Neste trabalho pretendo fazer uma abordagem teórica do fenómeno da globalização

aplicando os conhecimentos adquiridos ao longo da licenciatura e nas aulas da unidade

curricular. Seguidamente pretendo desenvolver um estudo de caso focado na Roménia,
usando análises de gráficos e outras ferramentas auxiliares. Pretendo apoiar os meus
argumentos com dados, bem como recurso a artigos científicos e autores como Stiglitz,
Há-Joon Chang etc. Em conclusão tenciono apresentar os resultados obtidos, e assim
averiguar os efeitos que a Roménia experienciou com a transição para uma economia
de mercado e com a globalização.
1.Globalization and its Non-existent Definition

Today’s globalization is undoubtly the greatest process of transformation in human

history, and a challenge for 21st century, encompassing the entire human society and
our planet’s space. There are many definitions of globalization, none fully satisfactory,
mainly because it’s hard to define such a complex concept, with each author evidencing
one dimension of it. Giddens defines globalization as the intensification of worldwide
social relations linking distant localities in such a way that local happenings are shaped
by events occurring many thousands of miles away and vice versa. Again, this
explanation is too simple. Probably the there is no clear definition as it can be shown by
a joke that I found on Internet regarding on how Globalization can be related to an event
like princess Diana’s death1. It goes as follows:

Question: What is the height of globalization?

Answer: Princess Diana’s death.

Question: How comes?

Answer: An English Princess with an Egyptian boyfriend, crashes in a French tunnel, driving a German
car with a Dutch engine, driven by a Belgian who was high on Scottish whiskey, followed closely by
Italian Paparazzi, on Japanese motorcycles, treated by an American doctor, using Brazilian
medicines!

And this is sent to you by an Indian, using Bill Gates technology which he stole from the Japanese.

And you are probably reading this on one of the IBM clones that use Taiwanese-made chips, and
Korean made monitors, assembled by Bangladeshi workers in a Singapore plant, transported by
lorries driven by Pakistanis, hijacked by Indonesians and finally sold to you by the Chinese!

Here you have it: Globalization!

As we can see, the Globalization can even be interpreted in a funny way, the truth is that
it constitutes a multi-causal process which carries repercussions in every part of the
globe. There’s no universally accepted definition, or definitive. This is due the fact that it
includes a multitude of complex processes that affect the diverse domains of a given
society. It can be a phenomenon, an ideology, a strategy or everything at the same time.

IMF defines globalization as ‘’a historical process, the result of human innovation and
technological progress. It refers to the increasing integration of economies around the

1
http://ultrafeel.tv/princess-dianas-death-is-a-perfect-example-for-globalization/
world, particularly through trade and financial flows. The term sometimes also refers to
the movement of people (labor) and knowledge (technology) across international
borders. There are also broader cultural, political and environmental dimensions of
globalization that are not covered here.’’2

Because the economic sphere constitutes the driving force of this phenomenon, it is no
wonder that the concept of globalization took an economic dimension. This phenomenon
at the same time is contradictory, when we say that we live in a ‘’global village’’, this
village is first and foremost an economic integration of markets between the countries.
How can we live in a global village
when we see walls and fences around
us, like the wall between USA and
Mexico? In spite of that they belong to
the same economic bloc: NAFTA, free
movement of goods and services. This
is why globalization can be interpreted
as being contradictory sometimes.

The subject of the globalization caused a great interest for thinkers, but also it created
divergences, as they understood the phenomenon of globalization in different manners.
Anthony Giddens in his book entitled "Sociology" highlights the perspective of David Held
and his collaborators (1999), which divides the opinions in three schools of thought3, the
sceptics, hiperglobalizers and transformationalists.

The Sceptics agree with the fact that there is a bigger interaction and contact between
several people nowadays, but that does not mean necessarily that there is a bigger
integration. The sceptics see the global economy divided in economical blocks, with
culturally similar countries, grouping together in intergovernmental organizations to gain
more economical, diplomatic and military power. The EU, ASEAN, MERCOSUR
CARICOM, and NATO are some of these organizations that aim to reinforce the power
in regions regarding the outside, which enters in contradiction with the idealistic vision
on which we are living in a "global village". Samuel P. Huntington in his book, "The Shock
of the Civilizations", presupposes that the next conflicts will happen between
civilizations, or groups of countries that share the same culture namely religion and
historical past. Each one of these civilizations trying to reach the hegemony at global
level. According to him the humanity might be divided in nine civilizations: Westerner,

2
https://www.imf.org/external/np/exr/ib/2000/041200to.htm#II
3
Giddens, A. (2006). Sociology 5th Edition. Cambridge: Polity Press p.61.
African, Islamic, Chinese, Hindu, Orthodox, Japanese, Latin-American and Buddhist. For
the sceptics the growing regionalization is proof that the world-wide economy made less
integrated and not the opposite, being concentrated in bags of intense economical
activities.

