Romania catches up on competitiveness

Newsroom 04/03/2008 | 17:40

Of the countries Romania is most often compared to, usually those in the SEE or CEE region, it has managed to surpass Poland, which is 52nd this year. It was however outrun by Bulgaria, Russia, Hungary and the Czech Republic. At the top of the list are the US, followed by Singapore and Hong Kong.
Several factors were taken into account when creating the report, such as economic performance, government efficiency, business efficiency and infrastructure – needless to say, where Romania has scored lower. While its overall economic performance has improved in the recent period, the country still lags behind in government efficiency and in infrastructure.
Romania's strong points, according to the reports issued by IMD in the last couple of years, have been the low-cost labor force and the inflows of direct foreign investments. Low inflation and the decrease in unemployment were also mentioned as favorable for the country. Other advantages have been the balanced budget and the decrease of total government debt. The state of central government foreign debt as a percentage of GDP are highlighted in the report as one of Romania's major strengths.
Romania's weak points are government efficiency, regulation intensity, tax evasion, discrimination and protectionism, which have hampered the business sector's activity in Romania.
While competitiveness of enterprises has been thoroughly researched by many scholars around the world, the competitiveness of nations is a relatively new discipline. IMD's research has included the investigation of possible links between competitiveness of private enterprise and competitiveness of nations. The competitiveness of nations, on the other hand, could be described as an integrative process of all policies in a country in order to have a blueprint to increase prosperity. This would typically include not only traditional economic policies, such as what the Central Bank would be doing in terms of interest rates, but also government policies and policies affecting business and infrastructure, education, research, and more.
These changes have had an effect on nations that now have to deal with competitors globally, and people who are now in competition with each other the world over. Not only cheap work force but also cheap brainpower has now become a key concept has now become a key concept in competitiveness, with everyone reinventing themselves to survive in this brave new world, say the IMD researchers.
Romania's competitive edges have been recently underlined by several large investors' choice to come to the country. Nokia's decision to shift production from the German town of Bochum to Jucu in Cluj county is one example. Daimler Chrysler is said to have chosen Romania over Poland to build a production unit. Austrian producer Voestalpine has recently announced its intention to invest in a steel factory in Romania in the following period, with Ukraine as a second option. The steel producer could thus invest EUR 500 million in the Romanian factory. And Voestalpine has selected Romania due to the direct transport possibilities to Russia and Turkey.

By Corina Saceanu

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