conditions.
Assuming the eco-efficiency in the economy as a whole can be achieved on many levels,
and national governments can set targets of eco-efficiency at macro, micro or regional levels,
targets which fit within the objectives of the sustainable development and which are reflected in the
national sustainable development strategies.
In order to analyse the eco-efficiency of Romanian economy, but also the progress towards
a sustainable development, we considered it is necessary to emphasize a number of indicators
regarding the efficiency with which the national economy uses the resources. Thus the rate of
material and energy consumption, the generation rate of emissions of greenhouse gases, and the
waste generation rate can be observed in the following charts.
Figure no. 5. The rate of the materials use

Source: Calculations based on data available on EuroStat
69
Figure no. 6. The rate of energy usage

Figure no. 7. The generation rate of GHG emissions

70
Figure no. 8. The generation rate of municipal waste

From the data presented it can be seen that the improvement of the resource consumption
efficiency, at national level, is part of the trend registered in the European Union regarding the eco-
efficiency growth. However, the lack of detailed information concerning these consumptions makes
it difficult for an extensive analysis regarding other key aspects of economy efficiency, both in
terms of domestic consumption (water use rate, land use rate) and in terms of identifying a broader
overview and for a longer period time.
Another problem that results from the detailed analysis of macroeconomic eco-efficiency is
that, despite the fact that on the whole it can be recorded an effective growth, this aspect may be
due only to the growth of the GPD value, while the consumptions and the generation of harmful
substances increase. Here comes the question whether the GDP has become an obsolete way of
measuring the progress under the given conditions of a society that tends to satisfy the needs of
humanity, in a most efficient way and with a price as low as possible on the environment.
7. OBSTACLES AT NATIONAL LEVEL REGARDING THE TRANSITION

TOWARDS A SUSTAINABLE ECONOMY
From the economical point of view, the main constraints on national level concerning the
transition to a sustainable development are the economy dependence on traditional fossil fuels, lack
of funding and low participation of the banking system in supporting the energy efficiency
programs. The weaknesses of Romania in the field of sustainable development were presented by
the statistical data EuroStat (2014), including: the Romanian energy strategy for the period 2011-
2035 which is not yet completed; transport networks of electricity, gas and oil are insufficiently
modernized; alternative energy production is underdeveloped compared to the potential; increased
emissions of greenhouse gases from transport by 18% (2012/2005); micro, nano and
biotechnologies for health care and quality of life underdeveloped; in many cases, uncontrolled
exploitation of the natural resources underground, land and water); insufficient financial resources
necessary for specific investments. Another problem is the lack of the framework and vision in
terms of creating "green" jobs, here is primarily needed a restore of a national network of vocational
schools and university programs with agricultural and ecological profile, agriculture representing
one of the most important areas at national level which can support the transition and then the
adaptation to a system of sustainable economic growth.
Social and cultural the blockages on addressing environmental problems occur also from the
perception and behaviour of the population towards these matters. Although at national level there
is a concern for the environmental changes, data from Special Euro barometer 372 regarding the
71
climate, shows that Romanians consider that economic development and environmental
conservation are incompatible and in the context given by the current economic crisis (high
unemployment rates and low levels of income), the general perception is that environmental
concerns must be sacrificed in order to create new jobs and to restore the economic growth (UE
Report, 2011).
Waste management and recycling issues are also less popular among Romanian citizens, and
according to EuroStat, from all European countries, Romania recycles only 1% of the entire volume
of the produced waste, the rest being disposed of as garbage, placing at the opposite pole from
Belgium, which recycles 94% of waste.
Therefore, lack of financial resources and expert personnel, lack of strategies and policies
for their implementation, but also public disinterest represent the major obstacles faced by Romania
in the transition to a cleaner economy.
8. CONCLUSION
The transition to a clean economy should be regarded as an economic revolution that

requires a series of efforts both on the part of governments, companies and the population, so that
we can enter on the path of sustainable development. The Governments will have to act in the spirit
of promoting sustainable economic growth policies, the companies will have to generate innovation
in the production processes, and the population must change the consumption habits towards more
efficient models from economic, environmental and social points of view.
However, the global economic crisis and the financial difficulties that we are facing are
likely to lead to the investment redirection from the environmental protection and from the
promotion of clean technologies to the difficulties from the financial markets. Preventing long-term
consequences of an inefficient and polluting economic growth is essential, and this can be achieved
only through a coherent public policy that should include environmental and consumer issues,
industrial policy and development, research and innovation issues.
By its nature, the concept of eco-efficiency aims the economic activity transition towards a
higher degree of sustainability and the acceleration of this process can be achieved by improving
production and consumption and creating economic and political instruments in order to facilitate
the implementation and fulfilment of some eco-efficiency targets which may be established at
company level, by the industry or even by the national economy.
However, the development should take into proper account the constraints of our
environment, rich but fragile. Only through eco-efficiency and optimization of human capital and
environmental resources we can offer to all and to future generations the hope for a better quality of
life.
BIBLIOGRAPHY
1. Brundtland Commission, (1987) Our Common Future

2. Romanian Government, (2012) National Reform Programme 2011-2013 Implementation
Report
3. EEA, (1999) Making sustainability accountable
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5. Georgescu-Roegen, N., (1971) The Entropy Law and the Economic Process, Harvard
6. OECD, 1998, Eco-efficiency
7. Pop C., Pop V., (2007) Management i dezvoltare, Editura Tipo Moldova, Iai
8. Special Eurobarometer 372, Climate Change, 2011
9. Stanciu M., (2006) Metode de cercetare a modelelor de consum, n Studii i Cercetri
Economice, Academia Romn
10. WBCSD, (2000) Creating more value with less impact
72
11. Zenghelis, D. (2012) A strategy for restoring confidence and economic growth through
green investment and innovation, Grantham Research Institute in Climate Change and the
Environment, London
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ACKNOWLEDGEMENT
Angela Nicoleta Cozorici would like to specify that this paper has been financially
supported within the project entitled Horizon 2020 - Doctoral and Postdoctoral Studies:
Promoting the National Interest through Excellence, Competitiveness and Responsibility in the
Field of Romanian Fundamental and Applied Economic Research, contract number
POSDRU/159/1.5/S/140106. This project is co-financed by European Social Fund through Sectorial
Operational Programme for Human Resources Development 2007-2013. Investing in people!
73
LOOKING FOR (RE)DEFINING UNIVERSITY AUTONOMY

Professor PhD Ala COTELNIC
Academy of Economic Studies of Moldova, Republic Of Moldova
acotelnic@hotmail.com

Associate professor Angela NICULITA
State University of Moldova, Republic Of Moldova
angela_niculitsa@yahoo.com

Professor PhD Petru TODOS
Technical University of Moldova, Republic Of Moldova
todospetru@yahoo.fr

Associate Professor PhD Romeo TURCAN
Aalborg University, Denmark
rvt@business.aau.dk

Professor PhD Larisa BUGAIAN
Technical University of Moldova, Republic Of Moldova
lbugaian@gmail.com

Senior lecturer PhD, HR and economic planning manager Daniela POJAR
Alecu Russo Balti State University, Republic Of Moldova
pojardaniela1978@gmail.com
Abstract:
The article presents a comparative analysis of the institutional university autonomy of the following EU
member states: Denmark, Lithuania, Romania, Scotland and Sweden. Today we are witnessing the restructuring of
various society sectors - the economy, labor market, social and political systems, etc. It is a process at state nation
level, as well as regional and global levels. Education systems in most countries, at their turn, react to this process and
engage in radical reform of higher education in order to achieve economic, social and political objectives of the
society. In this emerging environment universities have to review their position in order to redefine and adapt their
functions, forming an autonomous space for proper decision making and, thus, playing an innovative role in the socio-
economic environment.
Key words: university, institutional autonomy, higher education, teaching, research, knowledge transfer.
JEL classification: I20
INTRODUCTION
This article initiates discussions on institutional autonomy of universities and introduces a

modern approach to the concept of institutional university autonomy. The mission of a modern
university consists in its role as an actor in a knowledge-based society, with the purpose of
contributing to the welfare of both the individual, social and economic environment, generating
knowledge and transferring them to students through education, research and innovations. In this
context, the mission of the university towards society changes, being defined by three basic
components:
Teaching / Learning: forming competent human resources - Through the education process
the university is designed to prepare well trained professionals with skills that give them a
competitive advantage on the labor market and being perceived by employers as an added
value and ultimately would contribute to society`s welfare.
74
Research: generating new knowledge - through research, development and innovation, the
university produces transferable results to the business environment, taking the form of
products and services with high added value.
Knowledge transfer: active contributor to the development of the community - through
cultural and educational intervention in the spirit of social paradigm of the future,
institutional intervention - through university's involvement as an active institutional actor in
society development activities, individual intervention - through direct involvement of the
academic community members in the life of the society (advice, expertise, participation in
the activities of consultative and decision-making bodies, etc).
Realizing the full extent and diversity of contemporary higher education, universities need
more autonomy to fulfill their mission. In this sense, the challenge relates to the definition of the
"autonomy" concept, its forms, educational policies framework, the involvement of other
stakeholders and identification of the best international practices on university autonomy.
It is recognized that the nature of the word "autonomy" is not absolute, it all depends on the
context within which it is applied. Within higher education institutions this word is associated with
the following two words - "freedom" and "independence". If a growing number of people requires
higher education, where HEIs provide necessary skills and competencies of graduates and are
effective in the knowledge triangle: research-teaching-transfer of knowledge, the essence of the
word "autonomy" in practice is understood as academic freedom and independence, and is what
works better in relation to the state and society.
Autonomy is not a new word for the academic environment. In the last decade, the value of
this idea was appreciated by many European governments. In the modern society, the links between
academic and business environments have become stronger and society requirements to university
more strict. This is the reason why it is necessary to have a corresponding framework where
universities can carry aut/their mission in the best way possible.
According to the Association of European Universities, university autonomy has four
dimensions: organizational, financial, academic and human resources autonomy. Organizational
autonomy refers to the ability to decide on university structures and their status, procedures and
criteria for selecting the bodies and decision-making factors, as well as the ability to decide on the
involvement of outsiders in the work of the university Board and the ability to create distinct legal
bodies.
Financial autonomy provides financing means, types and amounts of funds available for
financing, mechanisms for attracting and allocating funds, the ability to keep the remaining balance
after funding from the budget, and the opportunity to borrow money from the financial market. It
also provides the right on buildings ownership, to decide on tuition fees and charges for the
provision of other services.
Academic autonomy refers to the educational offer, educational plans and teaching methods,
the ability to select admission mechanisms, decisions in various areas, objectives and research
methods, and the ability to select relevant institutions for quality assessment.
Human resources autonomy manages the responsibilities on procedures for staff recruitment,
remuneration and promotion.
In recent years the discussions and analyzes of university autonomy focused mainly on these
four dimensions of university management. However, the above-listed dimensions do not highlight
enough the understanding of the operation of modern universities and the fact of how extensive and
complex their relationships with stakeholders are.
At the basis of this article lies the idea that a fuller understanding of university autonomy can
be achieved only through an overall approach, defined by the term "institutional academic
autonomy."
For a better understanding of the concept of institutional university autonomy and the
classical dimensions of organizational, financial, academic and human resources autonomy, five
interfaces that characterize the internal and external points of interaction between modern university
and stakeholders will be introduced. These interfaces are: government - university; the university
75
management - academic staff; academic staff - students; university business environment and
university - international environment:
The government - university interface relates to state policies in higher education area; the
role of central and regional state administration in issuing regulations for the governing structures
of universities; government vs. administration; supporting and promoting higher education
institutions; the need and role of accreditation; financing models for research and teaching
activities; responsibility and public accountability, involvement in the mission of the university.
University management academic staff interface reffers to the models of leadership and
management of a modern university; delimitation of competences in decision making at strategic
and operational levels; organizational implications from the top down, bottom up or in parallel;
stimulation and evaluation mechanisms; external appointment and promotion policies vs. internal
policies; staff mobility; responsibility and public accountability.
Academic staff - students interface reffers to the role of students in the administration of the
university, as well as in teaching and research processes; university staff - teachers vs. academic
staff - mentors; change of the concept on students; models for the admission of students (e.g. related
to general state policies in higher education area); student assessment models; students mobility;
responsibility and public accountability.
University - business environment interface, refers to the role of enterprises in the
administration of the university, as well as in teaching and research processes; knowledge transfer
models (e.g. in the area of financing, ownership, intellectual creation, intellectual property rights)
and knowledge sharing (e.g. staff exchange programs, internships for students, promoting
entrepreneurship); career development and innovation; lifelong learning; responsibility and public
accountability.
University - internationalization interface refers to university internationalization policies;
university strategies on internationalization; mobility of lecturers and students; mechanisms and
models of internationalization; accreditation related to the process of internationalization;
compatibility of the internationalization with university autonomy; internationalization and
university mission; responsibility and public accountability.
After defining the mission of the university and institutional university autonomy, it is equally
important to discuss briefly the importance of university autonomy. The Bologna process and the
acceleration of the European integration contribute to a common European university culture,
characterized by a high degree of institutional university autonomy. It supports the idea that
university autonomy brings various benefits to higher education sector, while it does not imply the
lack of regulation. It is perceived as a factor for improving the quality of higher education,
increasing sectors performances, facilitating collaboration between universities, state and business
environment, thus contributing to increasing the attractiveness of educational institutions not only
for local students, but for international ones as well.
Massification of higher education and the increase of costs for studies led to an increased
accountability of higher education institutions to public opinion. The role and function of higher
education institutions on the effectiveness and efficiency of achieving society demands regarding
training of specialists are being more often discussed.
Failure to comply to these trends exclude the country from this innovative environment and
can seriously damage the future competitiveness of a nation. Institutional university autonomy is
not an objective in itself, but is a vital issue for the success of the academic sector. Performance
levels of higher education institutions can be seriously affected by strict regulations and government
control.
DIMENSION: ORGANIZATIONAL UNIVERSITY AUTONOMY
In order to reliably compare higher education systems, the mode of expression and regulation
of organizational university autonomy, a systemic definition of this notion is required. The current
study uses as a benchmark the definition of organizational autonomy of the Lisbon Declaration of
76
the European University Association (2007), according to which this component of university
autonomy is the ability of higher education institutions (HEIs) to decide on the organizational
structure and institutional governance - in particular, the ability to establish structures and
governing bodies, university leadership and reporting relationships (subordination).
To ensure clarity and comparability of the results of the study the following criteria used to
describe the organizational autonomy of universities have been identified: governing bodies,
executive management, university freedom to decide on the internal structure, representation of
students within governing bodies, university freedom to create legal entities: non-profit and / or
commercial ones.
This material derives from the research undertaken under the above-mentionned criteria,
taking into account the interfaces described in the previous article.
In two of the five studied countries, namely Lithuania and Scotland, the universities have a
dual governing structure, consisting of a governing Board, which includes a small number of
people, and the University Senate. Universities in Sweden, Denmark and Romania have a unitary
governing structure, the governing body being the Governing Council - for Sweden and Denmark,
and the University Senate - for Romania.
The governing Councils of the analyzed education systems, with all specific diversities of the
respective states, have similar responsibilities, being accountable for long-term strategic decisions
pertaining to the development of the university, such as: decisions on the status, strategic planning,
budgeting, choosing/electing the rector and vice-rectors.
In all of the analyzed systems the governing councils include external members (non-
university), who/that/which form the majority of the board and usually are representatives of the
real sector enterprises, practitioners from various fields, thus ensuring business environments
involvement in all activities of higher education institutions.
In the respective dual structure, existent in Lithuania and Scotland, the University Senate is
responsible for academic issues, namely: curriculum, teaching and research staff promotion,
awarding scientific degrees, etc.
In Romania the University Senate has the powers of the two governing bodies from the dual
structure, being the governing body that makes strategic decisions on the development of the
university, and manages the academic activity of the institution.
The university senates, where it exists, represents the academic community of the institution,
the academic and research staff, as well as students being their elected members. In Lithuania the
University Senate may include employees of other HEIs and research institutes. Unlike Romania,
Lithuania and Scotland HEIs Rector is a member of the University Senate, and in Scottish
universities he is also the president of the Senate.
The procedures for external members appointment in the governing councils vary from one
system to another. In Sweden external members are proposed by the university, but are appointed
by the Government. Universities in Scotland and Denmark are free to designate external members
in their governing bodies. In Lithuania some of the external members are selected by the HEI,
others are proposed from outside, but all of them are appointed by the Ministry of Education and
Science.
Internal members of the Councils are elected by and from the academic and student
communities of the respective universities. In Scotland and Sweden University rectors are
members ex officio of the governing Council.
In all of the analyzed systems the whole university community is involved in the process of
electing the Senate members, except the ex officio members (if there are any). Members of the
Senate, except students, are elected by teachers and research staff, while students representatives
are elected by a students representative structure or the general assembly of students. The
procedure for electing members of the Senate is provided in the Statute or other regulatory
university acts.
The executive management. Although the university management may include several key
positions in the university, this study focuses primarily on the head of the executive body who is
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referred to as the Rector. Although there are some differences between the 5 analyzed systems in
terms of powers of the Rector, mostly they are similar. Thus, in all of the systems the Rector is the
main executive authority of the higher education institution, that provides daily management of the
university.
The manner of Rector election / appointment in the studied higher education systems is
different. Thus, in Denmark and Lithuania the head of the executive body is appointed by the
University Governing Council on the basis of a public competition. Scottish University rectors are
also appointed by the governing councils, but based on the procedure for appointing developed by
these Councils. In Sweden rectors are appointed by the Government, based on the proposals
received from the governing councils of HEI, submitted after consultation with the academic
community. This ensures the participation of the academic community and students in this
important exercise for universities.
In Romanian universities the Rector may be designated by one of two ways:
1) on the basis of a public competition, based on a methodology approved by the newly
elected senate; or
2) by universal, direct and secret suffrage of all academic and research staff of the university
and student representatives in the senate and faculty councils.
In Romania, Lithuania and Sweden the mandate of the rector of the higher education
institution is established by law, for a period of 4, 5 and 6 years, respectively. In addition, a person
can be elected only two terms consecutively in the same institution. The term of the mandate for the
rectors of Danish and Scottish universities is determined by the Governing Council.
University freedom deciding on the internal structure. In Lithuania, Scotland, Sweden and
Denmark the internal structure of HEIs is not regulated by any law. Universities are free to decide
on their organizational structure. In Romania the situation is different in this respect. The
organizational structure of the university is strictly regulated by the Law on National Education.
Representation of students in governing bodies. In all of the five examined systems students
are represented in all decision-making, executive and advisory structures of the university. This is
stipulated in both institutional regulations and legislative acts. Here universities in Denmark and
Sweden can be mentionned, as students show a rather high degree of involvement in decision-
making, teaching and research processes, as well as other activities of the university life.
University freedom to create legal entities. Universities in Lithuania, Scotland, Denmark and
Romania have the right to establish legal entities, both non-profit and commercial. But there are
some restrictions in Lithuania and Denmark on the activities undertaken and the use of proceeds
from such entities. Universities in Sweden have no such a right.
DIMENSION: ACADEMIC UNIVERSITY AUTONOMY
Academic autonomy refers to the ability of the university to make decisions on the vision,
mission and academic profile, on the introduction or removal of study programs, the choice of study
language, design the structure and content of the programs, and such aspects as the admission of
students or quality assurance methods for programs and awards. The ability to decide on the areas,
scope/field?, goals and research methods are important subcomponents of the academic autonomy
(www.eua.be).
Based on this definition and multiple problems debated during the recent years within the
educational system of the Republic of Moldova, there has been selected a wide range of 10 criteria
that refers to the introduction and settlement of curricula, admission to studies, recognition of
studies, accreditation of study programs, the National Qualifications Framework (NQF),
organization of the study process, employment of graduates, the task of teachers, university
scientific research and doctoral studies.
Governance - university. The Parliament and the Government are the courts that decide to set
up or liquidate higher education and research institutions, approving / setting regulations,
objectives, guidelines and resource allocation domains. The Ministry of Education and Research
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(under various names) is the authority responsible for the education and research within institutions
offering higher education and is the body that decides on the permission of granting qualifications
by these institutions.
Four types of higher education institutions are hereby found: handcraft academies and
university colleges that offer professional Lycense programs (short-term higher education, for a
period of 2-3 years); universities that offer bachelor's and master scientific programs
(undergraduate) and PhD; university institutes specializing in arts.
The limited number of universities impresses. In Denmark, for example, there are only 8
universities to a population of 5 million. Universities are formed by law or royal act. Colleges
(vocational) are more numerous and are formed at the decision of the Ministry of Education.
Undergraduate programs last for 3-4 years (180-240 ECTS) depending on the profile and the
degree obtained at the end (e.g. Scotland, Romania). The Ministry of Education determines the
general requirements for college degree programs, I cycle study programs, integrated studies and
master. New college and undergraduate programs must comply with the classification approved by
the Ministry of Education.New programs are initiated at the request of the economic environment or
at the formation of a new scientific direction (Scotland, Denmark, Sweden). Institutions (program
team) prepare the program according to those requirements, the academic Council (University
Senate) approves them, then it goes through an approval procedure for temporary operation, up to
the accreditation.
So, institutions are free to decide on the introduction or liquidation of cycle I study programs,
if they meet the rules set by the Ministry.
As for the second cycle, professional and research masters lasting 60- 90-120 credits are
practiced, depending on the duration and type of the first cycle. There is a single requirement - the
total duration of the first two cycles should be of no more than 300 ECTS. Other requirement are
formulated by each university and are made public. It is noted that college graduates may have
access to master's programs (with professional license), but they have to study one more
compensatory year.
The Ministry of Education offers the right (authorizes) to carry out master and doctoral
programs only to institutions that carry out scientific research in the respective field. New master
programs must prove their originality in the application and knowledge advancement. The name
and content of programs are determined by the authorized institutions under general requirements.
New doctoral programs usually occur as the development of research programs. Institutions
may grant the title of Doctor in areas where the research is undertaken and where a doctoral school
has been established, either independently or in cooperation with other institutions approved by the
ministerial order. The doctoral school must be accredited or provisionally authorized as determined
by the Ministry of Education.
The PhD title is awarded to students who have successfully completed the program and
passed the PhD thesis. The PhD Program is equivalent to 180 ECTS. The name and content of
programs is determined by the institution based on general requirements.
All study programs are usually undertaken in the national language. In parallel English
language programs can be created, especially at Master and PhD levels, at institution's decision,
aiming to attract foreign students (extra charge) and increase mutual mobility.
The general requirements for candidates to admission are applied to all courses and programs
in higher education, specific (set by the institution) and regulated by state laws. The Ministry of
Education or another state body (the Council for Higher Education in Sweden, Universities and
Colleges Admissions Service in Scotland) is responsible for the centralized admission on behalf of
higher education institutions. Typically, the registration is done online. The student is free to choose
programs and institutions according to his priorities.
The Government approves the share of admission to study programs depending on the
capacity of university structures to ensure quality education. This ability can be established in the
accreditation act of the program or institution. In Romania the Ministry of Education develops on
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an annual basis a methodology framework and each higher education institution develops and
applies its regulation on the organization of the admission to the offered study programs.
For the admission to master studies the competition is done based on the bachelor's diploma
on related programs. University colleges graduates are admitted to studies only after one
compensatory year is passed. The specific requirements for admission to Masters and PhD are
determined by university at study program level. The Ministry of Education determines only the
general admission rules. The admission to the second cycle is the responsibility of the university,
which establishes its own admission methodology.
Sweden and Romania allot a number of study grants financed by the budget for university
master studies for state universities. In other countries master programs are paid.
PhD admission is based on the Regulation prepared by the Committee for Research, or anothe
similar structure, that provides grants for doctoral studies directly or through projects on a
competitive basis. The admission to doctoral studies is based on a master's degree diploma or
integrated studies with 240 ECTS.
Admission of foreign students is carried out by admission committees of universities. There
are no quotas on the admission. The admission of foreign students tyo cycle I and II is largely done
through mobility and students exchange programs. The admission requirements to cycle I and II
for foreign students are the same as for local students. The knowledge of English or Swedish /
Danish is required. The admission requirements are set independently by each institution. The
amission of foreign students is carried out by admission committees of universities.
Universities are autonomous in using different methods of vocational guidance, various
measures are undertaken at university, faculty and program levels. The activities of vocational
guidance, recruitment of students from the country and abroad is one of the tasks of each
department / faculty for all universities in conditions of the decrease of the number of students in all
European countries.
A special role in correct and objective informing of student belongs to the centralized
admissions service (e.g. UCAS in the UK).
Ensuring the quality of education and scientific university research is an obligation of each
higher education institution. For accreditation, the presence of a quality management structure is
mandatory.
Higher education institutions have the right to offer studies at accredited programs only. For
the external evaluation and accreditation of study programs a National Agency for Higher
Education Accreditation as an independent public body is created. The methodology, external
evaluation procedures of programs and quality and relevance criteria are, usually, developed by the
Agency and approved by the Ministry of education or a Governments decision.
The assessment is based on several fundamental criteria: the request of studies on the
respective labor market; the program is based on research and is connected to an active high quality
research environment; continuous internal quality assurance of the program. The overseas
subsidiaries and affiliated institutions of foreign institutions are also subject to assessment and
accreditation.
The British experience is of a high interest - the methodology, procedures and evaluation
criteria are very explicitly described in the UK Quality Code. Each quality criterion has detailed and
explicit instructions on the normative documentation the institution must have and may be
presented to the assessors. The Code presents an integrated document that meets basic requirements
for all stages of a life cycle of the university training process. Universities are free to choose a
foreign accreditation agency which is included in the European Register.
A National Qualifications Authority (NCA) is the statutory qualifications awarding and
accreditating body. The NCA provides qualifications recorded with various types of certificates (for
secondary education), diplomas and degrees for the levels related to higher education. The
qualification levels for higher education are described in terms of studies (descriptors) and in terms
of credits.
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National qualifications frameworks of the vizited countries is compatible with the EQF,
comprises eight levels of qualifications, four of which relate to higher education: professional level
(5), license (6), Master (7) and PhD levels (8). An exception is the CC of Scotland, which provides
12 levels of qualifications, but certain rules for compatibility with the EQF are provided. ANC is
under the auspices of the Ministry of Education / Government. ANC also coordinates the
development and maintenance of the National Register of Qualifications in Higher Education.
The inclusion of certificates and degrees / titles / diplomas in the NQF Register is based on
an assessment of the learning outcomes that individual degrees / certificates document in report to
the NQF level descriptors. Higher education institutions are required to register the information on
the skills they develop through the offer of studies in the respective Register.
The descriptors for higher education qualifications (degrees), present in the NQF, are used as
reference standards / criteria both at the elaboration and the assessment and accreditation of study
programs. All 5 countries use the European Credit Transfer System ECTS. There is a small
difference in Scotland.
Higher education institutions are responsible for organizing the whole study process, design
curricula and courses, as well as current and final assessment procedures. The content of curricula
must comply with the objectives and learning outcomes, as well as with competences provided in
the NQF, students must possess at the end of their studies. University study programs are designed
by groups of initiative, usually by research groups with high results. But the program curriculum
must comply with the legal documents issued by the ministry or other subordinated entity.
For example, in the UK the design, approval and implementation of programs is carried out in
accordance with the standards established by the Quality Code, developed by the Agency for
Quality Assurance in Higher Education of the UK, including a number of indicators of good
practice on program operation and mechanisms that higher education service provider can rely upon
to enhance the quality of the program put into action.
Among the general requirements to study programs specific requirements can be found on the
duration (in credits) of the practice, which depends on the program. Institutional normative acts
establish the organization, reporting and evaluation means of the practice.
The final assessment is an act of appreciation of competencies obtained by the student in
relation to the purpose prescribed by the program, is achieved through public presentation of a
project / thesis to the evaluation committee. Exceptions are only some vocational college programs.
Institutional normative documents define the presentation procedures and requirements for the
content of the work/paper. The development of projects in a team is widely practiced, but it has to
have a personalized assessment. The Danish system has a specific feature regarding the way of
external examination both at the final stage of the study program and the assessment of semester
modules.
The Romanian, Danish and Scottish NQFs clearly define the correspondence between levels
of Frameworks qualifications, the study documents that are issued, the type of education and
training programs through which qualification and reference levels of the European Qualifications
Framework (EQF) can be acquired.
The employment rate of people with higher education varies from one area to another and
from one country to another. Given that the employment and career growth rate is a performance
benchmark of the study program and institution at all levels, including at the national one. A lot of
effort is made to facilitate this process. Program teams and departments keep records of their
graduates employment and career advancement. At the study stage the training for the hiring
process is organized. Nationally, there is a good practice in Sweden, where every 12-18 months
after graduation the Swedish Authority for Higher Education collects data from graduates and then
publishes a report on the employment rate of graduates on fields and institutions. In Scotland there
is a long tradition of relations with alumni in order to attract sponsorship and bring candidates to
studies.
The Labor Code of the examined countries sets the working week for higher education staff
of 35-40 hours per week. Individually, institutions establish internal methodologies for calculating
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and apportioning the workload of teaching and research staff. It is noted that the core activities of
universities consist of conducting research and research-based teaching. The workload of a teacher
in Denmark, for example, consists of 490 teaching hours per semester, which constitutes 60% and
200 hours for scientific research (40%). For the administrative work a part of the academic task is
reduced.
Education and research policy is defined and implemented by the Ministry of Education,
University Research Council and the Centre for Quality Assessment.
In all of the 5 examined countries the scientific research is an indispensable part of the
training process of specialists with higher education. Research is concentrated by the side of
thematic departments and is funded from the state budget and projects, as well as non-budgetary
research grants. Most of the visited universities non-budgetary grants together with grants from
international collaboration are comparable by size to the budget ones.
The University is autonomous in creating its own organizational structures and conducting
scientific research: centers or laboratories, design units, consulting centers, university clinics, small
production units, other manufacturing and transfer of knowledge and technology entities, integrated
research, study and business centers. The institutions decide themselves on the internal allocation of
financial resources for research and doctoral programs.
MA students are integrated into applied research so that at cycle three they autonomously
develop valuable scientific research. In Denmark, involving students in research is regarded as a
fundamental principle of university education.
Out of the annual workload of the teaching staff 40% usually belong to scientific research,
which is organized and accounted for within the research group. Importance is given to the results,
based on which university science funding is done from the state funds. 2-3 valuable publications in
the country or international journals are mandatory. The state encourages the excellence in research
of the academic staff through specific financial leverages: additional funding for institutional
development, mobility grants for research at other universities in the country or abroad.
Collaboration with business environment forms an important aspect of university research
and is a prerequisite for institutions. This collaboration is often organized under the form of
competence centers and partnership associations that are autonomous units and report directly to the
university management. The organization of specialized research institutes that combine research
with the academic process is practiced, as well.
The Ministry of Education grants the right to offer PhD studies to universities alone or
together with research institutes. The right is granted based on the external evaluation. The
doctorate is considered as research-based studies, lasting 3 years full time, while in engineering - 4
years.
Aspects of the organization of doctoral studies (PhD admission, the organization of PhD
program, appointment of the main supervisor) are part of university autonomy. The University
establishes the rules on the access to the PhD program.
Doctoral study programs are, usually, held in doctoral schools accredited or provisionally
authorized with this right. Empowering the right to lead doctoral students belongs to the university
department. In Romania, the quality of doctoral supervisor is given by order of the Ministry of
Education.
Doctoral studies are organized doctoral schools, which can be organized: by a university,
university consortium with research and development units and doctoral centers. The organization
of doctoral schools is determined by a Regulation established by the Committee for Research, with
detailed specific elements provided by the regulations of the institutions. The study programs from
the third cycle are completed with the presentation of the PhD thesis, which done orally and
publicly. The University decides on the evaluation, assessment and the presentation procedure. The
Faculty / school appoints one or two opponents, and a board of examiners, as well as at least one
person from another university. The Commission is the only structure empowered on making
decisions on marking and awarding the PhD degree. The degree is confirmed at the University
Senate.
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In Lithuania, Romania and Sweden there is no a different degree than the PhD in science or
arts. Scotland has set a higher doctor degree (Higher doctorates), following the PhD, and is awarded
to a person for valuable research or publications. The title is offerred to people from education area,
based on the published work, but it does not have a distinctive position within the qualifications and
is considered honorary title. In Denmark a higher degree of doctor (doktorgraden) is provided,
which is similar to the degree of PhD in Moldova, but in this case the requirements are much
simpler.
Post-doctorate is a thorough research program for young people with a Ph.D., to gain
additional experience and qualifications.
DIMENSION: UNIVERSITY AUTONOMY ON HUMAN RESOURCES
The autonomy of human resources is one of the four pillars of university autonomy
materialized in the institutions right to set its own recruitment procedures, to develop its own
remuneration system based on specific performance indicators for each higher education institution
(HEI ) and decide on the procedures for promoting employees, etc. The autonomy of human
resources, as defined in the Declaration of European Universities (2007), includes university
freedom to recruit and select qualified university human resources, the responsibility for work
contracting, setting of wages, salary increments depending on the value of human potential.
The freedom / ability to decide on recruitment and employment procedures. This criterion
refers to HEIs freedom to decide on recruitment and employment procedures. Broadly, universities
are autonomous in achieving this freedom. Central authorities do not get involved in employment
and / or recruitment procedures (less in Romania), universities enjoying a high degree of autonomy
in this area.
HEI freedom to decide on the recruitment and employment procedures is correlated with the
general principles of the labor law: any HEI, as much autonomy as it might have, can not establish
internal regulations which would contravene to national and EU labor legislation. Exercising the
freedom to decide on staff recruitment and employment procedures should not limit the rights and
freedoms guaranteed to employees and employers through various legislative acts. So, the
institution has the right to develop its own procedures, to set its own criteria of employment to the
extent that they do not violate the rules of labor law.
In all of the analyzed universities there are specialized collegial bodies responsible for the
recruitment and / or employment procedures: Commission for wages and employment in Lithuania,
the Committee responsible for human resources procedures and strategies in Scotland, the
Commission for employment in Sweden and Denmark and the Competition Commission in
Romania.
The componence of these committees does not need the approval of a hierarchical authority,
except Romania, where rectors decision on establishing the componence of the committee is
submitted to the Ministry of National Education and the nominal componence of the competition
commission is published on the website. In case of associate professor, professor,II degree senior
researcher and I degree researcher, the commission componence shall be published in the Official
Gazette of Romania.
Although normative acts regulating the activity of HEI determine the procedure for
recruitment / employment, making it uniform for all institutions in the country, each institution is
free to definitely decide on the optimal candidate.
HEI staff does not have the status of civil servants, except in Sweden and Denmark, they are
considered employees of the public sector, but no country requires confirmation from a higher
authority for the employment of the academic staff.
In all countries the employment is initially made for a specific period, thereafter if the person
meets the requirements an employment contract for an indefinite period is signed, the establishment
of minimum requirements for hiring didactic and scientific staff by higher education framework law
of each country comes to support the idea that university autonomy of human resources should be
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correlated with the principle of public accountability of the institution. The University is free to
select its staff, establish its own criteria (which will not be less than those established by law), but
that selection must be among the best or: the State, being aware of the role of the university within
the society, establishes rules that will leads to the fact that HEIs option to be in favor of the best
performing candidates.
The freedom of institutions to decide on the promotion of employees. This criterion designates
HEI right to decide on ensuring career growth of the personnel, by passing to another grade,
position or higher vocational stage.
Employee assessment aims at determining promotion opportunities and remuneration criteria.
The career promotion of the staff of the universities of the five countries is done according to
internal evaluation procedures, with certain exceptions in Romania, where the Law on National
Education regulates these procedures. The promotion to a superior function is carried out on a
competitive basis, after prior verification and employees evaluation is part of the quality
management system in force in each institution.
In all five countries university autonomy of human resources is a large one, the institution is
free to decide on the periodicity of the evaluation, the structures responsible for the assessment and
the assessment methodology.
No external authority supervises these procedures, the institution must take care that the
evaluation will be set taking into account the principle of non-discrimination and transparency.
The rights and freedoms of higher education staff. HEIs in the respective five countries have
developed a number of policies on the right enforcement of staff in the institutions. These policies
also provide the respect of the right to rest by providing both ordinary annual leave and additional
leave as well. Institutions are autonomous in terms of providing the creation leave (sabbatical leave)
while maintaining the salary, thus stimulating research activities.
The frequency of such leave varies from one country to another and from one institution to
another. Usually, the leave provision method is determined by internal documents of the
institutions, they enjoying a high degree of autonomy in this regard. For example, the length of the
leave varies depending on the seniority that the person has within the institution, as it is a working
experience of at least four years in Scotland, at Strathclyde University.
The freedom to decide on the work load lies in HEIs right to determine the distribution of the
working time, the work load, to determine as accurately as possible the work tasks for a member of
the academic community.
The teaching load of the academic staff in HEIs of Sweden and Denmark is made up of a total
number of hours, distributed monthly throughout the academic year. According to internal
regulations of the university, the academic staffs working hours must be planned within the
department the employee activates, as a result of discussions held between him and the head of the
department. When planning the working hours, operational requirements, the financial situation and
the general analysis of the teaching tasks have to be taken into account. At the department level, the
total number of hours for teaching and research will be accounted, by spreading them evenly to all
department members.
In Lithuania the work load of the academic staff consists of the teaching and research
activities. In Scotland the work load of the academic staff consists of teaching, research,
knowledge transfer and fulfilling administrative activities. The share of a type of activity in the
totality of the work load is determined by the head of department, who, by assessing the skills of
each employee, will organize the activities of the department in such a way that there is a
reasonable balance among all members of the department. In Romania, the work load may comprise
a number of teaching and research activities.
In all five countries universities benefit from both institutional and national level autonomy.
The didactic staff benefits of a reduced work regime due to the increased emotional psycho effort
put into the activity. The annual amount of hours represents approximately 1000 hours, out of
which approximately are meant for the direct teaching-contact activities. Institutions are
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autonomous in terms of annual distribution of the working hours, this being the responsibility of
departments.
The freedom / capacity of institutions to decide on the payroll system. The freedom a HEI to
decide on the system of remuneration is manifested by their right to decide on the system of wages,
awards, establishing various salary increases depending on the complexity and volume of the work
performed work performed by an employee.
In all of the above-mentionned countries the salary consists of a fixed part (the function
salary: Lithuania, Scotland, Sweden and Denmark and the basic salary in Romania) and a variable
part, which consists of various bonuses, allowances, incentive payments, etc. Each institution is
required to adopt wage policies, which will contain provisions on transparency in the wage setting
process.
Universities enjoy greater autonomy in relation to the right to determine the conditions of
remuneration, except in Romania, where there is an express regulation in the Law of National
Education regarding the size of salaries and other incentive payments.
The structures empowered to set wages are usually collegial structures, called Committees for
salarization or Commissions labor remuneration. In Sweden and Denmark the employer and
employee representatives negotiate criteria for establishing salary criteria for different groups of
employees. Based on these criteria the subdivision director / head of department will evaluate each
employee in order to establish his rightful wages. These criteria negotiated by the parties to the
employment relationship of a HEI will serve as the basis for salary negotiation between the
employee and the head of the department, etc. In Romania, the Senate of the institution is
responsible for regulating the salary procedures, as well.
The freedom to decide on the termination of employment contracts. The employment
contracts of the HEIs staff in all five countries may cease, as a rule, in connection with the
expiration of employment term, or at the initiative of either party. Higher education institutions
have well-developed policies and grounds for termination are regulated under general rules by the
labor law.
It is not possible to report the degree of autonomy in this regard, but it is clear that institutions
are autonomous in terms that the decision to terminate employment relationships do not require
approval from an external higher authority.
Following the study visit it was decided to perform a cross case analysis of human resource
autonomy through the light of the five interfaces mentioned in the first article, namely:
governnment - university, university didactic staff; faculty - students; university - business and
university - internationalization.
Government - university interface. The resort ministries of these countries are bodies that
develop personnel policies, which must be considered and implemented by institutions, taking into
account the principle of non-discrimination. At the same time, ministries have an advisory role in
the work of the institution. Less can be said about Romania, where the role of the ministry is one of
the main, coordinating and monitoring all activities related to personnel.
Interface management staff - academics. Competitions on employment are open and give the
possibility to participate to persons that qualify for the contest, without any discrimination, under
the law, and the competition Methodology will not contain discriminatory provisions for candidates
based on gender, ethnic or social origin, citizenship, religion or belief, disability, political opinion,
social or economic state. The competition methodology makes no reference to seniority and
contains no provisions that would disadvantage candidates from outside the institution or abroad.
The position description will be made in comprehensive terms that correspond to the real needs of
the higher education institution without limiting the number of potential candidates. All vacancies
are announced at national and international levels (except Romania, where the vacancy is
announced in the Official Gazette).
The academic staff students interface. The process of study and research in the analyzed
countries is based on the "student-centered studies" principle. The student is an active partner in
promoting a positive study environment. Students are widely involved in the assessment process of
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the course and teaching method quality. Students are part of the Quality Management System. All
institutions have developed procedures for evaluating the academic staff, students being widely
involved in their implementation.
University business environment interface. Collaboration with business environment in all
visited universities is a mandatory activity. It means that each academic structure should be
involved in research and to conduct research projects. Research should be applied specifically for a
company, to be useful to the organization and bring to the institution and researcher additional
income.
University internationalization interface. Internationalization is a process designed to
improve the quality of training students for a globalized world. The role of the teacher in this
process is increased. All institutions in five countries have developed policies on
internationalization. Particular attention is given to the mobility ofvstudies at other universities in
the world, as well as receiving foreign students in the university. The mobility of academics both in
terms of teaching, but especially for research, is an important criterion in evaluating the academic
staff.
DIMENSION: FINANCIAL UNIVERSITY AUTONOMY
Lately, lots of discussions are held on financial autonomy. Many people are asking whether
financially autonomous universities will decrease or increase the fees for education and for the
accommodation in hostels. What will be the impact on the quality of education? In fact, there are
too many questions, and some of them dont have a reasoned answer yet.
First, it has to be clarified what does this type of autonomy represent. We used the definition
introduced by Estermann and Hakki (2009), and Estermann, Hakki, and Steinel (2011) as well, by
which the financial autonomy of universities is seen as the ability to: accumulate funds and to keep
budget surplus funds; establish tuition fees; borrow money from the financial markets; invest in
financial products; issue shares and bonds; owns lands and buildings. This means that we will
analyze the financial autonomy of universities through the light of certain criteria that define this
type of autonomy, but we take into account the five interfaces, which characterize the internal and
external points of interaction between modern university and stakeholders, without specifical
reference to them.
Thus, it was found out that in all of the five surveyed countries higher education funding is
made from two basic sources: public and private. There is a different percentage ratio between these
sources. Funding from the state budget in the analyzed countries is based on different approaches:
in Lithuania public funds are allocated based on the global grant, which is divided between different
categories of expenditure. But the global grant must be spent according to the budget categories
presented to the financier or supervisory body, so the university does not have the freedom to
decide in which direction the respective amounts to be spent. In other countries (Scotland, Sweden,
Denmark and Romania) financing is made under the form of block grant on two funding lines:
teaching and research.
The funding of studies is carried out based on different criteria: in Lithuania - the number of
physical students (through vouchers); in Scotland - the number of equivalent students (FTE). Their
number is determined by dividing the total number of study credits accumulated by all students
during the respective year to 60. Sweden considers both physical students (40%), and their
performance, by FTE students (60%), as well. Denmark considers only performant and Romania -
equivalent students in proportion of 70% and 30%, based on relative quality indicators.
The funding of research in all 5 countries is based on the dual system, which means that some
of the expenses are covered by the state and are included in the amount of the voucher (Lithuania)
or in the core funding (Scotland, Romania, Denmark) , and are designed to cover some operational
and maintenance costs of the infrastructure needed for research. The second part (much larger) is
allocated on a competitive basis for projects by the competent authorities of each country.
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Each country has its own methodology for allocating financial resources for universities. It's
natural that some elements are common, others specific to each state. The allocation of budgetary
resources in Lithuania is made based on the principle "money follows the student". The enrolment
is carried out by an independent specialized agency and not by the university. The candidates opt
for a particular specialty, and being admitted to study, choose the university. The money from the
budget, through vouchers, go to those universities that the enrolled students chose. In Scotland and
Sweden allocation is carried out, largely, based on allocations from previous years and according to
the existing budget at the state level.In Scotland, the Scottish Funding Council concludes an annual
memorandum with each university, setting out the respective conditions. In Sweden, a planning of
funds for a period of 3 years is made, specifying the respective amount every year. Denmark has a
system for allocating financial resources based on outputs. The Ministry allocates resources
according to the number of FTE and cost of a student in the respective area: for teaching and basic
research. Romania allocates resources to universities based on contracts signed with the Ministry of
National Education. There is a methodology based on calculation formulas, that is reviewed
annually.
In each of the five analyzed countries there is a historically established methodology for
calculating the cost (price) of a students training. In Lithuania this methodology is based on
calculating the cost (price) per student, which represents the total amount of expenses related to the
number of students financed from the state budget in the past. The price varies depending on the
training level (bachelor, master, doctorate), the form of education (day time), and the field of study.
In Scotland the basis for calculating the cost of preparing a student is the so-called TRAC
methodology. The processes thay form the TRAC base take into account direct and indirect costs of
the organization in order to be analyzed and attached to activities in a fair and reasonable manner.
In Sweden and Denmark the calculation of the cost per student is based on a Full Costing
methodology that allows consideration of all costs, both direct and indirect, incurred by the
institution to train a student. After calculations are done at institution level, all costs are divided by
the number of students, taking into account the field and form of study. Thus, as the basis for
calculating the cost per student serves the humanitarian education cost, while at financing programs
using advanced technology components a coefficient depending on the complexity is included. The
student that studies on a daily basis is taken into account as well, those studying on a reduced
frequency are quantified at 0.75 (Sweden). In Romania there is a methodology based on the use of
certain formulas that take into account all costs incurred at university level.
Universities from the 5 countries enjoy, along with funding from the state budget, of funding
from private sources, as well. Both the share of private sources and their structure differ from
country to country. Practically, there are legal provisions to private sources that may be attracted to
higher education, and means of monitoring their use. Private sources are used depending on the
strategy adopted by the university. Monitoring the use of resources is carried out by internal
financial audit, and by external financial audit through various control bodies specific to each
country, which verifies the use of financial resources by the destination established in the university
plans. So, in terms of financial university autonomy, the use of revenues from private sources is not
specifically monitored.
Not all universities have the right to borrow money on the financial market. Thus, in
Lithuania higher education institutions have the right to loan money through loans, to sign credit
agreements, leasing (finance lease) within the overall lending limits established by the Law
approving the financial indicators from the state and municipal budgets for the respective year. In
Scotland, the university may borrow money from banks only by bringing reasons and with the
consent of the Scottish Funding Council. In Sweden universities can borrow money on the financial
market only from the bank specified (designated) by the responsible authority. In Denmark
universities are allowed to borrow money from the financial market without restrictions. In
Romania, the law allows universities to borrow money as well.
Universities in all of the five countries have the freedom in determining the size of tuition
fees. Even in countries where there are no taxes for local students and those from the European
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Union (Scotland, Sweden, Denmark) universities establish the size of fees for students from outside
the European Union, as well as for another category of students, such as those from masters, etc.
The requirement imposed in all these countries is that the fee considers all types of costs and is not
less than the actual costs for the preparation of a student.
In the 5 countries the respective study reffers to the tuition policy for local citizens and those
from the European Union is the same. The university establishes the tuition fee by itself fro students
coming from countries outside the European Union. Usually, it's bigger than the tuition for the
domestic ones and than the actual training costs. In Romania, university senates can determine the
final size of the fees for foreigners, but not less than the amount set by the Government Order.
The situation regarding cash balances at the end of the year in these countries is of a high
interest. In Lithuania and Scotland the money left at the end of the year, from the state budget must
be reimbursed to the State. The balance of own resources is kept by the university and can be
transferred to the next year. In Swedish, Danish and Romanian universities the unused funds,
regardless of their sourcing, remain at the university and can be reported from year to year.
When referring to the right to be own a property we find out that the situation in this respect
is different as well. Thus the universities from Lithuania, Romania and Denmark can be owners of
buildings purchased from its own sources. The ones purchased from public funds belong to the
state. In Sweden, universities do not have the ownership of buildings. They are renting space from a
state agency that manages these buildings. In Scotland universities only manage the property.
All of the surveyed countries have certain ways of supporting the students. Performance and
social scholarships are granted to students by universities in Lithuania and Romania. In Lithuania
students can obtain state-supported loans to cover their study costs, living expenses, partial studies
according to international agreements. In Scotland scholarships are granted by an independent
agency. In Scotland, Sweden and Denmark students receive grants and loans under certain
conditions. Thus, in Denmark and Scotland loans should be repaid during 15 years after graduation,
while in Sweden - during 25 years as reimbursement only after reaching a certain level of income.
There is no homogeneous distribution of resources within the university. Thus, in Lithuania
the distribution of resources is undertaken centrally by the administration, while in other countries
(Scotland, Sweden, Denmark and Romania) - in a decentralized manner. Many universities apply
the funding principle within the internal allocation of funds identical to that at the country level.
CONCLUSIONS
Although universities of the almost all of the analyzed systems have internal regulations,
which provide a framework for their organizational autonomy, the number and level of detail of
these rules differ a lot. In most cases, national legislation contains only guidelines on setting the
decision-making body (bosdies), their structure and representative groups the members of which are
selected of.
In most of the studied countries universities are relatively free to decide on their
administrative structures. This is also true for their ability to decide, within the legal framework, on
the academic structures and the creation of legal entities. Through such entities institutions may
carry some additional activities, both non-profit and commercial.
The inclusion of external members is an important element in preparing competitive
specialists on the labor market, efficient cooperation of the scientific environment with the business
environment, as well as increasing the accountability of autonomous universities to stakeholders
and society as a whole.
In most of the analyzed systems institution's governing bodies include external members who
are either selected by universities themselves or are nominated by an external authority, based on
the opinions provided by universities.
The head of the executive body of the university is always selected / elected by the institution
and is responsible to the governing body of the university. In some of the studied systems the head
of the executive body is selected or elected, appointed / confirmed by a higher authority.
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With regard to the executive management, in most of the analyzed countries the transition to a
"managerial" type of leadership seems to contribute to greater autonomy in the management of
universities and their internal structure determination.
Analyzing the legislation of the 5 European countries with respect to their Higher Education
systems and internal norms we observed homogeneity in treating the most important issues in the
academic and research areas. This, in our view, is the result of the implementation of the basic lines
of the Bologna process, which aims at harmonizing the education systems. Higher education
institutions in EU countries have a well-defined academic autonomy, and concrete obligations and
responsibilities towards society and central administrative authorities as well.
The central administration determines the policies and development strategies of education,
and is responsible for assessing the achievement of these strategies. Institutions are autonomous in
choosing tools and mechanisms to achieve the educational and research process and are fully
responsible for the quality of the final results.
There is no perfect model of human resource autonomy, but there are good practices of
certain universities with traditions, which, once taken and adjusted to socio-economic realities of
our country could bring positive results, strengthen institutional capacities of higher education and
would increase autonomy of the existing human resources management, correlating it with the
principle of public accountability of each institution or: university autonomy means, besides
freedom, a high level of responsibility as well.
The respective study demonstrated that the financial autonomy of universities is characteristic
for all of the above-mentioned states. Theres still a difference in the degrees of freedom they have
in solving certain problems. It is to be noted that its impossible to highlight an ideal model, perfect
for use in any country. Every time it has to start from specific features, traditions and the historical
evolution of universities. In the same time, the high degree of responsibility universities have at
using the financial resources was very much stressed.
REFERENCES:
1. A strategic analysis of the Scotish Higher Education Sectors distinctive assets. A study
commissioned by British Council Scotland , Neil Kemp, William Lawton, April 2013
2. Aarhus University By-laws, http://goo.gl/mDo40T
3. Accounting Model for Allocating Indirect costs in Higher Education Institutions, link
http://goo.gl/PffSOA
4. Al. Ioan Cuza University Chart from Iai, 2011, http://goo.gl/msSs9S
5. Bucharest University Chart, 2011, http://goo.gl/jC2cD5
6. Constantin Oprean, Vasilie Mooc, Camelia Oprean Per student equivalent cost, an
instrument for financial management of the university, link
http://www.managementmarketing.ro/pdf/articole/61.pdf
7. Consultation on the development of a new Scottish Code of Good HE Governance - Issues
Paper, November 2012
8. Efficiency and effectiveness of public expenditure on tertiary education in the EU Annex:
Country Fiche Denmark, , link http://goo.gl/R5LYtF
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November 2006 Evanthia Kalpazidou Schmidt, Kamma Langberg, Kaare Aagaard The
Danish Centre for Studies in Research and Research Policy University of Aarhus, link
http://www.oecd.org/denmark/38307998.pdf
10. Further and Higher Education (Scotland) Act 1992, http://goo.gl/QlZR6U
11. Gharter of the University of Strathclyde http://goo.gl/yMu04L
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http://goo.gl/AwSVaY
89
13. Law on Higher Education and Research, Republic of Lithuania, 30 APRIL 2009, no XI-242,
http://goo.gl/Ry36fg
14. Law on National Education, no. 1, 2011 (with later modificationa and completions),
http://edu.ro/
15. Methodology for allocation of budget funds for excellence-based core financing and
supplimentary financing of higher education institutions from Romania for the year 2013,
link http://goo.gl/WrmCqt
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17. Ordinance on application fees and tuition fees at higher education institutions, Sweden, link
http://goo.gl/MFP4aK
18. Ordinances of the University of Strathclyde, http://goo.gl/07UGBx
19. Peter Maassen Models of Financing Higher Education in Europe, Center for Higher
Education Policy Studies (CHEPS), University of Twente, 2000
20. Regulations of the University of Strathclyde, http://goo.gl/cCJThg
21. Romanian Government Ordinance no. 22 of August 29, 2009 establishing the minimum
amount of tuition fees, in currency, for citizens studying on their own expense in Romania
from countries not members of the European Union and countries not part of the European
Economic Area and of the Swiss Confederation;
22. Romanian Government Ordinance no. 57 of August 16, 2002 on scientific research and
technological development;
23. Stancu Ion, Bodea Constanta .a. (2011), Financial Resources Management in Higher
Education, Bucureti
24. The Danish (Consolidation) Act on Universities (the University Act)
25. The Swedish Higher Education Act Hgskolelag (1992:1434)
26. The Swedish Higher Education Act, 1992, http://goo.gl/ywcSM9
27. Thomas Estermann and Anna-Lena Claeys-Kulik (2013) Financially Sustainable
Universities Full Costing: Progress and Practice
28. Thomas Estermann i Terhi Nokkala, University Autonomy in Europe I (2009),
http://goo.gl/vuJzR8
29. Thomas Estermann, Terhi Nokkala i Monika Steinel, University Autonomy in Europe II,
the Scorecard (2012), http://goo.gl/MYRn7i
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Consulting Ltd, link http://www.jcpsg.ac.uk/guidance/about.htm
31. Vilnus University Statute, http://goo.gl/Y4ysnz
90
PRIORITIES IN REGIONAL DEVELOPMENT IN ROMANIA
Associate professor PhD Mihai POPESCU

tefan cel Mare University of Suceava, Romania
Faculty of Economics and Public Administration
mihaip@seap.usv.ro
Abstract:
This paper attempts to bring answers to some questions that are born , more quickly , on how Romania
manages to cope with EU requirements . The paper does not claim to treat exhaustively the proposed issue , but
attempts to present a balanced and understandable manner the decisive role that regional policy plays in the effective
implementation of Europe 2020 , based of the situation in Romania.
I chose to approach this subject as, besides being a very topical theme, which continues debate is a table of
positioning Romania in the European context , not only economically , regional policy and strategy since 2020 applied
to Romania's case highlights the disparities between our country and other parts of Europe.
Key words: regional development,strategies, national objectives , economic restructuring
JEL classification: O11, O47, P25
1. REGIONAL DEVELOPMENT IN ROMANIA
Romania has tried since 1989 to build a regional development policy, the fundamentals both
internal and external. Internal reasons economic weakness of a region that has been severely
affected by the transition period following the exit from communism. Such weakness was not
tolerable, since it could easily degenerate into political and economic instability, leading in this way
to create major obstacles for the entire national development [1].
External reasons were related to Romania's aspirations to join the European Union in 2007,
a process which involved numerous changes at multiple levels, including regional development.
Regional policy in Romania has no tradition, no formal or documented. It is possible
regionalization to affect the very existence of the nation state, and this could be one of the reasons
the 8 regions were simply drawn on the map Romania to meet European integration requirements
(regions should have about the same territorial expanse roughly the same population) in an attempt
to avoid possible historical factor.
Regional policy in Romania has started to develop simultaneously with Phare [2] in 1996.
However, a legal basis has been developed only in 1998, with the adoption of the Law on Regional
Development (Law 151/1998 and Law 315 / 2004), which brought some clarification on the
situation of the 8 regions, associations considered "voluntary" local administrative units) and on the
institutional framework on regional policy.
The negative consequences of this organization equalizers centralized and Romania were
felt immediately after the fall of communism in 1989, when some economic and social changes and
some reforms were inevitable. During the transition period that followed it was preferred "shock
therapy" to the detriment of gradual change and resulted in the acceleration of privatization,
liquidation of bankrupt companies, price liberalization, reduction of customs duties, foreign
investment promotion etc. Some policy areas where restoration was tougher were affected by an
economic and social decline and is facing extreme environmental degradation, high rates of
unemployment and very low living standards. The deepest and most obvious discrepancies in
Romania after 1990, given the changes in structural terms were between urban and rural areas.
Romania's main problem was the fact that this restructuring targeted a "cleansing" of the
economy unprofitable activities, without however doubled up activities to stimulate economic
growth. The result was producing more negative effects.
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Poorer regions have suffered a rather forced and artificial industrialization during
communism, which meant also that the regions concerned have been most affected by the
transition, once the industry was not producing profit that was totally closed in 1990. These regions
are located in the northeastern part of the country - the historical region of Moldova - and south -
Plain Romanian agricultural region. In terms of average income and unemployment rate, Moldova
and Muntenia are the poorest regions, while Transylvania and Banat are the most extensive and
Oltenia, Maramures is characterized by a medium level of development. It should also be
mentioned huge discrepancy between the Bucharest - Ilfov and all that, as in all capital domeniil
attract investors and has a rapid level of development.
Current Discrepancies in Romania are both regional (between the 8 regions), corresponding
to level II established Nuts and intra (between counties included in each region), corresponding to
level III established Nuts. Nomenclature of Territorial Units for Statistics (Nomenclature of
Territorial Units for The Statics) is a hierarchical system to divide the economic territory of the
European Union. Level II is a population between 800,000 and 3,000,000 inhabitants and level III -
a population between 150,000 and 800,000 people [3].
Therefor, Romania's regional policy was outlined only to meet financial assistance by the
European Union. We may wonder whether Romania has indeed a coherent public policy of this
mechanism (given especially politically), as experience has shown that member states with a
tradition in regional development have been implemented better and even users Best of financial
resources received from the European Union.
2. THE CURRENT SITUATION
2.1. REGION, REGIONALIZATION, THE IMPACT OF REGIONAL POLICY
Creating European Union has meant a reaffirmation of the role of the national state, which
has eroded the powers degree. The boundaries, both internal and external, were redrawn and the
decision has not been the prerogative exclusive, national governments, acting alone or in tandem
with each other.
Regions, once defined, although they were formed on administrative criteria, tend to build
up a certain identity and become functional regions. In other words, the actors tend to evolve
towards regional cooperation and interdependence with other actors positioned in the same region.
For example, public corporations tend to include organizations from a single region, entrepreneurs
tend to seek contractors in one region and rely solely on the existing workforce in the region.
Regionalism can be of several kinds: political (Spain and Italy), incorporated (the unitary
state is formed by unifying several states retain their individual characteristics), various (regional
administrative structures are not based solely on political or territorial criteria, but on the basis of
language and culture), classic (France, where regions are the result of decentralization), functional
(for Greece, where the regions are simple district state administration) and cooperation (for
Romania [4], with regions the result of cooperation between local authorities).
One controversy is linked to this regional policy promoted by Romania, referred to as
"artificial" because of the way the definition and delimitation of the regions, whereas the
geographic dimension is not necessary to draw a region. Its limitations should be a social decision,
based on one or more criteria. Of these, the most important are: [5]
- features Spatial / Geographic Region consists given certain special geographical features; for
example: the Black Sea
- social features: language, religion, culture, nationality
- politico-administrative features: the limits of the region are set according to a certain rule; for
example, regions should have similar size
- economic characteristics: the regions is based on a certain type of economic activity.
Romania had a chance to become an EU member in 2007. Although accession of Romania
involves numerous rights and benefits, it also involves obligations on Member statului-. Romania
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should be aware that regional policy will bring the expected benefits if and only if it will be
released in connection with another comprehensive policy, national development and the overall
development policy of the state. In the absence of other mechanisms, regional policy will not have
the expected effects. Regional development must be a partnership between government, business
and community.
In Romania regionalization is directed to discrease disparities between regions, it should be
taken into account that poorer regions are less able to absorb funds and, moreover, if they obtain,
use them effectively. If local skills cannot themselves generate progress and prosperity, viable
solution is to be given assistance to develop their skills in creating solid income from economic
activities.
It is also important to note that the intervention is not always the optimal considered that
would allow maximizing the benefits and minimizing the negative effects, but is still kept as a
reference rural- urban limit.
The eight development regions are not administrative units and there remains the question of
whether they really are the most effective way of dividing Romania. The current structure cannot be
changed, since Romania is obliged to maintain this form of territorial division during the
implementation period 2007-2013. Any change to the structure is a complex process that requires
consultation with all the agents involved, including the European Commission.
The success of a region will depend ultimately on its ability to self-organize and organize
players around common goals, to adapt and adjust according to external pressures. Source
development of a region is to the region itself, in its people, its institutions and, most importantly,
its innovative spirit and entrepreneurship of the region's population.
2.2. REGIONAL COMPETITIVENESS AND ECONOMIC AGGLOMERATIONS
The idea of regional competitiveness has become topical in the context of globalization, as
the flow of goods, capital and labor around the world has become a reality. Investors are attracted to
regions where human capital is well prepared and where labor cost is at a fair.
According to B. Gardinier (2004), there are three main sources that determine regional
competitiveness: infrastructure and accessibility, human capital and environment.
The current trend in Romania to keep up with the pace of globalization is creating economic
clusters. An economic agglomeration is a geographic concentration of interconnected companies,
suppliers of services, firms in fields related or associated institutions (eg universities,
standardization agencies and professional associations) in certain sectors, who are simultaneously
and competitors and collaborators. In the European Union as an example of such clusters can be
given: Alsace-Ruhr steel industry or the chemical industry in Basel. If we consider the case of
Romania, we can talk Galati shipbuilding industry, the timber industry in Mures, Bukovina's
tourism industry, the automotive industry in Arges etc.
There are two main causes that lead to the creation of economic clusters in Romania. The
first case relates to soil, climate, water waterways, in other words, regional facilities can not be
changed. The second category of cases are related to the chosen location circularity, through this
understanding that businesses want to be where there are large markets and large markets will be
where the companies are located. Economic clusters and trade are inextricably linked. Romanian
companies will try to focus activity close to the main markets, which will enable them to reduce
production costs due to external factors, and transport costs.
The link can envisage between regional policy and economic agglomerations is: clusters is a
key factor of economic growth, but it is important to note that they will not automatically lead to
reducing disparities between regions and cohesion.
Applied Economics Group (The Group for Applied Economy) considers that Romania has a
dynamic business environment and a substantial competitive potential, but also a limited capacity
for monitoring and evaluation of the advantages actions. The lack of a legal framework to empower
action and discretion regions is perhaps the biggest barrier to decentralization.
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In conclusion, it can say that the EU is in constant motion. The process of integration of
Romania into the Union has been slow and full of difficulties and the integration has changed the
direction of economic integration to one that includes more social and political opportunities.
As regards regional policy programs designed to eliminate poverty must take into account that the
poor are not able to achieve an effective absorption of European funds, as neither are unable to
manage or use them. By offering substantial amounts of less developed regions, you might miss
some important opportunities in more developed regions.
The main challenge for Romania is to be able to make an effective tool for regional
development, economic and social cohesion. Although cohesion can only be achieved through
regional development, according to the European Union, it remains the most important instrument.
Regional policy is a financial mechanism put into practice the principle of solidarity and
social cohesion and interregional economic efiient resulting in a redistribution of income. Regional
policy makes it possible meeting in the same place at the same time the three factors needed for
development (territorial resources, human resources and capital), given that these factors can not
always be found together.
3. EUROPE 2020 AND DEVELOPMENT PRIORITIES
Europe 2020 will feature three priorities: smart growth, sustainable growth, inclusive
growth and of course the crisis. She also brings some significant news. First, the Europe 2020
strategy stimulates a new kind of growth (smart, sustainable and inclusive) by increasing the powers
and strengthening education throughout life, fostering research and innovation, the use of smart
grids and smart digital economy , modernization of industry, to promote a more efficient use of
energy and resources.
It also aims to strengthen governance by regular monitoring and transparent decision-
making at the highest political level - the European Council. The Commission will lead this process
and will use all the new tools introduced by the Treaty of Lisbon: recommendations, warnings and,
where serious delays, the possibility of sanctions.
3.1. PRIORITIES - GOALS - FLAGSHIPS
The Europe 2020 strategy proposes five major objectives that the European Union should
consider to boost growth and employment. A first objective is to increase the employment rate of
the labor population aged 20 to 64 from the current 69% to at least 75%.
It also aims to achieve a level of 3% of GDP investment in R & D, in particular by
improving the conditions for investment coming from the private sector and developing a new
indicator for innovation.
A third objective is to reduce emissions of greenhouse gases by at least 20% compared to
1990 levels or by 30% if the conditions are favorable and also to increase the share of renewable
energy consumption Final energy to 20% and achieve a 20% increase in energy efficiency.
Another object on which it proposes strategy in question is to reduce the drop out rate from the
current rate of 15% to 10% and to increase from 31% to at least 40% share of graduates in the
population aged between 30 and 34 years.
European strategy 2020 also aims to take out of poverty around 20 million people, reducing
by 25% the number of Europeans living below the subsistence level.
So the five objectives of the Europe 2020 Strategy are: employment; growth, development
and innovation; Climate Change and Energy; education; poverty and social exclusion. These
objectives define the position that the EU should deal with 2020 in terms of some major parameters
are interdependent and mutually reinforcing. Thus, progress in education plan contributes to
improving employment prospects and poverty reduction. More research and innovation and
efficient use of resources helps us become more competitive and provide better living conditions.
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These objectives are translated into national targets, for each of them to be able to track
progress. They are common and not burden sharing, to be achieved by action at national and
European level.
The EU has identified areas that could boost economic growth and create new jobs. They
are at the center of major apteiniiative. Within each initiative, the European and national
authorities should coordinate their efforts to support each other. Most initiatives were presented by
the Commission in 2010.
1) Innovation Union: to improve framework conditions and access to finance for research and
innovation available to strengthen the innovation chain to ensure levels of investment throughout
the Union
2) Youth on the Move: to improve the performance of education systems in the European Union
and strengthen both the international attractiveness of Europe's higher education institutions
3) A Digital Agenda for Europe: to accelerate the development of high-speed internet services and
to benefit from a digital single market for households and businesses
4) efficient Europe in terms of resources: to help decouple economic growth from resource use by
decarbonising our economy, increasing the use of renewable sources, modernizing the transport
sector and promote energy efficiency
5) An industrial policy for the globalization era: to improve the business environment, especially for
SMEs, and to support the development of a strong and sustainable industrial base able to compete
globally
6) An agenda for new skills and jobs: to modernize labor markets by facilitating labor mobility and
skills development throughout the life cycle in order to increase labor participation and better
matching between demand and supply labor
7) The European Platform against Poverty: to ensure social and territorial cohesion so that the
benefits of economic growth and employment growth are widely shared and people experiencing
poverty and social exclusion can live in dignity and to take an active role in society
For the implementation of Europe 2020, all policies and tools that were previously used in
the Lisbon strategy must be improved. Particular attention should be paid to the Single Market, the
composition of the budget and foreign policy.
The Single Market must be deepened. This involves removing all residual bottlenecks to
cross border activity; creating a single market for services; full implementation of the Services
Directive; exploiting the huge potential of information and communications technology; improving
SME access to the Single Market; protection of market competition against any temptation to
economic nationalism.
All economic policies should be useful for achieving the Europe 2020 objectives of
cohesion policy and structural funds should be used to achieve the Europe 2020 priorities, the
European Investment Bank and European Investment Fund should focus on innovation funding and
entrepreneurship, and the EU's multiannual budget should reflect long-term growth priorities.
All foreign economic policy instruments should be used to stimulate European growth. This
applies to all external aspects of internal policies and trade and international macroeconomic policy
coordination. EU must assert itself more effectively on the world stage, playing a major role in
shaping the future global economic order G20 and must follow European interest through the active
use of all instruments at its disposal.
Governance of the Europe 2020 strategy follows a double track: a thematic approach which
focuses on three priorities of smart, sustainable and inclusive growth and the five objectives; a
national approach that focuses on crisis exit strategies of each Member State dealing with
macroeconomic stability and sound public finances finding.
The first step in the political process is the approval of the Integrated Guidelines by the
European institutions located at a higher level. These guidelines refer both to long-term growth
issues and issues related to exit from the current economic crisis [6]. Then the implementation of
the policy is divided into two: a thematic approach and strategy of each country reporting.
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The thematic approach covers three to five strategic priorities and objectives. Each Member State
should report annually on progress in implementing the strategy and objectives (NRPs). The EU
will comment on these reports and distribute each state implementation advice on the form of
recommendations.
Reporting every State to strategy relates to the implementation of exit strategies, to restore
macroeconomic stability and return to sustainable growth and public finances consistent.
Euro area Member States prepare annual stability programs annually, while the other EU Member
States prepare convergence programs and submit them to the Commission and Council. Council
examines the programs at the beginning of each year and issue an opinion on the program each
Member State on the basis of assessments by the Commission and the Economic and Financial
Committee (EFC).
The European Council is responsible for driving the strategy through general assessment of
the progress made at European and national level and at the same time satisfies a more general role
of guidance and control.
The Council is primarily responsible for monitoring and peer review. State ministers
responsible for each relevant policy areas discussed implementation of the national reform program
in their area of competence.
The Commission is monitoring the situation every year, based on a set of indicators showing
overall progress towards the headline targets of Europe 2020; prepares an annual growth survey and
assess the reports states and stability programs / convergence; issuing specific recommendations
and, if necessary, policy warnings Member States.
EU governments must draw up two reports each year, by explaining what they do to get
closer to the objectives of the Europe 2020 national stability programs / convergence should focus
on public finances and fiscal policy. National Reform Programmes should focus on progress
towards achieving the national objectives of the Europe 2020 strategy for smart, sustainable and
inclusive growth. The two reports are separate reports, but delivered simultaneously.
Guidelines of Europe 2020 are:
1. Ensuring the quality and sustainability of public finances
2. Addressing macroeconomic imbalances
3. Reducing imbalances in the euro area
4. Optimising support for R & D and innovation, strengthening the knowledge triangle and
development potential of the digital economy
5. Increase resource efficiency and reducing emissions of greenhouse gases
6. Improving business and consumer environment and modernizing the industrial base
7. Improving labor market participation and reduce structural unemployment
8. Developing a skilled workforce responding to labor market needs, promoting job quality and
lifelong learning
9. Improving the performance of education and training at all levels and increasing participation in
higher education
10. Promoting social inclusion and combating poverty
3.2. ANALYSIS OF PRIORITIES
The seven initiatives of the Europe 2020 strategy are correlative to the three priorities set by
the European Commission: smart, sustainable and inclusive growth. But an important difference
between the Europe 2020 Strategy and the Lisbon Strategy is that the first was launched in the
midst of a profound economic crisis, which is why Europe 2020 Strategy includes an important
section regarding exit strategy. Crisis exit strategy focuses on finding and attracting financial
resources consistent, progressive withdrawal of short-term sectoral aid, better policy coordination in
the economic and monetary union.
96
1. Smart growth involves the improvement of the EU in the fields of education - by encouraging
learning and skills upgrading); research and innovation - creating new products and services that
create growth and new jobs and help us meet the challenges of social order; digital society - use of
technology and information.
Smart growth means strengthening knowledge and innovation as drivers of our future
growth. This requires improving the quality of education, strengthen research performance,
promoting innovation and knowledge transfer throughout the Union, and full use of information and
communication technologies.
Under this priority, the EU promotes three flagship initiatives: Innovation Union, Youth on
the Move, A Digital Agenda for Europe.
a). Innovation Union aims to refocus innovation policy and research and development to the
challenges facing our society, such as climate change, energy and resource efficiency, health issues
and demographic change.
b). Youth on the Move aims to improve the performance and international attractiveness of
Europe's higher education institutions and increase the overall quality of all levels of education and
training in the EU by promoting mobility of students and teachers and improve employability of
youth .
c). A Digital Agenda for Europe aims to bring economic and social conditions due to a Digital
Single Market based on fast and ultra fast internet and interoperable applications, with broadband
access for all by 2013, access for all to much higher speed 2020, and increased by 50% or more of
European households having internet connections above 100 Mbps (megabits per second).
2. Sustainable growth means setting a competitive, sustainable, resource-efficient, low-carbon,
exploiting Europe's leadership in the race to develop new processes and technologies. This priority
includes investment in clean technologies and renewable energies, environmental protection,
reduction of emissions of greenhouse gases and halt biodiversity loss decoupling resource use from
non-renewable energy, combating climate change and improving capacitatii of disaster prevention
and response where they occur.
Under this priority, the EU promotes two flagship initiatives: An efficient Europe in terms
of resource and an industrial policy for the globalization era.
a). An efficient Europe in terms of resource aims to support the transition to an economy that uses
resources efficiently. The goal is to decouple economic growth from resource and energy use,
reduce carbon dioxide emissions, enhance competitiveness and promote a greater energy security.
b). An industrial policy for the globalization era aims to implement a modern industrial policy,
entrepreneurship support, guidance and support industry to meet the challenges of globalization,
promoting competitiveness primary service industries, manufacturing and services in Europe and
help them exploiting opportunities in green economy. This involves improving the business
environment to promote the restructuring of sectors in difficulty towards future oriented activities,
promote technologies and production methods that reduce natural resource use, promoting the
internationalization of SMEs, increasing competitiveness in the tourism sector.
3. Inclusive growth means empowering people through high levels of employment, investing in
skills, fighting poverty and modernizing labor markets, training and improving social protection
systems. Under this priority, the EU promotes two flagship initiatives: An Agenda for New Skills
and Jobs and European Platform against Poverty.
a). An agenda for new skills and jobs aims to create conditions for modernizing labor markets to
increase employment levels and ensuring the sustainability of our social models. This means
empowering people through the acquisition of new skills to enable our workforce to adapt to current
and future conditions to us and possible career changes and reducing unemployment and increasing
labor productivity.
b). European Platform against Poverty aims to ensure economic, social and territorial cohesion,
combating poverty and social exclusion. This means implementing programs to provide
opportunities for education, training and employment innovative disadvantaged communities and to
97
fight discrimination, to facilitate the integration of immigrants, and to cope with the groups at
particular risk.
4. CONCLUSION
As regards regional policy, it emerged only to meet financial assistance by the European
Union. For regional policy to have the desired effects, there must be mechanisms for implementing
economy-administraie- to coordinate the community as efficient as a direct result of
regionalization, far from being labeled as "artificial". We have made considerable progress and
rapid development of the process of regionalization, for it to meet economic and social realities
existing in Romania, and is also in line with the will of the people.
Romania should be aware that regional policy will bring the expected benefits if and only if
it will be released in connection with another comprehensive policy, national development and the
overall development policy of the state.
The crucial problem of the country remains poverty, the percentage of people living below
subsistence level, in poor conditions, without access even to education, increasing.
5. ENDNOTES
[1]. Claudia Ionescu, Regional development policy - vol. 2, Ed. Triton 2007
[2]. Nomenclature of territorial units for According to statistics - Regions in the European Union Nomenclature
[3]. According www.mie.ro
[4]. Sandu D., Optimising regionalisation in today Romania, University of Craiova Conference on Regional
Development, April 2012
[5]. Jozsef Benedek, Regional Policies in Romania, Polirom, 2011
[6]. Paul Krugman, Return economy decline and crisis of 2008, Ed. Post, Bucharest, 2009
6. BIBLIOGRAPHY
1. Benedek Jozsef, Regional Policies in Romania, Polirom, 2011

