Evaluation ofCompetitiveness and

BusinessEnvironment in

Romania: Challengesand Perspectives

Athina Koniari

SCHOOL OF HUMANITIES

A thesis submitted for the degree of

Master of Arts(MA) in Black Sea Cultural Studies

January 2015

Thessaloniki – Greece

Student Name: Athina Koniari

SID: 2201130032

Supervisor: Prof. Harry Papapanagos

I hereby declare that the work submitted is mine and that where I have made use of another’s work, I have attributed the source(s) according to the Regulations set in the Student’s Handbook.

© Date, Student’s name, ID number

No part of this dissertation may be copied, reproduced or transmitted without the author’s prior permission.

January 2015

Thessaloniki - Greece

Abstract

This dissertation was written as part of the MA inBlack Sea Cultural Studies at the International Hellenic University. This dissertation aims to examine the competitiveness of the Romanian economy based on the GCI and its pillars where as a general picture will be presented regarding the procedures that have to be followed for the establishment of a company in Romania based on theIndex of EDB and its pillars. In each chapter there will be recommended further measures for themelioration of the scores that Romania has taken and how these measures can be achieved in the future for the economic development of the state.

Finally, in the third and last chapter there will be an overall picture of the economic environment of the state along with the steps that have taken place the last years in the economic field and what should be done further to attract foreign investors and their economic capitals in the Romanian market and how these further steps can meliorate the economy and ensure a prosperous future for the Romanian economy and society. Certain tables will be presented in the appendix to support all the evidence that is used making the dissertation as safe as possible for certain conclusion relevant to the Romanian economy.

Keywords: Competitiveness, Romanian economy, growth, Business environment

Athina Koniari26/01/2015

Preface

Special thanks to my supervisor prof. Harry Papanagos for his valuable help and support and to all the friends that made me confident and willing to finish this dissertation.

CONTENTSABSTRACT

PREFACE

CONTENTS

ROMANIA………………………………………………………….p.6-7

INTRODUCTION…………………………………………………..p.8-9

CHAPTER 1: The GCI Index…………………………………….p.10-11

Pillars……………………………………………………………p.11-33

Romanian Competitiveness in the Black Sea region and recommendations…………………………………………………p.33-35

CHAPTER 2: The EDB Index……………………………p.36-38……..

Pillars……………………………………………………p.38-55……

The Romanian EDB in the Black Sea region and recommendations…p.55-57…..

CHAPTER 3: Further suggestions for the melioration of the Romanian competitiveness……………………………………………p.58-70

CONCLUSIONS………………………………………………p.71-73

BIBLIOGRAPHY……………………………………………..p.74-78

APPENDIX……………………………………………………p.79-86

ROMANIA

Romania is a country situated in the southeast ofEurope and on the western shore of the Black Sea.

Its population is about 20 million people for whom 90% are Romanians and 7% Hungarians (europa.eu). Even though there is a big discussion throughout the years concerning the roots of the Romanian nation, since there were those who supported the idea that Romanians are Slavs and those who believe that Romanians are Latins and exist there since the Roman Empire, Romanians as a whole believe they are Latins and for this reason, their language alike the other Slavic languages is directly dissented from the Latin script and language. This fact, make Romanians think themselves as more Europeans fromthe other Balkan countries and made more imperative the need to become European citizens, something that finally happened in 2007.

Romania’s territory is very rich in natural resources like oil, natural gas, coal, iron, copper and bauxite. Metal-working, petrochemicalsand mechanical engineering are the main industries. Romania’s biggest part of work force (about 30%) is mainly dealing with agriculture, since its land has great productivity in wheat and potatoes (wikipedia.org).There is, also a high developing industry sector, but in general Romanian economy is mostly based in agriculture.

According to the World Bank1, Romania is ranked in the 61st position between the 185 countries of the world, which are listed from the best to the worst after examined their GDP in PPP per capita.1 Whose research is based in actual data.

This index, is calculated from the Gross DomesticProduct and the Purchase Power Parity, and is defined as the “gross domestic product divided bymidyear population” (data.worldbank.org). More specifically, the Romanian GDP in PPP per capita is 293.668 million $. With this position Romania cannot but hope for a prosperous future.

From the 2000s, Romania was characterized as an economic “tiger”, because of its high rates in growth and development. It is considered to be the most developed state of the region, especially in the industry. Unfortunately, Romania the last years (from 2009), seems to follow the general route of the world economy andthe economic crisis, but even this way, Romania continue to be a country with a growing economy and a more and more improved standards of living aiming to attract more and more foreign direct investments that will definitely renovate the economy of the state and will make it stronger against the existent economic crisis in the wholeworld

INTRODUCTIONRomania the last years seems to attract more and more the interest of those that wish to create new industries and companies. The last year the economic indexes show a very prosperous future for the Romanian economy, even though the citizens do not feel, in the greatest part, very rich, if not poor. This dissertation, aims to examine the Competitiveness and the Business environment in the country of Romania.

In order to have a clear view, regarding the economic situation of Romania the essay will be based on specific data, which are the two basic economic indexes and their pillars: the GCI for the Competitiveness and the EDB for the business environment as long as the relation between them.Moreover, the place of Romania will be discussed relatively to the other Black Sea states. What will, also, be attempted will be the description of the relation between Competitiveness and Economic Growth.

The essay will be structured in two basic chapters, the one dedicated to the GCI and the other to the EDB index. In each chapter, there will be a general picture of the index and its use to the economic studies and after that, therewill be a small analysis for each pillar of the

index. Finally, in each chapter there will be a description of the Black Sea region in general and of course, the place of Romania in it. A special chapter after these two will help the reader have a clear view, of the Romanian economy, its entrance to the European Union and how it is affected from the economic situation oftheir country.

The final aspiration is more about practical knowledge. What is important is the reader to have taken the information that are needed for the Romanian economy and to be capable of understanding if any investments are possible in Romania from foreigners and ,more importantly, what will be the gain of an investment in Romaniadepending on the various components of the country.

There will be an attempt to even predict the economic situation of Romania based on the indexes and the data that present the last years and the overall process. The competitiveness as an economic element will allow those that are interested in investing to the Romanian state have a general impression about the safety of their investments and the ability to know in advance what they will face during the establishment of a company regarding bureaucracy,working force, equipment or any other issue that may occur. This ay they might be more prepared and so more capable to deal with the issues more efficiently and in a short time.

CHAPTER 1

The GCI index

The GCI (Global Competitiveness Index) is the most important tool in order to evaluate the competitiveness of a country. “Competitiveness is defined as the set of institutions, policies and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be earned by an economy.” (http://www.weforum.org). C ompetitiveness , as a consequence, is related to the productivity whichleads to a prosperous economy for the state and higher income for the citizens, which provides better standards of living.

GCI as an index gives a general image of the “value” of an economy and is highly related to the development of the state. Using the Global Competitiveness Report (GCR), it is possible to evaluate and observe the progress of a state throughout the years and in this way, make some conclusions regarding the future of the state, byscoring the states from 1 to 7, where 1 is the worst and 7 is the best. This report is publishedevery year and set the states into a list, based on the score each state has. Apart from states like USA or Denmark which tend to have the best scores the last years, other states, also seem toimprove their scores like the Balkan states.

Using the GCI it is possible to categorize the states in categories regarding their GDP per capita and their goods and services relation (exports etc). If a state is between two stages, then this state is considered to be “in

transition”. The three stages that are used to categorize the states (factor-driven, efficiency-driven and innovation-driven), are very useful tool for the study of the development of a state.

For Romania, which is considered to be in the second stage of development, the so called efficiency-driven economies, the GCR seems to be rather ambitious for the year 2014-2015. According to this source, Romania has a score of 4.3, which gives it the 59th position among the 144 states that participated in this report. Thisposition is the best Romania ever had in the last20 years, something that of course underlines thegood condition the Romanian economy is, in combination with the future of the country and its citizens.

In order to have a more clear view, regarding theindex of the Competitiveness, is essential to make a citation to the elements that define and assemble this Index. The 12 pillars that are related to the competitiveness are divided in 3 categories, the basic requirements, the efficiency enhancers and the innovation and sophistication factors. The basic requirements are consisted of the Institutions, Infrastructure, Macroeconomic Environment and theHealth and Basic Education. On the other hand, the pillars that are listed in the Efficiency Enhancers are the Higher Education and Training, the Good Market Efficiency, the Labour Market Efficiency, the Financial Market development, the

Technological Readiness and the Market size. Finally, the Innovation and Sophistication factors are the pillars of Business sophistication and the Innovation. Those pillars will be seen with more details below.

PILLARS1. Institutions

Romania, even thought has entered the EU since 2007, is still in the effort of becoming a state that meets the EU standards. The difficult past that the country has experienced during the communist era, has not been totally forgotten from the people who have experienced so much the poverty of those years. This political change hasof course influenced the function of the state which consequently has lead to a bad image for the standards of the state.

According to the World Forum, Romania has a scoreof 3.62, regarding the Institutions and their functionality within the state. This score is considered a bad performance, since it shows a difficult situation for those who wish to invest their money in Romania. What is more, it is generally observed that the countries that have so low scores in this pillar, tent to face a lackof trust from people with power and willingness

2 In the scale of 1 to7.

to invest and create companies in other countriesin general.

Corruption is maybe the most important factor forthe present situation, since corruption as a political and social phenomenon, leads to the insufficient existence of the public sector and the aim of those who work in the public services only to gain money just to offer what they are obliged to do according to their position. Bribery becomes a very common practice and this is why, there are court scandals and social inequality. This situation has caused a very infertile climate for the political scene of Romania, because the majority of the Romanian population has no trust to the politicians and the members of the parliament as well. There are many cases, where the court decisions are taken in favour of the government officials as it is estimated3, setting into question the judicial independence.

A very important problem regarding the various institutions in Romania is the so called Government Efficiency. The scores are more than disappointing in this field and especially when it comes for situations that are in charge of setting the legal system into operation; spend the public money wisely or even setting under question the transparency of the government

3 In this situations, Romania was scored with 2.5 (http://reports.weforum.org/global-competitiveness-report-2014-2015/economies/#economy=ROU)

system. Security is another field that faces some issues. Romania is well-known for its big network of organized crime since the fall of the Communist regime. The fact that the current government seems to be weak to face such problemscreates a feeling of uncertainty, since Police isnot very active in order to meliorate the situation. Even the cost of terrorism and crime creates a hole in the Romanian economy which could have been used to make the economy strongerand more competitive. For example the Black Market is a major economic issue, with the existence of drugs and other products to be in the list, which more or less costs about $1.5 billion per year (www.havocscope.com ). It is important to be mentioned, that the so called “Romanian Mafia”, is believed to have created a worldwide network, with most of its activities inNorth Italy and Spain. Apart from the drug trade and the prostitution, its members are believed tobe involved in cases of document forgery and contract killings (http://en.wikipedia.org/wiki/Romanian_mafia). Asa consequence, people from the state or other states, hesitate to invest their money thinking of this factor. Because this situation creates a feeling of in uncertainty and fear to the foreigners that are not used to such a way of living in a state with high criminality.

In order to have a complete analysis of the Institutions is it vital to make a reference to

the private ones. There the situation does not seem to change a lot. The main weakness seems to be concentrated to the attitude of the employees.More specifically, it is observed an immorality to everything that has to do with the relation ofthe corporations with them regarding economic issues or issues of functionality as well as the trade relations with certain firms that may also affect the quality of the production. This phenomenon makes it difficult for Romania to attract new investors as it does not give the impression of a trustworthy state. In combinationwith the fact that Romania is not characterized from a countable environment, meaning that there are low scores to everything related to the efficiency of the corporate boards, the incapability of imposing specific standards relevant to the productivity and ensure that all the partners of a company will have equal rights and not be in favour of those that owns the most numerous part of the shares. But, a specific field tends to meliorate the whole bad image. Thefact that Romanians care mostly in protecting theforeign investors and their rights in the market,especially when it comes for economic affairs dueto the Romania currency, is a very serious advantage for those who want to invest in this state (reports.weforum.org).

As a general view, it is estimated that Institutions is not well-functioned in Romania, which of course, does not help any king of

investors to create business there. The most important problem is corruption, that affects both the public and the private sector in many ways and creates obstacles in the well-being of the Romanian economy. As for the corporations, they face several problems regarding their presence to the market, depending to the protection for their rights not only from the institutions, but from the people who work there as well.

2. InfrastructureRomania is not considered to be a country with very good infrastructure from the majority of thepeople worldwide, which, according to the data isnot far from the truth. According to the World Forum, the Infrastructure in Romania is in very low standards, something that has created some serious problems to the citizens but also to the economy of the state.

