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The USV Annals of Economics and Public Administration VOLUME 15, ISSUE 1(21), 2015

Editura Universităţii “Ştefan cel Mare” din Suceava

The USV Annals of Economics and Public Administration

Volume 15, Issue 1(21), 2015

EDITORIAL BOARD: Editor‐in‐chief: Carmen NĂSTASE  Executive editor: Adrian Liviu SCUTARIU  Editors: Elena HLACIUC, Carmen CHAŞOVSCHI, Florin BOGHEAN, Mariana LUPAN,   Ovidiu Florin HURJUI, Simona BUTA  SCIENTIFIC COMMITTEE: Angela ALBU, „Ştefan cel Mare” University of Suceava, Romania  Paolo ANDREI, University of Studies in Parma, Italy  Stefano AZZALI, University of Studies in Parma, Italiy  George P. BABU, University of Southern Mississippi, USA  Christian BAUMGARTNER, International Friends of Nature, Austria  Grigore BELOSTECINIC, ASEM, Chi şinău, Republic of Moldova  Ionel BOSTAN, „Alexandru Ioan Cuza” University of Iaşi, Romania  Aurel BURCIU, „Ştefan cel Mare” University of Suceava, Romania  Gheorghe CÂRSTEA, Academy of Economic Studies, Bucharest , Romania  Slobodan CEROVIC, Singidunum University, Belgrade, Serbia  Simion CERTAN, State University of Chişinău, Republic of Moldova  Carmen CHAŞOVSCHI, „Ştefan cel Mare” University of Suceava, Romania  Liliana ELMAZI, Tirana University, Albania  Manuela Rodica GOGONEA, Academy of Economic Studies, Bucuresti, Romania  Cristian Valentin HAPENCIUC, „Ştefan cel Mare” University of Suceava, Romania  Elena HLACIUC, „Ştefan cel Mare” University of Suceava, Romania  Elena IFTIME, „Ştefan cel Mare” University of Suceava, Romania  Marian JALENCU, State University of Chişinău, Republic of Moldova  Miika KAJANUS, Savonia University of Applied Sciences, Iisalmi, Finland  Alunica MORARIU, „Ştefan cel Mare” University of Suceava, Romania  Maria MUREŞAN, Academy of Economic Studies, Bucuresti, Romania  Carmen NĂSTASE, „Ştefan cel Mare” University of Suceava, Roman ia  Alexandru NEDELEA, „Ştefan cel Mare” University of Suceava, Romania  Ion PÂRŢACHI, ASEM, Chişinău, Republic of Moldova  Rusalim PETRIŞ, „Ştefan cel Mare” University of Suceava, Romania  Abraham PIZAM, University of Central Florida, Orlando, Florida  Ion POHOAŢĂ, „Alexandru Ioan Cuza” University of Iaşi, Romania  Gabriela PRELIPCEAN, „Ştefan cel Mare” University of Suceava, Romania  Gheorghe SANDU, „Ştefan cel Mare” University of Suceava, Romania  Petru SANDU, Elizabethtown College, Pennsylvania, USA  Doru TILIUŢE, „Ştefan cel Mare” University of Suceava, Romania  Viorel ŢURCANU, ASEM, Chişinău, Republic of Moldova  Diego VARELA PEDREIRA, University of A Coruna, Spain  Răzvan VIORESCU, „Ştefan cel Mare” University of Suceava, Romania  Marian ZAHARIA, Petroleum‐Gas University of Ploiești, Romania  Cover design & graphic layout: Adrian Liviu SCUTARIU Contact: Faculty of Economics and Public Administration „Ştefan cel Mare” University of Suceava Str. Universităţii nr. 13, Corp H, Birou H105, 720229 SUCEAVA, ROMANIA Phone: (+40) 230 216147 ext. 297 E-mail: [email protected] Journal web site: www.annals.seap.usv.ro Faculty web site: www.seap.usv.ro University web site: www.usv.ro 2

Întreaga răspundere asupra conţinutului articolelor publicate revine autorilor. The entire responsability for the content of the published articles rests with the authors.

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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 STRATEGY…………………………………………………………20 Victor‐Romeo IONESCU PRESSURE OF AGEING ON REGIONAL DEVELOPMENT. CHALLENGES AND LIMITS FOR THE LABOUR MARKET.29 Silvia PISICĂ Valentina VASILE Ana Maria DOBRE INFORMATION AND KNOWLEDGE IN A GLOBAL CONTEXT……………………………………………………………………………39 Florina BRAN Maria‐Loredana POPESCU GENERAL CONSIDERATIONS ON INDUSTRIAL PROPERTY RIGHTS AND THE ROLE OF PATENT ADVISOR………41 Gabriel I. NĂSTASE Bogdan PASCU Carmen Georgiana V. BADEA REGIONAL DEVELOPMENT: ROMANIA’S CASE………………………………………………………………………………………………49 Emilian M. DOBRESCU Diana‐Mihaela POCIOVĂLIȘTEANU SUSTAINABLE DEVELOPMENT OF ROMANIAN AGRICULTURE WITHIN THE CONTEXT OF EUROPEAN UNION’S REQUIREMENTS……………………………………………………………………………………………………………………………………………57 Carmen Valentina RADULESCU Ildiko IOAN SUSTAINABLE ECONOMIC GROWTH AND ECO‐EFFICIENCY……………………………………………………………………………63 Mariana LUPAN Angela Nicoleta COZORICI LOOKING FOR (RE)DEFINING UNIVERSITY AUTONOMY…………………………………………………………………………………74 Ala COTELNIC Angela NICULITA Petru TODOS Romeo TURCAN Larisa BUGAIAN Daniela POJAR PRIORITIES IN REGIONAL DEVELOPMENT IN ROMANIA…………………………………………………………………………………91 Mihai POPESCU ASPECTS OF REGIONAL COMPETITIVENESS THROUGH DYNAMIC PRICES OF PETROLEUM PRODUCTS……………99 Daniela ENACHESCU THE ILLUSION OF CATCHING UP THE SOCIO‐ECONOMIC REGIONAL GAPS……………………………………………………105 Eugen GHIORGHITA LANDMARKS IN THE EVOLUTION OF REGIONAL SCIENCE……………………………………………………………………………114 Adrian Liviu SCUTARIU 3