2. Ionescu Claudia, Regional development policy - vol. 2, Ed. Triton 2007
3. Nomenclature of territorial units for According to statistics - Regions in the European Union
Nomenclature
4. Krugman Paul, Return economy decline and crisis of 2008, Ed. Post, Bucharest, 2009
5. Sandu D., Optimising regionalisation in today Romania, University of Craiova Conference
on Regional Development, April 2012
6. Scutariu Adrian Liviu, Nstase Carmen, Comparative evolution of tourism in the North-
Eastern Region of Romania, Subcarpathia of Poland and Central Slovakia, Bulletin
UASVM Horticulture, Nr. 67 (2), 2010, pp.229-237
7. www.mie.ro
98
ASPECTS OF REGIONAL COMPETITIVENESS THROUGH

DYNAMIC PRICES OF PETROLEUM PRODUCTS
Associate Professor PhD Daniela ENACHESCU
PetroleumGas University of Ploiesti, Romania
denachescu22@yahoo.com

Abstract:
This paper presents aspects regarding the dynamics of prices of petroleum products: gasoline and diesel in
Romania in the period 2003(2007)-2014. Both focus on relationship-price raw material and finished product by the
impact of market prices. Given that the price of fuel is a key factor in economic development but also in the living of
population, this paper has proposed to analyze some aspects of the dynamics of prices of petroleum products in
correlation with commodity prices in a competitive market in 2003 -2014. In the analized period, price of oil barrel has
a dynamics substantially influenced by the global political turbulences but also by lower oil demand due to
consumption reduction, especially lately. Increases and decreases were abrupt and unpredictable in the early years of
the first decade of the XXI century. Political crises in the Middle East, the economic crisis started in 2007 and
especially the crisis in Ukraine and policies adopted by the EU and the US have led to extremely large fluctuations in
oil prices from one period to another . This dynamic will only cover the price of petroleum products namely gazoline
and diesel for vehicles.
Key words: regional competitivness, dynamics of prices, petroleum product prices, gazoline, diesel
JEL classification: A10, L71, R10
1. INTRODUCTION
Despite all the predictions, oil remains one of the most important energy resources for the
economy of a country. However, few nations in the world and in Europe were blessed with "black
gold", and they enjoyed a rapid growth based on the industry.
If in the world, Saudi Arabia holds the first position in the ranking, with a daily production
of 11.726 million barrels of oil, oil production in Romania halved from the Revolution to the
present, from almost 8 million tons of oil extracted in 1990 to 4 million tonnes in 2013.
Although production fell to 86.000 barrels / day, our country has managed to maintain a leading
position as the 10th largest producer of petroleum in Europe and Eurasia according to statistics from
British Petroleum, black gold "is, in fact, the most sensitive area of Romania on energy imports, and
no gas[4].
On the other hand, consumption of oil and oil products decreased in Romania in 2012,
standing at 182,000 barrels a day, which represents 0.2 percent of global consumption [10].
The economic crisis which began in 2007 had a significant impact not only on production branches
(Zaharia, 2015) or services in most EU countries (Zaharia, Enchescu & Blcescu, 2014) but also
the price of oil, one of the most important resources of XX and XXI centuries (Enachescu, 2002).
On the other hand, the deteriorating of international situation and the political crisis caused
by Ukraine, the economic restrictions imposed to Russia, one of the most important oil producing
countries in the world (the third place) had a major impact on the decrease oil prices but also to
finished products: gasoline and disel .
The paper aims to analyze the dynamics and correlations commodity prices: oil well
finished products: diesel and gasoline in the period 2003-2014.
2. ANALYSIS OF THE DYNAMICS OF OIL PRICES AND FINISHED PRODUCTS
For analyzes on the prices of oil and oil products were used data from statistical databases
INS (National Statistics Institute) (http://www.insse.ro/cms/), NBR (National Bank of Romania )
99
and portals Europe's Energy Portal official (http://www.energy.eu), International Energy Agency
(IEA) (http://www.iea.org/), OPEC (http://www.opec.org), Eurostat and the National Union of
Road Hauliers portal (http://www.untrr.ro/)
BARREL OIL PRICE DYNAMICS
It will analyze price dynamics for OPEC Reference Basket barrel of crude oil (ORB)
annually, in the period from 2003 to 2015, and from February 2014 to 2015, monthly, when there
were significant fluctuations.
The new OPEC Reference Basket (ORB) was introduced on 16 June 2005, is currently
made up of the following oil sources: Saharan Blend (Algeria), Girassol (Angola), Oriente
(Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es
Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban
(UAE) and Merey (Venezuela)[8].
In the period 2013 - 2015, price of oil barrel has a dynamics substantially influenced by the
global political turbulences but also by lower oil demand due to consumption reduction, especially
lately. Increases and decreases were abrupt and unpredictable in the early years of the first decade
of the XXI century. Political crises in the Middle East, the economic crisis started in 2007 and
especially the crisis in Ukraine and policies adopted by the EU and the US have led to extremely
large fluctuations in oil prices from one period to another (figure no. 1).
120
109.45
110 107.46 105.87
100
94.45 96.29
90
80
US$/bar
77.45
70
60 61.06
50 48.91
40
30 28.10
20
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Figure no.1. Evolution of the price of a barrel of oil in the period 2003-2015
Source: own processing after http://www.opec.org/opec_web/en/data_graphs/40.htm
In the first part of the last decade, in the period 2003-2008, oil prices increased 2.36 times
from 28.10 US $ / bar in 2003 to 94.45 US $ / bar in 2008. A very good approximation of this
evolution is given by linear model:
PUS $ / bar 12.608 t 12.439 , t 2003 t1 1 (1)
The above statement is supported by the coefficient of determination ( R 2 9664 )
corresponding to the model (1). Linear increase in the price of a barrel of oil, from this period can
be attributed to the process of economic growth in a relatively stable in terms of the international
situation, which led to continuous growth in demand.
100
First interrupting of this process occurs in 2009 and is determined by the magnitude of the
financial crisis that affected nearly all oil-consuming states. Consequently, in 2009, the price of a
oil barrel fell by 35.3% compared to 2008, being approximately equal to that of 2006. The years
that followed have led to a rebound in oil prices, the biggest increase was recorded in 2011 when oil
prices rose 30.01 US $ / barrel above the level recorded in 2010.
The 2011-2013 period is characterized by relative stability of oil prices around an average of
107.5 US $ / bar. This relative stability was maintained until mid-2014 (Figure no.2), when it
evolved from 104.15 US $ / bar in February 2014 and recorded 107.89 US $/ bar registered in June
2014.
107.89
110 105.38
104.15104.27 105.44 105.61 100.75
100 95.98
90 85.06
80 75.57
U S$/bar
70
59.46
60 53.92
50 44.38
40
30
20
Ju n -1 4
Ju l-1 4
A u g -1 4
N o v -1 4
Feb -1 4
A p r-1 4
M ay -1 4
Sep -1 4
Jan -1 5
Feb -1 5
M ar-1 4
O ct-1 4
D ec-1 4
Figure no.2. Evolution of the price of a barrel of oil in the period February 2014 Febr. 2015
Souce: own processing after http://www.opec.org/opec_web/en/data_graphs/40.htm
Since August 2014, the Ukrainian crisis and Russian restrictions on both the EU and USA
have led to significant decreases in the price of a barrel of oil on a linear trend:
PUS $ / bar 12 . 8 t 96 . 2 , t Sep _ 14 t0 0 (2)

Since for the model (2), R 2 0.988, we believe that it provides a good approximation of
the evolution of oil prices during the period.
Consequently, during September 2014 - January 2015, the price of a barrel of oil has fallen
every month, with approximately 12.8 US $ / bar. Julie 2014 versus January 2015 he was with
61.23 US $ / bar lower, ie 44.05% of the value recorded in July 2014. This value (44.38 US $ / bar)
is approximately equal to the average price of a barrel of oil in 2005, and the absolute minimum of
the last 12 months.
3. THE VARIATION OF UNLEADED GASOLINE AND DIESEL PUMP PRICES IN

ROMANIA
During the analyzed period, the dynamics of prices at the pump for major finished
petroleum products: gasoline and diesel recorded significant fluctuations but not always in line with
fluctuations in raw material prices, as would be expected.
101
Thus, if in periods of rapid growth of the oil price and the selling price at the pump has
increased at a similar rate in periods when oil prices dropped significantly, the price of diesel or
petrol has a relatively high inertia to follow the similar trend.
This is due to the following reasons: the desire of the main players on the fuel market to get
higher profits in any situation, but also, because of excise variation rate, expressed in US $, both as
absolute value and due to depreciation of the leu versus the dollar.
Moreover, of retail price of gasoline at the pump 95, taxes (VAT) and excize is, in febrary 2015:
Excluding Excise VAT Retail

taxes duties price
0.508 0.460 0.232 1.200
Source:
https://www.energy.eu/fuelprices/
Do not forget the fact that OMVPetrom, with a market share of 34% in 2013, the oil
obtained from own production, so it is not influenced of international market price quotations.
Moreover, OMVPetrom, the largest company of Romania, has reached the end of the five years of
crisis, 2009-2013, in a historic profit of over one billion euros, 5.5 times higher than in 2009, most
difficult year for the local economy after the collapse of Lehman Brothers, and the net profit margin
higher than that of oil giant Shell and ExxonMobil[11].
In Figures no.3 and no. 4 are presented graphically the variation of liters of petrol price and
diesel in the period 2000-2012. Thus we see that the price per liter of unleaded gasoline pump
prices rose from 2000 to 2014, the average value of 1.2 to 5.8 ron, so 4.83 times or 383%

Figure no. 3. Variation unleaded gasoline pump prices in Romania in the period 2000-2012
(euro / liter)
Source: https://www.energy.eu/historical-prices/Romania/ and http://www.untrr.ro/pret-motorina/evolutie-pret-
motorina-petrom-cotatii-titei-si-cursuri-valutare. html#. VDqe0RY4jzg
The price of diesel has increased from 2000 to 2014, the average value of 0.92 lei (RON) to 6.02 lei
/liter or so of 6.54 times.
102
Figure no. 4. Variation of diesel price at the pump in Romania in the period 2000-2012
(euro / liter)
Source: https://www.energy.eu/historical-prices/Romania/ si http://www.untrr.ro/pret-motorina/evolutie-pret-motorina-
petrom-cotatii-titei-si-cursuri-valutare. html#.
The influence of the steep decrease in the price of raw materials, from February 2014 to
January 2015 at 105.38 US $ / barrel to US $ 44.38 / bbl, did not materialize in a similar decrease
for finished products: gasoline or diesel (figure no 5)
Figure no 5. Average oil price action, the exchange rate and the price of diesel at the pump
(OMV-PETROM) during 2013-2015
Source: http://www.untrr.ro/userfiles/files/Variatie%20motorina%202015.PNG
103
4. CONCLUSIONS
Given that the price of fuel is a key factor in economic development but also in the living of
population, this paper has proposed to analyze some aspects of the dynamics of prices of petroleum
products in correlation with commodity prices in a competitive market in 2003 -2014.
Romania, which was one of the main oil producing countries in Europe (14 million tons
annually) and one of the largest processing capacity of over 34 million tons per year after 2000
experienced strong impact of oil price fluctuations but also of derivatives.
This was reflected in continued growth in prices of petrol and diesel, with a major impact in
all areas of economic and social activity but also in the welfare of the population.
During the financial crisis household consumption has been falling, which was reflected in
falling prices, but major oil companies increased profit.
Aligning the prices in Romania prices within the EU has led to artificially increase the price,
with a negative impact on the welfare of the population, the more so as the minimum wage /
average in Romania is very small compared to the rest of the EU. No gasoline or diesel fuel
surcharges (over 58% of the sale price) does nothing more than deepen these issues. In addition, in
Romania, the price of gasoline and diesel (1.2 euro / l, 1.24 euro / l) is higher than in neighboring
countries, Bulgaria (1,043euro / l, 1,067euro / l), Hungary (1146 EUR / l, 1,205euro / l), Poland
(1,021 euro / l, 1.045 euro / l) (27 February 2015).
REFERENCES
1. Enachescu Daniela, (2002), Industria de prelucrare a titeiului, componenta principala a

industriei romanesti , The 27th Annual Congress of the American Romanian-Academy of
Arts and Science (ARA), Univ of Oradea, May 29June 2, 2002, Proceed, volI,
Polytechnic International Press
2. Zaharia M., Babucea A.G., Blcescu A., Rabontu C. (2015). Metallurgical Industry in
Romania in the Context of the Economic Crisis, Metalurgija, 54(5), pag.445-448, Zagreb,
Sijecanj-Oyujak, Croaia.
3. Zaharia M., Enachescu D., Blcescu A. (2014). Evolutions of employment and turnover in
services in EU, Industrija, Serbia, Vol 42, No 2 (2014) , p. 21 -34.
4. http://adevarul.ro/economie/stiri-economice/infografie-romania-mai-dependenta-
importurile-titei-decat-gaze-1_542830710d133766a87f5239/ index. html-[access at
9.03.2015]
5. https://www.energy.eu/historical-prices/Romania/
6. http://www.iea.org/statistics/topics/pricesandtaxes/
7. http://www.opec.org/opec_web/en/data_graphs/334.htm
8. http://www.opec.org/opec_web/en/data_graphs/40.htm
9. https://www.energy.eu/historical-prices/Romania/
10. http://www.ziare.com/articole/top+tari+petrol
11. http://www.zf.ro/zf-24/petrom-9-300-angajati-putin-pierdut-8-puncte-cota-piata-rafineaza-
27-putin-petrol-profitul-crescut-peste-cinci-ori-iar-marja-neta-mare-cea-exxon-12464881
12. http://www.untrr.ro/pret-motorina/evolutie-pret-motorina-petrom-cotatii-titei-si-cursuri-
valutare. html#. VDqe0RY4jzg
13. http://www.untrr.ro/userfiles/files/Variatie%20motorina%202015.PNG
14. http://www.insse.ro/cms/
15. https://www.energy.eu/fuelprices/
104
THE ILLUSION OF CATCHING UP THE SOCIO-ECONOMIC

REGIONAL GAPS*
Associate Professor PhD Eugen GHIORGHITA

Department for Marketing and International Business, Spiru Haret University Bucharest, Romania
eugenghi@gmail.com
Abstract:
There is a sort of scientific bias in the way economics literature approaches the issues of general or regional
economic growth and socio-economic backwardness.
The term 'catching up of socio-economic gaps' appears to be rather a contradictio in adjecto, a sort of
oxymoron, than a possible evolution of the worlds countries. The very idea of catching-up or recovery as a
consequence of lagging behind seems to be more specific to sports competitions or post-surgery periods. Transfering
the idea of backwardness to human communities (be it tribes, villages or political-administrative entities of higher
dimensions) is at least questionable. The contradiction is generated by the very establishment of the benchmarks for
identifying backwardness. During the last 50 years, and after 1990 especially, the appeal to such indicators as
GDP/capita, HDI, Gini coefficient, convergence criteria etc. became a common place. Nowadays it appears to anyone
a matter-of-course, that any geopolitical entity can be "weighed" or "measured" by reference to a set of uniform
criteria.
Unfortunately, the global and regional efforts made after WW II towards an accelerated socio-economic
growth of both developing and less developed countries succeded only for few countries to reduce the historically
shaped gaps as against developed countries. On the contrary, for the bulk of the lagged behind regions gaps seem to
have risen. This is why many questions arose about the inefficiency of the steps made towards 'catching up of socio-
economic gaps', such as: Why after about 70 years of international welfare levelling efforts, gaps between
development and living standards of the world regions are still so large? Why do economies have to grow at any
price? Is the forced (artificial), accelerated development beneficial? And it if so, to whom? Are specific historical
socio-economic structures negligible under the pressure of globalization?
This study tries to identify the fundamental bias of the regional accelerated development efforts.
Key words: economic development and growth, backwardness, development gap, catch-up effect, specific
regional policies, macroeconomic indicators.
JEL classification: B25, O10, O43, Q56, Z13
Motto:
People crushed by laws, have no hope but to evade
power. If the laws are their enemies, they will be enemies
to the law; and those who have most to hope and nothing
to lose will always be dangerous. [1]
But the age of chivalry is gone. That of sophisters,
economists, and calculators has succeeded; and the glory
of Europe is extinguished forever. [2]
INTRODUCTION
During the last 50 years new theories, models and scenarios appeared concerning the
objectives and stages of socio-economic growth and development for all world regions. According
to established criteria and indicators, countries have been classified in developed, developing
and less (or least) developed.
According to the United Nations Statistics Division, nevertheless, there is no established
convention for the designation of "developed" and "developing" countries or areas in the United
Nations system. [3] The same source states that The designations developed and developing
are intended for statistical convenience and do not necessarily express a judgment about the stage
reached by a particular country or area in the development process. [4]
105
However, the statistical convenience, expressed by economic and social indicators

annually published by international, regional and national institutions, shows smaller or bigger
differences between regions, areas or countries. This is how the issue of development gap became a
common place.
The origin of the idea of economic development gap is associated with the obsession of
economic growth. In both academic and mass media there are cohorts of researchers, analysts,
commentators who use a more or less wordy language fitting often perfectly to the wooden
language sadly recalling the socialism era. [5] So, we got used to consider as objectively given
some statements that became axioms:
1. The economy, in general, has to grow permanently, including of course the inherent
cyclical fluctuations.
2. The gaps between the backwards economies and the developed ones must be alleviated
and finally eradicated.
The above underlined words (given, has to and must) suggest the character of
historical necessity or objectivity: the economic, political and sociological thinking follow
ineluctably this way.
Despite this common, generalized approach, the very issue of gap between socio-
economic development levels of the contemporary political entities has always been extremely
delicate.
As a conference paper aims to reveal not only ultimate truth, but also heuristic issues, here
are several questions concerning the fragile issue of gaps and backwardness:
a. How did they get to the necessity of featuring the development level of each political or
geo-economical entity by the instrumentality of economic macroindicators systems?
b. Are the accelerated and at any price [6] economic development and growth of all
inhabited regions of the world the main target of mankind?
c. How did the imperative of generalized economic growth become a postulate?
d. How much effective is the regions ranking by macro indicators (such as GDP/capita,
GNP/capita, HDI etc.) for the scientifical knowledge, as well as for the adjusting actions at the local
or global level?
e. Is it reasonable to compare regions with distinct institutional evolution features, as if they
were supposed to follow the same historical path (the Palau, Tonga, Kiribati archipelagos with the
USA, Norway, China or Singapore)?
f. The economies of the advanced, highly civilized regions are outcomes only of free market
and private property democratical institutions or rather of their colonial and military expansion?
Perhaps we could not give accurate answers to all these questions. But we must at least
agree with Richard Ennals:We need to find, develop and test new ways of working together so
that problems can be addressed and, if not solved, at least better understood. [7]
INSTITUTIONAL DIVERSITY AND HISTORICAL DELAY
Nowadays human society appears to be still divers, despite the countless efforts towards
homogenization.
Over the past two centuries, within the framework of the so-called modernization and
globalization processes, political revolutions and institutional restructuring by reforms aim at
diluting the differences given by the traditional peculiarities of each local community.
This is why people strive, individually or collectively, to change their lifestyle, deserting
oldfashioned customs and traditions for the modern ones. And so, change became the leitmotif of
the common and scientific thought. The absolutely necessary change was converted to a
fundamental preconception (or prejudice).
There are not only common prejudices, but also scientifical prejudices. Belaboured by
famous historians, sociologists, and political scientists (G. Vico, G.W.F. Hegel, K. Marx, W.
106
Sombart, W. W. Rostow, and many others) the hypothesis of stage evolution of mankind became a
thesis.
Human society advances from the inferior to the superior (Hegel). Here lies the key of
progress. [8] The faster evolving regions of the world influence or determine the delayed ones in a
necessarily historical way.
Such a modeling of the becoming of mankind starts from o series of prerequisites, as:
- There are evolution models and ways unavoidably and gradually followed by all human
societies. [9]
- Each new stage of evolution is obviously superior to the previous one; passing to the new
stage is therefore historically necessary.
- Leapfrogging should occur when it is not possible or necessary to run through each stage
already experienced by the developed regions, or when the catch-up estimated period is too short.
- New institutional forms (cultural, religious, political, economical and social organization
patterns) are assimilable within longer or shorter historical periods.
- Ethnical apriorism (customs, traditions, popular culture, mentalities) is merely a temporary
hindrance for the establishment of the new rules.
- For the backward regions the next stage is generally already known.
- The very probable incompatibility of the new institutional forms with the mentalities
peculiar to the backward regions would be solved by centralised decision at the level of state or
international agencies.
The application of this theoretical approach would prevent (and actually has prevented) the
local communities not only from a free (by themselves) evolution, but it also would preclude (and
has precluded) a specific, own rhythm of change.
Introduced as integrating or holistic (globalizing) the aforementioned preconception
assumes the existence of one or more theoretical and methodogical evolutionary model(s) generally
available and locally applicable. Per se, the historical analysis has become subject of prejudgement
and anticipation of the very probable historical stages to reach by the developing or less developed
countries.
Therefore, many authors acquainted with the previous progressing evolution of Western
capitalism, and following the matrix inherent to new regions integration, use to call as objectives
the processes derived from the experience of developed regions, such as: building of instrastructure,
electrification, industrialization, schooling, literacy, modernization of agriculture, urbanization, etc.
The principle of this approach method is extremely simple. It starts from the prerequisite of
the success won by the organization forms in certain regions/countries, and, considering that they
shouldnt reinvent the wheel, concludes the necessity to direct all the backwards on the same
path on which passed the western wealthy nations.
Unfortunately, the history of lagging or backwards regions abounds in contradictory
facts, data, and events specific to the very processes of institutional, cultural, and behavioural
adjustment. And, more than that, there is a permanent pressure put on the development rhythm of
peripheral regions to catch up with the core regions of progress.
It is apparentally unreasonable, physically and mentally impossible for a region to build in
decades (20-50 years) effective economic and social mechanisms shaped during centuries in other
regions. History showed that even more than 150 years were not sufficient for most of less
developed regions to catch up with the more developed ones.
STAGES OF DEVELOPMENT
After Great Britains industrial take-off by the end of the 18th century, during the 19th
century the successful industrializing economies were Belgium, France, Germany and the USA. For
the beginning of the 20th century they were followed by Austro-Hungary, Russia, Northern Italy,
Japan, and the Scandinavian Countries.
107
The success of the industrial development in Western Europe, USA, Japan and later
Australia and Canada opened the way to optimistical expectations for the possible spread of
economic progress through industrialisation over other regions of the world. [10]
The economic and social evolution during the past five centuries is generally described as a
rather linear process that crossed several stages, from mercantilism (or commercial capitalism) and
industrialisation to the post-industrial stage. [11]
Starting from the fifth decade of the 19th century economic nationalism emphasized the big
role played by the development of the national productive forces that is by a vigorous industrial
development. [12]
For the new created national states, the first step towards economic growth was considered
to be the building of a democratic, free market institutional framework. This process lasted about
fifty or more years for the majority of the European regions during the 19th century. The new
institutions were supposed to assure freedom and welfare. A fairly timid process of industrialisation
took-off as well in the Eastern regions of Europe.
But...! A lot of hindrances were met on the way of a fast industrialization of the agricultural
or raw material exporting regions. [13] By the middle of the 19th century, manufactures were little
developed in the vast majority of the world countries. Furthermore, the propensity to
entrepreneurship and the domestic investment capital were mostly absent. More than that, monetary
economy was specific only for a relatively few areas.
Apart from the main prerequisites, such as financial capital, crafts and manufacturing
traditions, entrepreneurship and investment propensity, a major obstacle to development was the
ideology prevailing for the majority of individuals (the peasantry) in the most backwards regions
consisting of informal constraints (customs and traditions), the so-called path dependance.
The situation changed with very slow rhythms until 1940, despite the endeavours to spread
the institutions of freedom (free markets and constitutional democracies) in many regions of the
world. The assimilation of the foreing modern institutions (constitutions, civil codes) proved to be
rather formal than actual.
By 1940 no one could have said how long it would have lasted until less developed regions
economies structures, such as those of the South-Eastern European countries, would have become
compatible with the supply structure of the developed regions. However, the proper, suitable
transformation rhythms were too slow as compared to the growth rhythms of the West.
The experience of the Soviet Union was considered an encouraging example, and so
socialism became the solution for a number of less developed countries to accelerate their growth
and development rhythms.
Leapfrogging appeared to be the solution. Socialism should have been an effective
leapfrog. But was it indeed? Has Romania and other socialist countries achieved the catch up
by 1989 or after 1990?
COMPARISON CRITERIA FOR THE UNEVEN REGIONAL DEVELOPMENT
The statistical analyses [14] made during the fourth and fifth decades of the 20th century
showed great differences between the factors productivity in agriculture and industry [15], between
the standards of living, sanitary and education conditions, etc. of industrialized and raw materials
producing regions.
Meanwhile, so many works concerned with growth models and analyses have been
belaboured, that it should be really hard to accurately list them. However, the research criteria in the
field of economic growth and development can be classified in two significant groups:
The first group of criteria would include growth and development macroindicators used
for quantitative cross-countries analyses. [16]
The analysis of macroindicators offers stunning results. Lets take a simple example looking
at the GDP figures produced by the international agencies.
108
Table 1. Gross Domestic Product of Romania, according to the international estimates

- Billions of US$ -
IMF WB UN CIA
2014 2013 2013 2104
Total GDP (nominal) 53 199.9 53 189.6 53 188.1 53 188.9
Total GDP (PPP) 45 392.8 46 379.0 - - 43 288.5
Surse: http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29,
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29
Data for Total nominal GDP (Table 1) appear to be slightly different: Romania ranks on the
53rd position among the worlds countries, regions and dependencies, with about 189-199 billion
US$.
On the other side, the values mentioned for the Total PPP GDP show a staggering
difference of more than 100 billion US$: the IMF produces the greatest value, 392.8 billions of US$
(45th position), while the CIA World Factbook shows only 288.5 billions of US$ (43rd).
Table 2. Gross Domestic Product of Romania per capita, according to the international
estimates
- US$ -
IMF WB UN CIA
2014 2013 2013 2103
GDP (nominal)/capita 68 10034 73 9499 75 8705 72 8900
GDP (PPP)/capita 60 19712 59 18974 - - 77 13200
Surse: http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29_per_capita
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita
The values for Nominal GDP/capita data (Table 2) are once again divergent, lowering
Romanias position from 68th with 10034 US$/capita as given by IMF statistics to 75th place with
8705 US$/capita mentioned by the United Nations. The same happens with GDP (PPP)/capita: the
optimistical IMF data place Romania on the 60th position with 19712 US$/capita, but the
pessimistic CIA statistics see Romania on 77th place in the world with only 13200 US$/capita.
These substantial differences reveal not only distinct methodological approaches, but also
the relativity of statistical data, given the specificity of each country, region or territory represented.
The second group of criteria, the cultural and institutional background seems to be much
more important than the quantitative approach.
The rising West covered the area where European shipping, trade and handicraft, developed
during the late Middle Ages, made possible the conquest of vast overseas regions that gave birth to
the future colonial empires starting from the 16th century.
By the middle of the 20th century the worlds economic map was mostly configured. Only a
few winners, the already developed countries, were comparable to each other.
For the rest of the backwards regions newcomers, who had missed the take-off, the
predominance of the old established institutional paths, mentalities and behaviours should not
allow a reasonable quantitative comparison to the advanced societies. [17]
To many libertarians the modern constitutional-democratic and competitive free market
institutional framework appeared to be successfully applicable everywhere and anywhere. Because
it worked somewhere, it would automatically work everywhere, as an engine, or a computer,
irrespective of the cultural and educational patterns.
Romania is not a particular case, in spite of its certain originality. Leapfrogging by
importing the main formal institutions intended to a democratical and free market organization was
specific to the vast majority of the world regions. Within two or three generations the less
developed regions were expected to record growth rhythms superior to the developed countries.
109
But they didnt! Until 1940 the Romanian democracy created not even the conscience of
citizen, as Emil Cioran magistrally put it.
Adopting and adapting foreign rules is not a guarantee that they will be effective. The
radicalism of change as well as the lack of an effective authority to enforce the new constraints
begot weak institutional structures. Perhaps more important than the differences between cultures
was the manner - how - the new patterns were protruded.
The weak institutionally structured economy and society are the main outcome of a hasty
transition from unstable political and economical regimes to apparently stable and hard to assimilate
structures. History shows that radical and serious institutional changes have been followed by
enforcing regimes. From Peisistratids tyranny to Bonapartes dictatorship (Premier Empire)
compelling effectively new systems of laws has been done under strong authoritarian regimes.
Instead of a real authority starting from 1859 until 1940 Romania benefited by a persistent
laxity of the newly introduced institutions. The political and economical elites were not able to
enjoin a coherent specific juridical system. As in many other world countries (regions), the contact
with the new western constitutional structures after 1859 led to superficial and formal assimilations
of the new institutional framework.
The survival art and techniques acquired during centuries under the Turk domination and
Greek administration taught the landlord as well the peasant, the industrial employer as well the
worker to mime adaptation.
The lack of an organic evolution of the economic institutional framework is visible during
both the capitalist and the socialist systems. It is hard to speak about structures, as long as the
institutional instability was not frictional but quite symptomatic: most of the Romanian (economic)
subjects learned to permanently adopt and adapt (foreign) institutions, as everybody knows that
laws are done only to be broken.
***
Considering only the macroindicators, any comparison between economic entities is

possible and allowed. But is any comparison effective or efficient? What should we use quantitative
indicators for?
A simple list of tabulated macroindicators such as total or per capita GDP and GNP, Gini
coefficient, or the HDI showing the rank of a country or region in the world might be significant
for quizzes. It would be the same as comparing Mont Blanc, Chomolungma and Moldoveanu
peaks, as well as we may compare the number of population or the countriess areas or the land
distribution according to properties size or crops types etc..
What should we than compare?
Any development is explainable, even if it is considered to be a miracle.
Lets take, as an instance of such a miracle: the rough development of Japan. Starting
from 1867, during the Meiji Era, Japan industrialized rapidly importing capital and modern
technologies from Western Europe and USA. After only two generations, Japan was able to
successfully engage in two wars within a single decade - the first Sino-Japanese war (1894-1895)
and the Russo-Japanese war (1904-1905) gaining control of Taiwan, Koreea and the southern half
of Sakhalin. Was it really a miracle? Or was it rather an expectable evolution? How had Japan
evolved until 1867? After introducing the Chinese characters during the Heian period (from eighth
to twefth century) and developing of a system of education in the spirit of discipline, honour and
sacrifice for more than ten generations during the Tokugawa or Edo period (1603-1867) based on
bushido (samurai code of honour), Japan adopted the Western European institutions after 1967,
during the same span of time as Romania. Are these two countries comparable?
How could it ever be reasonable to compare the macroeconomical outcomes of regions with
quite different cultural or institutional paths?
Which are the common cultural background criteria for a reliable comparison between
Bermudas, Philippines, Albania, Tanzania, Bulgaria, Columbia, Japan and Norway?
110
Is it correct to call backwards a region or a country only because they didnt evolve
similarly to the developed ones?
And furthermore how could it ever be possible for a backward region to really catch up
with the advanced ones? Or, put it in other words: a region that was obedient for centuries could
catch up with an expansive (imperial) region, a colony or a neocolony with a metropolis state?
USA, Canada and Australia are the great exceptions! On the other hand, the Asian tigers Taiwan,
South Korea, Hong Kong or Singapore are not at all miracles.
Thus the term 'catch up' appears to be rather a contradictio in adjecto, a sort of oxymoron,
than a reasonable evolution of the worlds countries. The very idea of catching-up or recovery as
a consequence of lagging behind seems to be more specific to sports competitions or post-surgery
periods. Sportsmen and sportswomen engaged in a competition will not get the same results, but
they are compatible to compete: all of them are similarly trained to face competition.
Transfering the idea of backwardness to human communities (be it tribes, villages or
political-administrative entities of higher dimensions) is at least questionable. The contradiction is
engendered by the very establishment of the benchmarks for identifying backwardness. Applying
the same macroindicators to all the countries/regions appears to be as a Procustean bed.
The diversity of endowments prerequisites consisting of capital, natural, human resources,
etc., etc. would make impossible a reasonable comparison.
Effective comparisons should be made only if the prerequisites of the historical evolution
were compatible: early/late development of an expanding monetary economy, commercial network
and trading techniques, crafts traditions, capital resources, investment in education, science and
technologies resulting in national agricultural, demographic and industrial revolutions, as well as
raise in productivity, modern credit institutions, entrepreneurship, occupational diversity, policies
expanding or defensive character, etc.
Most authors assert the idea of the unavoidable, implacable, irreversible character of
globalization. Is it indeed too late to reconsider the way the humanity evolves?
ENDNOTES
* The present paper was presented in a simplified form at the trimestrial conference of the Section for Economic
history and history of economic thought of the Romanian Academy on December, 10th, 2013.
[1] Edmund Burke, Letter to Charles James Fox (1777-10-08)
[2] http://www.brainyquote.com/quotes/quotes/e/edmundburk149708.html,
http://www.brainyquote.com/quotes/authors/e/edmund_burke_2.htmlm, retrieved: 2013.08.10.
[3] http://unstats.un.org/unsd/methods/m49/m49regin.htm#ftnc, retrieved 2015.01.23.
[4] http://unstats.un.org/unsd/methods/m49/m49.htm, retrieved 2015.01.23.
[5] In the quest for economic growth, free market ideology has been embraced around the world with the fervor
of a fundamentalist religion faith. n goana dup cretere economic, ideologia pieei libere a fost mbriat
n ntreaga lume cu fervoarea unei credine religioase fundamentale.; David C. Korten, When Corporations
Rule the World, Kumarian Press Inc. i Berrett-Koehler Publishers, 1995; Corporaiile conduc lumea, Editura
Antet, 1997, p. 82.
[6] The price of economic growth during the last two centuries was the environments havoc, resource depletion,
support of local, regional, and sometimes global conflicts, as well as dilution of cultural identities in the great
ocean of worlds expected welfare. This price of accelerated development rises proportionally with the stifling
rhythms of both economic growth and technological progress supported by an exceptional credit expansion
(created fake money that became legal tender).
[7] Richard Ennals, Artifical Inteligence and Human Institutions, Springer-Verlag, London, 1991, p. 3.
[8] Cf. Alberto Martinez Piedra, Natural Law: the foundation of an orderly economic system, Lexington Books,
2004, p. 88.
[9] a peoples intelligence and strength may not suffice [], and it may hold to the lower law; or it may
happen that another nation has reached its higher constitution, thereby rising in the scale, and the first gives up
its nationality and becomes subject to the other. G. W. F. Hegel, Lectures on the History of Philosophy, vol.
II, p. 98, apud http://en.wikipedia.org/wiki/Hegelianism#Philosophy_of_history.
[10] A good deal of our thinking about industrialization of backward countries is dominated consciously or
unconsciously by the grand Marxian generalization according to which it is the history of advanced or
established industrial countries which traces out the road of development for the more backward countries.
111
Alexander Gerschenkron, Economic Backwardness in Historical Perspective, a book of essays, Cambridge,

Massachusetts: Belknap Press of Harvard University Press, 1962, p.6.
[11] The taxonomy of development stages of the world regions is obviously much more complex. See, for example,
among others, professors Frithjof Kuhnen excellent synthesis: Causes of underdevelopment and concepts for
development - an introduction to development theories at http://www.professor-frithjof-
kuhnen.de/publications/causes-of-underdevelopment/3.htm. Almost all so far existant development theories
are synthetically described: modernization, dualism, balanced growth, unbalanced growth, stages of
growth, big-push, development poles, circular causation, socio-psychological theories, sociological
explanation of socioeconomic change, theory of social change, dependence theories, external trade
theories, circular deterioration of terms of trade, theory of immiserizing growth, imperialism theory,
classical imperialism theory, modern imperialism theory.
[12] The neo-mercantilist classical work for the 19th century remains Friedrich Lists Das Nationale System der
Politischen konomie, Stuttgart, Tbingen, 1841.
[13] [] in several important respects the development of a backward country may, by the very virtue of its
backwardness, tend to differ fundamentally from that of an advanced economy. Alexander Gerschenkron, op.
cit., p.7.
[14] See for instance Industrialisation et commerce extrieur, Socit des Nations, Genve, 1945.
[15] It is worth to mention here the contribution of Mihail Manoilescu in his fundamental work Forele naionale
productive i comerul exterior, Editura tiinific i Enciclopedic, Bucureti, 1986, first edited in French,
Thorie du protectionisme et de l'echange international, Paris, 1929, translated into Italian and English, as
well as in a new edition in German: Die nationalen Produktivkrfte und der Aussenhandel; Theorie des
internationalen Warenaustausches, Berlin, Junker und Dnnhaupt verlag, 1937.
[16] For instance: World Banks World Development Indicators; UNCTAD, Handbook of Statistics; European
Union, Eurostat etc.
[17] Scholars and generally people may compare anything to anything. So, for instance, one might compare mice
with elephants, or worms with snakes. All one needs is to establish the criteria for the comparative analysis.
REFERENCES
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growth, in Handbook of Economic Growth, Volume IA, edited by Philippe Aghion and
Steven N. Durlauf, Elsevier B.V., 2005
2. Barro, R. J., Rule of Law, Democracy, and Economic Performance, n 2000 Index of
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Community, the Environment and a Sustainable Future, Beacon Press, Boston, 1989
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1991
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Koehler Publishers, 1995; Corporaiile conduc lumea, Editura Antet, 1997
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Legitimacy, American Political Science Review, 53(1), 1959, p. 69105
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10. Murgescu, Bogdan, Romnia i Europa. Acumularea decalajelor economice (1500-2010),
Editura Polirom, Iai, 2010
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University Economic Review, 22, 1-25, 1987
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Economic Growth; Technological Development and Economic Systems: Japanese
Experiences and Lessons, October 1-2, 1994, Tokyo, Japan, 1996.
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14. Nakaoka, T. (Ed.), International Comparison of Technological Formation-social capability

of industrialization, Tokyo, Chikumashobo (Japanese), 1990
15. Nakaoka, T., Science and technology in the history of modern Japan: imitation or
endogenous creativity? in A. Abdel-Malek, G. Blue and M. Pecujlic (Eds.) Science and
Technology in the Transformation of the World, The United Nations University, 1982
16. North, D. C., Institutions, Institutional Change and Economic Performance, Cambridge
University Press, 1990
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Lexington Books, 2004
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Literary Criticism From Lessing to Hegel, Cambridge University Press, 1988
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Perspectives Vol 14 No.3 (2000): pp. 217-23
20. * * The Economist, http://www.economist.com/economics-a-to-z/c#node-21529531
113
LANDMARKS IN THE EVOLUTION OF REGIONAL SCIENCE

Lecturer PhD Adrian Liviu SCUTARIU
livius@seap.usv.ro
Abstract:
This article approaches issues of regional science development, science that analyzes the phenomena and
processes related to space, distance and location. One can notice the diversity of theoretical approaches, and these can
be grouped into: theories of localization, theories of regional growth and development theories. The evolution of this
science was not linear, it has experienced both periods of boom and decay, recording remarkable progresses over time.
Along with other disciplines, in the frame of regional science stands the regional economy that studies the optimal
location of firms and the territorial economic development. The region is the core of these theoretical concerns, and
one of the problems of regional development refers to factors that determine the development of a region. Regarding
future research directions, regionalization existing in the EU provides regional science a further opportunity to
continue its development.
Key words: regional science, regional economy, region, regional development, theories
JEL classification: R10
REGIONAL SCIENCE. INTRODUCTIVE ASPECTS
Since microeconomics studies economic phenomena at the economic entity level and
macroeconomics deals with these issues at the national economy level, it is the competence of
mesoeconomics to analyze phenomena in the branches and sectors. In its logical and comprehensive
approach, the spatial approach aims to meet both micro and macroeconomics requirements and
challenges of the mesoeconomics.
Over time, many researchers have contributed to the theoretical framework of regional
science. Regional science bases were made by the representatives of the German school of spatial
economy (J. von Thnen, W. Launhardt - 19th century and A. Weber, W. Christaller, A. Lsch -
20th century) and the regionalists of the American, French, Scandinavian, Russian, Dutch schools
successfully continued the work of their predecessors.
Regional Science focused, right from its appearance, on two elements not approached by
economic theory: the distance and the area. Distance was important because of the transport costs
which influenced the market price and the location of production factors. Therefore, regional
science deals with developing methods and rigorous and systematic techniques of analysis of
phenomena and processes in which space, distance and location have a central role [1].
Regional Science Association International (RSAI), which was founded in 1954, has played
a major role in shaping regional science (in the 50s) and its subsequent evolution. Since 1956, the
Association was formally recognized as a legitimate organization in the social sciences field, and
afterwards there were created branches almost worldwide.
Establishment of regional science as a distinct field was based on the adoption, from spatial
perspective, of some concepts and methods of economics, geography, econometrics, mathematics,
sociology, political science, etc., which gives it a strong interdisciplinary character [2].
THE MAIN GROUPS OF THEORIES OF REGIONAL GROWTH AND

DEVELOPMENT
Theoretical approaches were multiple, and we intend to highlight briefly the main theories
developed in this field.
114
While there was an insufficient economic growth at regional level, the classical theory of
regional development appeared. Because at regional level the development is uneven, regional
development theory tried to explain regional growth processes, as well as the differences that are
reported in their frame.
In a first phase, it was considered that the differences among regions are not due to their
particularities, but to different rates of economic growth. Currently, it is accepted the idea that
endogenous processes of evolution, which are based on qualitative characteristics of regions, have
some influence on regional growth.
Understanding regional growth processes involves the necessity of presentation of the main
regional development theories: theories of localization, of regional growth and of development.
The first theoretical landmarks of the regional economy, as an essential part of regional
science, were recorded in the 19th century. These were the theories of localization, underlying
understanding of the interaction between space and the local economy. In essence, the theories of
localization investigate the location of firms in order to meet demand in the conditions of the lowest
costs. In the analysis some macro-regional phenomena are also brought to attention, such as
heterogeneous spatial distribution of economic activities, thus paving the way for the analysis of
territorial imbalances.
Classical and neoclassical economists of the 18h and 19th century had considered the
economic growth process as the being conditioned by the productive efficiency, by the division of
labor and by the productivity of factors of production, and according to current theories of regional
growth, growth means capacity is to increase real production of a region and the ability to maintain
it, due to cumulative economic and territorial elements [3]. From these differences of vision come
out the importance that currently has the economic adaptability to a changing economic
environment.
Development theories have the basic idea of presence of fundamental inequalities between
center and periphery, inequalities that lead to a specific dependence of peripheral regions of central
ones, which over time can diminish.
One can say that theoretical approaches were quite diverse, this diversity coming from the
fact that researchers had different visions and railed at different theoretical currents.
THE PROGRESS OF REGIONAL SCIENCE
Over time, the evolution of regional science has not been marked by linearity, but there were
both flourishing periods and less prolific ones.
Regional science recorded an evident progress during 1950-1970, but the situation changed
in the 80s, globalization capturing increasing attention to the detriment of regionalization (Figure
no. 1).
Figure no. 1. The three main periods of regional science

Source: A. Bailly, L.J. Gibson - Regional science: Directions for the future, Papers in Regional Science, 83, 2004,
p.131
115
In more than half a century of existence, regional science has sought and largely succeeded
to combine in a balanced way combine theoretical and applied research. Since the early years of
research in the field, scientists have analyzed the spatial issues, including regional differentiation.
Subsequently, other issues were approached, such as: analyzes regarding the location of new
facilities for manufacturing and services, regional development initiatives to counter the economic
and social disparities, as well as advanced spatial models for improving the efficiency of regional
planning activities [4].
According to David Boyce [5], the evolution of regional science includes several periods.
He believes that the foundation of this science was made between 1954 and 1968. Among those
who could be considered regional science pioneers is William Alonso, who first obtained a PhD in
regional science.
One of the regional science reference books, Location and Land Use (1964), was elaborated
by William Alonso, author who has worked under the direction of Walter Isard and Ben Stevens. It
should also be noted that Alonso has developed consumer and producer theory in spatial context.
The theoretical approaches of Alonso also had influence on the subsequent development of some
studies on housing markets.
The next phase, respectively 1969-1989, is considered to be what Boyce called the
expansion years and includes two periods, the boom one (1969-1976) and the expansion
(diffusion) one (1977-1989) [6]. During the boom period the researchers Peter Nijkamp
(Netherlands) and Alan Wilson (England) stands out, and the expansion one is marked by the
deployment of World Congresses and by the reconfiguration of RSAI. Also, there are signs of
disseminating knowledge and establishing of new major research centers in the field.
Boyce considers that the period 1990-2003 represents the mature years for regional
science. Among the topics discussed which have had increased attention we mention regional
convergence and competitiveness. To note is the fact that the interest for practical aspects was
brought again to attention. An important aspect for the evolution of this science was the creation of
the journal Papers in Regional Science, with a special role in improving the information flow.
However, in this period a new generation of researchers appeared, which includes also the
distinguished economist Paul Krugman. He helped create the New Economic Geography and was
involved in the development process of regional science. It should also be noted that the objective
of regional science was not rallying to the main economic current, but rather creating a new
discipline in the frame of social sciences [7]. After the elaboration of Isard's work, the researchers
Fujita, Krugman and Venables have contributed to the development of localization economy and of
the spatial economy. They also analyzed an aspect of the field which had previously been
insufficiently approached, namely, the formation and networking of cities, explained through
imperfect competition in spatial framework. However, it should be noted that with the new ideas
appeared, there have also emerged new directions for future research.
Among the iconic figures, present in all three periods of evolution of regional science,
stands out the Dutch researcher P. Nijkamp. He believes that regional science is not a discipline in
itself, because it is a set of complementary disciplinary perspectives, centered around the thematic
concept of "region" [8]. Throughout the whole development of regional science, a multidisciplinary
orientation emphasizes, this being useful to the research approaches in the field. Regional science
perspectives are closely linked to multidisciplinarity, meaning that the role of some disciplines (e.g.
economy, geography, statistics, ecology, political sciences, etc.) will still be determinant in terms of
contributions made. A future direction of development of regional science involves creating a
convergence between the different theoretical approaches, this being only partially revealed in the
new theories of regional growth [9], [10]. Although in the regional economy there are various
visions on space, there is already a shaping convergence among the main groups of theories.
Publication of journals and books on this topic, but also organization of conferences and
summer schools have escalated, contributing to the exchange of ideas and to the development of the
field. In this sense, we can mention some of the most important periodicals: The Journal of
116
Regional Science, The Annals of Regional Science, European Research in Regional Science,
Regional Science and Urban Economics, Papers in Regional Science.
Strengthening of an academic field could not take place only by editing journals, but it was
also imperative the publication of research results in the form of monographs and books. Also,
many research institutes, such as Institute for Research in Regional Science, played an important
role in the publication of materials in the field.
REGIONAL ECONOMY, REGION AND REGIONAL DEVELOPMENT
Regional science covers a range of disciplines, such as regional economy, regional planning,
rural economy, spatial sustainable development, urban economics, urban planning, etc. Regional
economy has its beginnings in the 19th century (especially the theory of economic activities
localization), developing within main currents of economic theory [11]. Regional economy is the
division of economics that studies the optimal location of firms and the territorial economic
development. Reality shows that the evolution of regional science has recorded moments of
recognition and repeated declines, without regional elements to be taken into account in the analysis
of economic life (until around 1950) [12].
The aim of regional economy is to investigate at spatial scales the links between regional
economic systems and the relations among the components of each system.
The methods and techniques developed for understanding the functioning of national
economies were the starting point for analyzing issues that the regional economy is studying.
The main reason for the existence of regional economy is related to the need to provide a
theoretical and methodological scientific basis for the regional strategies and policies, namely for
setting a coherent set of goals and ways to mitigate regional imbalances, as well as for identifying
the appropriate measures and instruments for achieving the targets set [13]. The periods of
stagnation experienced by the regional science were also felt by the regional economy. However, at
present, the regional economy is facing a challenge, namely the possibility to influence the regional
science, in order to reduce the divergence between the theoretical and practical approaches [14].
Region is the key element that lies in the center of these theoretical and practical concerns,
both in regional science (in general) and in the regional economy. The term region has its origins in
the Latin word "regionem" and it is present in most European languages, with the meaning of land,
geographic area with borders and more or less accurate characteristics [15]. This notion was used
by geographers in the early 20th century.
Assembly of European Regions (AER) adopted (in the Declaration on regionalism in
Europe - 1996) a definition in which the region is considered a territorial public entity
corresponding to the level immediately below that of the state, being administered by a government
that has its own political powers [16].
Aspects of a region were not covered by a comprehensive definition, but the idea of space as
a whole is common to all definitions of the region, so that the region is considered a unit
comprising a number of neighboring areas.
The term region is used for the delimitation of areas belonging to a certain geographical
area, both nationally and internationally.
The main problems [17] of regional development refer to the forces that drive the
development of a region, to the influence of external decisions on these forces, to the tendency of
space towards homogenization or differentiation.
The wide scope of regional development sometimes lead to overlaps with other fields in
which there are similarities in terms of content: local development, economic development or
territorial planning. Regional development is a relatively new concept, which means not only
boosting and diversifying economic activities, stimulating private sector investments, contributing
to reducing unemployment and improving living standards, but a whole environment of support and
of adaptation of sustainable actions that converge to the fields of competence of the region [18].
117
From the above aspects we see that regional development is interconnected with a whole
series of elements, which gives it a great complexity.
CONCLUSIONS
Regional science deals with developing methods and techniques for analyzing the
phenomena and processes related to space, distance and location. Theoretical approaches were quite
different, and they can be grouped into: theories of localization, theories of regional growth and
development theories. Following the presentation of some aspects of regional science evolution,
one can see that this trend was not marked by linearity, but there were both flourishing periods (50s
and 70s and the post-2000 years) and less prolific periods (80s - with the occurence of
globalization). However, over time remarkable progresses have been made, and among those who
have made notable contributions we can mention W. Alonso, W. Isard, P. Nijkamp and A. Wilson.
In the development of regional science, RSAI had an important role. The exchange of ideas was
facilitated by organizing scientific events and publishing of books and journals on this topic.
In the frame of regional science, along side other disciplines, the regional economy is of
particular importance and studies the optimal location of firms and the territorial economic
development. The region is the essential element that lies in the center of these theoretical and
practical concerns, and the factors that determine the development of a region is one of the
problems of regional development. There is no unique way to define a region, but in all definitions
of region the idea of space as a whole is found, so that the region is considered to be a unit
consisting of a number of neighboring areas.
Experts believe that regional science has promising prospects for development by
approaching current spatial problems, especially in the context of regionalization process in the EU
and the multidisciplinarity of this science is an important asset. Another aspect to be noted is that
policies are often based on theories, situation that applies also in the case of regional development.
ENDNOTES
[1] D.L. Constantin Economie regional, Editura Oscar Print, Bucureti, 1998, p.9
[2] D.L. Constantin Op. cit., p.10
[3] R. Capello Regional economics in its 1950s: recent theoretical directions and future changes, The
Annals of Regional Science, 42, 2008, p.755
[4] A. Bailly, L.J. Gibson Regional science: Directions for the future, Papers in Regional Science, 83,
2004, p.132
[5] D. Boyce - A short history of the field of regional science, Papers in Regional Science, 83, 2004
[6] A.M. Isserman - Intellectual leaders of regional science: A half-century citation study, Papers in Regional
Science, 83, 2004, p.99
[7] W. Isard - History of regional science and the Regional Science Association International: The
beginnings and early history, Springer, Berlin Heidelberg NewYork, 2003 apud B.S. Waldorf Path-
breaking books in regional science, Papers in Regional Science, 83, 2004, p.85
[8] P. Nijkamp - Regional science: Multi-disciplinarity avant la lettre, Papers in Regional Science, vol.83,
number 3, July 2004, p.517
[9] R. Capello Op. cit., p.762
[10] Among the new theories that combines elements of the main groups of regional development theories are:
the theories of endogenous local development (with elements of theories of development and of
localization) and the new economic geography (with elements of theories of location and of growth)
[11] According to D. Antonescu Dezvoltarea regional n Romnia concept, mecanisme, instituii, Editura
Oscar Print, Bucureti, 2003, p.12
[12] M. Blaug - Teoria economic n retrospectiv, Literatura economic internaional, Editura Didactic i
Pedagogic, Bucureti, 1992 apud D. Antonescu Op. cit., p.12
[13] D.L. Constantin Op. cit., 1998, p.12
[14] According to R. Capello Op. cit., p.764
[15] D. Platon Regiunile din unghiul politicilor de dezvoltare ale UE in C. Prlog, D.L. Constantin (coord.) -
Dezvoltare regional i integrare european, Lucrrile celui de-al Doilea Simpozion Naional al
118
Asociaiei Romne de tiine Regionale, 4-5 aprilie 2002, Bucureti, Editura Oscar Print, Bucureti, 2003,
p.43
[16] Assembly of European Regions - Declaration on regionalism in Europe, 1996, art. 1
[17] According to D. Antonescu Op. cit., p.12
[18] V. Pucau Dezvoltarea regional, Editura Economic, Bucureti, 2000, p.14
BIBLIOGRAPHY
1. Antonescu Daniela Dezvoltarea regional n Romnia concept, mecanisme,

instituii, Editura Oscar Print, Bucureti, 2003
2. Assembly of European Regions - Declaration on regionalism in Europe, 1996, art. 1
3. Bailly Antoine, Gibson Lay James Regional science: Directions for the future, Papers
in Regional Science, 83, 2004, pp.127-138
4. Behrens Kristian, Thisse Jacques-Franois Regional economics: a new economic
geography perspective, Regional Science and Urban Economics, 37, 2007, pp.457-465
5. Blaug Mark - Teoria economic n retrospectiv, Literatura economic internaional,
Editura Didactic i Pedagogic, Bucureti, 1992
6. Boyce David - A short history of the field of regional science, Papers in Regional
Science, 83, 2004, pp.31-57
7. Capello Roberta Regional economics in its 1950s: recent theoretical directions and
future changes, The Annals of Regional Science, 42, 2008, pp.747-767
8. Constantin Daniela Luminia Economie regional, Editura Oscar Print, Bucureti,
1998
9. Isard Walter - History of regional science and the Regional Science Association
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2003
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creating a favourable environment for enterprises, Entrepreneurial Strategies and
Policies for Economic Growth, 2012, pp. 179-188
12. Nijkamp Peter - Regional science: Multi-disciplinarity avant la lettre, Papers in
Regional Science, vol.83, number 3, July 2004, pp.516-518
13. Platon Dan Regiunile din unghiul politicilor de dezvoltare ale UE, in Prlog Cornelia,
Constantin Daniela Luminia (coord.) - Dezvoltare regional i integrare european,
Lucrrile celui de-al Doilea Simpozion Naional al Asociaiei Romne de tiine
Regionale, 4-5 aprilie 2002, Bucureti, Editura Oscar Print, Bucureti, 2003, pp.43-49
14. Pucau Violeta Dezvoltarea regional, Editura Economic, Bucureti, 2000
15. Richardson Harry W. Regional and urban economics, Pitman Publishing Ltd.,
London, 1973
16. Scutariu Adrian Liviu - Aspects regarding the interconnection of regional science with
regional development, The USV Annals of Economics and Public Administration,
Volume 12, Issue 1(15), 2012, pp.84-90
17. Scutariu Adrian Liviu - Cercetarea fenomenului turistic din perspectiv regional, Tez
de doctorat, Universitatea Alexandru Ioan Cuza din Iai, 2013
18. Stanciu Pavel - Studiul pensiunilor turistice din judeul Suceava, Revista de turism-
studii i cercetri n turism, Nr. 4, 2007, pp.48-53
19. Waldorf Brigitte S. - Path-breaking books in regional science, Papers in Regional
Science, 83, 2004, pp.59-89
20. Zaharia Petronela - Aspects related to the autonomy manifestation in local public
administration management, The USV Annals of Economics and Public
Administration, Volume 13, Issue 1(17), 2013, pp. 273-279
119
THE MODEL OF CROSS-BORDER COOPERATION IN THE

ROMANIAN-BULGARIAN NEIGHBOURHOOD AREA BETWEEN
DESIRE AND REALIZATION
Lecturer PhD Bogdan Vasile ILEANU

Academy of Economic Studies, Bucharest, Romania
Departement of Statistics and Econometrics
ileanub@yahoo.com

Professor PhD Daniela Luminita CONSTANTIN
Department of Administration and Public Management
danielaconstantin_2005@yahoo.com

Associate Professor PhD Claudiu HERTELIU
Department of Statistics and Econometrics
claudiu.herteliu@gmail.com

Professor PhD Tudorel ANDREI
Department of Statistics and Econometrics
andreitudorel@yahoo.com
Abstract:
This paper develops some findings from the project entitled Bulgarian-Romanian Area Identities: A
Neighbourhood Study (BRAINS), funded by the European Regional Development Fund under the auspices of the
Romania-Bulgaria Trans-border Cooperation Programme 2007-2013, Priority Axis 3 Economic and Social
Development. More precisely, it aims to explore the manner in which the cross-border cooperation model perceived by
the Romanian and Bulgarian citizens living in the cooperation area responds the current economic and social
challenges. The main issue investigated is: does the local population as a main actor in the Romanian-Bulgarian
Neighbourhood Area (ROBULNA) connect its aspirations with the realities, possibilities and potential of this area?
The correlation degree between these two aspects is established starting from the project sampled data connected with
the official data from the Romanian and Bulgarian 2011 censuses. The analysis relates and comments upon aspects
regarding human capital, unemployment, economic structure and their distribution in ROBULNA, revealing fields of
both convergent and divergent opinions, which enhance or, on the contrary, create difficulties in constructing an
integrated cross-border cooperation action.
Key words: ROBULNA, trans-border cooperation model, regional analysis, county analysis Romania,
Bulgaria,
JEL classification: R19, R10, P48
1. INTRODUCTION
The new political and economic environment, characterized by the influences of

globalisation, internationalisation and integration, has determined major changes in the structure of
strategic relationships. Inter alia, they have transformed the functions of international borders, with
new challenges and opportunities in terms of interconnections, cooperation between countries and
regions (Clement, 1997; McMaster, 2013).
In this context various definitions and diverse types of border regions have been brought
into discussion, as well as different spatial scales of corresponding analyses (van Geenhuizen et al.,
1996). Thus, border regions can be addressed as border areas as public authority regions and as
functional economic spaces (van Geenhuizen, 1996, .675). According to Ratti (Ratti, 1994) and
120
Greenhuizen(van Geenhuizen ,1996) four approaches are usually employed for border areas, as
follows: the functional activity approach, focusing on the identification of the functional impact of
the border on the development of the neighbor regions; the core-periphery approach, which
considers the border areas as institutional and economic outskirts; the regional system approach,
emphasizing the role played by the borders in the restructuring processes at regional level; the
strategic planning approach, closely related to the strategic behavior of the actors involved in the
economic planning and their perception of borders as separation lines.
At present the border areas are more and more subject to territorial cooperation, which
creates appropriate conditions for functional cooperation between adjacent territorial units aiming at
solving problems of common interest (McMaster, 2013).
Territorial cooperation can take the form of cross-border (when adjacent regions are
envisaged), transnational (when regional and local authorities are involved) and interregional
(characterized by information exchange and experience sharing at larger scale) cooperation
(McMaster, 2013;Perkmann, 2003; Scott, 2002).
As far as the European Union is concerned, European territorial cooperation (ETC) is a
clear objective of the Cohesion Policy. In the 2007-2103 programme period it counted 53 cross-
border programmes, 13 transnational programmes and an interregional cooperation programme,
affecting more than 500 million people. All these programmes were funded via the European Fund
for Regional Developemnt, the allocated budget representing approx. 8.7 billion euros.
A distinctive feature resulted from the European integration processes, leading to the free
movement of services, capital and labour is the creation of two significantly different types of
borders, namely internal between EU member states and external between EU member states
and non-member states.
The accession to the EU of the new member states has brought about important changes in
their transborder cooperation, particularly in the internal borderland areas: formal legal
arrangements have been established and the shaping of connections between the actors of
cooperation in these border areas regional and local governments, local communities, business
firms, education, cultural and scientific institutions, NGOs, etc. has gained a considerable
importance (Dolzblasz and Raczyk, 2010).
The impact of successful territorial cooperation is examined in terms of economic growth,
job creation, quality of life, quality of natural environment, services provision, international trade,
foreign direct investment, tourism, social commuting, migration, educational exchanges, etc.
(Celinaka-Janowicz et al., 2013). A structural equation model measuring such impacts has been
elaborated and tested within the ESPON project TERCO European Territorial Cooperation as a
Factor of Growth, Jobs and Quality of Life (ESPON TERCO, 2013). The results with regard to
the most important factors for the success of territorial cooperation point to those that initiate the
cooperation people, stakeholders and resources, highlighting the need of responsible involvement
in this process from its early stages.
In the same register with the findings of the TERCO project, our paper points out the need
to investigate the opinions of the involved actors about the fields of cooperation and correlate them
considering the local identities in the participating regions as a part of the background for
establishing realistic strategies for cooperation. It offers as case study the opinions expressed by the
inhabitants from ROBULNA [1], demonstrating a variety of ideas and behaviours depending on
the investigated aspect and local identity features. They can serve as a background in order to
formulate policies able to contribute to surmounting the existing barriers and formulating a coherent
cooperation model.
2. DATA AND METHODS
The starting point of our research has been a questionnaire aiming to study the inhabitants
opinions with regard to the potential cooperation opportunities, so as to define the most suitable
121
cross-border cooperation model, in accordance with the profile of the two sub-areas (Romanian and
Bulgarian) involved.
The analysis is based on a mix of micro and macro-data related to ROBULNA, collected from
different sources:
a) Micro-data were collected during November and December 2012 from a sample of 1015
units, adult inhabitants living in the neighbourhood area, in the seven counties from the
South of Romania, and 900 respondents interviewed during almost in the same period from
the nine border districts of Bulgaria (see Map 1).
Map 1. Romanian-Bulgarian Neighborhood Area (ROBULNA)
Source: edited by the authors starting from the source available on the BRAINS project homepage http://robulna.eu/en/
The sample distribution by county and district is presented in Table 1.
Table 1. Sample distribution by county