The Hiperglobalizers constitute the totally opposite view of the sceptics. They argue
that globalization is really happening and its consequences are felt everywhere. Contrary
to the sceptics they think that the importance of the governments in the new emergent
global order, is reducing. They argue that the countries stop being able to control their
economies, as a consequence of the global market, thus reducing the importance of
States. For the hiperglobalizers this is a sign of a new era in which the barriers between
the people are disappearing gradually, suffering an "erosion" from the capitalist driving
force.

For the Transformationalists, like Rosenau and Giddens, the regulation of the global
order must be secured on basis of partnership with the new actors of the international
relations (ex: UN, NGOs, IGOs, international treaties), and the beginning of sovereignty
sharing and an adjustment of States to new global challenges. However, they do not
advance with any exercise that gives a perspective regarding the direction of this
historical process, since it is a phenomenon that never took such dimensions in the
history.

2.The Romanian Case

Globalization can have two types of consequences for Romania. The first ones are the
positive ones. Romania needs foreign investment capital for development, being unable
to produce this capital only from domestic sources. Being a country with multiple
economic opportunities - from tourism and agriculture to the oil and metallurgy industry
- Romania can become attractive to foreign capital if it provides favorable domestic
(legislative, fiscal) conditions. The rapid capital-driven movement of globalization - where
companies lose their classic "national" identity - can become advantageous for Romania
under a highly skilled but comparatively cheap labor force.

At the same time, the negative consequences - or, more correctly, the risks - of
globalization, are by no means neglected. Account must first be taken of the economic
risks. The phenomenon of globalization is accompanied more than any other by a
"philosophy of the winners" and Romania after the communist regime stepped into a
world where there is little mercy for the losers. If it doesn’t go beyond the current
economic meltdown and stay away from the economic and security structures (NATO
and the EU), Bucharest may remain suspended not in a "gray area" but in a "margin of
the Empire", synonymous with underdevelopment in the classical sense of the term, with
an economically, politically and militarily detrimental role on the continental and
international, and even regional level.

2.1. Historical Context: Romanian Economic Reform

Despite the Romanian economic reform being described as chaotic, confusing, and with
disappointing results, there was a significant change of property relations, prices and
state’s role in the economy in a market environment.

Many agree that indeed Romania started with more structural handicaps than the rest of
the East-Central European countries4 (Carey, 2004). In the later decade of Communist
rule, while some of the mentioned countries promoted more or less a decentralization
effort, flexibility and a consumer-oriented budget adjustment, Romania by contrast
strengthened the central planning and subsidized failing industries.

In 1981 Romania was obliged to resort to IMF’s lines of credit in order to meet its debt
obligations. As parto of conditions Romania was to make a structural adjustment, reduce
trade and account deficits, implement long term managerial and financial reform, and
thus trigger policy change. But instead Ceausescu took a path of austerity and
centralization. IMF report summarized the prospects of the reform:

‘’Ceausescu’s legacy was an economy plagued by inefficient industrial structures

and an almost obsolete capital stock, a completely disorganized system of
production and distribution, a collectivized agricultural sector, a decaying
infrastructure, and a population whose living standards had been forced steadily
down to a level where even basic necessities—food heating, electricity, and medical
attention—were hard to come by. There is little doubt that the initial obstacles to
reform in Romania were far worse than those faced by other reforming East
European countries.’’5 (Carey, 2004).

The political life right after the 1989 revolution was dominated by the National Salvation
Front (FSN), a party which curiously was controlled by dissident communists, military

4
Carey, H. (2004). Romania since 1989. Oxford: Lexington Books, p.373
5
‘’ p.375
officers and ex:members of the nomenklatura6. The political elites of the Communist era
simply transformed themselves and adhered to a new economic system. The initial
challenges were how to turn a planned economy into a viable and functioning market
economy. FSN’s leader Ion Iliescu argued that the ‘’shock therapy’’ approach in order to
make this transition was NOT on the Front’s agenda. Iliescu argued that the demolishing
of the central organs wasn’t the objective, and that ‘’we must rely on the existing
structures’’. The so called ‘’Draft Strategy of the Transition’’ was aimed at a slowly and
gradual economic transition. The key features of this policy were as follows: firstly,
introduce market forces into economic decision making; secondly, privatize State Owned
Enterprises, housing and land; and thirdly, reduce the role of the government in
economic decision making. Despite that, during the first stage of the reform, FSN gave
in to higher wages and shorter working hours, and besides that did little to encourage
private and market pricing. They strongly opposed any global integration, continuing
subsidizing failing industries7, using outdated instruments and paradigms in a world
which started its full throttle towards globalization.