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THE MODEL OF CROSS‐BORDER COOPERATION IN THE ROMANIAN‐BULGARIAN 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 CONTEXT………………………………………127 Mihaela NECULITA Liliana Mihaela MOGA COMPETITIVENESS AND INNOVATION IN THE ROMANIAN REGIONS – HOW MUCH PROGRESS DURING THE POST‐ACCESSION PERIOD? …………………………………………………………………………………………………………………………133 Carmen Beatrice PAUNA Marioara IORDAN Mihaela‐Nona CHILIAN DEVELOPMENT OF CROSS‐BORDER AREAS. STUDY CASES REVIEW……………………………………………………………..142 Marcela ȘLUSARCIUC THE EUROPEAN UNION “CHASING” A PLURILATERAL MARKET ACCESS BY NEGOTIATING THE TISA……………152 Ludmila BORTA SECTION 2 MANAGEMENT AND BUSINESS ADMINISTRATION…………………………………………………………………..159 CLOUD‐BASED VS DESKTOP‐BASED 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 Otilia‐Maria BORDEIANU Simona BUTA OPINIONS OF ECONOMIC ENTITIES FROM BRAȘOV AND SUCEAVA COUNTIES REGARDING THE IMPORTANCE OF LEASE SERVICES FOR DEVELOPING THE BUSINESS ENVIRONMENT……………………………………………………………..176 Oana BĂRBULESCU Cristian Valentin HAPENCIUC Andrei‐Alexandru MOROȘAN Mihai COSTEA PHARMACEUTICAL COMPANIES BETWEEN CRISIS AND COMPETITIVENESS ‐ SECTORAL DIAGNOSIS…………………………………………………………………………………………………………………………………………………189 Mihaela BÎRSAN Ştefăniţă ŞUŞU A TERRITORIAL PROFILE OF PUBLIC EXPENDITURES AT LAU 2 LEVEL, FOR 2007‐2013 PERIOD IN ROMANIA204 Cristina LINCARU Speranta PIRCIOG Vasilica CIUCĂ Draga ATANASIU Beatrice CHIRIAC IMPACT OF MARKETING STRATEGIES ON SACHET PRODUCTS IN BANGLADESH…………………………………………..214 Hossain Shahid SHOHROWARDHY H.M. Kamrul HASSAN

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SECTION 3 ACCOUNTING - FINANCES………………………………………………………………………………………………………………223 ACCOUNTING REPORTS AND BUDGET PROCESS IN THE ROMANIAN PUBLIC SECTOR BETWEEN CONVERGENCE AND CHALLENGE…………………………………………………………………………………………………………………………………………224 Elena HLACIUC Marian SOCOLIUC Geanina MACIUCA Antonela URSACHI RECENT ADAPTATIONS OF THE LEGAL STANDARDS APPLIED TO TAX LIABILITIES THROUGH GOVERNMENT ORDINANCES………………………………………………………………………………………………………………………………………………230 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 EDUCATION………………………………………………………………………………………………………………241 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 MATHEMATICS………………………………………………254 TERTIARY EDUCATION: WHERE TO? AN ANALYSIS AT THE REGIONAL LEVEL IN ROMANIA………………………….255 Marian ZAHARIA Aniela BĂLĂCESCU 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 ADMINISTRATION……………………………………………………………………………………………270 ETHICS IN PUBLIC ADMINISTRATION. CASE STUDY – ROMANIA…………………………………………………………………...271 Răzvan VIORESCU Gabriela NEMŢOI FORECAST, ORGANIZATION‐COORDINATION AND MOTIVATION IN LOCAL PUBLIC ADMINISTRATION MANAGEMENT……………………………………………………………………………………………………………….……………………………278 Petronela SCUTARIU PARADIGMS REGARDING CONCERTED PRACTICES OF COMPETITION POLICY………………………………………………286 Gabriela NEMŢOI Răzvan VIORESCU INSTRUCŢIUNI UTILE PENTRU AUTORI / AUTHOR GUIDELINES ............................................292 5

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SECTION 1

ECONOMY, TRADE, SERVICES

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THE ECONOMIC EFFECTS OF EMIGRATION OF YOUNG HIGHLY EDUCATED ROMANIANS Professor Ph.D. Dorel AILENEI Bucharest University of Economic Studies, Romania [email protected] Associate Professor Ph.D. Liana BADEA Bucharest University of Economic Studies, Romania [email protected] Assistant Professor Ph.D. Cristina DIMA University Politehnica of Bucharest, Romania [email protected] 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

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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 of migration

The main studied aspects

1957

D. Massey G. Myrdal

Migration can be seen as a process of self-sustaining capacity through the mechanisms which itself gives birth.

1960

1962-1964

O. Stark M.P. Todaro J.R. Harris G. Becker, Th. Shults, L.A.Sjaastad

1966

E.S. Lee

1979

L. Basch, M. J. Piore

1987

D. Massey, L.P. Goldring, J. Durand

1989

E. Taylor, O. Stark, P. Arnold, D. Massey

Migration can be analyzed from the perspective of individual rational decision. This kind of person will be able to assess prospects for increasing revenues. Migration can be regarded as an investment process in human capital of migrants. 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. Migration has to be studied as an effect of labor demand in the secondary sectors in developed countries. Migration is analyzed in terms of capital formation mechanism. Migration - family strategy directed to minimizing risks of 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

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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

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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”).

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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.).

Source: Authors processing based on the results of research carried out during March-April 2015

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

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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").

Source: Authors processing based on the results of research carried out during March-April 2015

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?".

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Fig. 3.5. Do you have relatives / acquaintances who have moved to another country and if so, where? Source: Authors processing based on the results of research carried out during March-April 2015

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? Source: Authors processing based on the results of research carried out during March-April 2015

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).

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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? Source: Authors processing based on the results of research carried out during March-April 2015

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.).

Source: Authors processing based on the results of research carried out during March-April 2015

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.).

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Fig. 3.9. To what extent do you think you could have a better standard of living in another country? Source: Authors processing based on the results of research carried out during March-April 2015

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? Source: Authors processing based on the results of research carried out during March-April 2015

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

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Fig. 3.11. What country would you choose in the situation you decide to emigrate? Source: Authors processing based on the results of research carried out during March-April 2015

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? Source: Authors processing based on the results of research carried out during March-April 2015

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

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Fig. 3.13. What are reasons for which you would return home? Source: Authors processing based on the results of research carried out during March-April 2015

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

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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. 275–289. 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 migraţiei internaţionale, Sociologie Românească, 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 Național de Statistică (2014), Migrația internațională a României, București, 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=00703370%281966%293%3A1%3C47%3AATOM%3E2.0.CO%3B2-B, [accessed March 15, 2015] 10. Marx, K. (2009), Critica economiei politice. Procesul de producţie al capitalului, vol.I, Alexandria Publishing House, Suceava 18

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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-populationregarding-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), Avuţia naţiunilor cercetare asupra naturii şi cauzelor ei, Editura Universitas, Chișinău 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.

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PIGS COUNTRIES’ NEW CHALLENGES UNDER EUROPE 2020 STRATEGY Victor‐Romeo IONESCU Danubius University of Galati, Faculty of Economics, Romania romeo.v.ionescu@univ‐danubius.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 Strategy’s 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 Strategy’s 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 crisis’s 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

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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).

Euro area Portugal Italy Greece Spain

Table 1: GDP growth rates (%) 2012 2013 2014 -0.7 -0.4 -3.2 -1.6 -2.5 -1.9 -6.4 -3.7 -1.6 -1.2

2015 1.2 0.8 0.6 0.6 1.0

1.8 1.5 1.2 2.9 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 rate’s 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.

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Figure 2: Real GDP growth rate under cluster analysis Source: personal contribution using IBM-SPSS software

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). 2010 Euro area Portugal Italy Greece Spain

Table 2: Employment rates trend (%) 2011 2012 68.8 68.4 68.1 70.3 68.8 66.3 61.1 61.2 61.0 63.8 59.6 55.0 62.8 62.0 59.6

2013 67.7 65.4 59.8 52.9 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 rate’s disparities Source: personal contribution using IBM-SPSS software

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.