With the quality of the overall Infrastructure tobe in very low score, it is not difficult to understand that the transports are very hard to realize and the cost is very high, compared to other EU members like Hungary (http://business-review.eu). As a result, investors are not very keen on investing their money to such a state. Itis true, that the last years many efforts have been made from Romania to meliorate the

situation, mostly based on EU funds, but the factthat the Infrastructure was close to zero, makes it even more difficult for Romania to compete theother EU member-states. The absorption of the funds is another very serious issue, but government has started to co-operate with privatecompanies. It is natural, because of the above facts that the quality of the road network is very poor. The network is very small and does notoffer what the citizens need to fulfil their needs. The basic problem is that even though, as it is already mentioned there are efforts from the state, the whole procedure needs a lot of time, whereas the needs of the people are more and more growing (http://business-review.eu).

It seems that the roads are not the only problem of Romania regarding Infrastructure. The railwaysare also a problem. What is interesting is that even though Romania has a low score in the indicator(http://reports.weforum.org), regarding the railways, people seems to be delighted from the railway network (romaniatourism.com), and consider it as the largest in Europe since the 19th century, when Romania was a part of the Austro-Hungarian Empire (http://en.wikipedia.org).

According to the World Forum, but also the Index Mundi, the ports in Romania are maybe the biggestproblem regarding transportation. They do not meet any of the European or International standards and they are not considered very

accessible for the ships, since Romania does not owns many natural ports. For this reason, the creation of a port from zero, demands huge amounts of money and time, which Romania is not in the position to provide.

The existence of airways is a very important aspect for the transport. Since it is the most modern and faster way for people and for productsto change location, it is very preferable, but inRomania does not seem to be very widespread. As for the quality of the airways transport, the score is rather frustrating. Even though, there are enough airports throughout the country, not all of them are International and as for the whole function, they are considered bad in equipment and with very old buildings and runways. As an overall view, they cannot be compared with many of other European airports, even though the last years there is an increase of passengers to the Romanian airports, from all over the world and many companies, including the biggest in the world have flights that connect Romania with the most countries in the world.

Apart from the transports, Infrastructure is alsorelated to the electricity supplies and the phoneconnection as well, that are very important for the good image of the state to the foreign investors, but also to the citizens who wish to have normal life standards. The electricity network, is provided to the all the inhabited territories of the state, and is supposed to be

in very good condition, with normal time for the procedures of getting an electricity line or to cancel an already existed (pdf.usaid.gov). Lastly, as for the phone network, there are different information regarding the fixed phone and the cell phone network. The fixed phone network is not very well-organised in general. Itwas started to be organised after the fall of thecommunist rule and since then a lot of progress has been made, so that Romania can accept international calls. The citizens are now able touse their fixed phone freely and all the areas have now their own prefix number to communicate in the country. Nowadays, it is in quite good condition and provides most of the services it owes to offer to the users (http://en.wikipedia.org/wiki/Telephone_numbers_in_Romania)

On the other hand, mobile phone network is in better condition, there are numerous mobile phonecompanies that offer different services in good prices for the citizens to choose. In contrary tothe fixed phone monopoly network, the creation ofcompetitiveness leads to the continuous melioration of the network which of course services the users, who enjoy better communication and prices, offering opportunities for investments but also ensuring a good quality of communication.

3. Macroeconomic environment

According to the World Bank, Romania appears to have a satisfactory macroeconomic environment, which by all means gives the impression of a healthy economy. After its entrance to the EU, Romania has passed to a very prosperous stage of its development, with the growth score to be risen every year. What is important is the fact that Romania because of organised projects managed to recover from the economic crisis of 2008-2009 very fast, and to make many reforms regarding the taxation, which still remains from the lowest in the CIS. Even though Romania asked for help from the International Monetary Fund in 2010, the relation between reforms and growth seems to become better and better every year. Thefact that Romania has only the 45% of the GDP in PPP of the Euro zone, is not something very optimistic, but since it has managed to face the Economic Crisis so efficiently, gives a lot of hopes for its augmentation.

It is true that Romania is not ranked between thecountries with the best business environment worldwide (47th position out of 82, source: http://www.iberglobal.com), but its position seems to rise every year, attempting to attract more and more Foreign Direct Investments. Being an EU- member, gives of course an advantage related to other countries in the area of the Black Sea like Georgia. Reforms have also been made to all the forms of the public

administration, which will be examined further ina next chapter.

4. Health and primary EducationRomania’s health system is basically universal, like most of the European countries. In this way,it provides medical care to all the citizens for free, except for some cases where patients have to pay little amounts of money (surgeries etc). In addition, all the European citizens have the right to ask for medical aid when there are foundin Romania. Prescriptions are given to every patient, and they are able to buy their medicine with a discount, no matter his annual income. In 2014, the 1.7 % of the Romanian GDP was dedicatedto the health sector, which is the lowest in the European Union (http://en.wikipedia.org). There are many hospitals to most of the Romanian cities, or at least a local doctor’s office.

Unfortunately, the image of the health sector in Romania is rather disappointing. The hospitals ofthe country are really small with not enough bedsto hostile the patients. Most of the times, they are not full with their equipment and sometimes they have to pay for their utilities even during their stay in the hospital, which is a very big problem for most of the citizens who are paid very little and can’t afford it (www.vice.com). The prescriptions that are given to the patents allow them to take their medicine cheaper, as most of the worldwide medicines exist in the drug

list of the country, but it is very likely they will buy generic and so they will have to pay theprice difference with the original ones (http://en.wikipedia.org/wiki/Healthcare_in_Romania ).

Generally, the hospital buildings are in very badcondition, which of course, affects the patient’scondition, who has to breathe the moistening environment while he is treated. The health sector cannot meet at all the western standards and especially in the smaller cities the situation is even worse (http://romania.usembassy.gov/acs/health4.html). The corruption, as a traditional practise makes even worse the bad image public health already has.

But the worst problem apart from the equipment isthe medical stuff. Most of the young doctors tendto leave their country and find a job elsewhere, since they are not paid properly for their services and they are obliged to work long-hour shifts and not be paid extra, in bad conditions even for them who cannot rest and be calm in order to do their job. The poor existent equipment makes it hard for them to do their job properly and help the patients (http://www.vice.com).

Primary education is another social issue that defines the whole image of the public sector. Theprimary education is registered in the state

Constitution. The system, in general, follows theEuropean and Western standards, with the existence of kindergarten (optional), the elementary school (eight years) and high school (Entering test is required). The programme follows the most known one, with Christmas, Easter and summer holidays. All the basic lessonsare taught depending on the level of the school, like Romanian language, maths and physics. Students from ethnic minorities are allowed to learn their mother language. The primary education is tuition-free and only 2% of the students attend private schools. The attendance of the primary education is compulsory.

According to surveys, it is observed that there are differences between the schools in central cities like Bucharest and Iasi, and the rural cities. Schools in the periphery are less crowdedwith less equipment regarding chemistry labs, libraries and teachers, while the schools found in the big cities are overcrowded and they have to settle morning and afternoon lessons to face the situation, even though they are equipment forthe basic needs of a school (http://www.expatarrivals.com/romania/education-and-schools-in-romania). The fact that Romania gives only the 3.5% of GDP in education (http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Educational_expenditure_statistics)

, makes understood the image of the education system and standards that exist in Romania. Most of the schools buildings are quite old. Very few were built after the fall of the Communist regimeand some of them were funded from various International NGOs, especially for the education of the Roma children that live in Romania and areconsidered to have the need of a different form of education. The need for more money from the state is more than needed, because even though the whole educational goal according to the Romania Constitution is to promote the Democraticmentality and the team spirit, along with the provision of knowledge in every level and science, with the lack of money, it is hard to beachieved.

Structure of the national education system 2013/14

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Source: https://webgate.ec.europa.eu/fpfis/mwikis/eurydice/index.php/Romania:Overview

5. Higher Education and TrainingIn Romania, the Higher education is following theEuropean standards in terms of structure. The last years, many reforms have been made in order a competitive academic environment to be created.Since the fall of the communist regime, the Romanian Universities have become equal to any other European university, with competitive Degrees. With 56 higher education institutions under the state and 26 private ones along with 6 graduate schools (http://www.studyinginromania.com/education-romania.html), Romania can provide the knowledge that is needed for every science. Romania, also, offers very well-educated academic staffs, which make it even more attractive for those who wish to study abroad apart from the Romanian students who finish their Primary education. The Romanian Ministry of Education, Research, Youth and Sportsis in charge for the good operation of the higherinstitutions.

The higher education is separated in 3 levels, the bachelor degree (licenta), the master’s degree (master) and the doctor’s degree (doctorate) (http://www.mae.ro/en/node/2176). A bachelor degree lasts 3-6 depending on the faculty, a master degree 2 years and a doctor’s degree 3-4 years (http://www.studyinginromania.com/education-romania.html). Most of the Romanian Universities

own large libraries that are rich on titles of scientific books and magazines and are available for the students, to use them during their studies. Many of the Universities offer lessons in German, French or English, for the foreigners that do not speak Romanian and are not interestedin learning it. For those that want to study in Romanian a preparatory year to learn the languageis highly recommended. To enter the University, students need to pass the entrance exams organized every year from the state and have a good final grade (http://www.bibl.u-szeged.hu/oseas/romania_facts.html).

It is true, that many European students choose Romania for their higher studies for many reasons. The great ranges of faculties that are offered to the Romanian Universities along with the fact that are able to get a fully recognized European University degree are the main ones. In addition, the cheap tuition fees and the low prices in rent and everyday life attract many students who cannot afford other countries’ costslike England of France. Romania is mostly preferred from foreign students for its medical schools rather than the theoretical or technical studies. Especially the faculties of general medicine, dentistry and veterinarian medicine areby far the most famous degrees for those who choose Romania for their studies, since they are considered to be well equipped and able to

provide the knowledge that is needed and so theirgraduates are capable to work efficiently in the important sector of health worldwide.

For the higher education to be efficient further training is required in order Romania to have powerful working force and in this way help the state and its economy for further development. Training is a very important factor for all the workers that are dealing with more practical jobsand so they need to attend technical schools or seminars that aim to give them more drawling and more new ideas for the melioration of the production. The training is dedicated to many sections from further technological training regarding engineering and new methods, to peace actions and social activities for every nationality (http://www.patrir.ro/). What is more, training is capable of creating new forms of occupation, like public projects (http://www.bechtel.com/training-in-romania.html). More importantly, training offers new opportunities for those who cannot afford thefees of a University or because of personal reasons did not manage to study when they were young. Training can, also, be organized for company employees that can hire a training company and relate training to the development goals of the company and so to be very specialized. Furthermore, this practice is very widespread to all the developed states and this can become an opportunity for the Romanian

companies to show their interest in the evolutionof the productivity to the other states of the world and underline the possibility of the Romanian economy to become better.

In Romania training exists as well. In specialized centres in the big Romanian cities like Bucharest and Iasi many people attend training lessons in order to gain knowledge regarding their job in combination with their work experience. This helps by all means the productivity of the companies, the everyday life,the education level of the population and as consequence, the state economy since workers learn new methods and remember the old ones, while new projects can be activated and so new techniques can be developed that meliorate the whole country’s picture.

6. Good Market efficiencyGood market is mostly related to the competition of the market not only between private companies,but also between state companies. Another competition in the market exists between the companies of the state and the companies that areunder foreign direction, like corporations. Nevertheless, it is observed much difference between the foreign and the domestic competition.

Foreign competition is rather intensive in the Romanian market, since the foreign companies

seems to have the dominant part of the market, which is related to the very low percentage of duty that the companies ought to pay to the statewith their trade tariffs. This low percentage is a very good way to attract foreign investors, because they will avoid paying money to the statein contrary to many other European countries thathave a high percentage in this field. But, according to the data, the presence of foreign competition has cause a weakness of the state to impose the trade barriers and the rules of fair trade in the market. Maybe this has been created because of the incapability of the local companies to compete the rich foreign companies that have a wide network and so are more organized and more experienced in the market. As a consequence, Romania is considered a state thathas a more and more developed network of foreign companies, which of course has a very good impactto the Foreign Direct Investments and to the overall image of the economy. A little problem for the investors may be the burden of the custombarriers which can affect the annual gain of the company and the price of its goods to the market.Lastly, even though Romania is considered a good market for FDI in the Black Sea area, there a lowpercentage of GDP in imports. This shows the lackof raw materials and is an additional cost for the industry and the cost of productivity as well.

The Domestic competition is not very intensive inthe Romanian market, as an outcome of the adoption of the modern competition law in 1996 (http://www.oecd.org/daf/competition/Romania-Competition-Law-Policy-2014-EN.pdf), which nowadays is in agreement with the European standards and so efforts are made to encourage the competition between the local companies in benefit of the citizens, since products will havea variety in prices and the state which will havea more competitive economy. Unfortunately, until today, the local companies do not have the dominance in the market because of their low budget which makes it impossible to overtake the international big companies which have a more experienced staff and more modern equipment and production line. Another problem is the insufficient protection from the monopoly market.As it is estimated from the data, the state failed to protect the local businesses which can create even unemployment and frustration if not adisability of the citizens to immunize their necessaries for their everyday life.

