Markets and networks in Romania - life after disorganisation

Geomina Turlea and Cezar Mereuta
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Geomina Turlea: Institute for World Economy, Bucharest Romanian Centre for Economic Modeling

No 15, UCL SSEES Economics and Business working paper series from UCL School of Slavonic and East European Studies (SSEES)

Abstract: The level of development of Romania is at the moment somewhere in between the one of the fast reforming economies in central Europe and the late reformers in the ex-USSR. Behind this statement however, one can find an uneven growth process, with multi-dimensional distortions and pronounced polarisation. The overall underdevelopment when comparing Romania with Central Europe is the statistical result of a melange of highly efficient performers on one hand and loss-making, strongly resisting to restructuring, economic agents on the other hand, acting together in an unfriendly and unpredictable business environment. There is no doubt that a mix of legal, institutional and political factors, as well as social and cultural ones, contributed to this outcome. In this paper we attempt looking at some aspects of industrial networks integration during transition. Our hypothesis is that, after a stage that could be better characterised, for reasons that will be outlined further, as an incomplete Blanchard disorganisation, the growth of private sector did not compensated for the decline in state sector output. Various constraints and modifications of behavioural characteristics of economic agents affect its potential growth. A stance that reflects a permanent and complex effort of adaptation to pronounced incertitude, and that we call systemic unrest. The main consequence is that the economy is evolving as a chaotic system. Both vertical and horizontal links between economic agents are established under a high moral hazard in an uncertain environment. Due to the implied significant instability of those links, the formation and alignment networks, as it is described by the western literature, is only emerging.

Pages: 43 pages
Date: 2002-03
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Citations: View citations in EconPapers (1)

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