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Figure 4: Employment rate under cluster analysis Source: personal contribution using IBM-SPSS software

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 (http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=0&language=en&pcode=t 2020_20&tableSelection=1) as in Table 3.

Euro area Portugal Italy Greece Spain

Table 3: Gross domestic expenditure on R&D (% of GDP) 2010 2011 2012 2013 2.00 2.04 2.09 1.53 1.46 1.37 1.22 1.21 1.26 0.60 0.67 0.69 1.35 1.32 1.27

2.12 1.36 1.25 0.78 1.24

According to Table 3, the Euro area average investment in R&D increased during 20102013, 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&D’s disparities Source: personal contribution using IBM-SPSS software

The same cluster test seems to be fair as quality and ratio sizes (see Figure 6).

Figure 6: R&D expenditure under cluster analysis Source: personal contribution using IBM-SPSS software 23

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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 (http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=0&language=en&pcode=t 2020_10&tableSelection=1). 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 Source: personal contribution using IBM-SPSS software

Figure 7 allows anticipating the existence of two clusters across the PIGS countries (see Figure 8).

Figure 8: Gas emissions under cluster analysis Source: personal contribution using IBM-SPSS software 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 (http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=0&language=en&pcode=t 2020_41&tableSelection=1). The statistical data are presented in Table 5.

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Euro area Portugal Italy Greece Spain

Table 5: Tertiary educational attainment (%) 2010 2011 2012 33.6 34.0 34.9 24.0 26.7 27.8 19.8 20.3 21.7 28.6 29.1 31.2 42.0 41.9 41.5

2013 35.9 30.0 22.4 34.9 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 attainment’s disparities Source: personal contribution using IBM-SPSS software

Figure 10: Tertiary educational attainment under cluster analysis Source: personal contribution using IBM-SPSS software

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. (http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=0&language=en&pcode=t 2020_50&tableSelection=2). Table 6: People at risk of poverty (% of total population) 2010 Euro area Portugal Italy Greece Spain

2011 21.9 25.3 24.5 27.7 26.7

2012 23.0 24.4 28.2 31.0 27.7

25

2013 23.4 25.3 29.9 34.6 28.2

23.0 27.4 28.4 35.7 27.3

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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 risk’s disparities Source: personal contribution using IBM-SPSS software

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 Source: personal contribution using IBM-SPSS software

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 Strategy’s targets and the possibility to have a cluster approach in analyzing these countries. 4 THE VIABILITY OF EUROPE 2020 STRATEGY’S 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

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Greece

Spain Figure 13: GDP forecasting (%) Source: personal contribution using IBM-SPSS software

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 rate’s forecasting result has to be compared to Europe 2020 Strategy’s goal of 75% in 2020. The employment rate’s forecast is presented in Figure 14.

Portugal

Italy

Greece Spain Figure 14: Employment rate forecasting (%) Source: personal contribution using IBM-SPSS software

Unfortunately, no PIGS economy will be able to achieve the Strategy’s 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 Strategy’s 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 Strategy’s 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 (%) Source: personal contribution using IBM-SPSS software

All PIGS countries will have a positive trend related to expenditure on R&D during 20152020. 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

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Italy

Portugal

Spain Figure 16: Gas emissions forecasting (%)

Greece

Source: personal contribution using IBM-SPSS software

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 (%) Source: personal contribution using IBM-SPSS software

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

Greece

Italy

Spain Figure 18: Risk of poverty forecasting (%) Source: personal contribution using IBM-SPSS software

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

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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. 2. 3. 4.

Dainotto Roberto M. (2006), Europe (in Theory), Durham: Duke University Press, p. 2. European Commission (2014), European Economic Forecast-Winter, Brussels, p. 1. Krouse Sarah (2012). Investing in PIIGS: Portugal, Financial News, 19th of March. 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 débat français, 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 8. http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=0&language=en&p code=t2020_20&tableSelection=1 9. http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=0&language=en&p code=t2020_10&tableSelection=1 10. http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=0&language=en&p code=t2020_41&tableSelection=1 11. http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=0&language=en&p code=t2020_50&tableSelection=2

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PRESSURE OF AGEING ON REGIONAL DEVELOPMENT. CHALLENGES AND LIMITS FOR THE LABOUR MARKET



Silvia PISICĂ National Institute of Statistics, Romania [email protected] Valentina VASILE Institute of National Economy, Romanian Academy, Romania [email protected] Ana Maria DOBRE Institute of National Economy, Romanian Academy & National Institute of Statistics, Romania [email protected]

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 Usual resident population, thousands persons of which, by age groups, in %: 0-14 years 15-24 years 25-34 years 35-64 years 65 years + Ageing Index, number of persons 65 years+ per hundred persons 0-14 years

2014 19942.6

2030 18107.1

2060 13031.8

15.5 11.4 13.9 42.6 16.6 106.7

12.1 10.7 11.6 44.2 21.4 177.2

9.9 8.5 10.1 40.5 31.0 311.5

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

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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 Romania’s 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

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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 Romania’s 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

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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 medianage. 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 elderly people in Romania, 2008-2013 (%)

Figure 7. Elderly persons participation in 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

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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 NorthEast (11.4 percentage points) and North-West (13.9 percentage points). Figure 8. Labour force participation for persons aged 15 years and over in Romania, NUTS 2 level (%)

Figure 9. Labour force participation by gender for persons aged 15 years and over in Romania, in 2013, 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

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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-ofpoverty 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

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South - West Oltenia West

36.9 15.9

37.4 15.4

30.7 17.6

28.9 18.8

29.9 20.5

30.1 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-ofpoverty 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

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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

To establish or increase future retirement pension entitlements

Romania 6.8

5.7

To provide sufficient personal/household income

37.2

90.5

To establish/increase future retirement pension entitlements and to provide sufficient personal/household income Non-financial reasons, e.g. work satisfaction

14.6

1.6

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

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5. National Institute of Statistics, Labour Force Survey, annual database, Tempo on-line, http://statistici.insse.ro/shop/ 6. Pisică S , Vasile V., Voineagu V., (2012), Piaţa muncii între formal şi informal, Bucharest: Editura Expert, ISBN 978-973-619-296-9. 7. Pisică S. (coord.), Moldoveanu R., "Forţa de muncă în România: Ocupare şi şomaj în anul…"(annual publication), National Institute of Statistics, 2005 – 2013, ISSN 1223-6446 8. Pisică S. (coord.), Postelnicu, M., Apostol, M., et al., (2012), "Îmbătrânirea populaţiei României", Institutul Naţional de Statistică, ISSN 2285-8237 Annex Z-Score analysis for employment rate of labour resources NUTS 2 (region) North - East

NUTS 3 (county) Bacau

Z-Score -1.81

NUTS 2 (region) South - East

NUTS 3 (county) Buzau

Z-Score -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

Valcea

0.77

South - Muntenia

Ialomita

-0.58

South - West Oltenia 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

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INFORMATION AND KNOWLEDGE IN A GLOBAL CONTEXT Professor Ph.D. Florina BRAN The Bucharest University of Economic Studies, Bucharest, România [email protected] Assistant Professor Ph.D. Maria‐Loredana POPESCU Spiru Haret University, Bucharest, România [email protected] 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 today’s 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 (Dobrotă, 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

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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

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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 40’s, 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. Asia’s 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, America’s 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. Brazil’s 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

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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

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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 economică, Editura AII, Bucureşti, p. 217. 2. Bran, F., ( Coordonator) (2012), Globalizarea.Manifestări şi reacţii, Editura Economică, Bucureşti 3. Bran, P. (2010), Managementul prin valoare, Editura Universitară, Bucureşti 4. Dobrotă N. (1994), Dicţionar de economie, Editura Economică, Bucureşti, 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 şi procesul economic, Editura Expert, Bucureşti 7. Suciu, M.C. (2008), Activele intangibile şi capitalul intelectual - factori-cheie şi convergenţi, in Convergenţa economică, Iancu Aurel coord., Editura Academiei Române, Bucureşti, pp. 242-287 8. http://europa.eu./int/infonnation-society/index-fr.htm 9.

