Regional Development Trends in Romania:
Insights from a Pilot Study


By

Alexandru Nedelea
Associate Professor
Stefan cel Mare University Suceava
Romania
&
Babu P George
Lecturer in Tourism Studies
School of Management, Pondicherry University
Pondicherry-605014, India
 


Abstract: This communication reports the interim findings of an ongoing project to study the regional development trends in Romania.

Introduction:

An overview of the situation in Romania related to regional development reveals that in the field of regional policy a great deal of progress has been achieved during the last few years. But there are many more things to be done in order to comply with the legal and institutional requirements of the European Union cohesion policy. Firstly, it can be said that in Romania there is in place a functional system for implementing regional policy, both at the central and the regional levels. The system has been in place since 1998 and is established by a special legal act that created central and regional bodies with attributions and responsibilities on corps of central and regional experts. However, although minimally functional, the system is not fully prepared to take over and efficiently implement even vital structural instruments.

A Summary of the Study Outcomes:

Studies being undertaken by one of the coauthors of the present paper reveal that the system has got a number of weaknesses which need to be corrected:

  • There is a sheer lack of synchronization among laws that aim to regulate public fund management, financing and administrative expenses that lead to unwanted legal tussles.
  • In the absence of central support, the functional system at the regional level is under-prepared to make use of the provisions of the law for best results.
  • There has been several ad-hoc changes in the system in the last three or four years without proper evaluations, especially at the regional level.
  • There is almost no communication existing among the administrative and political bodies, professional associations, academic experts, consultants, and the media in order to better understand the present situation and to find a feasible developmental path for the future.
  • The constitutional framework of the system must be made more comprehensive in order to help guide the responsibilities of the regional policy institutions
  • Our study shows that the conceptual foundation related to the regional policy framework is shallow. In fact, there is no consensus on how cohesion and synergy between the policies at the national and regional levels should be achieved. Critical debates and discussions at the academic level are also gravely missing. In order to set up a progressive but stable regional policy and to achieve social and economic cohesion, one major request is to get very detailed and scientifically assessments about the social and economic disparities of the territory. 

  • There has been no profound analysis of regional disparities in Romania since 1997 and yet is a growing official opinion that disparities are low and insignificant (at least compared to those existent within EU countries);
  • There is no sufficient attention given to the extremely high disparities between rural and urban areas and within urban areas1, proved by numerous studies, which can be a specific feature for Romania among the other EU and CEE countries;
  • No sufficient attention is paid to rural poverty, although this has been also proved by numerous studies and is currently praised as being of national importance;
  • There is not a significant group of aggregated indicators used by an official body at central and/ or regional level, to assess regional and intra-regional disparities, for the moment.
  • In fact, the research has brought into the fore, according to most of the opinions expressed by the participants at the meetings and interviews that there exists very little official information about the progresses and the policies undertaken by other candidate countries.

    During the elaboration of the report, it appeared clearly that a major issue related to cohesion and an effective regional policy is the role of the regional structures. The debates within the interest group and not only went around the issues of regionalization, de-concentration, and decentralization and as the status of regions and regional bodies. Although the matter of the administrative regions and their institutions was not entirely the subject of the present report, it is obviously of high relevance for the topic of the report. For such reasons, examples are given about France, Portugal and Greece and their de-concentration processes.

    Fourthly, the researches focused on programming process, provided besides obvious achievements, certain weaknesses especially in the way the NDP is elaborated and its relation to financial resources and to the implementation stage. Although, the NDP became a consistent document to assess the social and economic potential of Romania it does not yet fulfil all the criteria requested by such a document. The analysis of the NDP has started from the assumption that it will be the basis of a CSF and should comply with such demand. Although it is designed now mainly as a support for the allocations of the Pre-Accession funds it still does not comply in terms of structure, institutional arrangements and financial programming with the EC demands. Nor does it comply with the demands for partnership and internal coherence.

    Fifthly, a number of practical aspects have been also identified during the research as important weaknesses related to the implementation process of regional policy. Among the most important are:

  • Reduced training activities of staff of both central and regional institutions as well as of the elected people;
  • Lack of any correlation and integration of spatial and regional planning instruments;
  • Low correlation and integration of specially assisted zones (de-favored areas, economic free trade zones, industrial parks etc.) with the regional development policy and its specific instruments;
  • Reduced communication among national bodies and among national and local/regional institutions involved; reduced information and awareness at the level of the media and public about regional policy and its instruments.
  • The development of legal and institutional framework for regional policy is undergoing and is sustained by a number of opportunities. The most important one is the assistance provided by EU trough the Pre-Accession instruments Phare, ISPA and SAPARD. Besides that, Romania is participating to Interreg programs such as CBC and CADSES. Finally, another opportunity should be considered the national twinning and the 8 regional twinning programs planned for 2002-2003, aiming to strengthening the institutional capacity of the central and regional authorities established by the law No. 151/1998.

    Implications of the EU social cohesion policy for Romania:

    Social cohesion is defined by chapter XIV of the 3rd part of the EU Treaty (Articles 158 to 162) and is stated as one of the basic principles of the EU (article 3 of the TEU). The instruments of the cohesion policy are mainly the Structural Funds and the Cohesion Fund.

    Structural Funds (SF) are defined by the following Regulation for the 2000-2006 programming period:

  • Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds
  • Regulation (EC) No 1783/1999 of European Parliament and of the Council of 12 July 1999 on the European Regional Development Fund
  • Regulation (EC) No 1784/1999 of European Parliament and of the Council of 12 July 1999 on the European  Social Funds
  • Council Regulation (EC) No 1263/1999 of 21 June 1999 of the Financial Instrument for Fisheries Guidance
  • These regulations will be revised for the next programming period. Besides setting up and defining a number of principles such as concentration, programming, partnership and additionality for the SF, or macroeconomic conditionality and greater use of private finance for the CF these regulations set up various rules for payments, management, financial control, annual and final reporting, which have to be followed by the Member State.

