Is Romania a developed country? It is about to be officially considered part of the “first world”, despite much lower income levels than Western Europe

Sorin Melenciuc 25/06/2018 | 07:00

Romania is about to become part of the “high income” world this year, as its gross national income (GNI) per capita reaches the threshold set by the Word Bank for this status, despite the large differences in terms of development between it and the Western world.

According to the latest definitions by the World Bank, low-income economies (a politically correct name for “the third world”) are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of USD 1,005 or less in 2016, lower middle-income economies – between USD 1,006 and USD 3,955, upper middle-income economies – between USD 3,956 and USD 2,235, and high-income economies – USD 12,236 or more.

In 2016, Romania, with a GNI per capita of USD 9,480 calculated using the World Bank Atlas method, was classified as an “upper middle-income economy”.

Last year, due to its impressive economic growth rate of 6.9 percent, the highest in the European Union, Romania’s gross domestic product (GDP) reached a level of RON 858.3 billion, the equivalent of EUR 187.9 billion (around EUR 9,600 per capita) or USD 211.8 billion (USD 10,800 per capita), according to Business Review calculations based on official data.

For 2018, Romania’s government forecast a level of GDP of RON 930 billion, the equivalent of EUR 200 billion or USD 240 billion (calculated at an estimated average exchange rate of USD 1.2/EUR for 2018).

At this estimated GDP level, Romania will reach a level of about EUR 10,250 or USD 12,300 per capita, just over the World Bank’s threshold for high income economies.

Even if GNI per capita, calculated using the World Bank Atlas method, is slightly below the GDP per capita – in 2016, Romania’s GNI per capita using the World Bank Atlas method was 99.56 percent of GDP per capita (USD 9,480/USD 9,522) – Romania has many chances to become officially a “high-income economy” in 2018 – or in 2019 at the latest.

According to the latest World Bank report, 78 countries and territories are currently considered as being “high income economies”, including 26 out of 28 European Union member states – with the exception of Bulgaria and Romania.

Development gap

However, experts say Romania still lags behind not only the rich Western countries, but also most other new Eastern members of the EU.

“Currently, Romania has a 7-10 year development lag over other Central and Eastern European countries like Poland, Slovakia, Hungary, or the Czech Republic (i.e. it needs 7-10 years to reach their current development level) and a 35-year development lag over OECD counties (i.e. it took OECD countries 35 years to develop from Romania’s current development level to their current development level),” the report “Magnet Cities: Migration and Commuting in Romania” recently released by the World Bank points out.

During the last 25 years, Romania managed to catch up with the economies of Brazil and Mexico, according to analysts.

Romania’s growth rate between 1992 and 2016 was 1 percent higher than the average for upper middle-income countries and more than three times the rate for the EU and developed countries.

And compared with the rest of the world, the result was impressive.

“Most impressively, Romania managed to catch up with the economies of Brazil and Mexico, which in 1992 had a GNI per capita that was 3 respectively 4 times as high as that of Romania,” according to the report.

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