Alexandru Florea Economic Development and Growth

Topics: Economics, Economic growth, Economic development Pages: 22 (5263 words) Published: January 31, 2015
Economic Development and Growth of Romania

Alexandru Florea

ARISTOTLE UNIVERSITY OF THESSALONIKI
FACULTY OF ECONOMICS AND POLITICAL SCIENCES
SCHOOL OF ECONOMICS

Economic Development and
Growth
Professor: Dr. Grigoris Zarotiadis

Alexandru Florea

JANUARY 2015

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Economic Development and Growth of Romania

Alexandru Florea

Contents:

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Economic Development and Growth of Romania

Alexandru Florea

A. Introduction
The purpose of the project is to analyze the economic development and growth of Romania especially after communist period.
Economic development vs. Economic Growth
Economic development is the process of improving the standards of living and increasing the level of welfare of the population. Usually is expressed by the per capita income. Indicators of economic development:







Labor productivity
Weighted Machine tool industry in total industry
Weighted Machine tool exports in total exports
Weighted Brain drain in total export
Weighted Employment in services

Economic growth is represented by the evolution of specific economic indexes, with benefits for the social and economic life, in a specific time and area. The most known index for calculating the economic growth is the GDP/capita.

Types of economic growth




Extensive economic growth- based on growing the GDP/capita by increasing the number of workers, arable lands etc.
Consolidated economic growth: it would be realized at the global scale Zero economic growth: is happening when the economic indexes and the population of the country are increasing with the same percentage.

The single way that a state can achieve economic development and growth is by using their economies to make investments.
Economic development represents a qualitative process while economic growth is a quantitative one. However the processes of economic development and growth are produced simultaneous therefore they must be considered together.

The first part of the analysis will provide an overall picture of Romania’s economic performance. It will be presented the current economic development situation and its growth during the analyzed years.

The second part of the analysis represents an econometric exercise which will provide the connection between GDP, Urban Population and Employment. At the end of the exercise it will

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Economic Development and Growth of Romania

Alexandru Florea

be possible to predict values of GDP depending on Urban Population and the level of employment.
The third part of the analysis will provide information regarding the development lacks of Romania’s economy.
The fourth part of analysis refers to Romanian market inefficiency. It will provide the most important issues about market failures in Romania.
The fifth part of analysis includes the Development Policies. It will present the main targets to improve Romania’s economy for the next years.

B. Analysis
1. Methodology
For this analysis were chosen indexes from 5 areas: Romania, Bulgaria, Germany, France and European Union.
Besides Romania, which is the main subject of the analysis, it was chosen Bulgaria like a state with similar economic situation. Germany and France were chosen because they represent two of the most developed country in Europe. In the same time they represent examples of how the economic situation should be in a developed country therefore Romania must achieve a close level to them in order to become a state with a developed economy. Nevertheless, all of them are member states of European Union therefore all of them must converge to the same level, as result, it is absolutely necessary to include the European Union indexes. First part of the analysis contains statistical results about the economic development and growth situation in Romania. The analyzed period refers to 1990-2013. For this part there were used data series, with annual frequency, from the official website of World Bank. Second part of...
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