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GENERAL CONSIDERATIONS ON INDUSTRIAL PROPERTY RIGHTS AND THE ROLE OF PATENT ADVISOR Associate professor Ph.D. Gabriel I. NĂSTASE „Dimitrie Cantemir” Christian University, Bucharest, Romania [email protected] 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 (Năstase, 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

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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

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- 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

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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

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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. Năstase, I. G., Lorenţ, A. (2008), Managementul inovării. Inventatori şi consilieri de brevete, Editura AGIR, Bucureşti 4. Năstase, I.G. (2013), Innovation and industrial property rights, Quality – Access to Success, 14, S3, pp.101-109. 5. www.wipo.int 48

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REGIONAL DEVELOPMENT: ROMANIA’S CASE Prof. Ph.D. Emilian M. DOBRESCU Institute of National Economy, Romania [email protected] Assoc. Prof. Ph.D. Diana‐Mihaela POCIOVĂLIȘTEANU “Constantin Brancuși” University of Targu‐Jiu, Romania [email protected] 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 80’s 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 (Botoşani, Vaslui, Maramureş, Bistriţa-Năsăud, 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 70’s; they have worsened in the 80’s 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.

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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 Bucureşti-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 population’s 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 Botoşani and Vaslui, and the second one in the southern plain area of the country and it comprises the counties of Teleorman, Giurgiu, Călăraşi and Ialomiţa. In regards to Botoşani and Ialomiţa, 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 Călăraşi, 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 Constanţa, 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 ((Bistriţa-Năsăud, Botoşani, Tulcea, Vaslui etc.). In terms of spatial distribution, we can notice a classification of the spatial distribution , registering major differences between the East 50

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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 Maramureş 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 Mehedinţi, Caraş-Severin and Hunedoara, while Brăila, Dâmboviţa and Ialomiţa have undergone a certain growth. The maximum of stability has been acquired by both the developed regions (Sibiu, Braşov, Cluj and Timiş) and the less-developed ones (Giurgiu, Botoşani, Vaslui, Călăraşi, 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 government’s 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

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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 DEVELOPMENT

AND

OBJECTIVES

OF

THE

REGIONAL

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

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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 country’s needs and the needs of geographic regions, as well as economic and cultural. Regional development processes are placed in the broader context of Romania’s 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 country’s 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 economy’s 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 region’s 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

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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

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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. BIBLIOGRAPHY 1. Adumitrăcesei, I.D. şi Niculescu, N.G., (1998), Economia românescă postsocialistă Încotro? Cum? De ce?, Editura Economică, Bucureşti 2. Apostolache, Mihaela Adina, (2014), Regional Development in Romania – From Regulations to Practice, Procedia Economics and Finance, vol. 8, 2014, p. 35-41 3. Axenciuc, Victor, (2000), Avuţia naţională a României. Cercetări istorice comparate, Centrul Român de Economie Comparată şi Consensuală, Bucureşti 4. Bălăcescu, Aniela, Zaharia, Marian, (2013), The Impact of the Economic Crisis to Employment and Unemployment Rate in Romania Macroregion, Annals – Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 6, pp. 136-143 5. Belli, Nicolae, (2001), Tranziţia mai grea decât un război. România 1990-2000, Editura Expert, Bucureşti 6. Bondrea, Aurelian, (2000), Starea naţiunii 2000. România încotro ?, volumul I, Editura Fundaţiei România de Mâine, Bucureşti 7. Ciumara, Mircea, (1997), Economie, politică şi interesul naţional, Editura Expert, Bucureşti 8. Dobrescu, Emilian M., (2000) Românografia 2001. Bilanţ şi perspective, Editura Compania, Bucureşti 9. Dobrescu, Emilian M., (2000), Integrarea economică, ediţia a II-a revăzută şi adăugită, Editura All, Bucureşti 10. Dobrescu, M.E., Avram, S., Zamfirescu, S., "Europeanisation Opportunity for Romania through Promoting the Social-Economic Regional Development and Diversity", project financed by Directorate General for Education and Culture of the European Commission, within the programme called: "Support for European integration activities organised by the academic world", http://www.houseofeurope.ro/europEN.htm

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11. Dochia, Aurelian, (2000), Matricea stilistică a factorilor de producţie. Un nou cadru conceptual de analiză comparată şi măsurare a sistemelor economice, Editura Expert, Bucureşti 12. Frenţ, Gabriela şi Dumitrescu, Ileana, (2000), Stimularea iniţiativelor locale şi dezvoltarea durabilă, Bucureşti, Centrul de Informare şi Documentare Economică, Probleme economice, nr. 14-15 13. Ghibuţiu, Agnes, (2000), Serviciile şi dezvoltarea. De la prejudecăţi la noi orizonturi, Editura Expert, Bucureşti 14. Neagu, Vasile, (2000), Servicii şi turism, Colecţia Economia României, Editura Expert, Bucureşti 15. Odae, Nicoleta, (2000), Oportunităţi şi restricţii ale dezvoltării industriale la nivel regional în România, Bucureşti, Centrul de Informare şi Documentare Economică, Studii şi cercetări economice, nr. 6 16. Păuna, Carmen şi colaboratorii, (2000), Stimularea iniţiativelor locale şi dezvoltarea durabilă, Bucureşti, Centrul de Informare şi Documentare Economică, Probleme economice, nr. 23-24-25 17. Pavelescu, Florin-Marius, (2000), Valorificarea capitalului uman în plan regional, Bucureşti, Centrul de Informare şi Documentare Economică, Probleme economice, nr. 1 18. Perţ, Steliana, (2000), Ocuparea forţei de muncă – o prioritate naţională, Bucureşti, Centrul de Informare şi Documentare Economică, Revista Română de Economie, nr. 1-2 19. Petcu, Constanţa, (2000), Caracteristici ale dezechilibrelor pieţei forţei de muncă în România anilor ’90, Bucureşti, Centrul de Informare şi Documentare Economică, Revista Română de Economie, nr. 1-2 20. Simon, Maria, (2000), Potenţialul uman al României. Repatiţia teritorială şi perspective la începutul secolului XXI, Bucureşti, Centrul de Informare şi Documentare Economică, Analele Institutului Naţional de Cercetări economice, nr. 2-3 21. Surd, Vasile, Kassai, Ianos, Giurgiu, Laura, Romania disparities in regional development, Procedia Social and Behavioral Sciences, vol 19, 2011, p. 21-30 22. Zamfir, Cătălin, (2000), Strategii antisărăcie şi dezvoltare comunitară, Colecţia Dezvoltare comunitară, Editura Expert, Bucureşti * * * România în cifre – 2001, Institutul Naţional de Statistică şi Studii economice, Bucureşti, 2001 * * * Un proiect deschis: Strategia naţională de dezvoltare economică a României pe termen mediu. Documente, Bucureşti, Centrul Român de Economie Comparată şi Consensuală, 2000 * * * Cartea albă a preluării guvernării în luna decembrie 2000, Bucureşti, aprilie 2001, Monitorul Oficial * * * Comisia Naţională pentru Statistică – Mediul înconjurător în România, 1998 * * * Configuraţia actuală a învăţământului pentru minorităţile naţionale din România, 1999 * * * Agenda 2000 - Punctele de vedere ale Comisiei Europene în legătură cu solicitarea României de aderare la UE, Uniunea Eurpeană, 1999

