The progress that Romania has made since it was welcomed to join the European Union at the beginning of the century has been extraordinary. The EU has marked a very tangible difference for Romania, compared with its neighbors that are not part of it. The country has changed enormously, opening itself to Europe and the world. The EU has given a solid anchor to economic policies and to the Romanian currency, and it has supplied very large funds for infrastructure and cohesion.
Economic progress in Romania has been very substantial, despite the unfortunate timing of the worst international economic crisis since the interwar period, which hit hard precisely at the moment when Romania entered the Union, first in Eastern Europe and subsequently in the Euro Area. In fact, the immediate pre-EU-adhesion period was one of intense euphoria in investment and the economy, which was corrected by the crisis. But the gains of the pre-adhesion period have been recovered and surpassed. The benefits of the EU have not been a promise, but a reality.
Eurostat figures show a very large growth for Romania in Gross Domestic Product (GDP) GDP per capita measured in euros at current prices, with an increase from 1,800 € in 2000, when the pre-adhesion period started, to 8,600 € at the end of 2016, a 378% increase, the largest in Europe in this century. Romania has converged with Europe, as its per capita GDP was barely 9% of that of the EU at the turn of the century, and is now 30% of the Union average. There is still a large potential for catching up, but change has already happened.
Furthermore, if we do a slightly broader international comparison, according to the IMF data from the World Economic Outlook database, Romania has been the country with the largest growth of GDP per capita at current prices in Emerging Europe since 2000, passing from 1,670 $ to 9,465 $ in 2016, a historic increase of 467%, and is almost tied at the top with Bulgaria in growth of GDP per capita since it entered the EU on January 1st 2007, with a 63% increase measured in international US$. These impressive Romanian growth figures in this century are of a similar order of magnitude as those of Emerging Asia, including China.
One of the drivers of growth for Romania has been trade, particularly intense with EU members. The growth in Romanian trade has also been large, by 391% since 2000, but for instance the increase in trade with Spain has been phenomenal, from 264.9 M€ in 2000 to 3,558.7 M€ in 2016, an increase of 1,243%. Spain is now the 8th largest market for Romanian exports (of 1,626 M€), which shows how much the ties have grown and how much Romania benefits from full access to the EU market, and Romania has also become a very significant destination for Spanish exporters. Last year, it has become an export market for Spain of a similar magnitude (2,069 M€) as those of Japan and Brazil, and larger than South Korea, Russia or Canada.
Trade ties have deepened and become diversified, including industrial goods, with the automobile sector as the single biggest contributor, quality fashion and textiles, but also increasingly services, one of the areas where both Spain and Romania have both showed large progress.
Foreign investment in Romania has been a key driver in the acceleration of growth since the pre-EU-adhesion period. Spain has been one of the main investors in Romania, being the 9th largest according to the latest data of the Registry of Commerce, which shows 5,794 societies with Spanish capital, for a value of 1,700 M€, amounting to 4% of total foreign direct investment in capital. Spanish nationals have invested in a diversified amount of sectors, including industry, energy (particularly renewables), real estate, logistics and transport, retail and construction.
Spain is a very good case in which infrastructures have dramatically improved in the last decades, with EU funds and the EU institutional framework being a large contributing factor to this progress. Spanish national, regional and municipal authorities gave priority to infrastructure investment and adopted a business-friendly attitude towards construction companies which facilitated quality investment.
In this regard, the observed reduction and difficulties in public investment in the last two years can be a missed opportunity. To address it, reforms to make public tender contracts more balanced and follow closely international standards like FIDIC, and more streamlined and agile permits, would be key, as well as a higher priority to investment spending in the budget, the recognition of arbitrages and ensuring a business-friendly attitude of contracting authorities.
Spain is also one of the major destinations for Romanians abroad, which constitutes the most important link between the two countries. One of the economic returns for Romania are migrants’ transfers, and in this regard the estimates of the Spanish Economic and Trade Office are of between 900-1,500 M€ of remittances a year.
Finally, the institutional network in economic, investment, and trade issues is a necessary support for strengthening bilateral relations in the private and public domains. In this regard, the Economic and Trade Office of Spain in Romania celebrates in 2017 its 50th year of continuous presence and the private Association of Spanish Businesses in Romania (ASEMER) is very close to its recognition as an Official Spanish Chamber of Commerce. Spain is making the effort of upgrading its institutional network to reflect its weight and its interest in Romania as an economic partner.
Let me conclude by emphasizing that bilateral economic relations, like those of Spain and Romania, flourish in a stable and open environment for trade and investment. The European Union has been, ever since the pre-adhesion period, the key element for anchoring Romanian policies and improving the business climate for private investors and citizens at large. Romania has progressed enormously since it attained its aspiration of belonging to the Union, and has consolidated this progress once the economic crisis has passed. But there is still much potential for economic growth in this enterprising country. The solidarity of EU members has also showed in the large availability of EU funds, which hold the promise of further helping to converge to EU levels of income if prudent economic policies are followed and reforms are undertaken, particularly to improve the climate for public investment in Romania.