County Share(%) District Share (%)
1 Mehedinti 14.3 1.Vidin 6.3
2 Dolj 14.3 2.Veliko Trnovo 16.1
3 Olt 14.3 3.Vratsa 11.3
4 Teleorman 14.3 4.Dobric 11.4
5 Giurgiu 14.3 5.Montana 9.1
6 Calarasi 14.3 6.Plevna 16.5
7 Constanta 14.3 7.Razgrad 7.6
8.Ruse 14.5
Total 100.0 9.Silistra 7.3
Total 100.0
The sample distribution by age and by gender is very close to the official data. Thus 55.6% of
the respondents are females and the rest of 44.4 % are males. On the Bulgarian side a share of
51.4% is represented by females.
Regarding the distribution by age it can be mentioned that 44.9 % of the Romanian
respondents are close to middle age (30-49 years), 37.6% are over 50 years and only 17.4% are
youngers, aged below 30 years. 31. 3% of the Bulgarian respondents are in the middle age, 18.6%
are aged below 30 years and the rest of 50.2% are aged over 50 years old.
Most of the respondents have at least medium level of education, while 21.3 % of
Romanians and 22.5 % of Bulgarians have higher education.
The question addressed to the target population described above was: To what extent are you
influenced by the following factors, when you maintain /intend to maintain relations with your
Bulgarian/Romanian neighbours? with the following predefined answers: Finding job
122
opportunities, Finding business opportunities, Finding study opportunities in schools and

universities, Finding opportunities to learn the neighbor language , Finding health care
opportunities in hospitals, spa and wellness centres, etc., Finding opportunities related to culture
industries, Finding tourism opportunities, Finding holidays opportunities, Finding
shopping opportunities, Finding entertainment opportunities, Finding opportunities to support
civil society causes and goals, Finding opportunities to share my solidarity with
interest/pressure groups, Finding opportunities to participate in EU cross-border projects,
Finding a partner and creating a family, Getting acquainted with values, behaviors, traditions
of my Bulgarian neighbors, Tasting dishes of the Bulgarian cuisine.
b) Macro-data were taken from official data sources provided by National Institute of Statistics
(NSI) from Romania [2] and Bulgaria [3]. In order to explain the citizens behaviour socio-
economic conditions were analysed at county/ district level. Thus unemployment rates,
population structure by education, population structure by age and occupational status were
taken into consideration.
c) A special category of data - distance between residence center of the county/ district and
cross-border point Giurgiu/Ruse - the only one available in 2012, were structured by authors
taking into account basic information provided by three specialize web-sites, namely
www.distanta.ro, www. Jeka.ro and http://distante-rutiere.turism-zone.ro/
The answers to the questionnaire have been processed using the multiple correspondences analysis,
the results being presented in Figure 1.
Figure 1. The results of multiple correspondences analysis
1 Finding job opportunities, 2Finding business opportunities, 3 Finding study opportunities in schools and universities, 4 Finding opportunities
to learn the neighbor language, 5Finding health care opportunities in hospitals, spa and wellness centers, etc., 6 Finding opportunities related to
culture industries, 7 Finding tourism opportunities, 8Finding holidays opportunities, 9 Finding shopping opportunities, 10.Finding
entertainment opportunities, 11Finding opportunities to support civil society causes and goals,12Finding opportunities to share my solidarity
with interest/pressure groups, 13 Finding opportunities to participate in EU cross-border projects, 14.Finding a partner and creating a family 15
Getting acquainted with values, behaviours, traditions of my Bulgarian neighbours, 16 Tasting dishes of the Bulgarian/Romanian cuisine
Source: authors computation and design
123
3. RESULTS
The first result which can be noticed from available data is the fact that there is no evidence
of a common or specific opinion between Romanian and Bulgarians regarding the background of
actual or future close cooperation.
The overall spread can be explained taking into account some general aspects also
highlighted by other Romanian and Bulgarian studies and some particular aspects which are
specific to each entity.
One of the general aspects which characterize this complex neighborhood area is related to
high regional and county/district disparities. The problem of disparities was earlier underlined by
many researches with regard to different aspects. Various Romanian studies are making discussion
regarding the situation in the counties which now are included in the ROBULNA area. For
example, Goschin et al. (2008) point out disparities between territorial units and also classify the 42
counties based on absolute level and trends of disparities. Three ROBULNA counties, namely
Teleorman, Giurgiu and Calarasi are classified on this occasion in the poorest category, their main
indicators showing high time-decline.
Ileanu (Ileanu et al., 2009) shows that in the counties from South of Romania the small and
medium enterprises, as engine of the economy, form only small, fragile clusters, rather based on
customer capital than on core-value such as human or organizational capital.
A more recent study (Constantin, 2013) Constantin reveals that the inequalities within
NUTS2 regions (between counties) are more important than the interregional balances, the
Romanian area situated alongside the Danube river being a relevant example in this context. Not
least, as it was shown before in (Ileanu, 2013) some problems of communication or policy
transmission between different levels of public or private management authorities might exist. In
this case they may be counted on factor list which creates such distances between territorial areas.
The same aspects can be also remarked across the border, in Bulgaria, where Kirilova
(Kirilova,2013) noticed a high level of disparities between districts.
Beside the general aspects dominated by local disparities, particular aspects are highlighted
starting from results revealed in the Figure 1.
The Romanian counties and Bulgarian districts are spread overall the standardized space,
generally being in different quadrants and respondents attributes are associated with only a few
districts/counties.
The lowest standardized distance between Romanian and Bulgarians, as seen in the figure, is
between Giurgiu-Ruse-Veliko-Trnovo, county which makes the connection with Bulgarian districts
through the main road between counties.
The distance from the communities from Vidin and Dolj, which has multiple dimensions
is pregnant. Despite the historical facts, at the moment of the research study the bridge between
Danube towns Vidin and Calafat was not functional.
Some joint opinions could be seen between the administrative territories from the same
country, rather based on neighborhood characteristics. Enhancing this idea can be mentioned that:
-Citizens from Vidin are more interested in Finding study opportunities in schools and
universities or Finding opportunities to learn the neighbor language and it is the only district
with significant whishes related to education purposes. One explanation might be represented by the
fact that Vidin is at least twice closer to the Romanian city Craiova than to Sofia or Varna, as the
most important university centers, taking into account that the new passage possibility, the bridge
Vidin-Calafat will be finished soon [4].
- In Silistra district, people are more interested in job or business opportunities, mainly
because according to official macro-data found at Bulgarian NSI, Silistra was ranking in 2012 on
third place after Vidin and Razgrad by highest unemployment rate (16%). None of the Romanian
counties from the cross-border has such huge unemployment rate. Moreover in this area there is one
of the lowest shares of people with tertiary education from all Bulgarian districts. But the most
124
important issue is that Silistra has a ratio of retired to employed persons of 35% [5], the highest in
Bulgaria, double as value compared for example with Sofia. In this case the worst conditions of the
citizens determine them to seek any possibility of work.
-A special group of counties-districtis is formed by Calarasi, Montana, Olt and Dobrich,
where the inhabitants seem to have no expectancies about joint collaboration with neighbors.
-Citizens from Ruse are more likely to find health or other wealth benefits opportunities in
Romania.
-Items 10,12,14,16 which refer to entertainment, solidarity, family/relationship and testing
neighbor dishes are very far from the citizens expectancies.
4. CONCLUSIONS
The quantitative analysis reveals a relative distance between Romanian and Bulgarians.
Main opportunities which may be expected as joint activities should be created around education
and work: find/offer job opportunities, find offer education opportunities. The absence of a common
opinion regarding joy, feelings or solidarity opportunities warns about the difficulty of constructing
an integrated cross-border cooperation action. The importance of opportunities based on work and
education is an effect of the low socio-economic profile of the citizens around the border.
These differences might be also the consequences of an unstable economic situation,
underlined by lack of different types of capital and high disparities between counties as researchers
have shown, during a long period after 1990, in both countries, in areas alongside the Danube.
Dominated by local problems (intra-counties or intra-districts) the citizens are not able even to think
about potential cross-border cooperation.
Given these circumstances, in a broader perspective, future cooperation has to take into
consideration regional and local identities as an important element for the economic and social
development of ROBULNA, turning to good account the potential of the whole area. The changing
status of the Romanian-Bulgarian border, which is now an internal border of the EU raises
economic, cultural, administrative challenges in order to unite the border counties/districts: they
have to identify variables that can be controlled by these border areas and, thus, to formulate
adequate strategies for their joint economic, social and cultural development.
Acknowledgement: The authors acknowledge the support received from Professor Constantin
Apostol and Professor Mimi Kornazheva, the Romanian and, respectively, the Bulgarian
coordinators of the Bulgarian-Romanian Area Identities: A Neighbourhood Study (BRAINS)
project, 2(21)-3.1-11, MIS ETC:651, funded via the Romania-Bulgaria Trans-border Cooperation
Programme 2007-2013, Priority Axis 3 Economic and Social Development.
5. ENDNOTES
[1] Within the BRAINS project besides the inhabitants opinions about the fields of cooperation the opinions of
the local administration and business firms have been also studied.
[2] www.insse.ro
[3] http://www.nsi.bg/en/
[4] At the moment of the survey Vidin-Calafat bridge was not finished.
[5] Authors calculations using 2011 Bulgarian census data.
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16. Kirilova Y. (2013), Regional disparities in Bulgaria - evaluation and policy implications,
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126
ANALYSIS OF ROMANIAN FISHERIES AND AQUACULTURE IN

REGIONAL CONTEXT
Professor PhD Mihaela NECULITA
Dunarea de Jos University of Galati, Romania
Department of Economics
neculitam@yahoo.fr

Professor PhD Liliana Mihaela MOGA
Dunarea de Jos University of Galati, Romania
Department of Economics
liliana.moga@gmail.com
Abstract:
Integration in European Union assumes obtaining certain benefits. Fisheries and aquaculture can provide a
key contribution to food security and poverty alleviation. Employment in the sector has grown faster than the worlds
population, providing jobs and supports the livelihoods of hundreds of millions. Fish continues to be one of the most-
traded food commodities worldwide being very important for developing countries. However, productivity gains in
fisheries do not always imply long-term increases in supply. Developing countries are continuing their efforts to clarify
the linkage between development activities and sustainable resource use. Both population and economic growth are
putting enormous additional pressures on inland and marine fisheries resources as contributors to food security and
providers of a social safety net. At the same time, the use of domestic fisheries to generate foreign exchange is
exacerbating allocation issues between artisan and industrial fleets. The actual fisheries legislation was influence by
social, economic and environmental considerations. The paper proposes an integrated analysis of Romanian situation
by means of data and statistics provided by European and national statistics institutions. Fisheries in general and
aquaculture sector in particular could be regarded as an advantage for Romania in the European competition. The
main problem of the Romanian fisheries is its unsatisfactory competitiveness both regarding the domestic and
European market.
Key words: aquaculture, fishery, food security, integration, policy
JEL classification: F15, Q13, Q22
I. INTRODUCTION
The aim of this paper is to analyze Romanian fishery and aquaculture situation to the
regional level in the 8 development regions of Romania: North-West, Center, North-East, South-
East, South, BucharestIlfov, South-West, West.(Moga and Constantin, 2011). Romania's
development regions do not actually have an administrative status and do not have a legislative or
executive council or government. The main regions function is to allocate European Union funds
for regional development.
The paper analyzes the current Romanian fisheries and aquaculture sector because fishery is
very important in supply the European seafood market.
In Romania, the fisheries sector includes aquaculture, marine and inland fishing, processing
and marketing. Romanias main fishery production component is aquaculture, followed by inland
fisheries, while fishery activities along the coastline of the Black Sea remain limited when
compared to the importance of inland fisheries. (Figure 1)
Marine fishing takes place only in the Romanian Black Sea national waters and the national
fishing fleet is represented by the small scale fishery. Commercial inland fishing takes place in
rivers, ponds, reservoirs, the Danube River, the Danube Delta and the Danube Delta Biosphere
Reserve. The Romanian aquaculture sector is predominantly freshwater and regarding the extensive
farming, they have the advantage of preserving the quality of the water. Recently the extensive fish
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farms provide other service such as: ecological tourism, recreational fishing, and educational
activities.
Figure no. 1. Romanian fish productions. Variable trend (2005-2013)

Souce: Romanian market analysis of fish and fish products, ROMPOP 2014
The data analysis shows that, Romania's fish production has fluctuated (unpublished). In
2005 was 13,337 tones, registering a maximum of 17 942 tones in 2008, after which the economic
crisis, fell to approx. 11.600 tons in 2010 and 2011, the last two years, 2012 and 2013, registering a
recovery up to 13,500 -15,000 tons.
Fisheries and aquaculture, along with fish processing and trade of fish products are activities
present in all regions of the country. In some isolated areas, such as Danube Delta, fishing is one of
the main activities that provide employment and sources of income for the local population.
II. METHODOLOGY
The paper develops a methodological framework establishing statistical methods for

measuring and analyzing the interaction between regional integration and regional development to
the national level and the influence it has on Romanian fisheries and aquaculture production.
Data were collected and processed from the national institutions and Eurostat. The period
considered is 2005-2013.
III. AQUACULTURE AND FISHERIE SECTOR
1. Aquaculture
The Romanian aquaculture production represents the most important part in fish production,
in terms of share ranging. Its weight varies in period 2005 - 2013 from 54% to 76% of total
production, with an average of 68% of the total production.
The Romanian traditional aquaculture system is extensive or semi-intensive, and based on
cyprinid polyculture.( Zaharia 2012)) The main species produced in Romania from aquaculture to
2005 was dominated by cyprinids, both Indigenous and Asian origin(such as: silver carp, bighead
carp and grass carp), representing 85% of the total, 15% being represented by trout, perch, pike,
perch, catfish, sturgeon, etc. After the cyprinids, the second species produced is trout sharing 9%,
followed by crucian carp with 9%.
Many of the pond sites are degraded, as they have been given little or no maintenance over
15 years. Unfortunately, an important part of the existing aquaculture surfaces are unsuitable for
aquaculture, particularly since they have not been adapted to the requirements of modern
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production processes. There are over 100.000 ha designated for aquaculture activities in Romania,
structured in fish farms, hatcheries, and nurseries. (Table 1)
After 90 the aquaculture production decline as consequence of the transition to the market
economy, low investments and an unclear institutional and legal framework, particularly as regards
land ownership (Cristea, Zugravu et al 2011). Today, the production recovered, but we have more
to do until will reach the European average.
Table no. 1. Distribution of aquaculture units by region

Nurseries Farms %
Region Units Facilities Total area
area area
North-East 58 72 9412,2 942,014 8470,18 9,2
South-East 93 99 66726,1 3385,26 63340,7 65
South 143 160 14122,5 1472,81 12649,7 14
South-West 38 39 2544,15 129,312 2414,83 2,5
West 39 37 1709,22 279,676 1429,55 1,7
North-West 66 75 3128,84 380,741 2748,09 3
Center 53 57 2726,49 83,3207 2643,17 2,7
BucharestIlfov 28 5 1986,2 0 1986,2 1,9
TOTAL 518 575 102356 6673,14 95682,3 100
Source: ANPA (RUA, PNCD)
2. Inland fishing
Inland fishing is carried out as main, full time occupations, often by traditional fishers. In
some case, it is a subsistence activity for people who have insufficient income from other sources
(Zugravu, Turek Rahoveanu et al 2011).
Fish catches made in inland waters during 2005 2013 (Figure 2) are at a relatively constant
level. The lowest production was recorded in 2010 and was 2457.1 tons and the largest amount,
6.045 tons, was registered in 2006. In 2013 was a production of 3094.3 tons, the highest in the last 3
years.
Figure no. 2. Romanian inland fishing(tons). Variable trend (2005-2013)

The analysis of the average values of catches by species during 2005 - 2013 (Figure 2)
shows that the main species caught in inland waters were: crucian carp 41,2%, bream 16,7%, roach
5,9%, carp 4,7%, pike perch 4,4%, catfish 4,2%, pike 2,6%, Danube mackerel 8,4%. Predatory fish
represent 12,25% of the period average catch.
3. Marine fishing
In the period 2006 - 2013, Black Sea catches recorded in 2010 a minimum of 230.9 tonnes
and a maximum in 2013 of 1617.3 tons, this is mainly due to the increased demand for rapana,
representing over 50% of the marine production obtained. (Figure 3)
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Figura no. 3. - Regions share of catches from commercial fishing. Shares in 2013
The situation in the Black Sea catch is as follows: 2008 - 443,9 tons, 2009 - 331,8 tons,
2010 - 230,9 tons, 2011 - 537,2 tons, 2012 810,6 tons, 2013 1.617,3 tons.
Regarding processing industry of fishery and aquaculture products we observed a
concentration of these units in areas with a tradition of fishing and fish farming, respectively in the
South-East region (Figure 4) formed by counties with a large hydrographic network.
Figura no. 4. - Distribution processing industry units by region. Shares in 2013

In Romania, the overall value of the output of the processing industry amounts to around
44504 EUR Value of the output in 2011 (in thousands of EUR) and the number of persons
employed measured in full-time equivalent national was1178. Consumption varies in European
Union from 5.3 Kg per person in Hungary and 6.3Kg per person in Romania to 56.7kg per person
in Portugal according to EUROSTAT( FAO -STECF, The 2013 Annual Economic Report).
Aquaculture fish production is about 17,000 tons and the rest up to 90,000 tons, as is the
annual consumption in Romania, is covered by imports. Our country provides less than 20% of
consumption.
It predicts that the total market fish (fresh and frozen) will continue to grow about 25-30%
each year. One of the problems of suppliers is lack of qualified personnel in factories and shops.
Fish is most sensitive meat and when you are dealing with this product or with fresh seafood, the
problem is the warranty. It takes well-qualified people to implement traceability systems. Economic
objective is to increase fish consumption from 6 Kg per person per year in Romania, to an average
of 20kg per person per year in European Union.
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Table no. 2. Fish consumption evolution [thousand tons]

2008 2009 2010 2011 2012 2013
Sales of fish from domestic sources, to
population and processing units. Total 16,2 16,1 11,5 11,6 13,4 14,5
of wich:
Fish from aquaculture *** 12,5 13,1 8,8 8,4 10,0 10,0
Fish from marine and inland fishing 3,7** 3,0** 2,7** 3,2** 3,4* 4,5*
Imports*** 89,6 90,2 86,0 69,2 74,4 74,8
Exports *** 1,7 4,1 4,7 6,5 6,2 6,3
Total intern consumption (= 1+2-3) 104,1 102,2 92,8 74,3 81,6 83,0
Consumption per capita (kg/pers/year) 4,6 4,6 4,1 3,3 3,6 3,6
Source: * M.A.D.R.; **ANPA statistics; *** EUROSTAT
4. Economic performance
From 2013 to 2012, total income decreased by 16%, while the operational cost decreased by
15%. The total income is dominated by the turnover from the sale of fish from the farms, which
contributes 65% of total income, leaving only 33% to other income and only 2% for subsidies.
The feed costs are 21%, livestock costs are 18% and wages and salaries 20%.. The total
expenditures totalize 68% of the total income. The total value of assets decreased in 2013
comparing with 2012 by 11% and debts increased by 3%. This is mainly due to the decreasing
number of bigger farms and increasing the number of small farms. The net investment increased
180%, but it is still low.
It is importance to increase the local production and reduce the dependence from the import(
more than 100,000 tones are imported annually). The price is driven by the trout price, which has
remained at the relative constant level.
For the Romania aquaculture producers 2013 was better than 2012 because the Romania
sector opportunities are at a higher level. The economic crisis and the consequences are over
passed. The new regulation, especially its provisions stimulating aquaculture production is expected
to increasing the investments in the sector for on growing production.
IV. CONCLUSION
In case of the 8 regions, have been observed for aquaculture, inland fishing and marine
fishing, certain needs of the actors involved, needs that lead to a slow positive trend compared with
the European situation.
Aquaculture sector needs more efficient production activity, investments in rehabilitation
and sites modernization, state intervention through legislative simplification, fiscal incentives, use
of allocated funds and funding partnerships with research institutions.
Commercial fisheries (inland and marine fishing) should invest in the modernization of
ports, fishing fleet, promoting fishery products, implementing an integrated traceability system for
monitoring the entire route from capture to final consumer, compensation and subsidies for
unforeseen circumstances. Across all regions, identified needs for processing are related to the
efficiency of the production activity, the use of allocated funds and state intervention measures.
Must trace the improvement of product quality, problem that influence the marketing of
products internally and externally. Product quality is conditioned by European and international
regulations and the Romanian water legislation (difficulty of land tabulation) which sometimes
hinders the development of fish farming.
Product diversification is very important, Romania has to sell new species, especially
valuable species to attract new market share to national and international level. Increasing market
share is based on sales growth,, which is based on marketing and on effective management of
distribution channels. Market share is influenced by the buyer reticence for commercialization of
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fish from natural environment or from aquaculture. In Romania the population prefers fish from the
natural environment, even if aquaculture fish do not suffer genetic mutations.
Romania has a special situation in Europe because we do not have a fishing fleet. However,
in all 8 regions, the share of sales of native species is holds by carp, crucian carp followed with
20% and then followed the other freshwater species. Although in recent years has stimulated the
research for development sturgeon aquaculture, the lack of habit and lack of market consumption
prevented its commercialization.
However to expand the production further the industry needs new licenses, modernizing the
existent farms, and training of the staff, new technologies to be applied(Dong, Moga et al 2011).
V. ACKNOWLEDGEMENT
This research was financed by the Programme Partenerships in Priority Areas National Plan
for Research, Development and Innovation 2007 2013 (PN II), sponsored by Ministry of National
Education Executive Agency for Higher Education, Research, Development and Innovation Funding
(MEN UEFISCDI), project no. 167/2014, Cloud computing based traceability information system
for fishery.
VI. REFERENCES
1. Cristea, V., Zugravu, A., Moga, L., Cristea, D., Maftei, C.O., Oprea, R.A.(2011) Impact of
Information Technology Management Processes on Fish Farming, Journal of Environmental
Protection and Ecology, ISSN 1311-5065, Vol. 12, nr. 4
2. Dong Tian, L.M. Moga, C. Nistor, X. Zhang, C. Oprit Maftei (2011)A Decision Support System
for Water Pollution Assessment and Control in Aquaculture Pond, Journal of Environmental
Protection and Ecology, ISSN 1311-5065, Vol. 12, Nr. 3A
3. Moga L. M., Constantin D.L. (2011) Specialization and geographic concentration of the
economic activities in the Romanian regions, Journal of Applied Quantitative Methods, vol. 6, no. 2
p.15
4. Zaharia T.(2012) National aquaculture sector overview: Romania, in: Proceedings of the
International Conference, Scientific and Technical Innovation in the Blue Economic Zone, 18 - 19
May, 2012, Yantai, PR China, Editura Didactic i Pedagogic, Bucureti, ISBN 978-973-30-3305-
9: 71-86
5. Zugravu, Neculi, Turek Rahoveanu(2011) Information System for Financial Analysis and
Economic Planning within Fish Farms, The XVIIth International Conference IBIMA (International
Business Information Management Association) Creating Global Competitive Economies: A 360-
degree Approach, Milano, Italia, Proceedings cotat ISI
*** (2014) - Romanian market analysis of fish and fish products, chap. 3, Conceta Silva
Consulting Company, Agrotec, Geastrategy & Consulting, Studiu ROMPOP, unpublished
*** (2013) - The Economic Performance of the EU Aquaculture Sector Scientific, Technical and
Economic Committee for Fisheries (STECF) Report
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COMPETITIVENESS AND INNOVATION IN THE ROMANIAN

REGIONS HOW MUCH PROGRESS DURING THE POST-
ACCESSION PERIOD?
Senior Researcher Carmen Beatrice PAUNA
Institute for Economic Forecasting, Bucharest, Romania
carmenbpauna@gmail.com

Senior Researcher Marioara IORDAN
miordan@ipe.ro

Senior Researcher MihaelaNona CHILIAN
cnona@ipe.ro

Abstract:
The paper aims to assess the latest developments in the competitiveness of the Romanian regions, with a
particular focus on innovation as one of its key determinants. Different sets of indicators are used and comparisons
with the EU countries and their regions are provided. The results reveal some progress towards better competitive
positioning, but little advancement in the field of innovation in most of the Romanian regions (below 50% of the EU
average). This exposes a systemic weakness of the innovation process in Romania, determined by both the national
RDI system and the business sector, which calls for sustained efforts at multiple levels (political, economic,
institutional, social, entrepreneurial, both nationally and regionally) to overcome the current stagnation and push
strongly towards the most needed change in mindsets and actions in the near future.
Key words: Romanian regions, regional competitiveness, regional innovation, composite indices
JEL classification: O30, R10, R11
1. DEFINING REGIONAL COMPETITIVENESS
In a broad sense, competitiveness may be defined as the ability of a country, measured against
the performance of other countries, to build up and ensure an economic, social and political
environment able to support the accelerated value added creation. At national level, competitiveness
also entails a territorial dimension, the territorial spread of the competitive economic agents being rather
unequal, but usually concentrated in certain areas of the national territory. As regards this issue, the
broad concept of competitiveness also involves defining its limits, the standard competitiveness
analyses usually emphasizing three competitiveness levels country, industry and company (Porter,
1990; Reiljan et al., 2000), while the more recent ones expanded towards sub-regions and supra-
national organizations (Reiljan et al., 2000). At regional level, competitiveness must capture the fact
that despite the presence within the region of both competitive and not competitive actors/structures,
there are also certain common features in every region that impact on the competitiveness of all its
companies. Such features include, among others, the social and physical infrastructure, labor skills, and
public institution efficiency.
The complexity of regional competitiveness was also captured by an analytical
decomposition by four levels (elaborated by Esser in 1995 and presented by Annoni and Kozlovska
in 2010 in their report on the regional competitiveness index of the EU), in which different types of
competitiveness drivers operate: i) the micro level, the competitiveness drivers focusing on the
efforts of companies and on their collaboration/company networks; ii) the medium level, which
aims at creating an enabling environment for companies, the competitiveness drivers focusing on
the physical infrastructure, on the competitiveness-oriented sectoral policies (education and R&D,
industrial policy, environment policy, export promotion), but also on territorially-focused policies
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(regional policy, localization policy, territorial promotion), iii) the macro level, which includes the
macroeconomic, political and legal framework which favors competition, its key drivers being the
monetary, budget and fiscal policies, the trade and exchange rate policies, the competition and
consumer protection policies and iv) the meta-level, which pertains to the basic societal directions,
its drivers being the competitive economic system, the capability to elaborate visions and strategies,
value systems that encourage learning and change, collective memory, social cohesion, social
capital, social status of entrepreneurs. At regional/sub-regional/local level, the four levels are
interconnected, although their degree of relevance differs; however, what is interesting is the fact
that lately the significance of the meta-level seemed to have increased within the territorial units in
what regards the choice of their development paths and ways, especially in the long and medium
term.
Finally, we mention the most recent definition, proposed by the report on the EU Regional
Competitiveness Index 2013, which integrates both the vision of the companies and that of the
people located in/residents of a region: regional competitiveness may be defined as the ability to
provide the companies and residents with an attractive and sustainable working and living
environment, sustainability being considered the ability of a region to provide an attractive
environment both on the long and on the short term (Annoni, Dijsktra, 2013).
2. ASSESSMENT OF REGIONAL COMPETITIVENESS IN THE EUROPEAN UNION

AND ROMANIA
Different ways to assess the regional competitiveness may be found in the specialized literature,
one of the most often used being that regarding the aggregate/composite competitiveness indicators.
However, some specialists say (Jula et al., 1998, 1999) that it can be difficult to build an aggregate
indicator in order to assess regional competitiveness starting from its defining elements, because it
is not easy to choose what to include in such an index, due to the elusiveness and non-direct
observation of the concept itself. Moreover, practically all the indicators which are relevant for
competitiveness are inter-correlated, so that causality is difficult to assess. However, efforts can be
done to distinguish between the drivers of competitiveness and its outputs.
One may find many studies which compute global competitiveness indices, but mostly at
country level (for instance, those computed by the World Economic Forum and International
Institute for Management Development). Beside them, there are studies dealing with regional
competitiveness that use fewer indicators than in the case of the national competitiveness indices.
From among them we mention the European Competitiveness Index (ECI), United Kingdom
Competitiveness Index, World Knowledge Competitiveness Index (elaborated by Robert Huggins
Associates), Atlas of Regional Competitiveness (Eurochambers) and, in Romania, the regional
competitiveness index elaborated in 2007 by the Group for Applied Economics, the regions
competitiveness index elaborated in 2011 by IRECSON and the regional competitiveness indices
elaborated on the basis of integrative model proposed by Prof. Cezar Mereu (Mereu et al., 2007;
Chilian, 2011).
Based on the methodology employed by the World Economic Forum, which yearly
publishes the Global Competitiveness Report, an index of competitiveness of regions was elaborated
in the EU (for the NUTS-2 regions), with 11 pillars and 73 indicators [2], organized by three groups
(basic competencies, efficiency drivers and innovation drivers), which cover a wider range of
factors than purely economic aspects. The pillars of this indicator are the following [3]: i) basic
competencies: i1) institutional quality, i2) macroeconomic stability, i3) infrastructure, i4) health, i4)
primary and secondary education quality; ii) efficiency drivers: ii1) higher education and lifelong
learning, ii2) labor market efficiency, ii3) market size; iii) innovation drivers: iii1) technological
readiness, iii2) business sophistication, and iii3) innovation. The i1)-i5) pillars have greater
significance for the less developed regions, while the iii1)-iii3) pillars for the more advanced
regions (especially for those with a very high development level), but also for the regions in
transition from a lower towards a higher development stage. For each pillar, a score is computed as
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simple average of the standardized and/or transformed indicators (some indicators are computed
only nation-wide), and the final score (total RCI) is computed as weighted average of the three
basic pillars.
Because different indicators have a different impact on regions competitiveness in
accordance with their development levels, the weights attached to the three groups of drivers were
correlated with the regional GDP per capita (3 weighting classes in the 2010 version and 5 classes
in the 2013 version). This may also provide useful insights to the decision-makers, because
competitiveness of a less developed region may be enhanced, for instance, by increasing the
institutional and educational quality, as well as by increasing innovation. In fact, this was
recognized by the authors of the RCI report, who increased the weight of innovation drivers also in
the case of the less developed regional economies, in order to reward the innovation policies in
such regions (Annoni, Dijkstra, 2013) (Table 1).
Table 1. RCI weighting scheme of sub-indices of main competitiveness drivers, the 2013
version
GDP per capita, in Development Basic Efficiency drivers Innovation drivers
relation to the EU stage competencies pillar pillar
average pillar
< 50 1 35% 50.00% 15%
50-75 2 31.25% 50.00% 18.75%
75-90 3 27.50% 50.00% 22.50%
90-110 4 23.75% 50.00% 26.25%
>110 5 20.00% 50.00% 30.00%
Source: Taken from P. Annoni, L. Dijkstra, EU Regional Competitiveness Index 2013, JRC Scientific and Policy Reports,
European Commission, DG for Regional and Urban Policy, ISBN-978-92-79-32370-6, 2013.
In the European Union, the regional competitiveness index (RCI) reveals a remarkable
regional dimension of competitiveness, both among the member states, and inside them. One may
notice large differences between the group of the more developed states (EU-15) and the less
developed ones (NMS-13) regarding also the territorial distribution of competitiveness drivers and
the channels of its diffusion among the regions [4]. The first 10 top competitive regions may all be
found in the EU-15 countries (more precisely, in 7 countries: the Netherlands 3 regions, the United
Kingdom 3 regions, Sweden, Germany, France and Denmark one region each). At the opposite
end, the least 10 competitive regions are equally found in EU-15 countries (Greece 5 regions!)
and in NMS-13 countries (Romania 3 regions and Bulgaria 2 regions). Considering the three
main pillars of RCI, the situation does not change much, although the number of countries varies
within larger limits (Table 2). Unfortunately, in the case of basic competencies pillar almost all the
regions of Romania are may be found among the least 10 competitive European regions, while in
the case of innovation drivers pillars six regions of Romania are similarly unfavorable positioned.
Table 2. The top and the least competitive 10 regions of the EU countries, as according to the
RCI 2013 pillars
Basic competencies pillar Efficiency drivers pillars Innovation drivers pillar
Top 10 regions Last 10 regions Top 10 regions Last 10 regions Top 10 regions Last 10 regions
Netherlands 6 Romania 7 Netherlands 6 Greece 5 Germany 3 Romania 6
regions! regions! regions! regions! regions! regions!
Finland 4 Bulgaria 2 United Kingdom Spain 2 Sweden, United Bulgaria 3
regions regions 3 regions regions Kingdom, regions
Greece 1 France 1 France 2 Denmark, Greece 1
region region region Belgium, regions
Bulgaria 1 Finland,
region Netherlands,
Luxembourg
(NUTS-1) 1
region each
135
Source: Computations based on data from P. Annoni, L. Dijkstra, EU Regional Competitiveness Index 2013, JRC
Scientific and Policy Reports, European Commission, DG for Regional and Urban Policy, ISBN-978-92-79-32370-6,
2013.
The inter-regional overall competitiveness gaps [5] in the EU countries are of a higher
magnitude in the case of the EU-15 countries than in the case of the NMS-13 countries, but
considering the three pillars the situation differs (Tables 3 and 4). Thus, while in the case of basic
competencies pillar the inter-regional gaps are similar in the two groups of countries, in that of
efficiency drivers pillar the inter-regional gaps are somewhat higher in the EU-15 countries, and in
that of innovation drivers pillar the highest inter-regional gaps are accounted for by the NMS-13
countries (namely by Romania).
Table 3. Inter-regional competitiveness gaps in the EU-15 countries

Basic Efficiency Innovation
competencies drivers drivers RCI
pillar pillar pillar 2013
Belgium 1.32 1.42 1.70 1.45
Denmark 1.05 1.32 1.63 1.32
Germany 1.23 1.47 1.67 1.46
Ireland 1.03 1.23 1.24 1.20
Greece 1.80 3.39 3.80 2.80
Spain 1.22 5.23 2.47 2.75
France 1.64 35.02 2.57 3.64
Continental
France 1.42 2.61 2.19 2.15
Italy 1.37 2.93 1.92 1.94
Netherlands 1.13 1.43 1.59 1.35
Austria 1.12 1.20 1.52 1.17
Portugal 1.21 2.04 2.17 1.77
Finland 1.06 1.34 1.61 1.22
Sweden 1.13 1.54 1.98 1.52
United Kingdom 1.33 1.83 3.04 1.66
Source: Authors computations based on data from P. Annoni, L. Dijkstra, EU Regional Competitiveness Index 2013, JRC
2013.
Table 4. Inter-regional competitiveness gaps in the NMS-13 countries

Basic Efficiency Innovation
competencies drivers drivers RCI
pillar pillar pillar 2013
Bulgaria 1.80 1.94 3.83 2.15
Czech
Republic 1.13 1.45 1.94 1.42
Croatia 1.03 1.14 1.03 1.08
Hungary 1.27 1.62 2.01 1.65
Poland 1.42 2.08 2.64 1.61
Romania 1.60 3.15 7.03 3.25
Slovenia 1.02 1.19 1.42 1.19
Slovakia 1.29 2.57 2.35 2.11
Source: Authors computations based on data from P. Annoni, L. Dijkstra, EU Regional Competitiveness Index 2013, JRC
2013.
When assessing the regional competitiveness gaps, we also consider as interesting and
useful the assessment of the possible theoretical influence of the maximum, and the minimum ranks
of regions, respectively [6], for the RCI and its three pillars. The gaps among the EU countries are
136
very large in such a case. The highest (theoretical) competitive influence of the maximum ranks of
regions may be noticed, both for the RCI and for its pillars, exactly in the countries with regions in
Top 10 competitive positions (United Kingdom, Sweden, Germany, Netherlands, Denmark, France
and Belgium), and the lowest in countries with regions in weaker or medium competitive positions
(Greece, Italy), or in countries with small gaps between the maximum and the minimum ranks
(Austria, Ireland), and vice versa in the case of the competitive influence of the regions minimum
ranks. In the NMS-13 countries, the influences of competitive positions of both the minimum and
the maximum ranks are of smaller magnitude and almost similar (except for Slovakia, which comes
closer to some EU-15 countries). Also in this case, the most striking gaps may be found for the
innovation drivers pillar, which appears to be the key factor for sustainability of the competitive
positions of the regions of the EU countries.
As regards Romania, except for the Bucuresti-Ilfov region, all the regions were positioned
among the least competitive in the European Union (ranks higher than 240, from among 262
positions), and the Sud-Est region was ranked the penultimate among the EU regions (the lowest
overall competitiveness score from among the regions of the new member states, beside the
Severozapaden region of Bulgaria also in 2010). Also, in the case of certain sub-indices of
competitiveness drivers pillars, at least one Romanian region may be found as ranked last in the
NMS regions or even in the entire UE: all Romanian regions in the case of basic education, the
Bucuresti-Ilfov region in the case of institutional quality, the Sud-Vest Oltenia region in the case of
infrastructure, the Vest region in the case of basic competencies pillar, the Sud-Est region in the
case of health, higher education and lifelong learning, labor market efficiency and efficiency
drivers and innovation drivers pillars, the Nord-Est region in the case of market size, technological
readiness and innovation drivers pillar, the Sud Muntenia region in the case of business
sophistication. One may also notice that the Bucuresti-Ilfov region (the most developed in
Romania, with the highest competitive position except for the basic competencies pillar) is
surrounded by regions with much worse competitive positions (Sud Muntenia, Sud-Est and Sud-
Vest Oltenia), which reveals the concentration of competitiveness drivers on its territory and the
limited nature of competitiveness diffusion, due both to the poor quality of transport
infrastructure, and, mostly, to the significant gaps regarding the sectoral structure and dynamics,
business development and propensity to innovate. In fact, the Bucuresti-Ilfov region is already
included among the regions in the 4th development stage (namely, transition towards an innovation-
driven economy), unlike the rest of the regions, which are included among the regions in the 2nd
stage of development (namely, transition towards an efficiency-driven economy the Vest region)
or even in the 1st stage of development (basic competencies-driven economy the other regions of
Romania).
3. INNOVATION PERFORMANCE IN THE ROMANIAN REGIONS
Since innovation is a key driver of competitiveness, both at national and regional level, we
present in the following some issues in this respect. Thus, the regional performance in innovation in
the EU regions [7] was determined by the Regional Innovation Scoreboard (RIS), according to
which the regions of the EU member countries were classified by four performance groups, as
follows: innovation leaders (34 regions), innovation followers (57 regions), average innovators (68
regions) and modest innovators (31 regions Figure 1). As one may see, although the regional
innovation performance may largely vary within a country, generally in the EU the regional
performance groups are correlated with the national ones. One may notice a clear innovation divide
between the countries (and regions) of the Northern and Western Europe, and the Southern and
Eastern Europe. Romania has a single region that exceeds the modest innovators level - the
Bucuresti-Ilfov region, included in the average innovators group results in line with those
regarding the competitiveness performance of the Romanian regions.
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Figure 1. Innovation performance of the EU countries regions
Source: Regional Innovation Scoreboard 2014, Directorate-General for Enterprise and Industry, European Commission.
The regions that are innovation leaders registered the best performance regarding all the
indicators considered for the analysis, by about 30% above the EU averages, while the regions that
are modest innovators registered the lowest performance, especially regarding the business
innovation performance. Despite the presence in such regions of highly skilled and educated labor
force, they experience both major weaknesses concerning the other fields of the regional innovation
systems, and negative impacts due to the hindrances from the part of the national RD&I systems of
the countries of which they are components. In the case of the Romanian regions, the evolution of
the overall innovation performance gaps over the interval 2004-2010 was positive for six of the
eight development regions, except for the Sud-Vest Oltenia and Vest regions, which registered
negative average annual growth rates of RIS ranging between -2.5% and 0% (Figure 2). The best
evolutions of the innovation performance were registered by the Bucuresti-Ilfov, Sud Muntenia,
Nord-Vest and Nord-Est regions.
Figure 2. Evolution of innovation performance of the EU regions
Source: Regional Innovation Scoreboard 2014, Directorate-General for Enterprise and Industry, European Commission.
When analyzing the performance of the Romanian regions regarding the RIS indicators
(Table 5), we may notice that most of them have registered performance below the level of 50% of
the EU average for all indicators. Paradoxically, some of the regions with lower development levels
138
(Nord-Est, Sud-Vest Oltenia) have registered slightly better performance for certain indicators
correlated to a higher extend with the innovation capability and the capability of trading the results
of innovation, and regions with a higher development levels (Vest, but also Bucuresti-Ilfov) have
registered poorer performance. However, on the whole, the weaknesses of the innovation process in
Romania, due both to the national RD&I system, and to the business structures and their inner
relationships, are also true at the regional level, which call for action at multiple levels (political,
economic, institutional, social, entrepreneurial) in order to overcome the current unfavorable
situation and build up the premises for a mindset shift and operational action in the very near future.
Table 5. Features of the innovation performance in the Romanian regions

Indicators Performance level Performance level Performance Performance level
> 120% of the EU between 90% and level between <50% of the EU
average 120% of the EU 50% and 90% average
average of the EU
average
Share of population Bucuresti-Ilfov Nord-Est, Sud-Est, Sud
aged 25-64 years Muntenia, Sud-Vest
with higher Oltenia, Vest, Nord-
educational level Vest, Centru
Research on R&D in Bucuresti-Ilfov Nord-Est, Sud-Est, Sud
the public sector as Muntenia, Sud-Vest
% of the GDP Oltenia, Vest, Nord-
Vest, Centru
Research on R&D in Nord-Est, Sud-Est, Sud
the business sector Muntenia, Sud-Vest
as % of the GDP Oltenia, Vest, Nord-
Vest, Centru, Bucuresti-
Ilfov
Non-R&D Sud-Est Nord-Est, Centru, Bucuresti-Ilfov, Nord-
innovation Vest, Sud Vest, Sud-Vest Oltenia
expenditures as % of Muntenia
turnover
Single innovating Nord-Est, Sud-Est, Sud
SMEs, as of total Muntenia, Sud-Vest
SMEs Oltenia, Nord-Vest,
Centru, Bucuresti-Ilfov.
Regiunea Vest lips
date
Collaborations Nord-Est, Sud-Est, Sud
between the Muntenia, Sud-Vest
innovative SMEs, as Oltenia, Vest, Nord-
% of SMEs Vest, Centru, Bucuresti-
Ilfov
EPO patent Nord-Est, Sud-Est, Sud
applications per bill. Muntenia, Sud-Vest
regional GDP (PPS) Oltenia, Vest, Nord-
Vest, Centru, Bucuresti-
Ilfov
Product or process Nord-Est, Sud-Est, Sud
innovators as % of Muntenia, Sud-Vest
SMEs Oltenia, Nord-Vest,
Centru, Bucuresti-Ilfov.
Regiunea Vest
unavailable data
Marketing or Nord-Est Bucuresti-Ilfov, Sud-Est, Sud Muntenia,
organizational Sud-Vest Oltenia Vest, Nord-Vest, Centru
innovators % of
SMEs
Employment in Vest Bucuresti-Ilfov Centru, Sud Nord-Est, Sud-Est, Sud-
medium and high- Muntenia Vest Oltenia, Nord-Vest
139
tech manufacturing
and in knowledge-
intensive services, as
% of total
employment
Sales due to new-to- Sud Muntenia,
Nord-Est, Sud- Vest
market or new-to- Centru Est, Sud-Vest
firm innovations, as Oltenia, Nord-
% of turnover Vest, Bucuresti-
Ilfov
Source: Adaptation based on information from Regional Innovation Scoreboard 2014, Directorate-General for
Enterprise and Industry, European Commission.
[1] The paper presents some partial research results of the research themes Stimularea clusterelor locale - factor
determinant al competitivitti regionale coordinator Carmen Beatrice Puna, Institute for Economic Forecasting,
Bucharest, 2013, mimeo and Identificarea reelelor inovative n dinamica economic a spaiului European cazul
Romniei. Capitalul uman. Dezvoltarea economic bazat pe cunoatere, inovare i inteligen, coordinator Carmen
Beatrice Puna, Institute for Economic Forecasting, Bucharest, 2014, mimeo.
[2] The 2013 version; the 2010 version has included 69 indicators.
[3] Investing in Europes future, Fifth report on economic, social and territorial cohesion, European Union, 2010 and
P. Annoni, L. Dijkstra, EU Regional Competitiveness Index 2013, JRC Scientific and Policy Reports, European
Commission, DG for Regional and Urban Policy, ISBN-978-92-79-32370-6, 2013.
[4] Data available upon request.
[5] Computed by the ratio of normalized (score+2) maximum to minimum scores for each EU country with at least two
NUTS-2 regions.
[6] Computed as according to the formulas: (Rmax-Rmin)*Rmin/(Rmax-Rmin)*Rmax, and (Rmax-Rmin)*Rmax/(Rmax-
Rmin)*Rmin, respectively. Data available upon request.
[7] 190 analyzed regions, from 22 EU countries, Norway and Switzerland, in 2004, 2006, 2008 and 2010 Regional
Innovation Scoreboard 2014, Directorate-General for Enterprise and Industry, European Commission.
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141
DEVELOPMENT OF CROSS-BORDER AREAS. STUDY CASES

REVIEW
PhD Marcela LUSARCIUC
University tefan cel Mare Suceava/Institute of National Economy Bucharest, Romania
slusarciuc.marcela@usv.ro
Abstract:
The paper aims to review study cases found in the scientific literature concerning the development of cross-
border areas in European Union and its neighbourhood. The introductory part of the paper is drawing few
considerations about the cross-border areas. Further we identified in the specific literature relevant study cases that
provide lessons learned, tools and models that can contribute to the development of the cross-border areas. The last
part of the paper is focusing on an inquiry about how this lessons, learned, tools and models may be adapted in case of
cross-border areas along the Romanian border with the EU Eastern Neighbourhood.
Key words: cross-border area, economic development, Eastern Neighbourhood
JEL classification: P48, R58
1. INTRODUCTION
The present paper is part of a larger research frame that has as objective to analyze in a
multidisciplinary frame the economic development poles that are located in the border areas and to
identify the way in which the viable development strategies can be applied in the cross-border
context, therefore to propose a setting up of a new architecture for the cross-border areas
development. As a step in this research we consider some relevant study cases that scientific
literature provides about cross-border areas, inside the European Union Borders and at its borders
with Eastern neighbours, in order to figure out lessons learned, tools and models that can contribute
to the development of the cross-border areas. For the selected cases we considered, partly or
entirely, few elements: the existence of historical encouraging/discouraging background, existence
of written treaties/agreements, diplomatic exchanges at national level, partnership relations,
financing framework, existence of a strategy, the involved actors (public administration, civil
society, companies, universities), particularities that mark the cross-border area. We will use these
elements in order to figure out a development frame for the cross-border areas along the Romanian
border with the EU Eastern Neighbourhood, namely with Ukraine and Republic of Moldova.
2. FEW CONSIDERATIONS ABOUT CROSS-BORDER CONTEXT
If we think at the borders it is constructive to accept that their existence cannot be avoided, as
a continuous element, the only changeable being the character and courses of borders, therefore, the
Europe territorial limits will be temporary in terms of political relevance (Langer, 2012). A vivid
example is the one of the borders and border regionals in the Central and Eastern part of Europe
that faced many changes in the last decades. On the one side we have the free movement in the
Schengen area but limited by the lack of trust in some Member States in terms of border control
abilities and on the other side the problems that an open border brings specific crimes, food
security issues, environmental pollution issues, traffic, so on.
Beyond all these, the cooperation among local and regional authorities from the different
sides of the border make tighter relations between regions and countries, making from Europe a
place for meeting the diversities in many fields economic, politic, institutional cultural or
professional (Bohner, 2011). The governance of the cross-border regions cannot be approached in
the traditional political or territorial sense, instead having the approach of networks among many
public and private actors bringing together different social systems based on different system values
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(Lepik, 2011), and therefore, the decisions are not depending so much on national level. That makes
the cross-border regions in EU and its neighbourhood as forms of institutional building due to the
demanding changes along the borders, involvement of different types of local governance and the
interaction of multilevel governance networks local, regional, European and even global
(Lissandrello, 2004). The researches about the cross-border areas generally compare the living
conditions on the both sides of a border and the relations across the border, with consideration of
the political order of the two states, the geostrategic balance, the mode of historical establishment of
the border, the degree of openness and permeability, emotional loadings (Langer, 2012). Sometimes
the cross-border cooperation is not limited to involvement of border cities or regions only, but also
growth centers, such as capital cities (Lepik, 2011).
An encouraging frame of cross-border cooperation at European level is the one of the legal
instruments, which has two main sources: the Council of Europe and the European Union
(Odendahl, 2011). The Council of Europe provides mainly three sets of instruments conventions,
recommendations and political declarations, all of them issued and/or adopted by the Committee of
Ministers, to which it may be added some others that do not have immediate impact, such as
decisions of the Committee of Ministers or activities that are promoting the cross-border
cooperation in Europe. The instruments provided by the European Union are different than the ones
that Council of Europe uses but are complementary, widening the legal frame of the cross-border
cooperation. European Union focuses on technical and financial support of cross-border
cooperation, both inside the EU borders and between EU and its Neighbours. Therefore there are
funds and programmes Cohesion and Regional Policy, European Neighbourhood Policy, Pre-
Accession Policy. Relevant to be mentioned is the European Grouping of Territorial Cooperation -
EGTC (European Parliament and of the Council of European Union, 2006), that is a cooperation
instrument at the EU level established for the creation of cooperative groups on its territory,
invested with legal personality, in order to overcome the obstacles hindering territorial cooperation
and the use of this instrument is optional. An EGTC must have members from at least two member
states and members can include local or regional authorities, bodies governed by public law within
the meaning of the second subparagraph of Article 1(9) of Directive 2004/18/EC, or Member States
and the composition and powers should be described in a convention that is subject to approval by
the member states with members in the body.
After these short getting through we should retain the reality of border existence and the
always changing course and character of it, the network governance of the cross-border regions and
the existence of a complex legal frame for cross-border cooperation in Europe as elements that are
part of the cross-border cooperation context in Europe.
3. MODELS FOR DEVELOPMENT OF CROSS-BORDER AREAS
In the following we will go through some study cases found in the literature in order to
identify lessons learned, tools and models that can contribute to the development of the cross-border
areas. We made two groups of study cases one formed by cases of cross-border cooperation inside
the borders of European Union, between member states, and one formed by cases of cross-border
cooperation at the borders of the European Union, between member states and neighbouring
countries. Some of the cases we used in a previous paper as partnership and cooperation models
examples in order to illustrate the challenges and the solutions that the partners identified aiming a
good partnership in the benefit of all countries or regions involved (Slusarciuc, 2013).
3.1. Cross-border development cases inside the European Union borders

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a. Polish-German border
Widely, one model of cooperation is the Polish-German cross-border mainly because the
historical disadvantageous background deeply imprinted in the memory of the inhabitants from the
cross-border area was overcome. There is a Polish-German cooperation treaty focused on three
main areas: conservation activities, logistical activities concerning the establishment of consistent
protection goals according to international agreements and planning of a coherent system for
environmental management between the two countries (Degrski, 2008). The area benefited by the
European funds through the INTERREG programme few lessons being important (Ciok & Raczyk,
2008), such as, a polarization is created by the cooperation programmes in the cross-border areas
and a change in the structure of projects is recommended, with more focus on economic and social
integration and less on infrastructure. There is relevant also the cooperation and networking
between the capitals of the two countries, that consist of a deeper and complementary level of
collaboration (Korcelli-Olejniczak, 2008). The support for the cross-border cooperation in this area
comes from different levels: EU, national governments, regional authorities from both sides of the
border, Euroregions and local administrations, therefore nowadays the Polish-German cross-border
cooperation serve as a model for the regions at the Eastern border of EU, having similarities
between this border and the Ukrainian-Polish one (Gorzelak, 2006). A specific element that helped
the neighbours at the border between Germany and Poland to become familiar with each other,
eroded the language and cultural barriers and increased the regional consciousness may was the
existence and good functioning of the Euroregions, as example Euroregion Pro Europa Viadrina
(Yoder, 2003). Consequently, the region took the first steps in this direction through the promotion
of common interests, common goals and common institutions.
b. Danish-German border (Malloy, 2010)
We found a study case that shows the contribution of national minorities to the building of a
new frame for cooperation in the so considered old DanishGerman border region, transforming it
into a European cross-border regional space for politics. Todays border region covers the old
Duchy of Slesvig (Danish) or Schleswig (German), meaning the area from the River Eider in
todays Schleswig-Holstein in Germany to the River Kongeaen in todays Region Syddanmark in
Denmark. The area had a changeable leadership during time until 1920 when a permanent division
put an end to this state, establishing two national minorities, the German minority residing in
southern Denmark and the Danish minority residing in northern Germany. Subsequently, it
followed events and conflicts that broke the relationship between the two states, the rebuilding after
1945 of a cooperative relationship being a slow and difficult process. Early stages of cross-border
development had a slow progress partly because of the almost diametrically opposed views and
actions about the EU in the border region in the middle of 1990s, some opinions quoted in the same
cited paper considering that there is not one border/barrier but four, a structural (legal) one, a
language one, a cultural one and an information one. Therefore, in the last part of 1990s there were
political tensions augmented by economic ones, caused by uneven economic development between
the two national economies across the border. Still, the actors from both sides of the border,
meaning national minorities, changed this largely antagonistic situation and, throughout the 1990s
and 2000s, rebuilt the border region through transforming it into a European space for politics.
c. Three Borders area Austria, Italy, Slovenia (Janschitz & Kofler, 2006)
A case where the historical roots led to closed connections between three countries is the one
of the cross-border area between Austria, Italy and Slovenia. Economic issues, political decision-
making process and social patterns were the influencing factors for the communities on all the sides
of the common borders, this being considered a multicultural living space by virtue of a shared
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history and material culture, as well as geographical proximity. All the three countries, as member
states, assumed a common European identity and benefit by financing programmes as PHARE CBC
and INTEREG, the financial framework helping various cross-border projects and activities. The
first step of an institutionalized cooperation was made at the national level in 1978, through the
Working Community Alpe-Adria organization that includes regions from more than the three
countries (Austria, Croatia, Germany, Hungary, Italy, Slovenia and Switzerland). The aim was
focused on economic development, traffic, tourism, water management, cultural relations and other
related issues. The European funds created the context for specific projects: development of a cross-
border cooperation plan for common marketing of cultural monuments and cultural events, design
of common offers for recreation and touristic attractions, tourism development concept for the
Three Borders Area that promotes a variety of cultural sites, social aspects and natural resources
that united and divided the area in the past, the application of a coordinated bid for Olympic Winter
Games 2006 with a common marketing view and many more.
d. Italo-Slovene border (Lipott, 2013)
The case of Italo-Slovene border is relevant due to the example of border twin towns Gorizia
and Nova Goriza, located in the two states. Gorizia was home for three different communities
German, Italian and Slovene until 1918, later, in 1947, being founded Nova Goriza as a separate
town on the other side of the border, in a different political and economic system. Due to relations
and acquaintances, people cooperated on land property issues first and culture and sport later. In
1962, the Udine Accords set up new frame for cooperation on finding solutions to practical issues
as drinking water supply, urban planning, roads, local traffic, environmental protection or mutual
consultation. In 1990 it was signed the Transfrontier Pact, later named Collaboration Protocol, that
added an organizational frame to already existing cooperation on economic basis and cooperation
between municipalities. In 2002, the mayors of the two cities and the one of Sempeter-Vrtojba
created the three executives body as an area of collaboration with regular meetings. The funds
from INTERREG programme helped to run projects, a significant one being EureGo as a private
law association of Slovenian and Italian local administrative bodies (59 Italian and 13 Slovenian).
In 2010, the three municipalities mentioned earlier established the first European Grouping of
Territorial Cooperation as mentioned in a previous section of this paper.
e. Slovenian-Croatian Border
This cross-border area has an interesting dynamic because both countries had history of open
border and cross-border cooperation as parts of former Yugoslavia, the change later when Slovenia
became member state of the EU in 2004 and of the Schengen area in the same year and a recent
change again when Croatia became member state too in 2013. The cross-border trade, the petty
trade, the visits from a country to other for consumption goods influenced significantly the
economic cooperation between the two countries in the cross-border area. 1999 was the year when
it was ratified a free trade agreement between the two countries that contributed at a large extent to
the economic cooperation between the two states (Barbi, 2006). Officials realized that during the
intermediate time, when the border between the two countries was not so open, the exports from
Croatia to Slovenia declined because of the border rules change and despite the long and peaceful
tradition along the border, these changes in status affected the economic relationships (Pavlakovich-
Kochi & Stiperski, 2006). Before Croatia becoming member states both countries receive financial
assistance for cross-border cooperation from EU through Slovenia-Croatia IPA Cross-border
Programme, component of the Instrument for Pre-Accession Assistance that follows an
INTERREG Community Initiative for the period 2000-2006, during which there were implemented
cooperation projects in fields of economic and social development and sustainable management of
the natural resources. The actual financing frame is through INTERREG programmes inside EU
borders.
145
f. Hungarian-Croatian Border (Hajdu, 2006)
The case of Hungary-Croatia cross-border area is one example of a cross-border area marked
by various historic events, some of them even tragic, therefore the relationship between the two
countries and the international interests marked the cross-border cooperation. Following the 1991
Yugoslavian war, in parallel with the internal changes in Hungarian political, economic and social
life, the border crossing started to decline after 1990, Croatian market became risky for Ukrainian
entrepreneurs, the only growing trade relations being the ones about gasoline and gun running.
After that, the development of the two countries was different, Hungarian economy turning
westward, fact that declined more the trade relationships with former Yugoslavia countries. Few
years later the small border traffic started to develop, Croatian people crossing the frontier in order
to buy consumer goods. The Croatian state started to revive, opening to the Hungarian Chambers of
Commerce and Industry along the border that had initiatives of initiating representation agency in
Croatia. On the other side, the national levels manifest desire of cooperation and potential for good
cross-border cooperation and after 2013 the both countries EU membership status make the relation
easier. The national levels is focused on cooperation on some specific issues: transportation
infrastructure, utilization of Adria oil pipeline and the management of the Drava River, while at the
local level the counties, cities and communities from both sides of the border have contacts with
each other in the frame of cross-border projects in fields of tourism, environment, cooperative
economy and intercommunity human resource development. The European funds played a good
role in the enhancement of the cross-border cooperation between Hungary and Croatia through the
IPA Cross-border Cooperation Programme and for the actual programming period there is the setup
of Hungary-Croatia Cross-border Cooperation Programme 2014-2020.
g. Vienna-Bratislava metropolitan region (Jao, 2008)
A relevant case is the one of the most closely located pair of capitals in the world - two cities
that are administrative and economic centers for the two neighbourhood countries Austria and
Slovak Republic. The proximity was favouring the development of the cooperation between the two
countries influencing significantly the relationship between different actors in the region. The
cooperation was strategically built on few clear issues: the Vienna-Bratislava region intends to
become a development pole of European significance, considering the concentration of human,
scientific, cultural, technological and institutional potentials, the adequate transportation and
communication interconnections to other development poles in Europe; the efforts are concentrated
for building a residential, economic and cultural center for the upper and middle Danube line; the
region aims to become one of the development centers in Central Europe, important issue in the
frame of the accession of the four Visegrad countries (Czech Republic, Hungary, Poland and
Slovakia); the region targets to be an economic, cultural and information gateway to Austria and
Slovakia. The accomplishment of these structured objectives can make a model area for cross-
border development.
h. Eurometropolis LilleKortrijkTournai metropolitan governance (Durand &

Lamour, 2014)
The Eurometropolis is considered one of the pioneering spaces regarding the cross-border
cooperation at metropolitan level. In 1991 the relations gained an official frame the relations official
through a flexible and informal institution - the Confrence Permanente Intercommunale
Transfrontalire (COPIT) and later, in 2008, it was created a new institution, a European Grouping
of Territorial Cooperation (EGTC). The COPIT, as cross-border structure bringing together French
and Belgian local authorities, had a limited scope for action and was quite dependent on central
state funds. Still, the ground rules for cooperation were established also at national level through
146
agreements reached in the last 20 years that allowed the development of a local cross-border
dynamic controlled by the state. For an improved governance and cooperation possibilities in 2000
started a series of ratifications of cooperation processes by the French and Belgian governments,
therefore, in 2002 the two countries signed the Brussels Agreement, that allowed cross-border
cooperation between the regional and local authorities and the local public bodies in the shared
Franco-Belgian space. A year later the French CIADT (Interministerial committee for spatial
planning and development) supported the setting up of a parliamentary working group. In 2007,
their conclusions used as starting point for a cooperation project and for the signing of the
Declaration of intention for the creation of the Eurometropolis LilleKortrijkTournai by the 14
founding members and in the next the creation of the Eurometropolis was officially recognized
thanks to a French bylaw, which introduced all institutional levels, including states themselves, into
cross-border governance. This case is relevant because multi-level governance seems best adapted
to managing cross-border cooperation, due to involvement of numerous actors and the differences
in power distribution on either side of the border. EGTC functions here as a flexible institutional
structure that connects two systems of state powers.
i. Espace Mont-Blanc Project (Lissandrello, 2004)
The EMB Project started in 1991 together with the decision making forum Conference
Transfrontaliere du Mont-Blanc as an area to solve, in a cross-border cooperation frame, the issues
of international environmental protection in a mountain area, with the benefits of the previous
endeavours that international non-governmental organizations did. The financial help of
INTERREG programmes boosted the project aims, involved the national decision makers from
Switzerland, Italy and France, together with local administrations and international NGOs and put
the label Espace instead of Park. Despite the accident with the Mont-Blanc Tunnel, the EMB
Project pursued to develop a common understanding of the sustainable development concept based
on tri-lateral relationships in a regional context. By now, under the label and platform of Espace
Mont-Blanc1 there were many joint projects for region development in fields as sustainable
development, mountain agriculture, nature and landscape, integrated tourism and transport. It is a
good case of cross-border cooperation and strategy among a nature object and the interests linked
with it.
j. Centrope Project (Swiatek, 2013)
Centrope is a regional space created by a political project with the aim to promote the region
as a competitive location in the Central Europe covering part from four European countries:
Slovakia, Austria, Hungary and Czech Republic. It was initially funded by INTERREG funds as a
joint initiative of the Austrian Federal Provinces of Vienna, Lower Austria and Burgenland, the
Czech Region of South Moravia, the Slovak Regions of Bratislava and Trnava, the Hungarian
Counties of Gyr-Moson-Sopron and Vas as well as the Cities of Bratislava, Brno, Eisenstadt,
Gyr, Sopron, St. Plten, Szombathely and Trnava. This cooperation project intended to create a
multilateral and sustainable framework for the cooperation of local and regional authorities, public
institutions and enterprises in the Central European Region. Specific goals consisted mainly in
creating of polycentric cooperation framework which should allow all the partners to work jointly
and more effectively on the cross border issues. The Centrope Project had a preparatory phase
(2002-2003) and 3 main phases: Centrope I (2003-2006), Centrope II (2006-2007) and Centrope III
(2008 and later), all of them benefited by EU funds through INTERREG and European Territorial
Cooperation programmes. The relevance of this project for us consist in at least few aspects: high
number of countries and partners involved, duration of the project and multi-phases planning
approach.
1
www.espace-mont-blanc.com/
147
3.2. Cross-border development cases at the Eastern border of the European Union
a. Hungary and the Eastern neighbours
The case of Eastern borders of Hungary is relevant to mention due to the cross-border
cooperation approach through Euroregions that in some other areas is not necessarily efficient. The
Eastern border of Hungary that overlap the Eastern border of EU is a short one along the
Hungarian-Ukrainian border therefore is more significant to take in consideration the wider
cooperation in the Carpathian basin, including Hungary, Poland, Slovakia, Romania and Ukraine.
In the actual context of geopolitical state of play, besides the historical fragmentation and the
peripheral situation of the borders, in case of Ukraine border is in fact double bordered. The area,
more or less, is on the Transcarpathia region considered with high peripherality (Batt, 2002). That
makes the Euroregions to play an important role due to flexibility in matters of territorial or
regional governance (Branyi, 2006). The Carpathian Euroregion was the first of its kind in Central
or Eastern Europe when founded in 1993, it was established along the EUs borders with former
socialist states and it corresponds to a macroregion with peripheral status regarding all the states
involved and the EU territoriality, meaning an assembly of socioeconomic peripheries. For
strengthening the structure and to allow access to resources, the partner countries decided to give
legal form to the Euroregion as Carpathian Foundation International, with the mission of the
regional presence and cross-border role for itself, aiming to strengthen programming, organizational
capacity and financial sustainability at regional level. They targeted two areas, promoting
innovative initiatives and cross-border exchanges in community development, community resource
mobilization and strengthening participative democracy and community organizing throughout the
region2. In order to accomplish their goals they attracted financial resources that further granted to
local administrations or non-governmental organizations from the Carpathian Region. Nowadays
they are not so active anymore but the financial frame is ensured by the cross-border cooperation
programmes Hungary-Slovakia-Romania-Ukraine and Poland-Ukraine-Belarus, for both 2007-2013
former programming period and 2014-2020 actual programming period.
b. Poland and Ukraine (Krok & Smtkovski, 2006)
Two decades ago Ukraine was the second largest trade partner of Poland in the Eastern
Europe after Russia and the economic change was based on industrial centers in central Poland and
Eastern Ukraine. It looked like Ukraine is on the path that Poland was fifteen years earlier, the
similarities, mainly in socioeconomic and administrative area, being a starting point for cooperation
and knowledge transfer. The situation is fundamentally changed now, considering the military
conflict with Russia from the Ukrainian Eastern side. The progress that Poland made and the
economic breakdown in Ukraine, caused by the war, increased the gap between the two countries.
Even if few years after the Poland accession to European Union the cross-border cooperation was
disappointing as far as concern the impact in the regional development, in case of this border also
the existence of European funds give an impulse through the projects financed by Joint Operational
Programme having as priorities increasing competitiveness of the border area and improving the
quality of life3. Moreover, a good opportunity for cross-border cooperation between Poland and
Ukraine was the organization of the final tournament UEFA 2012 that put together resources in the
aim of economic development of the countries. Despite the sudden change in the political,
economic and social frame in Ukraine and considering that the Western part of Ukraine is not
directly affected by the military actions the cooperation at the border is still running, even if not to a
high rate.
2
Carpathian Foundation International, carpathianfoundation.eu
3
Cross-border Cooperation Programme Poland - Belarus - Ukraine 2007-2013, http://www.pl-by-ua.eu
148
c. Romania and Republic of Moldova (Marcu, 2011)
Romania and Moldova are countries with a common history and a common geography at a
certain time, sharing the same identity, culture and traditions. The length of the border between
these two countries is covered by three euroregions that, in a cross-border frame, contribute in
different manners to the communities development and relations among people living on the border.
Therefore, after the political changes of 2009, euroregions have played an important role in the
Europeanization of the Romania-Moldova border area. The more recent events make the common
border between Romania and Moldova a relevant tool for mobilizing EU resources, in terms of
legal frame, funds and governance network, in order to develop institutions, infrastructure, and local
human resources.
4. CONCLUSIONS AND REMARKS ABOUT THE ROMANIAN BORDERS
In the context of accepting the existence of borders, as a continuous element, the only
changeable being the character and courses of borders, we considered some relevant study cases
that scientific literature provides about cross-border areas, inside the European Union Borders and
at its borders with Eastern neighbours, in order to figure out lessons learned, tools and models that
can contribute to the development of the cross-border areas with the observance of some elements:
the existence of historical encouraging/discouraging background, existence of written
treaties/agreements, diplomatic exchanges at national level, partnership relations, financing
framework, existence of a strategy, the involved actors (public administration, civil society,
companies, universities), particularities that mark the cross-border area. No matter the case studied,
one of the core elements that are compulsory for a healthy development of the cross-border areas is
the cooperation among local and regional authorities from the different sides of the border in many
fields economic, politic, institutional cultural or professional, becoming forms of institutional
building due to the demanding changes along the borders, involvement of different types of local
governance and the interaction of multilevel governance networks local, regional, European and
even global. The wider the cooperation network is, including enterprises, universities, non-
governmental organizations, the better the results are, enforced by the existence of the legal frame
at European level.
Going through the selected models some relevant lessons can be useful for the approaches
Romania can have to its borders. An important step is the signature or update of the national
agreements between states that can be complemented by local or regional agreements, making use
of the legal European frame (example, for the borders Romania-Hungary and Romania-Bulgaria).
Moreover, for all the borders the already existing euroregions frame can be reinforced with real
actions and active networks. The historical stories that bring together the communities can be used
better and the old conflicts can be reconciled in a structured way, maybe with a constructive
involvement of the relational potential that the minorities from the border communities have. A
strategic approach can make a better use of the natural settings building cooperation around it
(example, the setting of the Carpathian area in the North cross-border area between Romania and
Ukraine) or the urban settings closed border pair towns/cities (example, Giurgiu, Romania - Ruse,
Bulgaria), potential metropolitan areas (example, Iasi, Romania - Chisinau, Republic of Moldova or
Suceava-Botosani, Romania Cernivtsi, Ukraine). As far as financial aspects, the existence of
already third generation of EU cross-border programmes that finance projects for development of
all Romanian borders with neighbours is an opportunity that can be exploited more efficient
thinking complementary projects that cover all the areas and projects that are continuing other
successful previous initiatives.
ACKNOWLEDGEMENTS
149
This paper has been financially supported within the project entitled Horizon 2020 - Doctoral
and Postdoctoral Studies: Promoting the National Interest through Excellence, Competitiveness and
Responsibility in the Field of Romanian Fundamental and Applied Scientific Research, contract
number POSDRU/159/1.5/S/140106. This project is co-financed by European Social Fund through
Sectoral Operational Programme for Human Resources Development 2007-2013. Investing in
people!
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151
THE EUROPEAN UNION CHASING A PLURILATERAL MARKET

ACCESS BY NEGOTIATING THE TISA
Ph. D. Student Ludmila BORTA
"Alexandru Ioan Cuza" University of Iai, Romania
Doctoral School of Economics and Business Administration/Department of Economics and International Affairs
borta.ludmila@gmail.com
Abstract:
The international trade is an important and significant area of the world economy which can ensure the
growth and more jobs for countries in a current global world. At the present time, it is represented more by exports and
imports of goods than by trade in services. Despite this, the aim of this paper is to show the current interest of the
countries and regions of the world, especially of the EU and the USA, to continue the GATS agreement of World Trade
Organisation by negotiating a plurilateral agreement in services. Thus, 23 countries of the world have started in 2013
to negotiate aspects of the TiSA (Trade in Services Agreement). This new agreement is based on the General Agreement
on Trade in Services ("GATS").
To understand the importance of this plurilateral agreement in services, we analysed the share of world GDP
and international trade in services, our research being entire focused on the global place of the European Union for
year of 2012. Because the services sector constitute the most dynamic economic activity in the EU, we analysed the
trade relations of this region with rest of the countries which are part of TiSA negotiations. In final, we found that these
are substantial partners of the EU commercial service exports and imports.
Key words: the TiSA, trade integration in services, the GDP, market access, transparency.
JEL classification: F10, F13.
1. INTRODUCTION
Currently, 23 countries (members of the World Trade Organisation), including the European
Union, started the negotiations of an agreement based on international trade in services. Because
these countries accounted more than 60% of world trade in services, the TiSA become a subject in
focus worldwide. It aims at opening up markets and improving rules in areas such as licensing,
financial services, telecoms, e-commerce, maritime transport, and professionals moving abroad
temporarily to provide services.
The purpose of the present paper is to highlight the importance of the services sector in the
international trade. Also, services are a central part of the EU economy. For the moment, the EU
suggests to replace GATS provisions into the plurilateral agreement to create a solid basis for the
negotiation of additional services liberalisation. TiSA is based on the WTO's General Agreement on
Trade in Services (GATS), which involves all WTO members.
In the long run, the results of the plurilateral services negotiations could be transitioned to
multilateralization. By all participating countries, the TiSA is seen more as a tool and an initiative
that could reinforce the multilateral system. Thus, this agreement could be turned into a broader
WTO agreement and its benefits can be extended beyond the current participants.
In the next two sections of this paper we present the image of the international trade in
services for year of 2012, focusing on the European Union. The aim of the below market analysis is
to find answers at the following questions: What is the place of the European Union in the
international trade? And, are the rest of parties of the TiSA negotiations important trade partners for
the EU?
Thus, in order to respond on the above questions, in the second (next) section we chose to
analyse the share of world GDP and the international trade of the worlds countries. It knows
already that goods are an important aspect in the global economy. But, the ongoing negotiations of
the TiSA show the fact that the services sector are an important and an essential subject of current
bilateral and multilateral negotiations in the world.
152
The purpose of the third section of this paper is to point out that the aim of the TiSA is to
facilitating trade in services between worlds countries and regions. Opening up markets for
services will mean more growth and jobs for the countries of the EU. Here, our research is focused
on trade relations in commercial services of the EU with the rest of the countries which are parties
of the TiSA negotiations.
2. THE PLACE OF THE EUROPEAN UNION IN THE INTERNATIONAL TRADE