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SUSTAINABLE DEVELOPMENT OF ROMANIAN AGRICULTURE WITHIN THE CONTEXT OF EUROPEAN UNION’S REQUIREMENTS PhD. Associate professor Carmen Valentina RADULESCU The Bucharest University of Economic Studies, Romania [email protected] PhD. Associate professor Ildiko IOAN The Bucharest University of Economic Studies, Romania [email protected] 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

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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

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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; - Agriculture’s 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

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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. ROMANIA’S 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 Romania’s territory by categories of use Source: own representation using INS data

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Fig. 3 The structure of Romania’s 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 farmer’s 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

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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. Romania’s agriculture could be amongst the most productive ones in Europe if the status of the natural resources is to be considered. In fact, however, Romania’s 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. REFERENCES 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.751763. 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 2013-20202030, Ministry of Environment, Waters and Forests. 10. * * * (2014). National Program for Rural Development 2014-2020, Ministry of Agriculture and Rural Development.

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SUSTAINABLE ECONOMIC GROWTH AND ECO-EFFICIENCY Associate Professor PhD Mariana LUPAN 'Stefan cel Mare' University of Suceava, Romania [email protected] Lecturer PhD Angela Nicoleta COZORICI 'Stefan cel Mare' University of Suceava, Romania [email protected] 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 postwar 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

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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

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The European Environment Agency addresses the eco-efficiency as a strategy aimed at decoupling 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 ecoefficiency 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

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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 ecoefficiency, 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.

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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 (CO₂ equivalent - kilotons) Source: EuroStat, Sustainable Development Indicators

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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 EU 28 166,9 Bulgaria 866,2 Romania 515,9 Source: EuroStat, 2014

2005 164,9 849,4 491,3

2006 159,3 823,5 471,4

2007 152,0 759,9 441,5

2008 151,0 711,7 409,9

2009 149,0 661,4 387,4

2010 151,7 668,8 394,6

20011 143,9 705,5 393,7

2012 143,4 669,9 378,9

2013 141,6 610,6 334,7

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.

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Table no. 2. National targets Europe 2020 Europe 2020 objectives – Energy and climate change Reducing greenhouse gas (GHG) emissions by at least 20 % compared to base year 1990

Romania 2020 target value

Current values

20%

56,55%

Increasing the share of renewable energy to 20%

24%

23,3% (including biofuel consumption) 22,2% (ignoring biofuel consumption)

Increasing energy efficiency and decrease energy consumption by 20%

19%

17,3%

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

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

Figure no. 7. The generation rate of GHG emissions Source: Calculations based on data available on EuroStat

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Figure no. 8. The generation rate of municipal waste Source: Calculations based on data available on EuroStat

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 ecoefficiency 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 20112035 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

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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 4. Krebs C., (2008) The ecological world view, Editura Csiro Publishing 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 şi dezvoltare, Editura Tipo Moldova, Iaşi 8. Special Eurobarometer 372, Climate Change, 2011 9. Stanciu M., (2006) Metode de cercetare a modelelor de consum, în Studii şi Cercetări Economice, Academia Română 10. WBCSD, (2000) Creating more value with less impact 72

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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 Web

1. http://conspect.nl/pdf/Our_Common_Future-Brundtland_Report_1987.pdf, [accesat la 28.03.2015] 2. http://www.eea.europa.eu/publications/Topic_report_No_111999, [accesat la 20.03.2015] 3. http://ec.europa.eu/europe2020/europe-2020-in-a-nutshell/targets/index_ro.htm, [accesat la 18.02.2015] 4. http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/, [accesat la 20.03.2015] 5. http://ec.europa.eu/europe2020/pdf/nd/nrp2012_romania_en.pdf, [accesat la 25.03.2015] 6. http://www.insse.ro/cms/rw/pages/index.ro.do, [accesat la 20.03.2015] 7. http://books.google.ro/books?id=Tu1j3nfXheQC&printsec=frontcover&dq=krebs+ecologic al&hl=en&sa=X&ei=yOtTUezcCc-Gswaf7IDYAg&redir_esc=y¸[accesat la 18.02.2015] 8. http://www.keepeek.com/Digital-Asset-Management/oecd/environment/ecoefficiency_9789264040304-en, [accesat la 03.03.2015] 9. http://ec.europa.eu/public_opinion/archives/ebs/ebs_372_en.pdf, [accesat la 10.04.2015] 10. http://www.iccv.ro/oldiccv/romana/articole/Modele%20consum%20metodologie.pdf, [accesat la 20.03.2015] 11. http://stats.oecd.org/, [accesat la 10.04.2015] 12. http://www.wbcsd.org/web/publications/eco_efficiency_creating_more_value.pdf, [accesat la 20.03.2015] 13. https://sustainabledevelopment.un.org, [accesat la 10.04.2015]

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!

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LOOKING FOR (RE)DEFINING UNIVERSITY AUTONOMY Professor PhD Ala COTELNIC Academy of Economic Studies of Moldova, Republic Of Moldova [email protected] Associate professor Angela NICULITA State University of Moldova, Republic Of Moldova [email protected] Professor PhD Petru TODOS Technical University of Moldova, Republic Of Moldova [email protected] Associate Professor PhD Romeo TURCAN Aalborg University, Denmark [email protected] Professor PhD Larisa BUGAIAN Technical University of Moldova, Republic Of Moldova [email protected] Senior lecturer PhD, HR and economic planning manager Daniela POJAR Alecu Russo Balti State University, Republic Of Moldova [email protected] 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 socioeconomic 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

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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

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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 sector’s 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

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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 (nonuniversity), 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 environment’s 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 HEI’s 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 77

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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 decisionmaking, 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 78

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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 79

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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 Government’s 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. 80

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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 Framework’s 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 81

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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. 82

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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 institution’s 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 rector’s 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 83

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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 HEI’s 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 staff’s 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 ¼ are meant for the direct teaching-contact activities. Institutions are 84

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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 85

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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 don’t 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. 86

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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 student’s 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 87

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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. 88