What the local investors have, also, to face is the taxation that creates problems, since its high rates does not allow them to create new companies and make the economy blossom. Even though Romania in considered a transition economythe 42.9% of the taxation that the companies haveto pay to the state from their profit is an obstacle. On the contrary, it is interesting that

only 5 procedures are needed that take more or less 9 days. As we see it is somehow easy to start a business in Romania, but will cost a lot of money. Lastly, it is worthy to refer that since the biggest part of the Romanian work forceis dealing with agriculture from the medieval era, a lot of attention has been paid to it. As aresult, Romania has good performance in enacting an appropriate law, to protect the agriculture and so have low costs in that section.

In order to have a more complete picture of the situation in Romania regarding competition, whichis based to the market rule of demand and supply,it is vital to examine the demand of the population. Buyers in Romania do not appear to bereally oriented in terms of their demand and whatthey expect from the market. To justify this statement, is it necessary to look at the buyers’sophistication which in Romania is low in comparison to other states and understand that the overall demand condition in Romania are in bad performance.

7. Labor Market efficiencySince Romania has made an impressive progress in its economy as is considered a transition economy, from 1989 could not but experience changes in the labor force and the conditions under which employees work (http://mpra.ub.uni-muenchen.de/20332/1/MPRA_paper_20332.pdf). According to the Romanian Constitution, there is

a total respect in the human rights as in all themodern countries and there is the right for the employees to defend themselves when they feel theneed to create the suitable bodies and organization(http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/#wrapper). The labor market israther flexible, which gives to the employees a variety of positions to choose, even though thereis not very good relationship between the employers and the employees. Moreover, in Romaniathe wages, which is a very important aspect in the working environment, are flexible, which gives many rights to the employees to earn the money they deserve and more importantly this working environment can attract several educated people from other countries to work there and meliorate this way, the working force in terms ofeducation. Furthermore, Romania has good score inhiring and hiring practises, which reveals a wellorganized system aimed to protect the workers from becoming with no warning unemployed. As a matter of fact, in Romania, those that are fired take quite enough money as a compensation for losing their job, depending on their position. Unfortunately, even though Romanian working system appears to be good, the taxation creates many problems for the employers because of its high percentage for the employment of each worker, and so eliminates the number of employments.

As for the qualifications, Romanian work conditions do not pay much attention to them. According to the GCI report, employers in Romaniado not pay their employees according to their productivity, and worse than that they do not give much importance to the professional approachof the workers, which can affect the modernization of the working system. Consequently, employees in Romania do not have many chances to retain or develop their talent through their work and training and see what theyare capable to do. This can sometimes affect the productivity of the workers, since they do not feel confident and this can lead to elimination of the productivity. The present situation does not make many people who are talented in something regarding productivity or management, like being fast in organize the working plans etc, consider Romania as an option to find a goodjob. Lastly, it is observed a very little participation of women in the productive line, but this does not seem to be a rare phenomenon inmost of the countries in the world.

After its accession to the European Union, Romania has adopted European programs that aim toreduce the unemployment, which is not that high compared to other EU-members, like the ALMPs4, that wish to face unemployment and care for the proper training of the working force (http://en.wikipedia.org/wiki/Active_labour_marke

4 Active Labor Market Programs.

t_policies). In Romania, these programs are not very successful (http://link.springer.com/article/10.1007%2Fs00181-009-0256-z#page-1), probably because of the existence of a developed agriculture and the unawareness of the public for these programs. As a result, there was reported much difference in the sector of self-employment and training and retraining. This phenomenon is quite usual for the economies that are under transition, since they are supposed to need more time in order to ‘absorb’ such programs and to be accepted and understood from the society.

As a working force the Romanians are considered to be efficient in terms of physical and mental force. The following diagrams give a picture of the situation. The first one is referred to the future of the working force in Romania based on the current data. As it is estimated, until 2016,the working force will be reduced, in contrast ofthe 2000s, when the working force was in its bestefficiency and more numerous. The following diagram shows the labor force was structured the last years, giving the same picture as the previous.

Labor force structure

Source: http://www.tradingeconomics.com/romania/labor-force-total-wb-data.html

8. Financial Market developmentThe Financial Market in Romania is in a satisfying condition for starting a new business.This pillar is mostly related to the loans and the financial aid that is need from the companiesfor their development. This development will leadto further economic development of the state itself, since the presence of well organized industrial unities that are capable of producing big quantities that can increase the exports of

the state as a whole and contribute to the increase of the state income through taxation aremore than welcome.

To achieve this goal, a better supporting system for the companies is imperative. Since the fall of the communist era many reforms have been made for the melioration of the economy. The lack of acapital market affected the mentality of the citizens, who cannot fully understand the need ofthis change (http://www.ipe.ro/rjef/rjef2_09/rjef2_09_10.pdf). The capacity to provide loans to the businessmen from the local fund is existed but not very developed and able to cover the needs ofthe market. Many businesses address to Romanian private banks to ensure the appropriate amount ofmoney to start their business (http://en.wikipedia.org/wiki/Services_in_Romania).The last years start up programs are developed,that according to the legacy of the state allow those that desire it to start their own business more easily (http://europa.eu/youreurope/business/start-grow/start-ups/index_en.htm#romania_en_setting-up). Another important factor of funding new businesses is the interests that increase a lot the final amount that each business has to pay back. Fortunately, the lending interest rates have decreased more and more every year (http://data.worldbank.org/indicator/FR.INR.LEND). In addition, according to the data, it is not

that easy to take a loan many bureaucratic issuesemerged during the procedure. In fact, it is estimated that present system in Romania regarding business loans is rather inefficient, since there is not a developed network for the new businessmen except for the capital city of Bucharest. The funding is not that easy to be achieved especially for the little companies. Capitalization of the market is a procedure that needs time because of the state past, but the future seems prosperous. In 2008, the World Bank estimated that the stock market capitalisation was about $56 billion, showing the changes that have happened in the 21st century and how the economic and productivity future will be (http://en.wikipedia.org/wiki/Services_in_Romania).

The lending system in Romania, apart from the fact that faces enough difficulties, has also to earn the trust of the international markets in order to take loans from them and the foreign investors as well. The banking system is close tothe European standards. Romania’s accession to euro is programmed for the start of 2015, but it seems that some issues have occurred that will beexplained further. Today the currency is the Romanian leu (RON), whose value is minor to euro (http://www.expatarrivals.com/romania/banking-money-and-taxes-in-romania). For this reason, there are those who do not appreciate much the current situation of the country. The banks are

on the average regarding their soundness, but theexchanges are not very widespread. For instance, most of the shops in small towns do not accept credit cards, giving the impression of a state that does not follow the modern era. Hopefully, the financial market has introduced a legal framecapable of ensuring the legal rights of the businesses and the investors; so that they feel safe they have used the Romanian banking system and have started a business there.

9. Technological readinessTechnology is a very important factor for the modernization of a state in the industry, but also in the everyday life. According to Global Competitiveness Report 2008-2009 the technological readiness measures the agility withwhich an economy adopts existing technologies to enhance the productivity of their industry. The importance of technology adoption for national competitiveness has been growing in recent years,as well as progressed in the dissemination of knowledge and the rising use of ICT has become increasingly widespread (http://www.aabri.com/manuscripts/09296.pdf). Romania, the last years tries to follow the technological evolution up to the extent that is possible in relation to the economic situation ofits citizens. In Romania, the adoption of the technology is near to the world average, showing a relative acknowledge of the citizens and the

companies regarding technology. This maybe existsbecause of the fact that there is not a great variety of technological products in the Romanianmarket, to make people come in touch with the newproducts that can facilitate their lives. Even the companies do not seem capable of coming in touch with the technological progress in the world, which can affect the amount of productivity, the ability to create an organized network and the absence of a total control to theworkers and the products. Besides, the lack of technology to the productive units gives a bad impression to the clients who prefer a more systematic and modern production, in order to ensure the quality of what the buy, especially when it comes to exports to countries that are more familiar with the technology. Apart from theexports of the local companies, the technological‘middle age’ is an obstacle for FDI, because the present technology does not help to systemize theproduction and the transfer of more advanced technological machines costs a lot.

Nowadays, for the majority of the people the use of the Internet as the major mean for communication, information, entertainment and shopping is very important. This practice also exists in Romania, where the people use the Internet daily for their needs. More precisely, about half of the Romanian population uses the Internet as their source of information. In fact,Romania has a quite satisfactory number of active

Internet lines in comparison to its population (17.3/100 pop), while the mobile broadband subscriptions are not that popular (37.6/100 pop). The Internet network is very well developedin order to meet users’ expectations, since Internet is so widespread.

The use of the Internet has helped the development of a new type of commerce and the passage to the new era. E-commerce is very activein Romania with many young people to prefer it from going out to the stores. Last year (2014), the online retail market reached more or less the600 million Euros, referring only to products that were sold and not to services (bills, tickets etc). This type of commerce that every year grows more and more, has made about 25% of Romanians use Internet for their buys, mostly those that live in the big cities (http://www.gpec.ro/blog/romanian-e-commerce-market-reached-eur-600-million-in-2013). Unfortunately, the credit card payment is not preferable from the users, who by 90% prefer to pay on the delivery to feel safer.

10. Market sizeMarket size is a very important factor for the economic development of a state giving an image of the economic movement of the people and the exports of the state. To make a safe consumption it is important to examine the GDP in PPP of a state. Additionally, the Romanian GDP in PPP is

$285.1 billion. In Romania, the GDP per capita income is $ 8,910.47, which is low relatively to other countries of the world. In fact, the last years people in Romania, seem to have change their shopping habits. Their low GDP per capita does not allow them to spend a lot of money in the market, for products that are not of their first need.

The Romanian market size is big enough (about 20 million people), which leads to the existence of a great number of consumers, who even though do not tent to spend great amounts of money for ‘luxury products’, have started to buy technologyor warehouse products aiming to facilitate their lives. Fortunately, since the Romanians came in contact with the Western way of life, they met new products and because of the marketing they have started to feel the need to spend money for them. They have not changed the way they spend dramatically, but they have shown the tension to follow the Western standards (http://www.eurodatamanagement.ro/article_details.php?link=2%7C2%7C45). The creation of ‘fake needs’ is a reasonable outcome of the industrialization of the state after the communist era, which brought the promotion of a modern way of life, of which the Romanians were unaware. Consequently, they sometimes absorb Western habits that are not relevant to the Romanian tradition and so there is confusion,

especially for the elders. This is a common phenomenon for the transaction economies.

Another very important parameter of the market size of the economy is the exports and the amountof them. Exports are those that determine in combination with the domestic demand, the final amount of the productivity that is need from the industry. Especially for Romania, exports are a great part of its commerce. With 41.9% of its GDPfor 2014 to become from exports, it in natural that Romania exports a great number of products. Apart from the agricultural products, that are the base of the trade, other products of exports are cars, leather, fabric, metallurgic products, electrical and electronic equipment and industrial machinery (http://www.romania-export.com/). The Romanian exports are more and more developed the last years and are opening newforms of export which contain energy, medical equipment, clothing and transport, as it is obvious from the following table. The exports have changed in many ways the state economy,

since new business possibilities and new working seats have occurred for the people that lead to the rise of the standards of living of the country in general and the state raises its income as well.

Romanian exports in percentage

Source: Wikipedia.

11. Business sophisticationThe overall competitiveness of a country is very much related to the quality and quantity of the

products and serviced it can offer. For the production, technology is very important since itdefines them. Especially in countries that have already reached a certain stage of development, business sophistication is very important in order to have a competitive economy. Above all, the level of the business has to do with the firms and the local quality of raw materials thatlead to the quality of the final products and services, in combination with the networks each of them has developed in the country, but also out of it (http://www.aabri.com/manuscripts/09296.pdf).

Romania in this pillar has not achieved a very good score. The quantities that are produced do not seem to be enough to compete the other countries in the field of exports, even though industry is a major part of the economy. On the other hand, the products that are produced are considered of a quality quite good and many counties prefer them for raw materials. What is considered to be very important for the business sophistication of a state, is the cluster development, which nowadays becomes more and morepopular around the world. According to certain theories, for the creation of a business cluster,proximity is an important factor, together with the quality of the enterprises (size of the company, local or foreign investors etc). A good outcome of the clusters is the combination of labour force which can lead to more precise

specialization and better quality of the production (http://www.minind.ro/presa_2010/iulie/MappingReport_230710.pdf). The Romanian clusters are not very strong because of the socialistic attitude of the people, since they have experienced communism.

The organized clusters, consequently, do not helpthe company chains to develop themselves, and arenot considered of high value. There is, also, theinability of the Romanian companies and their members to control the companies that import products from other states of the world. In this way, many international companies are appeared tohave higher benefits from the local ones having better prices and bigger part in the market. Moreimportantly, Romanian companies are not well equipped with the latest technology and the newest production practises, which make them lesscompetitive to other international companies that, follow every single innovation in their production line.