IN SERVICES
The main scope of the multilateral/bilateral trade negotiations that takes place between the
Parties worldwide is to ensure market access for goods and services, to make trade faster and
cheaper, to increase investment opportunities; and all of these to guarantee growth and more jobs
for each Parties. Thus, services are an increasingly important aspect in the global economy and a
central part of the EU economy. The aim of the TiSA is to facilitating trade in services between
worlds countries and regions. The EU is the world's largest exporter of services with tens of
millions of jobs throughout Europe in the services sector. Opening up markets for services will
mean more growth and jobs for the countries of the EU.
In order to understand better the current interests of the EU in international services trade,
we took into consideration the statistical books of Eurostat Database. In these books are published a
statistical image of the European Union (EU) in relation to the countries and regions of the world.
In the below figure (Figure no. 1), we can see that the EU accounted for a 23% share of the
worlds GDP in 2012 (the world GDP was valued at 56577 billion in 2012), while the United
States share was 22%. The Chinese share from 4.3% in 2002 to 12% in 2012, a higher value than
Japan with 8%. In current price terms GDP of China was 4970 billion, an increase from 2002
equivalent to the combined GDP in 2012 of the Mexico, South Korea, Indonesia, Turkey, Saudi
Arabia, South Korea, Argentina and South Africa. Thus, the overall GDP of the EU, the USA,
China, and Japan covered more than 50% share of the worlds GDP in 2012.
Figure no. 1. Share of world GDP, in 2012

Source: Own processing after the Eurostat Database
According to the Eurostat, the world share of the GDP accounted for the EU was higher than
that accounted for China. Despite this, China still has a relative importance within the global
economy, accounting for more than two thirds of the EUs GDP.
With regards to sectors that was the subject of exports and imports in 2012, we found that
agriculture, forestry and fishing contributed 10% or more of GDP in countries as India, Indonesia
and China, whereas its contribution was 2% or less in the United States, Japan, Canada, the EU and
153
Australia. Industry (including mining and quarrying; manufacturing; electricity, gas and water
supply) contributed more than half of Saudi Arabias GDP (58%) and more than one third of total
GDP in China, Indonesia and South Korea, while in Canada, the EU, India and the United States its
contribution was less than one fifth of the total.
The services sector as hotels and restaurants, transport, information and communication
services varied least across the world countries from Turkey to China. In the United States, Canada
and the euro area (EA-18), services as financial and business services, and services often associated
with public sector provision contributed more than half of total GDP, while the EU and Australia
recorded contributions from other services just below this level. By contrast, other services
contributed a share between one quarter and a little over one third of GDP in Mexico, Turkey,
India, Russia and China and even less in Saudi Arabia and Indonesia.
With regard to international trade, the United States reported the second lowest ratio of it of
goods and services to GDP (16 %) in 2012 among the G20 members. While trade in goods
dominates international trade, trade in services has grown strongly. Trade in services was equivalent
to 5.05 % of GDP in Canada, 7.15 % of GDP in India, in the EU at 4.5 % of GDP, and in the USA
at 3.3 % of the GDP.
Figure no. 2. Trade integration: Share of services relative to goods, reported to GDP, in 2012
For a number of 16 countries (Figure no. 2) we analysed the average value of imports and
exports in goods and services relative to their GDP for 2012. We found that the trade in services
was less than 50% of trade in goods relative to GDP for all analysed countries. The higher level was
represented by India (34.21%), the EU (33.71%), the United States (27.62%), and Brazil (25.59%).
The lowest level was represented by Mexico (6.15%), China (12.34%), Indonesia (15.08%), South
Africa (15.45%), and Saudi Arabia (15.56%).
Relative to GDP, Saudi Arabia recorded by far the largest international trade surplus in
goods and services (combined) of 23.9% in 2012; Russia with a surplus of 7.3% of GDP, and South
Korea with a surplus of 2.7% of GDP. At the other end of the scale, South Africas large goods
deficit and smaller services deficit combined for a total deficit equivalent to 10.3% of GDP, larger
in relative terms than that for India (-9.7%) and Turkey (-7.9%).
The EU recorded a trade surplus of 147 billion in 2012, with a trade deficit for goods and
a trade surplus recorded for services. The United States recorded the second highest trade surplus
for services, valued at 128 billion. A relatively high share of the EUs trade in services was with
the United States which is an important trade partner fort the European Union.
154
Figure no. 3. Selected G20 trading partners for EU exports and imports of services, in 2012
(% share of extra-EU exports)
To conclude this section of the present paper, we chose to show the trade relationship of the
EU with the world as a trade partner. From the above analysis (Figure no. 3) of the EUs trading
partners, we can see the importance of the United States (with 29%) as a trading partner for the EU
in services, in 2012. According to Eurostat, this is notably higher than it was for goods, whereas the
reverse was specific for China and Russia. Also, Switzerland was an important partner for trade in
services (around 12%) with a larger share than that recorded for Russia, China and Japan combined
(10%).
3. TISA: A NEW LEVEL OF INTERNATIONAL TRADE IN SERVICES
In the above research on international trade in services and goods, we saw that the services
represent less than 50% of goods relative to GDP in 2012 though, the services sector are an
important and an essential subject of current bilateral and multilateral negotiations in the world.
At the present time, TiSA is an agreement negotiated plurilateral and in which talks taking
part 23 members of the World Trade Organisation, namely: Australia, Canada, Chile, Chinese
Taipei, Colombia, Costa Rica, the EU, Hong Kong China, Iceland, Israel, Japan, Korea,
Liechtenstein, Mexico, New Zealand, Norway, Pakistan, Panama, Paraguay, Peru, Switzerland,
Turkey and the United States. It remains open to all of the rest of WTO members who want to open
up trade in services. It is not a replacement of multilateral negotiations on services, because TiSA is
seen as a part (or a way) to start as soon as possible the stalled multilateral negotiations of the WTO
(the Doha Development Round). Thus, this agreement will be based on the General Agreement on
Trade in Services (GATS).
According to European Commission, since the talks were launched in March 2013, the
European Union makes efforts to ensure that the TiSA is compatible with the GATS, making it
easier to integrate it into the WTO. These new and improved commitments are very important for
the EU, because the services sector constitute the most dynamic economic activity in this region.
EU companies are leading providers of services in many sectors and are the biggest exporters of
services worldwide, with almost 26% of world total export of services and half of all foreign
investment flowing from the EU to other parts of the world. Legal security and new market access
opportunities are therefore crucial for European companies.
The other 22 countries that are participating in the negotiations on the Trade in Services
Agreement represent a substantial partners of exports and imports of commercial services of the
155
EU: 58% of EUs exports and 59% of EUs imports. The main values are represented by the trade
with countries as the USA, Switzerland, Japan, Norway, Australia and Canada. These alone
represent almost 50% of both EU exports and EU imports. With these countries the EU has already
signed or is negotiating ambitious bilateral agreements that include both goods and services
liberalisation, as following:
- EU-US: Transatlantic Trade an Investment Partnership (TTIP) (when negotiations are
completed, this agreement would be the biggest bilateral trade deal ever negotiated);
- EU-Switzerland: a series of bilateral agreements concluded (where Switzerland has
agreed to take on certain aspects of EU legislation in exchange for accessing the EU's
single market);
- EU-Japan: Free Trade Agreement (ongoing negotiations);
- EU-Norway: European Economic Area (EEA) Agreement;
- EU-Australia: Trade and economic relations under the EU-Australia Partnership
Framework
- EU-Canada: Comprehensive Economic and Trade Agreement (CETA).
Only with four countries of other 22 members of TiSA the European Union has bilateral
agreements including a services chapter in force. These countries are the following: Norway,
Iceland, Mexico, and South Korea.
Figure no. 4. The level of GDP and the EUs Trade in commercial services under TiSA,
in 2012
Source: Own processing after the European Commission Database
For Parties of TiSA (excluding the EU) we analysed the level of GDP, and also the EU trade
relations in commercial services with these countries. The research is placed in year of 2012, as
reference. Only for 15 of 22 countries the statistical data was complete and available on European
Commission Database (Figure no. 4).
As it can be seen in the above figure, the highest level of the GDP was accounted by four
countries of 15, as: the USA by 12643.7 billion, Japan by 4621.5 billion, Canada by 1417.7
billion, and Australia by 1192.7 billion. These was followed by South Korea ( 951.7 billion), and
Mexico ( 923.5 billion). The lowest levels was accounted by New Zealand by 133.5 billion, and
Iceland by 10.6 billion.
With regard to EU Trade in commercial services with these countries, in the top of the list
made its way Switzerland. Thus, the highest level was reached by the USA with 155.95 billion,
followed by Switzerland with 70.75 billion (with a GDP of 491.3 billion), and Japan with 20.1
billion. The lowest levels was accounted by New Zealand ( 1.9 billion) and Iceland ( 0.6 billion).
156
Figure no. 5. The share of services relative to GDP, in 2012

Source: Own processing after the European Commission Database
But the most interesting was the fact that the share of the international trade in commercial
services with the EU was more representative for Switzerland by 14.4% of its GDP (Figure no. 5).
The second in the top of the list was Iceland with 5.66%. For the rest of the countries of 15
accounted a percentage is less than 5% of services relative to their GDP, in trade with the EU. Even
the United States accounted only 1.23%. We can concluded that the exports and imports in services
with the EU is more important for countries (which are Parties at TiSA negotiations) as
Switzerland, Iceland, Hong Kong China (4.79%), Norway (4.56%). But for countries as Japan
(0.43%), Mexico (0.56%), Korea (0.75%), Canada (0.95%), and Australia (1.14%) the international
trade with the EU is not based on services sector.
Today, we can see an increasing importance on trade in services worldwide. A considerable
number of companies are seeing more benefits by practicing this type of trade. The EU has
contributed significantly to the TiSA negotiations which are based on texts tabled by the
participating countries. In the EU's case, texts submitted by the EU are first agreed with the
governments of the EU's Member States, the transparency being important to the European
Commission.
The EU's ideas on how the agreement should be structured are set out in a concept paper,
intituled A modular approach to the architecture of a plurilateral agreement on services, published
online by the European Commission and distributed in September 2012. It also includes the EU's
ideas on how to eventually make it a part of the World Trade Organization's general rules.
We present below a few general aspects of the paper proposed by the European Union.
According to this, the participants to the TiSA would take part in a greater liberalisation of trade in
services while eventually reinforcing the multilateral trading system:
- The EU suggests to replace GATS provisions into the plurilateral agreement. The aim of
this is to create a solid basis for the negotiation of additional services liberalisation,
while ensuring that commitments undertaken will be fully compatible with existing
GATS commitments and could eventually be brought to the WTO.
- The Parties to the TiSA could develop additional rules and disciplines that could cover
domestic regulation, ICT services, e-commerce or other topics chosen by the
participants.
If the existing GATS architecture is respected, then can be ensured a smooth transition to a
multilateralization of the results of the plurilateral services negotiations. Ultimately, the plurilateral
157
agreement on services could disappear and as a consequence, the multilateral system would be
reinforced by this initiative.
4. CONCLUSIONS
The main scope of the TiSA is to ensure market access for goods and services, to make trade
faster and cheaper, to increase investment opportunities; and all of these to guarantee growth and
more jobs for each Parties. It is just a way in order to complete and to conclude the blocked
negotiations of Doha Development Agenda of World Trade Organisation.
In the following we will offer answers on the questions from the introduction section of this
paper. The responses are based on the above research which subject is international trade in services
of the European Union.
To answer at the first question namely, what is the place of the European Union in the
international trade? we analysed the world GDP and the exports and imports of the countries of
the world. We found that the overall GDP of the EU, the USA, China, and Japan covered more than
50% share of the worlds GDP in 2012. The EU recorded a trade surplus, with trade deficit for
goods and a trade surplus recorded for services. Among the important trading partners in services of
the EU was the USA and Switzerland.
To answer at the second question namely, are the rest of parties of the TiSA negotiations
important trade partners for the EU? we analysed the EU Trade in commercial services with 22
countries that are participating in the negotiations on the Trade in Services Agreement. We found
that these was represented in 2012 the substantial partners of exports and imports of commercial
services of the EU, more than 50%. The main values was represented by the trade with countries as
the USA, Switzerland, Japan, Norway, Australia and Canada.
BIBLIOGRAPHY
1. *** A modular approach to the architecture of a plurilateral agreement on services,

European Commission, this document was distributed in September 2012, accessed on
February 2015 at http://trade.ec.europa.eu/doclib/docs/2014/july/tradoc_152686.pdf
2. *** EU chairs next round of plurilateral talks on services, European Commission,
Brussels, 19 September 2014, accessed on February 2015 at
http://trade.ec.europa.eu/doclib/press/index.cfm?id=115
3. *** Trade in Services Agreement (TiSA), European Commission, accessed on February
2015 at http://ec.europa.eu/trade/policy/in-focus/tisa/
4. *** The Trade in Services Agreement ('TiSA'), European Commission, accessed on
February 2015 at http://trade.ec.europa.eu/doclib/docs/2013/june/tradoc_151374.pdf
5. *** The EU in the world 2014 - A statistical portrait, Eurostat Statistical Books,
accessed on February 2015 at
http://ec.europa.eu/eurostat/documents/3217494/5786625/KS-EX-14-001-
EN.PDF/8642be84-659a-4a3d-a451-1ef26101c78f?version=1.0
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SECTION 2
MANAGEMENT AND BUSINESS

ADMINISTRATION
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CLOUD-BASED VS DESKTOP-BASED PROPERTY MANAGEMENT

SYSTEMS IN HOTEL
Prof. Dr. Mustafa GULMEZ
Tourism Faculty, Akdeniz University, Antalya, Turkey
mgulmez@akdeniz.edu.tr

PhD Candidate Edina AJANOVIC
Institute of Social Sciences, Akdeniz University, Antalya, Turkey
edinaajanovic@akdeniz.edu.tr

Ins. Ismail KARAYUN
Ayse Sak School of Applied Sciences, Akdeniz University, Antalya, Turkey
ismailkarayun@akdeniz.edu.tr
Abstract:
Even though keeping up with the modern developments in IT sector is crucial for the success and
competitiveness of a hotel, it is usually very hard for new technologies to be accepted and implemented. This is the case
with the cloud technology for which the opinions between hoteliers are divided on those who think that it is just another
fashion trend, unnecessary to be taken into consideration and those that believe that it helps in performing daily
operations more easily, leaving space for more interaction with guests both in virtual and real world. Usage of cloud
technology in hotels is still in its beginning phase and hoteliers still have to learn more about its advantages and
adequate usage for the benefit of overall hotel operating. On the example of hotel property management system (PMS)
and comparison between features of its older desktop-version and new web-based programs, this research aims at
finding out at which stage and how effective is usage of cloud technology in hotels. For this, qualitative research with
semi-structured interviews with hotel mangers that use one of these programs was conducted. Reasons for usage and
advantages of each version are discussed.
Key words: Cloud benefits, Cloud technology, Cloud-based PMS, Desktop-based PM, Hotel PMS
JEL classification: L83, M1, M150
1. INTRODUCTION
Constant innovation in hardware, software, and network developments and applications

means that only dynamic organizations that can respond efficiently and effectively to these
innovations, will be able to outperform their competitors and maintain their long-term prosperity.
The more powerful and complex the Information technologies become, they will become more
affordable and, user-friendly, enabling more people and organizations to take advantage of them.
Information communication technologies should be used for both operational and strategic
management. ICT developments have direct impacts on the competitiveness of enterprises, they
determine the two fundamental roots to competitive advantage, i.e. differentiation and cost
advantage (Porter, 2001). It is crucial for tourism and hospitality practitioners to proactively
incorporate new technologies into their businesses as these will improve service quality and
differentiate their products and services.
In order to be able to follow the increasing guests' requests for qualitative services, it is
mandatory for hotel management to constantly work on improving its functions and operations. For
this it is necessary to keep track of innovations in sectors outside the hospitality, like IT sector that
works on creating, developing and introducing new technologies. Humanity is becoming more
dependable on Internet, mobile devices (smart phones and tablets) and our everyday and business
activities are rapidly moving into virtual (Internet) environment. This is resulting in constant and fast
changes in not only human habits but in the way how the business functions will be performed.
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One of the developments in IT sector that have impact on our everyday Internet habits and
behaviour is cloud technology. Idea of having your information of interest stored in a virtual
environment -''cloud'' - is the starting point for many projects that are taking or will take place in IT
sector. Hospitality is one of targeted sector that is considered appropriate for application of cloud
technologies and services. Hotel Management System or widely known as Property Management
System (PMS) is one of the system where IT practitioners saw the chance for improvement by
''moving it to the cloud''.
The topic of the cloud based PMS was already introduced and discussed in various
international magazines in hospitality sectors such as- Hotel Management, Hotel Business, Lodging
Hospitality, PhoCusWright Innovation, Hospitality Upgrade - as well as international exhibitions
and fairs like HITEC 2013, HITEC 2012, WTM 2012 etc. Hotels will be forced to upgrade their
current systems so that they can respond to various and changeable guests' habits and requirements.
However, until today, there was not enough academic papers related to usage of cloud technology in
hospitality industry even though this sector is under continuous changes caused by usage of new
technologies which made search, evaluation and payment of the hotel rooms easier than ever.
In this paper, the short review on basic literature and benefits of cloud computing is
presented. In continuation importance of PMS for hotels and method used in the research will be
described. After comparing the two groups of hotels, from which one was using desktop PMS and
other group cloud- based PMS, the results of the research were derived and presented. In conclusion
of the paper, challenges with which the hotels are facing and which affect their decision of starting
to use cloud- based technology as well as recommendation for future work will be discussed.
2. CLOUD TECHNOLOGY
In the work of Heart and Pliskin (2002), case study on the company, that enables small and
medium sized tourism enterprises to have an internet presented by providing application service
providers (ASP) for a fixed monthly fee, was conducted. In this research on usage of modern
technology for that period, the authors shared the belief of Oracle company that "...in 10 years all
business applications will be delivered via the Web as a software service, rather than shipped as a
product that customers must implement, manage, and maintain.'' (Heart and Pliskin, 2002) Since
2002, when this paper was published, business applications were constantly developing and the rise
of cloud computing proved that Oracle's forecast was correct. As stated by the Sharif (2010), cloud
computing is the latest technology that is being introduced by the IT industry as the next (potential)
revolution to change how the internet and information systems operate. The term cloud was
probably inspired by IT text books illustrations which depicted remote environments (the Internet)
as cloud images in order to conceal the complexity that lies behind them (Sultan,2010).
BASICS OF CLOUD TECHNOLOGY
Similar to traditional utilities such as water, electricity or gas, cloud computing is also being
transformed to a model where users access services based on their requirements regardless of where
the services are hosted or how they are delivered (Buyya et al., 2009). The goal of a new computing
world is to develop software for millions to consume by easily accessing it over a network. Cloud
service providers are making profit by charging consumers for accessing these services. In this way
both individual and enterprise consumers are attracted by the opportunity to reduce and sometimes
even eliminate costs of new software installation. Cloud computing services can provide seamless,
convenient and quality-stable technology support for the user (Buyya et al., 2009 and Pyke,
2009).The services offered by cloud computing can be listed in three types (Miller and Veiga,
2009 and Sultan, 2010):
Infrastructure as a Service (IaaS): Products offered via this mode include the remote
delivery (through the Internet) of a full computer infrastructure (e.g., virtual computers, servers,
storage devices, etc.); the building blocks of an IT enterprise. Those who buy and use IaaS are
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predominantly the IT/system administrator types charged with obtaining general processing, storage,
database management, and other core IT resources and applications. Services provided in this
category include CPU processing on demand, virtual Web hosting, and storage on demand. The most
notable vendors are Amazons EC2, GoGrids Cloud Servers, and Joyent.
Platform as a Service (PaaS): With cloud computing, services and applications that
were managed locally in the past requiring hardware, operating systems, web servers, as well as
teams of network, database and system management experts are now provided remotely by cloud
providers under this layer. PaaS is an emerging category of cloud services where developers can
design, build, and test applications that run on the cloud providers infrastructure and then deliver
those applications to end users from the providers servers. The early market leaders in this area
include Googles App Engine, Microsofts Azure, Amazon Web services, and Force.com (by
Salesforce.com).
Software as a Service (Saas): Under this layer, applications are delivered through the
medium of the Internet as a service. Instead of installing and maintaining software, access is
provided via the Internet. This type of cloud service offers a complete application functionality that
ranges from productivity (e.g., office-type) applications to programs such as those for Customer
Relationship Management (CRM) or enterprise-resource management. Yahoo mail, Google Apps,
Salesforce.com, WebEx, and Microsoft Office Live are all cloud service products.
Cloud computing services can be adopted by firms in three different forms (Goscinski and
Brock, 2010):
Public clouds - online applications that are open to everyone for free, such as Google
Docs (Stross, 2008),
Private clouds - involves firms deploying key enabling technologies, such as
virtualization and multi-tenant applications, to create their own private cloud database (Low et al.,
2011) which is less threatening and easy to handle (Tuncay, 2010) and
Hybrid clouds - mix of the previous two types that are emerging with the intention of
providing clients with a level of control over their resources (Sultan, 2011)
BENEFITS OF THE CLOUD SERVICES
Positive sides of implementing cloud technology and usage of cloud services can be
classified and presented (Figure 1) as follows (ISACA, 2009):
Cost containment The cloud offers enterprises the option of scalability without the
financial commitments required for infrastructure purchase and maintenance.
Immediacy Many early adopters of cloud computing have cited the ability to provision
and utilize a service in a single day.
Availability Cloud providers have the infrastructure and bandwidth to accommodate
business requirements for high speed access, storage and applications.
Scalability With unconstrained capacity, cloud services offer increased flexibility and
scalability for evolving IT needs.
Efficiency Reallocating information management operational activities to the cloud offers
businesses a unique opportunity to focus efforts on innovation and research and
development. This allows for business and product growth and may be even more beneficial
than the financial advantages offered by the cloud.
Resiliency Cloud providers have mirrored solutions that can be utilized in a disaster
scenario as well as for load-balancing traffic.
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Figure 1. Benefits of the cloud technology

Source: Cloud Computing: Business Benefits With Security, Governance and Assurance Perspectives 2009,
ISACA
Investments Technology
in New Advance
Technology
Lower Improved
Prices Operational
Efficiencies
Cloud services
Competitor Decreased
costs
Improved
Increased Economies
Customer Scale for
Demand Providers
Figure 2. Circle of commodities cloud as a result of services
As cloud technology gains more popularity cloud services become commodities from which
users can progressively benefit due to their involvement in circle of commodities (Miller and Veiga,
2009). This circle is presented in the Figure 2. Starting point in this circle is technology
advancements that lower infrastructure costs and increase operational efficiency. Operational
efficiency as a result, leads to the lower costs which enable providers to apply economies of scale.
As natural consequence, economies of scale encourage and increase the customer demand. Strong
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demand attracts competition which lowers the prices and spurs investments in new technology.
These investments and efforts for a new technology to be presented open a new progress circle of
technology advancements and it continues in the same way.
3. PROPERTY MANAGEMENT SYSTEM (PMS) IN HOTELS
Research papers related with E-tourism always emphasize that tourism and hotel
organizations should pay special attention to ITs and their usage for business operations. Although,
it seems as a very reasonable implication, practical integration of IT industry's way of thinking and
working principles with those implemented in a hotel is not an easy work. When creating software or
an application for a hotel, IT personnel have to possess a certain level of flexibility, openness and
creativity. On the other hand, hotel employees are expected to have more insightful and open-
minded approach towards new ways of performing business operations, sometimes take risks and
have experiences with using different programs and applications.
Success for some hospitality companies has been achieved, in large part, by taking advantage
of information technology (Siguaw and Enz, 1999). A hotel's PMS can gather and keep valuable
information about hotel guests by incorporating business intelligence tools which help hoteliers
organize and make sense of the gathered data. Regardless of whether room reservations come from
Online Travel Agency, Global Distribution Systems or by telephone, all of them are gathered, stored
and managed in the PMS. Many PMS offer extensive reporting on the collected data. Business
intelligence options provide hoteliers with a three-dimensional view of guest data. PMS helps hotels
with keeping a more comprehensive record of its reservations, guest's information and enables more
coordination between different departments in the hotel as the record of important functions in hotel
is also kept in this system.
In the past, company needed at least three requirements in order to install one hotel
management system: software, server and data base system. With cloud based PMS there is no need
for upgrades for both software and hardware because Cloud Servers are always updated to latest
technology. Cloud Servers work at a very low cost; in fact no investment cost but, usually,
reasonable monthly subscription fee is charged. Simplicity of the cloud based property management
system allows it to be productive. Cloud based PMS's can operate on any advice that has a web
browser and the companies are putting their efforts to make it even more friendly on smaller devices
like tablets and smart phones. That is why customizing program to fit into mobile application is and
will continue to be of great importance. It is recommendable for a company that intends to develop a
cloud based PMS to open their system for clients inputs. These customer's inputs can help enhance
the program and at the same time enable company to meet and exceed expectations.
PMS helps hotels with keeping a more comprehensive record of their reservations; guest
information by keeping the record of important functions in hotel enables more coordination
between different departments. Business intelligence options provide hoteliers with a three-
dimensional view of guest data, which allows easily statistical reporting and increased hotel
management efficiency.
4. RESEARCH OVERVIEW AND METHOD
The aim of this study was to investigate the difference in practical usage of the two types of
PMS systems cloud based and classical (desktop) ones. In order to obtain participants views and
experiences of using one of these two PMS solutions as well as extracting key benefits and features
of each system, a qualitative research with semi-structured interview was conducted. The questions
were concentrated on examining the strong points of one particular system, reasons for using it,
financial costs, support conditions and knowledge about the other systems and technologies in IT
sector.
With the help of the software company offering both desktop and cloud based solutions to
hotels in Turkey, authors managed to contact with general managers, IT supervisors, front office and
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marketing managers of hotels that differed in size and location. Hotels were divided in two groups:
Group A with hotels that use classical desktop PMS and Group B that use cloud version PMS.
Group A, which hotels traditionally use classical desktop PMSs, was consisting of 5 hotels that were
5-star and 4-star categorized, resort type hotels with average room number of 300. In Group B there
were 5 boutique and city hotels with category ranging from 3-star to 5-star and a room count that
was not exceeding 50 rooms.
5. RESULTS
On the question about the reasons for using the current PMS type in hotels, answers of Group
A were based on usage of their current PMS for years and on the fact that employees in all hotel
departments were used to work on it. As time passed by, hotels upgraded their system to new
versions for several times and additional customization was implemented with regard to hotel
preferences. In one of the interviews it was mentioned, that after technical trainings common when
upgrading to the last version of the program, front office manager concluded it with 40 different
extra features, processes or buttons that should be added to the new version provided by the
developer of PMS. After new version of PMS was tried for 30 days, 30 changes from the list were
implemented and the rest were to be done in the future. This is time consuming for both parties as
providers employees need extra time to work on additional features and hotel, has to wait a certain
period for program to be customized according to its requirements.
Hotels from Group B were consisted of relatively new boutique hotels that operate for more
than a year and from those that were not using any kind of PMS solution (they were using Excel
tables and creating reservation records manually). The reason why hotels from this group wanted to
use cloud PMS was a desire to try the latest technology used in hospitality industry. After the initial
test period when some of their additional requirements were compensated, they started to use cloud
based PMS. Other reasons for using it were: PMS could be reached from any place where Internet
connection is available, simple but effective design with lots of visual solutions, more options to
enter the important information and the fact that it is working not only on any PC but also on any
mobile device due to its mobile applications.
When it comes to financial aspects, low investment costs were main reason for hotels from
Group B to decide in favor of cloud based version. Initial investment in classical PMS starts from
10.000$ and goes up to 100.000$ depending on the system used and its provider. The similar amount
of initial investments were confirmed by the Group A. Being considered as great amount of money
for newly opened and small sized hotels to invest, management decided to try out the cloud version
which allows access to this system based on monthly subscription with very little or no investment
cost, depending on the solution provider. This ''pay as you use'' system, similar to those payments
made for monthly usage of Internet, was more than affordable and acceptable for newly opened
hotels.
For users of classical PMS system, license contracts are made on one-year basis and regulate
maintenance and support issues. After initial investments in the system implementation, hardware,
software and training of employees, every year hotel makes a one-year-based contract for additional
support services and, if needed, extra training. Support is provided any time a hotel reports an issue
or malfunction by directly connecting to hotel's computer through remote programs. Fixing a
problem sometimes may take a couple of days. With cloud based versions there is no need for
connecting with user's computer. By simply logging in to the system, any changes made from the
support service will be automatically updated to all users of cloud PMS of this provider. With
classical PMS there is no general application of changes to all users. Changes are made either for
each hotel at a time, or after releasing new version, when provider try to convince all the current
users to upgrade to it. Upgrade is provided by the extra charge, so these costs should be also
considered during planning investments in classical PMS.
Regardless of which type of system they used, all participants were very careful about and
interested in the matter of data security. For Group A, the fact that server is in the hotel, in place
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where it can be controlled and with a certain number of people having access to it, provides a feeling
of security for hotel managers. However, it is totally different situation with cloud based system,
which is mainly open system where all authorized users and providers from outside have access to.
Of course, it is up to hotel management to whom the authorization rights will be given and being an
open system it makes support, development and innovation activities much easier. Cloud based PMS
are hosted on some of the world's best known servers so there is no need for additional computers to
be used as servers.
According to the data obtained from examining these two groups of PMS users, important
differences and perceptions in function of classical desktop-based PMS and cloud-based PMS are
presented in Table 1 (table no 1).
Table 1. Important differences in functions between classical and cloud based property
management systems
Functions Classic PMS Cloud based PMS
Problem notified to the provider of

No need for connection with
PMS is solved by distance connecting
Support hotel's server, all the support is
to the hotel's computer or within one
given online instantly
or two days
General solution offered to all

Program Customization of the program
properties, requires constant working
Changes according to needs and requirements
in improving its features to fit all
of each individual hotel
clients
Type of In many cases close system that does System opened for all authorized
System not allow manipulation from outside users and providers from outside
One server computer located inside the

Server No need for special server
property. Without it or if it does not
Location computer, server is hosted outside
work program cannot work either
First investment depending of the hotel

No first investment costs.
Financial 10.000 -100.000$ plus yearly support
Monthly subscription of about 1
Cost fee (1.000$) plus upgrading to new
per room
version
Although there are some great differences in functions and way of managing regarding
classical and cloud based system, both have their advantages from which hotels do not want to give
up. They are listed in Table 1 as summary of results obtained by this research.
Table 2. Main advantages of the cloud based versus classical property management
system
Cloud Based PMS Desktop PMS
Can develop personalized service Customization according to hotel
awareness preferences
Its features can be developed or
High security control
improved easily
Online reservations received are
Advantages Employees are used to working on it
directly connected to the PMS
More open to the end users
Constant speed of working
(Enhanced CRM)
Backup made from the hotel IT
Easy follow up on online reservation
department itself
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One of the biggest advantages of cloud based PMS for the Group B is the fact that this
system can be directly integrated with hotel online booking engine. This is considered as a great
advantage for the hotels that besides having functional web site, wish to maximize use of its online
booking engine, receive more online reservations directly from the guests and gain more profit. Due
to integration between PMS and booking engine, prices and room availability information are
automatically updated to hotel's booking engine and there is no concern of overbooking. Such a
functional connection between hotels PMS and online reservation system allow hotels to have a
social media integration as well. This means that hotels are able to receive online reservation
through their Facebook page as well as receive direct links to its page from the biggest review sites
such as TripAdvior.com. As mentioned by the group B, not only did cloud PMS enhanced CRM due
to direct contact with potential guests but it also pushed hotels to work more on digital marketing
and use the advantages on integration in easily managing its own and other selling channels as well.
6. CONCLUSIONS & RECOMMENDATIONS
In this paper two different approaches and perspectives on usage of cloud based and classical
hotel management systems were exposed. Hotels from Group B have shown a tendency for usage of
new technologies and readiness to adopt and continuously learn about them. Of course, when matter
is considered from the perspectives of each hotel, advantages and options of both systems are valid.
Among factors, affecting why hotel prefers one system over another, are type and size of hotel,
through which channels are guest reservations coming, previous experience with IT stuff and
different programs, etc. At least in Turkey, cloud based solutions at this phase can be implemented
in small or medium size hotels which are highly working on receiving more direct online
reservations. Cloud based program can help them in order to update prices and room availability
information to hotel's booking engine. This prevents overbooking, provides easily management of
CRM functions and information, with no first investment costs or extra expenses which results in
revenue increase.
However, there are many challenges which cloud technology has to face and they are
consisted with the ones mentioned by Miller and Viega (2009) such as question of security, lack of
measurement standards for cloud-provided services, interoperability of cloud services with legacy
systems and resistance of hotel employees to learn and use cloud-based software. Hotels that use
classical PMS pay a great attention to the security issue because they do not want to risk opening
their hotel for external intervention. In recent years we can find in media lots of evidence of
information linkage from system that had much higher security measures than an average hotel.
Cyber security is a burning topic and a matter of potential worry for every company that is
considering moving its business online, not only in case of hotels. This is one point that developer of
the web based PMS should take into consideration.
Measuring the performance of cloud-provided services is another challenge for the hotel
management, primarily due to the lack of measurement standards. Once these standards are defined
and they definitely will be, as the number of users is increasing, it will be easier to measure the
benefits of cloud services as well as evaluating its negative and positive aspects. Their definition will
be also beneficial for academic world as more research and case studies could be performed which
will result in new opinions in further development and implementation of cloud technology.
Users and providers face the additional challenge of migrating functions and data from
legacy systems to the cloud, as well as the interoperability of cloud services with legacy systems.
Because of the significantly higher number of employees and labor intensity, once the stuff is
accustomed to one system changing it can cause more difficulties.
While investigating the previous knowledge about the other system solutions, hotels in
Group A have claimed lack of information about the cloud technology and its solutions. There is still
simplified picture and prejudice among the hotel managers about cloud being a virtual place where
one just uploads all kinds of information and takes it whenever it is needed. When cloud computing
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logic is explained in this way, hotel managers do not see the point in going into an ''uncertain'' and
''unknown'' virtual area in the clouds when one can continue using current program with server being
inside own property and under control. Even though IT stuff in these hotels has some basic
knowledge about it, it is still not enough to convince the other managers about its benefits. Therefore
it may be concluded that, besides trying to overcome the above mentioned challenges, developers of
cloud based solutions to hotels should also work hard on training the potential clients about the
positive aspects and correct usage of cloud technologies.
Being a pioneer paper on topic of cloud technology in hospitality, sample size is one of the
limitations of this work. Also, the fact that in Turkey there is not such a large number of hotels that
are using cloud based PMS, it is not easy to find the adequate number of managers that are willing
to share their ideas and experience on this topic. Lack of measurement standards for cloud-provided
services in general as well as for hotels is another important limitation due to which qualitative
research was conducted. Authors recommendation is that academicians should focus more on topics
of cloud computing, cloud solutions for other business operations and on defining measurements
standards for cloud services.
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168
INKING HUMAN RESOURCES STRATEGY WITH KNOWLEDGE

MANAGEMENT STRATEGY TO DRIVE MEASURABLE RESULTS

OtiliaMaria BORDEIANU
Stefan cel Mare University of Suceava, Romania
otilia@seap.usv.ro

Simona BUTA
simonab@seap.usv.ro
Abstract:
Today the human resources are seen as a very valuable asset to achieve long-term performance. Today we
understand that every employee is required to learn throughout life, so to acquire new knowledge, to process such
knowledge and possibly disseminate expertise with other members of the organization. The theory on human resources
in various organizations has changed over time; recommendations have become more numerous, but there is no
consensus on the subject. In other words, the permanent change which defines the competitive environment of business
remains a type of constant when analysing the efficiency of human resources within companies; inter-individual
relations (formal and informal) and the values to which each employee relates remains crucial for any theoretical
construction in this area. Principles and strategies applied by organizations yesterday could prove their inefficiency
today; human resource strategies in organizations today should include a separate subcomponent, we believe, i.e.
knowledge management (KM) strategy. This is because the competitive advantage obtained or maintained by the
company depends today, in large proportion, on the type, quality and value of knowledge possessed by the
organization. Therefore, organizational strategy and thus the strategy of acquisition, developing and rewarding of
human resources (HR) should take into account this reality from the global environment. Moreover, in the current
knowledge-driven economy, organizations must know how to develop and implement knowledge-based strategies to
drive measurable business results. The goal of this paper is to describe a potential relation between the overall
company strategy, HR strategy and KM strategy.
Key words: human resources, human resources management, knowledge management, knowledge economy,
strategy
JEL classification: M10, M12.
1. INTRODUCTION
In the current economy there is a new approach to human resource management, so as to be

able to cope with many types of challenges.
The most relevant resources within the knowledge economies are: knowledge, intellectual
capital and time (Tottderdill, 2002). Being the only source that has the ability to think and
implement new ideas, people occupies the central position within organisations. People are
considered the only true source of sustainable competitive advantage. Since knowledge belong to
the employees, any activity of the employees will affect the knowledge management. HRM could
lead the development of well-rounded KM strategies to add value. HRM face new challenges: to
recruit and retain top talent, and to embrace a new skill set to add more value. The HR department
has a very crucial and vital role to play in not just its formation but also in giving KM its shape. The
new type of human resource management (HRM), evidenced in knowledge-based firms has several
characteristics that differ from classic human resource management (Todoru et al, 2011). First, the
focus in addressing human resources is related to amplification and efficient treatment of
knowledge. There is also a need of intensive differentiation of approaches, decisions, actions and
behaviour of specialists in human resources management, to be able to effectively consider the
heterogeneity of human resources involved in the organization, their characteristics, motivations
and expectations. HR activities must be designed and implemented in a flexible way, constantly
changing content and functions, in accordance with endogenous and exogenous evolutions of the
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organization; finally, all human resource activities must be coordinated in accordance with
performance objectives of the company, to ensure its sustainability.
Because knowledge management is a fundamental business enabler, it will help
organisations to protect their intellectual capital, to focus on their most important assets:
their human capital, to link people to people by setting up collaborative methods and re-orient their
culture by developing an optimal knowledge sharing strategy.
2. HUMAN RESOURCES FROM THE STRATEGIC VISION OF TOP

MANAGEMENT
Analysing the human resources in organizational context, implicitly the strategic vision of
the top management upon them, we identify two diametrically opposed situations, models based on
different assumptions on the motivation of human resources (the McGregor optics - the theory of X
and Y); we understand that the motivating factor on the employee was and remains one crucial in
trying to explain the performance obtained. Most often, the management theory and the business
administration theory discusses about a positive motivation regarding the employee (salary,
bonuses, promotion, negotiation, shared objectives, etc.) and a negative motivation regarding the
organization members (sanctions, removal of the group, layoffs, etc.). The motivation in the
organizational context regarding the "n" employees that an entity dispose, depends to a certain
extent on the management styles practiced by various executives, on the daily relationship between
bosses and subordinates, on the type of leadership which is required by the senior management and
depends on the values that give the content to the organizational culture. In other words, intuitively
we notice certain connections between the theoretical developments concerning the motivation in
management and theory of human capital and / or intellectual capital from the business
organizations.
The first perspective concerning motivation, considers that organizations exist only as a sum
of "n" individuals (seen as "parts") who work together in order to achieve certain objectives. This
perspective is based on a worst-case scenario, enshrined by the traditional optics upon the
individual against work, optics that was valid in the industrial enterprise from the beginning of the
nineteenth century; basically, this traditional conception considers that (McGregor, 1967):
the usual individual is evil by its nature and manifests "an inconvenience inherent to
work and will avoid it whether he can"; it comes to the typical employee encountered in the classic
enterprise, that behaves as a rational person, person belonging to a certain cultural matrix
(McGregor, 1960, p. 32);
due to this characteristic, most people / employees should be obliged, controlled,
punished etc. in order to target their efforts toward the "achievement of the organizational
objectives (McGregor, 1960, p. 32);
The second perspective, aiming to motivate the employee, diametrically opposed, considers
that human beings cannot exist without a certain social context such as the organization; this
assumption starts from another extreme hypothesis, consecrated by "the idealistic optics towards
the individual in the labour process; basically, this view suggests that:
the ordinary man "does not dislike working" and spending the physical or mental effort
can become, under certain created circumstances, a pleasure or a source of satisfaction (McGregor,
1960, p. 47);
applying the external control is not the only solution for directing the effort toward the
organizational objectives, because the individual may self-control / self-drive in order to achieve
"the objectives for which he has committed";
commitment to company goals is a function of an associated reward, therefore, the
employee expects a reward when obtaining the performance etc..
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Table no. 1. Different perspectives on human resources in the organizational context

Autocratic Paternalist Supportive Collegially Motivational
Economic
The basic model Power Leadership Partnership Alignment
resources
Orientation /
Authority Money Support Team Coaching (Mentoring)
managerial vision
Competence and
Orientation / vision Security and Performance Responsible
Obedience accomplishment /
on employees benefits at work behaviour
achievement
The psychological
Dependence Dependence on
consequences of the Participation Self- discipline Fluency / flow
on the chief the organization
employees
Fulfilling the needs Esteem /
Subsistence Security Respect Self-realization
of employees consideration
The guaranteed Passive Supporting Moderate
Minimal Dedication
performance cooperation units enthusiasm
Source: Processing after Newstrom, John W. & Davis, Keith (1993), Organizational Behavior: Human Behavior at
Work. New York: McGraw-Hill, Timmers J. S., Mennes M. A. (1998), Fundamentals on Design of Satisfaction
Questionnaires, The European Foundation for Quality Management, Brussel
We will not emphasize the issues related to employee motivation in the organizational
context as they are relatively well individualized in the management theory and the optics of the
decision-makers from the performing companies has changed greatly over the past three decades.
After the appearance of the paper "In search of excellence" (1982), the human resources, including
their motivation, have somehow definitively entered in the attention of the "top" management from
various companies. The arguments brought by theorists, various people who have held positions of
CEO, opinion leaders, extremely tough global competition etc. have required important changes
regarding the theoretical hypostasis of the human resource position is in the modern company
(Toffler, 2006). Synthetic, in the table no. 1, we present some guidelines on human resources at the
level of business organizations.
3. LINKING HR STRATEGY WITH KM STRATEGY
Today the resources are seen as a very valuable asset for achieving the long term
performance (various models / guidelines discuss about cooperation, participation, respect,
enthusiasm, self-realization, dedication, etc.); Today we understand that every employee is required
to lifelong learn, therefore, to acquire new knowledge, such knowledge to process and eventually to
disseminate his/her expertise to other members of the organization.
The theoretical/pragmatic optics on human resources in various organizations has changed a
lot over time; the approaches and the theoretical recommendations have become more numerous,
but there is no consensus on the subject. In other words, the permanent change which defines the
competitive business environment remains a type of constant when analysing the efficiency of
human resources within companies; inter-individual relations (formal and informal) as well as the
values to which each employee reports, are, nonetheless essential assets for any theoretical
construction in this area. As implied by Ducker, the principles or the strategies implemented
yesterday by organizations, might prove their inefficiency today (Drucker, 2004); the human
resources strategies in organizations today should include a separate subcomponent, we believe,
that is KM strategy. This is because the competitive advantage obtained/maintained by the company
depends today, overwhelmingly by the type, quality and the value of the knowledge that the
organization possess.
Therefore, the organizational strategy and thus the acquisition strategy, development and
reward human resources (HR) strategy should take into account this reality globally encountered. It
is difficult to say as a theoretical description, what is the most appropriate relationship between the
171
overall company strategy, the HRM strategy and the KM strategy; the experience and the
imagination of the decision maker from a particular company must find the right answer to the
question raised. From the perspective of our research, in Figure 1 we suggest only the essential
components from which one can start to build an effective strategy which can favour the acquisition
of knowledge, satisfaction and self-realization of employees and the annual performance of the
organization.
Figure no. 1. Directions of HRM in business field
Therefore currently the human resources management concerns in our optics, three basic
directions (Figure no. 1. and 2.): Human resources activities (A); values and
organizational/corporate identity (B) and human development (C), directions that fundamentally
aim to improve the organizational performance. Moreover, the overall strategy of the organization
should harmonize certain interests that are apparently contradictory; in the fact, the objectives
aimed by the organization and by the employees can be fully convergent if there is a coherent
framework of manifestation. The overall strategy should take into account the type of
organizational culture (the importance was also underlined by (Staniewski, 2008)), values of each
employee (Nicolescu, Nicolescu, 2005), existing practices in the other organizations and the
realities from different markets. In fact, the idea of building a "framework" (i.e. a model, a
pragmatic working mechanism etc.) that would harmonize the organizational goals with the goals of
each employee is an old idea in the management theory. This idea was argued by Drucker in 1954
(Drucker, 1954); subsequently, it has known dozens of reconceptualization and opinions more or
less unitary in the management theory, but there is still no consensus optics on this topic. In
addition, it is an obvious truth that any employee within an organization today cannot be efficient
(not for himself nor for organization) if he/she fails to constantly acquire/process new knowledge,
more selective and sophisticated in the area he/she operates.
The two broad categories of knowledge (tacit-explicit) are mixed; they process and
permanently transform from one type to another in various organizations; they offer the vector that
can ensure the maintenance of the competitive advantage on markets. Even if today we have some
explanations and models concerning the knowledge conversion from one type to, actually this
mechanism is less known, as it is essentially dependent on the mechanism of human thinking.
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Figure no. 2. Current conditionings of HRM as part of the overall strategy of the organization
In figure no. 2, we suggest some current conditionings to be considered by the top

management of companies in a bid to build a strategic vision that would harmonize/integrate the
individual wishes and the organizational objectives. As shown in the graphic suggested, which is
enshrined in the management theory under the name of "values" (as part of the organizational
culture) is found as a vector type both in various directions of action of the decision maker and in
the various stages in the evolution of the organization. In our opinion, the employee self-perfection
as hypothetical ideal on long term will remain permanently under the influence of several factors
(part dependent on person, part dependent on organization).
Finally, from what we have suggested in figure no. 2, a series of conclusions can be drawn,
directly/indirectly related to the theme of our research. Among these conclusions, we selectively
mention the following:
The component called "values" has been and remains a major vector in the management theory
both for the individual and for every organization. In fact, every employee of a company relates to
certain values in which he/she believes (as being a member of society) and by which he/she will
define certain objectives regarding the work done by him/her in the interest of the organization. So,
from the perspective of the employee, this component will play a special role starting in the
recruitment stage of the organization, following the maintenance and up to the point where he/she
will be asked whether or not to agree particular objectives through negotiation with the company's
top management (goals / objectives);
The issues mentioned regarding the employees and the values in which he/she believes, remain
equally valid when analysing the organizational behaviour and strategies conceived by the top
management (company mission, corporate objectives, the type of organizational culture, etc.) are
reported in a greatly proportion to the value component;
Thirdly, what we have assigned as "organizational values and identity" (figure no.2) has always
had, we believe, a special significance in the superior decision maker attempt to build a working
environment which can favour human participation, therefore, to highlight the contribution of each
173
employee in obtain the "common good". Moreover, in the organizational contexts in which
the acquisition and the processing of knowledge require extremely well educated employees, this
conditioning and / or direction of HRM management analysis should occupy a central position in
top management concern. Today it is extremely difficult (perhaps impossible), we say, for the top
management of a company to succeed in building an effective overall strategy that ignores or leaves
a subsidiary position for the HRM strategy and for the KM strategy;
What we have typified by "motivation" and "self-control" constituted a big concern for the
greater analysts in the theory of business administration; MBO system proposed by Drucker is
intended to be a pragmatic working instrument precisely for the purposes raised (Drucker, 1954).
However, the issue of self-motivation and self-control of the employee within an organization has
remained open and susceptible, we believe, to other recommendations made by theorists. This is
because this requirement is extremely difficult to achieve/to fulfil and should constitute a major
concern for long-term for the superior decision maker. In other words, depending on the specificity
existing in a company (stated mission, organizational culture type, line of work, competitors
practice etc.) the organization should permanently respect certain pre-defined values and to build
an organizational identity, best possible public individualized. Moreover, it would be ideal if each
member of the organization would feel that he/she is a "part" of this construction that strengthens
over time, meaning that he/she finds certain values (as being common with those in which he/she
believes) and identifies their own contribution to the organization's identity;
Finally, we understand that what we have defined as "human development" can be found in
sociology as a normal course of action for each individual, as each seeks a certain ideal (but this
ideal appears as a result of what is happening in the organization, society, family and various social
micro-groups). In terms of organization, it promotes/supports certain values that tries to induce in
the employees behaviour through motivational mechanisms, training programs and personal
development; the concrete results which every employee will obtain in the organization's daily life
however will be significantly different. Particularly, the manner in which an employee acquires
explicit/tacit knowledge transforms them into own tacit knowledge and agrees to transmit them to
others (from the same group or to the next generation of employees) remains substantially different
from one case to another even in favourable organizational contexts. In other words, self-perfecting
(in the sense of self-realization according to Maslow's optics) of each member of the organization
can be reflected in completely different plans; some may target some spiritual self-realization,
others can predominantly envisage the personal/family self-realization, while others can considered
themselves as self-realized, when they obtain a balance in the religious plan.
4. CONCLUSION
The literature review has suggested that effective KM should be a balanced focus on people,
process and technology which features at the core of the firms strategy. Certainly, implementing
any strategy requires, first, a strong commitment of senior managers in this process, as they trigger
the whole mechanism of change. Since that reshaping organizational culture means changes at the
level of each employee, these depend heavily on the commitment and demonstrated competence of
the managers who lead them directly. Active participation of top management levels is necessary
for successful change, and learning organizations and creating the right environment for learning
and knowledge transfer cannot be built only from the training department / training.
A culture that encourages change is an essential feature of organizational learning. The new
organizational culture based on knowledge is an essential component of knowledge supportive
environment to which contributes all the components of the organization management and which
ultimately condition sustainability and performance decisively.
HRM has to be the catalyst for culture change connecting the traditional to the new
methods, to leverage the collective knowledge in an atmosphere of openness with a competitive
advantage. Thus, the HRM role can shift into a new value delivery model and can be seen as a more
value added, becoming a strategic resource.
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Knowledge and knowledge-sharing have become most important factors of organisational

potential in this environment of rapid change, since it increases competitiveness. The transition to
knowledge management/organization should start with building a new culture, which itself is an
intangible management resource of the organization. The values promoted by each organization
have a significant impact on the conduct of the employee through the process of internalization. The
organisations must create and promote a climate of honesty, productivity and safety orientation. Not
the last, the values reflect the harmonization of each person values with organizational values.
The paper demonstrates the importance of building a KM strategy linked to HR strategy,
giving important directions for organisations facing a very complex environment.
ACKNOWLEDGMENT
The author, Otilia-Maria Bordeianu, would like to specify that this paper has been
financially supported within the project entitled SOCERT. Knowledge society, dynamism through
research, contract number POSDRU/159/1.5/S/132406. This project is co-financed by European
Social Fund through Sectoral Operational Programme for Human Resources Development 2007-
2013. Investing in people!
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cunotine/Economy, company and knowledge management, Editura Economic, Bucureti
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knowledge management, Amfiteatrul Economic, special number
175
OPINIONS OF ECONOMIC ENTITIES FROM BRAOV AND

SUCEAVA COUNTIES REGARDING THE IMPORTANCE OF LEASE
SERVICES FOR DEVELOPING THE BUSINESS ENVIRONMENT
Lecturer PhD Oana BRBULESCU
Transilvania University of Braov, Faculty of Economic Sciences and Business Administration, Romania
oana.barbulescu@unitbv.ro

Professor PhD Cristian Valentin HAPENCIUC
tefan cel Mare University of Suceava, Faculty of Economics and Public Administration, Romania
valentinh@seap.usv.ro

Assistant PhD AndreiAlexandru MOROAN
alexandrumorosan@gmail.com

Master Student Mihai COSTEA
mihai_costeaa@yahoo.com
Abstract:
We herein aim at identifying some development opportunities for Romanian SMEs within a changing business
environment by using the lease as a means of business financing. In this regard, we undertook a piece of quantitative
marketing research using, especially, a series of descriptive and inferential statistics elements so as to meet our
research objectives: highlighting the financing forms used by the economic entities in the two counties, identifying the
proportion in which lease is used and describing the main constraints existing when financing companies by leasing.
The research results underline the fact that the main business entities use this financing system, it being considered
more advantageous than the bank loan. Moreover, we notice some differences between the two counties analysed
suggesting the existence of an important influence of the local business environment.
Key words: Lease, Development, Financing forms, Financial lease, Operational lease, Leaseback.
JEL classification: D23, D24, E22, G23, G32.
I. INTRODUCTION
The development of SMEs plays an important role in the growth and prosperity of every
county. The small and middle-sized enterprises (SMEs) are considered to be the engine of the
economic growth both in the developed and in the emerging countries as well, if taking into account
the level of investment, they generate more workplaces than the large companies. At the same time,
SMEs have a significant contribution to GDP, to the national budget through the revenues collected
as taxes, to the increase of the entrepreneurial culture, to the development of the skills of the human
resources that lead to the increase of the standard of living of the communities where SMEs operate
in. The development of SMEs field creates a competitive environment and contributes to the correct
distribution of revenues within the economy (Qureshi, Herani, 2011).
Due to their small size, SMEs enhance the atomic nature of the market and reduce the power
of large companies to influence it. Besides, their large number stimulates competition, limiting the
monopole positions of large companies and thus decreasing their possibilities to increase prices.
Due to their abilities to respond promptly to the local demands as a result of their flexibility, SMEs
often manage to operate on local markets more efficiently than large business entities (Silivestru,
2013). Hence, SMEs may be considered as valuable players of the economy, offering entrepreneurs
many opportunities and benefits that they would not be faced with otherwise.
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In 2013, SMEs continued to have a major share of 99.7% in the total number of Romanian
active companies and had a significant contribution to creating new employment, as 65.7% of the
total number of Romanian employees work in SMEs. This can be also explained as SMEs are
customer-oriented organizations, possessing considerable resources and technical abilities. But they
often do not have the necessary financial resources to create and transfer value to stakeholders
(Popescu, Dumitru, Veghe, Kailani, 2013).
Facilitating access to financing represents nothing but the main instrument in ensuring the
economic growth, the innovation and the aggregate productivity of a country. Improving SMEs
access to financing plays a crucial role in promoting the entrepreneurial spirit and in intensifying
competition at the level of the entire economy. The access to capital sufficient and adequate to
growth and development is one of the main challenges that most SMEs face with. This situation is
also intensified by the difficulties they encounter in their relationships with financial intermediaries
that consider their financing as highly risky but lowly profitable (Silivestru, 2013).
A real scan of the main financing sources of the Romanian SMEs shows that the lease and
the bank loan are more accessed by entrepreneurs than venture capital funds, risk capital funds,
factoring, European funds and governmental assistance programmes. In this respect, lease has an
important role in the modern economy, making possible the meeting on the same market of capital
owners/suppliers and capital receivers who need it in order to render their activities more efficient
(Vintil, 2004). In this context, the relationships between the implied parties have been strictly
regulated both legally and fiscally. Hence, the volatility of the Romanian business environment
generated limitation of the activity of capital users and consequently, the cessation of lease
contracts conclusion, creating large disequilibria in the management of the supplying companies.
This paper emphasizes on one hand the importance of the lease within all the SMEs
financing sources and, on the other hand, characterizes the behaviour of the consumers of such
financial services with the aim of improving law and practice in this field. In this regard, the novelty
of this article consists of the research undertaken, which aims at filling the existing gap in the
Romanian specialty literature and which brings as a foreground essential aspects regarding SMEs
financing by means of lease.
II. SCIENTIFIC LITERATURE REVIEW
The economic and social importance of the SMEs field is also underlined in the specialty
literature. A well spread statement in the papers focused on SMEs is that SMEs represent the
backbone of the economy, being the main engine for economic growth".
In order to emphasize SMEs role in ensuring economic growth from the point of view of
increasing workforce occupancy rate because of the reduced costs associated to the creation of a
workplace (Audretsch, Keilbach, 2008), it has been demonstrated that during the period of time
from 1980 to 1990, the main regions in Germany registered economic growth as a result of the
increase of SMEs share as far as the number of employees is concerned, in most of the industrial
fields.
Some authors (Beck, Demirguc-Kunt, 2005), grounding on three premises: SMEs capacity
of stimulating competition and developing entrepreneurship, their productive flexibility to produce
more sophisticated, varied and innovative goods than the large companies and their significant
contribution to the increase of employment, maintain the economic development model that
focuses on SMEs. Within their previous analyses, the same authors (Ayyagari, Beck, Demirguc-
Kunt, 2003) underline the fact that SMEs prevalence on the market is a feature of those economies
registering significant growth and not a cause of it.
Other authors (Silivestru, 2013) demonstrated the existence of a positive connection
between SMEs prevalence at the level of an economy as far as the created added value is
concerned, and the increase of GDP. But as regards the size, the situation is different: as micro-
enterprises do not manage to generate increases of GDP, SMEs significantly contribute to economic
welfare. The main cause of the different roles that SMEs play according to their size for our
177
countrys economy is the efficiency per employee. In small companies, we can find the highest
proportion of number of employees of SMEs but the lowest labour productivity per employee. The
lack of efficiency is caused by the limited access of small companies to the financing sources for
investment projects.
It is well recognized in the speciality literature that the reduction of financial constraints for
the private sector and the focus on the increase of firm sizes is a means by which the financial
system contributes to ensuring the economic growth (Beck, Demirguc-Kunt, Laeven, Levine,
2008). As economy currently passes through some deep changes, economic development theories
and models must be adapted to the new realities. More and more specialists attribute to services the
role of engine of economic growth (Ioncic, Petrescu, 2005).
In the last decades, lease has proven to be one of the most efficient financing ways of
investment in the production field and not only, offering high security to capital owners
(Georgescu, 2002). Thus, it has become an alternative preferred by 80% of the companies in the
developed countries, reaching 70% of the wealth of these companies. The main reasons of using
lease as a financing form truly reflects its philosophy referring to the fact that:
Profit is generated by the effective use of the fixed assets and not of their ownership right
over them;
Owning some old or obsolete equipment is generally a real disadvantage for the companies;
Getting the right of use, with the minimum invested capital, on some modern and proficient
equipment leads to the growth of the business and consequently of its activity, generating in
the end a higher profit.
The lease represents a form of trade and financing by which specialized financial companies
or producers directly rent some goods to those customers who do not have sufficient own funds or
borrow in order to buy (Ciobanu, 1997). By such transaction, a party named lessor or financer
transfers to another party named lessee, for a certain period of time, the right of use over an asset
against a sum of money, named lease rate (Niulescu, 2008). At the end of the stipulated period of
use, the financer undertakes to respect the users right of option to acquire the proprietorship of the
good at a residual price or to extend the lease contract, or to terminate the contract (Clocotici,
Gheorghiu, 2000).
III. THE ROMANIAN LEASE MARKET
When analysing lease operations, we can see that, among all its forms, it is financial,
operational, direct lease as well as leaseback that present the highest attractiveness for Romanian
entrepreneurs. Following 2008, the Romanian financial lease market got stable to around Euro 1.3
billion whereas last year, as a result of some financing projects that were postponed, it registered a
decrease of 9% as compared to 2012, a total funded volume of Euro 1.243 billion (ALB) being
realized.
Funding given in 2013 was used for the three traditional fields of financial lease: that of the
means of transport which has a major proportion of 71% (Euro 879 million), that of equipment to
be used in different economic fields with a proportion of 25% (Euro 315 million) and the real estate
with a proportion of 4% (Euro 49 million). As in 2013, the automotive market registered significant
decreases; the dependency of lease funding on this market is the real reason that negatively and
directly affected the total volume of new lease funding at national level. In accordance with the
national economy growth sustained by the agricultural production and export growth, financial
lease funding proved to be a consistent supporter of the financing need of such fields. Thus, as
compared to 2012, in 2013 there was registered an increase of agricultural equipment financing
from 14% to 23%, as well as of wood processing industry equipment financing (from 3% to 4%), of
food industry financing (from 2% to 5%) and of automotive service companies (from 1% to 3%).
With the same dependency on the general evolution of Romanian economic fields, the
proportion of financing other industries is decreasing as follows: construction field from 22% to
17%, metallurgy from 9% to 8%, technology financing in the energy field from 19% to 14%. The
178
financing of the other economic fields preserves a relatively constant proportion. The real estate
field maintains the historically low value from 2012, in accordance with the general context of the
Romanian real estate market as well. Furthermore, legal persons as customers attracted the highest
proportion of total financing that of 97%, increasing by 9% as compared to the same period of
2012. Most legal persons who use financial lease as a financing source necessary to their economic
activities are SMEs.
The highest market share is registered by the financial lease companies which are affiliated
with banks, with 65%, followed by those belonging to producers with 20% and independent
financial lease companies with 15%.
Operational lease mainly responds to the needs of large companies that possess or want to
acquire vehicle fleets. From the point of view of turnover, at the end of 2013, this market reached
the value of Euro 200 million, registering a little increase of approximately 3.5% as compared to the
previous year, getting to almost 43,000 units (ASLO). The new 11,500 vehicles registered by
operational lease in 2013 represent more than 17% of the total number of the new registered light
commercial vehicles. This evolution was registered as in 2012 the market had also a positive
tendency increasing by 11% to no more than 41,500 units. For 2014, the potential of operational
lease market is estimated to Euro 220 million, this being a low increase of approximately 5%.
Within all the operational lease services, the main proportion of 70% is of fleet financing
and management services (complete services of operational lease) followed by fleet management
with 23% and operational lease services consisting exclusively financing with 7%. After a long
period of stagnations and declines, for the first four months of 2014 it has a positive evolution, the
Romanian lease industry being consolidated by 28% as compared to the first semester of 2013.
To conclude, lease is considered an exact barometer of economic development, financing
increase or decrease affecting the performance of the overall economy, as a rule between 6 and 8
percentage points in the lease market involving 1 percentage point increase in GDP. In such
conditions, if forecasts of lease market increase are to be confirmed, we shall state an increase of
economy performance.
IV. RESEARCH METHODOLOGY
Given the importance of this financing source, we undertook an enquiry at the level of two
Romanian regions, based on the following hypotheses:
1. More than 40% of business entities of the analysed counties used the services of lease
companies.
2. Less than 60% of business entities of the analysed counties consider that lease is more
advantageous than banking loan.
3. The activity field of business entities of the analysed counties influences the number of
contracts concluded with lease companies.
In order to test the hypotheses herein formulated, in April-June 2014, we undertook a piece
of quantitative marketing research at the level of Braov and Suceava counties on a sample
consisting of 886 companies (this sample size was established based on the data published by the
county statistics departments the number of companies in every county, assuming an limit error
rate of 5%).
Because we wanted to obtain a sample size similar in structure to the researched population,
we chose the proportionally stratified sampling (stratifying according to the activity field:
agriculture, industry, construction, trade and services; and according to the firm size: micro-
enterprises, small enterprises and medium-sized enterprises). In order to collect data, we used a
questionnaire consisting of 42 questions. In terms of the type of questions, we used both closed
questions (especially dichotomous and with multiple answer) and open questions. Regarding the
types of scales, we used especially the Likert Scale and the semantic differential scale (Osgood) in
order to determine the average score (weighted arithmetic mean) representing the overall
assessment of the entire sample.
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The questions aimed at identifying the information sources used, describing the behaviour
and profile of lease services customers, identifying issued appeared during the duration of financing
contracts as well as the possibilities of improving such services. Questionnaires were applied by
using two methods: applying questionnaires by e-mail and by an interview operator. In both cases,
we used lists with the trading companies of the two counties, grouped according to their field of
activity and size.
According to the proportion of every stratum, we randomly (we used a random number
generator) selected from the two lists the companies to question. With regard to Suceava county, we
used only questioning by e-mail so the response rate was lower (data are still representative) as with
regard to Braov county where both data collection methods were used. Further, data were
centralized by using the software SPSS version 19.0 for Windows.
In order to test the hypotheses, we used non-parameter correlation tests (Spearman and
Kendall) as well as tests for binominal variables. Due to the way that we structured our hypotheses,
we used a binomial test to analyze the appearance probability for one of the values (for a alternative
variable H1 and H2). In the case of the third hypotheses we intended to use a chi-square test and as
a back-up some correlation tests.
V. SYNTHESIS OF THE MARKETING RESEARCH RESULTS
According to the study we undertook, more than 39.4% of the business entities of Braov
county that demanded offers from the lease companies had as a main information source the
recommendations of the suppliers as well as of the dealers of the goods they wanted to buy, a
similar situation being registered also at the level of Suceava county where the proportion of the
business entities who chose to use this information source is higher (57.4%). Another information
source often used by trading companies of Braov county is the recommendations from their
acquaintances or cooperators (35.6%), situation which is different from that registered in Suceava
county, where only 19.1% of the economic units use such information sources. In contrast, the least
used information sources by companies from both counties are street billboards and mass-media,
the results obtained corresponding to the reality if we are to consider the fact that these means of
information are focused less on promoting lease services.
A good proportion of the business entities from Suceava county (61.7%) choose as a rule, to
demand offers from 1-2 lease companies before making the decision of acquiring a good unlike
most of the companies from Braov county (47.55%) that, in general, require offers from 3-4 lease
companies so as to compare them and to choose the best financing option (Figure 1). As a
consequence, the companies from Suceava county which demand offers from more than two
companies are less represented as compared to the data registered in Braov county; this denotes a
more pragmatic approach of companies from Braov when it comes to choosing the optimum
financing sources.
Figure 1: Comparison regarding the number of lease companies that business entities from
Braov (left) and Suceava (right) choose to demand offers from
Source: Authors
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The fact that during the lease process there are not required, as a rule, additional guarantees
as in the case of the banking loan, represents for the business entities from Suceava county the main
reason for which they appealed up to the present to the services of a lease company (26%). As
similar as it regards the economic companies questioned in Braov county, the rapidness in getting
the financing (24.5% - relative value registered at the level of Braov county, 24% - Suceava
county) and the possibility of VAT deduction at vehicle acquisitions (17.17% - Braov county,
19.8% - Suceava county) are also reasons of high importance that determine entrepreneurs to use
lease as a financing method (Table 1).
The opinions with respect to the possibility to renounce at the acquired good during the
contract and the possibility of extending the contract at the end of the lease period registered the
same values at the level of the two counties herein analysed, the elements invoked not being real
reasons so as to determine companies to use the services of a lease company.
Table 1: The main reasons invoked so far by the business entities from Braov and
Suceava counties for using the services of a lease company
Braov Suceava
The leased asset may be replaced anytime during the location period. 9.2% 1.0%
One may renounce anytime to the leased asset during the contract. 3.7% 3.1%
At the end of the contracting period, there is possible to extend the contract. 6.3% 1.0%
Accelerated amortization is possible. 6.5% 7.3%
Deduction of almost entire VAT at vehicle acquisition. 17.7% 19.8%
Rapidness in getting the financing. 24.5% 24.0%
There are not required additional guarantees. 14.8% 26.0%
Less advance payment than in the case of other financing instruments. 16.1% 15.6%
Other. 1.2% 2.1%
Source: Authors
An interesting aspect is that, as the business entities of Braov county considered, the
services of the lease companies affiliated to producers or goods dealers are different from the
services offered by the lease companies affiliated with banks (59,67%), this opinion being also
expressed and sustained by the majority of questioned companies from Suceava county (72.34%).
Out of the business entities from Braov county that stated such differences, 37.44% consider that
the interest rate used by the lease companies affiliated with manufacturers or dealers is at an
average level (neither high, nor low) as 31.29% appreciate that companies offering lease services
affiliated with a manufacturer or dealer have high interest rates. However, by taking into
consideration the average score of 3.22 on a scale from 1 to 5, where 1 represents the lowest level
of the interest rate and 5 its highest level, we can state that business entities from Braov county
have, in general, a neutral opinion with regard to the level of the interest rate demanded by the lease
companies affiliated with manufacturers, a similar view having the business entities from Suceava
county as well (average score of 3.36).
As regards the interest used by the lease companies affiliated with banks, most business
entities from the two counties herein researched consider it as high (36.29% - Braov county,
41.94% - Suceava county), and less than 32% of the questioned companies of Braov county and
25.81% of those of Suceava county agree that interest is at an average level. The overall of 3.87
registered in this study for the Suceava county, little higher than that determined for Braov (3.61)
show that on the whole, business entities from the two counties consider that the interest used by
lease companies affiliated with banks is a high one and as a consequence, it is higher than that used
by the lease companies affiliated to producers or goods dealers.
According to the general opinion of 45.16% of the business entities from Suceava county,
interests used by independent lease companies have an average level whereas more than 29% agree
that such interest is a high one. As compared to Braov county, the average reaches approximately
the same value (3.36 to 3.32 value registered at the level of Braov county) which shows that the
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interest rate used by independent lease companies lies at an average level. The same as regards the
results registered for Braov county, we find that business entities from Suceava county use higher
interest than independent companies as well as than the companies affiliated with manufacturers or
dealers.
According to the research results, the interest used by banking loans institutions is at a
higher level than the interest used by lease companies, either independent or affiliated, thing that
may be one of the main reasons for which an business entity would choose to finance its activity
with the help of a lease operation and not with a banking loan. When the interests used by the lease
companies are at a lower level, at least in terms of asset volume, lease would be clearly a more
advantageous option.
Among the companies of Braov county, the opinions regarding the amount of the interests
charged for loans are divided: 30.9% consider that they are not either high or low, 30.34% consider
that loan interests are high whereas interestingly, unlike the opinions regarding interests used by
lease companies, more than 28% of economic units in this study appreciate that loan interest is very
high. Furthermore, business entities from Suceava county are more conservative when it comes to
banking interest and no more than 40% of them agree that interests used by banking institutions are
very high.
Most of the companies (80.65%) operating in Braov county consider that lease is a more
advantageous financing form than the banking loan, the main reasons stated referring to the
approval time which is shorter for lease (30.7%), the possibility of VAT deduction at vehicle
acquisition (25.4%), respectively the existence of some criteria more flexible to grant the financing
for lease than for banking loans (18.2%). With respect to the business entities of Suceava county,
there are often expressed the ideas that lease is a more advantageous form, offering the possibility
to deduce VAT when acquiring means of transport (29.6%) and lacking of additional real estate
securities not being requested than banking loans (22.2%) being the main reasons expressed (Table
2). Even though loans are a frequent option in the economic practice, the business entities most
probably remark a number of drawbacks of this financing form, such as: loan securities and meeting
some strict financial solvency criteria as well as, sometimes, the fluctuating interest.
Table 2: The main reasons for which business entities choose lease as a means of financing
and not the banking credit
Braov Suceava
Shorter time for financing approval 30.7% 14.8%
More flexibility in granting financing 18.2% 14.8%
VAT deduction at means of transport 25.4% 29.6%
Flexibility in establishing the advance payment, instalments and
16.5% 11.1%
residual value
Lack of additional real estate securities not requested 8.9% 22.2%
Other 0.3% 7.4%
Source: Authors
However, it is important to state that those business entities, for instance, who have not
used up to the present the services of a lease company invoke as their reasons the obligation to
insure the asset purchased by this form of financing (75%) as well as the fact that the financing
period is not long enough, the lease contracts being concluded, as a rule, on periods of time
relatively short if compared to the other financing forms as the banking loan (25%). We consider
that based on the economic decrease as the present one, the disadvantages of lease as a financing
source (either those already invoked by the questioned business entities or other economic or legal
reasons) can hardly weigh generating a decrease of the lease market.
Thus, lower interest and longer-term financing possibility represent the main reasons for
which the business entities from Braov county would use a banking loan in order to purchase
goods and not the lease. According to the hierarchy made by the respondents according to the
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importance, the third ranks the possibility to receive financing for more categories of goods that is
not to be offered by a lease operation. It is interesting the fact that, even if possessing the
proprietary right at the moment of entering into the possession of the good is a feature specific to
banking loans and not offered by leasing, this aspect does not represent the main priority for the
business entities from Braov county, so it may not be considered one of the main reasons for which
they would use a banking loan rather than a lease contract. It is also interesting that unlike the
business entities from Braov counties, the companies questioned from Suceava counties give a
high importance to the possession of the proprietary right on the goods, this aspect being ranked the
second when classifying their priorities. Moreover, unlike the business entities from Braov
counties, SMEs of Suceava counties do not consider that the fact that the user of a lease operation
who is obliged to assure the purchased good is an impediment and as a consequence, the lack of
such obligation is not a good reason for which they would take a banking loan.
The business entities from Braov who have not yet used the services of a lease company
have financed their activity by other means, of which: own sources (40%) which help them as much
as possible to ensure their financial autonomy and to eliminate the risk of accidental capital
withdrawal; banking loan (40%) especially in the case of SMEs, as in Romania, the access to loans
offered to new or small companies is more difficult; another form used by business entities to
ensure their financing is accessing non-reimbursable funds (20%) offered by the European Union or
the governmental programmes.
Conversely, at the level of Suceava county, most business entities who have not used by
now the services of a lease company have financed their activity by a banking loan (57.6%).
Moreover, 12% of the subjects questioned mention non-reimbursable funds as an alternative
financing whereas 8.7% of these companies state that they have used factoring so as to financially
sustain their activity. Hence, we state that 44.5% of the questioned companies from Braov county
have used many times the services of a certain lease company, the main reasons for such repetitive
cooperation being the rapidness in getting the financing (31%), the attractiveness of the lease
companys offer as compared to the offers of their companies on the market (25.3%) and the ease in
getting the financing (23.8%).
The reasons for which the business entities from Braov county chose to use a lease
company and not a banking institution so as to get a banking loan, have also based their choice of
continuing the cooperation with that lease company and to conclude other financing contracts. But,
unlike those companies, the business entities from Suceava county focus more on the ease of
getting the financing (more precisely the ease of preparing the documents needed for getting the
financing) than on the rapidness of getting the financing itself.
Not more than 60.98% of the companies from Braov county which made the object of this
piece of research state that they invest, on the average, up to 10% of their turnover in the purchase
of goods by using lease, whereas 25.57% state that the investment by lease operations do not
annually surpass 20% of the companys turnover. Investments needing a budget higher than 20% of
the companys yearly turnover are made only by 15.41% of the companies of Braov county. On
the contrary, 61.29% of companies from Suceava county declare that they invest, on the average, up
to 10% of their annual turnover in the purchase of goods by leasing, whereas 35.48% state that their
annual investment by lease operations do not surpass 20% of the companys turnover.
Most enterprises from Suceava county (69.89%) as well as from Braov county (65.57%)
generally conclude a lease contract at intervals of few years, the number of the companies with
more financing needs that determine the more frequent use of lease operations resulting, as a
consequence, in a relatively low proportion. (Figure 2).
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Figure 2: The frequency that the business entities from Braov (left) and Suceava (right)
counties choose to conclude financing contracts in lease system
Source: Authors
From the point of view of the type of lease operations undertaken, as a result of this study,
we find that enterprises from both Braov and Suceava counties are familiar more frequently to
financial lease operations than to operational and direct lease or leaseback. For instance, not less
than 82.9% of the business entities from Braov county have not yet concluded any operational
lease contract, this being explained if the legal provisions in force stipulating that the customer/user
may not purchase the good from its financer at the termination of the lease contract, it being obliged
to return it, are to be taken into account. Thus, because considerations facilitating ownership,
financial lease is more popular among the business entities from the two counties herein analysed.
With respect to leaseback operations, we can state that the companies from Braov county
are familiar as much as the companies from Suceava county to the sale of fixed assets, immediately
followed by their rental from the new owner in order to turn them into liquidities. In other words, it
seems that questioned companies are pragmatically not aware of the usefulness of such operations,
in the sense of improving financial conditions by increasing liquidity indicators without
destabilizing companys activity as the good object of the leaseback contract may be further used in
the same conditions as before being turned into liquidity.
With respect to the categories of goods being the object of lease operations, we can state
that, as in the case of the business entities from Braov county, most business entities from Suceava
county have used lease contracts so as to purchase vehicles (53.8%), in small proportions lease
being used to purchase utility vehicles (19.2%) and goods transportation vehicles (15.4%). If 13.9%
of the used lease operations by the business entities from Braov county consisted from purchasing
equipment, in the case of companies from Suceava county, such goods represented the object of
only 9% of total acquisitions made by using lease as a financing form.
The interest used by the lease company (average score of 2.50) and the ease in getting the
financing (2.63) represented the factors that the business entities from Braov county based their
process of making decisions on when purchasing the last asset by lease system. In their opinion, the
lease companys reputation (3.40) comes the third, this also being a decisive factor when deciding
upon the conclusion of a financing contract. On the other side, the business entities from Suceava
county consider that the factors taken into account when making decisions to acquire the last asset
by leasing are the ease in getting the financing (opinion average of 2.95), the suggestions of the
dealers or suppliers representatives (average of 3.37) and the interest used by the lease company
(average of 3.43).
A question that this study answered to is to what proportion the current law encourages the
lease activity. Thus, not more than half of the economic entities from Braov county consider that
the current Romanian law stimulates on the average the lease activity, whereas 17.91% of them
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appreciate that the Lease law no. 287/2006 and the other regulations and governmental ordinances
do not stimulate enough this activity. At the level of Suceava county, the dissatisfaction degree is
higher, as not less than 37.78% of the questioned economic entities consider that the present law in
force slowly stimulates the lease activity whereas 24.44% appreciate that the Romanian regulations
do not help in any way the development of the business environment by the lease services (Fig. 3).
Figure 3: The opinion of the business entities from Braov (left) and Suceava (right) counties
with regard to the measure by which Romanian law stimulates the lease activity
In order to encourage the user to choose lease as a financing form, the decrease of the
interest level used by lease companies should firstly be encouraged and secondly, companies should
be offered the possibility to totally deduce VAT. Last, but not least, other proposals made by the
companies from the two counties refer to fiscal and legal relief with respect to the users obligation
to conclude a CASCO (no-fault) insurance policy for the vehicle purchased by leasing, the
extension of the limited payment periods and legal and fiscal encouragement of entrepreneurs so as
to renew their vehicle fleets.
With respect to the three statistical hypotheses herein enounced, as a result of the analysis of
the data collected and of the statistical tests made, we can formulate the following:
1. More than 40% of the business entities from the analysed counties used the services of a lease
company;
At the level of Braov county, only 46.1% of the analysed companies used the services of a
lease company whereas at the level of Suceava county, 57.3% of the analysed companies used this
type of financing.
In order to test this hypothesis, we used a non-parametric test specific to alternative
variables. This test was applied using a 40% probability. The results obtained show that the null
hypothesis must be rejected. But, by applying the same test at the level of the two groups (the
counties of Braov and respectively Suceava) we found similar results. As a consequence, the first
hypothesis is confirmed (in table 3 Sig. <0,000), more than 40% of the trading companies of the
two counties used lease to finance.
Table 3: Binomial Test