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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. There’s still a difference in the degrees of freedom they have in solving certain problems. It is to be noted that it’s 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 Sector’s 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 Iaşi, 2011, http://goo.gl/msSs9S 5. Bucharest University Chart, 2011, http://goo.gl/jC2cD5 6. Constantin Oprean, Vasilie Moțoc, 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 9. Funding Systems and Their Effects on Higher Education Systems Country Study Denmark, 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 12. Guide for Members of Higher Education Governing Bodies in the UK, March 2009, link http://goo.gl/AwSVaY 89

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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 16. Mikolas Romeris University Statute, http://goo.gl/oX7G7u 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 ș.a. (2011), Financial Resources Management in Higher Education, București 24. The Danish (Consolidation) Act on Universities (the University Act) 25. The Swedish Higher Education Act Högskolelag (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 şi Terhi Nokkala, University Autonomy in Europe I (2009), http://goo.gl/vuJzR8 29. Thomas Estermann, Terhi Nokkala şi Monika Steinel, University Autonomy in Europe II, the Scorecard (2012), http://goo.gl/MYRn7i 30. Transparent Approach to Costing (TRAC) Guidance: prepared for the JCPSG by J M Consulting Ltd, link http://www.jcpsg.ac.uk/guidance/about.htm 31. Vilnus University Statute, http://goo.gl/Y4ysnz

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PRIORITIES IN REGIONAL DEVELOPMENT IN ROMANIA Associate professor PhD Mihai POPESCU “Ştefan cel Mare” University of Suceava, Romania Faculty of Economics and Public Administration [email protected] 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. 91

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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 92

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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. 93

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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 efiientă 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 decisionmaking 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. 94

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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 şapteiniţiative. 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. 95

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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.

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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 capacitatăţii 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

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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-administraţie- 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, Năstase Carmen, Comparative evolution of tourism in the NorthEastern Region of Romania, Subcarpathia of Poland and Central Slovakia, Bulletin UASVM Horticulture, Nr. 67 (2), 2010, pp.229-237 7. www.mie.ro

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ASPECTS OF REGIONAL COMPETITIVENESS THROUGH DYNAMIC PRICES OF PETROLEUM PRODUCTS Associate Professor PhD Daniela ENACHESCU Petroleum‐Gas University of Ploiesti, Romania [email protected]

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, Enăchescu & Bălăcescu, 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

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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

100

94.45

90 US$/bar

105.87 96.29

80

77.45

70 61.06

60 50

48.91

40 30

28.10 2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

20

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

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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.

110 105.38 100

107.89 105.61 100.75 104.15104.27 105.44

95.98

90

85.06

U S$/bar

80

75.57

70 59.46

60 50

53.92

44.38

40 30 Feb -1 5

Jan -1 5

D ec-1 4

N o v -1 4

O ct-1 4

Sep -1 4

A u g -1 4

Ju l-1 4

Ju n -1 4

M ay -1 4

A p r-1 4

M ar-1 4

Feb -1 4

20

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

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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 taxes € 0.508

Excise duties € 0.460

VAT € 0.232

Retail price € 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-pretmotorina-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.

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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-motorinapetrom-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

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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 29—June 2, 2002, Proceed, volI, Polytechnic International Press 2. Zaharia M., Babucea A.G., Bălăcescu A., Rabontu C. (2015). Metallurgical Industry in Romania in the Context of the Economic Crisis, Metalurgija, 54(5), pag.445-448, Zagreb, Sijecanj-Oyujak, Croaţia. 3. Zaharia M., Enachescu D., Bălăcescu 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-dependentaimporturile-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-rafineaza27-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-cursurivalutare. 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/

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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 [email protected] 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 world’s 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 socioeconomic 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

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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 socioeconomic 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

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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 shouldn’t 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 Britain’s 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

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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. Let’s take a simple example looking at the GDP figures produced by the international agencies. 108

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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 world’s 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$ GDP (nominal)/capita GDP (PPP)/capita Surse:

IMF 2014 68 10034 60 19712

WB 2013 9499 73 59 18974

UN 2013 8705 75 -

CIA 2103 8900 72 77 13200

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 Romania’s 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 world’s 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

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But they didn’t! 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 Bonaparte’s 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 countries’s 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”. Let’s 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

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Is it correct to call “backwards” a region or a country only because they didn’t 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 world’s 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”. „În goana după creştere economică, ideologia pieţei libere a fost îmbrăţişată în întreaga lume cu fervoarea unei credinţe religioase fundamentale.”; David C. Korten, When Corporations Rule the World, Kumarian Press Inc. şi Berrett-Koehler Publishers, 1995; Corporaţiile conduc lumea, Editura Antet, 1997, p. 82. [6] The price of economic growth during the last two centuries was the environment’s havoc, resource depletion, support of local, regional, and sometimes global conflicts, as well as dilution of cultural identities in the great ocean of world’s 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 people’s 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

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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, professor’s Frithjof Kuhnen excellent synthesis: Causes of underdevelopment and concepts for development - an introduction to development theories at http://www.professor-frithjofkuhnen.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 List’s Das Nationale System der Politischen Ökonomie, Stuttgart, Tübingen, 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 extérieur, Société des Nations, Genève, 1945. [15] It is worth to mention here the contribution of Mihail Manoilescu in his fundamental work Forţele naţionale productive şi comerţul exterior, Editura Ştiinţifică şi Enciclopedică, Bucureşti, 1986, first edited in French, Théorie 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 Produktivkräfte und der Aussenhandel; Theorie des internationalen Warenaustausches, Berlin, Junker und Dünnhaupt verlag, 1937. [16] For instance: World Bank’s 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 1. Acemoglu, D., Johnson S., Robinson, J.A., “Institutions as a fundamental cause of long-run 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”, în 2000 Index of Economic Freedom, Washington, DC, Heritage Foundation, 2000, p. 31–49 3. Daly Herman E., Cobb John B.Jr., For the Common Good: Redirecting the Economy toward Community, the Environment and a Sustainable Future, Beacon Press, Boston, 1989 4. Ennals, Richard, Artificial Intelligence and Human Institutions, Springer-Verlag, London, 1991 5. Gerschenkron, Alexander, Economic Backwardness in Historical Perspective, a book of essays, Cambridge, Massachusetts: Belknap Press of Harvard University Press, 1962 6. Haas, B. Ernst, Beyond the Nation-State, Functionalism and International Organization, ECPR Press, 2008 7. Korten, David C., When Corporations Rule the World, Kumarian Press Inc. and BerrettKoehler Publishers, 1995; Corporaţiile conduc lumea, Editura Antet, 1997 8. Lipset, S. M., „Some Social Requisites of Democracy: Economic Development and Political Legitimacy”, American Political Science Review, 53(1), 1959, p. 69–105 9. http://ihome.ust.hk/~sochenshuo/file/ECON7198/Course%209%20Lipset%201959.pdf 10. Murgescu, Bogdan, România şi Europa. Acumularea decalajelor economice (1500-2010), Editura Polirom, Iaşi, 2010 11. Nakaoka, T., On technological leaps of Japan as a developing country. Osaka City University Economic Review, 22, 1-25, 1987 12. Nakaoka, T., The learning process and the market: the Japanese capital goods sector in the early twentieth century, LSE STICERD Research Paper No. JS271, 1994 13. Nakaoka, T., “Technology in Japan: From the Opening of Ports to the Start of the Postwar Economic Growth”; Technological Development and Economic Systems: Japanese Experiences and Lessons, October 1-2, 1994, Tokyo, Japan, 1996. 112

