Romania’s Infrastructure Development Is Slow

EBRD EE outlook on Romania

Read the latest Outlook on Romania 2017 special report

.

In 2015, Bucureşti-Ilfov, Romania’s capital-city region, had a GDP per capita of €19,300 amounting to 136 per cent of the EU average (GDP per capita PPS, EU28=100). At the same time, Sud-Muntenia, Sud-Vest Oltenia and Nord-Est were three out of 19 EU regions that were still below half of the average 47, 40 and 34 per cent of the EU average respectively, according to Eurostat.

“The first step in developing a country is its access to sufficiently big markets and capital. The larger cities are the first to attract capital and to develop markets, and in this way they become the engines of development for a region, in the process attracting the secondary cities and then the villages,” Ana Maria Mihăescu, IFC chief resident representative for Romania, Bulgaria, the Czech Republic, Hungary, Moldova, Poland and Slovakia, tells Emerging Europe.

“For many years, the biggest engine of growth in Romania was Bucharest, the capital city. In the last few years, other cities are becoming strong engines of growth such as: Cluj, Arad, Timișoara, Brașov, Constanța, Sibiu, Iași, and Oradea. The growth rate of some cities has even exceeded that of the capital city,” she adds.

Alexandru F. Ghita, the founder and director of the Centre for Urban and Territorial Development (CDUT), adds some additional reasons, for example, the public administration aspect. “The regional dimension, in the case a Romania, was an EU integration priority and had little local impetus. Also, because of the “thin” chapters on regional policy of the acquis, the implementation of the regional layer is somewhat problematic. The regional level lacks decision-making status and is not an administrative-territorial unit, which would require a constitutional reform and a referendum. This situation perpetuates strategic void at the regional level, which hinders coherent development above county level,” he says.

IFC’s Ms Mihăescu says the investments in infrastructure are lagging behind. “The large infrastructure projects have not been started yet. In order to respond to the need for accelerated development, infra-projects will need to rely on a high percentage of EU funds, as well as private sector participation,” she says.

Roger Kelly, EBRD’s lead regional economist for Romania, says that the country’s poor infrastructure limits labour mobility within the country, and reduces flexibility in the labour market and ultimately contributes to emigration. “While EU Structural Funds are available to support large-scale infrastructure projects, a lack of coordination and strategic planning within the public administration, as well as ongoing issues relating to public procurement and PPP legislation, mean the country’s ability to absorb these funds has been limited. Consequently, infrastructure has remained chronically underdeveloped,” he says adding that the development of national transport networks “will not happen overnight”.

“Combining the lack of resources, outward migration, and the lack of investment in strategic business and communication infrastructure results in what we could call a development vacuum, where nothing really happens,” says CDUT’s Mr Ghita.

“A more immediate means to foster growth in the regions is to focus on making them more attractive places to live and do business. This involves municipalities developing their public services. This is a highly effective strategy for addressing regional disparities, using loans blended with EU grant funding, and has resulted in a number of cities becoming regional hubs, that generate growth and jobs and help to stem the emigration of young skilled workers to Bucharest and overseas,” says EBRD’s Mr Kelly.

RELATED ARTICLES

Romania’s EU Membership Was Slow to Be Appreciated But Now the Tide Is Turning

Romanian Palace Of Parliament

Surprising Resilience of Romanian Social-Democrats

BUCHAREST ROMANIA - June 21 2017: Liviu Dragnea President of Social Democrat Party speaks in front of Parliament during a no-confidence vote against Sorin Grindeanu's Cabinet.

Romania Works to Cement its Position in the EU

european union

Romania — Decades After Two Milestones

View of Palace of Parliament in Bucharest Romania

Romanian Market Moving Towards Rebalancing

Romanian IT Business Statistics Are Promising

ANIS romanian ICT

Romania’s European Values Are Changing Public Misinformed Opinions

world bank emerging europe

Romania’s Short-Term Prospects Remain Solid

romania economist

Romania Needs to Follow its EU Membership With Some Sweeping Reforms to Avoid Stagnation

Bucharest Romania - March 07 2016: Bucharest Sky Tower Business Center. Bucharest urban landscape.

Romania Could Catch Up in Innovation

innovation emerging europe

It’s Time for Romania to Roar

outsourcing romania emerging europe global sourcing association

The Competitive Edge in Central and Eastern Europe

SOFIA BULGARIA - MAY 5: View of the Ivan Vazov National Theatre in Sofia on May 5 2016. Sofia is the largest city and capital of Bulgaria.

Nurturing a Needed Knowledge and Innovation Culture

It cluster cluj

Romania To Stay Close After Brexit

Greg Hands

Driving the Romanian Automotive Industry

opel romania

Office Real-Estate Is Burgeoning in Romania

romania office space emerging europe

Romanian Wine Is Making a Comeback

Romgaz and GE Partner in a New Power Project

romania GE

Poland and Romania: Almost 100 Years of Friendship That Is Still Growing

warsaw poland emerging europe

20 Years of Romanian-US Cooperation

usa romania emerging europe

Netherlands and Romania’s Love-Match Continues

romania netherlands emerging europe

Merging and Growing Romania’s Outstanding Broadband and Other Infrastructures

electrogrup emerging europe

Romania Will Be a Hot Topic in Europe

Romania’s Economic Outlook Is Bright

Different Romanian Lei Banknotes on the table

Seven Reasons for Optimism in Romania

gazelle emerging europe romania

Romania Says No to Corruption

Corruption romania

Romania’s 140 Years of UK Cooperation

A Family Between Britain and Romania

london emerging europe

The Bucharest Stock Exchange Has Started the Year on a Promising Note

stock exchange bucharest

A Country of Beauty and Warmth That Will Reward Those Who Visit With an Open Mind

Cityscape Brasov

People Power Reminds the Government of the Rule of Law

Romanian Banks Must Use Lessons Learned

romania emerging europe banks

Romanian Upgrade to Emerging Market is on the Cards

Romania capital market

Juncker’s “More, Together” Offers Romania a Better Future

aspen institute romania emerging europe

Can Romania’s success last longer?

brasov adecco emerging europe

Romania’s Government Plans to Grow the Country’s Already High ICT Reputation

romania ICT emerging europe

Alexandru Petrescu: Romania Is Working to Solidify the Highest Growth Rate in Europe

BUCHAREST ROMANIA - MAY 1: Unidentified people relax and socialize in the green area of the Promenada Mall on May 1 2014 in Bucharest Romania. The mall has a gross floor area of approx. 110000 m.

Risky (but Rewarding) Business

risky business

The Goal for Romania — the Positives Outweigh the Negatives

ebrd emerging europe romania

Romania Can Foster German Partnership

frankfurt emerging europe

Building on CEE’s Established Reputation for Quality and Value

What Was First on the Romanian Table?

food romania dragut emerging europe

Privatisation, Past and Present in Romania

energy privatisation romania emerging europe

Robust First-Quarter Growth in Romania

emerging europe romania brasov

Romanian Wine: A Growing Opportunity

halewood wine

Political In-fighting Must Be Resolved

Sorin Grindeanu

Romania in 2017 in Brief

romania emerging europe

Changing Perspectives and Showing That True Romania is a Vibrant Innovative Country

Princess Marina Sturdza: Things Are Bound to Improve for Romania

Central square in Iasi town Moldavia Romania

Leave a Reply

Your email address will not be published. Required fields are marked *