Category N ObservedProp. Test Prop. Exact Sig. (1-
tailed)
Have you turned, so far, to Group 1 da 415 .5 .4 .000
the services of leasing Group 2 nu 471 .5
companies? Total 886 1.0
Source: Authors
2. Less than 60% of the business entities of the analysed counties consider that lease is more
advantageous than banking loan;
In order to test the second hypothesis of this study, we analysed the results to the eighth
question. The results show that at least 60% of the business entities analysed consider lease to be
185
more advantageous than the banking loan. There is a little difference between the results obtained
for the two counties, the number of the business entities from Braov county who consider that
lease is more advantageous than the banking loan being higher.
Following the use of a binominal test, at the level of the whole selection collective, the null
hypothesis is not rejected (table 4). But, by applying the same test at the level of the two consisting
groups, we state that the null hypothesis is rejected only at the level of Suceava county. Thus, we
can appreciate that the second hypothesis is just partially confirmed (only at the level of one county
analysed).
Tabel 4: Binomial Test

Exact Sig. (1-
Category N ObservedProp. Test Prop.
tailed)
Group 1 da 327 .8 .6 .000
Do you consider that leasing
Group 2 nu 86 .2
is cheaper than bank credit?
Total 413 1.0
Source: Authors
3. The activity field of the business entities from Braov county influences the number of contracts
concluded with lease companies;
In order to test the third hypothesis, we analysed the connection between the number of
contracts concluded every year and the field of activity of the companies. The differences existing
among the five groups of companies (generated by their activity field) are not noticeable.
Thus, to test the connection between the two variables, we used a chi-square test, but the
results could not be taken into account as data did not respect one of the test suppositions (cells
registering values below 5 represent more than 20%). Under such circumstances, we chose to use
the non-parametrical correlation coefficients (table 5).
Tabel 5: Correlation coefficient

Total Braov Suceava
Correlation
Number of leasing contracts signed
Correlation coefficient -0.045 -0.039 -0.098
Field of activity of the
Kendall's tau_b Sig. (2-tailed) 0.307 0.393 0.466
company
N 409 364 45
Correlation coefficient -0.052 -0.045 -0.117
Field of activity of the
Spearman's rho Sig. (2-tailed) 0.297 0.393 0.445
company
N 409 364 45
Source: Authors
Following the testing of the correlation between the two variables, both at the level of the
selection collective and at the level of the two counties, we found that there is no connection
between them. In order to test the correlation, we used two non-parametrical coefficients (Kendalls
and Spearmans correlation coefficients) as the two variables are measured by an ordinal scale.
Under such conditions, the null hypothesis may not be rejected (as a consequence, the third
hypothesis is invalidated).
VI. CONCLUSIONS
SMEs are considered the engine of economic growth and their development plays a vital
role in the prosperity of developed and emerging countries. In order to maintain the role of engine
of the economy, SMEs need funding to support innovation, higher productivity and, consequently,
the aggregate economic growth of a country. However, the access to sufficient and adequate capital
to grow and develop is one of the main obstacles facing most SMEs.
186
In Romania, leasing and bank loans are the most accessible forms of funding for the SMEs.
In the Braov and Suceava counties, the results obtained are extremely interesting and show the
importance of lease in financing the activity of SMEs. Most business entities questioned had a
favourable opinion regarding this financing instrument considering it more advantageous than the
banking loan. For example, the fact that during the lease process there are not required, as a rule,
additional guarantees as in the case of the banking loan, represents for the business entities from
Suceava county the main reason for which they appealed up to the present to the services of a lease
company. As similar as it regards the economic companies questioned in Braov county, the
rapidness in getting the financing and the possibility of VAT deduction at vehicle acquisitions are
also reasons of high importance that determine entrepreneurs to use lease as a financing method.
Moreover, according to the research results, the interest used by banking loans institutions is at a
higher level than the interest used by lease companies, thing that may be one of the main reasons for
which an business entity would choose to finance its activity with the help of a lease operation and
not with a banking loan.
Following the analysis of the research results, we find that leasing is undoubtedly one of the
most important forms of financing to SMEs, both in Braov county, and in Suceava county.
Company managers from the two counties analyzed believes that leasing could become a real
growth opportunity in the country's economy, given that the legislation would help in this regard by
supporting SMEs in choosing this form of financing. The companies surveyed do not hesitate to
come with some proposals in this regard: the decrease of the interest level used by lease companies,
companies should be offered the possibility to totally deduce VAT and other proposals regarding
the fiscal and legal relief with respect to the users obligation to conclude a CASCO (no-fault)
insurance policy for the vehicle purchased by leasing etc.
In conclusion, this approach on lease, a field less studied in the specialty literature, confers a
great value to the paper. By his study, we shaped a clear image of the present stage of the
development of the Romanian lease field, highlighting the fact that the development of SMEs by
facilitating the access to financing creates the necessary premises for a sustained economic and
social growth, by creating new employment and by ensuring a development framework adequate to
the individual and the society as well.
VII. LIMITS AND PERSPECTIVES OF RESEARCH DEVELOPMENT
As any piece of scientific research, this paper undoubtedly presents a series of inherent
limits that we identified but they do not have significant effects on the conclusions obtained as a
result of our analyses. Taking into account that this research does not intend to exhaustively present
all the issues related to lease as a business financing form, we consider that there are perspectives
for further development of this study.
At the level of the two counties, we observed more important differences; under such
circumstances, in order to have a clear image, the research should be conducted for other regions,
too, so as to characterize the behaviour of the consumers of financial lease services based on
regional particularities.
Wishing to cover a range as large as possible of topics specific to lease, we used an ample
questionnaire consisting of 42 questions, either close or open, which many times generated
constraints with respect to them being completely answered by business entities. We consider that,
in order to get a higher response rate and more accuracy of the results, the questionnaire should be
optimized, which means to shorten it. Furthermore, we consider that it is absolutely necessary to
use it by some unitary methods (either using it exclusively online or using it exclusively offline
with the help of field operators) at the level of all the counties to be analysed.
As a conclusion, we can say that this paper has an introductory mission, shaping a future
investigation enterprise that would help formulate real solutions conducting to the elimination of all
the issues that SMEs meet when accessing resources with the aim of undertaking and developing
investment projects by using lease as a business financing method. In this respect, another
187
development direction of this study aims at taking into account its annual use so as to process data
and to obtain some dynamic analyses that may bring us a clearer image on this phenomenon.
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188
PHARMACEUTICAL COMPANIES
BETWEEN CRISIS AND COMPETITIVENESS - SECTORAL
DIAGNOSIS
Associate Professor PhD Mihaela BRSAN
University lecturer PhD tefni UU
Economics, Business Administration and Tourism Department
mihaelab@seap.usv.ro
stefanitas@seap.usv.ro
Abstract:
The evolution of the pharmaceutical industry was a positive constant with the indicators of industrial
production even in years of crisis. Although the economic crisis in Romania decreased average growth rate of
pharmaceutical companies, market value is expected to increase.
The explanation comes from the fact that in order to boost productivity, pharmaceutical companies are
turning to emerging countries with aging populations such as open new markets for future development. Add to this the
recent health policies implemented by newly industrialized countries that are aimed at ensuring increased access to
care.
Analysts see the field phenomenon called "Farma-merger" a good chance for European pharmaceutical
companies oriented to developing countries where drug sales should record a double-digit annual growth until 2017.
In Erste Group reports stated that the impact of the crisis on the pharmaceutical industry should be limited
markets for EU only their economic slowdown. This will be possible because the external indebtedness of
pharmaceutical companies in the EU remains at a minimum, they are able to finance their investment plans without
tapping financial markets, are not adversely affected by the current limited availability of credit resources. Therefore
major pharmaceutical companies in the EU will remain a solid investment on the long term, the negative developments
are limited due to high resistance to the crisis their business model segment "generic".
The consequence of these developments is reflected in the recognition for the first time, the pharmaceutical
sector as a strategic sector for the Romanian economy. In the context of public debate launching the National Strategy
for Competitiveness 2014-2020, Generic Medicines Industry Association of Romania (APMGR) local pharmaceutical
industry reminds the Government proposals on correcting the current fiscal and operational regulatory framework, to
allow unlocking investments in facilities local production and increasing the stability of the business environment in
this sector.
Key words: diagnosis, competitiveness, crisis, pharmaceutical companies
JEL classification: M10, M40
1. COMPETITIVENESS - EVOLVING CONCEPT
The literature reveals, on competitiveness, a complex concept, difficult to catch in a

comprehensive definition. The complexity comes from the numerous indicators that may be
relevant sources of competitiveness that are not always the same for all the domains or enterprises.
In a general manner, Explanatory Dictionary of the Romanian language
(http://www.archeus.ro/lingvistica/CautareDex?query=COMPETITIV) provides for competitive
explanation "Suspected of support competition; where it can compete where competition is possible.
In other words, competitiveness is the ability of a system to cope with competition being tied to a
given competitive environment and the ability to obtain performance after participating on the
profile market". (http://ro.paradox.wikia.com/wiki/Competitivitatea)
In the economic competitiveness of a state express complex and dynamic economic system,
the potential competitive advantages and become effective regardless of the position held: global
(global/international), regional, national, sectoral, organizational, product/service, individual,
mirroring, as defined by the Statistical Office of the European Union (Eurostat)
189
(http://ec.europa.eu/eurostat), their ability to generate a sustainable manner and in conditions of

competition, a level of revenues and occupancy levels/use of relatively high makers.
Although the literature searches are, most often, definitions of the size of its global
competitiveness, macroeconomic, regional or national, it points out that the level is the
microeconomic competitiveness is generated and it supports macroeconomic competitiveness.
In macroeconomic perspective, considering the fact that this is the level at which support and
reinforce competitiveness, it refers to the ability of a nation to form an environment economically,
socially and politically to support accelerated creation of added value (Constantin Ciupagea,
coordinating, Direcii strategice ale dezvoltarii durabile n Romnia, European Institute of
Romania Study III, 2006: http://strategia.ncsd.ro/docs/comentarii/3_fc.pdf). A country becomes
competitive when you manage to build that climate that allows each company creating added value
to be efficient, to be able to survive or grow in any domestic or international economic
environment. The country maintains or improves its profitability internationally when it decides to
apply the set of economic policies required to foster the achieving optimal expansion at the micro
level.
At microeconomic competitiveness you essentially internal conditions, the companys,
conditions expressing all components and functions that define and identified the following
competitive categories:
global competitiveness
financial competitiveness
commercial competitiveness
human resource competitiveness
managerial competitiveness
technical competitiveness, material resources
organizational competitiveness.
Basically, a company is competitive when under the influence of operating conditions
(material resources, human, financial, technical, managerial and marketing capabilities, etc.)
achieve a sustainable advantage over competitors (on costs, prices, diversity and quality of supply,
market share, profits, growth/development, sustainability), giving it the strength to face competition
by responding to customer goods (by price, quality and diversity) and economic performance
remunerates them according to participants marginal productivity of factors of production that they
own.
Competitiveness is seen as part of the company's performance, inextricably linked to the
concept of competitive advantage (competitive advantage) obtained the right combination of
resources (infrastructure, finance, technology, people) with some competitive processes (quality,
service, adapting to customer needs quickly).
Regarded as a quality that allows the company to face competition in a particular sector of
activity, competitiveness is a way to pressure and control over the evolution of economic
performance parameters.
Globalization has brought increased interdependence of national economies favored by
reducing and eliminating obstacles of all kinds in the way of international flows of goods, services,
capital and labor, accompanied by more intense competition:
between firms, to occupy a better position as the market;
between countries, to create a favorable business environment that will attract capital and
talent, wherever they are in the world (Theodor Stolojan, Globalizare i competitivitate,
http://econ.unitbv.ro/ed/pag-rom/cursuri_on_line/globalizare.html).
Distinguished today as sources of competitive advantage designed to make a sustainable
business in a global economy:
classical sources of competitive advantage: economies of scale, standardization of
products backed by operations being carried out at lower costs, in case a higher production volume;
mix of resources (infrastructure, finance, technology, people);
competitive processes (quality, service, adaptation to customer needs, speed);
190
knowledge as intangible resources of the company to be acquired and developed within

the company in a "knowledge economy". This is an economy in which welfare is created through
knowledge management and not by the financial and physical assets;
Knowledge is central to the Lisbon strategy of the European Union to become the "most
dynamic competitive knowledge-based economy in the world". The "knowledge triangle"- research,
education and innovation - is a core factor in European efforts to achieve the ambitious Lisbon.
innovation - will lead to improved products and processes, reduce costs and annual
financial results best. This will lead to the development of business strategies that will include
aspects of research, development and innovation.
information - competitiveness through information, is an activity that requires the
acquisition, analysis and exploitation of data, news and information about products, services,
customers, competitors and any other issues about the environment in which an organization
operates or has interests in order to support top management's decision-making processes of the
organization (https://ro.wikipedia.org/wiki/Competitivitate_prin_informa%C8%9Bie)
stakeholder relations may also become sources of competitive advantage companies such
as Marks & Spencer, Benetton and Toyota have grown very close relationships with their suppliers
and dealers, which contributed to the uniqueness of their products and sometimes vertical
integration.
location can also be seen as an important source of competitive advantage, basic questions
as which countries or what region to be chosen for the opening of a branch or even a factory and
then what type of activity to be executed in each of locations. Sometimes cultural influences can tell
in dramatic fashion word.
corporate social responsibility, corporate governance
Interest shown for ethical or environmental sustainability can also be seen as sources of
competitive advantage. It adds its corporate governance.
Good corporate governance is a powerful tool for increasing competitiveness, for developping
these practices and ensure compliance with the new requirements and trends, easily assimilating
opportunities. A transparent decision-making process, based on clear and objective rules, enhances
the confidence of shareholders in any company ensuring the protection of shareholders' rights,
improving the overall performance of the company, providing better access to capital and risk
prevention.
The organizational culture is also an important source of competitiveness for companies.
Companies must develop a culture that reflects openness, accountability and focus on development
orientation that aim to generate competitive advantages.
Measuring practice the level of competitiveness is considering interdependent factors which
characterize (Tlmaciu Mihai, Mihai Costic, mbunirea competitivitii firmelor printr-o
strategie axat pe calitate, Analele tiinifice ale Universitii Al. Cuza Iai, TOM LII/LIII, tiine
Economice, 2005/2006)
profitability - the ability to earn money and make a profit;
investing profits in the improvement and development activities;
improve product quality while reducing costs;
expand markets - due to a price / performance advantage for the consumer;
increase production capacity and hiring new employees;
adapting existing products to changing customer requirements, design and marketing of
new products.
Modern management does not regard profit as an objective of the company, but as a means to
ensure the existence, development and economic and social goals which it has stability through
customer satisfaction and society as a whole.
However profit performance remains a key indicator for the company and its competitiveness,
regarded as a consequence of economic objectives - established social enterprise as a reward for
success in a competitive market.
191
Table 1. Size of the competitiveness of the company

The basis of comparison Indicators
1. Financial Competitiveness Size profit
Ability to auto financing, loan amount and maturity
Potential financial performance: Return on Equity
Potential solvency: the ability to cope reimbursements
2. Competitiveness commercial The market, evolution of turnover, profitability threshold, position in the life
cycle of each product
Commercial reputation: brand image, customer loyalty, coherent range of
products, the advertising budget
3. Human Competitiveness The skill labor, skill levels, absenteeism rate, enrollment rate
4. Competitiveness technique Nature equipment: seniority, performance
Technical advances, the importance of research and development, the level of
automation
The supply relationships with suppliers, stock rotation
5. Competitiveness Management Profile leaders: age, experience, education, training
Driving ability: ability command, the delegation, negotiation, the spirit of
synthesis
Value collaborators, team cohesion degree
6. Organizational Competitiveness Shape organizational structure, the number of hierarchical levels
Nature delegating decisions, the degree of decentralization, the information
flow
The degree of integration of services to individuals and business objectives,
how the completion of targets, the achievement of control, state social climate
Source: Dan Vasile, Strategii si structuri industriale competitive, All Educational, Bucureti, 1997
2. THE PHARMACEUTICAL INDUSTRY - DEVELOPMENT AND GROWTH

ASSUMPTIONS
Europe recognizes the link between health and growth and the importance of their role in
providing pharmaceutical industry. Given the fact that access to medicines directly determines the
results of national health consequences related to life expectancy and quality of life standards and a
considerable impact on productivity, innovation and competitiveness of a state, the European Union
issued Motion for the third program of EU action on health (2014-2020), "Health for Growth"
(Proposal for a Regulation of the European Parliament and of the Council establishing a program
"Health for Growth", the annual program The EU action in the field of health for 2014-2020
http://eur-lex.europa.eu/legal-content/RO/TXT/?uri=celex:52011PC0709).
The program is geared towards actions with clear EU added value in line with the current
policy objectives and priorities of the Europe 2020 strategy.
The Commission stressed that "promoting good health is an integral part of the objectives of
smart and inclusive growth for Europe 2020. Keeping people healthy and active for longer has a
positive impact on productivity and competitiveness. Innovation in healthcare helps to successfully
addressing the challenge of sustainability in the sector in the context of demographic change".
Pharmaceutical companies contribute in a strategic manner to create jobs, education,
innovation and financing system, playing an important role for growth and future competitiveness
of nations. In fact one of the three industries ranked by the Statistical Office of the European Union
(Eurostat) in group "High Technology", the pharmaceutical industry is characterized by high added
value. Countries such as Ireland, with an added value of 777314 euros/employee are well above the
European average (158453 euros/employee), opposite hovering Romania with only 33396
euro/employee. The High Technology category, according to Eurostat, enter high value-added
products from aerospace, computers, electronics and telecommunications equipment, TV and radio,
192
pharmaceuticals, electrical equipment, armament industry, medical instruments, precision and

optical, watches etc.
The pharmaceutical industry is highly globalized, with a particular business model
(http://www.minind.ro/presa_2013/septembrie/Sinteza_consultari_Industria_produselor_farmaceuti
ce_de_baza_25092013.pdf). Within the industry, Research, Development and Innovation (RDI) are
vital, the world that concentrates the highest values of investments in research.
In this context, scholars such as(P. Kirkbride, in the work Globalization. The External
Pressures, Ashridge: Ashridge School of Management, 2001, p. 251) argue that the pharmaceutical
industry "has technological complexity, uncertainty of the future and long-term investments of the
energy industry, but on the other hand, it has new product development challenges and pressures
that resembles the consumer goods industry".
Europe faces new challenges in public health, scientific and economic by relating the
(European Commission, Making Europe a center for safe and innovative medicines,
http://ec.europa.eu/enterprise/newsroom/cf/_getdocument. cfm? DOC_ID = 3348):
globalization and internationalization growing sector of the value chain;
Globalization offers challenges and opportunities. The emergence of new threats to global
health, such as an increasing number of counterfeit medicines or pandemic flu, the
internationalization of the value chain and the rise of new actors in the global competition provide
compelling reasons for stepping up international cooperation.
In this context two objectives are met:
- Better health protection of EU citizens;
- Improving the competitiveness of European companies by removing regulatory or non-
regulatory barriers which impede access to foreign markets and by ensuring fair international
competition.
proper functioning of the internal market in an expanding Europe;
The proper functioning of the EU internal market is also a major challenge for the future. As
regards regulatory issues, implementation and interpretation of Community law by Member States
still create obstacles to the free movement of medicines. Excessive requirements also affect
competitiveness, especially for small and medium enterprises, without always bringing public
health benefits.
There is the possibility of better regulation, for example in the modification of existing
authorizations and possibly clinical trials.
progress in science and technology
Technologies, therapies and new drugs are emerging. This applies in particular regenerative
medicine, personalized treatments, and the development nanoterapiilor. This trend is already
affecting the development strategy of EU companies, the industry structure - the creation of small
and medium enterprises particularly innovative - concept clinical trials and the way medicines are
prescribed. These should be gradually implemented within the EU pharmaceutical industry XXI
century.
For companies that are on the market today, the stakes are enormous because powerful
innovative products are needed that to fuel further growth and to cover losses caused by the
expiration of patents or market protection. At the same time, small firms continue to specialize in
different segments of the value chain, resulting in a fragmentation of power between big
pharmaceutical companies and specialized firms.
They dominate in this area two business models (RB Helms, Competitive Strategies in the
Pharmaceutical Industry, American Enterprise Institute for Public Policy Research, Washington
DC, 1996). The first is companies specialized in activities that become key players in a segment of
the value chain, such as product development, clinical trials and production. The second model is
the specialized marketing firms that are integrated into the entire value chain about markets certain
products, such as vaccines, HIV treatment, hormones or dermatology.
In preparation for future action, integrated pharmaceutical companies have at their disposal
several strategic alternatives:
193
(Ciulu, Ruxandra, Abordri strategice n industria farmaceutic mondial, Revista

Management-Marketing:http://www.managementmarketing.ro/pdf/articole/44.pdf)
1. are able to focus on specific parts of the value chain, such as cardiology, urology, central
nervous system. This strategy will involve companies in a total organizational reform;
2. are able to opt for sections of the value chain, such as the discovery of compounds, product
development, production and marketing and sales;
3. are able to continue the current strategy based on acquisitions and integrating new
companies into their organizational structures.
PricewatehouseCoopers (PwC) (http://www.wall-street.ro/articol/Companii/99964/PwC-
Companiile-farma-trebuie-sa-si-regandeasca-radical-lanturile-de-distributie.html#ixzz3f8yXcdlq)
identified in his report, "Pharma 2020: Supplying the future. Which Path Will You Take? "As the
challenge for the coming years that the pharmaceutical industry must radically rethink their supply
chains to adapt to rapid market developments and the shift from product to patient. The same report
states that "The growing importance of emerging markets, new medical therapies and
environmental concerns are putting pressure on supply chains of pharmaceutical companies and
there is a risk that many of these are discontinued. Accordingly, PwC believes that the next decade
many companies will have to reassess from a strategic perspective and to radically change the
model of production and distribution".
Regarding the economic crisis, some pharma sector analysts at Erste Group
(www.erstegroup.com/de/Downloads/a160e563.../pi20090129-ro.pdf) consider its impact on the
pharmaceutical business should be limited, even if EU markets will also witness a slowdown of
their economy. This will be possible because the external indebtedness of pharmaceutical
companies in the European Union remains fairly minimal and they can finance their investment
plans without tapping financial markets, is not adversely affected by the current limited availability
of resources lending. Secondly, regional currencies have continued their weakening trend, to the
benefit of European Union pharmaceutical companies focused on export.
While EU markets have experienced crisis pharmaceutical companies' balance sheets Union
remained solid, with substantial cash. Generics will keep their status as drugs of choice in European
Union countries, and preference will get even more in the West. According to Erste Group analysts,
generic drug consumption is about to grow even in times of crisis, as cheaper generic drugs will
become increasingly attractive to health insurers, becoming more cost both in East and in the West.
3. PHARMACEUTICAL INDUSTRY IN ROMANIA
Regarding drug market in Romania, 2013 was a favorable one. Even in an economic crisis,
while other areas recorded heavy losses, plus the pharmaceutical industry has remained and
continues to grow at a sustained pace, according to specialists.
Besides the pharmaceutical industry has become a strategic sector for the Romanian economy
being included in the National Strategy for Competitiveness 2014-2020, under which the country's
strategic priorities set out in this document are intended to create the conditions that Romania can
compete effectively with the rest European countries (National Competitiveness Strategy 2014-
2020.(http://www.minind.ro/%5C/strategie_competitivitate/Strategia_Nationala_de_Competitivitat
e_iunie_2014.pdf)
If in 2008 the pharmaceutical industry was considered to be focused on producing generic and
not very competitive, the situation seems to have evolved over time, becoming the sector with
competitive potential, smart specialization.
Studies conducted recently
(http://www.lawg.ro/files/assets/userfiles/files/Industria%20Farmaceutica%20din%20Romania.pdf)
it shows that the pharmaceutical industry has seen considerable growth over the last decade in all its
segments, reaching to contribute more than 1% to the GDP. Although local manufacturers of drugs
are in a minority, they have expanded capabilities production, while the big players in the
pharmaceutical industry in Romania have entered the market by acquiring local manufacturers or by
194
opening representative offices. The total number of drug manufacturers market presence is
significant in Romania (184), but the top 10 players, depending on the volume of sales, controls
almost 60% of this market. The market drug distribution is restricted to a small number of players
despite the difficulties encountered by the pharmaceutical industry since the beginning of the crisis
of 2008 have continued to invest in expanding storage capacity.
In terms of sales dynamics, the same study reveals that medicines subject to prescription (RX)
gained a larger share of total retail sales, up from 79% in 2005 to 84% in 2011, representing a total
1.9 billion. Drugs without prescription (OTC) lost market share in favor of RX drugs, reaching a
total of 0.35 billion in 2011, which equals a 16% share in total retail sales. Innovative medicines
represent over 70% of value sales and only 25% by volume, while generics represent 30% of total
market value and 75% by volume. Data on generics market in Europe suggests, moreover, that
Romania is in fifth place after Poland, Slovakia, Germany and Slovenia in terms of market share of
generic medicines. The imports of pharmaceutical products are the main source for domestic
consumption of drugs. Price differences of RX drugs which appear between countries led to a
parallel increase in exports, particularly for pharmaceutical distributors.
4. PHARMACEUTICAL COMPANIES COMPETITIVENESS OF ROMANIAN
This report aims to brief the addition radiography pharmaceutical field in Romania,
highlighting the evolution of four Romanian companies, in terms of competitiveness in 2009-2013.
Currently (at the time of the research) at the Bucharest Stock Exchange listed companies
Antiobiotice SA Iai, Biofarm S.A. Bucharest, Zentiva SA (formerly called Sicomed) and
Farmaceutica Remedia SA, the only company in Iasi Romanian society where the state is still the
majority shareholder.
Table 2. Top 10 Romanian companies for 2013
Company name County Employees Net turnover Net income
TERAPIA S.A. Cluj 801 500629696 109059553
ANTIBIOTICE S.A. Iai 1465 318625015 31380855
ZENTIVA S.A. Bucureti 484 290362767 40297608
SANDOZ S.A. Mure 257 268037485 21849078
LABORMED-PHARMA S.A. Bucureti 235 141782355 -17969560
GEDEON RICHTER ROMANIA S.A. Mure 544 119175198 -44192159
BIOFARM S.A. Bucureti 360 119072518 25581079
BIO EEL S.R.L. Mure 165 112690579 1337923
INFOMED FLUIDS S.R.L. Bucureti 409 110651746 3451357
ROMPHARM COMPANY S.R.L. Ilfov 263 98005719 2320132
Source: http://www.med-farm.ro/top-10-companii-farmaceutice-din-romania-2013-an-favorabil-pentru-piata-
medicamentelor/
Hierarchies change in 2014, as follows:
Table 3. Top 10 Romanian companies for 2014

Company name County Employees Net turnover Net income
TERAPIA S.A. Cluj 859 521047272 86105757
EUROPHARM S.A. Braov 213 426324960 -9104204
ZENTIVA S.A. Bucureti 488 394072623 54242886
ANTIBIOTICE S.A. Iai 1465 320058303 31138739
SANDOZ S.A. Mure 270 307301739 10904722
BIO EEL S.R.L. Mure 165 140726524 2170440
LABORMED-PHARMA S.A. Bucureti 241 136686016 -20130437
BIOFARM S.A. Bucureti 380 128508056 26559851
INFOMED FLUIDS S.R.L. Bucureti 418 115750485 1877062
GEDEON RICHTER ROMANIA S.A. Mure 548 114021588 -56920366
Source: http://www.risco.ro/suport/comunicate-risco/evolutia-pietei-de-produse-farmaceutice-2014-top-10-companii-92
195
The situation Antibiotice, Iasi, listed on the Bucharest Stock Exchange, the size and dynamics
of turnover, the operating result, the net result and the average number of employees is shown in the
following table.
Table 4. Situation company Antibiotice, Iai

The period of analysis
Company Indicators
2009 2010 2011 2012 2013
Net turnover (lei) 219754104 243626062 281847455 304731950 318625024
Indices of evolution (%) 100 110.86 115.69 108.12 104.56
Operating profit (lei) 26172761 30562500 32062861 44191919 52297136
Operating margin (%) 11.91 12.54 11.38 14.50 16.41
Absolute deviation (%) 0 0.63 -1.17 3.13 1.91
Net profit (lei) 11916807 12539100 20298909 27110836 31380856
Net margin (%) 5.42 5.15 7.20 8.90 9.85
Antiobiotice Absolute deviation (%) 0 -0.28 2.06 1.69 0.95
S.A. Average number of employees 1430 1441 1450 1465 1465
Labour productivity 153674.19 169067.35 194377.55 208008.15 217491.48
The average salary/employee 33997.89 35365.05 36937.69 36675.68 37742.39
The average expenditure () 929.30 929.71 912.75 899.45 898.82
Market share (%) 9.35 8.86 10.15 9.77 11.01
Added value 109803815 147639567 170426273 184358122 203450879
Source: Information retrieved and processed on site Bucharest Stock Exchange (http://www2.bvb.ro/),
www.antibiotice.ro and Ministry of Finance (www.mfinante.ro)
Antibiotice, the most important Romanian producer of generic drugs, has the mission to
transform valuable treatments in a more accessible way to improve the quality of life.
The portfolio of 137 drugs covering a range of therapeutic areas, product development
strategy is focused today on drugs in classes cardiovascular, infectious and central nervous system
(http://www.antibiotice.ro/companie.php).
The results recorded by the company the entire period confirms the upward evolution that the
company has pursued despite difficult market condition in the onset of the global economic
downturn.
The turnover shows an increase to another, reaching its peak at the end of 2013 (318625024
RON), which confirms the viability of the core business market.
It is worth mentioning that there is a decrease in the duration of storage of goods in the
market through careful management structure of the product portfolio both at entry and exit of the
pharmacy.
The products that define the company's core business, such as Ampicillin and Amoxicillin
capsules or tablets - Ciproquin (ciprofloxacin), Ranitidine and Erythromycin recorded an upward
trend in market share relative to its main competitors and amid a reference markets regressing.
According to data from the table above, operating profit and the net also had positive
developments during that period, peaking in 2013, the 5229713610 lei and 31380856 lei, up by
18.34% or 15.75% compared to 2012.
The achievment of this economic performance was possible by implementing the
management team of the company, since mid-2008, a plan of measures to streamline the
business and reduce costs, which aimed to increase business profitability.
These measures may include:
196
the implementation of a cost reduction plan which aimed to reduce material expenses of
any nature, without affecting the pharmaceutical industry-specific manufacturing standards, product
quality or safety of employees. This plan resulted in reduced fuel consumption and utilities
(electricity - 15%, gas - 21% and drinking water - 22%, fuel - 23%) in the first quarter of 2009 by
approximately 14% over the same period 2008 and raw material costs fell 20%.
the hiring freeze and redeployment of staff within the company, including through
appropriate channels promoting hardworking staff who graduated from higher education.
adjusting the number of staff from 1624 employees at the end of the first quarter of 2008-
1480 at the end of March 2009 by boosting voluntary termination of the collective work and
retirement demand, which led to a reduction in salary costs over 7%.
improving the collection rate of the graphics market by establishing staggered payments,
the insurers cover claims related tools customers and expanding domestic insurance policies for risk
of default external clients.
The effects of these measures are already visible in the first quarter of 2009, they began to
produce effects both in terms of profit growth and cash flow.
Trading Antibiotice (ATB) on the Bucharest Stock Exchange and inclusion in the index BET-
XT (which reflects the evolution of prices of the most liquid 25 companies), BET-Plus (which
includes companies listed on BSE Romanian who meet the minimum criteria Selection excluding
investment companies) and BET-BK (which reflect price trends shares issued by domestic and
foreign companies traded on the BVB regulated market) reflects the fact that it is a solid,
competitive, developed on a sound economic trainic.
Maintaining between pharmaceutical manufacturers brands in Romania and internationally
favorable development was possible due to the continuous investments in manufacturing
technology, employee training and obtain certificates valued internationally recognized quality.
Recognition performance at national level has resulted in obtaining 2014 1st place for the fifth
consecutive year in the category "large enterprises industry-based pharmaceuticals", a top
compiled by The Chambers of Commerce in Romania. Also, Antibiotice received for the sixth
consecutive Trophy and Diploma of Honor from the National Association of Exporters and
Importers in Romania, in its capacity as the largest exporter worldwide of Nystatin, having the most
diverse Export offers of drugs.
The balanced growth in turnover and profit, based on a well defined business plan, supported
by five pillars of development that determine the future development of the company, confirmed
that Antibiotice is a competitive player in national and international pharmaceutical landscape.
Biofarm situation, listed on the Bucharest Stock Exchange, the size and dynamics of turnover,
the operating result, the net result and the average number of employees is shown in the following
table.
Table 5. Situation company Biofarm, Bucharest

Company Indicators
2009 2010 2011 2012 2013
Net turnover (lei) 67108836 82294885 93443090 104970886 119072520
Operating profit (lei) 13711173 16934705 15707018 16416857 22587898
Absolute deviation (%) 0 0.15 -3.77 -1.17 3.33
Biofarm
S.A. Net profit (lei) 19636090 14414793 14220788 21036200 25581080
Net margin (%) 29.26 17.52 15.22 20.04 21.48
Absolute deviation (%) 0 -11.74 -2.30 4.82 1.44
Average number of
343 343 362 340 360
employees
197

The average
29804.57 32344.79 31012.24 37620.70 38942.58
salary/employee
The average expenditure
692.26 796.66 828.86 788.01 766.60
()
Market share (%) 2.85 2.99 3.36 3.37 4.11
Added value 33625751 49904027 52401029 61247835 69277943
Source: Information retrieved and processed on site Bucharest Stock Exchange (http://www2.bvb.ro/), www.biofarm.ro
and Ministry of Finance (www.mfinante.ro)
With a tradition of over 90 years in the Romanian pharmaceutical industry with a portfolio of
over 200 products, Biofarm covers 61 therapeutic areas and continuously invests in media
campaigns, commercial and marketing to promote their products.
During 2013, Biofarm has maintained market trend and kept its position among the top 10
Romanian producers in terms of sales in stores.
With a stable position on the Romanian pharmaceutical market, Biofarm and improving its
position in the international arena. At the moment, Biofarm is present in 12 countries, with an
export value growth of 53% in 2013 compared to 2012 and aims expanding in the near future.
The turnover of the company is primarily from sales of finished products directly to
pharmaceutical distributors, the internal market, the point of sale steward Tutu Street, no. 99,
Bucharest.
Turnover growths throughout the period, the highest value recorded in 2013 of 119072520 lei.
Operating profit and net profit recorded oscillatory developments in the period. Despite record
operating margin and net margin developments oscillators are above the sector average.
From 2010 Biofarm initiated a project for the distribution of its products directly to
pharmacies in 2013 which led to an increase in sales through this distribution by 48% compared to
2012.
The company's development strategy includes improving the company's presence in the retail
market, further development of the sales force and increasing the number of products. Continued
investments in research, launch and promote their products will help strengthen the company's
position in the market.
The research - development Biofarm aims to strengthen the market position of pharmaceutical
products both quantitatively and qualitatively. The launch of new products and improving portfolio
are key points of the development strategy of the company. To improve its position both
domestically, as well as internationally, Biofarm aims to develop and launch about 10 products
every year. In 2013 the formulas were developed 20 new drugs and dietary supplements and have
been obtained marketing authorization for six new products.
Zentiva situation, listed on the Bucharest Stock Exchange the size and dynamics of turnover,
the operating result, the net result and number of employees, it is shown in the following table:
Table 6. Situation company Zentiva, Bucharest

Company Indicators
2009 2010 2011 2012 2013
Net turnover (lei) 175765574 259644377 235648166 242491029 290362752
Operating profit (lei) -10270467 62929082 38020442 37381079 50578068
Zentiva Indices of evolution (%) 100 -612.72 60.42 98.32 135.30
S.A. Operating margin (%) -5.84 24.24 16.13 15.42 17.42
Net profit (lei) -2882789 57377448 33857309 32181076 40297608
Indices of evolution (%) 100 -1990.35 59.01 95.05 125.22
198
Net margin (%) -1.64 22.10 14.37 13.27 13.88

Average number of
691 585 555 531 484
employees
The average
52088.48 61677.41 62323.73 65894.04 73169.71
salary/employee
1003.55 744.27 830.94 846.20 830.15
()
Market share (%) 7.48 9.45 8.48 7.77 10.03
Added value 62105104 142407929 157366572 129301554 137458104
Source: Information retrieved and processed on site Bucharest Stock Exchange (http://www2.bvb.ro/), www.zentiva.ro
ZENTIVA (http://www.zentiva.com/about-us/Documents/2004_EN.pdf. p. 4), one of the

largest generic pharmaceutical companies in Central and Eastern Europe, focuses on the
development, production and marketing of new versions of branded generic pharmaceutical
products which the company believes can be successfully introduced in the markets of Central and
Eastern Europe. The company is market leader in the Czech Republic, Romania and Slovakia and
its importance increases rapidly in Poland, Russia, Bulgaria, Ukraine and in the Baltic countries.
Regarding the growth of turnover, it records the entire period increases (less than in 2011),
reaching its peak at the end of 2013 (290362752 RON).
The operating result has an oscillating evolution, reached a peak in 2010 (62929082 lei),
continued to decrease in the next two years.
In terms of net result, there is a loss in 2009 (-2882789 lei), followed by profit in the future.
Regarding human resources, there is a decrease in the average number of employees during
the entire period of analysis, caused by the global economic recession.
The company's strategy is built around a number of key elements, namely
(http://www.zentiva.com/about-us/Documents/2004_EN.pdf. p. 6):
rank bringing innovative brand generic drug market;
promotion of these products to primary care through a highly trained sales force that is
able to educate this market about the value of these new drugs;
cooperation with healthcare providers in the countries where it works to expand the
primary care market. These benefits increase the number of patients who have access to modern
therapy without significantly increasing healthcare costs;
focus on cost competitiveness.
In the last three years the Bucharest factory has undergone a process of investment of 12
million Euros in new technologies and cost optimization.
The situation Farmaceutica Remedia was listed on the Bucharest Stock Exchange, the size
and dynamics of turnover, the operating result, the net result and number of employees, it is shown
in the following table:
Table 7. Situation company Farmaceutica Remedia, Deva

Company Indicators
2009 2010 2011 2012 2013
Net turnover (lei) 154401289 182561836 203467822 237446333 237835520
Farmaceutica Indices of evolution (%) 100 118.24 111.45 116.70 100.16
Remedia Operating profit (lei) 5138892 3533326 5568914 6762860 3609909
S.A. Indices of evolution (%) 100 68.76 157.61 121.44 53.38
199
Absolute deviation (%) 0 -1.39 0.80 0.11 -1.33

Net profit (lei) 918157 1959398 4077449 5553843 3013374
Net margin (%) 0.59 1.07 2.00 2.34 1.27
Absolute deviation (%) 0 0.48 0.93 0.34 -1.07
Average number of
398 415 395 424 447
employees
The average
26458.91 27873.94 31760.97 36016.79 33650.82
salary/employee
991.64 984.86 973.77 971.49 985.57
()
Market share (%) 6.57 6.64 7.33 7.61 8.22
Added value 24666779 25789431 30141060 32098886 27792438
Source: Information retrieved and processed on site Bucharest Stock Exchange (http://www2.bvb.ro/), www.remedia.ro
Farmaceutica Remedia (http://www.remedia.ro/wp-content/uploads/2014/05/raport-anual-

CA-2013-consolidat.pdf, p. 3) is present on the market with a network of eight centers logistics, a
chain of 73 pharmacies and local distribution, integrated with selling drugs activities, health
promotion and marketing, having a market share of medicines and products market frmaceutice
below 2%.
The company's mission (http://www.remedia.ro/companie/misiune/) is to promote and launch
innovative concepts pharmaceutical business, providing quality health services adapted to the needs
of customers; respecting international standards of ethics and professionalism.
The company continued during 2013 ongoing process of refurbishment and logistic centers
both in their pharmacies, consisting of both facilities with new equipment (furniture, by car,
computers) and the continuous improvement of both software systems used
(http://www.remedia.ro/wp-content/uploads/2014/05/raport- 2013-CA-year consolidat.pdf, p. 6).
Turnover growths throughout the period, with different growth rates, the most significant
being recorded in 2010 by 18.24%.
Operating margin recorded an upward trend in 2009-2012, followed by a fall of 1.33% in the
last year of analysis, hovering well below the sector average, without putting the company in
difficulty.
Net margin recorded an upward trend in 2009-2012 due to the fact that the growth rate of net
profit growth rate ahead of the turnover, followed by a fall of 1.07% in the last year of analysis,
reaching 1.27%, which is below the sector average.
Shopping online has a strong upward trend in urban population and therefore during the
previous year was implemented a new platform for online sale (e-shop) for increasing the number
of visitors and to shorten the time of order.
Farmaceutica Remedia continued during 2013 and the ongoing process of revamping both
logistics centers and in their own pharmacies that consisted in the equipment with new equipment
(furniture, by car, computers) and in the continuous improvement of both software systems used.
As elements of perspective on the company's activity is envisaged that there was a high
probability that in the first half of 2014 the financial difficulties of independent pharmacies -
customers Farmaceutica Remedia - to emphasize. In this context, the company will work with
partners who offer guarantees priority for payment of goods purchased from Farmaceutica
Remedia.
Given the above, in 2014 Farmaceutica Remedia will maintain a policy of accelerated
collection of receivables from market including by offering additional discounts. Also, capital
200
expenditures will be made strictly on the basis of the investment budget and within available funds,
without affecting operational activity.
On the other hand, especially the difficulties encountered by independent pharmacies free,
market opportunities direction to find new forms of collaboration, mergers and acquisitions.
5. PHARMACEUTICAL MARKET RISKS
Among the factors influencing drug manufacturers affairs mention:

the long service Receivable (250-300 days) and delayed payments of invoices by the
National Health Insurance;
the setting a fixed exchange rate to calculate the prices of medicines. For 2009 drug price
was calculated at an exchange rate of 4 lei for one euro, while the 2010 rate announced is 4.25.
Drug manufacturers are thus disadvantaged if the national currency depreciates against the euro
above 4.25. But winning at a rate euro/USD below 4.25;
new way of calculating the prices of medicinal products for manufacturers that provides
basic selection of lower producer price of the same drug existing in the Czech Republic, Hungary,
Greece, Bulgaria, Poland, Spain, Germany, Slovakia, Austria, Belgium, Italy and Lithuania. The
minimum price selected is converted from euros to lei at a fixed exchange rate;
the claw-back system which requires three months once drug manufacturers to transfer tax
equivalent government accounts for 11.5% of revenues (http://www.med-farm.ro/top-10-companii-
farmaceutice-din-romania-2013-an-favorabil-pentru-piata-medicamentelor/).
The economic crisis in Romania has decreased the average growth rate of pharmaceutical
companies, but the market value is estimated to grow because pharmaceutical companies are
influenced to a lesser extent by economic cycles.
6. CONCLUSION
At present, Pharmaceutical industry companies are divided into several areas (life sciences,
Healthcare, disease management), and recently appeared other new fields (biotechnology, genetic
products, foodaceuticals). Fundamental changes in the pharmaceutical industry have led to an
explosion of companies specializing in limited areas, generally in one or several sections of the
value chain and an integrated firms attempt to advance the pace of transition.
In the new economy changes the role of pharmaceutical companies and some already
emerging trends will increase. These relate to:
increase the number of specialists in biotechnology and research companies that
companies will increasingly rely, which can provide new compounds licensed and partnerships;
specialized firms will increasingly focus on technologies that will lead to new research;
rethinking of clinical trials and other product development functions;
new alliances with companies in the healthcare system for the distribution of medicines.
Romanian pharmaceutical sector can be characterized by dynamism expressed both in the
manufacturing sector and in the distribution, makers with an important contribution to increasing
competition are composed of market growth and high profitability prospects of investment in
production capacity or distribution units (http://www.analizeeconomice.ro/2013/04/analiza-pietei-
Pharmaceutical-between-anii.html).
Romanian pharmaceutical companies are moving towards exports so as not to be affected too
much by local market, "diseased" clawback tax high pressure or poor payment discipline, persisting
(http://www.romanialibera.ro/economie/companii/sectorul-farmaceutic--o-investitie-sigura-pentru-
romania-277058).
Specialists from Tradeville (http://www.tradeville.eu/despre-tradeville), financial investment
services company with a successful history of over 19 years of capital market in Romania,
recommends investors as part of a long-term portfolio should be allocated to the pharmaceutical
201
sector for, in the coming years, amid generalized aging of the population, application of
medicaments for cardiovascular diseases, CNS or respiratory diseases will increase.
All four pharmaceutical companies, listed on the Bucharest Stock Exchange (BVB) were
positive developments this year. So, "Antibiotice Iai" (ATB) has increased in early by 50%,
followed by "Biofarm" Bucharest (BIO) -with 39%, Zentiva (SCD) - 30%, the lowest increase
recorded a Farmaceutica Remedia (RMAH) - 12%. Brokers bring these positive developments are
due financial results of companies, how, especially in the case of BIO and ATB securities
exchanges on behalf of companies, made by their major shareholders
(http://www.remedia.ro/companiile-farmaceutice-au-crescut-pe-fondul-schimburilor-intre-
actionarii-strategici/).
For the future, product development portfolio, business internationalization, protecting
working capital, human resource focus to increase competitiveness of the company, remain the
cornerstones of the strategic development of the company Antibiotice
(http://www.antibiotice.ro/investitori.php?sid=20).
Capitalization of three of the four companies fluctuates between 200 and 315 million, while
the market value of Farmaceutica Remedia Deva is about 10 times lower. But Farmaceutica
Remedia business volume is comparable to the sales of the other three companies. The explanation
comes from the fact that the main activity of the company is Deva pharmaceutical products, while
the other three companies are manufacturers of pharmaceutical products. As a result, the need to
make investments in fixed assets and in research is higher for eventually
(http://www.ziare.com/bani/bursa/tradeville-investitiile-in-sectorul-farmaceutic-recomandate-pe-
termen-lung-1052968).
REFERENCES
1. Ciulu, Ruxandra, Abordri strategice n industria farmaceutic mondial, Revista

Management-Marketing, http://www.managementmarketing.ro/pdf/articole/44.pdf
2. Ciupagea, Constantin, coordonator, Direcii strategice ale dezvoltarii durabile n
Romnia, Institutul European din Romnia, Studiul III, 2006,
http://strategia.ncsd.ro/docs/comentarii/3_fc.pdf
3. Helms R.B., Competitive Strategies in the Pharmaceutical Industry, American Enterprise
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4. Hugues, Kirsty, European Competitiveness, Cambridge University press, 1993, p. 5
5. Kirkbride, P., Globalization. The External Pressures, Ashridge: Ashridge School of
Management, 2001, p. 251
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rom/cursuri_on_line/globalizare.html
8. Tlmaciu, Mihai, Mihai, Costic, mbunirea competitivitii firmelor printr-o strategie
axat pe calitate, Analele tiinifice ale Universitii Al. Cuza Iai, TOM LII/LIII, tiine
Economice, 2005/2006
9. Vasile, Dan, Strategii i structuri industriale competitive, All Educational, Bucureti, 1997
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sigure i inovatoare, http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=3348
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Sntate pentru cretere economic, al treilea program multianual de aciune a UE n domeniul sntii pentru
perioada 2014-2020, http://eur-lex.europa.eu/legal-content/RO/TXT/?uri=celex:52011PC0709
13. http://ec.europa.eu/eurostat
14. http://ro.paradox.wikia.com/wiki/Competitivitatea
15. http://www.analizeeconomice.ro/2013/04/analiza-pietei-farmaceutice-intre-anii.html
16. http://www.antibiotice.ro/companie.php
202
17. http://www.antibiotice.ro/investitori.php?sid=20
18. http://www.archeus.ro/lingvistica/CautareDex?query=COMPETITIV
19. http://www.lawg.ro/files/assets/userfiles/files/Industria%20Farmaceutica%20din%20Rom
ania.pdf
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pentru-piata-medicamentelor/
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tate_iunie_2014.pdf
22. http://www.minind.ro/presa_2013/septembrie/Sinteza_consultari_Industria_produselor_fa
rmaceutice_de_baza_25092013.pdf
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24. http://www.remedia.ro/wp-content/uploads/2014/05/raport-anual-CA-2013-consolidat.pdf,
p. 3
25. http://www.remedia.ro/wp-content/uploads/2014/05/raport-anual-CA-2013-consolidat.pdf,
p. 6
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regandeasca-radical-lanturile-de-distributie.html#ixzz3f8yXcdlq
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recomandate-pe-termen-lung-1052968
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33. http://www2.bvb.ro/ListedCompanies/SecurityDetail.aspx?s=SCD&t=2
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203
A TERRITORIAL PROFILE OF PUBLIC EXPENDITURES AT LAU 2

LEVEL, FOR 2007-2013 PERIOD IN ROMANIA
Senior researcher Cristina LINCARU
National Scientific Research Institute for Labour and Social Protection INCSMPS, Romania
cristina.lincaru@yahoo.de

Senior researcher Speranta PIRCIOG
pirciog@incsmps.ro

Senior researcher Vasilica CIUC
silviaciuca@incsmps.ro

Senior researcher Draga ATANASIU
incsmps1@incsmps.ro

Senior researcher Beatrice CHIRIAC
beatrice.chiriac@yahoo.de
Abstract:
In view to improve the use of Cohesion policy resources more effectively and efficiently, we propose to explore
the achievements of Structural and Cohesion Funds in 2007-13 in Romania at NUTS 5 /LAU 2 level in rural and urban
areas. The common reformed cohesion policy represented by the EU Regulation 1303/2013 proposes the integrated
approach of territorial development. On this background the territorial unit of analysis is the local administrative unit
as the smallest regional hub for integrated public policies, including cohesion policy as well. This analysis involves
administrative data provided by MDRP Regional Development and Public Administration Ministry, connected with
socio-economic indicators provided by INS TEMPO.
The budgetary capacity of the LAU2 is evaluated using the spatial analysis applications according Anselin
(2005, 2006 - using ARC GIS and GEODA software) for period 2007-2013.
The main result of this article is the territorial heterogenic profile of public expenditures at LAU 2 level with
focus on expenditures on projects funded by external grants (irredeemable), useful input for regional policy efficient
targeting, especially on the background of the Jobs Growth - Investment Plans New EU Initiative. Looking at the big
picture it is visible the higher the spatial heterogeneity tendency in terms of socio economic indicators than the terms of
local budget indicators, when is applied the LISA clusters analysis.
Key words: public expenditures at local level LAU2; expenditures on projects funded by external grants
(irredeemable) at LAU 2 level, total incomes at LAU2 level, endogenous incomes total incomes at LAU2 level.
JEL classification: H53, H72, O20
INTRODUCTION
This territorial profile of public expenditures associated to cohesion policy, using spatial
analysis tools, has its start point from The Sixth report on economic, social and territorial cohesion
(2014) under the perspective "Investment for jobs and growth, Promoting development and good
governance in EU regions and cities". This report describes the new role of the public expenditures
in general and at regional and local level in special, following 2008's crises impact with a
consequence in increasing the contribution of Cohesion Policy to public investment as share in total
public investment in the Member States. The increasing importance share of public expenditures
and public investment at regional and local level increases the responsibility of regional and local
level of government administrative units in an integrated development strategic perspective
(Regulation 1303/2013 of the EU Parliament and Council).
204
One approach is focused on Cohesion policy impact evaluation is provided by Martin Ferry
in the report "The Achievements of Cohesion Policy: Evidence and Methodological Challenges
from a EU10 Perspective". Author "include a range of perspectives and methodologies: assessing
Cohesion policy's input in terms of: the reduction of regional disparities; contribution to growth and
competitiveness (including at an EU level); impact in specific policy-fields. (Ferry, 2013, 1).
Coccossis and Psycharis, Ed. (2008) presents The Greek Experience in cohesion policy
implementation after 20 years, using some spatial analysis tools. As an example of regional pattern
analysis Monastiriotis explores the spatial patterns and spatial heterogeneity across the regions at
prefectures level: using "exploratory spatial data analysis (ESDA), the author explores the
persistence of spatial clustering across socio-economic indicators through the application of simple
statistical tests." (Monastiriotis, Coccossis and Psycharis, Ed. 2008, 16) The Greece spatial pattern
identified indicates "that policy spill overs for interventions targeting spatial cohesion may be also
limited" (Monastiriotis; Coccossis and Psycharis, Ed. 2008, 16). Another regional pattern analysis is
made by Psycharis (2008) regarding the Public Spending Patterns - The Regional Distribution of
Public Investment in Greece. This profile highlight the spatial spending pattern governments of
period 1976-2005, to compare the changes (between) different periods and to try to explain whether
redistribution of national wealth or other factors such as political ones could be held as sufficient
evidence for explaining the pattern and its temporal changes." (Psycharis; Coccossis and Psycharis,
Ed. 2008, 41)
Public expenditure programmes on regional level represents a debate topic exploited in
Central and Eastern Europe. Problems of public expenditures programmes on regional level in
Czech Republic is signalled by umpkov, Krbov et.al in 2004.- these findings fully support
heavy criticism of the quality of public financial control and audit in Central and Eastern Europe".
(umpkov, M., Krbov J., et.al., 2004, 323),
In Romania in 2014 Human analyses the local budget place in the general consolidate
budget, exploring theoretical aspects regarding the new role of local budgets "in the context of
constantly increasing the importance and impact of local budgets both on the economy at European
and national level through the decentralization processes that are more intensely debated and
implemented (Human, 2014, 105).
2. RESEARCH QUESTION
Our research is centred to realise an territorial heterogenic profile of public expenditures at

LAU 2 level with focus on expenditures on projects funded by external grants (irredeemable),
useful input for regional policy efficient targeting, especially on the background of the Jobs
Growth - Investment Plans New EU Initiative, for 2007-2013 period in Romania.
The local public budget [1] is a management instrument for multilevel governance,
regulated according to Law No. 273 of 29 June 2006 updated in 24 April 2014. Among the budget
typology from the source point of view, the external non-refundable budget funds (introduced by
the Emergency Ordinance 63/2010, becoming active since 1 January 2011 as indicated by the Art.1
(2) L237/2006) plays an important role from the policy cohesion perspective. We consider this
category the best proxy for monitoring at LAU2 level the input of cohesion funds.
3. MODELS, VARIABLES AND DATA
3.1. SPATIAL DATA
The specific of spatial / geographic data is to link place (location), time and attribute.
(Fisher, Wang, 201, 2)
Administrative and geographical data area data:
a. Area data are provided by Romania ESRI shape polygons that reflects territorial
description of LAU2 are regulated according Law 351/6th July 2001 regarding the National
205
Territory Arrangement Plan - spatially vectorised using the polygons areas for LAU2 described by
ESRI Romania using Arc GIS Software. The territorial administrative units LAU2 level are
represented in SIRUTA [2] code by municipality,
b. town, commune and County residence and are equivalent with NUTS5 level [3].
3.2. ATTRIBUTE DATA
Local budget data are provided by MDRAP / Finance Ministry:

The execution of revenue and expenditures budgets of administrative-territorial units [4] is
reported at national level by the General Direction of Public Finance from the Finance Ministry at
county level by the County Administration of the Public Finance annually at the 31th of December.
Our data source is provided by the MDRAP [5] site.
Variable on which is made the LISA spatial analysis, on which we calculated high-high
(H-H), low-low (L-L), low-high (L-H), and high-low (H-L) clusters for 2013 in GeoDA
(Anselin), are:
Expenditures (RON) in 2013 on projects funded by external grants at LAU2 level in
Romania
Variables used to characterize the territorial profile of public expenditures at LAU 2 level,
for 2007-2013 period in Romania:
A1) Total incomes (RON) in years: 2007, 2009 and 2013 at LAU2 level;
A2) Total endogenous incomes (RON) in the years: 2007, 2009 and 2013 at LAU2 level;
A3) Total expenditures (RON) in the years: 2007, 2009 and 2013 at LAU2 level;
A4) Expenditures (RON) in the years 2009 and 2013 on projects funded by external grants at
LAU2 level
Socio-economic indicators (Romania, provided by INS) as attribute information

B1) Number of LAU2 in the specific cluster type
B2) Average number of employees in the years 2007, 2009 and 2013 at LAU2 level, FOM104D
INS TEMPO
B3) Registered unemployed persons at the end of the month in the years: 2010 and 2013 at
LAU2 level, SOM101E INS TEMPO
B4) Demography data 2011 Census Data INS ESRI for the indicators: Total population, Total
masculine population; Total feminine population; Total population aged 15-64 years old; Total
masculine population aged 15-64 years old; Total feminine population aged 15-64 years old;
B5) Number of persons that entered in a locality 2009 (*)-Total population which who arrived
and proved to have ensured a dwelling in a locality in 2009: Settling of domicile (including external
migration) by counties POP307A - TEMPO INS - Origindestination flow.
3.3. MODELS
Our territorial profile of public expenditures is focused in direct relation with its specific
subcomponent of expenditures on projects funded by external grants at LAU2 level in Romania
through the instruments of spatial analysis. The spatial perspective is built in 5 steps of spatial
analyse with the objective of spatial variation analyse and agglomeration tendency identification for
the mentioned indicator:
1. Exploratory spatial data analysis (ESDA) procedures applying the tool Choropleth
maps using the classification [6] scheme by natural breaks (Jenks) [7] in 5 classes, from the
software ARC GIS 10.2.3 [8]. Using the Chrolopleth maps classification by natural breaks (Jenks)
then the error distributions of the "error blanket" is homogenous on the mapped surfaces. This
classification scheme allows the using of less than 7 classes of data. Each class of data minimize
the average deviation from the class mean, while maximizing the deviation from the means of the
other groups. The method reduces the variance within classes and maximizes the variance between
206
classes. See (map no. 1) with expenditures (RON) in 2013 on projects funded by external grants at
LAU2 level in Romania and by area of residence (urban/rural) are presented. The share of
expenditures on projects funded by unrefundable external grants in total expenditures at LAU2 level
(%) in 2013 in Romania and by area of residence (urban/rural) are presented in (map no.2);
2. Neighbourhood analysis / contiguity and spatial weighting technique used. Spatial
relation conceptualization spatial LAG modelling is based on rook contiguity, first order type.
Among the 3189 LAU2 with data there are 805 locations with 5 neighbours, 799 locations with 6
neighbours, 577 locations with 7 neighbours, 408 with 4 neighbours and 282 with 8 neighbours,
summing a cumulative percent of 90.1%. The maximum number of neighbours is 16 and minimum
1 in 4 locations.
3. Analysis of global and local spatial autocorrelation is realised through the Morans I
[9] and LISA Local Indicators of Spatial Association Maps [10], local clusters highlighting in 2013
the spatial pattern for expenditures on projects funded by external unrefundable grants at LAU2
level. (Anselin, 2003,p.99)
It is evident a slight clustering tendency in 2013 while Global Moran I Index (Anselin 1995,
1996) =0.0220969 > 0. In this case, Global Morans I values are higher than its theoretical value
E[I]= - 0.0003 indicates a significant correlation, corresponding to a total of 999 permutations, with
a pseudo-significance level of p=0.027 [0.27; 0.316] <0.32 (low confidence level of 68%. Based
on the scheme of interpretation, Z score of Morans I [0.1467; 0.3081] Sd=0.097 <1.65 Sd, we
accept the null hypothesis and we conclude that the identified pattern is a result of chance.
We present in (map no. 3) the 4 clusters types that reflect 4 types of spatial autocorrelation:
The high-high [HH] and low-low [LL] locations (positive local spatial autocorrelation) are typically
referred to as spatial clusters, while the high-low [HL] and low-high [LH] locations (negative local
spatial autocorrelation) are termed spatial outliers. While outliers are single locations by definition,
this is not the case for clusters. It should be kept in mind that the so-called spatial clusters shown on
the LISA cluster map only refer to the core of the cluster. (Anselin, 2005, p.145) This
agglomeration profile is obtained at LAU2 level in Romania at general Significance 0.05, for 999
permutation in (map no. 4.) LISA Cluster Map for expenditures (RON) in 2013 on projects funded
by external grants and in (map no. 5). LISA Significance Map for expenditures (RON) in 2009 on
projects funded by external grants.
4. Selection of LAU2 units included in HH and LL clusters types (Anselin 1995, 1996) [11]
refers to the spatial clusters on the map refer to the core of the cluster. The cluster is classified as
such when the value at a location (either high or low) is more similar to its neighbours (as
summarized by the weighted average of the neighbouring values, the spatial lag) than would be the
case under spatial randomness. The cluster itself extends to its neighbours. [12] The (maps no. 3
and no. 4) shows at least p<0.05 and 999 permutation HH and LL spatial clusters and HL and LH
spatial outliers
5. Comparing the means of some relevant socio-economic indicators at LAU2 level in
the period 2007 - 2013, differentiated by spatial variation and agglomeration tendency of the cluster
level with national means and emphasis some tendencies. See for the LISA clusters express the
spatial association tendency for expenditures on projects funded by external grants (un-refundable)
in 2013 in locations at LAU2 level the (table no. 1). A measure of spatial heterogeneity is
expressed through ratio of local budget indicators means at national level to means by clusters type
during 2007-2013 and (table no. 2). Measure of spatial heterogeneity expressed through the share
calculated for means of some socio-economic means by clusters type in the means at national level
during 2007-2012.
4. RESULTS AND DISCUSSIONS
Our first set of results is represented by the geo-visualisation for the Expenditures (RON)
in 2013 on projects funded by external grants at LAU 2 both in absolute terms in (map no. 1) and in
relative terms in (map no. 2.) The natural groupings of the data values emphasis some break points
207
with relevance to policy budget projecting. In (map no. 1), is visible that the large majority of
LAU2 locations execute expenditures on projects are funded by external grants (un-refundable) in
2013 are below 2.4 million RON / LAU2 and in (map no. 2) below 6.7% as a share in total
expenditures/LAU2. The outliers look to appear in locations with expenditures on projects that are
funded by external grants (un-refundable) over the 27.8 million RON / LAU2 visible in (map no. 1)
and over 21.3% as a share in total expenditures /LAU2 as it is visible in (map no. 2).
The second set of results is represents by the description of spatial dependence / spatial
association characteristic for execute expenditures on projects are funded by external grants (un-
refundable) at LAU2 level in 2013. In purpose to keep the full spectrum of diversity we identified
with a low significance level (p<0.05) the locations included in clusters and outliers according
(Fisher, Wang, 2011 p.15). In (map no. 3) are presented the LISA cluster map with 40 HH
locations as nucleus for clusters with positive externalities and 42 LL locations as nucleus for
clusters with negative externalities. There are identified 123 LH outliers type locations and 51 HL
outliers locations. In (map no. 4) are presented the LISA significance levels for the locations
included in LISA
Map no. 1. Map no. 2.