Romania has also shown a satisfactory progress regarding the marketing sector. Even though it isnot very developed, like in most of the countries, there is relevant progress comparing to other year in the past. Lately, the electronicmarketing seems to gain most of the attention of the companies, since it is cheaper, easier to be seen and more modern. Besides, it is ‘greener’ and easier to be widespread to all over the world

through Internet, which is now the main tool for quite everything as is has already been written (Ethics And International Marketing: Research Background And Challenges). Lastly, the Romanian companies are not very willing to co-operate withthe authorities that might help them in internal issues. Romanians in general, do not face every kind of public authority in a good manner, maybe because of the existence of organized crime in the state, or because of their communist past.

12. Innovation

The last pillar of competitiveness is probably the most important and the more hopeful one. It shows the efforts for melioration that are made in a state and gives the general image of the future to the production of an economy. Moreover,it shows how modern a state is and the collaboration between scientists and the industryalong with the willingness of the state to help the increase of the productivity.Fortunately, Romania seems to have pretty good scores regarding innovation, which makes her economy competitive enough in the Black Sea and Balkan region. Besides, Romanian scientists through the years have made some very important discoveries, mostly related to medicine like treatment of diabetes type 2 and the insulin or the treatment of cholera, epidemic typhus and other diseases of the previous century, while some others preeminent in other sciences like mathematics and physics creating important innovative methods and solutions

(http://en.wikipedia.org/wiki/List_of_Romanian_inventors_and_discoverers). The Romanian industry the last years has made many steps in order to achieve the progress of its economy. It is considered a transition economy in stage 2 of itsdevelopment (efficiency-driven economy), so it has to do many things in order to become a marketeconomy. For this reason, nowadays Romanian productivity is capable enough to achieve any innovation for its product and services. Its scientific institutions are on the average of theworld, with their research to deal with several sciences, from archaeology to industrial productivity and genealogy (http://en.wikipedia.org/wiki/Category:Research_institutes_in_Romania) and are considered to be ofhigh value, with notable researches. On the contrary companies themselves do not spend a lot of money for Research & Development, which is a ‘weak’ part for the innovation of a state, but industry is collaborating better with the universities for R&D that can help the situation and not only the industry, but this can also helpthe students have a basic experience in such issues and find a job easily, even in these industries. For the progress of innovation in a country, therole of government is very important because its support is more than helpful to make the work of research centers easier and quicker in terms of bureaucracy and other issues that may occur with public sector. According to the Ministry of education and research, the Romanian Government is generally more than willing to help any kind of innovation of the industry, science and education with the establishment of proper

institutions and equivalent centers in the universities (http://www.euraxess.gov.ro/strategy_EN.pdf). Thelast year, the government does not appear to havemade a lot of progress in this sector, but the fact that it is has a positive attitude to that is more than hopeful. What is more, the presence of quite enough scientists and researchers in Romania, offer the possibilities for a better future for the industry production and services, while the engineers that exist can offer the innovation in the creation of modern productions machines and new ways of producing. Last but not least, Romania has enough applications for patents, showing this way the efforts that have been made to give a new form to the production and give the country’s economy the chance to develop and attract new investors that will offermoney to the state from all over the world.

Romanian Competitiveness in theBlack Sea region and recommendations

As it is already assumed from the pillars, Romania is not the ideal state to live with a lotof social and economic problems. The fact that for many years Romania was under communist rule (1947-1989),was something that influenced not only the past century in the political and economic field, but also the mentality of the Romanians that had a significant impact on the economic, social and political attitude of them in everything related to development and

modernization. Nevertheless, after the fall of the communist regime that happened because of social revolution, there was the need for Romanian to move forward and follow the general spirit of the era, creating Parliament, Constitution and in general a democratic regime. The establishment of democracy was the main factor that helped the state and its citizens achieve a gradual development until today. The first goal Romanian state wished to achieve was its entrance to the European Union. Finally, thisgoal was achieve and from 2007 Romania and Bulgaria became EU-members according the 2007 enlargement plan (http://en.wikipedia.org/wiki/2007_enlargement_of_the_European_Union). Through these years (1989-2007), a lot of reforms have been made regarding human rights, organized crime and freedom of expression. Romanian currency is still the Romanian leu, but as it is planned, it will enterthe euro currency in 2017. Actually, Romania had such huge development and growth rate, that in late 2000s it was characterized as a ‘Tiger’ (http://en.wikipedia.org/wiki/Economy_of_Romania). Romania is also a member of the Black Sea Economic Cooperation (BSEC), as one of the 10 Black Sea countries has even there a very significant course. From 2000 until today, Romania is in the second or third position of development rates. This shows its power in the Black Sea region regarding trade, exports and economy. Since its economy is basically agricultural with a very well developed industry,offers many chances to create new companies, witha quite good connection with the Black Sea region, the Central Europe and the rest Balkan

Peninsula by train, by vehicle but also by the sea using the Black Sea ports that already exist,some of them naturals.The development in Romania was a very important achievement as a post-communist country. More importantly, as an EU- member, Romania is part ofthe various programs regarding melioration of theliving standards and for this reason new projects have came up for every sector of the public life. In fact, a lot of attention has beenpaid in the energy sector being a very important one in the modern everyday life, in the financialinstitutions for the rise of the state income andin the safeguard of the first need products in order to make sure sustainable living standards and the avoidance of the existence of the absolute poverty in the country (http://www.bstdb.org/countries/romania). In comparison with the Black Sea region, Romania is considered a quite dynamic country as one of the biggest and most populated countries in the region. It has become a power in the region and ahigh competitive one, because of its rapid development which attracted the interest of many investors until today, who found a new space to create companies that did not even existed in thecommunist era. This made Romania a state that experienced modernization quite late from other states in the Black Sea (Greece, Turkey) making its economy stronger and with many potentials forthe future. The rates of the country regarding competitiveness and state incomes are estimated to rise the next decade making it a state that can set the trading rules in the Black Sea. What

is widely known for Romania is tat has done a lotof efforts and has achieved more than enough for a post-communist state in very little time; something that in the biggest part is ought to the Romanian people and their will to create a modern and developed state.

There is no doubt that the Romanian economy needsnew measures in order to become more competitive and provide to its citizens good living standardsand a state that is capable of offering any social demand for them. Even though there have been made a lot of changes the last years and thecountry has been modified a lot, there are a lot of things to be done in order Romania to become astate that has no poverty, has no loans and in general operates with an excellent economy and isinnovative and modern. New policies must be adopted and programmed for the melioration of theRomanian economy. Since Romania is considered to be a country with satisfactory growth rate, the last years, it would be important to increase thepercentage of the state budget that is dedicated to the education, giving this way the chance to the educational system to modernize and create a better environment for innovation, knowledge and progress for the generations to come. The need for the creation is of new infrastructure is morethan vital. Even though many steps have been madefrom the Romanian government, there are a lot to be done in order to reach the European standards regarding the road network and the facilitation

that can lead to the easier transport between Romania and other countries of the world which ofcourse can increase the industrial growth that will give more money to the state from the taxes and the use of the public facilities like energy.The creation of the a good condition for the economy will attract more investors and as a result lower unemployment, better salaries and better living standards. What is more, technologyshould take a bigger part of the state interest and so help for more productivity and an overall melioration of the economy which more importantlywill increase the prestige of the country among the other countries. To put it in a nutshell, what should be done for Romania is the increase of the government expenditures that will give thechance to many institutions and sectors to be developed aiming to provide a better education and research in the higher education that will cause innovation and new investments that will increase the value of the state economy and will change the opinion of the other states towards Romanian for the best, since it will be considered a well functioning economy equivalent to any other European or Black Sea one.

CHAPTER 2 THE EDB index

The index of Ease of Doing Business was introduced from the World Bank in 2003. This index aims to show whether it is possible for a company or a corporation to create a business in a state or a region. It is particularly referred to the small or medium-size domestic companies since they are those that contribute to the stategrowth, the creation of new jobs which will reduce the unemployment to every modern and developed economy. In addition, the EDB index shows the level of flexibility of the economy, regarding the accessibility, the efficiency and the regulations that exist in each state during the life existence of a company.

In order for an EDB research to be correct and with safe outcomes, it is vital to make sure thatan economy is based in specific rules that ensurethe good operation of the economy and the state institutions as a whole, which is hard but can bedone under certain regulation. For example, the safeguard of the property rights and the time fora resolution of various problems are some of themand can surely make easier the ability to predictthe time, the conditions and the cost of procedures between the company and the public institutions. Besides, these rules can provide a healthy relation between the companies and the

public sector and this way facilitate any kind ofprotection from illegal actions and abuse providing a good environment for the creation anddevelopment of businesses that feel safe and are sure that will not face any problems with the lawthat may take money and time.

EDB is mostly tending to form the appropriate regulations that will help the companies and makeit more simple and quick for them to co-operate with the state for every issue that may occur andalso helps each state to have a more complete view of the situation that exists within it and how it can be better. It is important to be mentioned that the EDB as an index, is not showing the whole situation that exists in an economy and interests the companies, so it is wrong to depend only on it in order to have trustful and real conclusions regarding the competitiveness of a country. More specifically, EDB does not provide any information for the condition of the public sector and the quality ofits services. It does not connect the domestic economy with the international markets, it does not analyzes the quality of the infrastructure for the trade and the energy supplies, along withthe power that an economy has and is able to provide a sustainable market for a business. Whatis more, using the EDB is unlikely to know if thestate is capable of offering any protection from thieves of the property, apart from the protection by law and the citizen rights. The

macroeconomic condition remains unknown with thisindex and the impact of the economic actions of acompany to the further economy in combination with the services of the basic institutions in a wider perspective cannot be predicted by the EDB.

EDB’s use is mostly ranking the countries that participate to this index according to their scores. Based on the scores, a high position in the rank, means that the country’s economy is more “fertile” for the creation of business depended on the factors that will be mentioned. For the right ranking of the countries, certain pillars are used. The 10 pillars are : starting abusiness, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contactsand resoling insolvency (i.e. closing a business). These pillars are all equal to each other and their percentage is what gives the final score of a country. They have a fundamentalrole to the life circle of a firm in its daily operations, from the start-up level and its creation (location and finance) until the possibility of closing the business if things do not go as they were expected. The pillars will beanalyzed below in order to give a more clear viewfor this index and its necessity and later recommendations for Romania to meliorate its score in this index.

Romania the last years has a quite stable rank inthis index, getting the 50th position in 2014 and the 48th in 2015 worldwide (http://www.doingbusiness). Being in a period of prosperity and growth, Romania seems to be in a very good position for the EDB index, which

Will definitely attract the interest of manycompanies that wish to create a firm there andgives a relatively good picture of the state andits operation in addition to its willingness tohave more industrial firms and a strongereconomy.

Pillars

1. Starting a businessIn Romania the creation of a business seems to bea rather quick procedure in comparison to other countries of the world. In this pillar, Romania is ranked 38th in the world with a little number of procedures and a very short time period to deal with bureaucratic issues in comparison to the other countries of the world. For the rankingof the countries it is primarily assumed that there has been no other contact with the authorities regarding this issue before from the entrepreneurs and that the whole procedure is free of corruption.

More specifically, for a company to create a firmin Romania only 8 days are needed to have every permission and license from the authorities to operate formally, which is over the average of the rest of Europe, but in general, the Black Seacountries are considered to have a low percentageof bureaucracy. In addition, the procedures that are needed in Romania to start a business are only 5 which is exactly the average of Europe

making, Romania a quite competitive country for acompany to start a firm. Most importantly, since money and gain are the main reasons for the creation of a business, Romania seems to have taken care of that, shaping its economy this way that only the 2.1% of the income per capita is the cost of the creation of the firm, while in the rest of Europe relatively high in 5.3%, whichmakes many companies consider Romania as a country that will bring more financial gain than any other country. Lastly, in Romania an entrepreneur has to deposit very little amount ofmoney in comparison to other European countries. More specifically, in Romania the percentage of paid-in per capita is only 0.7% and in Europe 5.8%.

Indicator Romania Europe & Central Asia

Procedures (number) 5.0 5.0

Time (days) 8.0 12.1

Cost (% of income per capita) 2.1 5.3

Paid-in min. capital (% ofincome per capita) 0.7 5.8

Source: http://www.doingbusiness.org/data/exploreeconomies/romania/#starting-a-business

As it is shown by the World Bank, if a company decides to create a firm in Romania the whole procedure is not complicated, short time and of low cost. The evidence of verification and the registration of the company name is an on-line procedure that takes only one day and costs only RON 72 ($ 20.08). Then, the bank affairs take only a day and are free of charge and refer to the creation of a fund in a Romanian bank to obtain a certification of sufficient funds to thebank account. What will take a little time is theregistration to the Trade Register Office that will take about 3 days as a procedure with a costthat depends on the size and the capital of the firm. It will be also needed to ensure a registration to the VAT which will take 3 days aswell and is not charged. Finally, the company that wishes to create a firm in Romania should make sure that the employees have made their registration of their contracts to the Territorial Labor Inspectorate to be totally legal regarding insurance issues. This will take only some minutes, since it is an on-line procedure. As a whole, to start a business in Romania is a not only simple and of short time, but also very updated regarding the modern means and does not demand to speak the local language to get along with all this, which can by all means facilitate the foreign investors.

