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Romania and the need to reinvent its competitiveness from within - Doing Business | DOINGBUSINESS.RO

  |  08.11.2012

Romania and the need to reinvent its competitiveness from within

According to the World Economic Forum’s latest Global Competitiveness Report 2011-2012, Romania belongs to the second stage (out of a total of three transition stages) of a category of 28 other economies whose competitiveness features are defined as being 'efficiency-driven'

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Only Bulgaria is part of the same category from among the latest EU entrants, while all the other members of the trading bloc either belong to the third stage of the category or are well ahead in the lead category that are described as being “innovation-driven.”

According to the report, the top key efficiency enhancers for efficiency-driven economies are “higher education and training,” “goods market efficiency,” and “labor market efficiency.” The other enhancers have to do with de development of financial markets, technological readiness and the size of their markets.

The existential dilemma that Romania has come to face these days is that despite the nearly 23 years of democracy since it broke with communism, the country as a whole became less competitive than under communist rule in most ways. At least that’s what documented evidence shows. Startling as it may sound, that also appears to be the truth if we look around and in the recent past.



Let us start understanding what is going on by having a look at “higher education and training,” which is supposed to be the efficiency-driven economy’s top enhancer.

When Ceausescu’s communist regime was toppled in December of 1989, Romania had hundreds of thousands of skilled engineers. It also had tens of thousands of well-trained physicians, teachers, computer programmers and economists. And it had armies of skilled construction workers, mechanics, electricians, welders etc. But they were all trained and educated to serve the scope of a centralized economy. They were, however, more creative than their peers in other former communist countries, because they were often put at work due to reasons fueled by Ceausescu’s ambitions to become economically independent from both the Soviet Union and the West, as well as by his huge appetite to “reconstruct” the country by destroying both the good and the bad things around them. So all of these people had to often be more innovative then others in neighboring countries. Engineers figured out ways to move entire churches that Ceausescu had ordered to be demolished. Together with workers they had to find ways to complete works under the dictator’s tight deadlines. Education was a lot about discipline in Romanian schools and pupils were trained in a competitive environment, with the aim to obtain at least a high-school degree in urban areas. Universal literature books were cheap and Romanians were doing a lot of reading in the absence of rich TV programs or under heavy media censorship. Lots of students aimed to become physicians because of the deeply-rooted habit of paying the doctor under the table with goods, including food, coffee or cigarettes, at a time when food staples were extremely scarce. Others took the research path, because Ceausescu had realized he could not become economically independent without creating the country’s own patents or smartly copying western ones. Such development begged for more computer engineers and programmers, automation engineers and other jobs as such. Romania soon produced its own PCs, having copied a lot from the west, and it also had the manpower to run them.

But in communist years, Romania also had a problem in opposition with the type of labor force it partly possessed. Although education and training took place in a competitive manner to a certain degree, the economy itself was not one based on competition. Thus, skilled workforce was trapped in an economy that produced for the sake of production volumes rather than that of productivity, quality or market rules.

Too many of these skilled people found out soon after communism fell that their talents and services are no longer needed in their country that claimed to become market oriented. They soon came to realize out that their monthly wages were enough to buy only about 20 large bottles of western-made Coke in the early ‘90s, at a time of hyperinflation in Romania. The pace of building and producing gradually slowed because there were no more communist-type orders, and many construction workers and electricians went to countries like Israel, Germany, Spain, Italy or France to make money, often working illegally and constantly hiding from authorities. Only the less skilled and the younger stayed at home. That was also the case of the more educated – physicians, teachers, professors, computer scientists and many more – who soon found out that their work and talents were being paid extremely poorly at home when compared to what they could earn elsewhere in the West. And since lots of them spoke English or French, plus the fact that Romanian is Latin-based thus making it easy for Romanians to learn and understand Spanish or Italian, millions of the country’s citizens started a new life in the West. Among them, some of the most skilled left to never return again.


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