Expenditures (RON) in 2013 on The share of expenditures on projects
projects funded by external grants at funded by external grants in total
LAU2 level in Romania and by area of expenditures at LAU2 level (%) in 2013 in
residence (urban/rural). Map Romania and by area of residence
classification by Natural Breaks (urban/rural). Map classification by
(Jenks) in 5 classes Natural Breaks (Jenks) in 5 classes
Map no. 3. Map no. 4.

LISA Cluster Map for expenditures LISA Significance Map for expenditures
(RON) in 2013 on projects funded by (RON) in 2013 on projects funded by
external grants at LAU2 level in external grants at LAU2 level in Romania
Romania. [Cpffen2013] Significance
0.05, Number of permutation 999
208
Legend
NotSig. High-High Low-Low Low-High High-Low Not Sig. p=0,05 p=0,01 p=0,001 p=0,0001
2933 40 42 123 51 2933 179 50 27 0

Source: Own elaboration using data from MDRAP, INS-TEMPO and ESRI-RO
Cluster Map. From the 179 locations with a significance level of p<0.05 there are 50 locations with
a significance level of p=0.01 and respectively there are 27 locations with a significance level of
p<0.001.
The locations with HH cluster type for expenditures are mostly in rural area, with high level
of p< 0.01 level of significance are entirely communes. We mention for 2013 this type of cluster in
county Gorj Comuna Hurezani and comuna Stoina, in county Vaslui/ Comuna Dimitrie
Cantemir and Comuna Hoceni, in county Mures there are included in the list the following
communes: Papiu Ilarian, Ceuasu de campie and Band, and not least in Salaj counthy the
Comuna Sanmihaiu Almasului. With the same level of significance we point out the the only one
center of LL cluster for comuna Ruginoasa from county Neam.
The 3rd set of results reflects the spatial heterogeneity of the attributes of location included in the
identified cluster by the LISA for Expenditures (RON) in 2013 on projects funded by external
grants at LAU 2 level. For each type of location (HH, LL cluster, HL or LH outlier or not
significant) at national level and at rural area are calculated the following aggregate characteristics
for local budget and for some socio economic indicators: mean, the share of each category in total
sum, the Standard Deviation and the Standard Error of Mean.
In synthesis our territorial heterogenic profile of public expenditures at LAU 2 level with
focus on expenditures on projects funded by external grants (irredeemable) is presented in (table no.
1 and no. 2). According with the structure of clusters identified the national mean for any indicator
(from the mentioned list) is very close to the means of location included in NS (Not Significant)
clusters. A measure of spatial heterogeneity is presented in (table no. 1) as the ratio of local budget
indicators means at national level to means by clusters type during 2007-2013 and in (table no. 2) as
the share calculated for means of some socio-economic means by clusters type in the means at
national level during 2007-2012 (according with the best existing data).
Table no. 1. Measure of spatial heterogeneity calculated as a ratio of local budget indicators
means by clusters type (NS, HH, LL, LH and HL for the means corresponding to the numbers
by location type) to national level means (T for the total number of LAU2) during 2007-2013
[Ratio]
Rural area location type average location
Indicator year NS/ HH/ LL/ LH/ HL/ NS/ HH/ LL/ LH/ HL/
T T T T T T T T T T
2007 1 0,9 1,1 1 0,9 1 0,7 2,1 0,8 1,1
Total income 2009 1 1 1,2 1 1 1 0,7 2,1 0,8 1
2013 1 3,7 0,4 0,3 2,8 1 4,1 0,4 0,4 2,7
2007 1 1 1,1 1 0,9 1 0,6 1,9 0,7 1,2
Total endogenous incomes 2009 1 1 1,2 1 1 1 0,6 1,9 0,7 1,1
2013 1 3,3 0,3 0,3 2,3 1 3,6 0,3 0,3 2,2
2007 1 0,9 1,1 1 1 1 0,7 2,2 0,8 1,2
Total expenditures 2009 1 1 1,2 1 1 1 0,7 2,1 0,8 1,1
2013 1 3,7 0,4 0,3 2,7 1 4,1 0,4 0,4 2,7
Expenditures on projects 2009 1,1 0,3 0 0 0 1,1 0,1 0,1 0 0,2
funded by external grants 2013 0,9 7,4 0,1 0,1 3,3 0,9 8,2 0,1 0,1 3,4
Source: data calculated by authors, LISA clusters express the spatial association tendency for expenditures on projects
funded by external grants (un-refundable) in 2013 in locations at LAU2 level
Note: all communes are included in rural area / average commune location type
209
Table no. 2. Measure of spatial heterogeneity expressed through the share calculated for means of some socio-economic means by clusters type
(NS, HH, LL, LH and HL for the means corresponding to the numbers by location type) in the means at national level (T for means
corresponding to the total number of LAU2) during 2007-2012 [share %]
Indicator Rural area location type average location
year
NS/ HH/ LL/ LH/ HL/T NS/ T HH/ LL/ LH/ HL/ T
T T T T T T T
Average number of 2007 99,7 90,0 101,4 114,7 88,0 99,2 56,2 253,1 77,0 111,2
employees 2009 99,7 96,5 107,5 108,1 95,9 99,3 55,7 239,9 76,4 119,4
2012 99,7 95,7 99,8 114,2 87,4 99,1 53,8 236,2 78,0 126,9
Registered unemployed 2010 100,9 95,6 110,4 84,4 84,1 99,9 91,7 193,2 80,9 82,6
2013 101,0 88,9 113,2 81,7 83,2 100,4 91,3 176,6 77,0 78,4
Total T 2011 100,2 93,5 122,0 93,9 95,3 99,7 81,1 191,7 80,6 102,4
Population M 2011 100,2 93,8 121,6 93,8 94,5 99,7 82,0 191,0 80,8 101,5
F 2011 100,1 93,1 122,5 94,0 96,0 99,7 80,3 192,4 80,3 103,3
Population 15- T 2011 100,2 92,9 118,5 94,5 96,7 99,7 78,3 196,5 79,5 103,5
64 years M 2011 100,2 93,2 118,9 94,6 95,8 99,7 79,6 194,2 80,1 102,5
F 2011 100,2 92,5 118,0 94,4 97,6 99,7 77,1 198,8 79,0 104,5
Persons entering in location 2009 100,0 88,2 110,2 99,4 102,9 100,1 67,2 200,5 74,5 99,1
Source: data calculated by authors, LISA clusters express the spatial association tendency for expenditures on projects funded by external grants (un-refundable) in 2013 in
locations at LAU2 level
210
In HH commune location type the expenditures on projects funded by external grants, un-
refundable are 7.4 times higher than national mean in 2013 (while the same ratio was only 0.3 in
2009), the total expenditures are 3.7 timed higher than national mean in 2013 (while this ratio was
0.9 in 2007 and 1 in 2009), total endogenous incomes are 3.3 times higher than national mean in
2013 (in 2007 and 2009 the national and HH commune mean were equal) and the total income is
3.7 times higher than national mean (in 2007 and 2009 the national and HH commune mean were
equal).
In HH commune location or rural location type the mean values for the demographic
indicators is much below the mean of the same indicators in the average national rural location,
respectively this share is 93.5% for total population, 93.8% for masculine population, 93.1% for
feminine population in 2011. For persons entering in a location in 2009 the share of mean in HH
rural location type in the national mean location 95.7% is registered the lowest level compared with
the other share of means by cluster type (LL, HL, LH, NS). In HH rural location type the mean
values for the labour market indicators is also below the mean of the same indicators in the
average national rural location, respectively this share is for population in working age 15-64
years in 2011 is 92.9% for total population, 93.2% for masculine population and 92.5% for
feminine population, for the average number of employees in 2012 (decreasing from 96.5% in 2009
but increasing with 3.5pp comparing to 90% in 2007), is 88.9% for registered unemployed persons
in 2013 (decreasing from 95.6% in 2010).
5. CONCLUSION
Looking at the big picture it is visible the tendency that the spatial heterogeneity for
attributes in terms of socio economic indicators is higher than the terms of local budget indicators
for the LISA clusters identified (HH, LL, HL, LH, NS) by the public expenditures on projects
funded by external grants (non-refundable) criteria. The highest differences are registered between
the HH and LL clusters locations, conserving the general tendency that the levels for budgetary
indicators are inverse proportional variation to socio-economic indicators. The degree of spatial
heterogeneity has a higher variation among the labour market indicators and especially by the
dimension of LAU2 by population. Because of the high level of heterogeneity of urban areas
(municipality, town and county residence) we presented only the results from rural areas results
more reliable and more homogenous.
Our research considers that the public expenditures on projects funded by external grants
(non-refundable) outside the process of local budget balance procedure according to L273/2006 and
working under the cohesion policy demands, subordinated to strategic objectives (cohesion policy,
employment strategy, etc.).
This article is an attempt to fill the gap in Romanias spatial processes identification in
literature. The spatial processes understanding offers a useful instrument to the cohesion policy in
identifying the barriers and opportunities in development.
The presence in the local budget of the external grants (irredeemable / non-refundable) as
instrument to implement cohesion policy highlight the need to improve the public local
expenditures management, on the background of integrated approach of territorial development
requested by the 1303/2013 Regulation of the EU Parliament and Council.
ACKNOWLEDGMENT
This work was supported by a grant of the Romanian National Authority for Scientific
Research, UEFISCDI under the DYNAHU project (number PN-II-PT-PCCA-2011-3.2-0084).
211
ENDNOTES
[1] According to Article 5/L273/2006 is presented the public local budget structure includes: a) own revenue
[endogenous revenues/ incomes] consisting of: taxes, contributions and other payments, other income and allowances
deducted from income tax; b) amounts deducted from certain income of the state budget; c) subventions received from
the state budget and other budgets; d) donations and sponsorships; e) amounts received from the European Union and /
or other donors made payments and pre-financing.
[2] ***, Romanias National Institute of Statistic (INS) The National Interest Nomenclature Server
SENIN, Methodology SIRUTA General Presentation,
http://colectaredate.insse.ro/senin/classifications.htm?selectedClassification=SIRUTA_AN_2014&action=download
[3] NUTS - Nomenclature of Territorial Units for Statistics (Nomenclatorul unitilor teritoriale pentru
statistici la nivelul Uniunii Europone - Autoritatea de origin : Oficiul de Statistic al Uniunii Europene EUROSTAT)
[4] MDRAPs data published on 17.12.2014 -http://www.dpfbl.mdrap.ro/sit_ven_si_chelt_uat.html, Romanian
Ministry of Regional Development and Public Administration, Direction for Local Budget and Fiscal Policy is
organized and is part of Ministry of Regional Development and Public Administration. Direction and operates under the
General Direction of Public Administration under the Government Decision no. 1/2013 on the organization and
functioning of the Ministry of Regional Development and Public Administration.
[5] http://www.dpfbl.mdrap.ro/sit_ven_si_chelt_uat.html
[6] Smith, Goodchild, Longley, Univariate classification schemes in Geospatial AnalysisA Comprehensive
Guide, 3rd edition; 20062009, http://www.spatialanalysisonline.com/HTML/index.html;
[7] http://www.spatialanalysisonline.com/HTML/index.html
[8] http://wiki.gis.com/wiki/index.php/Ecological_fallacy
[9] http://help.arcgis.com/en/arcgisdesktop/10.0/help/index.html#//005p0000000t000000
[10] L. Anselin. Local indicators of spatial association | LISA. Geographical Analysis, 27:93{115, 1995.
[11] Luc Anselin, GeoDa 0.9 Users Guide, Spatial Analysis Laboratory, Department of Agricultural and
Consumer Economics University of Illinois, Urbana-Champaign, Urbana, IL 61801, http://sal.agecon.uiuc.edu/ and
Center for Spatially Integrated Social Science http://www.csiss.org/, Revised, June 15, 2003, Copyright 2003 Luc
Anselin, All Rights Reserved
[12] Spatial Statistics: Spatial Autocorrelation, Workshop Exercise 1/24/2013,
http://libraries.mit.edu/files/gis/spatial_auto_exercise_iap2013.pdf
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213
IMPACT OF MARKETING STRATEGIES ON SACHET

PRODUCTS IN BANGLADESH
Hossain Shahid SHOHROWARDHY
University of Chittagong, Bangladesh
hssmanik786@gmail.com

H.M. Kamrul HASSAN
University of Chittagong, Bangladesh
kamrul@cu.ac.bd

Abstract:
A product is anything that can be accessible to the market for satisfaction. The basic objective of marketing is
maximum satisfaction since satisfaction of consumer and business performance is positively related to each other. For
satisfaction, product is diversified in different categories i.e. generic product, product type product, substitute product
and product line etc. Sachet product is one of the expansions of product line. The term Sachet is originated from the
French word which means mini. In Bangladesh, sachet product has a strong market share. Thus, this study attempts
to determine the exiting share of sachet product and measure the impact of marketing strategies on sachet product in
Bangladesh. This study uses the selective 22 dimensions to favor the sachet product on the basis of 4Ps (Product, Price,
Place and Promotion). To accomplish the study, 125 samples have been taken from selective markets in Cosmopolitan
city, Chittagong. The study found that sachet product has strong market position comparative with other categories of
products, where promotional effect is the dominant factor who played the vital role to sustain the sachet product in
Bangladesh. The results of this study will be constructive for executives and policy-makers of business organization
who works with fast moving consumer good (FMCG) items effectively in Bangladesh.
Key words: Sachet Product, Sales-Profit Pyramid and Marketing Strategies.
JEL classification: M31, L11
1. INTRODUCTION
Consumers are the key element of product/service industry. Consumer satisfaction is the
prime enhancing factor of revenue and profit generation. Consumers are predominantly attached
with business in case of delivering different types of products or services (Nichols, 1998).
Therefore, in order to get the competitive advantage (Porter, 2010), it is necessary to offer new
dimension of products in the market which would assist in ensuring sustainability of the market
performance of an organization. Sharma (2005) suggested that new dimension of product or service
leads to the efficiency of consumer satisfaction and creates huge scope for business sustainability.
Therefore, the innovated product, sachet is the current issue that lug apex priority in the field of
sustainability of business performance of any organization in Bangladesh.
The French Word, sachet means the mini. Application of sachet product is much better in
developing countries like Bangladesh than developed countries (David, 2004). In Bangladesh,
maximum company use sachet product concept in their business operation (Examples: Clear
Shampoo Mini pricing with Taka 2). Sachet product is a powerful category to attract a huge number
of consumers mainly for its price, size, packaging, user-friendliness, cost incentive, more profitable,
attractive demonstration of sales etc (Granger and Billson, 1972; Wansink, 1996; Krishnan, 2001;
Prahalad, 2004; Rundh, 2005; Crockett and Wallendorf, 2004; Ramirez, 2006; Lee,2006; Jardine,
2006; Santoz, 2006 and Sing, 2009). Sen (2001) suggested that scope of sachet product is included
in the following fields i.e. Soap (Lux-mini), Biscuits, Aerated drinks (Coca-Cola and Pepsi-Cola),
Toothpaste (Pepsodent-mini), Chocolate (Dairy Milk), Tea (Ispahani tea bag), Detergents (Surf
Excel-mini), Wheat Flour (Atta-200 gms pack), Shampoo (Clear Tk.2), Grocery Items, Oil, Bread
etc. Therefore, Sachet is identified as the micro form of existing product/s offered to the market for
faster business performance both in consumers and company perspective. In Bangladesh, maximum
people maintain their living standard below the poverty level thats why government declares
214
Vision-21 to establish Bangladesh as mid-level country in the world. From the survey report, it is
found that at present, Sachet products share is 94% of total sales volume, 59% of total sales
amount, 75% of profit per unit and 96% of profit per gram. This study is supported by Prahalad
(2004) and Hammond (2007). Now a day, all sorts of production oriented business organizations
use sachet product concept in their business operation in Bangladesh.
2. STATEMENT OF THE PROBLEMS
The problem of the study has been developed by an extrusive survey in different business
points in Chittagong city. It was found that business performance of sachet product market is much
better than other product available in the market. We have conducted the survey to find the
comparative market structure of sachet products on the basis of sales volume, sales price, cost price
and profit (Wansink, 1996; Prahalad, 2004; Crockett and Wallendorf, 2004; Mahajan and Banga,
2006). 25 outlets are selected on the basis of transaction of business on the sample business points.
We consider 30 sachet product from the area of Soap (Lux-mini), Biscuits, Aerated drinks (Coca-
Cola and Pepsi-Cola), Toothpaste (Pepsodent-mini), Chocolate (Dairy Milk), Tea (Ispahani tea
bag), Detergents (Surf Excel-mini), Shampoo (Clear Tk.2), Grocery Items, Oil, Bread etc to
determine the .market position of sachet product. We explain the finding by using pyramid
techniques i.e. sales volume pyramid, profit per unit pyramid, profit per mg pyramid and sales
amount pyramid.
Other Product
6% Other Product
41%
94%
Sachet Product 59% Sachet Product
Pyramid-1: Sales Volume Pyramid-2: Sales Amount
Pyramid-1 & 2 expresses the comparative position of sachet product and other product on
the basis of sales volume and sales amount. It is worth mentioning here that sachet product market
position is much better than other product. That indicates that sachet product position is 94% and
51% on sales volume and sales amount where other product position is 6% and 41% respectively.
Other Product
4% Other Product
25%
96%
Sachet Product
Sachet Product
75%
Pyramid-4: Profit per mg

Pyramid-3: Profit per Unit
Pyramid-3 & 4 expresses the comparative position of sachet product and other product on
the basis of profit per mg and profit per unit. It would mention here that sachet product market
position also better than other product. That indicates that sachet product position is 96% and 75%
215
on profit per mg and profit per unit where other product position is 4% and 25% respectively. The
above explanations create a question why consumer are habituated in using sachet product though
their expenditure (Business Profit) level of living is going to be high in perspective of using sachet
products than others. Then, the study attempts to determine the effect of marketing strategies i.e.
4Ps concept of marketing (Product Strategy, Pricing Strategy, Placing Strategy and Promotional
Strategy) on the existing business performance of sachet product in Bangladesh.
3. THEORETICAL FRAMEWORK AND METHODS
We developed a theoretical framework on the basis of evidence available in the above-

mentioned literature and market survey. At the first time, we conduct a survey to determine the
share of sachet product. Secondly, we use another quarry behind the consumer tendency towards
the sachet product tendency of consumers. In this perspective, dependent variable is consumers
tendency on sachet product and independent variables are marketing strategies i.e. 4Ps expressed in
Figure 1.
Figure 1: The Research Framework (Figure shows the imagination of effect of marketing
strategies on the business performance of sachet product in Bangladesh)
4. OBJECTIVES OF THE STUDY
The broad objective of this study is to identify the market position of sachet product in
Bangladesh. The more specific objectives in this regards are as follows:
1. To identify the present market position of sachet product in Bangladesh.
2. To measure the level of effectiveness of marketing strategies on sachet product in
Bangladesh.
3. To analyze, the extent of dependence of 4Ps (Marketing Strategies) on business position of
sachet product in Bangladesh.
5. HYPOTHESES OF THE STUDY
Considering the objectives of the study, the following operational hypotheses have been
developed and tested:
H1: There is no market position of sachet product existed in Bangladesh.
H2: There is no significant association among the components of 4Ps irrespective with sachet
product in Bangladesh.
H3: There is no significant dependency of the dimensions related to 4Ps on effect of performance of
sachet product in Bangladesh.
6. DATA COLLECTION METHOD
For this study, data was collected by using two self-administrative questionnaires. The first
questionnaire was used to determine the market position of sachet product in Bangladesh,
specifically some selected points in cosmopolitan city, Chittagong. This survey questionnaire was
216
determinately used for businessman. The second questionnaire was used to measure the consumer
perception on sachet product consisting of basic two sections. The first section has been designed to
collect the information about the respondents regarding their demographic and socio-economic
characteristics along with some other factors such as gender, sex, marital status, age, education,
income level while second section consists of 22 dimensional questions with four constructs related
with 4Ps to measure the effect of marketing strategies on the performance of sachet product
available in Bangladesh. The responses of the respondents were collected by using the Likert non-
comparative five-point scale of the range of attitude; from 1-strongly disagree to 5-strongly agree.
7. SAMPLING
There are two types of questionnaire were used in this study. Firstly, a total of 50
questionnaires were distributed purposively to the businessman for determining the market position
of sachet product comparative with other products consisting with basic four identity i.e. Sales
volume, Sales amount, Voucher cost price, MRP then calculate the profit per unit and profit per
gram. Secondly, a total of 200 questionnaires were distributed for measuring effect of marketing
strategies on sachet product and out of them, only 125 questionnaires were received useable for
analysis (63% response rate). Specifically, questionnaires were distributed to the selective
consumers considering the shopping hour of the respective points of shopping (Usually from 4 PM
to 10 PM) or their convenience time. However the data were collected from five (05) businesses
points/shopping points of Chittagong i.e. New Market, Agora Super Store , Agrabad, Bohoddar Hat
and Kornophulli Market.
8. STATISTICAL TOOLS USED IN THE STUDY FOR ANALYZING
The statistical techniques were used in this study are as follows: descriptive and frequency
analyses were conducted to determine the market position of sachet product and represent the
respondents demographic and socio-economic characteristic. In addition, reliability tests to check
for the internal consistency of the questionnaire by applying Cronbachs coefficient, Alpha.
Normality distribution was tested using Skewness and kurtosis. Finally, Multiple Regression Model
(MLM) is used in this study to measure the effect of 4Ps on the business performance of sachet
9. RESULTS
9.1 RESPONDENTS DEMOGRAPHIC AND SOCIO-ECONOMIC PROFILE
Consumer is the blood circulation of business organization. So, the demographic characters and socio-
economic profile must qualitatively qualify due to the proper justification of respondents responses. In this sturdy, the
majority of respondents are males (57.06%) followed by female (42.94%) from which 82% are educated in which 18%
respondents come from housewife group. It is worth mentioning here that 56% respondents are incorporated in this
study whose expenditure level is more than BDT 30,000 per month.
9.2 RELIABILITY TEST

The results of Cronbachs alpha coefficient of all variables having multi dimensions item shows a moderate to very high
coefficient ranging from 0.59 to 0.89.
Table-1: Shows the Cronbachs alpha coefficient of constructs for reliability test
SL Marketing Strategies No. of Items Cronbachs alpha coefficient
1 Product Strategy 7 0.716
2 Pricing Strategy 4 0.586
3 Placing Strategy 4 0.596
4 Promotional Strategy 7 0.697
Total Items 22 0.878
Source: Calculated by Authors
217
Table-1 explore the Cronbachs alpha coefficient of constructs used in the study for
measuring the normality of the data are found little bit lower to standard but in an acceptable form
which is supported by earlier study 0.59 to 0.83 (Finn & Lamb, 1991).
9.3 DESCRIPTIVE STATISTICS
Descriptive statistic is explained using mean, standard deviation, variance, skewness and
kurtosis.
Table-2: Shows the descriptive statistics of the variables/constructs used in the study
Variables/Constructs Mean STD Variance Skewness Kurtosis

Product Strategy (P1) 3.78 0.65 0.42 -0.30 0.30
Absolute Product (P11) 3.71 1.38 1.92 -0.77 -0.67
Innovated Product (P12) 3.74 1.02 1.03 -0.22 -0.52
Affordable Product (P13) 4.08 1.13 1.28 -1.24 0.91
Friendly Usable Product (P14) 3.60 1.35 1.82 -0.66 -0.66
Comfortable Product (P15) 4.00 0.99 0.98 -0.91 0.30
Easy Carry Product (P16) 4.34 0.94 0.89 -1.31 0.93
Full Consuming Product (P17) 4.04 0.99 0.97 -0.80 -0.16
Pricing Strategy (P2) 4.49 0.68 0.46 -1.13 0.69
Cost Incentive (P21) 4.25 1.00 0.99 -1.21 0.75
Profitable (P22) 3.71 1.38 1.92 -0.77 -0.67
Low MRP (P23) 4.55 0.73 0.54 -1.67 2.32
Affordable Price (p24) 4.18 0.81 0.65 -0.82 0.74
Place Strategy (P3) 4.25 0.76 0.58 -0.90 0.71
Available (P31) 3.60 1.35 1.82 -0.66 -0.66
Found in all Location (P32) 3.92 1.06 1.12 -1.24 1.47
Easy Demonstration (P33) 4.12 0.85 0.72 -1.04 1.25
Comfortable Transporting (P34) 3.83 1.04 1.08 -0.49 -0.55
Variables/Constructs Mean STD Variance Skewness Kurtosis

Promotion Strategy (P4) 4.19 0.67 0.45 -0.57 0.64
Attract by sachet Interior Decoration
(P41) 3.55 1.15 1.31 -0.19 -0.92
Create awareness (P42) 3.84 1.11 1.23 -0.79 0.07

Encourage to retain (P43) 4.01 1.23 1.51 -1.08 0.15
Simplest Communication (P44) 3.86 1.01 1.01 -0.82 0.25
Auto demo 3.75 1.06 1.12 -0.56 -0.24
Assist for Comport Living 3.56 1.03 1.07 -0.27 -0.03
Create perception on Changing Habit 3.74 0.99 0.99 -0.55 0.14
Table-2 explores the various parameters of descriptive statistics of variables or constructs
using in this study. There is no evidence found these statistics to indicate abnormality of
respondents responses used in this study.
9.4 CORRELATION AMONG THE CONSTRUCTS
Correlation explores the power of relationship among the constructs. Table-3 indicates the
Pearson coefficient of correlation at 1% level of significant.
218
Table-3: Pearson Coefficient of Correlation (r)

4Ps Product Price Place Promotion
Product 1
Price 0.582** 1
Place 0.625 **
0.577** 1
Promotion 0.381 **
0.431 **
0.494** 1
**. Correlation is significant at the 0.01 level (2-tailed).
Coefficients of correlation (r) of the constructs are found positively significant expressed in
the table-3 that means constructs i.e. product, price, place and promotion are positively correlated to
the market tendency of sachet product in Bangladesh. But, high correlation is existed between
product and place (r product-place= 0.625) and low correlation is existed between product and
promotion (r Product-promotion= 0.381).
9.5 DEPENDABILITY OF MARKETING STRATEGIES (4PS) ON SACHET

PRODUCT
The study uses multi-regression model to determine the effect of marketing strategies i.e.
product strategy, pricing strategy, placing strategy and promotional strategy on the business
performance of sachet product in Bangladesh. Standardized Regression Weight () is expression
power of the variables. Table-4 expresses the standardized regression weight of different constructs
used in the study. In order to identify the relative effect of marketing strategies (4Ps) on the
business performance of sachet product, Multi-Linear Regression model (MLM) is attempted.
Retrospective data collected from the sample are used to run this model. The regression model in
this regard is as follows:
BPSP = f (Product, Price, Place, Promotion) .(1)
Where:
BPSP = Business Performance of Sachet Product
Thus the linear equation is assumed fit for the regression as
BPSP = + 1 Product + 2 Price + 3 Place + 4 Promotion + e (2)
Where , 1, 2, 3 and 4 are the parameters and e, refers the stochastic error term that is the
deviation of the observed value of BPSP from the value of respondents score on 22 dimensions of
4Ps on the regression line, which well represented all the factors affected BPSP but e is not take
into account explicitly. Table-4 represents the regression Output of equation-2.
Table-4: Effect of 4Ps Strategies on Sachet Product

4Ps Standardized regression Weight () t-Statistic Sig.
Strategies Constant()= 0.129 0.496 0.621
Product 0.171 4
2.463 0.015
Price 0.272 2
4.020 0.000
Place 0.260 3
3.603 0.000
Promotion 0.340 1
5.673 0.000
F-Statistic 66.519 0.000
R2 0.689
D-W 2.138
219
For better performance of sachet product than other product, 4Ps are significantly effective.
High values of t-statistics with low level of p-values (0.000) indicate the significant relationship
among the constructs that is supported by F-statistics (66.519, p=0.000). This findings are also
recognized by standard R-squire value (R2=0.689) and D-W value shows the stationary nature (Rule
of thumb, DW< 2, DW = 2, DW >4) of the finding.
BPSP = 0.129 + 0.171 Product + 0.272 Price + 0.260 Place + 0.340 Promotion (3)
From the equation-3, it is found that promotional strategy is the highest effective (
Promotion=0.340) factor of better business performance of sachet product in Bangladesh followed by
pricing strategy ( Price=0.272), placing ( Place=0.260) and product strategy ( Product=0.171)
consecutively.
Table-5: Orderly Arrangement of factors affecting to the performance of sachet product in

Bangladesh
F-Statistic
t-Statistic
SRW()
Mean
D-W
Sig.
Variables
R2
Promotional Strategy (P4) Promotion=0.3401
Encourage to retain (P43) 4.01 0.25 5.17 0.00
68.990 (0.000)
Attract by sachet Interior Decoration (P41) 3.55 0.24 5.38 0.00
0.860
1.819
Simplest Communication (P44) 3.86 0.24 4.67 0.00
Auto demo 3.75 0.24 4.53 0.00
Assist for Comport Living 3.56 0.22 4.61 0.00
Create perception on Changing Habit 3.74 0.16 3.29 0.00
Create awareness (P42) 3.84 0.16 3.17 0.00
Pricing Strategy (P2) Price=0.2722
156.870
Highly benefited (P22) 3.71 0.55 13.88 0.00
(0.000)
0.839
1.593
Low MRP (P23) 4.55 0.32 6.80 0.00
Cost Incentive (P21) 4.25 0.26 6.50 0.00
Affordable Price (p24) 4.18 0.23 5.02 0.00
Place Strategy (P3) Place=0.2603
Available (P31) 0.43 12.06 0.00 186.485
3.60
(0.000)
0.861
1.752
Comfortable Transporting (P34) 3.83 0.40 11.21 0.00
Easy Demonstration (P33) 4.12 0.28 6.96 0.00
Found in all Location (P32) 3.92 0.26 6.41 0.00
Product Strategy (P1) Product=0.1714
Friendly Usable Product (P14) 3.60 0.28 4.76 0.00
80.065 (0.000)
Absolute Product (P11) 3.71 0.27 4.84 0.00

Innovated Product (P12) 3.74 0.25 5.43 0.00
0.827
2.103
Full Consuming Product (P17) 4.04 0.21 4.96 0.00

Affordable Product (P13) 4.08 0.18 3.05 0.00
Easy Carry Product (P16) 4.34 0.17 3.97 0.00
Comfortable Product (P15) 4.00 0.10 2.22 0.03
Table-5 explores the orderly arranged of factors affecting the business performance of
sachet product in Bangladesh on the basis on their standard regression weight. All the arranging
factors are significantly effect to the business performance of sachet product.
10. RESULTS
From Pyramid-1,2,3,4, it is shown that 94% of Total sales volume, 59% of total sales
amount, 75% of profit per unit and 96% of profit per gram position of sachet product is existed in
Bangladeshi market. So, hyppthesis-1 is rejected. From the table-3, Pearson coefficient of
correlations among the constructs i.e. product, price, place and promotion are significantly positive.
220
Therefore, hypothesis-2 is rejected that means the constructs are significantly attached for the
present situation of sachet product and finally, table-4 & 5 explore that hypothesis-3 is also rejected
that indicated that pro-determined factors are significantly affected to the market position of sachet
11. CONCLUSION
In Bangladesh, consumers of sachet product have been performed themselves on the basis of
promotional effectiveness of sachet arrangement supported by Ramirz (2007), where consumers
retention, internal decoration on outlets, Simplest communication, and comfort living natures are
treated as more priority effective factors. Moreover, it would be mentioned that auto demonstration
nature of sachet product is significantly effective to attract the consumers. Pricing is the second
significant strategy to attract the consumers of sachet product where consumers feel that sachet is
more benefited product. In case of placing strategy, consumers favor product availability and
comfort bearing to choose sachet product. Finally, product strategy is the little effective factors for
better business performance of sachet product where friendly use pattern is the highest favorite
criteria to select sachet product in Bangladesh. The entities that are offered sachet product in
Bangladesh must consider social and ethical factors to survive in the market since promotional facts
are most effective factors rather than product criteria to favor sachet product in Bangladesh.
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222
SECTION 3
ACCOUNTING - FINANCES
223
ACCOUNTING REPORTS AND BUDGET PROCESS IN THE

ROMANIAN PUBLIC SECTOR BETWEEN CONVERGENCE AND
CHALLENGE
Professor PhD Elena HLACIUC

elenah@seap.usv.ro

Lecturer PhD Marian SOCOLIUC
marians@seap.usv.ro

PhD Student Geanina MACIUCA
geaninasth@yahoo.com

PhD Student Antonela URSACHI
antonelaursache@yahoo.com
Abstract:
Starting with the 1st of January 2014, the Romanian public sector has undergone a long transformation
process: the change in the order of the organization and management of public institutions accounting, the chart of
accounts and the instructions for its implementation, the implementation of an electronic reporting system for financial
statements, the automatic verification within the system of whether the payments are within the budget or not, providing
information on revenue achievement and payments made. Other measures are to be implemented such as the electronic
signing by the credit release authorities of the revenue and expense budget. Even if these measures were for testing
purposes in 2014, they influenced the work of the public sector professional accountant, on the one hand, and the
public sector as a whole, on the other hand.
In the present paper, we will present the effects of these changes on the budget transparency and especially on
budgetary efficiency and the accounting reports.
Key words: budget, public sector, reform, convergence
JEL classification: M41
INTRODUCTION
In recent years, efforts have been made to modernise the accounting system in the public
sector in most OECD countries. The main goal of these efforts is firstly the need to obtain an
efficient management of public resources. The global financial crisis has put the governments of
various countries in the situation of being unable to effectively control the budget revenues and
expenditures, which means that the modernisation efforts in the field must continue.
The main aspects which have characterised this reform process were aimed at the
implementation of accrual accounting and the introduction of techniques to improve the
management of public funds by the government (Brusca, 2010). As a result, the public sector
worldwide has evolved to meet the stability requirements (Diamond, 2002).
Often, due to the unforeseen economic circumstances, the budget must be adjusted during a
financial year and if we take into account the fact that the decisions regarding public expenditures
have an impact on the economy before the payments are made (according to the Romanian
legislation, for an expenditure to be paid, it must go through certain steps regarding: employment,
liquidation, authorisation and, later, payment) then it is easy to understand the need to monitor all
the stages, including those of a non-monetary nature. Therefore, with the compliance and
improvement of the mechanisms which ensure the objectives of macroeconomic stability, in the last
224
thirty years, the OECD governments have focused their attention on the goals regarding efficiency
and effectiveness (OECD, 1994, 1995). The factors which determine the need for a reform in the
public sector as well as the areas of interest which arise from these reforms are shown in figure no.
1.
Factors Areas of Interest

Accounting normalisation
The control of
fraud and
corruption The analysis and
presentation of
information: improving the
quality of financial and
The new public statistical information
management
Management accounting
Good
governance The consolidation of the
financial statements
Globalization
Reforms National accounting
and the and
international evolution in
public The comparability and
accounng accounting harmonisation
Decentralisation
Electronic management:
increasing the speed with
which information is
The new obtained
technologies
Audit and control
In search for New forms of financing

budgetary of public institutions
stability
Figure nr.1- Areas of interest in accounting and management in the public sector
Source: processed after Brusca, I., (2010), Treinta anos de investigacion en contabilidad y gestion publica en
Espana, Revista de Contabilidad, vol.13, no. 2, p. 182
It is noteworthy that in the public sector, the annual and quarterly financial statements show
the relationship between the approved budget, the items of expenditure (budget items according to
the economic classification established by the body for accounting normalisation, in Romanias
case, the Ministry of Public Finances) and the actual expenses. In this context, the budget
commitments would be a solution recommended by the large international organisations.
In this context, Romania has made a number of changes in the public sector. In this paper,
we will present the latest changes in this regard and our point of view concerning the impact of
225
these changes on both the professional accountant, as well as on the budget system. For the present
study, we have consulted scientific articles published on this topic, papers on accounting and
national and international accounting regulations. Moreover, the research is also based on our
experience in the implementation of the accounting regulations.
THE BUDGETARY PROCESS IN ROMANIA FACING NEW CHALLENGES
Brusca (2010) believes that although the need for the harmonisation of public accounting
cannot be justified similarly to the private sector reform, other aspects support the importance of the
existence of comparable accounts between the public administrations of different countries. The
role of the International Standards for the Public Sector is that of making the accounting systems of
different countries convergent at a formal level, because most countries adapt their legislation to
these rules.
The Spanish philosopher Jose Ortega y Gasset stated that, first of all, there is a need to do
something and then the instrument needed to do so is invented. The same is true in accounting: first
we need to make a change and then we invent the method to achieve it (Gonzalo et al, 2013). That
was the case with the Romanian public accounting reform. Due to the necessity of joining the
European Union, Romania had to initiate a series of reforms, including those in the public sector
(fig. 2).
Cash accounting Accrual accounting-convergence towards IPSAS
1984 1989 2002 2003 2004 2005 2006 2014
Communist period,
centralised
Changing of the legal framework
Order no.2021/2013
Order no. 324/1984

OMFP 1792/2002 approving the Methodological Norms Order no. 1917/2005 approving the
regarding the employment, validation, methodological norms regarding the organization
authorization and payment of expenditure and management of public institutions accounting,
of public institutions and the organization, recording chart of accounts for public institutions
and reporting of budgetary and legal commitments; and instructions on its application.
Ordinance 81/2003 on revaluation and depreciation
of fixed assets owned by public institutions;
Order 1487/2003 approving the methodological norms
on revaluation and depreciation of fixed assets
owned by public institutions and non-profit legal persons
Figure 2- Short presentation on the evolution of public accounting in Romania

Source: own processing
The latest stage is that of 2014, when the Ministry of Public Finances launched the
implementation process of the national system of verification, monitoring, reporting and control of
financial statements, legal commitments and budgets.
In the public sector, the public institutions face the following types of reports: financial
reports (in accordance with IPSAS or, as in the case of Romania, with the national regulations
convergent with IPSAS), statistical reports and budget execution (fig. 3).
STATISTICAL
226
REPORTS
FINANCIAL
REPORTS
REPORTS IN
THE PUBLIC
SECTOR
BUDGET
EXECUTION
Figure 3- Types of reports of the public institutions in Romania
Source: Tiron Tudor, A., (2013), Conferina Internaional Implicarea profesiei contabile n dezvoltarea calitii
raportrilor financiare din sectorul public (Involvement of the accounting profession in developing the quality of
financial reporting in the public sector International Conference), CECCAR, material accessed on the 18th of March,
2015, on the website http://ceccar.ro/ro/wp-content/uploads/2013/11/Implicarea-profesiei-contabile-%C3%AEn-
sectorul-public-Adriana-Tiron.pdf
Without attempting to create discordance between statistics and accounting, we will pay
attention to the financial reporting and budget execution. In this context, accrual accounting
presents certain advantages, particularly in terms of improving resource allocation and especially in
reinforcing the responsibility of managers and increasing the transparency regarding the costs of
government activities.
The need to continue the reforms in the public sector and, implicitly, in the reporting system
derive from (Alec, 2014):
- the obligation to send EUROSTAT the COFOG III level data of the member states of the
European Union (implicitly, Romania as well);
- the request from the international bodies for detailed information on the budgetary and
legal commitments, budget execution, in the functional and economic profile;
- increasing the speed with which information is gathered;
- increasing the data storage capacity;
- improving the quality of the financial and statistical information.
Thus, the public institutions will need to report the aggregated and individual budgets
according to the systems operation procedure, the approval and electronic signature of the credit
release authorities of the revenue and expenditure budgets, the provision of information on the
income execution rate and on the incurrence of expenditure, the automatic check within the system
if the payments are kept within the budget, the collection of the budgets in accordance with the
COFOG III standard. In the category of reporting entities we find: the main, secondary and tertiary
credit release authority, autonomous public institutions, state-owned economic operators, the local
departments of public finance and other public institutions. The main beneficiaries are the
international organisations (the World Bank, the International Monetary Fund, the European
Commission), internal bodies (the Court of Auditors, the Government, the Parliament, the National
Institute of Statistics, the National Bank of Romania).
In this respect, the following were proposed: the development of the cash revenue and
expenditure accounts within the tresury at COFOG III level, the control of the legal commitments
227
within the treasury, the transmission of some standardised analytical balances by each public
institution at the MFS level, the elimination of the financial statements centralisation (aggregation)
at the level of the main and secondary credit release authorities, the consolidation of the financial
statements (Alecu, 2014). The public institutions will no longer prepare the annexes for the income
and expenditure execution accounts, these being automatically generated by the treasury.
Romania has indeed started on this path with timid steps. By issuing Order no. 720/2014 on
the execution of the income and expenditure budget of the autonomous public institutions, of the
public institutions financed entirely or partially by their own revenues and by the activities which
are entirely financed from their own revenues, for these institutions, starting with the 1st of July
2014, income and expenditure accounts were opened on the COFOG III budget classification
structure. Thus, the state, through its treasury, provides data validation regarding the budget
execution of income and expenditure as well as the automatic validation of payments, through their
inclusion within the limits of the approved budget.
budget execution
budgets collection commitments management consolidated reports
accounting reporting
Figure 4- The reporting process through the FOREXEBUG program

Source : The electronic reporting system of the financial statements in the public sector (2014), accessed on
16.03.2015 on the web address https://chat.anaf.ro/forexebug.../prezentare%20proiect%20forexebug.ppt
Instead, the process of reporting, approval and signing of the budget within the electronic
system has been delayed.
As in the other countries of the European Union, we also notice that, in Romania, the
treasury institution, in this case, plays an important role. In France, all payment orders go through
the treasurys system, which centralises the data on commitments and payment orders while, in
Spain, all transactions which are processed by the treasurys system go through six stages (budget
allocation, commitment, verification of actual expenditure, payment requests, payment orders and
payment) (Allen and Tommasi, 2001).
CONCLUSION
If for the Ministry of Public Finances, as the main beneficiary, these changes have a positive
result on the budgetary reporting, there is more safety in the data submitted by the public
institutions, the time needed to obtain the information is shorter while the professional accountant
faces greater challenges. By creating these income and expenditure accounts in the COFOG 3
system, the issues regarding immediately knowing what is available are determined, which leads to
finding additional ways to cover this syncope and thus increasing the workload. Furthermore, there
are disruptions between the treasurys reasoning and that of the professional accountant, working in
a public institution, regarding many accounting issues. Moreover, the public institutions must spend
more to adapt the software to the new changes.
228
Acknowledgment
This paper has been financially supported within the project entitled SOCERT. Knowledge
society, dynamism through research, contract number POSDRU/159/1.5/S/132406. This project
is co-financed by European Social Fund through Sectoral Operational Programme for Human
Resources Development 2007-2013. Investing in people!
BIBLIOGRAPHY
1. Newberry, S., (2015), Public sector reforms and sovereign debt management: Capital market
development as strategy, Critical Perspective on Accounting, no.27, pp. 101-117.
2. Allen, R., Tommasi, D., (2001), Administrarea cheltuielilor publice. Manual de referin
pentru rile n tranziie, OECD.
3. Alecu, G.,(2014), Dezvoltri i inovri privind raportarea financiar n instituiile publice din
Romnia, Ceccar, material accesat n data de 08.03.2015 de pe pagina web http://ceccar.ro/ro/wp-
content/uploads/2013/11/Dezvoltari-si-inovari-privind-raportarea-financiara-in-institutiile-publice-
G.-Alecu.pdf
4. Brusca, I., (2010), Treinta anos de investigacion en contabilidad y gestion publica en Espana,
Revista de Contabilidad, vol.13, no. 2, pp.175-209
5. Sistemul electronic de raportare a situaiilor financiare din sectorul public (2014), accesat n
data de 16.03.2015 de adresa de web
https://chat.anaf.ro/forexebug.../prezentare%20proiect%20forexebug.ppt
6. Tiron Tudor, A., (2013), Conferina Internaional Implicarea profesiei contabile n
dezvoltarea calitii raportrilor financiare din sectorul public, CECCAR, material accesat n data
de 18.03.2015 de pe pagina web http://ceccar.ro/ro/wp-content/uploads/2013/11/Implicarea-
profesiei-contabile-%C3%AEn-sectorul-public-Adriana-Tiron.pdf
7. Diamond, J., (2002), Performance Budgeting-Is Accrual Accounting Required,
International Monetary Fund Working Paper. Fiscal Affairs Department (WP/02/240).
8. Gonzalo Angulo J.A., Tenant K., Riquelme Alvarado M., Royano Muro L., (2013), El camino
hacia la convergencia. Comparacion y analisis critico entre la normativa contable internacional
(NIC/NIIF) y la estadounidense, Ed., Edisofer S.L., Madrid, p. 49
229
RECENT ADAPTATIONS OF THE LEGAL STANDARDS APPLIED

TO TAX LIABILITIES THROUGH GOVERNMENT ORDINANCES
Professor PhD Ionel BOSTAN
Doctoral School of Economics and Business Administration, Stefan cel Mare University, Suceava, Romania
ionel_bostan@yahoo.com
Abstract:
Our endeavour is directed at revealing certain difficulties identified during the actual process of levying the
government revenue that have lasted in time, as well as the methods used in solving or merely alleviating such
difficulties, as imposed and applied by the Executive authority. Among the above mentioned issues, we will specifically
refer to the measures taken to discourage tax payers from using arrears as a source to fund their own activities, with
important mentions on the special correction (undeclared tax penalty) for cases when certain sums payable to the
public budget are not declared (either totally or partially). The 2nd part approaches the setting up of the ancillary
obligations system which is specifically directed at protecting the real value of the fiscal claims and at sanctioning
defaults of payment upon the due date.
Key words: Tax procedure code, Government, debtors/tax-payers, taxes receivable, ancillary obligations,
special correction.
JEL classification: K40
1. INTRODUCTION
The institutional mechanisms designed to ensure the smooth operation of the budget system
can be rather rigid at times, and this fact has been often approached in the professional literature.
Renowned researchers and academics specialised in the field of financial-budgetary and taxation
law have actually approached this specific issue in a compared manner in their papers, often
pointing out the available solutions, based on the best practices identified in the juridical and
financial systems of other states [1-4]. To a certain extent, the author of the present paper has
approached the proposed topic by revealing the strengths and also the weaknesses identified as
concerns the establishment and enforcement of financial and taxation law regulations, both during
the transition of the Romanian economy to the market economy, and also after the year 2007 when
Romania became a member state of the European Union [5-10], in the context of sustainable
development [11]. Our endeavour is directed at revealing certain difficulties identified during the
actual process of levying the government revenue that have lasted in time, as well as the methods
used in solving or merely alleviating such difficulties, as imposed and applied by the Executive
authority. Among the above mentioned issues, we will specifically refer to the special correction
(undeclared tax penalty) for cases when certain sums payable to the public budget are not
declared (either totally or partially) and the double standard of the ancillary obligations.
Additionally, we will make certain references to the defective and unequitable standards, in terms
of the sums, and in relation to the ancillary obligations.
2. THE SPECIAL CORRECTION (UNDECLARED TAX PENALTY) FOR CASES

WHEN CERTAIN SUMS PAYABLE TO THE PUBLIC BUDGET (EITHER TOTALLY OR
PARTIALLY) ARE NOT DECLARED
The tax-payers attempt to default on the tax liabilities due to the public budget namely to
correctly ascertain and declare the tax liabilities and then to pay in due time is a separate case to
be sanctioned. Thus, the New Code of taxation procedure (NCPF) [12], which is currently in the
project stage, provides the enforcement of a special correction in the case of a possible oblivion to
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declare revenues (either totally or partially). We are specifically referring to the undeclared tax
penalty penalty (UTP), whose enforcement refers to the application of a fair treatment in terms of
the tax-payers behaviour, in order to differentiate those who fill in their tax return correctly but do
not pay and those who do not declare their revenues. Certainly, the measure ensures the
submission of accurate and timely tax return forms and the subsequent payment of the tax
liabilities, thus helping alleviate tax evasion. The detection of the failure to declare revenues
through tax investigation, will entail the enforcement of UTPs that may differ depending on the
amount of the unpaid liability. If the sum does not exceed the 25% margin related to each tax
liability declared by the tax-payer in the tax return submitted for a certain taxation period, the UTPs
will amount to 5% of the main tax liabilities undeclared by the tax-payer and established by the tax
investigation authority (through tax return enforceability). If tax-payers exceed the margin, they
will be liable to pay a fine that is five times higher than in the previous case (25%). Nevertheless,
the UTP is limited to 1 000 000 lei every time the specific enforcement measures cause it to exceed
this specific margin. This limit does not apply if the undeclared amounts were generated by deeds
falling under the scope of Law no. 241/2005, concerning the prevention and combating of tax
evasion [13]. On the contrary, in this case, the penalty increases by 100%. However, the UTP is
reduced by 75% if the main tax liabilities established through a decision are paid by the due time as
set by the Taxation Procedure Code or are legally set to be paid by instalments. We noted that the
taxation procedure code also provides a measure that is in the favour of the tax-payer, namely that
UTPs are not levied when the tax differences are generated after the interpretation conducted by the
National Agency of Fiscal Administration (NAFA) in that particular tax-related issue. However, the
prerequisite is that the respective interpretation would result from documents such as circular
letters, instructions or methodological guidelines.
3. THE DOUBLE STANDARD OF ANCILLARY OBLIGATIONS
As far as taxation is concerned, the introduction of the ancillary obligations system is only
directed at protecting the actual amount of the due tax liability and at sanctioning the default on
payment. However, as the New Taxation Code continues to be delayed, we will also be stuck in a
situation in which interests calculated according to two separate formulae will be levied when tax
liabilities consisting of the same amount and with equal maturities are delayed. That is the case
because when we deal with the state budget, defaulting on the payment of taxation liabilities will
result in an 0.03% interest rate per day (10.95% a year) for delays, but also late fines of 0.02% a
day (7.3% a year) as well. Adding up, we get 18.25%, which means that forgetting/omitting to pay
an amount in the NAFA account for one year entails, apart from the payment itself, another one
fifth of the capital. On the other hand, if the tax-payers oblivion entails the default on a payment
due to the local authority, the penalty will be even higher. This entails that, apart from the principal
debt (tax, etc.), an ancillary tax is added, which, in the case of a one year delay, tends to amount to
one quarter of the initial sum. Defaulting on the payment of tax liabilities due to the local
authorities would namely result in late fines of 2% per month or fraction of a month (thus
amounting to 24% a year). Such a regulatory action, apart from the above shown differences in the
applied financial treatment, is regarded by finance professionals as a defective and unequitable
regime in terms of the sums related to ancillary payments [12]. And here are the arguments. Upon
examination, the described system (that of the ancillary payments applied for defaulting on the due
payments to the local authorities, consisting of interests and late fines) also applies to the additional
tax differences established by the supervision authorities. The major inconvenience arising is that
the system does not take into account the two taxation obligation to do, namely (1) to correctly
ascertain and state the amount of tax liability and (2) to pay the respective tax liability in due time.
The tax-payers behaviour in terms of the obligation to accurately state their tax liabilities is
practically of no importance. Thus, taxpayer A, who correctly states his tax liability (but does not
pay), is fines just as taxpayer B, who hasnt paid the same amount due to the fact that his tax return
was inaccurate. What we believe is rather counterproductive is that there is no distinction between
231
the fact that B is in breach of two obligations stated in the taxation law: to correctly ascertain and
state his tax liabilities and, as a consequence, to pay the respective liability in due time.
4. CONCLUSIONS
The references we have made in the present paper have taken into account only a few of the
recent adaptations related to the legal standards applied to taxation liabilities adaptations
conducted by means of government ordinances. Clearly, they are all important, but the institutional
mechanisms that were meant to ensure the smooth functioning of the public budget are yet to be
improved. They should lead to the increased efficiency of NAFA/ DGAF and augment the
voluntary compliance degree (VCD) with the payment of tax liabilities. We would like to close by
showing that the above mentioned degree (VCD, percentage), at the end of 2014, hasnt increased
significantly, as previously expected. In exact percentage points, it has reached 83.7, by half a
percentage higher than it had amounted to in 2013.
Acknowledgments. The author would like to thank the anonymous reviewers for their valuable
comments and suggestions to improve the quality of the paper.
REFERENCES
[1]. Drosu-aguna, D., Tofan, Mihaela (2010), Drept financiar i fiscal european, Editura C.H.
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[2]. Maha, L.G., Mariciuc, D.F. (2009), Characteristics of the financial crisis in 2008 and its
implications on Romanian economy, Paper no. 27180, MPRA/ Munich Personal RePEc Archive.
[3]. Oprea, F., Mehdian, S. and Stoica, O. (2013), Fiscal and Financial Stability in Romania an
Overview. Transylvanian Review of Administrative Sciences, 40 E, pp. 159-182.
[4]. Stoica, O., Capraru, B. (2012), The Current International Financial Crisis And The Financial
Supervision Institutional Arrangements Effectiveness In The European Union Countries, Revista
Economica, Lucian Blaga University of Sibiu, no. 4: 590-597.
[5]. Bostan, I., (2014), Fundamentarea ordonanelor i a hotrrilor guvernamentale cu impact
financiar, Editura Lumen, Iai.
[6]. Bostan, I., (2014), Juridical tools of Governmental nature used to mitigate various difficulties
of the Financial and Budgetary System, Scientific Annals of the "Alexandru Ioan Cuza" University
of Iasi, Economic Sciences Section, 61(2): 133-148, DOI:10.2478/aicue-2014-0010/
[7]. Bostan, I., Radu, P. (2003), Controlul financiar i auditul intern la instituiile publice, Editura
Sedcom Libris, Iai.
[8]. Bostan, I. (2007), Drept financiar comunitar, Editura Tipo Moldova, Iai.
[9]. Bostan, I. (2010), Proceduri privind auditul public financiar i al performanei, Editura Tipo
Moldova, Iai.
[10]. Bostan, I., V. Grosu (2009), Limits on legislative harmonization financial accounting, The 33-
rd Annul Congress of the American Romanian Academy of Arts and Sciences (ARA), Politechnic
International Press Montreal, Quebec, pp. 250-253.
[11]. Pohoa, I., Bostan, I., Prelipceanu, Drugu, D., Morariu, A., Bunget, O. (2014), Equity,
intra/inter-generation equalization and profit, in the context of the right to a healthy life and a clean
environment, Rev. Rom. Bio. 12, no. 2: 58-69.
[12]. Noul Cod de procedur fiscal (NCPF), Proiect, http://www.mfinante.ro/
transparent.html?method=transparenta&pagina=acasa&locale=ro
[13]. Legea nr. 241/2005 privind prevenirea i combaterea evaziunii fiscale
http://codfiscal.net/21775/legea-2412005-prevenirea-si-combaterea-evaziunii-fiscale
232
ECONOMIC MEASURES DESIGNED BY INTERNATIONAL

FINANCIAL INSTITUTION IN ORDER TO MACROSTABILIZE
AND TO AUGUMENT ECONOMIC RECOVERY PROCESS
PhD Lecturer Anca Maria PARASCHIV

Bucharest University of Economic Studies, Bucharest, Romania
anca.maria.gherman@gmail.com

PhD Assistant Professor Alexandru POTORAC
Stefan cel Mare University of Suceava, Suceava, Romania
alex@fim.usv.ro

Postgraduated Student Ioana ENACHE
Bucharest University of Economic Studies, Bucharest, Romania
ioana.enache92@gmail.com
Abstract:
The recent economic crisis has affected the world economy in general, but the contagion degree for each
member economy was different, depending on the specific economic situation existing at the crisis debut. Some
European economies were very seriously affected, especially those who have expressed a number of internal and
external imbalances in the pre-crisis period, and who did not take countermeasures. The economic crisis and the
recession that followed were felt strong also in the USA, but the flexibility of the US economy and the measures taken
since the onset of the crisis allowed a faster recovery than in European vulnerable economies. The accommodative US
monetary policy permitted to avert liquidity crises and to clean the bank balance sheets, which was also a premise of
resuming lending in order to get out of the recession. In this article we conducted an extensive analysis of management
measures adopted in different states which are carrying out programs with IFIs, taking into account both short-term
effects and implications of these economic policy measures in the medium and long term horizon.
Key words: economic crisis, macro stabilization policies, IFIs agreement;
JEL classification: E 60, E 61, G28;
1. OVERVIEW
The economic crisis that started in 2008 affected most world economies. In many cases they
were forced to seek financial support from international financial institutions (IFI) like the
International Monetary Fund (IMF), European Commission (EC), European Central Bank (ECB)
and the World Bank (WB) in order to ensure macroeconomic stability,to regain access on
international financial markets and to restor investor confidence in the economic prospects of these
economies. A number of countries, especially in Europe, are still in the financing agreements with
international financial institutions, since the economic problems there economies are facing persists,
although the situation in the last five years significantly improved. The paper provides an analysis
of financial assistance programs concluded by international financial institutions, the causes of
these programs and the types of measures and their effectiveness in eliminating internal and
external imbalances that these states have faced.
The literature has been enriched with many papers that analyzed funding and the
effectiveness of economic policy in these programs. However, it is worth noting that international
financial institutions do not provide estimates of the effectiveness of these measures, for example in
the form of indicators that provide a ranking of Member States in terms of success and
recommended reforms implemented by these states.
An important study on the success of EU and IMF financial assistance programs during the
crisis was developed by Jean Pisani-Ferry, Andr Sapir and Guntram Wolfe and published in 2013
[1]. The review examines EU and IMF assistance programs (EC and ECB) taking into account three
233
euro area Member States, namely Greece, Ireland and Portugal. The authors concluded that, from
an institutional perspective, the cooperation between the EC and the IMF was inevitable, given the
lack of experience of EU in funding crises and also a lack of confidence in the Union in their own
institutions. Despite the differences in organization and approach between the two institutions, the
cooperative process worked. The topics on which there were the most serious disagreements were
related to the restructuring of Greek debt and to the acceptance of losses by holders of bonds
(senior) issued by Irish banks. Regarding the success of these programs, the authors concluded that
the results were mixed. An obvious success has been made in reducing current account deficits in
the three countries, even if the reduction occurred predominantly on the basis of reduced imports
due to the collapse in domestic demand, in which case the success may be questionable.
Compared to other European countries which have signed one or two financing agreements,
Romania has signed three agreements, the last to be finalized in 2015 [2-4, 6]. In 2013, even before
the signing of the third agreement, the European Commission has prepared an analysis of the first
two funding programs concluded with Romania in 2009-2013, 'Overall assessment of the two
balance-of-payments assistance Program for Romania , 2009-2013 '[3]. The purpose of the two
programs funded by 5 and 1.4 billion euros, was to provide financial support for financial and
economic crisis and to create prerequisites for a sustainable and inclusive growth by promoting
structural reforms in order to substantiate this economic growth. The role of the first program, with
a value much higher than the value of the second and third one, was to ensure macroeconomic
stability in terms of the balance of payments, public finance, inflation and financial stability.
Once that macroeconomic stability was ensured, the second program focused on structural
reforms, particularly in transport and energy to ensure a raise in potential GDP**. Other areas of
interest important reform measures were those of health, fiscal governance and state enterprises,
employment and business . The evaluation findings show that in general, most of the benchmarks
contained in the two funding programs have been met.
International financial institutions such as the IMF and WB have clear mandates to support
Member States in case of economic difficulties. Thanks to a long period of operation and
intervention in crises , these institutions have developed appropriate tools and specialized
personnel. Despite having responsibilities in supporting Member States under the Treaties in force,
at the onset of the economic crisis, the European institutions experience was almost inexistent, not
having a practice in the design and monitoring of economic programs for overcoming economic
imbalances. In the near future, the EU has enriched the tools to prevent macroeconomic imbalances
and to promote economic governance by adopting new regulations in the economic packages.
Thus, since the economic crisis started, international financial institutions were more or less
prepared to meet the needs of Member States in terms of financial resources, intervention
instruments, as well as experience in economic development programs. At the onset of the crisis,
the IMF was the only institution that possesses the kind of economic programs, legislation,
professional experience and financial resources needed for the formulation, negotiation and
implementation of these programs. However, to assist countries with sound macroeconomic
policies, but indirectly affected by contagion, the IMF has developed two new financial
instruments, respectively the Flexible Credit Line (2009) and the Precautionary Liquidity Line
(2011). At the same time the IMF has increased the capital available to support Member States
through economic programs with funding from 250-1000 billion. This operation started in 2009
through loans from member states less affected by the economic crisis.
European Commission and the ECB were less prepared to support member countries,
because they had the tools and financial resources, but no professional experience. In case of the
European Union, the only financial instrument (type of economic program) was available for non
euro area countries which were facing balance of payments difficulties. With this type of program
(balance of payments assistance), the European Union through the European Commission could
give countries outside the euro area financial resources from the EC loans on international financial
markets. Until the onset of the economic crisis the European Union never used this tool. The same
situation was also in the case of ECB, which did not have a clear mandate to support Member States
234
in the euro area and beyond. However, both the EC and the ECB have developed legal framework,
logistic and financial support to help Member States facing great economic problems. The ECB
played an active role, as partner, in the euro-area countries while in non-euro states this institution
had an observer role. ECB role under these programs was to provide liquidity to banks which were
in difficulty.
World Bank was part of the economic program especially with the IMF in emerging
countries. Experience and financial resources of the first previous mentioned institution aimed
primarily structural adjustment and modernization in different areas - such as education, transport,
environment, governance of public institutions, agriculture, etc - specific especially in emerging
economies. In Europe, the World Bank has been a partner in economic programs with the IMF and
EC only in Hungary and Romania and Latvia.
2. INVENTORY OF MEASURES TAKEN IN ROMANIA
External financing agreements signed by Romania with IMF aimed to limit spread of the
financial crisis effects in Romania through the transmission channel of external financing and
promoting economic package of measures to limit the negative effects on the Romanian economy
and ensuring the necessary conditions to resume economic growth .
The first economic program with funding from IFIs aimed at restoring macroeconomic
stability which was severely affected during the boom economic registered in the 2003 2008
period, and which led to overheating and unsustainable imbalances. GDP growth averaged over
6% per year in 2003-2008 (showed by Figure no.1) fueled by foreign direct investment and
capital inflows (in part by foreign bank branches in Romania). Robust increase exports to the EU
countries reflected a process of integration increasingly higher in Western European economies.
Domestic demand growth was even faster, generating current account deficits increasingly larger,
which culminated in 2007, reaching 14% of GDP. The overheating economy and the rapid capital
inflows complicated a lot the Monetary policy of the country, which drew after itself the National
Bank of Romania inability to achieve the inflation target despite rising interest rates and reserve
requirements [5].
Figure no.1 Real Growth Evolution between 2003 - 2015

Source: Own calculation based on Eurostat data
Real Exchange Rate (RRES) has appreciated by approx. 50% during the interval 2004 -
2007, the value being determined by massive capital input and by the economic convergence
expectations due to the EU aderathion.
The rapid increase of credit that fueled the boom led to a large exposure of Romania to the
global financial temporary obstacles and to the exchange rate volatility. External loans of the
banking system led to an increase of domestic credit, which reached an average of 50% per year
235
over the past four years until 2007. The companies' access to foreign loans also contributed to the
boom, increasing from a net 4% of GDP in 2005 to almost 11% in 2007.
Moreover, over half the domestic private loans were in foreign currencies, much of them
belonging to people or companies exposed at risk, which generated a significant indirect exposure
of the banks to currency risks (Figure no. 2). The maturity structure of external debt also
deteriorated in those years, the coverage of short-term external debt to gross international reserves
decreasing to about 75% in February 2009 from over 170% in 2003.
Figure no. 2 Romania Public Debt as GDP percentage, 2008-2014

Source: Self Calculation based on MPF data
The second grant agreement signed by Romania focused on stimulating growth potential
through structural reforms. Structural deficiencies in key economic areas slowed economic growth.
Improving the eficiency in public sector should have the effect of reducing bureaucratic barriers
and increase the absorption of EU structural funds, boosting in the same time the capital
expenditure for improving national infrastructure.
The new program also aimed at reaching reforms in the transport and energy sectors,
including reforms in terms of pricing mechanisms, better regulation and restructuring and
privatization of state enterprises in the transport and energy sectors. Precautionary assistance from
the International Monetary Fund and the EU was a reinsurance to private markets and an
opportunity to mitigate future shocks in the event of their occurance.
Target for fiscal balance at the end of December 2011 was met by a substantial margin,
reflecting bigger tax revenue than anticipated. Fiscal policy has played a strong pro cyclical role,
the budget deficit rising from under 1% of GDP in 2005 to almost 5% of GDP in 2008. Difficult
fiscal measures adopted in 2010, supplemented by the prudent policies on spending, make Cash
fiscal deficit target of 3.0% in 2012 to be achievable (See Figure no.3).
However, to ensure sustained deficit reduction was essential to continue efforts to improve
tax collection, to reduce expenditure pressures (especially in the health sector), and to reduce the
arrears [8]. Under sustained efforts to improve tax administration, the government approved a
decision on indirect methods of control, as a prior action for the new joint agreement (with IMF and
EC) [7].
236
Figure no.3 GCB Deficit (GDP percentage)

Source: Own Calculation based on AMECO data
The banking system faced well the crisis, being well capitalized and liquid. Nonperforming
loans (NPLs ) continued to grow, althow at a slower pace , and reached a peak in mid 2011. Banks
were still well capitalized, at the end of 2010 recording an average of capital adequacy ratio of
14.7%, all banks hovering above 11% [21]. However , the vigilence was maintained, given the fact
that performance varied significantly from bank to bank. In March 2011 , the authorities discussed
with the largest foreign banks an extension of the European Bank Coordination Initiative (ICBE ),
in order to continue the stabilizing effects that this initiative have had.
The third funding program provides a valuable anchor of policies and supports the
comprehensive economic program of Romania for the period 2013-2015. The purpose was to
maintain sound macroeconomic policies and financial sector stability and also the continuation of
structural reforms designed to enhance growth prospects.
In particular, the program seeks :
( i ) to protect a healthy public finance system, supported by a stronger institutional fiscal
framework;
( ii ) to continue monetary and financial sector policies that restore the reserves and protect the
economy against external shocks;
( iii ) to reduce economic bottlenecks which are impeding the country's growth potential and
competitiveness, through structural reforms.
The program aims to maintain investor confidence by ensuring discipline and stability of
policy design. This agreement also allows the targeting of measures in order to support domestic
demand. Because people, banks and companies continue to lower the debt level, domestic
consumption and investment demand remain modest. The program combines long-term institutional
responses to short-term measures, targeted, such as the extension of mortgage guarantee scheme,
aimed at putting recovery on a firmer basis.
Specifically, measures were related to fiscal consolidation, financial stability and structural
reforms in order to facilitate and accelerate economic recovery. Adjustment program demanded that
the consolidation proccess to focus mainly on spending cuts, given the pre-crisis fiscal slippages in
current spending and financial constraints. The strategy also involved reducing the deficit below 3
% of GDP by the deadline set by the European Council in the context of the excessive deficit
procedure***. The European Council initially set 2011 as the deadline for reaching a deficit below
3% of GDP, but in 2010 this deadline was extended until 2012 because of a significant deterioration
in economic conditions [9-14].
The category of fiscal consolidation measures includes both measures designed to reduce
costs but also to increase revenue. Reducing expenses covered all categories of expenditure,
respectively expenditure on wages, goods and services and capital expenditure. The income
increase aimed all income categories, but especially tax revenues which are the majority in the
budget and are easier to control.
237
After the timeframe for implementation and action we can distinguish [9-20, 22]:
short-term measures. In the category of short-term economic measures are the ones that can be
implemented immediately and have immediate effects on relevant economic indicator (for example
- reducing the budget deficit), such as increasing some taxes (VAT, social security contributions )
and reduction of expenses (wages , pension and investment ) .
long-term measures. Long-term measures are involving improvement of strategy in the aimed
field and requires a development of the strategy, appropriate legislation, the possibly to set up
institutions with clear responsabilities in the frame of the new strategy. In this respect we can
mention fiscal consolidation measures by strengthening the fiscal framework and by developing the
fiscal budget strategy on the medium term, public pension reform, healthcare reform, governance
reform at state enterprises, local public finance reform, public administration reform, etc.
Development and implementation of these reforms is a lengthy process, and consequently the
results are supposed to be visible at least on a medium timeframe. For example, in case of the
reform of public pensions, the results can appear even after a period of 20-50 years, if one of the
measures is to increase the period of retirement or relocation scheme of contributions and benefits.
Other reforms in the energy, transport, business environment, etc are a plus in the reform field with
a direct effect on public finances.
3. THE IMPACT AND THE EFFICIENCY OF ECONOMIC MEASURES