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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 17. Piedra, Alberto Martinez, Natural Law: the foundation of an orderly economic system, Lexington Books, 2004 18. Simpson, David (Ed.), The Origins of Modern Critical Thought: German Aesthetic and Literary Criticism From Lessing to Hegel, Cambridge University Press, 1988 19. Sokoloff Kenneth L., Engerman Stanley L.. "History Lessons: Institutions, Factor Endowments, and Paths of Development in the New World". The Journal of Economic Perspectives Vol 14 No.3 (2000): pp. 217-23 20. * * The Economist, http://www.economist.com/economics-a-to-z/c#node-21529531

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LANDMARKS IN THE EVOLUTION OF REGIONAL SCIENCE Lecturer PhD Adrian Liviu SCUTARIU “Ştefan cel Mare” University of Suceava, Romania Faculty of Economics and Public Administration [email protected] 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 Thünen, W. Launhardt - 19th century and A. Weber, W. Christaller, A. Lösch 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

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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

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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

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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

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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 regională, Editura Oscar Print, Bucureşti, 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 – Pathbreaking 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 regională în România – concept, mecanisme, instituţii, Editura Oscar Print, Bucureşti, 2003, p.12 [12] M. Blaug - Teoria economică în retrospectivă, Literatura economică internaţională, Editura Didactică şi Pedagogică, Bucureşti, 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. Pârlog, D.L. Constantin (coord.) Dezvoltare regională şi integrare europeană, Lucrările celui de-al Doilea Simpozion Naţional al 118

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Asociaţiei Române de Ştiinţe Regionale, 4-5 aprilie 2002, Bucureşti, Editura Oscar Print, Bucureşti, 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. Pușcaşu – Dezvoltarea regională, Editura Economică, Bucureşti, 2000, p.14

BIBLIOGRAPHY 1. Antonescu Daniela – Dezvoltarea regională în România – concept, mecanisme, instituţii, Editura Oscar Print, Bucureşti, 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-François – Regional economics: a new economic geography perspective, Regional Science and Urban Economics, 37, 2007, pp.457-465 5. Blaug Mark - Teoria economică în retrospectivă, Literatura economică internaţională, Editura Didactică şi Pedagogică, Bucureşti, 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 Luminiţa – Economie regională, Editura Oscar Print, Bucureşti, 1998 9. Isard Walter - History of regional science and the Regional Science Association International: Thebeginnings and early history. Springer, Berlin Heidelberg NewYork, 2003 10. Isserman Andrew M. - Intellectual leaders of regional science: A half-century citation study, Papers in Regional Science, 83, 2004, pp.91-126 11. Năstase Carmen, Popescu Mihai, The model of cluster in implementing change and 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 Pârlog Cornelia, Constantin Daniela Luminiţa (coord.) - Dezvoltare regională şi integrare europeană, Lucrările celui de-al Doilea Simpozion Naţional al Asociaţiei Române de Ştiinţe Regionale, 4-5 aprilie 2002, Bucureşti, Editura Oscar Print, Bucureşti, 2003, pp.43-49 14. Puşcaşu Violeta – Dezvoltarea regională, Editura Economică, Bucureşti, 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 perspectivă regională, Teză de doctorat, Universitatea “Alexandru Ioan Cuza” din Iași, 2013 18. Stanciu Pavel - Studiul pensiunilor turistice din judeţul Suceava, Revista de turismstudii și cercetări în 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

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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 [email protected] Professor PhD Daniela Luminita CONSTANTIN Academy of Economic Studies, Bucharest, Romania Department of Administration and Public Management [email protected] Associate Professor PhD Claudiu HERTELIU Academy of Economic Studies, Bucharest, Romania Department of Statistics and Econometrics [email protected] Professor PhD Tudorel ANDREI Academy of Economic Studies, Bucharest, Romania Department of Statistics and Econometrics [email protected] 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

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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 crossborder 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

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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 1 Mehedinti 2 Dolj 3 Olt 4 Teleorman 5 Giurgiu 6 Calarasi 7 Constanta

Share(%) 14.3 14.3 14.3 14.3 14.3 14.3 14.3

Total

100.0

District 1.Vidin 2.Veliko Trnovo 3.Vratsa 4.Dobric 5.Montana 6.Plevna 7.Razgrad 8.Ruse 9.Silistra Total

Share (%) 6.3 16.1 11.3 11.4 9.1 16.5 7.6 14.5 7.3 100.0

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

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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 socioeconomic 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

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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 respondent’s 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

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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 citizen’s 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.

6. REFERENCES 1. Celinska-Jankowicz, D., Zwalinska, K., Widla-Domaradzki, L. (2013), “Structural Equation Model of Successful Territorial Cooperation”, in G. Gorzelak, K. Zawalinska, European Territories: From Cooperation to Integration?, ESPON and EUROREG, Warsaw: Scholar, pp. 134-154 125

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2. Clement, N.C. (1997), “The Changing Economics of International Borders and Border Regions”, in P. Ganster, A. Sweedler, J. Scott (Eds.), Borders and Border Regions in Europe and North America, Institute for Regional Studies of the Californias at San Diego University, San Diego 3. Constantin, D.L.(2013), “Romania’s Regional Policy between the Current Realities and the Challenges of the 2014-2020 Programme Period”, Acta Universitatis Danubius. Œconomica), Vol 9, No 4, pp.281-291 4. Dolzblasz, S., Raczyk, A. (2010), “Relationships between actors of transborder cooperation. Polish-German borderland case study”, Europa XXI, Vol. 20, pp. 119-129 5. McMaster, I. (2013), “European Territorial Cooperation: Overview and Evaluation”, in G. 6. Goschin,Z., Constantin, D.L., Roman, M., Ileanu, B.V.(2008), “The current state and dynamics of regional disparities”, Romania Romanian Journal of Regional Science, Vol.2, No. 2, pp. 80-105 7. Gorzelak, G., Zawalinska, K. European Territories: From Cooperation to Integration?, ESPON and EUROREG, Warsaw: Scholar, pp. 54-68 8. Ileanu, B.V., Isaic-Maniu,A., Herteliu,C. (2009), “Intellectual capital components as causes of regional disparities. A case study in Romania”, Romanian Journal of Regional Science, Vol. 3, No. 2, pp.39-53. 9. Ileanu B. (2013) SME’s Priorities, and Management Authorities Directions. A Regional Approach in Romania, Acta Universitatis Danubius. Œconomica, Vol. 9, No. 5, pp. 191-199 10. Perkman, M. (2003), “Cross-border regions in Europe: significance and drivers of regional cross-border cooperation”, European Urban and Regional Studies, Vol.10, pp. 153-171 11. Ratti, R. (1994), “Spatial effects of borders: an overview of traditional and new approaches to border region development”, in P. Nijkamp (Ed.), Europe on Move, Avebury, Aldershot, pp. 115137 12. Scott, J.W. (2002), “Cross-border governance in the Baltic Sea Region”, Regional and Federal Studies, Vol. 12, pp. 135-153 13. Van Geenhuizen, M., van der Knapp, B., Nijkamp, P. (1996), “Trans-border European Networking: Shifts in Corporate Strategy?”, European Planning Studies, Vol.4, No.6/1996 14. http://www.nsi.bg/en/content/11236/economic-statistics/ 15. http://statistici.insse.ro/shop/ 16. Kirilova Y. (2013), “Regional disparities in Bulgaria - evaluation and policy implications”, paper presented at the “EU in the New Economic Complex Geography” COST seminar, Lisbon, available at: www.gecomplexity-cost.eu/.../Presentation_lisbon_Yana_kirilova.ppt