2. Dealing with construction permits

In this pillar, Romania is not that successful. As the construction permits are very time-consuming to deal with, it would be better for a company to act as soon as possible in order to have their permitions ready by the time they wantto start their business activities. The majority of them demand also a quite big amount of money. The lack of infrastructure may be the biggest problem, but additionally quite expensive. What should be mentioned is that even though Romania’sscores are not very encouraging, they still remain over the European average, making this waythe Romanian economy a very competitive one.

To have a more detailed view of what someone has to do to ensure the construction permits for his firm, a more detailed examination should be presented in combination with the scores of Romania. Firstly, a certificate of the urban planning is required which costs RON 17 ($ 4.75),and a time period of one month, because the placeand the building of the firm have to be settled under the rule of law and in a safe place in the area of interest. Then follows a certificate of clearance for the water and sewerage supply that are necessary for the function of the firm that will take 18 days and will cost RON 72 ($ 20.1). After that, the project clearance from the General Inspectorate for Emergency situations is required for the protection of the employees during the existence of the firm and the good quality of the production and services. This

takes about 15 days and is free of charge. Moreover, because Romania wants to promote the protection of the environment and targets to follow the European and International Standards, it is necessary for a firm to have a certificate of Bucharest Regional Environmental Protection Agency which ensures that the certain company follows environmental-friendly practices of production and services which allows it to operate within its borders. This so important project clearance costs RON 500 ($ 139) and will take 21 days to be prepared. This is related withthe contract of that it should be signed with theSolid Waste authority that affect mostly the environment since the industry waste have to be placed somewhere that will not create any problems which takes about 1 days but is quite expensive with RON 5,292 ($1471). The clearance of the health department is also vital for the firm especially for firms related to the health and food sector.

For the overall legacy of a firm in Romania, a primarily need is the arrangement of the buildingissues, apart from the urban planning is the clarification of the land space that the company wants to build in its firm and that there are notany land disputes which as a procedure takes 1 day and costs RON 15 ($ 4.8). After that, the building permit has to be taken from the company,which may delay the creation of the building as it will take 30 days to be edited and costs RON

15,323 ($ 4,260). By the end of the building construction, the employers ought to ask for a 1-day procedure that costs RON 12,259 ($ 3,408) from the Foundation of Work Inspection in order to be legal with the insurances and the wages of its employees. Another free and sort-time procedure is the Frame inspection that ensures onbehalf of the state that the firm is functioning according to the local legacy. The most time-consuming procedure is that of the final assessment of the construction from the Acceptance Commission, which allows the company to realize the last changes in the building and makes it totally legal. Unfortunately, to be achieved this about 90 days are needed and RON 350 ($ 97.3). This is followed by the final acceptance from the Acceptance Commission which completes the procedure in just 1 day and a priceof RON 150 ($ 41.7) and takes place once meaning that there is no need to renew it after a period of time. The water and sewage connection is a vital issue for a firm and so has to be ensured. How the waste will be carried out in a way friendly to the environment and will not cause any problem to the everyday life of the citizen that live in the area, is something that has to be arranged. This connection costs about RON 582 ($ 161.8) and takes 75 days to be finished. Last but not least, the company should come in contactwith the Real Estate Registry in order to register the building through a week and make

sure the property and the legacy of the building so as to pay the taxation that is supposed to paying RON 480 ($ 133.5).

3. Getting electricityElectricity is the main source of energy for the majority of the plants, since the modernization of the production requires many machines that work using electricity. Apart from the productionelectricity is necessary for the lighting of the buildings and the administration offices. For this reason, special procedures should be made from the state services in order to cover the electricity needs of a company. This takes of course time and money in Romania, like everywhereelse but a little more than the average. More specifically, a company needs 7 procedures to take the electricity connection, while the European average is about 5.9 (http://www.doingbusiness.org/data/exploreeconomies/romania/#getting-electricity). The overall procedure in Romania is estimated that takes 223 days and in Europe just 138. The cost is not thatdifferent compared to the European average with 496.1 % of per capita income in Romania and 471.1% in Europe. The OECD average is much betterwith 4.7 procedures in 76.8 days and a cost of 73.2% of the income per capita (www.doingbusiness.org). Besides energy plays an important role in Romania since it is estimated that by 2020 Romania will be the only European

country to meet the renewable energy target, since the use of hydroelectric energy is used a lot (http://www.eia.gov/countries/country-data.cfm?fips=ro).

The Romanian electricity service is not really modernized. As it is already been said, Romania faces a lack of infrastructure to the electricitynetwork which many times creates problems to the connection, especially to the new ones. In case acompany wants to have an electricity connection for its building, the first thing it has to do isto fill an application with ENEL, the Romanian company for electricity supply, and then to wait for the letter that informs the client about the technical conditions and that the connection willstart. Normally, this takes 3 weeks time to be completed and its cost is estimated to be around RON 128.6 ($ 35.8). In addition to that, the company has to ask from an electrical design firmto realise a technical study for the building which then has to be taken to ENEL for approval within 1 month with its cost to be pretty high which is RON 10,672 ($ 2,969.57). After that the company, has 19 days to select and apply all the documents in order to take the final permission for the connection and edit and sign the contractwith ENEL. This stage of connection is free of charge for the company. After the contact, the company takes itself the designs of the electricity plan and the final approval of ENEL with specific dates and details of the connection

and in 2 months time to wait for the technical connection to be done by a proper electrical contractor, which will cost RON 150,877.48 ($ 41,943.5).

What else should be done by the company that wishes to create a firm is to present to the relevant authorities the internal file of everything that has been done regarding the electricity installation and the whole wiring file of the building in which there should be setthe details of the land contract that will allow the company to receive the connection certificatethat makes the whole procedure totally legal at any case and that guarantees to the company that no further problems will be faced from the supplier if the bills are paid as they have to. This takes 1 month and is free of charge, from the company. Besides many times this is undertaken by the company that realizes the wiring plan of the building. Lastly, for the electricity connection to be considered as legal,well-made and according to the rules of electricity consumption that are set from the legacy, the company has to deposit the supply contract in order to obtain the meter installation that will be done by ENEL in 2 days for free, that will allows to the new firm and the ENEL to have trustful and exact quantities ofelectricity consumption along with the money thathave to be paid for this every month. The electricity supply this way will be safe and will

provide to the firm a stable energy supply for its needs and its production and to ENEL satisfying amounts of money from its services.

4. Registering propertyAccording to the world ranking, Romania has a quite good score in this pillar, making easier for the companies to secure the rights of their property. Even though enough procedures have to be done compared to the rest of Europe, they appear to be done in less time which is somethingoptimistic for the melioration of the system in this pillar in the future. Fortunately enough, the cost of the whole procedure as percentage of the per capita income is quite low not only in comparison to Europe but also as a solid percentage that shows the Romanian goal to attract new firms within its borders that will help the growth of the Romanian economy.

The registration of the rights takes about 150 days all told and the cost varies according to the area and the total value of the property. As a percentage, the registration costs 1.9% of the total property value. The first thing that shouldbe done from the company is to take all the information that is needed from the Cadastre, which takes about 25 days. In the same time, the company can obtain a fiscal certificate in 16 days. With these 2 actions another one is able totake place, which is the Land Registry extract from the Land Registry office which can be done

in 5 days. When these papers are complete and every single information in them is correct, the company has to come in contact with a notary who will be in charge of verifying the non-encumbrance and the fiscal certificates that havebeen taken and will confirm that the sale-purchase agreement is authentic. The authenticityof the papers gives the company the right to register the title of its property to the Land Registry office that can be done in 19 days. Whenthe certificate of the registration has been edit, the contract is set to the files of the Fiscal declaration of acquiring the property which is finished in one day. Another day will take the publication from the company that makes the acquirer for the corporate documents. Lastly,the most time consuming issue that has to be donefrom a company that wishes to create a firm, is the enrolment to the Trade Register office of theworking place that the company has set as its own(http://www.fcmweb.org/documenti/registering%20property%20in%20romania.pdf).

The cost of this pillar is not stable and has to be measured under specific circumstances. An example of the cost calculation might make thingsmore clear. A company that wishes to create a firm in Bucharest with an estimated value of its property to be RON 643,890 will have to pay RON 1,000 to obtain the information that needs from the Cadastre. Subsequently, the company has to pay another RON 10 for a fiscal stamp in order to

obtain a fiscal certificate for the company’s property and a total of RON 25 for a fiscal stampand a judicial stamp for the extract of the Land Registry from the Land Registry office. Additionally, an amount of money should be paid to the notary that will be in charge of the bureaucratic issues. His reward varies between 0.1-1 percent of the transaction value, which is also a matter of the total value of the property and can be between RON 14,518 and RON 582,185. The registration to the Land Register office willcost about 30% of the tax that will be paid for authentication. Another RON 19 will be paid for the declaration of acquiring the property, while RON 100 will additionally be given in order corporate document of the acquirer company to be published. Finally, the Trade Register Office will pay RON 30 for the registration of the working place, plus RON 10 for the publication ofthe document (http://www.fcmweb.org/documenti/registering%20property%20in%20romania.pdf).

5. Getting creditThis pillar is quite different from the others, because it measures the strength of the economy to offer credit to the companies in both public and private sector. The Legal Rights Index shows whether an economy is capable of offering the most appropriate law to expand access to credit in a scale from 1 to 12, where 12 is the most

organized economy to offer this service. Furthermore, the Legal Rights Index, which aims to inform about the legal frame work of a state that allows the companies to have the right to take credit. There the ranks are between 0 and 8,with 8 to be the best rank, showing information about the credit that is available from the private bureau and the public registry.

In Romania, this pillar appears to be very well prepared to meet the needs of the companies that need the ability to take some credit in order to create a firm or develop an already existed one. Since Romania the years 2000-2004 has experiencedan explosion of its growth, the need for a reset to the credit system was more than vital to be able to maintain this growth and the investors that want to invest in the country that has developed its economy (http://egateg.usaid.gov/sites/default/files/01.128.08BP7_Romania.pdf). Fortunately, the government acted fast and with the banks that worked together, was able in a six months period to create the appropriate capable system for the growth of the country.

As it appears from the data of the World Bank, Romania with a rank of 10 to the legal rights index and 7 to the credit information index, meaning that its economy has enough strength and depth to support any kind of credit that a company may need. These great score are better than the European average or the OECD average,

making this way the Romanian economy very competitive and attractive to the investors. A more extensive look to the data shows that the investors will not face quite any problems in getting credit from the Romanian banks or the public office. The Romanian credit system is veryaccessible to the borrowers making easier for them to take any cash in case they need to for the development or the maintenance of their company when it faces a hard time. This is more than important for the growth of the state that wishes to develop its economy to every level, which apart from the increase of the state incomebecause of taxes and services, will also attract new investors and will modernize the state. The boards below present the exact procedure and the rights that the companies face in order to get credit from the private credit bureau or the public credit office. As it seems, the companies have enough rights regarding credit which makes it easier for them and more accessible, making ita very good characteristic of the willingness theRomanian economy shows for further growth.

Depth of credit information index (0-8)Private credit bureau

Are data on both firms and individuals distributed? No

Are both positive and negative credit data distributed? Yes

Are data from retailers or utility companies - in addition to data from banks and financial institutions - distributed? No

Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Yes

Depth of credit information index (0-8)Private credit bureau

Are data on loan amounts below 1% of income per capita distributed? Yes

By law, do borrowers have the right to access their data in the credit bureau or credit registry? Yes

Can banks and financial institutions access borrowers’ credit information online (for example, through an online platform, a system-to-system connectionor both)? Yes

Are bureau or registry credit scores offered as a value-added service to help banks and financial institutions assess the creditworthiness of borrowers? Yes

Score ("yes" to either public bureau or private registry)

Strength of legal rights index (0-12)

Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents to security interests in movable assets exist in the economy?

Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description of collateral?

Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of collateral?

May a security right extend to future or after-acquired assets, and may it extend automatically to the products, proceeds or replacements of the original assets?

Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations besecured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered?

Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an electronic database indexed by debtor's name?

Does a notice-based collateral registry exist in which all functional equivalents can be registered?

Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third party?

Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside of the solvency procedure?

Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated?

Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and/or sets a time limit for it?

Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell the collateral through public auction and private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt?