DESIGNED BY THE FINANCIAL ASSISTANCE PROGRAMS
Romania had the most drastic fiscal adjustment during programs in comparison with similar
countries in the region. The structural deficit improved by 5.5 percentage points of GDP in 2009-
2011. Romania had also the weakest starting position, with a unsustainable structural deficit of 9.5
% of GDP in 2009, highly generated by a pro-cyclical fiscal policy during the years of growth from
2004 to 2008. Despite drastic fiscal adjustment measures which had negative effects on domestic
demand Romania returned to economic growth since 2011, after a significant decline in real GDP to
almost minus 7 % [15-21]. The resumption of economic growth process is accompanied by
increasing levels of confidence in the economy, expressed by economic sentiment indicator.
The success of financing is directly reflected in the reduction of the perceived risk by
markets toward Romanian economy. The CDS spreads (the cost of insurance in case of bankruptcy,
practical the bankruptcy likelihood of a country) followed a similar trend and fell below 200 basis
points in mid- June 2013, from a peak of about 800 basis points in March 2009. (note that the
market believes that the risks of failure are higher in Hungary than in Romania, so that the cost of
insurance in case of bankruptcy in the first mentioned country is at about 300 basis points, which is
almost double than in Romania). The interests on government loans followed a downward trend
since 2011 and dropped to a historical low in the spring of 2013 (Figure no.4).
Figure no. 4 Government bond yields-as weighted average of 3, 5, 10, 12 and 15 year bonds
Source: OWN Calculation based on MFP data
238
Generally, programs have attained their recovery macroeconomic stability objectives,

restoring market access to finance sovereign debt and maintaining financial stability.
4.CONCLUSION
The three programs signed by Romania with IFI had some slippages and unconvinients but
also had the effect of restoring macroeconomic balance and economic recovery, so that in 2014
Romania recorded the highest GDP growth rates in the EU. Although some economic measures
have had negative effects on household income (wage cuts, reduction of employment in the state
sector, increasing inflation due to the VAT increase), the Romanian economy is back in the area of
sustainable economic growth with sound macroeconomic fundamentals. Macroeconomic
adjustment that occurred in the last 4 years in Romania and the return indicates positive growth due
to the economic reforms implemented during the three IFIs financing economic programs.
* This work was co-financed from the European Social Fund through Sectorial Operational
Program Human Resources Development 2007-2013, project number POSDRU/159/1.5/S/134197
Performance and excellence in doctoral and postdoctoral research in Romanian economics science
domain
** The third program aims to protect and deepen the initial reforms, and expanding
particularly in modernizing public administration.
*** According to the Stability and Growth Pact of the EU, European Union Member States
should maintain the general government deficit below 3 percent of GDP. Exceeding this limit
attracts a specific procedure (excessive deficit procedure) to return the budget deficit below 3
percent of GDP.
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Staff Supplement; Press Release on the Executive Board Discussion; and Statement by the
Executive Director for Romania, Country Report No. 12/11.
14. FMI (2011) Romania: Second Review under the Stand-By Arrangement and Request for
Modification of Performance Criteria-Staff Report; Staff Supplement; Press Release on the
Report No. 11/297.
15. FMI (2011) Romania: First Review under the Stand-By Arrangement and Request for
Modification of Performance CriteriaStaff Report; Staff Supplement; Press Release on the
Report No. 11/158.
16. FMI (2011) -- Romania-Seventh Review Under the Stand-By Arrangement, Cancellation
of Current Stand-By Arrangement, and Request for a New Stand-By Arrangement-Staff Report;
Supplement on the Assessment of the Risks to the Fund and the Funds Liquidity Position;
Supplementary Information; Press Release on the Executive Board Discussion; Statement by the
Executive Director and the Senior Advisor to the Executive Director for Romania, Country Report
No. 11/80.
17. FMI ( 2011) Romania- Sixth Review Under the Stand-By Arrangement, and Requests for
Waiver of Nonobservance of Performance Criterion, and Request for Modification and
Establishment of Performance Criteria-Staff Report; Supplementary Information; Press Release on
the Executive Board Discussion; Statement by the Executive Director and the Senior Advisor to the
Executive Director for Romania, Country Report No. 11/14.
18. FMI (2010) Romania - Fifth Review Under the Stand-By Arrangement, and Requests for
Waiver of Nonobservance of Performance Criterion, and Request for Modification and
Establishment of Performance Criteria - Staff Report; Supplementary Information; Press Release on
the Executive Board Discussion; Statement by the Executive Director for Romania, Country
Report No. 10/301.
19. FMI (2010) Romania - Staff Report for the 2010 Article IV Consultation, Fourth Review
Under the Stand-By Arrangement, and Requests for Modification and Waiver of Nonobservance of
Performance CriteriaStaff Report; Staff Supplement; Public Information Notice and Press
Release on the Executive Board Discussion; Statement by the Executive Director for Romania,
Country Report No. 10/227.
20. FMI (2010) Romania: Financial Sector Stability Assessment, Country Report No. 10/47.
21. FMI (2010) Romania: Second and Third Reviews under the Stand-By Arrangement,
Request Re-phasing and Waiver of Nonobservance of Performance Criterion; Statement by the IMF
Staff Representative; and Press Release on the Executive Board Discussion, Country Report No.
10/49.
240
SHOULD TAX COURSES BE REQUIRED FOR ALL ROMANIAN

UNIVERSITIES BUSINESS STUDENTS? THE NEW FUTURE OF
BUSINESS EDUCATION
Kevin A. DIEHL
Western Illinois University (QC), United States of America
KADiehl@wiu.edu
Abstract:
Typically, Romanian university colleges of business require students to pursue basic accounting, economics,
finance, and management classes at the undergraduate level or, for the first time, while pursuing studies in the masters
of business administration (MBA) program. Generally, university administrators do not impose tax courses on business
students (economics, finance, management, etc.) and sometimes do not even require them for accounting students.
Administrators likely do not require tax studies because of the combination of their real-world advisors,
managers, not truly understanding the value of tax planning in their own businesses let alone in university curricula
and few available tax professors.
Many real-world managers, universities advisors, also do not truly comprehend the value of tax planning.
With these beliefs then, they generally do not advise university administrators to require tax courses for students who
are about to enter the business field.
Too few tax professors are available not just in Romania but also globally. Individuals in the tax field earn so
much that they rarely consider entering academia because of the pay cut.
The paper then provides examples, evidencing the necessity of combining tax knowledge with financial
accounting, economics, finance, and management studies. Next, solutions to the lack of professors are discussed. These
results are then analyzed with implications for Romanian universities with the conclusion following.
Key words: Romanian universities; tax courses; required curriculum; business students.
JEL classification: M40.
1. INTRODUCTION
Many Romanian universities emerged in the early 1990s. Given that specific timing, an
opportunity has existed to pursue new-world educational methods. Romanian universities have
capitalized on this opportunity, becoming leaders of emerging nations with regard to business
education development (Popescu and Crenicean, 2012).
Part of this effort was required because of the 1999 Bologna Declaration (Scarlat, 2007).
However, at least in one area then, tax studies, an old-world notion still exists (Scarlat, 2007). More
specifically, Romanian university administrators have not yet necessarily found the value of tax
courses to the extent that other countries university administrators have.
This paper seeks to change that attitude toward tax courses. In fact, it endeavors to
demonstrate that not only should tax courses be provided but also required of all business students
because of the necessity of this knowledge to the new-world business professional.
The paper begins with the discussion of the reasons for the current lack of required tax
courses in Romanian university business curricula. In explanation, it mentions the combination of
real-world managers, not just in Romania but elsewhere, not truly understanding the value of tax
planning and then advising universities on what courses should be offered and of few available tax
professors.
The paper then pursues the case studies to show the importance of tax knowledge to
managers. It then shows how the issue of insufficient tax professors can be solved.
The paper ends by considering implications to Romanian university administrators with the
conclusion following.
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2. LITERATURE REVIEW
Romania is definitely at the leading edge of education for developing countries (Popescu
and Crenicean, 2012). However, in the survey of 94 fourth-year students, Romanian business
schools were seen as not matching the level of preparation in certain business skills that these
students were seeking (Glazer-Segura et al., 2007). Also, Romanian university administrators have
been forced to rely more on real-world managers for curricula advice has occurred (Scarlat, 2007).
This idea has received additional support (Bordean, 2012).
3. CASE STUDIES
3.1. APPLE
Many Romanian business students, academics, and professionals look to Apple as the
worlds ideally managed business. Innovations occur at the highest levels possible. Sales are in
hundreds of billions. The company has the largest market capitalization in the history of the world
and continues to improve on that record. Most importantly for at least those student Apple idolizers,
the company is extremely profitable, $41.7 billion in net income in 2012, leading to some of the
worlds highest salaries. In fact, compensation is so high at Apple that even the directors on its
board earn $1 million each year. Leaders of Romanian companies would consider such
compensation to be equivalent to winning the lottery.
While the leadership style, innovations, sales, market capitalization, and profitability in
general are ever cited, what gets lost in these specific successes is how important it is to Apples
executives to manage their tax expenses and how that emphasis results in their record-setting
innovations, sales, market capitalization, and profitability.
Any companys decisions can be judged as to how ethical they are. However, with that point
to the side and not just an important consideration in the tax area but in any business area, the case
can be analyzed for what it stands, how important tax knowledge is to any business professional.
Because Apples executives had knowledge of not just of the currently required business
core courses but also of taxes, the company was able to create offshore entities, such as Apple
Operations International, without tax residency in any jurisdiction (US Senate, 2013). While Ireland
utilizes management and control to test the location of tax residency, the US refers to the place of
incorporation. With AOI incorporated in Ireland but not managed and controlled from there, neither
taxing authority would consider it to be resident in its jurisdiction. Because of this tax knowledge
then, the entity had $30 billion of financial accounting income from 2009 to 2012 but paid zero
dollars in taxes (US Senate, 2013). Based on US tax rates then, this structuring literally saved over
$10 billion.
Further, Apple established Apple Sales International to own its offshore intellectual property
in exchange for sharing in the main companys research and development costs. Similarly, without
being resident in any tax jurisdiction, its income of $74 billion from 2009 to 2012 was taxed at the
rate of zero percent (US Senate, 2013). In essence, to get this rate, Apple Sales International had to
be expertly structured with general business and tax knowledge to buy finished products from its
Chinese supplier, sell at higher prices to other Apple entities, and then maintain those earnings. This
structuring could have saved Apple, based on US tax rates on global income, almost $25 billion.
For many years then, knowledge of global taxes led Apple executives to establish these
entities in Ireland. The Irish government provided the special tax rate of 2 percent or less, which
was below its already lowest (other than zero-percent jurisdictions) tax rate in the EU (US Senate,
2013). The less meant rates so low as .05%, .0005 in the decimal form (US Senate, 2013).
Relying on check-the-box and look-through tax rules, Apple executives also deferred taxes
on $44 billion of offshore income from 2009 to 2012. Check-the-box rules enabled executives to
ignore lower-tier overseas entities for taxation purposes and instead have them treated as part of
242
higher-tier overseas entities. Transactions between ignored entities then do not exist under the US
tax system and their payments to each other then become payments from and to the same higher-tier
entity. Payments to and from the same entity are not considered in the US tax system. This case is
true whether the payments were based on sales revenue or were dividends. Because of the time
value of money, any tax payments deferred to later dates can in the interim be reinvested to earn
returns on that money. Thus, roughly $15 billion in money could be reinvested. If only 4 percent
return on the investment were earned over just the single year, $600 million dollars would be
received.
While roughly $36 billion could have been in the pocket of governments, Apple instead had
access to it and could invest it on more research and development to create even more innovations,
sales staff to reach even higher sales, or at the least on showing higher profitability, leading to ever
higher stock prices and market capitalization. Thus, knowledge of taxes matters to business leaders.
Many times, it can matter more than knowledge in any other single discipline.
3.2. HEWLETT PACKARD
While not to the level of Apple in legendary status, Hewlett Packard has been at the Fortune
20 level for many years. The companys executives used loans to return offshore earnings to the US
from two overseas entities (US Senate, 2012). Hewlett Packard executives did not directly return
earnings to the US as doing so would result in those earnings being subject to US taxation under the
interaction between the Tax Code and Accounting Principles Board (APB) 23. Indeed, APB 23
would have required the company to report more expenses and less profitability if those earnings
were not deemed to be permanently reinvested overseas and therein not subject to consideration of
US tax liabilities on them. These loans were so extensive that they completely funded the cash
requirements for the companys US operations (US Senate, 2012). In fact, Hewlett Packard would
have had insufficient cash to continue in business in the US if not for these loans (US Senate,
2012). In any given year, the US parent could have been borrowing between from $6 to $9 billion
(US Senate, 2012).
4. SOLUTIONS TO SHORTAGE OF TAX PROFESSORS
University administrators can seek funding from private sources to endow professors
salaries. For instance, the Big Four accounting firms utilize endowing and then naming professors
as an important advertising method to get future students from those respective universities
interested in working for their firms. Also, the Big Four enjoy the opportunity to collaborate with
such academics, in exchange for the endowment then, in providing tax advice for their clients.
Many universities have as currently employed so-and-so, the Deloitte, Ernst & Young, KPMG, or
PwC professor of accounting or tax. By approaching the Big Four for funding, administrators could
then provide the necessary level of compensation to attract tax professionals to higher education.
However, university administrators with an interest in change with regard to tax should also
try to push their universities and therein the Romanian government at large to fund and require that
discipline.
5. IMPLICATIONS
The successful negotiation to get funding for, provide, and require tax courses would
involve sharing some of what has already been discussed in the case studies. First, graduates of
Romanian university colleges of business should have the requisite knowledge necessary to succeed
in that field, or the university is not completing its educational mission. As the paper has previously
demonstrated, tax knowledge is equally (if not many times then more) important to business
professionals as other required courses, financial accounting, economics, finance, and management.
243
Second, individuals who decide to enter the tax field, given the high level of compensation,
can actually give back to the university who educated them. Donations to be able to employ more
tax professors can come from the students who have just been educated at this university in this
discipline.
Next, if the tax course of study is provided, more students would be attracted to enroll at
that particular Romanian university. For example, if any consumer has only enough time to shop at
one location, all other things equal, that consumer would likely choose the store that has more
products to offer.
Fourth, current professors who have less students because of the newly required tax courses
can be consoled easily. In the long run, as more students choose that university with its greater
offering of study opportunities, the entire business program enrollment would grow. Students who
enroll at the university to study tax could find financial accounting, economics, finance, or
management more interesting and end up choosing those other disciplines. The end result would
permit any short-term student losses to be more than compensated for in the long run with the
aggregate greater enrollment.
6. CONCLUSION
While there is not extensive research on the implementation of new disciplines in the
Romanian context, the Bologna Declaration at the least requires universities to try to provide
knowledge-based educations. As such, students should be offered the opportunity to study tax but
also required to study it as part of the business core curriculum. As Scarlat (2007) mentioned, the
role of Romanian universities is to prepare students for their specialized interest but also in general
for the area in which they are to be employed. This approach requires tax courses to be
implemented in Romanian universities. However, in the end then, Romanian universities benefit
from inclusion of this course of study.
7. FUTURE RESEARCH OPPORTUNITIES THEN
The future of business education is now in the balance. It is up to those individuals who care
the most to push for this change. While not every university could want to follow this new
approach, including tax courses is the good starting point. However, ultimately, tax courses should
be required as part of the general business curricula at every university.
Other research opportunities exist. Surveys of current students perceptions on the issue
could be completed at the various universities. However, before surveying, the researcher should
provide the students with the opportunity to understand the value of tax courses. To be fair then, the
alternative view could be presented. Tax courses as require would lessen the amount of electives or
remove other business core courses from the curricula. Students do enjoy the opportunity to have
electives so as to better construct what subjects are of primary importance to each of them
individually. Removing other business core courses should primarily be of an issue to the current
professors in those areas. Nevertheless, if the growth occurs by being first to the market with these
offerings, long-run growth in enrollments should reach the courses with lower enrollment in the
beginning because of this proposal.
While surveys of specific Romanian universities can be of importance, comparative surveys
would be of even more benefit. The French university v. the Romanian university would be an
example. The researcher could analyze the various options at the French university, the related
costs, and students perceptions. Then, the researcher could compare those results to the Romanian
universitys results.
More research should be finished on how important taxes are to managers in Romania.
While anecdotal evidence supports the discussions in this paper, greater information in the area can
only be more helpful.
244
More research should be completed on the availability of tax professors and venues to
educate tax professors in Romania. This knowledge would better enable schools of business to deal
with how to fund the employment of such professors.
Finally, government support of this move should be considered. While governments should
not necessarily have strong influences on business school curricula, involving the Romanian
government could lead to greater support for this endeavor. Surveys could be the primary
methodology.
This research could lead to projects on what the budgetary support has been for universities
over the years. Those results could provide greater background for how difficult it would be to
support the creation of tax courses.
BIBLIOGRAPHY
1. Bordean, O., (2012), Business Students Perceptions on Corporate Governance, International

Journal of Arts and Commerce, 1, 4.
2. Glaser-Segura, D., Mudge, S., Batianu, C., and Jianu, I., (2007), Quality Improvement of
Business Education in Romanian Universities: The Student as Customer and Client, Higher
Education in Europe, 32, 2-3.
3. Popescu, M., and Crenicean, L., (2012), Innovation and Change in EducationEconomic
Growth . . . in Romania in the Context of Knowledge-Based Economy, ProcediaSocial and
Behavioral Sciences, 46, 3982-3988.
4. Scarlat, C., (2007), Developing New Curricula for Engineers Entrepreneurial Education:
Romanian Experience, World Transactions on Engineering and Technology Education, 6, 2.
5. US Senate, Permanent Subcommittee on Investigations, (2012), Offshore Profit Shifting and the
US Tax Code Part 1 (Hewlett Packard),
http://www.hsgac.senate.gov/subcommittees/investigations/hearings/offshore-profit-shifting-and-
the-us-tax-code (Accessed on December 11, 2014).
6. US Senate, Permanent Subcommittee on Investigations, (2013), Offshore Profit Shifting and the
US Tax Code Part 2 (Apple),
http://www.hsgac.senate.gov/subcommittees/investigations/hearings/offshore-profit-shifting-and-
the-us-tax-code_-part-2 (Accessed on December 11, 2014).
245
THE IMPACT OF THE FOREIGN CAPITAL BANKS ON

ENSURING FINANCIAL STABILITY ON LONG TERM
Isac BORS
University of Economic Studies, Bucharest, Romania
isacbors@yahoo.com
Abstract:
The present study is focusing on analysing the role played by the foreign banks within the national and
international banking system as well the impact the foreign banks have on the autochthon banking system, on the
financial activity, on the real economy and on the financial stability on long terms.
The research conducted highlights the fact that along the positive impact on the banking system and on the
economy of the host country, generated by their quality as vectors of mobilizing and directioning the international
financial flows towards the host country, there can also be considered a negative impact. The study shows that the
impact of the negative effects, that have as main cause the reversibility of the international financial flows, depends, on
a great extent, on the specific conditions of the host country, on the characteristics of the foreign banks, but mostly, by
the share held by the foreign countries within the framework of the host banking system.
Starting from the role played by the capitalization of the banking system to ensure financial stability, the
research made on Romanias case shows both, the positive effects generated by the presence of the foreign banks and
also, their vulnerability in front of this excessive dependence on the foreign capital induced by this presence. The
solution to reduce this dependence can only come from the autochthon capital direction whose mobilization may
countervail the gap made by the foreign banks and, by surceasing the process of financial disintermediation, to ensure
the maintenance of the financial stability on long term.
Key words: financial stability, foreign banks, banking capital, globalization, financial crisis.
JEL classification: F21, F23, G21, G28.
1. INTRODUCTION
The globalization phenomenon that has started since the 70s and that materialized mainly
through ample profound deregulation and capital market liberalization processes, has become the
determinant for a long period of economic growth registered in the last forty years on the global
level. There are undisputable economic and social benefits deriving from this process, the financial
globalization bringing its contribution to the improvement of the macroeconomic performance, to
the institutional development and to the appropriate risk management, not only in the developed
countries as in the emerging ones, as well.
However, the global crisis registered between the years 2007-2008 represents, according to
Lane (2012), a test for globalization as model, as, apart from the positive contribution brought to the
economic and social development, this globalization process has determined the spread of the
financial crisis. The foreign banks action as well as the quick swelling of the banking balance sheet
represent the two lines identified by the author, that, induced by the financial globalization, have
contributed, to the increase of the vulnerability of the loaning market and eventually, to the
activation of the crisis spread. Definitely, I have to emphasize the idea that, in the absence of these
vectors, I generally consider the foreign banks and investors, whose activity is based on the freedom
of capital movement, and, under these circumstances, it is difficult to say which were the exact
funding resources needed to support the process of economic growth recorded especially in the
emerging countries.
The reformation of the regulation and supervision setting to ensure the financial stability has
to consider both, identification and management of systemic risk, induced or aggravated by the
phenomenon of globalization, as well as the need to ensure future economic development
conditions. Strengthening the resilience of the financial system should not lead to stagnation or
even economic underdevelopment.
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One of the most important course of action in reforming the framework of ensuring financial
stability is focusing on the capitalization of the banking system as an important post in the process,
direction that is promoted and supported by the new Basel III agreement on the global level. By the
macroprudential approach, the reform suggested by the new Basel III agreement, is aiming at
improving the financial system resistance to shocks by actions focusing on two main directions: the
improvement of the capital base and of the liquidity. As the first course of action, namely, the
improvement of the banking system capitalization, that, in my opinion is the most important, is
expected to improve the capital basis from the quantity and quality points of view, it is to raise the
question which direction to follow in the case of the emerging countries, as in the case of Romania,
considering the modest capacity of mobilizing the necessary amount and the necessary quality of
capital. The present article has the main objective of studying the positive or negative effects, as
appropriate, of the presence of the foreign banks in the autochthon financial system and the
identification of solutions to the issue of improving the banking capital base, a recurrent problem of
the countries with less developed financial systems, also considering the fact financial stability is
not the last objective of the reform, it is just one of the means of ensuring sustainable development.
Further, the work is structured as follows: Section 1 Introduction; Section 2 Review of
scientific literature on the role of recapitalizing the banking system in order to ensure stability;
Section 3 Analysis of the impact of the presence of foreign banks in the autochthon banking system;
Section 4 Conclusions.
2. RECAPITALISATION OF THE BANKING SYSTEM THE MAIN STEP TO

IMPROVE THE RESILIENCE TO SHOCK
The literature is replete with studies supporting the role of capital as an important pillar in
supporting financial stability. Most researchers who considered this issue concluded the fact,
supported by Caruana (2012) or by Brei and Gadacnez (2012), that more capital and better quality
is the appropriate step that can lead to strengthening the resilience of the financial system to shocks.
Vasquez and Federico (2012), seeing the complementarity of the two courses of action of
the Basel III, respectively, capitalization and liquidity, demonstrate that a better capitalization
improves the banks capacity to be more resistant to crisis situations. Providing liquidity is essential
in fighting against a crisis situation, however, the banks capacity to generate liquidity is closely
related to the leverage. In the same time, the leverage, that is a measure of capital relative to total
risk-weighted assets held, besides the fact that it is closely correlated with the size and quality of the
capital ratio, it is one of the causes of the pro-cyclicality phenomenon which is specific to the
financial activity.
Pro-cyclicality of the banking activity amplifies the business cycle and is seen by many
researchers (Drehmann, and Tsatsaronis Borio (2011), Caprio (2010), Cardarelli, Elekdag, Lall
(2009)) as the main cause of financial instability. The explanation is simple, during the economic
boom, the banks, under the impact of leverage, of the increase of the assets value and of the
undervaluation of risk, they expand their balance sheets at an accelerated rate. Subsequently,
during the phase of economic decline, when the financial shocks result into great loss,
simultaneously takes place an erosion of the capital ration, a diminishing in the value of the assets
and an increase of the associated risks, so that, in the end, a phenomenon of credit compression and
of financial disintermediation takes place which leads to economic collapse.
In the given case, the most appropriate instrument to fight against pro-cyclicality is the
capital that can contribute, by an established anti cyclical component, to shock attenuation.
Practically, the anti cyclical characteristics of the instrument is determined by the possibility to
make up some capital buffers during the good times (economic growth) that can be used for shock
absorption occurred in bad times (economic decline).
For this purpose Cardarelli, Elekdag and Lall (2009) state that restoring the capital base of
banks is the most secure way to stop the economic downturn, when the banks were caught with
over expanded balance sheets when the economic crisis set off, and that is at the regulators hand.
247
Nier et al. (2008) in their turn show that there is a direct link between the aggregated
capital of the entire banking system and the probability of bankruptcy of banks in the system, given
the fact that a low level of aggregated capital weakens its resistance, seen as a whole, by
amplifying the systemic risk and the contagion effect.
Therefore, as you can see, the literature shows unequivocally the importance of capital in an
greater amount and of a better quality, for ensuring financial stability, however, designing an
operational framework of capital management remains a major challenge. Capital is the most
appropriate instrument to counter pro-cyclicality and to restore confidence, which is relatively a
simple instrument and which eliminates issues of discretionary policies. Capital management
challenges are related to the sizing the optimal level and to the timing, in other words, when the
capital reserve should be increased, to what extent and when to be used.
Given this objective, to make the banking system more resistant, regulators have proposed,
in their turn, through Basel regulatory framework, a series of measures that emphasize the role of
capital. Since 2004 the Basel II standards have been established which introduced minimum capital
requirements for banks to cover credit risk and operational risk. By this regulatory framework they
established principles for the necessary estimates can be made both for banks and for supervisors
regarding capital adequacy to the assumed risks. The financial crisis has shown the need to review
these standards, so in 2010 the Basel Committee published the new agreement Basel III (BCBS,
2010). The new regulatory framework is a reform of the previous agreement designed to increase
resistance to the existing banks and of the financial system in general.
Basel III aims to increase the strength of the system / banks based on the important
combined role played by the liquidity and capital, the conclusion being that a stronger capitalization
is associated with a lower probability of recording banking crises and with less severe costs to
affect the system.
Finally, restoring capital base is seen by the literature as the first step in restoring confidence
and ensuring financial stability, however, for countries with less developed financial systems,
affected by the shortage of resources and where the banking system is dominated by banks with
foreign capital, solving this problem can become particularly difficult, with adverse effects on the
level of financial intermediation.
3. IMPACT OF THE FOREIGN BANKS ON THE EVOLUTION OF THE

AUTOCHTHON FINANCIAL SYSTEM
3.1 ADVANTAGES AND DISADVANTEGES OF FOREIGN BANKS PRESENCE
On the background of globalization the role of foreign banks has increased permanently on a
global level occupying an important position in the domestic financial intermediation. The inability
of some countries to raise sufficient capital to support banking activities and hence the real
economy was offset by the increased role of foreign banks in the local financial systems that,
entering these markets have contributed decisively to increase levels of capitalization and liquidity
through intake capital and easier access to international financial resources.
The process of strengthening the role and position of foreign banks in the global financial
system, shown graphically in Table no. 1, confirms the extent of the phenomenon and the
accelerating trend in recent years.
Table no. 1 Evolution of the capital percentage of foreign banks among total banking sector in
different countries
Tara 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Romania 21 32 39 45 57 57 63 70 70 74 81 85 81 81
OECD 22 22 23 24 24 25 26 27 27 27 27 28 28 28
USA 16 16 15 17 19 21 21 21 23 24 24 27 29 32
UK 45 46 47 48 48 48 49 51 53 54 54 56 57 57
248
Japan 0 0 0 0 0 1 1 1 1 1 1 2 1 1
Italy 3 3 4 5 5 5 5 5 5 5 7 10 10 10
France 7 7 6 7 8 8 7 7 6 6 6 6 6 6
Germany 10 11 10 10 11 12 13 13 12 13 13 13 14 14
Hungary 68 73 75 78 78 81 79 86 85 85 90 93 93 92
Ireland 83 83 84 80 81 85 89 89 89 89 90 90 90 90
Czech R 39 39 44 52 52 54 54 57 57 55 59 64 67 67
Sources: Claessens and van Horen 2012
As it can be seen there has been a lasting phenomenon which affected all countries, certainly
on a greater or lesser extent depending on the characteristics and evolution of each economy. On the
other hand it is clear, however, that less developed countries were affected earlier, Romania being
included in this category. In Table 1 we made a selective presentation of the evolution of some
banking systems in the countries of Europe, nevertheless, the analysis and the data presented by the
authors (Claessens and van Hren, 2012) are more comprehensive and reinforce the idea that, in
particular, less developed economies experienced this kind of development, so that, shares above
80% are to be found in Albania, Bolivia, Nicaragua, Slovakia, Burkina Faso, Burundi, Cameroon,
Rwanda, Uganda, etc.
This process has been accompanied by a number of beneficial effects, in addition to
increased capitalization and liquidity of the system, which favored its acceleration and which are
highlighted by Cull and Peria (2011) such as increased autochthon banking competition,
potentiation/ building up of the customers economic competition, increasing accessibility of
financial services and even ensuring financial stability. Romania was no exception to these global
trends and introducing technical progress, novelties in the field, the contribution of know-how, but
mostly, the easy access to foreign funds, generated by the presence of foreign banks, have brought
their contribution to registering a stronger stabilization and development of the banking business in
Romania. As shown in Figure 1, recovering the capital base after the banking crisis of 1998-1999, it
was achieved solely on their own merits, for later the financial intermediation to grow strongly
foreign banks have expanded their networks in many areas of the country, providing banking
services to relatively broad categories of the population.
The extent and the evolution of the penetration process of the autochthon financial systems
by foreign banks, accompanied by the benefits listed above, are explained by McCauley (2012) who
argue that the meaning of international financial flows and capital liquidity are in close correlation
with the capital market conditions. When financial and capital markets are characterized by calm
and low volatility, the capital flows from developed economies to emerging markets, and when
volatility increases, the flows are reversed.
Therefore, this phenomenon is reversible and precisely, this reversibility induces the
prerequisite of some negative effects that may occur. Claessens and van Hren (2012) show that in
addition to beneficial effects, since 2007 there has been a number of adverse effects that can be
highlighted, among which, the most important one is reducing lending facilities of the host country
economies during the financial crisis.
The problem of adverse effects generated by the position improvement of the foreign banks
in the local financial sector has been addressed in other studies which point out that there are
difficulties that may occur, caused by contagion effect, namely, transmission of shocks from parent
banks to their subsidiaries, with negative consequences for their current work (Cetorelli and
Goldberg, 2011).
Risks induced by the foreign banks to financial stability are pointed out by Danila (2011,
2013) who highlights the vulnerability of an economy, such as the autochthon one, which is
induced by the dependence of major banks on the capital coming from the outside and the volatility
of these financial flows.
Provided to the change of direction of the financial flows the new capital and liquidity
requirements imposed by Basel III are added, it is expected a worsening of the adverse effects in the
249
absence of adequate support from their own groups of shareholders of the foreign banks. The
consequence of this kind of situation is that foreign banks will be forced to reorganize their activity
which will be based mainly on resources resulting from savings and less on loans, fact that will
affect lending, especially supporting projects of investment on long terms.
3.2 MORE OR LESS RECENT EVOLUTIONS AND THE CURRENT SITUATION
To emphasize the positive or negative impact, as appropriate, of the presence of foreign

banks in Romania, I have made, in this present study, an analysis of the evolution of the Romanian
banking system over a long period of time, in order to point out the significant events that have
happened. The present analysis focused on studying the evolution of the banking capitalization in
the period 1996-2013, which is, in my opinion, a relevant indicator on the commitment of foreign
banks present on the autochthonous market and, consequently, to determine the positive or negative
effects recorded. The analysis took into account both quantitative aspects, expressed by the
variation of total own funds at aggregate level, and qualitative aspects, expressed by the variation
analysis of Tier 1 capital, noting that, the study focused on the real changes to eliminate the effect
induced by inflation, the situation is shown in Figure no. 1.
Figure no. 1 Evolution of banking capitalization in Romania

Sources: NBR;authors calculations;
Following the analysis of the evolution of the capital base of the autochthonous banking
system there can be identified three distinct phases:
first stage 1996 - 2000 is characterized by a phenomenon of strong erosion of the capital
base determined by the economic crisis that hit Romania and brought the banking system to
the brink of collapse (there were some resounding bank failures), requiring extensive
rehabilitation and reorganizing processes;
the second phase 2000 - 1998 is characterized by accelerated development of the banking
system and a permanent consolidation of the capital base. Following the banking system
reorganization and its repositioning on sound bases, under the impact of foreign capital
injection, there is an unprecedented development recorded. However, it will be stopped in
2008, once with the start of global financial crisis;
the third stage 2008 - 2013 is characterized by the inability of the system to recover its
capital base to the required level, so that, even if there were not significant problems
250
recorded, it suffered a process of financial disintermediation, counterproductive to the

development needs of domestic economy and to ensure financial stability;
The phenomenon of erosion of the capital base can be seen much better in a comparative
analysis Romania versus EU of the capitalization variation in real terms, in which the year 2008 is
taken as reference point (Figure no. 2):
Figure no. 2 Evolution of bank capitalization Romania vs EU - real variations fixed base
2008
Sources: NBR; ECB; author's calculations;
As it can be seen until 2008 the capital base has permanently been improved in the EU and
in Romania, for later, if in the EU the recapitalization efforts continued, in our country this has not
happened any longer. The explanation must be studied in the big share the foreign banks are
holding in the domestic banking system under the pressure of the problems in their own financial
centers that have not provided sufficient support so that it came to an erosion of capital, significant
decreases being recorded in real terms in 2011, the trend being the same for the following period of
time. It is worth pointing out that while in the EU the financial and banking system is still
improving through new capital contributions, registering an increase of 30.76% in mid-2012
comparing to December 2008, in Romania it is registered a decrease of 9.23% in real terms, of the
volume of aggregated capital.
4. CONCLUSIONS
In the present study I investigated the effects of the presence of the foreign banks on both
levels - the domestic banking system and the economy of the host country, looking at things from
the perspective of the need to ensure financial stability. The analysis conducted on the development
of the banking sector shows that the beneficial effects of their presence are undeniable. Without
their presence it is difficult to explain how it could have sustained the economic development of
Romania in the period 2000 - 2008 in the absence of capital injections and funds attracted from
foreign banks. It is also hard to believe that restoring the capital base and the banking system after
the crisis of 1998-1999 would have been achieved within such a short period of time without the
contribution of these banks.
251
At the same time the reversibility of financial flows and reform of the global regulatory
framework, shows that in addition to benefits, especially in the given case of big shares held by
foreign banks in the domestic banking system. The effects of this presence on the domestic
financial system therefore depend primarily on the share but also on specific local conditions and
the type and characteristics of the respective banks. However, looking at things from the
perspective of financial stability and the necessity of increasing financial intermediation, excessive
dependence on external capital induced by foreign banks is an extreme vulnerability.
Solving this problem must be sought in improving the capacity of local capital to take over
the activities of foreign banks, in this way, Claessens and van Hren (2012) show that domestic
banks in emerging countries can take the opportunities of market redistribution, thus gaining a
stronger position on the market, this way, reducing the effects generated by reversal of financial
flows at the global level and the acceleration of disintermediation process. In the same sense, there
comes the proposal made by Danila (2011) to allot, in the case of Romania, local public and private
resources for the establishment of a systemically important bank through which the public policies
can be implemented so that they can achieve financial stability in the context of macro-prudential
approach.
Promoting some policies to support the development of local banks with domestic capital,
either it is the establishment of a new financial institution or recapitalization of some existing ones,
such as banks that are part of the Creditcoop network, it may help to increase financial
intermediation, especially in those areas of the country and those activities for which any other
credit institutions show no interest.
BIBLIOGRAPHY
1. Brei, M., Gadanecz, B. (2012), Public recapitalizations and bank risck: evidence from loan
spreads and leverag, BIS Working Papers No 383, Bank for International Settlements;
2. Basel Committe on Banking Supervision - BCBS (2010), Basel III: A global regulatory
framework for more resilient banks and banking systems, December 2010 (rev June 2011),
Bank for International Settlements, http://www.bis.org/publ/bcbs189.pdf;
3. Caruana, J. (2012), Financial and real sector interactions: enter the sovereign ex machina,
BIS Papers No 62, Proceedings of conference Financial sector regulation for growth,
equity and stability, Monetary and Economic Department, Bank for International
Settlements;
4. Cardarelli, R., Elekdag, S., Lall, S. (2009), Financial Stress, Downturns, and Recoveries,
IMF Working Paper No. 09100, International Monetary Fund.
5. Cetorelli, N., Goldberg, L. (2011), Global Banks and international Shock Transmission:
Evidence from the Crisis, IMF Economic Review, Vol. 59, Pp. 41-76, International
Monetary Fund;
6. Claessens, S., van Horen, N. (2012), Foreign Banks: Trends, Impact and Financial Stability,
IMF Working Paper No. 1210, International Monetary Fund;
7. Cull, R., Peria, M. (2011), Foreign Bank Participation n Developing Countries: What do
We Know about the Drivers and Consequences of this Phenomenon, forthcoming n Gerard
Caprio (Ed.): Encyclopedia of Financial Globalization, Elsevier, Amsterdam;
8. Dnil, N. (2011), Poate contribui la stabilitatea financiar o banc de importan sistemic
avnd capital autohton?, Banca Naional a Romniei, http://www.bnr.ro/Prezentari-si-
interviuri--1332.aspx;
9. Dnil, N. (2013), Noul model de business al bncilor comerciale i provocrile lui, Banca
Naional a Romniei; http://www.bnr.ro/Prezentari-si-interviuri--1332.aspx;
252
10. Drehmann, M., Borio, C., Tsatsaronis, K. (2011), Anchoring countercyclical capital buffers:
the role of credit aggregates, BIS Working Papers No 355, Bank for International
Settlements.
11. Lane, P.R. (2012), Financial Globalisation and the Crisis, BIS Working Papers No. 397,
Bank for International Settlements ;
12. McCauley, R.N. (2012), Risk-on/risk-off, capital flows, leverage and safe asset, BIS
Working Papers No. 382, Bank for International Settlements;
13. Nier, E., Yang, J., Yorulmazer, T, Alentorn, A. (2008), Network models and financial
stability, Working Papers No. 346, Bank of England.
253
SECTION 4
STATISTICS, ECONOMIC INFORMATICS

AND MATHEMATICS
254
TERTIARY EDUCATION: WHERE TO?

AN ANALYSIS AT THE REGIONAL LEVEL IN ROMANIA
Professor PhD Marian ZAHARIA
marianzaharia53@gmail.com

Lecturer PhD Aniela BLCESCU
Constantin Brancusi University of Targu Jiu, Romania
anielabalacescu@yahoo.com

Lecturer PhD Adrian NEDELCU
nedelcuadrian@yahoo.com
Abstract:
Education, alongside of employment, research and innovation, climate change and energy, and combating
poverty are the fundamental directions of action within the framework of the Europe 2020 strategy. Though still before
1990, Romania has granted very high attention to this area, unfortunately, next years have marked a series of
regressions which led to alarming increases in dropout rates. In 2002, the rate of persons who leave early systems of
education and vocational training between the ages of 18 and 24 recorded in 2002 a level of 23%. On the other hand,
the economic crisis has had a strong impact on this indicator. If in the period 2003-2008 it had fallen to 15.9%, in 2013
was 17.3%, the 2020 target is 11.3%. Based on these observations, the paper analyzes the evolution of tertiary
education in Romania, at the regional level in the period 2003-2013 and the ways that it is influenced by the evolution
of gross domestic product in developing regions in Romania.
Key words: dropout, econometric model, Romania, tertiary education.
JEL classification: C320, I250, I290, R110
1. INTRODUCTION
Until 2013, according to the International Standard Classification of Education (ISCED 97),
tertiary education was by level 5, and access to it was a condition of completion of upper-secondary
education. Regarding the structure of tertiary education, there were two categories: short cycle (the
duration of studies was 2-3 years and at the end of study finalized with the graduation diploma) and
long-cycle (the duration of studies was 4-6 years and at the end of study finalized with the
Bachelor's degree).
After 2013, according to the International Standard Classification of Education (ISCED
2011) tertiary education contents and academic education license with durations of studies by 3-4
years (level 6), academic education license with durations of studies by 5-6 years (level 7) and
higher education with doctoral studies and postdoctoral (level 8). Although in UE28 is acting
towards convergence in all fields, in education, in Romania still exists some particularities
(Enchescu and Zaharia, 2013) also related to the development and implementation of ICT in
education (Enchescu, 2014) and other sectors (Zaharia et al., 2010)
In the Europe 2020 Strategy, the target for tertiary graduation rates is 40%. For many
European countries, included Romania this target is very difficult to achieve. The tertiary
graduation rate has to be increased by more than 20% by 2020, which means more than doubling
the number of tertiary graduates in just one decade. (Roth and Thum, 2010).
Low graduation rate of tertiary education and dropout produce serious consequences, easy to
predict, such as: unemployment, poverty, low quality of life.
255
Dropout is determined by a variety of factors and it should be analyzed by two points of

view, firstly from the individual perspective of dropping out (such as motivation, etc.) and secondly
from the institutional perspective (Rumberger, 2001).
Dropout from learning is not only (or perhaps mainly) the result of academic weakness.
Unforeseen financial difficulties may play a role in many cases, particularly when brought on by
such factors as tuition fee increases or a downturn in the economy (with less student employment
opportunities). In such circumstances, the availability of student loans (for tuition fees or for living
expenses, as appropriate) may be important in mitigating potential student dropout. (Ziderman,
2013).
Another aspect to be considered in analysis of tertiary education is the migration for
education. Within the last years, an ever higher number of youngsters started migrating at least
temporarily to finish their studies. These international students are not always considered
migrants, in the formal sense of the word, but they do have a significant social and economic
impact, not only in the countries they leave behind, but also in the ones where they study. In many
cases, this migration for education is also a prelude for longer trips abroad or even permanent
emigration. (Pociovlteanu, 2012). Half of all incoming students from inside the European Higher
Education Area choose United Kingdom, Germany, France and Austria as their study destination.
(Nicolescu, 2014)
In elaborating this study, the research method used was the quantitative method, based on
linear multi-factor econometric model. (Zaharia and Gogonea, 2008).
Econometric analysis aims to identify a functional relation between percentage of total
population for age 18 to 24 years which early leavers from education and training, percentage of
population aged 25-64 with tertiary education and GDP per capita, at regional level in Romania.
The main problems pursued in analysis are: estimation of parameters of the model, the
quality of the estimate, the verification of the hypothesis, quality of prediction, the choice of the
best model and parametric and nonparametric correlations. In the analysis, as IT support, were used
SPSS and Excel (Oprea and Zaharia, 2011) and were used the official data series provided online by
the Eurostat on the above-mentioned indicators, for the period from 20032013, and for the
following economic development regions of Romania: North West, the Central Region, North-East,
South-East, South-Muntenia, Bucharest-Ilfov, South-West, West.
The Evolution of Territorial Distribution on the Population with Tertiary Education
In the period 2003-2013, the percentage of population with tertiary education in the total
population aged 25-64 years have been upward trends, both in Romania and in the four Macro-
regions. Average annual increases have ranged from 0.49 percentage points in Macro 2 and 0.76
percentage points in Macro 3, average annual growth in Romania was 0.61 percentage points (Fig.
1).
In the same period, at the level of EU-28, the average annual growth rate was 0.77
percentage points, with 0.16 percentage points more than in Romania. These evolutions have made
that the gap between Romania and EU-28 in this area to grow up from 11.2 percentage points in
2003, to 12.8 percentage points in 2013. It is also pointed out that in none of macro regions haven't
recorded growth which leading to convergence towards the EU average.
Regarding the evolution of the gender of the population with tertiary education, in the period
under review recorded some differences.
The share of population with tertiary education, the male population, increased by an annual
average values between 0.37 percentage points in Macro 2 and 0.57 percentage points in Macro 3.
With the exception of Macro 2, both in the other macroregions and in Romania the gap average
from UE28 has continued to increase. Noting that, in 2009, with the exception of Macro 4, there has
been a stagnation and even regression (Macro 1) of share of male population with tertiary
education. This is a consequence of the outbreak of the economic crisis which has led to
unemployment and reducing the incomes of households. Also, the percentage of the female
population with tertiary education in the total female population aged 25-64 years has registered
256
increases. Their annual average values have evolved between 0.60 percentage points in Macro 2
and 0.96 percentage points in Macro 3.
30%
25%
20%
15%
10%
5%
%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Macro 1 Macro 2 Macro 3 Macro 4 EU28 Romania
Figure 1 - Population aged 25-64 with tertiary education attainment at Macro level
Source: own construction based on Eurostat data series: http://ec.europa.eu/eurostat/data/database, Population
aged 25-64 with tertiary education attainment by sex and NUTS 2 regions [edat_lfse_11], accessed on 15.02.2015
Comparing the annual average increases of persons with tertiary education in the male
population, respectively the female population, results that increases recorded by the share of
tertiary education in the female population is higher than those recorded in the case of the male
population. If until 2008, the share of male population with tertiary education was higher than that
of the female population, starting 2009 the places are change Thus, at the level of Romania in 2003,
10.3% of the male population aged 25-64 years have tertiary education, while the female population
share was 9.1%, in 2013 the share of female population with tertiary education reaches 16.4%, and
the share of the male population reaches only 14.9%.
In Romania, this change of places occurred since 2009 and it could be a consequence of the
decline in the standard of living due to the breakout of the economic crisis. But on the other hand,
considering the fact that this phenomenon has been posted at EU-28 level since 2006 and continues
to increase (in EU-28, the difference between the share of the female population with tertiary
education and the share of male population increasing from 0.1 percentage points in 2006 to 2.9
percentage points in 2013), this phenomenon is also the consequence of increasing the role of the
female population in the EU countries.
In the period 2003-2013, the evolution of population aged 25-64 with tertiary education
attainment at development region levels recorded both similarities and differences. Of course, the
largest share of the population aged 25-64 with tertiary education was recorded throughout the
period, in Bucharest-Ilfov region where their share has increased from 22.6% in 2003 to 33.3% in
2013, the biggest increase recorded by 2011, with 2.8 percentage points from the previous year.
Also, in 2008 the share of population aged 25-64 with tertiary education exceeds the average
value of the EU-28 with 4.7 percentage points, and with 16.5 percentage points, the value of this
indicator registered in Romania. After 2011, the intensity of increase has decreased so that in 2013,
the share of population aged 25-64 with tertiary education in Bucharest-Ilfov region was with 4.8
percentage points over the average EU-28 and with 17.6 percentage points above the average
recorded in the country.
In the others seven development regions of Romania (Fig. 2), evolutions have been more
modest. The values recorded in these were far below the average of both EU-28 as well as below
257
the average recorded in Romania. So in 2013, the biggest gap was recorded in the regions North-
East and South-Muntenia (-13.6 percentage points compared to the average registered in EU-28 and
-2.4 percentage points compared to the average registered in Romania), and in 2013, the last place
was occupied by South-Muntenia region (-16.6 percentage points compared to the average
registered in EU-28 and -3.8 percentage points compared with the average registered in Romania).
16% North-West
15%
Center
14%
13% North-East
12%
South-East
11%
10% South -
9% Muntenia
South-West
8%
Oltenia
7% West
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Figure 2 - Population aged 25-64 with tertiary education attainment at development

region levels without Bucharest-Ilfov region
Source: own construction based on Eurostat data series: http://ec.europa.eu/eurostat/data/database, Population
aged 25-64 with tertiary education attainment by sex and NUTS 2 regions [edat_lfse_11], accessed on 15.02.2015
Economic evolutions from the period 2003-2013 have influenced the evolutions of share
population aged 25-64 with tertiary education in the seven regions causing periods of convergence
and periods of divergence. Thus, if in 2003 differences between the highest and the lowest share
was 2.5 percentage points, in 2006 this difference drops to 2.1 percentage points, and in 2009 to
5.2 percentage points, the highest value recorded in the West Region by 14.3% , and the lowest in
South-Muntenia region by 9.1% . In 2013, the gap was reduced to 2.8 percentage points, the biggest
values registering in the South-West Oltenia and Center regions (14.7%), and lowest in South-
Muntenia region 9.1% (11.9 percent).
Analyzing the evolutions of the shares population aged 25-64 with tertiary education it can
observed a grouping of the seven regions into two groups. The first group includes the North-West,
Center, South-West Oltenia and West regions, with the values of the shares of the population aged
25-64 with tertiary education ranging from 14.3% to 14.7%. The second group includes the
Moldova and Eastern of Muntenia regions (North-East, South-East and South-Muntenia) with the
values of the shares of the population aged 25-64 with tertiary education between 11.9% and
12.5%.
Regarding the shares of male population and female population with tertiary education
regions by the regions, in generally remains the trend highlighted above regarding gap of share of
male population with education tertiary by the female population with tertiary education. Exception
makes the West region where, throughout the period under review, the share of male population
with tertiary education to exceed the value recorded by the female population. Thus, while in EU-
28, at the level of Romania and in all other regions the differences between shares of male
population and female population with tertiary education were negative; in the West region the
258
difference was by 2 percentage points (15.5% for the male population and 13.5% of the female
population).
2. EVOLUTIONS OF DROPOUT RATE
Percentage of population from 18 to 24 years which early leavers from education and
training to the total population in the period 2003-2008 had a downward trend, approaching the
average of EU-28 (Fig. 3). If in 2003 in Romania, the percentage population from 18 to 24 years
which early leavers from education and training was 22.5%, with 6.1 percentage points, in 2008 it
reduced to 15.9%, with 1.2 percentage points than EU-28 average.
30% EU28
Romania
25% North-West
Center
20%
North-East
15% South-East
South -
10% Muntenia
Bucuresti -
Ilfov
South-West
5% Oltenia
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 West
Figure 3 Evolution of percentage of total population from 18 to 24 years which early

leavers from education and training by NUTS 2 regions.
Source: own construction based on Eurostat data series: http://ec.europa.eu/eurostat/data/database, Early leavers
from education and training by sex and NUTS 2 regions [edat_lfse_16], accessed on 27.02.2015
The most significant decreases of percentage of total population from 18 to 24 years which
early leavers from education and training in the period 2003 - 2008, over the average decrease at
Romania level, were registered in the regions of North-West (from 23.3% to 15.9%), the West
(from 22.4% to 12.6%), the North-East (from 28.0% to 18.4%) and Center (from 21.1% to 13.6 %).
However, in 2008, in four of the eight regions of Romania the percentage of total population from
18 to 24 years which early leavers from education and training, was over EU-28 average with the
values between 5.8 percentage points in South-Muntenia region and 1.0 percentage points in South-
West Oltenia.
Unfortunately, in the period 2008-2013, in most regions appear negative phenomena which
lead either to the decrease of the rate reduction the percentage of total population from 18 to 24
years which early leavers from education and training, either its increases. In 2013 compared to
2008, in EU-28 the percentage of the total population from 18 to 24 years which early leavers from
education and training, decreased by 2.8 percentage points. Compared to this evolution, with the
exception of the Bucharest-Ilfov region where the decreases was 3.3 percentage points, in all other
seven regions have registered unfavorable evolutions in comparison with the EU average. The most
unfavorable evolutions were registered in the Center, North-East and North-West regions, where in
2013 the percentage of the total population from 18 to 24 years which early leavers from education
and training, reaching 17.9%, 22.5% and respectively 15.9%. On the other hand, although in the
259
South-East region the percentage of total population from 18 to 24 years which early leavers from
education and training, decreases with 1.0 points, this was 18.2 percent, over average of EU-28
(12.0%) and over average of Romania (17.3).
The evolution of the percentage of total population by gender from 18 to 24 years which
early leavers from education and training, record some differences. In comparison with the values
recorded for the total population aged 18-24 years, in 2008 the percentage of male population which
early leavers from education and training, was under the average EU-28 in five regions (North-West
Center Bucharest-Ilfov South-Muntenia West, and West), while the percentage of female
population which early leavers from education and training, was below the average EU-28 in only
four regions (North-West, Center, Bucharest-Ilfov and West). Comparing the percentages of male
and female populations of which early leavers from education and training, at level of EU-28, the
corresponding percentages of male population are higher than those recorded by the female
population.
In Romania, except Bucharest-Ilfov region where recorded an evolution similar to the
Europe, in the other regions differences are both positive and negative, being determined primarily
by characteristics of economic evolutions in each region. A special situation is recorded in South-
West Oltenia region where the whole period under review, the percentages of female populations
which early leavers from education and training, is significantly higher than the corresponding male
population. Thus, in 2003 the percentages of female populations which early leavers from education
and training was 21.2%, compared with 13.8% for the male population, values recorded in 2008
was 18.8% respectively 12.6%, and in 2013 the percentages of female populations which early
leavers from education and training was 16.0% compared with 13.9% for the male population.
3. CORRELATIONS AND IMPLICATIONS
The percentage of total population from 18 to 24 years which early leavers from education
and training is an important indicator in evaluating the place occupied by Romania between
countries of EU-28. Till now, values recorded are far from the 2020 target (11.3%).
Starting from the above observations and conclusions and as the evolution of GDP per
capita in the period 2003-2011 were tested two hypotheses: on the one hand the existence of
correlations between percentage of total population from 18 to 24 years which early leavers from
education and training, percentage of population aged 25-64 with tertiary education and GDP per
capita, on the other hand the existence of a functional relation between these. The significance level
was 0.05 , corresponding to a probability of 95%. For testing the existence of correlations
between the three variables, the hypotheses were:
H0: No significant dependence between parameter values

H1: Between percentage of total population from 18 to 24 years which early leavers from
education and training, percentage of population aged 25-64 with tertiary education and GDP per
capita there are significant correlations.
Testing the null hypothesis (H0) was carried out from three rows of 72 registered values of
the indicators analyzed in period 2003-2011 in the eight development regions. The results are
presented in table 1. Both values corresponding nonparametric correlations (Kendall and Spearman)
and the Pearson correlations indicate the inverse strong relations between percentages of total
population from 18 to 24 years which early leavers from education and training (E_L), percentage
of population aged 25-64 with tertiary education (T_E) and GDP per capita.
Taking into account the fact that all values of bilateral test (SIG. 2-tailed) are lower than the
significance threshold result that the null hypothesis (H0) is rejected and accepted alternative
hypothesis (H1): between the percentage of total population from 18 to 24 years which early leavers
from education and training (E_L), percentage of population aged 25-64 with tertiary education
(T_E) and GDP per capita there are significant correlations.
260
Table 1 Correlation between variables E_L, T_E and GDP

Pearson Kendall Spearman
E_L T_E GDP E_L T_E GDP E_L T_E GDP
Value 1 1 1
E_L
Sig.(2-tailed) 0.000 0.00 0.00
Value -0.714 1 -0.609 1 -0.779 1
T_E
Sig.(2-tailed) 0.00 0.00 0.00 0.00 0.00 0.00
Value -0.734 -0.892 1 -0.619 0.621 1 -0.789 -0.796 1
GDP
Sig.(2-tailed) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Source: own assessments using SPSS
For testing the existence of a functional relation between the percentage of total population
from 18 to 24 years which early leavers from education and training (E_L) and percentage of
population aged 25-64 with tertiary education (T_E) and GDP there is a significant functional
relation has been chosen the model:
E _ L a 0 a1 T _ E a 2 GDP
(1)
The hypotheses of the test were:
H0: There arent significant functional dependencies between the parameter values E_L,
T_E and GDP.
H1: Between the parameter values E_L, T_E and GDP there is a significant functional
dependence characterized by the model (1)
Taking into account the fact that the Bucharest-Ilfov region presents a series of
particularities, statistical significance testing of the model (1), was carried out in two variants. In the
first variant (Variant A) have been taken into account the values of the three parameters recorded
during the period 2003-2011 in all 8 regions. In the second variant (Variant B) have been removed
parameter values, E_L T_E and GDP, values recorded in Bucharest-Ilfov region resulting in three
data series of 63 submissions. The results are presented in Table 2.
Taking into account the Significance values F (6.64E-13 variant A and 6.53E-14 for variant
B) much lower than the significance threshold chosen ( 0.05 ), result that the null hypothesis (H0)
is rejected and accepted alternative hypothesis (H1): between E_L T_E values, and GDP there is a
significant functional dependence described by model (1).
Table 2 Comparison between the performances of A and B variants of the model (1)
Variant A: 8 regions
Multiple R R Square Std.Err Observations F Significance F
0.74590 0.55637 3.13867 72 43.26873 6.64E-13
Coefficients t Stat P-value Lower 95% Upper 95%
a0 24.70210 26.69542 4.28E-38 22.85612 26.54809
a1 -0.23464 -1.63452 0.106704 -0.52104 0.051742
a2 -0.00073 -2.68099 0.009175 -0.00127 -0.00019
Variant B: 7 regions (without Bucuresti-Ilfov region)
Multiple R R Square Std.Err Observations F Significance F
0.79780 0.63650 2.53119 63 52.53113 6.53E-14
Coefficients t Stat P-value Lower 95% Upper 95%
a0 33.75014 18.15863 4.65E-26 30.03233 37.46795
261
a1 -0.84116 -3.46870 0.00097 -1.32623 -0.35609

a2 -0.00141 -4.21800 0.00008 -0.00208 -0.00074
Source: own assessments using SPSS and Excel (Data Analysis)
Taking into account the values of Multiple R and Std.Err, result that Variant B offers a
better approximation of dependence of E_L and factorial variables T_E and GDP. This conclusion
is underlined by the fact that, in the case of the variant A, the coefficient a1 corresponding variable
influence T_E (percentage of population aged 25-64 with tertiary education) on E_L (percentage of
total population from 18 to 24 years which early leavers from education and training), for the
selected significance threshold, is not statistically significant (P_value=0.106704>0.05) and, in
consequence, can not be taken into account.
On the other hand, taking into account the above observations, we believe that the model
Variant B is the one that can be taken into account to describe the functional relation between
percentage of total population from 18 to 24 years which early leavers from education and training
and the factorial variable percentage of population aged 25-64 with tertiary education and GDP.
In these circumstances, with a probability of 95%, can be considered that an increase of 1
percentage point of percentage of population aged 25-64, with tertiary education, will cause a
decrease of percentage of total population from 18 to 24 years, which early leavers from education
and training, with a value between 0.35 and 1.32 percentage points. Also, GDP per capita growth
with 1000 euro can lead to reduced percentage of total population from 18 to 24 years which early
leavers from education and training with values between 0.74 and 2.08 percentage points.
4. CONCLUSIONS
Economic evolutions in the period 2003-2013 influenced the evolutions of shares of

population aged 25-64 with tertiary education in the seven regions causing periods of convergence
and divergence of these. In seven of the eight development regions of Romania, the ratio between
the male population and female population with tertiary education is the same as in the EU: the
share of female population with tertiary education in the total female population aged 25-64 years is
higher than share of male population with tertiary education in the total male population aged 25-64
years. The exception is the West development region where, in the entire analyzed period the share
of male population with tertiary education is higher than that of the female population.
In the period before the economic crisis, the share of the population from 18 to 24 years
which early leavers from education and training in the period 2003-2008 had a downward trend
closer to the average for the UE28. Unfortunately, the economic crisis has not only stopped the
process, but reversed its trend of development. Thus, while in 2013, compared to 2008, in the
UE28, the share of total Population from 18 to 24 years which early leavers from education and
training, decreased by 2.8 percentage points, with the exception of the Bucharest-Ilfov region, all
the other seven development regions were recorded unfavorable developments. The most
unfavorable developments were recorded in the regions Center, North-East and North-West. So far,
the values recorded by the share of the population from 18 to 24 years which early leavers from
education and training are relatively far from the 2020 target, which for Romania is 11.3%.
The model estimated in this study shows the influence of the percentage of total population
from 18 to 24 years which early leavers from education and training on the factorial variable
percentage of population aged 25-64 with tertiary education and the influence of GDP per capita on
percentage of total population from 18 to 24 years which early leavers from education and training.
During the period analyzed, the functional connection between them is significant. Under these
conditions, with a probability of 95% can be considered both increasing share of population aged
25-64 with tertiary education, as well as, the GDP per capita led to the reduce of share of total
population from 18 to 24 years which early leavers from education and training, with significant
value. Correlated increase in the level of education and in the standard of living of the population in
all development regions of Romania, especially in disadvantaged areas constitute important strands.
262
Also, proper sizing of funds for education, and more attention of the legislative and executive
powers for education are imperative
The results obtained can be used as decision support for decision-makers.
The analysis can be improved by taking into account other influencing factors such as
financing of education, small values of this are often among the causes of dropout. This is a future
research direction for the authors.
BIBLIOGRAPHY
1. Enchescu, D. (2014). Developing ITC domain premise of sustainable development in

Romania. Annals of the Constantin Brncui University of Trgu Jiu, Economy Series,
Special Issue/2014- Information society and sustainable development, 230-235
2. Enchescu, D.& Zaharia, M. (2013). Considerations on the evolution of attention paid to
education in Romania compared to EU, in the 1998-2010 period, IEEE-MIPRO 36th
International Convention, May 20-24, 2013, Opatija, Croatia, 673-678.
3. http://ec.europa.eu/europe2020/index_ro.htm
4. http://ec.europa.eu/eurostat/data/database, Early leavers from education and training by sex and
NUTS 2 regions [edat_lfse_16], accessed on 27.02.2015
5. http://ec.europa.eu/eurostat/data/database, Gross domestic product (GDP) at current market
prices by NUTS 2 regions [nama_r_e2gdp], accessed on 02.03.2015
6. http://ec.europa.eu/eurostat/data/database, Population aged 25-64 with tertiary education
attainment by sex and NUTS 2 regions [edat_lfse_11], accessed on 15.02.2015
7. http://www.uis.unesco.org/Education/Pages/international-standard-classification-of-
education.aspx
8. Nicolescu, L. (2014) Convergence and internationalization of higher education in Europe: the
case of Romania, chapter 12 in Handbook of research on trends in european higher education
convergence, IGI Global
9. Oprea, C. & Zaharia, M. (2011). Elemente de analiza datelor i modelare utiliznd Excel.
Editura Universitar, Bucureti, Romnia.
10. Pociovliteanu, D. M. (2012). Migration for education nowadays, in Annals of the Constantin
Brncui University of Trgu Jiu, Economy Series, Issue 1/2012,
11. Roth, F. Thum, A.E., (2010), the key role of education. 2020 EU Strategy, Centre for European
Policy Studies.
12. Rumberger, R. (2001). Why students drop out of school and what can be done. Conference
proceedings Dropouts in America: How Severe is the Problem? What Do We Know about
Intervention and Prevention? Harvard University, January 13/2001.
13. Zaharia, M. & Gogonea, R.M. (2008). Econometrie. Elemente fundamentale, Editura
Universitar, Bucureti.
14. Zaharia, M., Gogonea R.M., Busuioc M.F. & Oprea, C. (2010). The place of metalurgical high
education in higher tehnical and industrial education in Romania, in Metalurgia International,
vol XV, Special Issue no. 8, 187-192, 1582-2214.
15. Ziderman, A. (2013). Increasing access to higher education through student loans. CESifo DICE
REPORT Journal for Institutional Comparisons, 11(2), 11-18.
263
MASTER STUDENTS PERCEPTION ON THE CORRELATION

BETWEEN ACADEMIC CURRICULA AND LABOR MARKET
REQUIREMENTS - A COMPARATIVE ANALYSIS OF MASTER
PROGRAMS IN ECONOMICS FROM BUCHAREST AND SIBIU
Professor PhD Erika MARIN

Bucharest University of Economic Studies, Department of Statistics and Econometrics, Romania
erika_tusa@yahoo.com

Alexandra HOROBET
alexandra.horobet@gmail.com

Lucian BELASCU
Lucian Blaga University of Sibiu, Romania
lucian_belascu@yahoo.com

Abstract:
The correlation between academic curricula and labor market requirements is a key issue of modern education
and a primary pillar of the Bologna process. Romanian universities have adjusted in the last decade or so their
curricula and academic offer to the labor market needs. Recently, the field of Project Management has gained more
prominence in the Romanian labor market, which makes one enquire about the academic preparation that Master
students get in this area of study.
Our research aims at shedding light on the way competences, abilities and academic curricula in Economics
specializations are related to the Romanian labor market needs, with a focus in the field of Project Management. We
are conducting a survey among Master students of two renowned Romanian universities - Bucharest University of
Economic Studies and Lucian Blaga University of Sibiu. A number of two samples of students will be selected to
conduct the survey, one for each university. The students and all enrolled in Master program with a specialization in
Economics.
Our study is useful for both academics and labor market, as interested bodies from both sides might learn
more about the perception of future graduates on the academic program they follow and the competences and abilities
they gain, on one hand, and on the labor market realities in terms of requirements for future employees, on the other
hand.
Key words: academic curricula, labor market, Master program
JEL classification: A23 C83 J21
1. INTRODUCTION
The Romanian business environment is facing a number of challenges that need to be

addressed by academic curricula in higher education institutions (Ilie, Horobet (2007): (i) an
increased maturity of companies, observable through the adoption of modern business techniques
and market approaches; (ii) the transformations due to the countrys EU membership, reflected in
an increased competition on the domestic market coming from foreign companies, besides the
competition between local companies; (iii) the high extent of business globalization, which forces
Romanian companies to compete not only at a national and European level, but at a global level. As
such, mastering modern management strategies should support Romanian companies efforts to
consolidate their competitive positions in the European and global business environment. But
learning these strategies cannot be done without the help of academia, by the means of knowledge,
competences and abilities gained during education years by the potential and future employees of
these companies.
Nevertheless, the effects of the global financial crisis on the Romanian educational system
are felt throughout and force it to change in order to better adapt to the requirements of the labor
264
market. As Serban-Oprescu et al. (2012) note, one of the problems faced by the Romanian higher
education system is the reduced rate of participation in training programs and professional
development courses for employees, including here master programs. This is the result of a low
level of adaptation of Romanian higher education curricula to the labor market requirements, in
terms of competencies obtained by graduates.
On the other hand, the quality of the education system in general, and a curricula
development adapted to labor market requirements, in particular, varied both conceptually as well
as how they are perceived by all the actors involved in the university labor market relationship.
Usually, the universities were compared to some ivory towers, defining themselves the
quality of the academic process and their own way of responding to the labor market requirements,
adapting only to those new societal requirements compatible to their own mission and vision
(Korka, 2009).
After signing in 1999 the Bologna Declaration, the EU countries started an educational
reform. The universities understood the importance of developing strategies to link all the external
factors impacting on the academic environment and to develop academic curricula dated to the
employers requirements. Lisbon 200 Strategy has a central element exactly the need to correlate
the academic supply to the labor market demand.
Implementing a strategic vision raises some challenges in a changing financial and
economic environment in general and labor market in particular especially in the last few years,
when the world economy was confronted to an economic and financial crises.
The changes in the required qualifications by the labor market are dictated by the labor
market restrictions or the market pressure (Crosier et al., 2007). The master graduates should
respond to the labor market requirements using the competences and abilities acquired during their
studies.
In the same vein, the universities should focus their attention both on the students needs as
well the employers need in order to harmonize the two sides of the labor market. On the other
hand, the students and graduates as well should participate actively to this process, mainly by
providing active feedback to universities on how well the academic curricula is fitting the labor
market requirements.
This paper aims exactly to offer an image of the master students perception regarding the
match between the design of their Master studies and the requirements of the labor market.
2. DATA AND METHODOLOGY
The data of this paper is collected from a survey on the students perception on the academic
program, the competences and abilities they gain as result of their master studies and how these are
currently helping or will help them to meet the labor market requirements.
The survey was conducted in March 2015 for Master students with a specialization in
Economics from two universities: Bucharest University of Economic Studies (BUES), the
International Business Faculty and the Lucian Blaga University of Sibiu (LBUS).
Two cohorts of students first and second year students received the questionnaire. The
questionnaire was distributed to all students present in the class in the allocated timeframe for data
collecting in each of the two universities.
In total, there were 110 questionnaires received from students, of which 65 students (or
59%) are first year students and 45 students (or 41%) are second year students.
In terms of regional comparison, 44% of the questionnaires are from the Bucharest
University of Economic Studies and 56% from Lucian Blaga University of Sibiu.
Close-ended questions using ordinal scales as the answer options were used, in order to
measure the students preferences.
265
3. RESULTS
The students were asked to rate on a typical five-level Likert scale their satisfaction related
to the following aspects (on a balanced scale from 1 - very satisfied to 5 very dissatisfied):
1. Courses relevance and utility for the master programs specialization
2. Courses complementarities and links between them
3. Courses diversity
4. Competences acquired and valued on the labor market
5. Courses fitting to labor market requirements
The main descriptive measures resulting from the students responses are presented in Table
1, first for the total number of students, and then for each of the two universities.
The results show some similarities, on one hand, between the first three aspects analyzed,
and, on the other hand, the last two aspects.
All the averages for the five analyzed aspects are between 2 and 3 (with one exception - the
last criteria in the case of Bucharest University of Economic Studies) as the students perception is
on average, between somewhat satisfied and neutral.
Table no. 1 The main descriptive statistical indicator comparison of BUES, LBUS and
total sample
Fit to
Valued
Total Relevance Complementarity Diversity labor
competences
market
Average - TOTAL 2.34 2.35 2.49 2.95 2.94
BUES 2.29 2.40 2.50 2.98 3.02
LBUS 2.37 2.32 2.48 2.94 2.87
Median -TOTAL 2 2 2 3 3
BUES 2 2 2 3 3
LBUS 2 2 2 3 3
Mode - TOTAL 2 2 2 3 3
BUES 2 2 2 3 3
LBUS 2 2 2 3 3
Standard deviation -
0.78 0.82 0.91 0.85 0.99
TOTAL
BUES 0.77 0.98 0.90 0.90 1.02
LBUS 0.79 0.67 0.92 0.83 0.97
Coefficient of variation
33.4% 34.8% 36.4% 28.9% 33.7%
TOTAL
BUES 33.6% 41.1% 36.0% 30.1% 33.8%
LBUS 33.5% 28.9% 37.0% 28.2% 33.7%
In terms of the median and modal values, the values are identical in both universities: for the
first three criteria the median is equal to the mode and equal to 2, as the most of the master students
are satisfied with the courses relevance, complementarity and diversity.
The students are less satisfied with the Competences acquired and valued on the labor
market and the Courses fitting to labor market requirements. Most of the students have a neutral
perception of these aspects, but around one quarter of the students said that they are unsatisfied with
these two aspects.
A better image of the responses for these two aspects related to the labor market is presented
in Figure no. 1.
266
Figure no. 1. The comparative presentation of the students satisfaction regarding the
Competences acquired and valued on the labor market a) BUES; - b) LBUS
Source: Own survey data
The students satisfaction regarding the Courses fitting to labor market requirements is the
lowest one from all the five analyzed criteria.
Figure no.2. The comparative presentation of the students satisfaction regarding the
Courses fitting to labor market requirements a) BUES; - b) LBUS
Source: Own survey data
Under 30% of students have a positive perception of the correlation between the academic
curricula and the labor market requirements, most of the students appreciation being neutral (41%
from BUES students and 47% of LBUS students).
The graphical representation shows an important similarity of the master students responses
from the two universities from Bucharest and Sibiu that are summarized in similar values from the
descriptive statistical indicators presented in Table 1.
267
Testing the difference between the means in the two universities
As noted earlier, at a first glance, the results presented seem very similar. In order to
conclude on the significance of the difference between means for the sample data collected in the
two universities, the statistical Student test (t test) is performed.
The null hypothesis used in the t-Test is that the means of two populations are equal.(H0:
1-2 = 0) and the alternative hypothesis is that the means of two populations are different (H1:
1 - 2 0). The statistical results of the two tailed t test used for comparing the differences
between means are presented in Table no 2.
Table no. 2 The statistical results of t test for comparing the differences between means
Criteria P(T<=t) two-tail t Critical two-tail t Stat

