Romania's Economy

Romania's Economy:

Yesterday, Today, and Tomorrow

Romania is in southeast Europe and is slightly smaller than Oregon. The Carpathian Mountains divide Romania's upper half from north to south and connect near the center of the country with the Transylvanian Alps running east and west. North and west of these ranges lays the Transylvanian plateau, and to the south and east are the plains of Moldavia and Walachia. In its last 190 mi (306 km), the Danube River flows only through Romania. It enters the Black Sea in northern Dobruja, just south of the border with Ukraine. (Infoplease) Most of Romania was the Roman province of Dacia from about A.D. 100 to 271. From the 3rd to the 12th century, wave after wave of barbarian conquerors overran the native Daco-Roman population. Subjection to the first Bulgarian Empire (8thÐ'-10th centuries) brought Eastern Orthodox Christianity to the Romanians. In the 11th century, Transylvania was absorbed into the Hungarian Empire. By the 16th century, the main Romanian principalities of Moldavia and Walachia had become satellites within the Ottoman Empire, although they retained much independence. After the Russo-Turkish War of 1828Ð'-1829, they became Russian protectorates. The nation became a kingdom in 1881 after the Congress of Berlin. (Pangaea). At the start of World War I, Romania proclaimed its neutrality, but it later joined the Allied side and in 1916 declared war on the Central Powers. The armistice of Nov. 11, 1918, gave Romania vast territories from Russia and the Austro-Hungarian Empire, doubling its size. The areas acquired included Bessarabia, Transylvania, and Bukovina. The Banat, a Hungarian area, was divided with Yugoslavia. King Carol II was crowned in 1930 and transformed the throne into a royal dictatorship. In 1938, he abolished the democratic constitution of 1923. In 1940, the country was reorganized along Fascist lines, and the Fascist Iron Guard became the nucleus of the new totalitarian party. On June 27, the Soviet Union occupied Bessarabia and northern Bukovina. King Carol II dissolved Parliament, granted the new prime minister, Ion Antonescu, full power, abdicated his throne, and went into exile. (Infoplease) Romania subsequently signed the Axis Pact on Nov. 23, 1940, and the following June joined in Germany's attack on the Soviet Union, reoccupying Bessarabia. About 270,000 Jews were massacred in Fascist Romania. Following the invasion of Romania by the Red Army in Aug. 1944, King Michael led a coup that ousted the Antonescu government. An armistice with the Soviet Union was signed in Moscow on Sept. 12, 1944. A Communist-dominated government bloc won elections in 1946, Michael abdicated on Dec. 30, 1947, and in 1955 Romania joined the Warsaw Treaty Organization and the United Nations. (BBC News). Running a neo-Stalinist police state from 1967Ð'-1989, Nicolae Ceausescu wound the iron curtain tightly around Romania, turning a moderately prosperous country into one at the brink of starvation. To repay his $10 billion foreign debt in 1982, he ransacked the Romanian economy of everything that could be exported, leaving the country with desperate shortages of food, fuel, and other essentials. An army-assisted rebellion in Dec. 1989 led to Ceausescu's overthrow, trial, and execution. An ex-Communist, Ion Iliescu of the National Salvation Front, served as president from 1990Ð'-1995. Emil Constantinescu of the Democratic Convention Party served as president from 1996Ð'-2000. The post-Communist governments' conflicted and halfhearted attempts to change to a free-market economy have been largely unrealized. In 2000 former president Iliescu returned to power with a landslide victory, easily defeating a xenophobic nationalist opponent. Discrimination against the Magyars (ethnic Hungarians) and the Roma (Gypsies) continues, fueled by several ultranationalist political parties. (Infoplease) The country applied for membership in the EU in June 1995. Economic reform has proceeded at a glacial pace, and growing dissatisfaction with the government's inefficiencies and economic policies led to a wave of protests by workers, students, and others that peaked in 1997, and again in 1999, when the coal miners went on strike. (Europa). Romania joined NATO in 2004, and in 2005 the EU approved the entry of Romania which will take place in 2007. Final acceptance into the EU will require a number of reforms, including increased law enforcement and environmental measures, and the protection of the rights of the Roma (Gypsy) minority. (Infoplease). Today the country is run by the President Traian Basescu and Prime Minister Calin Popescu-Tariceanu both who entered into office in 2004. Like the United States, Romania's government is Republic. A republic is a kind of government where the people can choose their own leaders. The main leader is called the president and some countries, like Romania have a prime minister while others, like the United States, do not. People in a republic send a representative to the capital city of the country to make laws. In some countries the laws are made in what is called a congress (U.S.) or parliament (Romania). In addition, Romania covers 91,699 sq mi with the capital Bucharest as its largest city and has 22,329,977 people. Romania's growth rate is at Ð'-0.1%, the birth rate is 10.7/1000, the infant mortality rate is 26.4/1000, the life expectancy of people in Romania is 71.3 years of age and the literacy rate is ninety-eight percent. (World Fact Book).

Since 1970, Romania's economy has been on an incline. Economy is measured largely by the Gross Domestic Product (GDP). The GDP is a measure of the total value of goods and services produced by the domestic economy during a given period, usually one year. It is obtained by adding the value contributed by each sector of the economy in the form of profits, compensation to employees, and depreciation (consumption of capital). Only domestic production is included, not income arising from investments and possessions owned abroad, hence the use of the word domestic to distinguish GDP from gross national product. Real GDP is the value of GDP when inflation has been taken into account. (Encyclopedia). As of 2004 the GDP in Purchasing Power Parity (PPP-which are the adjustments in exchange rate conversions that takes into account differences in the true cost of living across countries) is $171.5 billion per capita (which means the total output is divided by its population). The real growth rate in Romania is 8.1 percent while the inflation is 9.6 percent and unemployment is at 6.3 percent. Arable land is 41 percent which means that as far as agriculture goes, which makes up 31.6 percent of the workforce, they are able to produce

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