Why is Romania lagging behind?

Few days ago I had the opportunity to present a paper at a conference organised in Tallinn, the capital of Estonia. For me it was a great chance not only to get in contact with other participants but also to get to know the realities of a country that lately was perceived as being the main engine of the so-called Baltic economic miracle. Two years ago, being in St. Petersburg, the old Russian capital, a professor told me that after all is not true that in Estonia, Latvia or Lithuania the economic picture is very different of the Russian one and that the USSR’s legacy is still very visible. So, for me these countries represented a double challenge, to see if the economic miracle really exists and to compare their situation with that of my country. When being abroad, I have the obsession to identify what is different in Romania relatively to the country that I’m visiting, but also to understand the causes for such a difference.

A month ago I have been for the first time in Lithuania, and then I have been quite satisfied to see that my country is doing better than the Baltic one, and I started to believe that probably the Russian professor was right about the illusion of an economic miracle in that region. But now, in the Estonian case I could only be disappointed after noticing the gap that exists between Romania and the little Baltic country. I have the impression that to some extent in the Baltic region Estonia (and probably Latvia) is the projection of a micro-scale Central Europe, as a country or group of countries that are developing faster their economies than the countries of the region. In order to understand the gap, probably most scholars would make use of culture or religion for explaining why some countries are doing better and others not. Webber’s theory is always good for analysing such differences, but still not enough. If you have a look at the orthodox countries you could see that they are the less developed and the most problematic ones (nowadays Greece confirms such a fact). The religion always has a meaningful impact on the process of capital accumulation that is fundamental for further economic development, but at the beginning of the 90s accumulation of capital had to follow another pattern, not classical accumulation but rather import of capital from outside, mainly from capitalist western countries. Once again, it seems that Marx was right when he was arguing that the amount of capital is the main element of societies’ development.

Obviously, we should analyse why Estonia or Central European countries had a faster capital accumulation process. First of all, I should mention that in Romania no market reforms were provided by Ceauşescu’s regime, while other communist countries had reformist governments that starting already from the 80s prepared their economies for a more market oriented approach. Those shy reforms had also a positive impact on the society’s entrepreneurship and private initiative, that in the next decades proved to be very useful for these economies. The Baltic countries also experienced such reforms under Gorbaciov’s perestroika and Estonia even before that era. Theoretically, these reforms of the 80’s were determinant for internal accumulation of capital. So, Romania missed the begining of the race, having its start 10 years latter.

The external dimension of capital accumulation is also very important. If you look at a map, you could easily notice that Romania is completely isolated from Western Europe, representing the second wave of countries that are disposed around Germany and Austria. Romania and Bulgaria were granted membership to the European Union three years latter than Baltic and Central European countries not because the privatization wasn’t done or because reforms weren’t implemented, but because being less developped it was expected that they will not be able to face the EU’s internal competition. I would rather explain Romania’s lagging behind by the lack of real small and medium size enterprises investments, that are representing the driving force of each national economy. Also is well known that SMEs are the most cautious ones, because they never can rely on their national governments to protect them outside the national boarders, as it is the case for large companies. So, the SMEs will first invest not too far from home, looking for business opportunities in the neighbouring countries, that are also culturally similar to a certain extent. Historically, Romania has always been connected with France, but fifty years of communism deteriorated our traditional links, and explains why now there are no significative contacts between our two peoples. That is why excepting several large French companies, in Romania there are very few French SMEs that invested after 1989, being afraid not only of political instability but probably also of the war from the nieghbouring Yugoslavia.

Central European countries constituted at the begining of the 90s the Visegrad Group, that represented a shield around Germany and Austria, Western countries that represented not only significant investors but also a model for economic and social problems that these countries were facing. The same situation could have been noticed in the Baltic states, where a lot of Finish and Swedish investments came from the very begining of the 90s. From this perspective, the Lithuanian case is worth to be analysed, because that country is the last developed, and quite similar to Romania. If Romania is separated from the West by Central European countries, Lithuania is the most southern Baltic country and also with the most numerous population, being isolated between Poland, Russia, Belarus and Latvia. I would say that Western investments are made following invisible concentrical circles, geography being the most important factor when investing abroad and not specially different international rankings emited by different risk agencies.

Trying to understand Estonia’s economic situation I wanted to have a discussion about that issue with my Estonian colleagues. From them I found out that almost 50% of Estonia’s economy is in Finnish hands, but on the Tallinn streets you could find also a lot of Swedish brands. When in Tallinn, you don’t have the impression of being somewhere in a post-communist country, but rather somewhere in Scandinavia. This is not the case for Vilnius, where you still can find Soviet legacy in infrastructure and also in people’s mentality. After a short visit in Helsinki, on my way back to Estonia I had a quite interesting and fruitful conversation with a Russian from Estonia that was working in Finland. He also explained me several things about the realities from the field. First of all, it must be mentioned that Estonia is a country of only 1,3 million people and represented even under Brezhnev the republic where different economic experiments were tested. As we know, for the Gorbaciov’s USSR the scandinavian economic model always has been attractive because it combined market force with strong social protection. After the Soviet Union’s disapeared, neighbouring Finland begun to cooperate with Estonians that are also fino-ugric speaking population (only Hungarians are using a related language to their in Europe).