Relevance 0.5985 1.9833 -0.5281
Complementarity 0.6596 1.9905 0.4422
Diversity 0.9265 1.9835 0.0924
Valued competences 0.7626 2.0369 -0.3047
Fit to labor market 0.4364 1.9845 0.7815
The values of Critical two-tail t Stat and p value give us overwhelming statistical evidence
not to reject the null hypothesis and infer that the observed difference between the means in
Bucharest and Sibiu is not convincing enough to say that the average is significantly different. In
other words, there is no statistically significant difference between the students perception from the
two universities.
4. DISCUSSIONS AND CONCLUSIONS
The goal of this survey is to collect information on master students perception regarding the
link between academic curricula and labor market requirements.
One of the most interesting result is the similarity of the responses among the two
universities, with less than 5% difference between the averages calculated for each variables.
Statistical testing showed there is no statistically significant difference between the students
perception from the two universities.
The analysis was performed on first and second year students of Master programs with a
specialization in Economics from two different universities in Bucharest and Sibiu show a reserved
level of satisfaction regarding the curricula in general and its perceived fitting to labor market
requirements.
A concerning fact is the perception of students related to the Competences acquired and
valued on the labor market and Courses fitting to labor market requirements, were the most
common answer regarding their satisfaction was that they are neither satisfied or dissatisfied.
In the case of their Courses fitting to labor market requirements, only one third of the total
number of students perceived as satisfying of very satisfying their acquired competences during the
master classes in relationship to the labor market requirements. There are as well some minor
territorial differences, the students from ASE Bucharest being less satisfied compared to ULB
Sibiu. Nevertheless, the difference is not statistically significant.
On the other hand, around two thirds of the students appreciated the Courses relevance and
utility for the master programs specialization (more precisely 65% of ASE students and 71% of
ULBS students) and Courses complementarities and links between them (58% of ASE students
and 69% of ULBS students).
268
In conclusion, the study shows a moderate level of satisfaction of master students regarding
the programs design with respect to the labor market requirements. Their opinion is supported as
well by their own experience, as 62% of the respondents are currently employed.
The appreciation of the Courses relevance and utility for the master program leads though
to a double folded conclusion: one hand, there is an obvious necessity to improve university
curricula to keep up to the ongoing changes of the labor market.
On the other hand, there is a clear need to improving students career orientation after
graduating Bachelor studies in order to help them select the master program that suits the best their
career of choice.
Acknowledgement
This work was co-financed from the European Social Fund through Sectoral Operational Programme Human
Resources Development 2007-2013, project number POSDRU/156/1.2/G/141729 Innovative Higher Education in
Project Management using Modern Educational Techniques.
BIBLIOGRAPHY
1. Livia Ilie, Alexandra Horobe (2007), Educaia managerial postuniversitar : o necesitate

pentru un mediu de afaceri competitiv n Romnia, Revista de Management i Inginerie Economic,
vol.6, nr. 2A(23), pp. 135-142
2. David Crosier, Lewis Purser i Hanne Smidt (2007), Tendine V: Universiti configureaz
Spaiul European al nvmntului Superior. Raportul EUA, Brussels
3. Mihai Korka (2009), Educatia de calitate in invatamantul superior Quality education for
labor market, Editura Universitara, Bucharest
4. George-Laureniu erban-Oprescu, Alexandra Horobe, Anca-Teodora erban-Oprescu (2012) -
Assessment of the Romanian Tertiary Educational System in the Context of the Economic Crisis.
Lessons Learned and Lifelong Strategy Tools for Improvement, in Procedia - Social and Behavioral
Sciences, vol. 46 - 4th WORLD CONFERENCE ON EDUCATIONAL SCIENCES (WCES-2012)
02-05 February 2012 Barcelona, Spain, Glsn A. Baskan, Fezile Ozdamli, Sezer Kanbul and
Deniz zcan (editors), pp. 4575-4579
269
SECTION 5
LAW AND PUBLIC ADMINISTRATION
270
ETHICS IN PUBLIC ADMINISTRATION. CASE STUDY

ROMANIA
Lecturer Ph.D. Rzvan VIORESCU

razvanv@usv.ro

Lecturer Ph.D. Gabriela NEMOI
gabrielan@seap.usv.ro
Abstract:
Public services represent useful activities designated to meet a social need. The laws and regulations empower
the activities of public services, without indicating the motives for public services. The impact of government in day to
day life of citizens and communities is increasingly greater in terms of both public affairs management and budgetary
aspect. The power to spend the community resources and to influence the lives of others means at the same time a great
responsibility. That is the responsibility to act morally (with integrity) and ensure effective spending of resources. This
means not to corrupt and do not let yourself be bribed, but it also means openness to dialogue with stakeholders,
internal organizational climate of trust and cooperation, internal procedures to ensure ethical advise. In this sense, in
the last 20 years, the public sector has developed legal rules or internal policies, procedures and organizational tools
to ensure the integrity and responsible leadership. Public organizations have adopted and applied ethics codes,
procedures regarding conflicts of interest, whistleblowing, declaring gifts and other measures to prevent corruption.
Key words: ethics training for public officials, Code of conduct, Civil servants statute
JEL classification: K39, K10, K40
INTRODUCTION
Integrity in the public administration is an important condition for the effective functioning
of the state, for ensuring public trust in the government, and for creating conditions for sustainable
social and economic development. Ethics training for public officials is one of the instruments for
building integrity in state institutions and ensuring good quality public governance.
This study presents the findings of a project on ethics training for public officials
implemented by the Romanian Government.
According to OECD (1) , the ethics training is a useful tool for strengthening ethics and
preventing corruption in public administration if applied together with other tools as part of a
comprehensive anti-corruption and pro-integrity policy. Ethics training alone cannot produce
sustainable results, especially in countries with high levels of corruption. Ethics training produces
observable results only in the long-term.
The main aim of ethics trainings for public officials is to prevent corruption and to provide
good public service. Ethics training is provided to public officials in all countries examined by this
study, both in countries with high and low levels of corruption. While both groups of countries
confirmed that integrity in their public administration is a concern, the challenges they face are of
different scale. It appears that countries with lower levels of corruption and with better developed
public administration systems provide better ethics training for their public officials (2)
While public service users wish to circumvent the law, officials must apply the law precisely
and the discretionary power of public administration should not exceed the provision of laws the
public administration should chose the best alternative according to the given situation and
beneficiarys requirements.
271
Since in his official actions the civil servant expresses himself he/she must not forget that
he/she is in the service of citizens, public interest. As public officials are the bearers of government
discretion, and may often be corrupt or abusive by violating of the rights and interests of citizens, it
is necessary that the rules relating to professional conduct and moral public servant, the deontology,
to refer both to relations with superiors, with subordinates, the entire staff and the beneficiaries of
his work, with other legal entities, including other state institutions, in fact the whole society. The
field literature appealed to certain ambiguities in the public administration regarding the boundaries
between law and ethics, on one hand and ethics and corruption, on the other hand. Thus, some
authors consider necessary to study legal issues such as conflict of interest and to avoid attracting
liability under the law, while others bring in question the ethics of decisions made by public
chooses that are not covered by legal provisions. Some ethical perceptions are implicit, some are
explicit, some are contradictory. However, these principles are based on ethics seen as a virtue and
responsibility.
VALUES, ETHICS AND CONDUCT IN PUBLIC ORGANISATION
Although we can notice the lack of consensus concerning the real meaning of concepts
values, ethics and conduct - often used interchangeably we consider that some clarifications are
needed here, which can be applied in the context of public service ethics: Values: principles or
standards that guide independent concerning that is good and correct; Ethics: rules transposing the
ideals and ethos in typical daily activities; Conduct: actions and actual behaviour of civil servants.
As the ethos becomes conduct, a transfer from abstract to concrete is in place. The relations
between these concepts are still complex and overlapping.
PRINCIPLES CONCERNING ETHICS IN PUBLIC ADMINISTRATION (Victor
Alistar,2010): Ethical standards must be clear; Ethical standards should be reflected in the
legislative framework; The civil servants must receive mentoring concerning the application of
ethical standards; The civil servants should know their obligations and rights; The political class
must affirm its support for ethical values and support implementation of ethical values; Decision
making process must be transparent; A clear set of rules for interaction between public and private
sector; Managers need to promote and to behave ethically; Public policies, procedures and
practices must be created according to ethical values; Working conditions and the management of
human resources should be according to ethical values; Appropriate accountability mechanisms
must be implemented; There must be adequate procedures and mechanisms to punish
inappropriate behaviour.
CODE OF CONDUCT FOR CIVIL SERVANTS (4)
The rules of professional conduct provided by this code are mandatory for civil servants and
persons temporarily occupying a position in civil service, public authorities and institutions.
The objectives of this code of conduct aim at ensuring higher quality public services, good
governance in achieving the public interest as well as contribute to eliminating red tape and
corruption in government, by (5): regulating rules of professional conduct rules necessary for
appropriate social and professional relationships in order to create and to maintain at a high level
the prestige of civil service and civil servants; public information on professional conduct of civil
servants while to which he is entitled to expect from the civil servant exercising public positions;
creating a climate of trust and mutual respect between citizens and civil servants on one hand, and
between citizens and public authorities, on the other hand.
Most of the member states have defined their official ethics, i.e. official values and
standards of behaviour for the civil servants. (Androniceanu Armenia,2008) We find it useful to
make a distinction between a value declaration and a code of ethics. Value declarations are used to
announce the core values but they usually do not provide detailed rules on how to adopt these
values in practical situations. For example, value declarations generally state that transparency is a
core value, but value declaration does not provide guidelines on, for instance, how open civil
272
servants can be towards the public on matters that are still under preparation. These kinds of
guidelines or detailed standards of behaviour can be found from the code of conduct. A code of
conduct can be seen as an extended value declaration that transforms the values into practice. (7)
The member states have a number of laws that implicitly or explicitly define their official
public-service values and standards of conduct. A legal framework typically consists of the
following laws, acts and regulations: - constitutional provisions - penal code - public service law -
administrative procedure act - procurement law - laws on secrecy, free information and publicity of
information - ethics and anticorruption laws and instructions - conflict of interest provisions. (8)
In Romania, the code of ethics for the civil servants has been approved by the National
Agency for Civil Servants, but the effect is minimal. ( Armenia Androniceanu, 2007) The public
managers and the civil servants are much more motivated to follow the legal framework and the job
description than to make an effort for integrate the ethical values in their daily activities.
Romania is establishing a network of ethic counsellors that is coordinated by National
Agency of Civil Servants.
PRINCIPLES WHICH SHOULD GOVERN THE CONDUCT OF CIVIL SERVANTS
( Danielle Bossaert and Christoph Demmke,2004)
According to Art. 3 of the Act, the principles governing the professional conduct of civil
servants are as follow: supremacy of the Constitution and law the civil servants have a duty to
respect the Constitution and laws of the country; priority of public interest - the civil servants have
a duty to consider the public interest above personal interest only, in exercising of his public duties;
assuring equal treatment of citizens before public authorities and institutions - the civil servants
have the duty to apply the same legal status in identical or similar situations; professionalism - the
civil servants should to perform duties with responsibility, competence, efficiency, honesty and
conscientiousness; impartiality and independence - the civil servants should have an objective
attitude, neutral to any political interest, economic, religious or otherwise, in exercising public
positions; moral integrity the civil servants are forbidden to solicit or accept, directly or
indirectly, for themselves or others, any advantage or benefit in consideration of public office they
hold or to abuse in any way by this position; freedom of thought and expression the civil servants
may express and substantiate their views with respect for the rule of law and morality; honesty and
fairness - in exercising and carrying out public duties the civil servants must have good faith;
openness and transparency - the activities of civil servants can be monitored by citizens.
GENERAL RULES OF PROFESSIONAL CONDUCT OF CIVIL SERVANTS
ACOORDING TO ROMANIAN LEGISLATION ( Virginia Vedinas, 1998):
a) Providing a quality public service. Civil servants are required to ensure a quality public
service for the benefit of citizens, through active participation in decisions and their implementation
in practice, in order to achieve competencies of public institutions and authorities. The civil servant
should behave professionally and ensure, by law, the administrative transparency in order to gain
and maintain public confidence in the integrity, impartiality and effectiveness of public authorities
and institutions.
b) Loyalty to the Constitution and law. The civil servants are obliged, through their acts
and deeds, to respect the Constitution, laws of the country and work for the implementation of laws,
in accordance with their respective functions, in compliance with professional ethics. The civil
servants must comply with laws restricting the exercise of certain rights due to the nature of public
position.
c) Loyalty to the public authorities and institutions. The civil servants are obliged to defend
the prestige of public authority or institution and to refrain from any action which could prejudice
its image or legal interests. In this respect, civil servants are forbidden: to publicly express
appreciations inconsistent with reality in relation to the work of public authority or institution that
operates with its policies and strategies or with drafts of normative or individual acts; to make
273
unauthorised assessments about the ongoing litigation settlement in the public authority or
institution in which they operate as a party; to disclose non-public information in circumstances
other than those prescribed by law; to disclose the information to which they have access by their
public position, if that disclosure is likely to draw undue advantage or to damage the image of the
institution, or rights of civil servants and individuals or legal entities; to offer assistance and advice
to individuals or entities aimed to take legal actions against the state or public institution or
authority. Disclosure of information that is non-public or submitting documents containing such
information, at the request of representatives of other authorities or public institutions is permitted
only with the agreement of the public authority or institution. The provisions of the It is noted that
the Code of Conduct should not be interpreted as derogation from the legal obligation of civil
servants to provide public information of to those interested, according to the law.
d) Freedom of opinion. In performing official duties, the civil servants are obliged to
respect the dignity of public office, linking the freedom of dialogue with public authority or
institution in which they operate. In their work, public officials are obliged to respect freedom of
opinion and not be influenced by personal considerations or popularity. In expressing opinions,
public officials must have a conciliatory attitude and to avoid generating conflicts through the
exchange of views.
e) Public activity. The relations with media shall be provided by civil servants, appointed
for that purpose by the head of public authority or institution according to law. The civil servants
appointed to participate in activities or public debates must respect the mandate entrusted by the
chief representative of public authority or institution in which they operate.
f) Political activity. In exercising of their position, the civil servants are prohibited: to
participate in fundraising for political parties activity; to provide logistical support the candidates
for high public office; to collaborate outside employment relationships with natural or legal
persons which make donations or sponsorship to political parties; to show, inside the authorities or
public institutions, signs or objects with initials or name of political parties or their candidates.
g) Use of own image. In their public positions, the civil servants are forbidden to use their
name or image in their advertising activities to promote business or for electoral purposes.
h) Acting in public relations. In relationships with staff of the public authority or
institution, in relationships with individuals or legal persons, the civil servants are obliged to behave
based on respect, good faith, fairness and kindness. Civil servants have an obligation not to
prejudice the honour, reputation and dignity of persons in public institution or the authority by: the
use of offensive expressions; disclosure of certain aspects of privacy; formulation of slanderous
complaints or accusations. The civil servants should adopt an impartial and justified attitude for
clear and effective problem solving of the citizens. Civil servants are obliged to respect the
principle of equality of citizens before the law and government by: promoting similar or identical
solutions reported to the same class of facts; eliminating all forms of discrimination based on
nationality issues, religious and political beliefs, wealth, health, age, gender or other issues.
i) The conduct in international relations. Civil servants representing public authority or
institution within international organizations, education institutions, conferences, seminars and
other activities have an international obligation to promote a positive image of the country and
public authority or institution they represent. When dealing with representatives of other states, civil
servants are forbidden to express personal opinions on matters of national or international disputes.
In external visits the civil servants are obliged to take an appropriate course of protocol rules and
they are forbidden to infringe laws and customs of the host country.
j) The prohibition on accepting gifts, services and benefits. Civil servants should not
require or accept gifts, services, favours, invitations or any other advantages, which are designed to
them, to their family, parents, friends or people with whom they have business or political relations,
that can affect impartiality in the exercise of public functions or can represent a reward in relation to
these functions.
k) Participation in decision making. In making decisions, the civil servants are obliged to
act according to legal provisions and to exercise their capacity impartially. Civil servants are
274
forbidden to promise a decision by the public authority or institution, by other public officials and
the performance of the duties in a privileged way.
l) Objectivity in evaluation. In carrying out specific public management functions, civil
servants are required to ensure equal opportunities and equal treatment with regard to career
development for civil servants under their jurisdiction. Management civil servants are obliged to
consider and apply objective criteria for assessment of professional competence for staff, when
proposing or approving promotions, transfers, appointment or termination of office or material or
moral incentives, excluding any form of favouritism or discrimination. It is prohibited to top
management civil servants to advantage or to disadvantage the access or promotion in civil service
on discrimination criteria based on, family, affinity or other criteria inconsistent with the principles
of the Code.
m) Use of exercise of public powers. It is forbidden to civil servants, to use the public
powers in others purposes than those provided by law, of that they detained. In the decision making
activity of, counselling, preparation of draft legislation, assessment or participation in surveys or
control actions, civil servants were not allowed to obtain personal benefits or to produce material
damages for others. Civil servants are forbidden to use their official positions or relationships that
have been established in a public position in order to influence the internal or external
investigations or to determine a specific action. Civil servants are forbidden to impose other civil
servants to join the organization or association, regardless of their nature or to suggest that,
promising material benefits or professional awards.
n) Use of public resources. Civil servants are obliged to provide care for public and private
property of the state and administrative-territorial units, to avoid causing any harm, acting as a good
owner. Civil servants are required to use work-time, and property belonging to public authority or
institution only for activities related to the civil service positions. Civil servants must propose and
ensure the efficient use of public money in accordance with law. The civil servants engaged in
publishing or teaching activities are prohibited to use the logistics of the authority or public
institution in order to achieve them.
o) Limiting participation in procurement, concession or lease. Any civil servant may
acquire a private property owned by the state or administrativeterritorial units, subject to sale under
the law, except: when he became aware, during or following the performance of duties of the
value or quality of goods to be sold; when he participated in the exercise of official duties, at the
organization of property sales; when they can influence the sales operations or information
obtained from persons interested in purchasing the property.
The above rules shall apply accordingly also in the case of concession or lease of property
owned by public or private or state administrative-territorial units. Civil servants are not allowed to
provide information on public or private property or state administrative-territorial units, subject to
sales transactions, leasing or renting, in other conditions than those provided by law. ( Matei Ani,
Popa Florin, 2010)
LIABILITY OF PUBLIC SERVANTS
In accordance with Law No. 7/2004 (art. 24 of Law No. 7/2004 regarding Code of Conduct),
the infringement of the Code of Conduct attracts disciplinary responsibility of civil servants
according to the law. Thus, the disciplinary committees have the authority to investigate violation
of the Code of Conduct and to propose disciplinary sanctions under the law. Where facts meet the
elements of offences, they will be submitted to competent prosecution bodies. Civil servants are
responsible for the acts committed with violation of rules of professional conduct, when they have
created damages to individuals or legal entities.
Disciplinary liability of civil servants is regulated in Chapter VIII of Law. 188/1999 (13),
entitled "Disciplinary sanctions and accountability of civil servants."
According to the provisions contained in this chapter, violation by civil servants, with guilt
of his duties attracts disciplinary liability, civil or criminal contravention, as appropriate.
275
Infringement with guilt by the civil servants of duties according to their position and of norms of
conduct determines disciplinary actions and draws up their disciplinary liability.
The following determine disciplinary actions: systematic delay in performing the work;
negligence in solving work; absences in work programme; repeated failure of the work
programme; interventions to address specific demands or insistence outside the legal framework;
breach of professional secrecy or confidentiality work; manifestations affecting the prestige of
public authority or institution; conduct of political activities during the working hours; refusal to
perform duties; breaching the statutory duties, incompatibilities, conflicts of interest and
prohibitions established by law for civil servants; direct relationships with the petitioners to settle
their claims.
The disciplinary sanctions are: written reprimand; 5-20% decrease wage rights for a period
of up to 3 months; suspension of the right for pay grade advancement or, where appropriate,
promotion for a period of 1 to 3 years; shift in an inferior public position for a period of up to one
year with the appropriate reduction of income; dismissal from public office.
The individualisation of the disciplinary sanction should take into account the seriousness of
the misconduct, the circumstances, the degree of guilt and consequences of misconduct, the general
behaviour during the service of civil servants and the existence 14 of other sanctions. Disciplinary
sanctions shall apply within 6 months from the date of committing irregularities.
According to Art. 72 of Law no. 188/1999 as amended, in the framework of public
authorities or public institutions a discipline committee has to exist. Depending on the number of
civil servants in each public authority or institution, the disciplinary committee may be set for a
single authority or public institution or more. In the discipline committee there is an equal number
of representatives appointed by the chief authority or public institution and civil servants' union. In
the case that the union is not representative or the civil servants are not organized into unions,
representatives will be nominated by a majority of civil servants in that authority or public
institution. Disciplinary Commission for senior civil servants is composed of 7 senior civil servants.
Disciplinary Committees are competent to investigate the facts and propose disciplinary sanctions
applicable to civil servants or public authorities concerned. The constitution of disciplinary
committees, composition, functions, mode of referral and their working procedure shall be
established by Government decision on a proposal from the National Agency of Civil Servants.
Any civil servant unsatisfied with the penalty may appeal the administrative court
requesting cancellation or amendment, of the order or sanction as appropriate. To highlight the
disciplinary situation of civil servant, the National Civil Servants Agency will issue an
administrative record, according to the database. The administrative record is an act that includes
the disciplinary sanctions imposed and not removed by law. (Nemoi Gabriela, Ungureanu Ciprian, 2010).
The administrative record is necessary in the following cases: appointment of a civil servant as a
member of the competition commission for recruiting civil servants; appointment of a civil servant
as chairman and member of discipline committee; occupying a public office relevant to the class
or category of senior civil servants of management civil service; in any other circumstances
stipulated by law. The administrative record is issued on request to: 15 civil servant concerned;
head of public authority or institution in which they operate; chairman of the discipline committee;
others provisions provided by law.
CONCLUSIONS
The inclusion of ethics training in strategic documents is a positive indicator of the growing
recognition of its importance, especially if these documents include implementation action plans,
with specific actions, allocation of tasks to responsible institutions, timelines and budgets.
However, the strategies may not be not sufficient to ensure the practical implementation of the
training, especially in countries where such strategies do not establish a legally binding obligation,
do not have their own budgets, and where their implementation depends on the budgets of various
public institutions. In these cases, it may be useful to establish ethics training as a legal requirement,
276
at least for some categories of public officials, such as new officials or officials working in sectors
with high integrity risks.
REFERENCES
1. Alistar Victor, Deontology of civil servants, ongoing support, NSPSPA, 2010

2. Androniceanu Armenia - New public management, Economica Publishing House, Bucharest,
2008
3. Androniceanu Armenia, Essential Values of Ethical Behavior inside the public organizations-
Case of Romania, p.7 (https://www.law.kuleuven.be/integriteit/egpa/previous-egpa-
conferences/madrid-2007/armenia.pdf)
4. Bossaert Danielle, Demmke Christoph, Main Challenges in the Field of Ethics and Integrity in
the EU Member States (Viorescu R. (2006), Principalele provocri n domeniul Eticii i Integritii
n Statele Membre UE (traducere n limba romn a publicaiei: Main Challenges in the Field of
Ethics and Integrity in the EU Member States, Danielle Bossaert and Christoph Demmke) ISBN 13
978-90-6779-196-0 EIPA Code #: 2005/01 Year: 2005 Pages: 270 Copyright EIPA)
5. Dubnick, Melvin & Ciarn OKelly: Accountability through Thick and Thin. Moral Agency in
Public Service. In Fredrickson, George & Ghere, Richard (eds.): Ethics in Public Management.
Armonk 2005.
6. Landman, Todd: Issues and Methods in Comparative Politics: an Introduction. 2nd ed.
Routledge, London 2005.
7. Matei Ani, Popa Florin, Ethical Aspects in the Activity of Civil Servants. Case Study Romania,
2010 (http://mpra.ub.uni-muenchen.de/22469)
8. Moilanen Timo, Salminen Ari, Comparative Study on the Public-service Ethics of the EU
(http://vm.fi/documents/10623/307711/Comparative_Study_on_the_Public_Service_Ethics_of_the
_EU_Member_States_publication+131206.pdf/524e908b-5388-4d1c-9199-59b4f3e567a9)
9. Nstase Carmen, Scutariu Adrian Liviu, Chaovschi Carmen, Educating and informing tourism
consumers in the context of sustainable development, Revista de Turism - studii i cercetri n
turism, Nr.12, 2011
10. Nemoi Gabriela, Ungureanu Ciprian Administrative reform enhancing people participantion
in local affairs JOURNAL OF LAW AND PSYCHOLOGIC, ISSN 2078-1083, IJAR JLP,
pag.37, www.ijar.lit.az 2010
11. Scutariu Adrian Liviu, Nstase Carmen, Comparative evolution of tourism in the North-Eastern
Region of Romania, Subcarpathia of Poland and Central Slovakia, Bulletin UASVM Horticulture,
Nr. 67 (2), 2010
12. Vedinas Virginia The status of civil servant, Nemira Publishing House, Bucharest, 1998
13. Main features of an Ethics Framework for the Public Sector. As proposed by the Dutch
Presidency and adopted by the Directors General responsible for Public Administration in the
members states and the institutions of the Euro-pean Union in their 43rd Meeting in Maastricht
(NL). 22 November 2004
14. ***Ethics Training for Public Officials, OECD 2013
(http://www.oecd.org/corruption/acn/library/EthicsTrainingforPublicOfficialsBrochureEN.pdf)
15. ***www.oecd.org/dataoecd/3/17/47912383.pdf.
16. Law 7 / 2004 republished in 2007 published in Official Monitor 525 of 02/08/2007
17. Law no.188/1999 on the Status of Civil Servants
18. ***Principles for managing ethics in the public service - OECD 1998
277
FORECAST, ORGANIZATION-COORDINATION AND

MOTIVATION IN LOCAL PUBLIC ADMINISTRATION
MANAGEMENT
Lecturer PhD Petronela SCUTARIU
petronelas@seap.usv.ro
Abstract:
The proper functioning of local administrative system is not possible without the exercise of the functions of
local public administration management. From such a direction, in this article we intend to analyze the contents of the
functions of forecast, of organization-coordination and of motivation, in order to show how each of these contributes to
good management of local public affairs.
Defining the mission, the objectives of local government and the actions to be taken to achieve them, the design
and harmonization of optimal local organizational structure components to achieve preset objectives, but also the
human resources training from local public administration to use their skills and capacities towards achieving the
objectives of the local public organization contribute to improving the local administrative process with effect on
satisfying the interests of the local community.
Key words: foresight, organization-coordination, motivation, public organization, local public administration
management
JEL classification: H83
1. INTRODUCTION
Management of every entity revolves around some activities that it has to fulfill and which,
in essence, are reflected in its functions.
Using management in local public administration, with its main functions, is inevitable if
one desires the efficiency improvement of the local administrative system (Adroniceanu, 1999, 37)
and the management in the best conditions of the difficulties that the local community and the
authorities which they represent faces with.
In a brief inventory of the opinions formulated in the specialty literature on functions of
management in the public sector, we are entitled to say that they are not less discussed, various
approaches of them being identified.
A first approach belongs to Professor D. O. Durasaro, who speaks about seven functions of
management in the educational system, distinct domain of the public sector, namely: planning,
organization, leadership, personnel, coordination, reporting, budget preparation (Durasaro, 2-5).
Referring to management functions in public service organizations, Professor M. V.
Bedrule-Grigoru retains four functions: planning (forecast), organization, training-coordination
and control (Bedrule-Grigoru, 2008, 80-84).
By D. Rais, A. Simionescu and T. Pendiuc, the main public administration management
functions refer to: forecast, organization, decision, coordination, training, control (Rais et al., 1999,
11-27).
On this support, in the space of this article we intend to analyze three of the functions of
management in local government to highlight their role in streamlining the activities of local
administrative system. The question we aim to find the answer through this process is: Whether and
how forecast, organization-coordination and motivation contribute to the efficiency of the local
administration process?
From such a way, the aim followed by the present investigation consists in analysis of
contents of functions of forecast, of organization-coordination and of motivation in order to show
how each of these contributes to good management of local public affairs.
278
To achieve this objective we resort to investigation of specialty literature and of reference

regulations, their interpretation allowing highlighting the role that these functions they hold in
improving the local public administration process.
2. ACHIEVING FORECAST FUNCTION IN LOCAL PUBLIC ADMINISTRATION

MANAGEMENT
Initiating the management process from every entity, the forecast supposes defining the
mission, its objectives, as well as the actions to be taken to achieve them (Olum, 2004, 3).
The way this function is performed depends on the achievement of the other functions (Nica
and Iftimescu, 2004, 14), Professor P. Nica assures us.
In connection with this first function, V. A. Munteanu tells us, in a crystalline way, that
forecast expresses the connection of uncertainties and possibilities of tomorrow and operation of
realities of today and yesterday, with the aim of agreeing, in whole or in part, determining the
conditions of future (Munteanu, 2009, 26).
In our opinion, in the management of local public administration, the forecast function
includes all the management processes through which are defined the objectives of local public
authorities, in line with the needs of the local community, are determined the ways of acting to
achieve the objectives defined, specifying, for each way of action proposed, the needed resources.
In graphical representation, forecast function of the local public administration management
is illustrated as follows (figure no. 1):
Local needs
satisfy
THE AUTHORITIES OF
Resources show LOCAL PUBLIC establish Objectives
ADMINISTRATION
identify
Actions
Figure no. 1. Schematic representation of the forecast function
of the local public administration management
Analyzing the content of the figure, we see that exercising the forecast function in local
public administration management ensures establishing objectives to achieve in the future,
identifying ways of action to be accomplished towards achieving expected objectives, showing
resources for each of the ways of action, all them to meet local community needs.
On the objectives projected, P. Filip believes that a number of peculiarities should be taken
into account (Filip, 2007, 36):
- the potential of human, material and financial resources of local communities involved in
the process of providing local public services;
- the political, electoral commitment to local electorate, of the principal authorizing officers
(mayor, county council chairman);
279
- the level of professionalization of civil servants, depending on level of experience or

training;
- the specific organizational culture values of local communities;
- the system of motivation of civil servants;
- the material and technical-material base available to the local community.
We believe that are necessary the other two points, which gives a distinctive note to the
formulation of objectives - as act of forecast function in local public administration management
[1]. First, the determination of the objectives to be achieved in the future should be made,
necessarily, in compliance with the existing legislative framework, under the incidence of which
local public administration is organized and operates (for example, Law no. 215/2001 on local
public administration, Framework Law of Decentralization no. 195/2006, Law no. 273/2006 on
local public finances). Second, between the forecasted objectives and the needs of the local
community (water, public lighting, sewerage, construction, maintenance, modernization of public
roads) must operate a full correspondence.
For exercising forecast function, one uses specific functional tools, such as: forecasts, plans,
programs.
Forecasts are time investigative tools, by means of which one investigates and highlights the
future trends (Imbrescu, 2009, 36) of the administrative system. Based on the forecast shall be
determined current and future decisions and the strategic objectives are based (Munteanu, 2009,
27). Given that the forecasts envisage a long time horizon of between 10 and 20 years, most often
they make not possible the formulation of some realistic strategies. In local public administration,
except for financing strategies by long term loans, the forecasts are often not used. The explanation
is simple. In a time so long, completed with a state of permanent reform and modernization that
characterizes local public administration and not only, it is very difficult, if not impossible,
developing some strategies to ensure full correspondence between the objectives proposed and the
potential of resources (human, material, financial) necessary to achieve them.
Plans are instruments by means of which the assignment of the current activity of local
government in the perspective trends of its development and of economic and social development
as a whole. With the help of plans not only the objectives to be achieved are established, but also it
is stated how they will be achieved, by what means (Imbrescu, 2009, 36). Developed for short
periods of time, usually between one and five years, plans are widely used in local public
administration.
Programs are another way to realize the forecast function that describes in detail the
sequence and the interacting of the actions to be taken to achieve plans (Imbrescu, 2009, 36). They
are made for a reduced time horizon (decade, week, day, hour) and are characterized by a high
degree of certainty and maximum particularization (Iordan, 2010, 20).
On this support, forecast function in local public administration management is reflected in
the elaboration and approval of strategies, forecasts and development programs for the
administrative-territorial unit concerned [2].
It must be said that, although the forecast has long been neglected by the leaders of the local
system, with many reforms and changes in its organization and functioning, in consonance with the
need to harmonize to the situation in the European administration, forecast function finds its place
in the management of local public administration. For example, in local government the forecast
function of management manifests itself concretely by (Munteanu, 2009, 28):
- elaboration of administration reform strategy adjusted to economic and social reform and
sustainable development;
- elaboration of plans on development of people local public transport systems;
- elaboration of programs for training and retraining of civil servants to implement the
strategy.
On this support, we consider that by exercising forecast function of management, local
authorities determine the way forward to meet the expectations of the local community and to meet
in a higher degree their interests.
280
3. ORGANIZATION-COORDINATION IN THE MANAGEMENT PROCESS OF

LOCAL PUBLIC ADMINISTRATION
Being in close link and as an extension of the function of forecast, organization-

coordination is the most visible (Imbrescu, 2009, 37) function in the management of every entity.
Once objectives have been set, it is the turn of organization-ordination function to ensure
the frame of their achievement. The organization-coordination is the process of establishing
relations between people and resources to achieve the proposed objectives, which involves the
interaction of different responsibilities of the personnel and of different compartments of the entity
concerned (Waldron et al., 1997).
Referring at this function, Professor A. Androniceanu tells us that through it there are
designed and harmonized the internal organizational frame components necessary to achieve the
priorities and objectives in the public institution and in the field in which it fills (Androniceanu,
2005, 40).
As far as we are concerned, the organization-coordination function sums all management
processes through which the optimal local organizational structure is established, providing a full
concordance between its components, to allow the achievement with maximum efficiency of the
preset objectives in the management of local public administration.
In support of a correct reception of content of organization-coordination function in local
public administration management, we propose a graphical representation of it (figure no. 2):
Authorities of Local organizational Achieving

local public establish configuration allow the forecast
administration objectives
COHESION
Posts
Public Functions
Compartments
Figure no. 2. Schematic representation of the organization-coordination function

According to the figure, at local public administration level by organization-coordination

function of management, local authorities establish local organizational structure in an optimal
configuration, the components of which to be in a perfect cohesion, which permit to achieve the
preset objectives.
A comprehensive picture of the local internal organizational configuration, at which we also
concur, is presented by P. Philip, who lists the following components of it (figure no. 3):
281
- the domain of activity of local government; in this respect, Chapter IV of Frame Law of
decentralization no. 195/2006 establishes the scope of domains where local authorities are
competent;
- the organizational subdivisions for each domain of activity of local government: public institutions,
operators of local public services, companies and autonomous entities of local interest;
- the intellectual work processes carried out by each domain and organizational subdivision,
C including the own system of local authority;
O
M - the area of tasks, responsibilities and activities specific to each intellectual work process;
P - the posts, the leadership and the execution public functions, corresponding functions of contractual
O staff;
N
E - the organizational relations between subdivisions, posts, leadership and execution public functions,
N corresponding functions of contractual staff;
T - the weights for leadership posts and public functions; in this regard, Law no. 188/1999 on the
S Status of civil servants disposes, through art. 112 par. 1 that ,, the leadership public functions in
each public authority or institution, except territorial-administrative unit secretary public functions
and head of the prefectural office, is up to 12% of all public functions ".
- the hierarchical levels within the local organizational structure: executive director, deputy
executive director, head of department, head of office.
Figure no. 3. The components of local organizational structure

Source: processing from Filip, Petru, (2007), Managementul administraiei publice locale. O abordare
proactiv, Editura Economic, Bucureti, pp. 38-39
For how all these components fully chime with each other, the proper functioning of the
entire local administrative system depends on.
Unquestionably, the powers of local government in the organization-coordination matter is
an essential component through which the government from administrative-territorial units fulfills
its mission and which influences the achievement of its objectives.
In the remit of the local council is the organization and functioning of the mayor's
specialized staff, of the local public institutions and services and of the companies and autonomous
administrations of local interest [3]. Similarly, the county council carries out duties on organization
and functioning of the county council specialized staff, of the county public institutions and services
and of the companies and autonomous administrations of county [4].
In this regard, Law no. 215/2001 on local public administration orders the following: the
local council approve the regulation of organization and functioning and, at the mayor's proposal,
the establishment, the organization and the positions of mayor's specialized apparatus, of local
public institutions and services, as well as the reorganization and the positions of the autonomous
administrations of local interest (art. 36 par. 3 letter a and b); county council approves the
regulation of organization and functioning, the organization chart, the positions, the regulation of
organization and functioning of specialized apparatus, as well as of the public institutions and
services of county interest, as well as the reorganization and the positions of the companies and
autonomous administrations of county interest (art. 91 par. 2 letter c).
In exercising these powers, deliberative authorities of the local government approves
management tools (regulation of organization and functioning, organization chart) needed to
configure a local organizational framework as operative.
By interpretation, the exercise of organization-coordination function in local government
management is reflected in the local public administration authorities obligation to ensure
ergonomic organizational conditions necessary for the progress of the administration activity in the
best conditions at the level of the administrative-territorial unit concerned.
In light of the foregoing, we note that both the establishment of local internal organizational
framework and the ensuring the cohesion of its components, through the exercise of organization-
coordination function, should be oriented towards a clear purpose, namely to achieve the objectives
forecasted in local government.
282
4. BASIC RELATIONS IN THE ACHIEVING MOTIVATION FUNCTION OF

MANAGEMENT IN LOCAL PUBLIC ADMINISTRATION
How the achievement of the proposed objectives is possible only through the involvement
and participation of human resources, we can only imagine how important is the motivation
function in the management of every entity. Putting people moving, motivation function conditions
the effects of the other management functions.
From such a direction, W. Adamus believes that motivation reveals the action through
which people are convinced to make further efforts, intellectual and physical, and to use their skills
and capabilities to fulfill the objectives of the organization (Adamus, 2005, 2).
In connection with this function, professors I. Bordean and C. Tureac opine that, by
exercising it in public administration management, the public institution staff is determined to
contribute to the satisfaction of public interest (Bordean and Tureac, 2009, 29).
In a brief statement, A. Morariu thinks that motivation of civil servants is a way to
streamline the public administration (Morariu, 2007, p. 139).
In our opinion, the motivation function in local public administration management brings
together all the managerial processes involving training civil servants from the local government
apparatus in achieving the objectives set by forecast function.
To facilitate the understanding the content of motivation function in management of the
local public administration, we illustrate it schematically in the figure below (figure no. 4):
Effective
engagement in the
General needs
Individual Satisfaction exercise of duty Achieving Satisfaction of the local
needs of civil Motivation objectives community
Achieving
servants
performance
Figure no. 4. Schematic approach of the motivation function

As shown in the figure, motivation ensure correlation between the satisfaction of individual
needs of civil servants in the local administrative system, on the one hand, and the objectives
achievement, on the other hand, destined to satisfy the needs of the local community. A civil
servant whose own needs are satisfied will be motivated to achieve performance and put all its
expertise available to the citizen, seeking to find the best solution to meet its interest. In other
words, by this function it is performed the connection among the satisfaction of private interests of
civil servants - motivation - meeting the interests of the community in general. The essence of the
function of motivation is given by this trichotomy dimension.
The performance of local government is regarded as the extent in which, through the whole
activity of civil servants and through local interest services offered, the entity government respond
to citizens expectations (tefnescu et al., 2010, 232).
At the level of an organizational, performance can be defined as a function of three factors
(Popescu and Popescu, 2011, 142):
Pi = f (M, C, I),
(1)
where
Pi the performance of a member of the organization
M his/her motivation
C his/her professional capacity
I the image he/she has of his/her own role in the organization.
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By applying at the local government level, the performance of this sector depends on the
performance level of each civil servant who works in local structures, his/her motivation, the
competence and the image that he/she perceives about his/her role in local government apparatus.
Thus, according to the above formula, the motivation is one of the factors that influence individual
performance of public servant.
By exercising motivation function of management in local public administration, public
servants who work at this structure level are determined to achieve higher performance.
But achieving performance by civil servants in local administrative apparatus is related to
their reward system. The current unified salary scheme and exclusion of bonuses and premiums
from the whole administrative system will only lead to a demotivation of public servants, to a
flattening of their performance, which ultimately will lead to a decline in service quality offered to
citizens.
Beyond this shortcoming, by exercising the motivation function of management in local
government the best solutions are looked for to stimulate all those implicated in the administration
act, in order to satisfy the interests of the local community.
5. CONCLUSIONS
Amid those shown in the contents of this article, we conclude that the analyzed functions -
forecast, organization-coordination and motivation, offer themselves as support for improving local
government, both in terms of activity it performs, but also from structural point of view.
Without defining objectives and indicating actions to be taken in achieving them, without
establishing optimal organizational framework and without training civil servants from local
government in achieving the projected objectives, local administration process will prove
ineffective and, consequently, serving the local public interest would be affected.
Overall, we noted that each of these functions and all alike influence, by being exercised in
the management of local government, the good management of local communities affairs.
ENDNOTES
[1] These two aspects are retained, inter alia, by Androniceanu, Armenia, (2005), Nouti n
managementul public, Ediia a II-a, Editura Universitar, Bucureti, p. 37
[2] According to the Law no. 215/2001 on local public administration, the city council approved
strategies for economic, social and environmental development of administrative-territorial unit
(art. 36 par. 4 letter e); mayor prepares draft strategies regarding the economic, social and
environmental status of territorial-administrative unit and submit them for approval to local council
(art. 63 par. 3 letter c); county council adopts strategies, forecasts and programs of socio-economic
development and environment of the county, based on proposals received from local councils; it
dispose, approves and monitors, in cooperation with local communal and town authorities
interested, the necessary measures, including the financial ones, to achieve them (art. 91 par. 3
letter d).
[3] According to art. 36 par. 2 letter a of Law no. 215/2001 on local public administration
[4] According to art. 91 par. 1 letter a of Law no. 215/2001 on local public administration
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285
PARADIGMS REGARDING CONCERTED PRACTICES OF

COMPETITION POLICY
Lecturer Ph.D. Gabriela NEMOI
gabrielan@seap.usv.ro

Lecturer Ph.D. Rzvan VIORESCU
razvanv@usv.ro
Abstract:
The process of completing the single market requires the application of appropriate measures also in
competition field. Rather, it is a truism that, once are removed the non-tariff barriers (physical, technical, fiscal) of
hindering trade, companies and governments will seek new ways to limit the restrictions so that competition laws to
protect domestic industries.
This study is a reflection on competitive practices regarding the theoretical and practical aspects in the
phenomenon of economic competition.
Keywords: concerted practices, competitive market, economic relations, abuse of dominant power
JEL classification: K39, K40
1. INTRODUCTION
According to EU rules, the competition policy is not perceived as an end in itself, but as a
necessary condition for the internal market. Thus, Article 3 of TCE emphasizes that the aim is to
allow setting of a "system ensuring that, in the single market, competition is not distorted.
In this regard, we emphasize the idea that Community rules from competition domain
prohibit only those conducts and acts, which may adversely affect trade between Member States,
without regard to situations where negative effects are visible only within a single Member State
(such situations are the competence of national authorities in the field).
On the other hand, as competition in the market economy is essential in ensuring the
economic success, are considered acceptable some practices, which generate positive effects on the
economy.
Competition policy has been and continues to be a policy complementary to concerns
related to completing the single market, since it provides a mechanism for removing trade barriers
between Member States, creating favourable premises the most complete market integration.
European competition policy is based on a Community legislative framework provided
essentially by the EC Treaty art. 81-90. Also, additional regulations are assured by decisions issued
by the Council. Based on these competition policy focuses on the four areas of action.
Agreements and arrangements concluded between businesses in order to increase
production, promoting scientific research and technology in order to ensure economic progress, can
have positive effects on the market and influence the best way the competition in the internal
market.
Thus, it should be understood that economic integration is not a goal in itself, but a means, a
path toward achieving objectives. One of the objectives to be achieved is to have a perfect
competition, ideally, if is not achieved this goal then is trying by any means to reduce the factors
that lead to unfair competition.
Competition is seen as a reference situation in which there is a complete free confrontation
between all operators in the supply and the demand for goods and capital and production services
and goods ( Michelle Cini, Lee Mc Gowan, 1998).
286
Analysing from this perspective the general provisions of the Treaty, may be noted that
competition principles are based on the achievement of a common commercial policy for the
purposes of creating an internal market in Member States and to remove barriers that may appear in
circuit of goods, persons, services and capital, by implementing a legal framework that does not
allow distortion of competition.
Competition protection presents a particular interest to the national economy, but also in
Europe, which has faced and is facing the abuse of dominance, anti-competitive agreements and
mergers, unfair practices that result in worsening competitive environment.
Competition is the essence of the market economy. It means the choice between several
alternative products or services.
In the battle for market conquest, bidders apply a number of principles, such as sophisticated
concepts concerning business strategies and marketing, concepts to gain dominant market share in
the segments concerned, a simultaneous commitment to high quality and strong productivity,
without compromising on strategy of high performance requirement or an orientation to economic
sectors involving high technologies and gradual reduction of activities in the declining areas.
Often, from the desire to achieve a dominant market position, to attract more customers and
eliminate current and potential competitors, companies resort to a series of actions and illegal acts
that have an adverse effect on competition.
As the 60s were dominated by the interventions made under Article 85 (81) (regarding
restrictive practices), the 70s were characterized by attention to the abuse of the existence of
dominant positions, toward possibilities of mergers and merger control (see the case of Continental
Can, 6/72, ECR 21 5). The objective was to "introduce an institutionalized system of preventive
control" ( Bernini, G, 1983)
It should be underlined, however, that in those years, within the Council, had failed to find a
compromise between anti-supranational general attitude and the desire of some Member States to
maintain absolute control of national industrial policies, the attitude remained until the mid 80s. As
such, neither at the Commissions level was not obvious an unified opinion regarding this issue.
It should be pointed out that competition policy is not an end in itself but a means to achieve
a goal, which, most often, is defined as meeting consumers interests.
Amid natural concerns inscribed on the path to progress, development and modernization of
production and distribution, as well as the creation of a specific case regarding contractual
relationships between companies, the need for creating the competition environment and
compliance with fair behaviours of those facing the fight for winning some favourable market
position is becoming more acute and real.
One of the essential conditions for the creation and consolidation of a market economy is the
existence of a functioning competitive environment.
2. COMPETITION POLICY AND ANTI-COMPETITIVE PRACTICES
Competition can be defined as the ensemble of relations of economic agents generated by

their desire to achieve a better market place and a more advantageous price. (Birsan, Maria , 1999;
Cpn, Octavian, 1992)
From the economic point of view, the competition is always linked to transactions on the
market, supply and demand and the exchange process. It is known that the most important
regulators of the market economy is competition" (4)
Exercise of competition is a right of all economic operators. As any right recognized and
protected by law, competition law must be exercised in good faith and according to fair practices
without violating the right and freedoms of citizens and economic operators.
If certain agreements, agreements between companies may have beneficial effects on the
market, others may adversely affect competition ( Jacques Neme, Colette Neme, 1995). Article 81
(formerly Article 85) of the EU Treaty (TEU) introduces the principle of prohibiting agreements
between companies, decisions and concerted practices, which have as their object or effect the
287
prevention, restriction or distortion of competition within the Community space, and who are likely
to "affect trade between Member States".
A restrictive agreement is an agreement between two or more firms, which the parties
undertake to adopt a certain behaviour, by which are bypassed the rules and effects of free market
competition. The prohibitions to which Art. 81/1 (formerly 85/1) applies to both horizontal
agreements (which are covered by shares of firms in the same stage of production, processing and
marketing) and vertical agreements (are covered actions of firms placed in different stages of
production and marketing, not competing with each other).
Understanding is an agreement between two or more firms in which one or more partners
are forced to act in a definite way.
The concerted practice is at a lower level to agreements and a process of coordination is
achieved between different companies but not reflected in an agreement itself (does not require a
clearly expressed will manifestation, but only a coordination at the level of commercial strategies).
3. THE DIFFERENCE BETWEEN UNFAIR COMPETITION AND

MONOPOLISTIC PRACTICES
The first of the issues concerned is that of finalities: unfair competition involves capturing
the customers of the injured contestant, while monopolistic practices involve capturing market as
such, which alternatively leads also to gaining the customers of harmed competitors.
The second aspect is the results: unfair competition leads to distortion of competition while
monopolistic practices result in suppression of competition.
Unfair competition is a violation of ethical norms, while monopolistic practices lead to
socio-economic imbalances. Unfair competition revolves around the concept of "customer", while
monopolistic practices take into consideration the concept of "market". The certain trend is that
both practices have as main pillar the consumer.
The common denominator of both practices is that both require the existence of a
competitive relationship between aggressor and aggressed economic operators, learned on the same
relevant market. In comparative law, such a concept already enshrined in Swiss law, by the entry
into force in March 1988 of the new Law against Unfair Competition (Bundesgesetz gegen den
unlauteren Wettbewerb). (6)
The reason for extending the scope of the rules regarding unfair competition is as follows:
These regulations not only protect the interests of individual competitors to take part in trade
relations based on morality, but also the interests of all market participants and finally to the whole
community to exist a functional competition. Unfair competition law is not only impregnated by
individualism, but also by the concept of social justice.
The enlargement of the concept of competition allows taking into account the actions of
third parties that are important for competition, but do not fall directly into competitive play (such
as media bodies, institutes of comparative tests). The mere risk that these actions will produce an
anti-competitive outcome is sufficiently, independent of the use or not of specific means.
Also, fall within the economic domain economic the performances of economic nature of
public communities, to the extent they influence the market, irrespective of the existence of a
competitive relationship. As for the unfair nature of the action, he is in violation of rules of
economic behaviour, regardless of the existence of a form of guilt. However, guilt plays a role in
the prosecution and claims for compensation for damage.
The act of unfair competition likely to injure a competitor, several competitors or even an
entire economic sector, the customers (they are the recipients of the efforts of competitors and have
the interest to freely choose between offered services, those which meet better to their needs).
Protection of clients' interests, especially when they are consumers, responds to a requirement of
social policy, namely the protection of the weaker economic party.
The facts provided by the Law no.21 / 1996 as monopolistic acts can also be classified as
acts of unfair competition, if their impact on the market is reduced. This is because both types of
288
acts are contrary to fair practices. As a result, the main criterion for distinguishing between acts of
unfair competition and monopoly is given by the magnitude of the economic power of the infringer
fair usage.
Thus, there was a tendency within the legislature to include in consumers sphere also the
small businesses, small traders.
As a result, also businesses seek to apply consumer protection laws because in this way
achieve suppression of unfair practices.
On the other hand, consumer protection standards are not purely local, they should be seen
in the international context.
This legislation also seeks to promote full and timely information to consumers, especially
in relation to complex property and intervene in the balance of power between consumers and
traders, in case the first is deprived of the effective power of negotiating contractual terms.
There is no exclusive right over their merchant clientele. To attract this clientele by another
trader is lawful as long as it is not accompanied by acts of unfair competition. Hijacking customers
is, to a point, a game result of supply and demand, but freedom of competition cannot be without
limits. Freedom of competition is a corollary of freedom of trade. Trade freedom is a fundamental
freedom, which is to be exercised with respect for the freedom of others.
In the absence of any control, could occur and develop practices contrary to honest
commercial practice, the winner of the competition battle is not the best one, but certainly being
unscrupulous. In other words, the competitive harm (transfer of customers from one trader to
another) is lawful, but only if the relevant trade usages freedom includes freedom of fair trade price.
Thus, a trader does not commit an act of unfair competition as long as it sells its products at a price
below that of competitors, as long as this price is not ridiculous or contrary to customary trade.
The law of Member states in competition field does not excel, an example is French law
where there is no special legal basis of unfair competition. There is no special regulation acts of
unfair competition. Therefore, it is considered that unfair competition action - as a tool to ensure
that competition is fair - is an action based on tort for his own deed (art. 1382-1383 of French Civil
Cod). The foundation of action for unfair competition, even if only allows retrospective punishment
(the court intervention) of unfair behaviour, is seen as an advantage due to its suppleness, the
articles of the Civil Code, regarding the tort liability for its own act can be used to sanction such a
wide variety of behaviours. (7)
Yet, French doctrine and jurisprudence established in time that unfair competition action has
a wider scope than the action in tort, because the penalties for committing acts of unfair competition
aimed not only to repair the damage, they are equally preventive (may as object the termination of a
fact that distorts artificially the fair competition), protecting the victim against possible diversion of
their clientele. In addition, injurious of unfair competition has a certain specificity, being considered
less rigorous than in civil matters. Recent developments in French jurisprudence was with the
purpose of recognizing the existence of injury in this matter without any loss of clientele.
Such an approach exists in the German, Dutch and Belgian systems, combining the ethical
functions of action in unfair competition with the consumers and end-users law (general interest) to
make use of unfair competition action to compel traders to comply with their ethic obligations.
Therefore, may thus be sanctioned acts, which would not be indictable between competitors.
Some authors (Gavril Ilie, Gavril Tatiana, Popescu Anisia, 2006), starting from the
observation that the action for unfair competition is mainly repressive and not indemnitar, consider
however, that the purpose of action is not disciplinary, in the sense of punishing the infringement of
professional practice of operators, but a repressive action by taking into account a broader range of
interests, both interest of economic actors to have a normal competitive environment, and also the
consumer interests.
Italian authors have proposed another cornerstone of unfair competition action, namely the
protection of a right, namely the right of ownership on the customers. The consequence of this
approach is that was claimed that the action in unfair competition recognizes a privative right over a
competitive value that is not protected by a special law. As regards the foundation of action on a
289
deprivation right, even this might not support, because law requires the prohibition of any
competing deprivation, while action in unfair competition exists precisely because there are no free
competition, in certain limits. ( Moteanu, Tatiana, 2000)
Italian case law has stipulated the view that action is the basis for sanctioning an illegal act.
This orientation of action is considered as the best, being consistent with her action character in tort
liability.
Unlawful act consists in the abuse of freedom of trade that comes from business and not in
violation of a general obligation not to harm others, because the competition by definition implies a
'damage' caused to competitors. It is a case of unlawful conduct for whose existence requires an
intentional element.
According to art. 6 of Law 11/1991 updated, who commits an act of unfair competition, will
be forced to cease or to remove it and pay compensation for the damages caused, as appropriate. If
by facts of unfair competition was caused patrimonial or moral damage, the injured will be able to
act against the author liability claims.
The action for unfair competition is an action with special tort liability. The basis of this
action is the violation of a social obligation to respect certain moral rules in the relations of
competition, which means an excessive exercise of freedom of competition.
The action for unfair competition seeks primarily the cessation or prohibition of acts of
unfair competition and then repair the damage. It tends mainly "to suppress the facts whose
perpetuation would certainly lead to injury", and the compensation will be paid in addition, if it
proves that the applicant suffered a damage.
Due to the specific of competition relationships, unfair competition action is a action in
special civil liability.
The following are its peculiarities:
- The existence of an act of unfair competition and character of this competitor;
- The existence of a created and present interest, condition of any action;
- Evidence of harm is necessary not only to obtain compensation and to allow the action;
- The repair pursued will be mainly a repair in such in order to restore the previous situation,
the prohibition of committing future acts of unfair competition and suppression or destruction of
material used to commit acts of unfair competition (distinctive signs, advertising);
- If damage was caused, the action may have as object the payment of compensations, the
specific action in unfair competition allowing cancellation of the two forms of reparation;
- Unfair competition action is an action in achieving a right taking mainly the form of
prohibition;
- The action belongs to both individuals and legal persons exercising a right or industry,
with the condition that between them and the author is competition, meaning to exercise a trade or
identical or similar industry;
- Liability of the trader and his employee, who has committed the act of unfair competition
in the exercise of its powers, and persons, who caused the injury shall be joint together.
The action of unfair competition is limited by a legal framework, very real, the fact itself
arguing the presence of a rich jurisprudence.
Therefore, we can say that competitive practice places in the centre a vulnerable
representative namely the consumer, and he has as a regulatory and sanctioning tool a series of
institutions devoted to the protection of consumer rights.
4. CONCLUSIONS
In conclusion, the only way of effective control of restrictive business practices is

compliance with the legislation on competition, because only compliance with competition
legislation ensures protection, maintenance and competition in order to promote fair competition.
Solutions aimed the competitive loyalty between economic partners is based on establishing
a unitary market unit, in promoting fair partnership techniques.
290
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Universitii de Vest, Timisoara, 2006
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Europene n domeniul concurenei, Colecia Prelegeri Nr. 14, Editura Economic, Bucharest, 2006
5. Jacques Neme, Colette Neme, Economie de l`Union Europeenne. Analyse d un processus d
integration, Litec, Economie, Paris, 1995
6. Michelle Cini, Lee Mc Gowan, Competition Policy in the European Union, The European
Union Series, 1998
7. Moteanu, Tatiana, Concurena. Abordri teoretice i practice, Editura Economic,
Bucharest, 2000.
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europeana/
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AUTHOR GUIDELINES
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292
Nu se vor folosi note de subsol, dar se poate opta pentru unul din urmatoarele moduri de citare:
- sunt permise note la finalul lucrarii (endnotes), situate naintea bibliografiei si introduse manual. Ele se vor
scrie cu Times New Roman, caracter 10, italic. Trimiterile bibliografice din textul lucrarii se pot numerota cu
cifre arabe [1], [2] etc.
- trimiteri in text intr-o paranteza specificand numele autorului si anul aparitiei lucrarii: (Johnson, 2000),
(Johnson and Jackson, 2001) - lucrare cu 2 autori, (Johnson et al., 2002) - acolo unde sunt mai multi autori,
(Johnson, 2000; Peterson, 2001) - daca ideea se regaseste la mai multi autori, sau (Johnson, 2000a) si
(Johnson, 2000b) - in cazul in care exista doua lucrari diferite ale aceluiasi autor aparute in acelasi an (a si b
indicand ordinea in care apar la bibliografie). Se poate specifica si pagina in paranteza (Johnson, 2000,
250). Este obligatoriu ca autorii citati in text sa se regaseasca la bibliografie.
Concluzii
Concluziile pot recapitula punctele principale ale lucrarii, dar nu trebuie sa reproduca rezumatul. Ele pot
cuprinde aspecte legate de importanta lucrarii sau pot oferi sugestii referitoare la aplicatii ale acesteia sau
directii de extindere a cercetarilor.
Bibliografie
Lista bibliografica, de la sfrsitul lucrarii, se va scrie n ordine alfabetica, dupa numele autorului,
numerotndu-se. Cnd anumite studii, lucrari, articole sunt publicate n volum, atunci se va mentiona
numarul acestuia si paginile. Titlul lucrarii va fi scris cu font italic.
Precizari importante
Articolele trebuie sa aiba 6-10 pagini, pe formatul A4, marginile stanga, dreapta, sus, jos: 2 cm.
Lucrarile trimise trebuie sa fie formatate n Word cu extensia doc.
Articolele care nu respecta aceste instructiuni vor fi respinse inainte de a fi date la peer review.
V rugm manifestai foarte mare grij pentru corectitudinea traducerii n limba englez.
V rugm s trimitei i varianta n limba romn a art icolului, necesar pentru controlul tiinific (intr-un
document separat, incarcat ca fisier suplimentar). Vei primi un rspuns n urma procesului de recenzare.
Lucrarile se vor incarca on-line, astfel: pana pe 31 martie pt nr.1 si pana pe 30 septembrie pentru nr.2.
In cazul in care se primesc foarte multe lucrari, ordinea publicarii este cea cronologica a datei in care au fost
trimise.
Pentru alte detalii sau nouti v rugam urmrii site-ul revistei: www.annals.seap.usv.ro .
EN
T he USV Annals of Economics and Public Administration welcomes theoretical and

empirical articles, from all economic fields, according to the 5 sections:
Economy, trade, services
Management and business administration
Accounting-finance
Statisitics, economic informatics and mathematics
Law and public administration
It is expected that manuscripts will be organized in such a manner that maximize both the substance and
clarity of the document. All articles should report original research that has not been published or submitted
for publication elsewhere. Papers presented at conferences are accepted, provided that they have not been
published in full in Conference Proceedings. The papers will be all written in English. The papers will be
checked in blind review system.
Paper Title
Must be in 14-point bold type, Times New Roman, centered across the top of the page and will be writen in
uppercase.
Paper Authors
Authors names will be written under the paper title after a blank line, centered across the page, single
spaced specifing: title, university/institution affiliation, country and e-mail address. It must be written in 10
point type, Times New Roman in lowercase. First name will be in caps and the whole author(s) names will be
in bold.
Paper Abstract
It will be written after authors leaving a blank line before. The abstract must include sufficient information for
readers to judge the nature and significance of the topic, the adequacy of the investigative strategy, the
nature of the results and the conclusions. An abstract is not an introduction, it summarizes the substantive
results of the work. The abstract will be written in 10 point type italic, Times New Roman, justify. It must have
200 to 250 words, single spaced type.
Keywords
Select 5 to 6 keywords (words or expresions) that capture the essence of your paper. List the words in
decreasing order of importance. All the key terms must be translated in English and attached to your
293
abstract. It will be written in 10 point type, Times New Roman, after abstract leaving a blank line before.
JEL Classification
Please put one or several JEL codes, according to the subject of your paper. The codes can be found here:
http://www.aeaweb.org/journal/jel_class_system.html
Introduction
For introduction, state the purpose of the work, the motivation of the chosen theme and, briefly explain your
approach and the necessary arguments.Before introduction please let 2 blank lines.
Paper Content
Organize the body of the paper using titles and subtitles to emphasize both content and clarity. The titles
and subtitles will be written in caps, 12, bold, left aligned. Please let a blank line before and one after.
Consider the following:
the accepted terminology of the field to describe any subjects or experimental procedures used to
gather and analyze data;
include detailed methods, so readers could be able to follow the investigation;
state the results clearly and succinctly;
the implications of the findings and minutely discuss the impact of the results, both globally and
specifically.
Typeface must be 12-point Times New Roman type single spaced. Tables and figures should be sized and
placed in the body of the paper just as the authors want them printed in the journal. Care should be taken so
that tables and figures could be on one page. The tables contents will be written in 10 point type, Times New
Roman and the heading of the tables will be in 10 point type bold, Times New Roman.
The titles and numbers will be positioned above the table and the title and number of the figures bellow.
When it is needed, the source will be mentioned. The number of the tables and figures are to be positioned
in the body of the text, in a paranthesis, wherever they are mentioned, for example: (figure no.1), (table
no.1).
The graphs must be executed clearly so as to give clear black and white copies. Number all the equations
and formulas used positioning the numbers in paranthesis on their right side.
Define abbreviations and acronyms the first time they are used in the text, even after they had already been
defined in the abstract.
Footnotes are not allowed, but you can choose one of the following citation ways:
- endnotes at the end of the paper, situated before bibliography and introduced manually. They will be written
in Times New Roman, size 10, italic. The bibliographic references in the text of the work will be numbered
with [1], [2] etc.
- citations in text in a parenthesis specifying the author name and the year of the work apparition: (Johnson,
2000), (Johnson and Jackson, 2001) work with 2 authors, (Johnson et al., 2002) - work with several
authors, (Johnson, 2000; Peterson, 2001) if the idea is found at many authors, or (Johnson, 2000a) and
(Johnson, 2000b) - in the case where there are 2 different works of the same author appeared in the same
year (a and b indicating the order in which they appear at bibliography). It can be also specified the page in
the parenthesis (Johnson, 2000, 250). Authors cited in the text must be found in the bibliography.
Conclusions
Conclusions may review the main points of the paper, do not replicate the abstract as the conclusion. A
conclusion might elaborate on the importance of the work or suggest applications and extensions and
extensions of the research.
References
Sources should be in alphabetical order by authors last name, the list being numbered. When certain
studies, research, articles are published in a volume, the volume numbers and pages will be specified. The
title of the work will be written in italic.
Important Specifications
The articles must be at least 6 to 10 pages long in the style A4 sheet, margins left, right, top, bottom: 2
cm.
Submitted documents must be in PC-formatted Word (.doc) file.
The articles that don't respect specified guidelines will be rejected before they are sent to peer review.
The Romanian authors will also send the article in Romanian language (in another document, uploaded as
a supplementary file), necessary for the scientific control.
The journal appears twice a year (June and December). For the first number of the review (June), the
manuscripts should be submitted on-line until 31 March and for the second issue until 30 September.
In the case that a lot of articles are received, the publication order is settled chronologically by the date when
they were submissed to us.
For other details or news, please check our site: www.annals.seap.usv.ro .
Pentru comenzi va rugam sa ne contactati pe adresa de e-mail a revistei: cercetare@seap.usv.ro .
For commands, please contact us by e-mail at the address: cercetare@seap.usv.ro .
294

Forecast, Organization-Coordination and Motivation in Local Public Administration Management

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ISSN 22853332 www.annals.seap.usv.

The USV Annals

Editura Universitii tefan cel Mare din Suceava

Cover design & graphic layout: Adrian Liviu SCUTARIU

Contact: ntreaga rspundere

ECONOMY, TRADE, SERVICES

THE ECONOMIC EFFECTS OF EMIGRATION OF YOUNG

Professor Ph.D. Dorel AILENEI

JEL classification: J69, R10.

1. LITERATURE REVIEW ABOUT MIGRATION

Table 1. Some references on migration in the literature

1960 O. Stark Migration can be analyzed from the perspective of

2. THE MIGRATION PHENOMENON IN ROMANIA

3. RESEARCH REGARDING THE INTENTION TO EMIGRATE OF THE YOUNG

Fig. 3.6. Have you ever thought to emigrate?

PIGS COUNTRIES NEW CHALLENGES UNDER EUROPE 2020

JEL classification: E6, O5, R1.

3 PIGS COUNTRIES ECONOMIC DEVELOPMENT UNDER THE GLOBAL

Table 1: GDP growth rates (%)

Figure 1: Real GDP growth rates disparities

Figure 2: Real GDP growth rate under cluster analysis

Table 2: Employment rates trend (%)

Figure 3: Employment rates disparities

Figure 4: Employment rate under cluster analysis

Table 3: Gross domestic expenditure on R&D (% of GDP)

Figure 5: Gross domestic expenditure on R&Ds disparities

Figure 6: R&D expenditure under cluster analysis

Table 4: Greenhouse gas emissions (1990=100%)

Figure 7: Gas emissions disparities

Figure 8: Gas emissions under cluster analysis

Table 5: Tertiary educational attainment (%)

Figure 9: Tertiary educational attainments disparities

Figure 10: Tertiary educational attainment under cluster analysis

Figure 11: Poverty risks disparities

Figure 12: Poverty rate under cluster analysis

4 THE VIABILITY OF EUROPE 2020 STRATEGYS TARGETS FOR PIGS

PRESSURE OF AGEING ON REGIONAL DEVELOPMENT.

JEL classification: J40, R10

2. DATA ANALYSIS ON POPULATION AGEING IN ROMANIA

Table 2. Share of elderly people in total population, NUTS 2 level

Figure 1. Old-age dependency ratio in Figure 2. Ageing index in Romania,

Romania, NUTS 2 level (%) NUTS 2 level (%)

Source: Eurostat, online data code demo_r_pjangroup

Figure 3. Old-age dependency ratio (%) Figure 4. Ageing index (%)

Source: Own calculations, based on Eurostat, online data code demo_r_pjangroup

In Romania, the retirement age is linked to life expectancy. Other characteristic in

Figure 5. Median-age population, EU-27

Source: Eurostat, online data code demo_pjanind

3. PARTICIPATION OF THE ELDERLY PEOPLE IN ECONOMIC ACTIVITY IN

Figure 6. Economic activity rate of Figure 7. Elderly persons participation in

Source: National institute of Statistics, Labour Force Survey

Figure 8. Labour force participation for Figure 9. Labour force participation by

Source: National Institute of Statistics, Tempo online code AMG155F

Figure 10.Employment rate of labour resources in Romania, in 2013 (z-score method)

4. SOCIAL PRODUCTIVITY OF LABOUR AND POVERTY

Figure 11. Social productivity of labour in Romania, 2008-2012, at NUTS 2 level

Given relatively modest performance of the agricultural sector in Romania, performed

South - West Oltenia 36.9 37.4 30.7 28.9 29.9 30.1

Figure 12. At-risk-of-poverty-rate of elderly people in Romania, 2007-2013

Source: Eurostat, online data code ilc_li02

Source: Eurostat, online data code lfso_12reasnot

Z-Score analysis for employment rate of labour resources

INFORMATION AND KNOWLEDGE IN A GLOBAL CONTEXT