    Once member of the EU and beneficiary of SF and CF, Romania will have to comply with all these regulations, as they will be established for the next programming period as well as with other general regulations for financial management and control systems (CR 438/2001), and for financial corrections (CR 448/2001).

    Considering that most of the present regulations and principles will not change, Romania will be eligible for both Objective 1 area and CF. Objective 1 involves all the 4 types of SF, that is: ERDF,ESF, EAGGF. As an Objective 1 area Romania will have to submit a NDP to the EC, on the basis of which a CSF will be issued as a basis for the structural allocations.

    In order to comply with these minimum requests Romania will have to complete the legal framework, to develop the institutional capacities to managing these funds (including Managing and Paying Authorities), to set up effective procedures and financing control systems (according to the EU concept of Sound Financial Management) and a reliable monitoring one.

    Significant progresses must be done in relation to multi-annual programming, sectoral policies integration, collection of social and economic data and operational partnership at both central and regional levels.

    During the pre-accession period the regulations for the pre-structural instruments are set up by:

  • Council Regulation 1266/1999 of 21 June 1999 on coordinating aid to the applicant countries in the framework of the pre-accession strategy and
  • Council Regulation 1267/1999 of 21 June 1999 establishing an Instrument for Structural Policies for Pre-accession.
  • The Annex to the CR 1266 defines minimum criteria and conditions for decentralizing management to implementing agencies in applicant countries, which are meant to gradually prepare the candidate countries for accession.

    However, the support from Phare, ISPA and SAPARD, although important will not be enough for Romania to face the impact of cohesion policy by the time of integration unless significant actions will not be considered in institutional building and economic restructuring. In terms of costs, the institutional building capacity will be probably the most important as this should include not only direct costs but also indirect ones such as training of the staff. An optimum cost of the institutional building can be found only by special tailored studies.

    The Romanian co-financing to the EU contribution will represent important costs. However, these costs will be less than of benefits. The most difficult part and probably the most costly will be the economic restructuring process, which will be only partially covered by the SF.

    Concluding Remarks:

    As could be seen from the above considerations, the major challenge of the next decade for Romania is to make regional development an efficient instrument to achieve economic and social cohesion and consequently balanced growth. Having an appropriate legislative and institutional framework and also a corps of well trained professionals in the field of rural development are vital in preparing Romania to absorb the EU Structural Instruments. Besides direct measures, collateral actions are also needed to provide the larger administrative, social, and economic framework for social cohesion and regional policy.

    Based on the conclusions of the present research, on the information provided by internal and international documents, on the discussions undertaken with Romanian and foreign experts a number of recommendations has been formulated at the end of the report, to be considered by the responsible institutions in view of accession preparations. These recommendations are shortly listed below:

    1. Enhancing and consolidating the existing legal and institutional system and enabling all of its components to function efficiently.

    2. Consolidating the role and position of the NBRD's role by providing stronger support and more clear responsibilities and attributions.

    3. Taking serious actions in formulating a national concept on cohesion and regional development and to setting up clear commitments for the participating ministries and agencies in order to secure an effective contribution to social and economic development.

    4. Launching a national debate moderated by a governmental body to decide upon what kind of cohesion policy and regional development for Romania ("equity challenge" versus "promoting growth of larger towns").

    5. Setting up a legal status of the NDP, by issuing a special law, which will regulate its content and relationship with other planning documents, its approval procedures, application monitoring and revising system.

    6. Initiating actions and debate with large participations on the issues of de-concentration, regionalization, and decentralization aiming to preparing a national document.

    7. Setting up a Special Working Group under the direct authority of the NBRD (National Board for Regional Development) to work for a 3 years interval on the legal frame work for Economic and Social Cohesion.

    8. Encouraging research in regional development and social cohesion and higher education into regional development.

    9. Providing adequate financial instruments it provides the main institutions involved in cohesion policy and regional development with effective means to accomplish their tasks. The principal institutions envisaged as being involved should be: MPF, MAAF, MPWTH, MLSS, REGIONAL AGENCIES. In addition MPA, MWEP, NRA, MER AND MSME&C can be also considered.

    10. Taking serious actions in the field of institutional building by:

    10.1. Setting up an evaluation process of the capacity of the institutions involved in relation to management, programming, implementation, monitoring and evaluation, financial management and control, to be carried out over the next 2 years.

    10.2. Setting up training departments in all the central and regional institutions involved.

    10.3. Improved co-ordination among central and regional bodies in order to achieve an integrated organizational and financial regional policy system.

    10.4. Providing safer and sufficient financial resources for the RDA's, while gradually transferring them full responsibilities to implementing regional programs.

    11. Promoting partnership as a major principle of regional policy by extending the solidarity principle at regional level and by providing RBD with real and effective juridical character. Besides legal measures such as forums, working committees, national debates, conferences etc.

    12. Issuing a National Practical Guide for selection, evaluation and monitoring of regional development projects in order to improve and  integrate procedures of the central and regional bodies.

    --------------------------------
    1.
    In this respect more attention should be given to the poverty studies available and to studies focused on some pilot regions, such as the case of 4 pilot studies done in 1998 on the judets Alba, Dolj, Teleormen and Vaslui.
     


    Alexandru Nedelea
    Associate Professor
    Stefan cel Mare University Suceava
    Romania
    &
    Babu P George
    Lecturer in Tourism Studies
    School of Management, Pondicherry University
    Pondicherry-605014
     

    Source: E-mail August 17, 2006

         

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