Romania and BulgariaRomania and Bulgaria

A Brief OverviewA Brief Overview

Econ 270 – European Economic IntegrationEcon 270 – European Economic IntegrationDr. Diego Méndez-CarbajoDr. Diego Méndez-Carbajo

5/17/055/17/05

Presented By: Peter BrownPresented By: Peter Brown

LocationLocation

Official Names:Official Names:

• Romania (România)Romania (România) Capital: BucharestCapital: Bucharest

• Republic of BulgariaRepublic of Bulgaria Capital: SofiaCapital: Sofia

Geographical StatisticsGeographical Statistics

Area:Area: RomaniaRomania BulgariaBulgaria

Total:Total: 237,500 Km237,500 Km22 110,910 Km110,910 Km22

Land:Land: 230,340 Km230,340 Km22 110,550 Km110,550 Km22

Water:Water: 7,160 Km7,160 Km22 360 Km360 Km22

EMU Membership: Current EMU Membership: Current Challenges and Future AgendasChallenges and Future Agendas

RomaniaRomania• Good background with the IMF and the World Bank build Good background with the IMF and the World Bank build

credentialscredentials• Despite recent macroeconomic improvements, corruption Despite recent macroeconomic improvements, corruption

threatens to stifle economic activitythreatens to stifle economic activity• Lack of transparency in public spending and lack of Lack of transparency in public spending and lack of

competitiveness in the agricultural sector remain problemscompetitiveness in the agricultural sector remain problems

BulgariaBulgaria• Economy contracted dramatically after 1989 with the loss of Economy contracted dramatically after 1989 with the loss of

the Soviet marketthe Soviet market Living standards fell about 40%Living standards fell about 40%

• Series of unstable banking systemsSeries of unstable banking systems• Since 1997, has been on the path to recovery with GDP Since 1997, has been on the path to recovery with GDP

growing at a 4-5% rate, increasing FDI, and macroeconomic growing at a 4-5% rate, increasing FDI, and macroeconomic stability; however, still considered very poor economystability; however, still considered very poor economy

DemographicsDemographics

94.02

67.17

114.93

0

20

40

60

80

100

120

Romania Bulgaria EU Avg.

Population Density RomaniaRomania BulgariaBulgaria EU AverageEU Average

Total Total Population:Population:(2005 est.)(2005 est.)

22,329,977 22,329,977 7,450,349 7,450,349

Population Population Density:Density:(2005 est.)(2005 est.)

94.02 ppl/Km94.02 ppl/Km22 67.17 ppl/Km67.17 ppl/Km22 114.93 ppl/Km114.93 ppl/Km22

Population Population Grown Rate:Grown Rate:(2005 est.)(2005 est.)

-0.12%-0.12% -0.89%-0.89% 0.16%0.16%

Net Migration Net Migration Rate:Rate:(2005 est.)(2005 est.)

-0.13 migrants-0.13 migrants

Per 1000 pplPer 1000 ppl-4.3 migrants-4.3 migrants

Per 1000 pplPer 1000 ppl1.5/10001.5/1000

Life Life Expectancy Expectancy (yrs):(yrs):(2005 est.)(2005 est.)

Total Pop.Total Pop. : : 71.35 71.35

Male:Male: 67.86 67.86

Female:Female: 75.06 75.06

Total Pop. :Total Pop. : 72.03 72.03

Male:Male: 68.41 68.41

Female:Female: 75.87 75.87

Total Pop. :Total Pop. : 78.2 78.2

Male: 75.1Male: 75.1

Female: 81.6Female: 81.6

Ethnic Ethnic Composition:Composition:(2002)(2002)

Romanian 89.5% Romanian 89.5% Hungarian 6.6% Hungarian 6.6%

Roma 2.5% Roma 2.5% Ukrainian 0.3% Ukrainian 0.3%

German 0.3% German 0.3% Russian 0.2% Russian 0.2% Turkish 0.2% Turkish 0.2% Other 0.4% Other 0.4%

Bulgarian 83.9%Bulgarian 83.9%

Turk 9.4%Turk 9.4%

Roma 4.7%Roma 4.7%

Other 2% Other 2%

-0.12%

-0.89%

0.16%

-1.00%

-0.80%

-0.60%

-0.40%

-0.20%

0.00%

0.20%

Romania Bulgaria EU Avg.

Population Growth Rate

Economic Statistics (GDP)Economic Statistics (GDP)

RomaniaRomania BulgariaBulgaria EU AverageEU Average

Total GDP (PPP):Total GDP (PPP):(2004 est.)(2004 est.)

$171.5 Billion$171.5 Billion $61.63 Billion$61.63 Billion $11.65 Trillion$11.65 Trillion

GDP per Capita:GDP per Capita:(2004 est.)(2004 est.)

$7,700$7,700 $8,200$8,200 $26,900$26,900

GDP Growth Rate:GDP Growth Rate:(2004 est.)(2004 est.)