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ANALYSIS OF ROMANIAN FISHERIES AND AQUACULTURE IN REGIONAL CONTEXT Professor PhD Mihaela NECULITA Dunarea de Jos University of Galati, Romania Department of Economics [email protected] Professor PhD Liliana Mihaela MOGA Dunarea de Jos University of Galati, Romania Department of Economics [email protected] 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 world’s population, providing jobs and supports the livelihoods of hundreds of millions. Fish continues to be one of the mosttraded 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, SouthEast, South, Bucharest–Ilfov, 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 region’s 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. Romania’s 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 127

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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 128

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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 South-East 93 99 66726,1 3385,26 63340,7 South 143 160 14122,5 1472,81 12649,7 South-West 38 39 2544,15 129,312 2414,83 West 39 37 1709,22 279,676 1429,55 North-West 66 75 3128,84 380,741 2748,09 Center 53 57 2726,49 83,3207 2643,17 Bucharest–Ilfov 28 5 1986,2 0 1986,2 TOTAL 518 575 102356 6673,14 95682,3

% 9,2 65 14 2,5 1,7 3 2,7 1,9 100

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) Souce: Romanian market analysis of fish and fish products, ROMPOP 2014

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) 129

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Figura no. 3. - Regions share of catches from commercial fishing. Shares in 2013 Souce: Romanian market analysis of fish and fish products, ROMPOP 2014

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 Souce: Romanian market analysis of fish and fish products, ROMPOP 2014

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 Sales of fish from domestic sources, to population and processing units. Total 16,2 16,1 11,5 11,6 of wich: Fish from aquaculture *** 12,5 Fish from marine and inland fishing 3,7** Imports*** 89,6 Exports *** 1,7 Total intern consumption (= 1+2-3) 104,1 Consumption per capita (kg/pers/year) 4,6

13,1 3,0** 90,2 4,1 102,2 4,6

8,8 2,7** 86,0 4,7 92,8 4,1

8,4 3,2** 69,2 6,5 74,3 3,3

2012 2013 13,4

14,5

10,0 3,4* 74,4 6,2 81,6 3,6

10,0 4,5* 74,8 6,3 83,0 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 131

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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 Didactică şi Pedagogică, Bucureşti, ISBN 978-973-30-33059: 71-86 5. Zugravu, Neculiță, 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 360degree 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 POSTACCESSION PERIOD? Senior Researcher Carmen Beatrice PAUNA Institute for Economic Forecasting, Bucharest, Romania [email protected] Senior Researcher Marioara IORDAN Institute for Economic Forecasting, Bucharest, Romania [email protected] Senior Researcher Mihaela‐Nona CHILIAN Institute for Economic Forecasting, Bucharest, Romania [email protected]



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 supranational 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 133

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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 Mereuţă (Mereuţă 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 134

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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 Top 10 regions Last 10 regions Netherlands – 6 Romania – 7 regions! regions! Finland – 4 Bulgaria – 2 regions regions Greece – 1 region

Efficiency drivers pillars Top 10 regions Last 10 regions – 5 Netherlands – 6 Greece regions! regions! – 2 United Kingdom Spain regions – 3 regions – 2 France – 1 France region region Bulgaria – 1 region

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Innovation drivers pillar Top 10 regions Last 10 regions Germany – 3 Romania – 6 regions! regions! Sweden, United Bulgaria – 3 regions Kingdom, Greece – 1 Denmark, regions Belgium, Finland, Netherlands, Luxembourg (NUTS-1) –1 region each

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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 competencies pillar 1.32 1.05 1.23 1.03 1.80 1.22 1.64

Efficiency drivers pillar 1.42 1.32 1.47 1.23 3.39 5.23 35.02

Innovation drivers pillar 1.70 1.63 1.67 1.24 3.80 2.47 2.57

RCI 2013 1.45 1.32 1.46 1.20 2.80 2.75 3.64

Belgium Denmark Germany Ireland Greece Spain France 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 Scientific and Policy Reports, European Commission, DG for Regional and Urban Policy, ISBN-978-92-79-32370-6, 2013.

Table 4. Inter-regional competitiveness gaps in the NMS-13 countries Basic competencies pillar 1.80

Efficiency drivers pillar 1.94

Innovation drivers pillar 3.83

RCI 2013 2.15

Bulgaria 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 Scientific and Policy Reports, European Commission, DG for Regional and Urban Policy, ISBN-978-92-79-32370-6, 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

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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 SudVest 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 innovationdriven 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

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(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 > 120% of the EU average

Share of population aged 25-64 years with higher educational level Research on R&D in the public sector as % of the GDP

Bucuresti-Ilfov

Performance level between 90% and 120% of the EU average

Performance level between 50% and 90% of the EU average

Bucuresti-Ilfov

Research on R&D in the business sector as % of the GDP Non-R&D innovation expenditures as % of turnover Single innovating SMEs, as of total SMEs

Sud-Est

Nord-Est, Centru, Vest, Sud Muntenia

Nord-Est

Bucuresti-Ilfov, Sud-Vest Oltenia

Bucuresti-Ilfov

Centru, Muntenia

Nord-Est, Sud-Est, SudVest Oltenia, Nord-Vest

EPO patent applications per bill. regional GDP (PPS) Product or process innovators as % of SMEs

Vest

Nord-Est, Sud-Est, Sud Muntenia, Sud-Vest Oltenia, Vest, NordVest, Centru Nord-Est, Sud-Est, Sud Muntenia, Sud-Vest Oltenia, Vest, NordVest, Centru Nord-Est, Sud-Est, Sud Muntenia, Sud-Vest Oltenia, Vest, NordVest, Centru, BucurestiIlfov Bucuresti-Ilfov, NordVest, Sud-Vest Oltenia Nord-Est, Sud-Est, Sud Muntenia, Sud-Vest Oltenia, Nord-Vest, Centru, Bucuresti-Ilfov. Regiunea Vest – lipsă date Nord-Est, Sud-Est, Sud Muntenia, Sud-Vest Oltenia, Vest, NordVest, Centru, BucurestiIlfov Nord-Est, Sud-Est, Sud Muntenia, Sud-Vest Oltenia, Vest, NordVest, Centru, BucurestiIlfov Nord-Est, Sud-Est, Sud Muntenia, Sud-Vest Oltenia, Nord-Vest, Centru, Bucuresti-Ilfov. Regiunea Vest – unavailable data Sud-Est, Sud Muntenia, Vest, Nord-Vest, Centru

Collaborations between the innovative SMEs, as % of SMEs

Marketing or organizational innovators % of SMEs Employment in medium and high-

Performance level 0. In this case, Global Moran’s 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 є [0.27; 0.316]