Deindustrialization and Reindustrialization in Romania: Economic Strategy Challenges

274 Pages·2017·2.669 MB·English

by  Luminița Chivu, Constantin Ciutacu, George Georgescu

DEINDUSTRIALIZATION
AND REINDUSTRIALIZATION
IN ROMANIA
ECONOMIC STRATEGY CHALLENGES
LUMINITA CHIVU,
CONSTANTIN CIUTACU
AND GEORGE GEORGESCU
Deindustrialization and Reindustrialization
in Romania
“The depth and rigor of this work shows that the Romanian economy has spe-
cialists capable of offering a clear, precise and useful diagnosis of the weaknesses,
strengths and possibilities of Romanian industry from its origins to its present
and future. Luminita Chivu, Constantin Ciutacu and George Georgescu, with
the support of Romanian Academy, not only describe reality but also provide
alternative guidelines that will serve planners, international investors and
European and global governance bodies.”
— Jaime Gil-Aluja, President of the Royal Academy of Economics of Spain and
author of “Towards an Advanced Modelling of Complex
Economic Phenomena”
“The lack of industrial policy in the U.S.A. contributed mightily to the rise of
Trumpism, which demonstrates the dangers posed by globalization without
thinking creatively about the powerful structural and redistributive forces it
unleashes. This valuable case study establishes the foundational principles of
such policies for Romania with universal implications. Policy makers keen on
helping to establish a decent quality of life with a stable political system can
disregard these recommendations only at their peril.”
— John Komlos, Professor Emeritus, University of Munich and author of
“What Every Economics Student Needs to Know”
Luminiţa Chivu • Constantin Ciutacu
George Georgescu
Deindustrialization
and
Reindustrialization in
Romania
Economic Strategy Challenges
Luminiţa Chivu Constantin Ciutacu
National Institute for Economic Research National Institute for Economic Research
“Costin C. Kirițescu”, Bucharest, Romania “Costin C. Kirițescu”, Bucharest, Romania
George Georgescu
National Institute for Economic Research
“Costin C. Kirițescu”, Bucharest, Romania
ISBN 978-3-319-65752-3 ISBN 978-3-319-65753-0 (eBook)
DOI 10.1007/978-3-319-65753-0
Library of Congress Control Number: 2017957569
© The Editor(s) (if applicable) and The Author(s) 2017
This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and trans-
mission or information storage and retrieval, electronic adaptation, computer software, or by similar or
dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or
the editors give a warranty, express or implied, with respect to the material contained herein or for any
errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional
claims in published maps and institutional affiliations.
Cover illustration: Agencja Fotograficzna Caro / Alamy Stock Photo
Printed on acid-free paper
This Palgrave Macmillan imprint is published by Springer Nature
The registered company is Springer International Publishing AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Preface
The idea of the book originated in the importance we have given in our
previous studies to the key economic and social role of the industry sector
and the need to investigate the most relevant issues regarding the dynam-
ics of Romania’s post-communism deindustrialization, in order to find
appropriate answers to new challenges the country faces in the medium
and long term in a complex international context.
This book is structured into seven chapters, focusing, in a progressive
and analytical manner, on changes generated in the history of industrial
revolutions and particularities of Industry 4.0 current trends: Romania’s
macroeconomic developments during the transition to the market econ-
omy, including some adverse effects; the privatization of state-owned
companies; the impact of deindustrialization on industrial restructuring,
labour market and productivity, looking at relevant international experi-
ences in industrial policies as lessons to be learned by Romania; and con-
cluding with specific actions and measures, both legal and institutional,
which could support the country’ reindustrialization. Many arguments
are based on data series analysis and are illustrated with tables and figures,
making the material in the book more accessible by students and aca-
demic researchers, policy-makers in the field of industrial policies, inves-
tors or entrepreneurs.
We would like to mention that the elaboration of this study is the
result of much research, to which, an essential contribution was made by
v
vi Preface
the late professor Constantin Ciutacu, a remarkable personality and eco-
nomic researcher in Romania, who passed away earlier this year, to whom
we pay an emotional tribute. Respected and appreciated by all the
researchers and collaborators at the National Institute for Economic
Research “Costin C. Kiriţescu”, Professor Constantin Ciutacu enjoyed
honours, awards and distinctions of excellence, of which, the dearest to
his heart was the award of “Academic Merit”, the highest distinction
awarded by the Romanian Academy.
The study would not have had the actual substance it does and could
not have taken the pulse of Romania’s industrial realities without the
debate and analysis framework offered by the Employers Association of
Domestic Investors (PIAROM), for which we would like to thank the
President, Mr. Cristian Nicolae Pârvan.
All the work invested in this project could not have been finalized in a
book without the constant support of Palgrave Macmillan’s editorial
teams, to whom we are most grateful for their helpful initiatives, com-
ments and suggestions.
Contents
1 The National and European Context of Industrial
Development 1
2 M acroeconomic Changes in Romania During
the Transition Period 27
3 P rivatization-Driven Transformation of Romania’s
Industrial Landscape 57
4 I ndustrial Production Restructuring 81
5 Impacts of Romania’s Deindustrialization on 
Labour Market and Productivity 101
6 Industry and Industrial Policies in the European
Union 135
7 C onclusions on How the Industrial Economy in Romania
Should Be Supported 155
vii
viii Contents
A ppendices 175
Index 275
List of Figures
Fig. 4.1 Indices of gross value added, in industry, by subsectors
(1990 = 100.0). Source: Authors’ own compilation based
on data from Romania’s Statistic Yearbook, NIS, Bucharest,
various editions 90
Fig. 4.2 Indices of intermediate consumption, in industry,
by subsectors (1990 = 100.0). Source: Authors’ own
compilation based on data from Romania’s Statistic
Yearbook, NIS, Bucharest, various editions 90
Fig. 4.3 Share of imports and exports in production, by
groups of industrial products, in 2013 (%).
Source: Authors’ own compilation based on data
from National Accounts 2012–2013, NIS,
Bucharest, 2016 96
Fig. 5.1 The evolution of the number of employees in industry,
in the period 1960–2015 (thou. pers.).
Source: Authors’ own compilation based on NIS data 103
ix
List of Tables
Table 1.1 Steel production in some of the EU member states
(mil. tonnes) 6
Table 1.2 Manufacture of basic steel, and total trade in iron
scrap, by time periods 8
Table 1.3 Contribution of territories to the world added value
in the manufacturing industry (%) 10
Table 1.4 Manufacturing factor intensity level, by groups of industries 17
Table 1.5 Manufacturing factor intensity, by groups of industries 20
Table 2.1 The macroeconomic indicators, 1990–2015 32
Table 2.2 The GDP per capita, in purchasing power standards
(EU 28 = 100.0) 34
Table 2.3 The evolution of the gross production, intermediate
consumption and gross value added, by economic
sectors (current bn. euro) 35
Table 2.4 The structure of the gross production, intermediate
consumption and gross value added, by economic
sectors (%, prices for each year, total economy = 100.0) 37
Table 2.5 Price index during 1990–2015 (1990 = 100.0) 40
Table 2.6 Gross production, the GDP, and the annual worth
of transactions on the inter-bank foreign exchange
market (bn. euro) 43
Table 2.7 Romania’s foreign trade balance in 1991–2015
(bn. euro, %) 45
xi