By October 1990 the economic situation in Romania deteriorated significantly. In the first
nine months the post-Communist Romania experienced a 27.7% decline in net industrial
production and a 22.8% decline in worker productivity. The political elites recognized that
the economic crisis was unsustainable and the reforms had to be accelerated.

The elections in 1996 marked a change on policy regarding the centralist administration
towards more western and liberal principles. The Democratic Convention of Romania
assumed the power uniting other reformist parties into their coalition like the PNTCD,
PNL, PD and UDMR. This change reflected the people’s wish towards the promotion of
true democratic reform and the country’s integration into the international community8
(Văduva, 2016). The foreign investment initially stayed away, but the trend has been
reversing since 2000. At the end of 2000 the percentage of the economy in the state
sector was only about 25% compared to the 66% in 1993, a privatization policy was
carried out even though slowly and with many structural and corruption problems.

However fragile, institutions and a framework for a market economy were created

6
Nomenklatura was a category of people within the Soviet Union and other Eastern Bloc countries who
held various key administrative positions in the bureaucracy, running all spheres of those countries'
activity: government, industry, agriculture, education, etc..
7
Big state owned industries like Sidex Galați with 27000 employees, which were subsidized in order to
avoid massive unemployment. Many of these big companies were later purchased by foreign investors.

8
Văduva, S. (2016). Between Globalization and Integration: The Europeanization of Romania.
SpringerBriefs in Economics, p.72.
between 1989 and 2000, and the economy was de-statized with over 50% of GDP being
produced by the private sector9 (Carey, 2004). Despite all this, the period until 2000
meant very little for regular people. The macroeconomic stabilization, privatization and
the reduction of government deficits were not an issue for them. Life was still hard; the
survival and the satisfaction of basic necessities were their main concern. As you can

see on the graphic below, the period between 1990 and 2000 is characterized by a
profound stagnation. From 2000 onward, we can see an exponential increase in GDP,
as a result of efforts undertaken in order to integrate Romania into European Union’s
access requirements. In January 2007 Romania became a full-fledged Member of the
European Union, after 17 years of struggle with corruption and institutional problems, which still
persist today.

2.2. Globalization and Economic Effect on Romania

As a complex phenomenon, the globalization is dependent on national and international

factors that may stimulate or hinder it. This carry diverse effects on national economies
and world economy as a whole (Dima, 2016).

These factors that may affect globalization may be10:

 Economical - trade, capital flows and financial development;

 Technological - technology exports, research and development, information
society;

9
Carey, H. (2004). Romania since 1989. Oxford: Lexington Books, p.386.
10
Dima, S. (2016). Globalisation, Trade Openness and Foreign Direct Investment in Romania. ''Vasile
Goldis'' Western University of Arad. p.2.
  Social - population migration, educational, health systems, poverty,
discrimination;
 Cultural – freedom, acceptance, tolerance;
 Politic - international and multilateral global cooperation, global stability and
security.

It is also expectable that high shares of FDI stocks as percentage of GDP indicate that
foreign capital constitutes an advancing factor of the globalization process. As such, it is
absolutely necessary in order for Eastern and Central European countries, after the fall
of the Soviet Union to attract such investment and to create the necessary conditions.
FDI provides not only more wealth but provides jobs, new technologies which make the
industry more competitive and the development of the capital.

In the graphic above, taken from a study made on the evolution of the Romanian KOF
globalization index11, we can observe that in 1990 the levels were at approximately 34%
of the GDP and in 2000 at 62%, to a maximum of 72% in 2007. With the recession this
trend was negative but it bounced back in 2011 and since then it has been rising.

Other indicator for economic globalization is trade openness, measured by the share of
the sum of exports and imports in total GDP. Since 1990 it steadily rose reaching at 80%
in 2014.

11
Dima, S. (2016). Globalisation, Trade Openness and Foreign Direct Investment in Romania. ''Vasile
Goldis'' Western University of Arad.
Regarding the FDI, in the graphic below we can see that in the first 10 years there was
a timid evolution of the FDI inflows due to an innaproptiate legislative framework and
structural problems which we mentioned before. Between 2004 and 2008.there was a
peak in the flow of foreign direct investment reported to the percentage of GDP, which
with the crisis crashed to pre-2000 levels. Since then it has been slowly recovering.

2.3. Globalization and Social Effect in Romania

Bibliography
Carey, H. (2004). Romania since 1989. Oxford: Lexington Books.

Dima, S. (2016). Globalisation, Trade Openness and Foreign Direct Investment in Romania.
''Vasile Goldis'' Western University of Arad.

Văduva, S. (2016). Between Globalization and Integration: The Europeanization of Romania.

SpringerBriefs in Economics.

Giddens, A. (2006). Sociology 5th Edition. Cambridge: Polity Press