Romania under communism had the purest planned economy and no reforms were provided in the 80s. Unfortunately at the begining of the 90s Romanian transformation path was a gradual one, Romanian politicians being afraid of a shock therapy that was considered to be unappropriate for the national economy. Romania’s Latin relatives in Europe are situated unfortunately not in the Balkans, so it was quite difficult to count on their assistance in providing changes. Moreover, excepting France (which is perceived lately rather as a political power than an economic one), Latin countries of Europe were always facing economic troubles.

Trying furthermore to find explanations for Romania’s backwardness I noticed that excepting a good commercial partnership with Moldova, Romania didn’t had the possibility to benefit from being member of an effective regional agreement for trade. If the Visegrad Group focused also on trade through CEFTA, the Baltic countries provided more or less a coordinated trade policy, being perceived as a united group of countries, Romania wasn’t able to create such a partnership together with Bulgaria and Serbia. It is today known that trade agreements have positive impact on economic performance and can change also the view on foreign policy.

To the question why is Romania lagging behind other post-communist countries is difficult to have a precise answer, but I consider that to blame only the politicians for this fact is a wrong approach. Travelling accross Eastern Europe (Central Europe, Baltic states and the Balkans) I could have seen the same attitude and mistrust regarding politicians as we have it in Romania. There were other elements that advantaged Central European and Baltic countries, and as I tried to present it, the main advantage is the geography.

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  • Dr.Lucian Iosif Cueşdean  On Iunie 19, 2010 at 4:08 pm

    • Read the book Romanian, the first language of Europe, by Dr.Lucian Iosif Cuesdean, Editor Solif, Bucharest, Romania, 2008.

    • • It exists a real Onomatopoeic Romanian language with more than 300 onomatopoeias and more than 350 onomatopoeias composed primary words with 1500 derived romanian words, something missing in other European languages.
    • • You have to admit that it existed even more than 10.000 years ago, in the First Farmers Civilization from Romania, and also in the famous Romanian Painted Pottery Civilization of Cucuteni, 7000 years ago, lasting until today, only in Romania.
    • • Reading the book Romanian, the first language of Europe, you’ll have a lot of surprises, especially that some European words are starting from these Romanian onomatopoeias (understude only by Romanians and no else) and that their senses are created by Romanian free morphems, with their senses added sometimes, to compose new European words, described as metaphores, understood only in Romanian.
    • • The first CART = CAR, in Romanian, Latin etymology CARRUM, was making a big nois = a CAR-ii = to croak, to bicker, a sCAR-tii = to creak, to scratch, to scrape.
    • To out, to blow out, to fly, to go by air, to soar, you express in Romanian by the onomtopoeia ZBRR
    • •or by the derived word a ZBuR-a, Latin ethymology EXVOLARE.
    • • You’ll see that Romanian language is not coming from the Romans.
    • The rural colloquial Romanian’s Latin vocabulary is older than Rome, because it stops before mankind gave a name to bricks, constructions, towns, money, and number 100, a level of evolution before the times of the Roman Empire, missing any kind of specific words of Romans.
    • • You may see that Punjabi language has 2000 Romanian words, 1000 of Romanian „Latin” ethymology, being of Massa-GETAE’s origine, ancestors of Romanians, who never met Romans but entered Punjabi 2500 years ago.
    • • In accordance with Wikipedia, in Pahalavy and Sanskrit Massagetae means The Great Getae.
    • • It has a special system, deriving from onomatopoeias, the oldest from Europe.
    • • Even the Getae, the ancestors of Romanians spoke a kind of „Latin”.
    • • Some nomads of the Getae people were the Goth.They were spiking too a sort of „Latin”.
    • Goth were real Getae, according to Jordanes who is the one that, 1500 years ago, wrotte about Goth (De Origine Actibusque Getarum), sayng clear that the Goth are the ancient Getae.
    • • The vocabulary of 300 words you may find in
    • • http://en.wiktionary.org/wiki/Appendix:List_of_Proto-Indo-European_roots
    • • is theirs and from the total of 569 PIE it has 200 in common with Latin and 300 in common with Romanian.
    • • Strabon, in 64 BC, said that Dacians and Getae were the same people with the same language.
    • • These Getae (Goth) were spread at the north side of Rine and Danube sources, and when met Julius Cezar he was so astonished by their „Latin” language, that he said that they are twin brothers with the Latins (=Germans).
    • • According to Gabriel Gheorghe and a lot of antique and German scholars, this was a Getic space, in a Daco-Getic Kingdom
    • • http://www.youtube.com/view_play_list?p=41CF2E7C0849C136 .
    • • Even the first citizen of Europe, 42,000 years agou, was a „Romanian” found in The bones cave of Banat in Romania.
    • •
    • •

  • Emilian  On Noiembrie 20, 2010 at 7:12 am

    Foarte interesant. As vrea sa stiu de unde as putea face si eu rost de aceasta carte. Mereu am fost interesat de radacinile limbii romane si nu stiam de unde sa imi caut resurse.
    Care librarii vand cartile dumneavoastra? Vreau sa rog pe cineva sa mi-o procure din tara.


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