According to experts with the European Bank for Reconstruction and Development (EBRD), Romania needs a new economic growth model.
According to the latest report on transition, drawn up by experts with the European Bank for Reconstruction and Development, Romania needs a new economic growth model, based on innovation, in order to be able to catch up the developed countries in the West. The report was presented on Tuesday at a conference held at the headquarters of the Romanian Central Bank.
The regional EBRD director Matteo Patrone said that the GDP has been growing above its potential, based on consumption and salary increases, without being correlated with an increase in the country's productivity. "To accelerate on the convergence path, Romania, like many other countries in the region, needs a new growth model based on innovation and integration in the global value chain", Matteo Patrone also said, while also voicing his conviction that Romania is on the right path, due in particular to its human resources and high technology, in fields such as the IT and the aerospace industry. Still, as the EBRD director also stressed, many ingredients are still missing or need to be supported, in terms of structural reforms. Patrone believes that infrastructure is a crucial ingredient, as it stimulates social inclusion and geographical integration, increases productivity and paves the way for trade and foreign direct investments in the country.
According to the EBRD official, within the next five years, the need for infrastructure investment in the region will have reached 40% of the total investment required, accounting for 1.9 billion Euros. He also referred to Romania's motorway network, saying that with its only 747 km, Romania ranks quite low as compared to other countries in the region in terms of infrastructure network density and geographic expansion. Still, as Matteo Patrone stated, there are sectors where progress has been made, such as water and energy, pointing at the interconnection of the Romanian gas network with those of Bulgaria and Hungary.
The chief economist of the Romanian Central Bank Valentin Lazea, who attended the presentation of the EBRD report, said that a country cannot expect a high rate of economic growth indefinitely if it's a democracy and doesn't make the necessary structural reforms. Valentin Lazea drew attention to the fact that one of the costs of democracy is that decisions are made at a slower pace, things take longer and the growth is not as high as in dictatorial regimes. He mentioned a few issues that Romania is still faced with and needs to resolve, such as the gaps existing between regions, between youth and the elderly in terms of access to the labour market and between men and women as regards salaries.
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