Romania's integration into European markets: implications for sustainability of the current export boom

Bartlomiej Kaminski and Francis Ng

No 3451, Policy Research Working Paper Series from The World Bank

Abstract: In defiance of its unimpressive track in structural reforms and relatively low foreign direct investment (FDI) inflows, Romanian exports have experienced surprisingly strong performance in both European Union (EU) and non-EU markets since 2000 after a four-year period of flat growth. While the firstphase of growth in 1992-95 can be easily explained by redirection of trade toward the EU once the state monopoly over foreign trade was abolished and other policy areas liberalized, the current second phase of export expansion raises questions concerning its drivers and sustainability. Having examined overall foreign trade performance, evolving patterns of specialization, Romania's competitiveness in EU sunrise markets, changes in factor intensities of trade with the EU, and"intra-product"trade, the authors conclude that Romania's export offer has become diversified, reflecting an impressive progress in industrial restructuring. Restructuring has been facilitated by FDI inflows, even though they appear to have been too small to generate such a big effect. Romanian firms have become increasingly part of international production networks and traditional global value chains. Sustainability of this performance depends on maintaining macroeconomic stability and keeping wage increases in line with productivity growth, as well as increasing Romania's ability to attract larger FDI inflows through improvements in business climate and trade facilitation.

Keywords: Economic Theory&Research; Export Competitiveness; Trade Policy; Agribusiness&Markets; Environmental Economics&Policies; Economic Theory&Research; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Trade Policy; Agribusiness&Markets; Environmental Economics&Policies (search for similar items in EconPapers)
Date: 2004-11-01
New Economics Papers: this item is included in nep-cwa and nep-ifn
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Citations: View citations in EconPapers (2)

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