I. Romania: An Overview
Implanting an enterprise within the borders of Romania can
be quite advantageous, while posing several problems at the same time.
Following is an analysis of Romania with emphasis on its markets and the
possibility of implantation. First, one must look at the demographics, the
economy, the natural resources, and the government.
i. Demographics
Romania has a population of over 22 million inhabitants,
making it the second largest market in Central and Eastern Europe, just behind
Poland. However, Romania suffers from a negative population growth rate of
–0.11% due to a higher mortality rate than birth rate (11.69/1000 vs.
10.69/1000) and increased emigration. The average life expectancy is 67.63
years for males and 74.82 years for females. 98.4% of the total population is
literate.
ii. Economy
Romania’s GDP in 2003 was estimated at 155 billion $US
(PPP) and growing at an annual rate of 4.9%. This breaks down to an estimated
7000 $US GDP per capita (PPP) although the country still suffers from
widespread poverty; 44.5% of the population is below the poverty line. The Gini
Index for distribution of family income in Romania is at 31.3. A value of 0 represents perfect equality,
while a value of 100 represents perfect inequality; therefore, Romania ranks
quite well for distribution of family income (the US and Canada rank slightly
worse at 40.8 and 31.5 respectively). The public debt is around 25.5% of
the nation’s GDP.
The labor force of 9.28 million people is split into three
main categories: 41.4% in agriculture, 27.3% in industry, and 31.3% in
services. The unemployment rate is at 7.2% with a large amount of unemployed
skilled labor as well as unskilled. Inflation stands high at 15.3% but has been
on a downward trend over the last 5 years. Industrial production is growing at
2.3% in the areas of textiles and footwear, light machinery, auto assembly,
mining, timber, construction materials, metallurgy, chemicals, food processing,
and petroleum refining.
Romania exports almost $18 billion of goods to Italy
(24.3%), Germany (15.7%), France (7.4%), the UK (6.7%), Turkey (5.1%), and
others (40.8%). They export textiles and footwear, metals and metal products,
machinery and equipment, minerals and fuels, chemicals, and agricultural
products. Conversely, they import over $22 billion worth of machinery and
equipment, fuels and minerals, chemicals, textiles and products, basic metals,
and agricultural products. Their major import partners are Italy (19.6%),
Germany (14.9%), Russia (8.3%), and France (7.3%).
The local currency in Romania is the leu (ROL), which
equals 100 bani, and had been falling against the US dollar in the past 5
years. On December 31, 2003, it stood at 32,595.1 lei per $US (down from
15,332.8 lei per $US in 1999). On April
23, 2005, at 13:21 EST, the lei had rebounded to 27,561.0 lei per $US (Appendix
A).