Source: http://www.doingbusiness.org/data/exploreeconomies/romania/#getting-credit.

6. Protecting minority investorsAfter the fall of the communist rule in Romania, there were enough people who took advantage of the difficult and chaotic situation the state economy was and took for themselves some very important and rich companies that were managed bythe state before. This made some citizens rich who did not have a big capital in order to createa company after the liberation of the economy, but had important ‘connections’ with important people who were working for the state. Fortunately enough, the economic liberation in combination with the economic growth that Romaniaexperienced at the beginning of the 21st century, gave the opportunity to people that had the capital to buy shares from the big corporations that were then created.

In most of the developed countries with flourishing economies, there have been made a lotof efforts to protect the ‘weaker’ investors and be able to have the same rights to vote like all the other shareholders. The only way this could be achieved was by law. The countries with many companies within their borders decided to create laws that will give to all the shareholders the right to vote and not according to the number of shares, but only according to the fact that they

have bought shares of the company. This as a consequence, would not allow the richer partners to take decisions about the actions and the policy of the company without taking into consideration the smaller investors. Romania followed this practise of the democratic procedure for the decisions of a company, making the state really competitive among the countries of the region for those that wish a small amount of money to shares, making this way those investors to feel safe that they will not be overtaken through the years from the others. Thiscan help also the further development of a company, since there will be able to be heard allthe views for the face of a specific problem and more innovative practises to be adopted.

As an overall view, Romanian protection to the minor investors is considered satisfactory. The existence of specific regulation for the minor investors is a very characteristic example. According to them, when in a company the minor investor keep under 5% of the shares, then the big investors must make a public offer to buy this remaining percentage. This practise mostly aims to achieve balance in the company and a goodmanagement which of course aims to bring more gain to the company.

What is interesting is the fact that shares as a practice are not very common in Romania. A possible explanation can be the fact that Romanians have not developed the appropriate

mentality to familiarize with the market economy of the era that fast since their communist past did not offer that kind of education. The big companies that now exist in Romania are the result not of a healthy competitiveness, but of aprivatization that was an outcome of the conflicts that took place between the larger and the minor investors. The current situation made the minor shareholders to ask for transparency and respect of their rights from the big investors. Unfortunately, this was not very likely to happen which made the OECD declare thatby the end of 2001the little shareholders had no chance to protect their rights against the big investors who have the power to protect their strategy. What is worth to be mentioned is the fact that the governing board elections are quitedemocratic and is not related to the amount of shares an investor owns. Every shareholder has the right of one vote and not the number of shares he has. There are also cases in which the board is not elected by the shareholders but is chosen according to other perspectives related tothe capacity and the experience of its members. Finally it should be mentioned that the majority of the shareholders in the Romanian companies areRomanians and because of the loans that they havetaken there are cases in which the Romanian stateis the investor (https://www.cerge-ei.cz/pdf/gdn/rrc/RRCV_19_paper_01.pdf).

7. Paying taxesIn this pillar Romania made the most progress. Its place had an extraordinary melioration, whichof course is due to the reforms that have taken place in Romania the last year. Taxation is a very important aspect of the trade and the investments, since for the companies are considered as an extra amount of money that has to give to the state instead of investing to their own company for further development or modernization. On the other hand, the money from taxation is used for the melioration and modernization of the state services which by all means help the companies in terms of the waste disposal, electricity and water supplies. But, when a state has formulated its taxation laws this way in order not to make the companies pay large amounts of money, then this state is very attractive for the investors because this will bring more gain for them. Besides, there is not investor who wishes for the creation of a companyin a state with high taxation and high wages.

The tax rate for companies in Romania is generally 16% of the total annual income. This rate varies to some categories. For example, the small companies have tax revenue of 3%, while fornightclubs and gambling activities they have to pay either 5% of the revenues or 16% of the profit that is taxable, whichever is higher. For a company to be considered as a Romanian one, it

has to exist according to certain legislations. Acompany should be managed within the Romanian borders, which is to have reported is residency in Romania. Additionally, the company owner should be a Romanian resident or foreigner with apermanent establishment. Alternatively, a companyto be considered as Romanian has to be registeredtheir head office in Romania according to the EU legislation.

The legislation regarding tax rate differs for the non-resident companies of Romania. In general, under taxation rules are only the incomeof the companies that is set in Romania or the Romanian banks. Of course a company can change its residency to Romania whenever it wants, but there are several rules, under which this action can take place (https://www.cerge-ei.cz/pdf/gdn/rrc/RRCV_19_paper_01.pdf). The most important difference between the resident and the non-resident companies in Romania, is the fact that the resident companies are taxed for the whole income of the company peryear, whereas the non-resident are taxed only forthe amount of money that is imported as capital for the company or the total gain of the company,paying an additional tax of 4,000 Euros in RON intwo equal instalments every year (http://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-romaniahighlights-2014.pdf ).

As a whole, the Romanian taxation system is considered very well organized the last years andvery competitive not only for the Balkan region, but also for the EU and the Black Sea region. Thereason may be the total melioration of the economy and the need for growth after the economic crisis the country faced in 2010. Anyway, there have been observed many companies or corporations that wish to transfer or have already transferred their head offices in Romaniain order to pay fewer taxes, but this is also a gain for the Romanian state which sees its annualincome to rise.

8. Trading across borders The exports and imports of a country are more than important for the sustainability of the industry. In some cases, exports are the main source of income for the companies depending on the product or the service they offer. On the other hand, imports are very important for the raw materials and the modernization and development of the production. In general, imports and exports is also an important indicator of growth, competitiveness and economicdevelopment as well as the relations between the countries which is mostly a matter of external policy.

In Romania, the imports and exports are considered vital for the economic development of the market and the industry. Since the local

market is not very big, the other options the industries have in to export the quantities that cannot be absorbed within the borders. As long asthe bureaucratic issues are concerned, the procedure is quite different for the registrationof the right to import and export within the Romanian borders. The documents that are needed for the exports are 5 and will take 13 days, while the cost is about $1,480 for each container. On the contrary, to import product there are needed 6 documents in a period of 13 days for the registration and the cost of each container to be imported is $ 1,495.

A more detailed view can give more information about the procedure that should be followed. For the registration of the right to export the documents should be gathered in a week with a cost RON 1,476 ($410). The documents that have tobe bearded down are the bill of landing, the commercial invoice, the transport document from CMR (Convection des Merchandises Routiers), the customs export declaration and the packing list of the products that are about to be exported. For the inspections and the customs clearance a company should pay RON 270 ($75) in one day in order the exports to live the Romanian borders ontime. The ports and terminal handling that have to be regulated according to the rules of exportsduring 3 days with a price of RON 1,080 ($300). Next, the inland transportation and handling are faster but more expensive. In 2 days the

registration can be done paying RON 2,520 ($700).In a total sum for the registration of the rightsto export 13 days are needed and till cost RON 5,346 ($ 1,485)

The import is a close enough procedure with the exports. In a total of 13 days and RON 5,382 ($1,495), the right for imports for a company canbe listed. Firstly, 8 documents have to be defrayed and pay RON 1,512 ($420) in a period of 8 days. The documents that have to be gathered are the bill of landing, the certificate of origin of the products that are about to be imported, the commercial invoice, the transport document from the CMR, the customs import declaration and the packing list. Apart from these documents, there have to be regulated are the customs clearance and inspections that has tobe controlled in 1 day with a price of RON 270 ($75). After that, in 2 days period the ports andterminal handling of the products has to be settled paying RON 1.080 ($300). Lastly, the inland transport and handling will cost RON 2,517($700) and has to be edit in 2 days. Fortunately,regarding imports and exports, Romania is considered a competitive country with its averageto be better from the EU average, but not better from the OECD (http://www.doingbusiness.org/data/exploreeconomies/romania/#trading-across-borders).

Indicator Romania Europe & Central Asia

Documents to export (number) 5 7

Time to export (days) 13.0 23.6

Cost to export (US$ per container) 1,485.0 2,154.5

Cost to export (deflated US$ per container) 1,485.0 2,154.5

Documents to import (number) 6 8

Time to import (days) 13.0 25.9

Cost to import (US$ per container) 1,495.0 2,435.9

Cost to import (deflated US$ per container) 1,495.0 2,435.9

Source: http://www.doingbusiness.org/data/exploreeconomies/romania/#trading-across-borders

9. Enforcing contractsThe importance of this pillar is related to the ability of the companies to create commercial relations with other companies out of the borders. Of course, this procedure has its difficulties and its problems and has to be observed from the time the payment has to be given. Besides the satisfactory operation of the contracts and the laws that are relevant to it, shows the reliability of the economy along with the function of the economic offices and servicesof a country.

In Romania, this pillar seems to be operating in a satisfactory level allowing most of the companies to have an income circulation that helps them to their production and services. In the worldwide ranking, Romania is in a good position (51st for 2015), the best in the last years, enforcing even more its strength and its economic power. Besides the business contracts are the documents that officialise any kind of economical and business exchange and gives to both side the right to claim what they have agreed in case something goes wrong. Additionallycontracts can promote agreements between corporations and raise the state income by the taxes they will have to pay and the import and export expenses.

In Romania, the procedures that should be followed in order to officialise a business agreement, collaboration or economic exchange is quite time consuming and mostly, expensive. More specifically, the enforcement of a contract can take place in 512 days, during which several documents and procedures have to be gathered fromthe company. In 52 days, the services that are about to be offered have to be filed in order to have a stable image of the business exchange thatis desired. Then follows trial that will take place in order to legalize the contract and give it a more official form so as to be used for any official procedure. The trial will take some timebecause of the current judiciary system in

Romania that takes much time to organize a trial since the application for trials are many and there has to be followed an order. For this reason, a whole year will be needed for the trialto take place and the final judgment or the contract to be edited. Finally, for the enforcement of the judgment to be activated and have a formal form, 95 days will be needed, more than 3 months something that can create problems in the whole business activity.

The cost of the whole action seems to be another important problem for the companies that have to pay a pretty bug amount of money to enforce a contract and legalize their activities. The totalcost will be about 28.9% of the total company claim. From this percentage, the 7.7% will be given to the lawyers who will be in charge to represent their clients to the trial and to take care of all the documents that should be gatheredand all the procedures that should be done. An additional cost will be the cost of the court which will be about 11.2%. In this cost the fiscal stamp is calculated. Another 10% will be paid to the Office of the Ministry of Economy forthe final enforcement of the contract. All in all, about 34 procedures need to be done for the realization of this goal, which is an average amount of procedures and are less than in the past since the state’s system is generally more contemporary nowadays ad some unnecessary and time consuming activities have been skipped like

the trials in Specialized commercial courts that were also very problematic for the Romanian state. There is no doubt that the system for the enforcement of contracts in Romania can be meliorated, but efforts have been made to achievethis aim and more are needed in the future.

10. Resolving InsolvencyThe last pillar of the EDB index, aims to show the ability of a state to help the companies thatwish to close their firms to do it as quickly andeasy as possible, and the readiness of the state for the economic gap that may be created for the closure of the companies within its borders. The bankruptcy of several companies is most of the times a sign of the current situation of the state economy and may also harm the existent image of the state economy abroad. Even though the bankruptcy of a company is not a very good sign for the economy, especially if the company is a big one, the state has to take care of all the procedures, in order not to take much time for the company managers which shows also the good organization of the administrative affairs in a country that is a good element for those whoare interested in investing in this state: too know that in case their business fails, they are able to finish the whole business attempt as soonas possible. Definitely, the quick closure of a

company can make an economy more competitive regarding the state affairs that can take time.

Romania is not considered a state very organized and fast in this specific field. According to theWorld Bank, Romanian ranks are not very good in comparison to the EU average or the OECD average.A more detailed view can show the exact situationin the country. Firstly, for the total closing ofa company, the Romanian legislation needs about 3years and 4 months in order to finish with every single detail of the procedure and be sure that the company will face no other abeyance in the future. Fortunately for Romania, the cost of the procedure is quite competitive to the OECD and EUaverage. The percentage of the estate’s value that should be paid is 10.5% with no other cost during the closing procedure. The outcome of thisaction is different regarding the piece of the company that is set in closure procedure. If the company has bankrupt only in a piecemeal, this may have no impact to the rest of the company. Onthe other hand, if the whole company bankrupts, then the impact is much different to the economy and the investors of the company as well. Moreover, the recovery rate, that has to do with the cents of dollars that are secured by law for the company owner/s. For Romania, this rate reaches the 30.7 dollar cents. Next, the Commencement of proceeding Index shows the procedure for the liquidation or reorganization of the company that has started the procedure of

closeness for the investors of this company. In this index, Romania is ranked with 3 when the best rank in a scale from 0 to 3, is 3. Another index to which Romania has great success is that of the Management of debtor’s assets that has to do with the continuation of the insolvency or thepossible rejection of the debtors in terms of contracts. This index, whose ranking is between 0and 6, has ranked Romania with 6

, showing that is this index Romania goes extremely good. Moreover, Romania has a quite good score in the Reorganization proceeding index, which tends to protect the minority investors in a company. According to the data, Romanian has a score of 2.5 when the best score is 3 and the worst 0. In addition, the creditor’sparticipation index, aims to secure the rights and the participation of the creditors to the liquidation of the company. Here Romania has donea good job to achieve a fair liquidation for all the investors. In fact, in the ranks of the indexthat appear to be from 0 to 4, Romania is ranked with 2. Finally, the last index of the pillar presents the overall score of the last indexes that have been presented and gives a general image of the situation with the debtors and theirparticipation to the whole procedure. In this index which is the Strength of insolvency framework index, Romania is ranked with 13.5, which is a very good score in the scale of 0-16 with 16 to b the best possible score for a

country (http://www.doingbusiness.org/data/exploreeconomies/romania/#resolving-insolvency).