8.14%8.14% 5.3%5.3% 2.4%2.4%

GDP Composition GDP Composition by Sector:by Sector:(2005)(2005)

Agriculture:Agriculture: 13.1% 13.1%

Industry:Industry: 33.7% 33.7%

Services:Services: 53.2% 53.2%

Agriculture:Agriculture: 11.5% 11.5%

Industry:Industry: 30.1% 30.1%

Services:Services: 58.4% 58.4%

Agriculture:Agriculture: 2.2% 2.2%

Industry:Industry: 28.3% 28.3%

Services:Services: 69.4% 69.4%

Pre-Accession AidPre-Accession Aid Romania and Bulgaria receive no subsidies from the EURomania and Bulgaria receive no subsidies from the EU

Instead, they receive “pre-accession aid”Instead, they receive “pre-accession aid”

Pre-accession aid is delivered by three main instruments:Pre-accession aid is delivered by three main instruments:• Phare ProgramPhare Program, providing funding for institution-, providing funding for institution-

building and investment in support of EU accession building and investment in support of EU accession preparations preparations

• ISPAISPA, the pre-accession instrument providing , the pre-accession instrument providing investments in transport and environmental investments in transport and environmental infrastructure infrastructure

• SAPARDSAPARD, the financial instrument supporting agriculture , the financial instrument supporting agriculture

and rural developmentand rural development

Common Agricultural and Fisheries PoliciesCommon Agricultural and Fisheries Policies

RomaniaRomania• Agricultural Products:Agricultural Products:

wheat, corn, barley, sugar beets, sunflower seed, potatoes, wheat, corn, barley, sugar beets, sunflower seed, potatoes, grapes; eggs, sheep grapes; eggs, sheep

SAPARD for 2003 is € 162.2 million. SAPARD for 2003 is € 162.2 million.

BulgariaBulgaria• Agricultural Products:Agricultural Products:

vegetables, fruits, tobacco, livestock, wine, wheat, barley, vegetables, fruits, tobacco, livestock, wine, wheat, barley, sunflowers, sugar beetssunflowers, sugar beets

SAPARD allocation for 2004 is €68.0 million.SAPARD allocation for 2004 is €68.0 million.

Fiscal PolicyFiscal Policy RomaniaRomania

• Not currently a member of the EU (expected to join in 2007)Not currently a member of the EU (expected to join in 2007) No contributionsNo contributions

• Receives substantial EU support (around €700 million/year)Receives substantial EU support (around €700 million/year)• Represents around 1.4% of GDPRepresents around 1.4% of GDP

BulgariaBulgaria• Not currently a member of the EU (expected to join in 2007)Not currently a member of the EU (expected to join in 2007)

No contributionsNo contributions• Currently receives around € 400 million per year, reaching 2% of its Currently receives around € 400 million per year, reaching 2% of its

GDP GDP • EU will raise financial assistance by 30% in 2004-2006 periodEU will raise financial assistance by 30% in 2004-2006 period

32%

25%

43% ISPA

SAPARD

PHARE

Inflation and Unemployment RatesInflation and Unemployment Rates

9.60%

6.10%

2.10%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

Romania Bulgaria EU Average

Inflation Rate

RomaniaRomania BulgariaBulgaria EU EU Avg.Avg.

Inflation Inflation

Rate:Rate:9.6%9.6% 6.1%6.1% 2.1%2.1%

Unemployment Unemployment

Rate:Rate:6.3%6.3% 12.7%12.7% 9.5%9.5%

6.30%

12.70%

9.50%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

Romania Bulgaria EU Average

Unemployment Rate

Social PoliciesSocial Policies RomaniaRomania

• Unemployment is down due to increasing trade Unemployment is down due to increasing trade demands within Europedemands within Europe

• Social Security devastated by communist ruleSocial Security devastated by communist rule• Immigration policy is open due to need for higher labor Immigration policy is open due to need for higher labor

inflowsinflows

BulgariaBulgaria• Unemployment is decreasing rapidly, but still Unemployment is decreasing rapidly, but still

unacceptably highunacceptably high• Social Security affected by unstable economySocial Security affected by unstable economy• Immigration policy is open due to need for higher labor Immigration policy is open due to need for higher labor

inflowsinflows

Government StatisticsGovernment Statistics

Budget Balance:Budget Balance:(2004 est.)(2004 est.)

RomaniaRomania BulgariaBulgaria

Revenues:Revenues: $22.1 Billion$22.1 Billion $9.67 Billion$9.67 Billion

Expenditures:Expenditures: $23.2 Billion$23.2 Billion $9.619 Billion$9.619 Billion

Balance:Balance: -$1.1 Billion-$1.1 Billion $51 Million$51 Million

Outstanding Public Debt Outstanding Public Debt

(as % of GDP):(as % of GDP):(2004 est.)(2004 est.)

23.6%23.6% 41.9%41.9%

Current Account Current Account Balance:Balance:

-$3.63 Billion-$3.63 Billion $682.9 Million$682.9 Million

External Relations - RomaniaExternal Relations - Romania Social:Social:

• First Central and Eastern European country to have official EU First Central and Eastern European country to have official EU relationsrelations

• Close historical, cultural, and economic ties leads to a mutually Close historical, cultural, and economic ties leads to a mutually beneficial relationship with Russiabeneficial relationship with Russia

Dependent on Russian energy suppliesDependent on Russian energy supplies Economic:Economic:

• Most important destination countries of Romanian exports Most important destination countries of Romanian exports (2002)(2002)

Italy: 36.6%Italy: 36.6% Germany: 22.4%Germany: 22.4% France: 11.5%France: 11.5%

• Romania imports from EU (2002)Romania imports from EU (2002) Italy: 31.6%Italy: 31.6% Germany: 28.5%Germany: 28.5% France: 10.4%France: 10.4%

External Relations – BulgariaExternal Relations – Bulgaria Social:Social:

• Current administration has made public intentions of Current administration has made public intentions of strengthening ties with Eastern European countriesstrengthening ties with Eastern European countries

• Romanian-Hungarian relations are at an all time high Romanian-Hungarian relations are at an all time high • Great peacekeeping efforts worldwide (especially aligned with Great peacekeeping efforts worldwide (especially aligned with

the US)the US) Economic:Economic:

• Strong developing trade relations with all of EUStrong developing trade relations with all of EU