The Romanian EDB in the Black Sea and recommendations for improvement.

As it has already been shown, Romania is a country which is highly competitive and can attract many investors who are interested in investing their money to a new firm in order to take advantage of the gain. Of course, the investors would look for a country that can offerthem an organized system that will allow them to create the company they want very fast, with no problem to the supplies that are relevant to the production and the transport of the products. Romania is able to offer this kind of services tothose that decide to place their business activities there. In the Black Sea region, Romania is considered to be a very promising country. Its growth rates have been miraculously raised, showing the very successful measures thatthe Romanian government has taken after the fall of the communism. Between the 10 Black Sea countries, Romania has the second positions to the EDB index, after Bulgaria that reveals the good business environment in the country, in combination to the quite low wages of the employees makes it a country that can offer a lotof gain to the shareholders or the investors of a

company. What makes Romania a very good choice for investments is also its geographical positionthat allows it to communicate by the sea or by the ground with the Balkan region, Central Europeand the rest of the Black Sea, an element that can facilitate in many ways the transport of products and services and develop easier the public relations of the businesses. The fast growth that took place to the Romanian economy, has also offered to Romania a much better image for the people abroad than the one in the past. Nowadays, Romania is a developed country with a developed industry and not a country that is bankrupt and its citizens are starving. The economic development has also given Romania the possibility to demand certain things from Europe in terms of policy and more importantly, allowed it to become an EU-member, with countless economical, political and competitive benefits for the administration but for the society as well.

Even though Romania offers good opportunities forinvestments, there are always ways and ideas withwhich Romania can become even more competitive may become the leading power in the Black Sea region. For example, there could be done some changes to the bureaucratic issues in order a company to take the electricity supplies more quickly so a faster operation of the company can be achieved leading to more gain for the state and the company. Taxes can also be reduced in

order to gain the investors who are looking for low tax rates and beat the tax rates of Bulgaria that has the lowest in the region. Another important measure that should be taken for the melioration of the business environment would be the reduction of the procedures that have to be done to obtain a construction permit and to become cheaper to prices of the public documents that are considered necessary. The registration of a company’s property can be more simplified and less time-consuming, especially for the foreign investors who are not familiar with the Romanian lifestyle and are unaware of specific bureaucratic details, since most of them do not speak the local language.

Moreover, more simple and brief should be done the documents that have to do with the imports and exports. The industry is one of the most developed fields of the Romanian economy. Since the local market is very restricted because of the low annual income of the majority of the citizens, companies have to export the biggest part of their production, mostly to the European territory. Unfortunately, the documents that are required for the registration of the right to export are a lot and this makes the exports very time consuming and difficult. The contracts should be enforced faster which can allow the companies start their operation as soon as possible, since no investor wants to waste timein bureaucratic details that are mostly matter of

poor administrative organization. Lastly, the insolvency issues should be taken into consideration which could be simpler and less resilient to the protection of the protection of the minor investors during the liquidation of thecompany. All in all, Romania is a competitive country, but there are certainly possibilities tobecome better and more organized which will make the country more attractive for investments and offer more prestige to the country among the others of the region.

CHAPTER 3

Further suggestions for the melioration of the Romanian competitiveness.

The progress of the Romanian state that took place the last twenty years is a very interestingand admirable fact, which is mostly based on the flourishing economy of the state because of the industrialisation and the establishment of the democracy, which gave the citizens the opportunity for personal and social development. Even though, this development has meliorated a lot the living standards, the state’s status and the possibility to ask for more regarding the international relations and the trading with the other countries, there are many things that couldbe done for the economy and the society which canmake Romanian even stronger and prestigious in the future, allowing it to earn even more from the global market that already tries to gain a good position.

The majority of the Romanian inhabitants have experienced the communist rule, which has createda certain mentality about the business practises and the social inequality. There is no doubt that

this way of thinking cannot change very quickly and very easy, especially for the elders. What ismore important is the fact that most of the people that had key-places to the administration during communism continued to work for the government even after the fall of communism and the establishment of democracy. This has created a very serious social and economic problem, corruption. Corruption is a very harmful economichole to the economy of Romania that is hard to befaced effectively in a short time. As a phenomenon, corruption in Romania seems to be a remenant of the communist era, where people have to give a certain amount of money in order to have the state services, like assistance in health issues or bureaucratic ones. Unfortunately, corruption still exists in the same extent in Romania, which by all means is considered an obstacle for the competitiveness and the economic development of the state. Any investor who wishes to create a firm in the Romanian borders should be aware of that an amount of money will be wasted for the officers who are in charge of the services related to the publication of official papers that are needed for the legal operation of a company or a firm. As a consequence most of the investors think thatburdening as a practise is not profitable for them and that is an amount money that is spend for no real reason, that is why even though they think that the Romanian business environment is

very promising, they decide not to invest there because of the bad communist practises that have not stopped even after 25 years from then. This economic ‘wound’ has also affected the political situation in the Romanian government and has given abroad the image of a state that is not trustful and is not capable of facing its own problems and competes the other European or Balkan states. In general, the Black Sea region is a quite corrupted area, probably because of the traumatic past each of them has experienced in the political and economic field.

The improvement of the competitiveness is a very important goal that has to be taken seriously from the Romanian political scene and create the appropriate opportunities to the investors in andout of its borders that see a bright future for the Romanian economy in the productivity and innovation sector. The tough economic years at the beginning of the establishment of democracy have now passed, but unfortunately the infrastructure has remained the same in most of the cases. Schools for example have not adopted any new educational method based on the global needs and the ability for the young people to be aware of the needs of the labour market or the future technologies that may be helpful for theircareer. The fundamental role of education is not under discussion. For this reason, apart from theinfrastructure, the educational system has to be modernized and follow the demands of the new era

and the needs of the Romanian labour market that has developed the industrial sector the last years. The lessons at schools have to be done with more modern methods like the use of computers or power point presentations from the teachers, which will help the students, have a better understanding of the lessons, and come in contact with the new technologies that there are to the developed world. Moreover, new educationalmethod have to be adopted regarding the psychological attitude of the teachers towards the students, that will make students shape theirpersonality freely and not feel the pressure of the rules, that in general exists as an idea in the new educational methods of the 20th century and are formed in the most European and western schools. The materials that are taught should be more contemporary and the books need to be updated according to the historical facts and thescientific discoveries, since these elements willhelp the students in their university studies as they are considered the basic knowledge for the further studies. Another very important issue is the basic knowledge that the schools have to provide to the students are very useful to the everyday life for themselves but also for everyday life challenges and shape a critical thinking and shape opinion. Apart from the education, training programs have to be organizedfrom the authorities that aim to inform the employers about the new techniques and the new

way of production and the modern machines that have come out along with the manner with which they operate for the increase of the products andthe relation between time and quantity. Besides, the training every certain periods of time, can show to the investors that the working force of Romania is an updated one, and can meliorate the score to the labour market efficiency, intensifying this way the competitiveness in thisimportant factor, since the quality of the labor force is one of the basic criteria for the investors to choose Romania and not any other state in the region to create a firm.

Another factor that can be related to the training and the overall organization of events in all factors that are dealing with the competitiveness of the Romanian economy and its market in accordance with its possibilities and the services this state can offer, are the institutions. As a European state, Romania has tooffer to its citizens, visitors and investors theservices and information like any other member ofthe EU. Unfortunately, many of this kind of institutions do not exist within the Romanian borders and if they do, there are only in the capital and so not close to everyone. The lack ofinstitutions that have to do with the human rights and the protection of people, like orphanages and offices for human rights, since the Romanian government has not given the money it took from the EU to take care of its

institutions after the fall of communism, gives to the foreigners the impression that Romania hasnot changed a lot after the establishment of democracy and remains a state with no respect, nowilling to become better and that it deserves to be part of the European Union (http://news.bbc.co.uk/2/hi/europe/8425001.stm) and has to offer everyone a dissent life not onlyfor the high social layers, but for all the people, which will show that people can feel freeto work and live in Romania from all around the world and not think that they are in danger themselves or their money affecting by all means its financial, social and political attitude of the other countries and the reputation which willattract investors and make them feel safe for their financial capitals. And for the goods and services they will obtain from the creation of a company. A possible practice would be the establishment of cultural institutions that will promote the Romanian culture and the efforts thathave been made the last years from the Romanian governments for the melioration of the state and its general image that will make the foreigners appreciate the Romanian strength and what they can offer to those that are interested to that country and wish to invest for their gain. Another good step, for the attraction of foreign investors, would be the allowance of high rates to those the foreigners that will create an economic capital in the Romanian banks. High

rates will ensure to the depositors a certain gain every year according to their capital, and will give the chance to the Romanian economy to take advantage of the existence of these capitalsin its borders to give loans to Romanian citizenswhich can be used to give a new ‘breath’ to the Romanian market and renovate the circulation of money which will lead to the economic growth of the state and an overall prosperity. In addition,this import of capitals to the banks will underline the stability of the Romanian economy and that will consequently make several foreign investors interested in investing to the Romanianeconomy. The present deposit facility according to the Romanian National Bank, in 0.25% and the lending facility is 4.75%. As a result, the gain from the existence of more deposits is obvious, Even if the National Bank, rises the deposit facility to the foreigners to 1%, even this way, there would be gain from their presence in the Romanian economic scene for both sides.

Interest Rates on Monetary Policy and Standing Facilities

Valid since: Policy rate Lending facility Deposit facility

8 Jan.2015 2.50 4.75 0.25

5 Nov.2014 2.75 5.25 0.25

1 Oct.2014 3.00 5.75 0.25

5 Aug.2014 3.25 6.25 0.25

5 Feb.2014 3.50 6.50 0.50

9 Jan.2014 3.75 6.75 0.75

Valid since: Policy rate Lending facility Deposit facility

6 Nov.2013 4.00 7.00 1.00

1 Oct.2013 4.25 7.25 1.25

6 Aug.2013 4.50 7.50 1.50

2 Jul.2013 5.00 8.00 2.00

(% per annum)

Source: http://www.bnr.ro.

The public sector, in addition, has to follow thechanges of the era, and become more ‘digital’ regarding the methods that are used for the various procedures between the citizens and the state. For example, people could pay their taxes and all their bills from the Internet through thee-banking system that exists in all the European states. Several seminars could inform the workersof the public offices and services for the new technologies that can be used in order to serve more people every day and faster with less useless bureaucratic affairs. The simplification of the public sector apart from the satisfaction of citizens, will also intensify the country’s competitiveness for the foreign investors, since the old system of the country constitutes an obstacle regarding time and procedures for the opening of a firm.

Another factor that has to be taken care of is that of the International relations. The revelation of the relations with other states

will make Romania friendlier for those that look for another state to invest apart from their state. Besides, Romania’s geographical position is very important for the transport of industrialproducts to the central Europe and the import of raw materials. The very well developed road system of Europe allows a good communication and trade of the companies in and out of Romania. If the Romanian authorities manage to take advantageof their state’s position on the map along with the relations that can develop with many powerfulcountries, like China or Russia, they will be able to sign even trade agreements with them and strengthen this way their dynamic as country and gain money. A case could be the energy policy, where Romania can play an important role to the transport of the Caspian and Baltic gas to central Europe through pipelines that pass under the Romanian territories. This can bring a lot ofmoney to the state and can facilitate more easilythe industrial units to have the energy they needfor the production of their products and services, since gas is considered a very cheap and modern source of energy, and is not used thatmuch in Romania because of the poor network, making Romania less popular for investments in cases where certain vehicles or machines need gasto operate. All in all, the International relations appear to play a very important role tothe competitiveness of a state that aims to develop its industry as much as possible, like

Romania which considered one of the most industrialized states in the Black Sea region butits efforts to show its strength to thither states and look for better communication with them is rather weak for a member of the European Union.

The need for Romania to make more changes in order to meliorate its competitiveness is vital for its economy. There have to be taken measures for this goal, such as the increase of the per capita income and the provision of certain privileges to the foreign investors that will bring important amounts of money to the Romanian banks and the state as well (https://ideas.repec.org/a/blg/reveco/v62.3y2012i3p36-47.html) .Taxation needs to be changed and become more attractive for the investors as it has already been analyzed. It is true, that Romania provides a quite advantageous tax burden,in comparison to the rest Black Sea and Balkan region, which is a very serious advantage from the other countries. The only state that providesa lower tax burden from the Romanian one is only Bulgaria. It is very well known, that taxation isa very usual and serious criteria for the selection of a country to invest, because it consists the amount of money the company as to give to the state in order to maintain its right to exist in this state and enjoy certain rights and privileges. The limitation of taxation to thecompanies and the citizens can tone up the

Romanian market, since the companies will be ableto pay more for the employers’ salaries and this as a fact will lead to more money for the people to spend in the market for their needs which withits turn will renew the market and the state income will rise from the taxes that will be paidon time because they will be then affordable, as long as the taxation system is fair and the amount of taxation is calculated under reasonablemanners, according to the income of a company or an inhabitant. This situation will allow the state to provide more services to the inhabitantsaiming to attract new foreign investors and earn the respect of the other states as a prestigious country that managed to leave behind its traumatic communist past. Taxation remains the main source of the government revenue and the governments should always look for ways to increase it, rising this way, the living standards of the state and have a bigger GDP every year progressively.

The attraction of investors and the creation of amore competitive economy will undoubtly lead to the economic growth of the state and there is a very good relation between growth and competitiveness as it has already been described,showing that the Romanian competitiveness will help the so desirable economic growth of the state, which will allow it gain more strength andmore respect from the other state along with the possibility to create a welfare state eliminate

poverty, which in Romania is a serious social problem, improve its infrastructure, invest in new energy sources more friendly to the environment, provide the needed knowledge to the workers to improve the production every certain period of time an make sure that the state operates in a good way free of corruption and bribery and follows in general the new era of organization, operation and co-operation with theother countries through signing business agreements. The most serious and real effort fromthe Romanian part was its entranced to the European Union in 2007, which gave a real good chance for the rise of the country to reach the European standards and leave the communism behind. The entrance of Romania in the EU has totally changed many things to the trade and the public relations. As an EU member, it is easier for Romania to have trade relations with other countries of the EU since there is no need for bureaucratic procedures that most of the times take a lot of time. In addition, the entrance to the EU has given the chance to the state to participate in many programs relevant to the education and economic standards that have given a new perspective to the modernization of the state. Besides, now Romania can even ask for European funds that will be used for social needsand the melioration of the living standards for the Romanian citizens. Through this funding many factors can develop their techniques and this can

lead to further innovation for the Romanian production and science. Apart from the cultural sector, Romanian as EU citizens, are able to comein contact with other ways of production and technology, helping this way the technological readiness of the industry, as they will import more easily new equipment for their industrial unities. The ability to travel to the EU without passport, gave the possibility to many Romanians to travel all across Europe and meet themselves what the already developed countries have achieved and bring them back to Romanian and fit them to the Romanian way of life and mentality. Of course, Romania is an EU member only the last seven years and non all of them have been realised. But there is the intention to be done from the Romanian side. More importantly, the fact that the Romanian students can apply for studies in any European university they wish, andbe accepted according to the EU regulations for education that are not that strict in comparison to those for the students of countries outside EU, has offered a priceless chance for the transport of new ideas, scientific discoveries and living standards to their home country that can now be adopted more easily from the citizens since they majority of them are aware of the European living and production standards and are interested in adopting them for their own benefit.

What should not be forgotten are the local investments. The attraction of foreign investor from all around the world is of course the dominant goal for the Romanian growth and progress, but there many cases, where the Romanian investors were mistreated. It happens because investors those come from developed countries to invest in Romania have more knowledge regarding the technological innovationsthat might have taken place or have the experience of a free market economy, are more capable to face various situations during the creation of a company and are more trained to convince their partners and take decisions more convenient for them. This fact in combination with the capital that a foreign investor can haveand most of the times cannot be compared with thelittle Romanian ones, makes more possible for them to buy the biggest number of shares from a company and so act by themselves essentially. Thegovernment should protect the Romanian investors and make sure that any Romanian will feel safe for the money he has invested. A good solution would be the introduction of measures according to which, in every company that is established inthe Romanian borders, there will be a part of theshares that will be bought from Romanian citizens. Apart from the insurance that the Romanian investors will be protected, in this way, it would be possible for the state to have more financial benefit from the taxation of the

investor that are Romanians, since the taxation rate is quite higher for the Romanian investors than the foreign ones. This measure should be taken as soon as possible, because there are manycases in where the Romanian investors have been expelled from an investment and have lost their capital but was not able to ask for help and justice, since the current legislation does not offer him that right.

The entrance to the EU has definitely given Romania a new possibility to attract new investors from all around the world but most importantly from the other EU members. From 2007,every rule regarding the exports and imports of raw materials and final products is obliged to follow the existent rules of the EU that have been voted in the European parliament. As it has already been said, the transport outside the borders towards other EU members have been very easy and this has helped the Romanian economy a lot since it has faced several problems to the export of products. Moreover, investors have shown a lot of interest in Romania the last yearsbecause on the one hand there is this ease in thetransport and the communication of the product units to the trade partners across Europe, but also, on the other hand, the low taxation has also helped Romania become a country with heavy industry and depend most of its income of the state and the citizens on the industry. As a consequence, the situation has changed the

economy of the state and has lead to a further economic growth of the state which allowed it even to ask for an entrance to the European Economic Community, and adopt Euro as currency and leave the Romanian Leu. The last years the price of Leu keeps rising because of the Romanianeconomic growth, but still Euro has to offer somebenefits. There is no doubt, that Euro as a currency, will give a new possibility for even more investors in the Romanian borders, since it will make even more easy for the Europeans the economic relations since no exchange will be needed, like today.

The price relation between USD and RON the last months

Some years ago there was the estimation that Romania would be able to enter the Euro zone in 2015, but lastly it was announced that Romania has no target for its entrance to the Euro zone and it is not believed to be ready before 2020, because as the Romanian government has supported,Romania has not reduced the public dept as much as it is desired in order to feel ready for this economic change. There have been taken several measures for this goal but not as much as it is needed

(http://www.telegraph.co.uk/finance/financialcrisis/10002050/Romania-abandons-target-date-for-joining-euro.html). Fortunately, the rest of the Euro zone is keen on welcoming Romania to its family since the benefits for both sides are a lot.

The benefit for the European Union, on the other hand, by the entrance of Romania was also very important. With Romania, EU was able to have a free shore to the Black Sea which allowed the EU members to create new trade roads with all the other Black Sea states and enjoy a further development to their exports. It was easier for the EU members to import and export products to and from Romania leading to lower prices and faster transport. Especially, the agricultural products were very fragile and so less time for their transport was needed. In fact, the Romanianexports to the biggest part of Europe and Asia have made Romania a new ‘source’ of goods for everyday consumption, like wheat or vegetables, creating a further competition to the other European suppliers and ensuring reasonable pricesfor the European consumers. The fact that the Romanian economy is based on agriculture in a bigpercentage, has made the GDP of the World Bank risen its percentage of agricultural products, achieving a balance with the heavy industry (http://www.worldpolicy.org/blog/2014/04/28/romanias-eu-membership-costs-vs-benefits). As an EU member, Romania has also offered to the rest of

Europe working force that was experienced to the agricultural and every manual job in general and because of the cut of wages that the Romanian government had done in order to fulfil the economic criteria of joining the EU, was willing to move to any other state (that was now more easy) to ensure better living standards and better wages.

The rules that are followed since 2007 have changed radically the way the trade is done in Romania. The creation of trade bureaus in all over the country aiming to inform those that are interested about the legislation and the procedures that are similar to those of the rest of Europe in most of the cases, have given trade another chance for development and the chance forimports and exports.

These important changes the last years have definitely changed the living standards of the state. New jobs have been now occurred because ofthe modernization of the country, reducing this way the unemployment which has become a serious social problem in the end of 20th century and the fall of the communist rule. The efforts that tookplace in the economic field in order Romania to meet the preconditions for the entrance o the EU,even though were tough, were made in order the country to enjoy the privileges the EU had to offer and show how trustful and reliable the Romanian economy is to the other state and EU members. The future of Romania is by all means

bright and there is no doubt that Romania has become more competitive since as a member of EU, and can also enjoy the economic growth of the country. It is now observed that through the years, the industrialization of the country becomes more and more intensive, making Romania acountry that its economy is based on industry regarding state incomes and peoples occupation. For many Europeans, it is generally believed, that Romania is still a ‘Paradise’ regarding taxation, wages and human resources in comparisonto the majority of the other European states. Thefact that Romania has its own currency and not the European one, might has harmed the investments in a small percentage, since Romania is really interested in joining the Euro and has already taken enough measures for this goal, there is no possibility of not developing its economy more in the future and become one of the strongest country in the Balkan peninsula and theBlack Sea region.

What is more, Romania having made important stepsto the educational sector and the improvement of it in order to meet the modern expectations, innovation that should be taken into consideration aiming to show the real interest ofthe country to everything regarding production and productive lines especially to the so called,‘heavy’ industry which bring more money to the industry and to the state through taxation as well. Besides, innovation can lead to the funding

of various problems relevant to this goal, from the EU which can as a result attract many scientists from all around the world who wish to deal with innovative techniques. Lastly, it wouldbe a good step for Romania to meliorate the public supplies to the inhabitants like public health system and services that will or sure shoethat Romania can offer to the people what is needed for their everyday life and may make some people change their mind thinking of moving to Romania being sure that they live in a European state and not in a poor country like most people think that Romania is. As for the expenses that are needed for this goal, they can be ensured from the small increase of taxation which will beused for the melioration of the living standards for all the people that even though are considered better than these of the past, still there are many things to be done regarding the improvement of the Romanian economy making it more competitive and more attractive for the foreign investors or the Romanians that live abroad. The further competitiveness will cause animprovement of the economy and the overall growthin the economic, social and cultural field, showing the ability of the state to provide a healthy business environment and a healthy economy with a capable working force and good living standards that will have nothing less fromthe European standards of life and working environment and competitive quality production.

One factor that should be examined and that can by all means contribute to a bigger competitiveness and growth for the economy, are the comparative advantages of Romania, in relation with the European Union. The agricultureis firstly the most important advantage of Romania as it has already been mentioned and alsothe economic growth has offered more advantages to Romania. The industrial units that have been created from the beginning of the 21st century, have given to Romania a different image from the past which is more updated and more capable of following the general changes from the other Balkan countries. Moreover, the number of importsand exports the last decade has given a totally new perspective to the Romanian market and a stepforward to the other countries of the region (http://www.rebe.rau.ro/RePEc/rau/journl/SU06/REBE-SU06-A8.pdf). The growth rate of the country ismaybe the most important comparative advantage asit shows the potential and the general movement of an economy to even better scores in the indexes, more prestige for the country, confidence from the other states and more benefits for the state economy. The Romanian growth is of course in a very high level in comparison to any other state of the Eastern Europe.

Last but not least, a reference should be done tomaybe the most vital but still the less importantfor the majority of the investors: the building

of the company. The buildings that will host the various companies in the Romanian borders have tofollow the standards of the century and the European ones. The attraction of foreign investors in Romania has to follow certainly a specific plan. Part of this plan is the modernization of the bureaucratic system in the field of constructions. The buildings are very important for the creation of a company because they offer a certain place and a safety for the production line. New techniques have to be adopted from the Romanian authorities and the constructing companies that will give them the possibility to create building in less time and with less money. For example, the procedures can become shorter in order to avoid the long period to 90 days for the final permission from the Acceptance Commission. The connection with the European market has offered the possibility to come in contact with new building techniques and materials, elevating this way the quality and theloyalty of the buildings. Funding should be givento the construction companies by the state and oblige them to follow the needs of construction and buy the new machines for the construction which will not need so much of the human energy as a manual work for the building, There have to be also some changes regarding the prices of the construction permits since most of them are really high and sometimes this is ought to the high corruption of the public sector.

CONCLUSIONS

There is no doubt, that Romania has made very important and vital steps for the melioration of the county in general after the fall of the communist rule in 1989. In the economic sector there is a great progress the last years. The establishment of the democracy, and the government that was shaped had as a goal to meliorate the state economy and provide to the citizens good living standards. The melioration of the economy had to be achieved through the attraction of foreign investors as it happens in most of the countries that are in an analogue situation. The attraction would be even easier through the blossoming of the trade and the economic growth. The measures that were taken

during the 90s were very painful, but finally at the beginning of the 21st century the Romanian economy passed to a whole new level of production. The state growth was that impressive that motivated many Europeans to create companiesthere. It was then able for Romania to become a member of the European Union and enjoy the uncountable benefits this brought to the country and its economy.

Romania has turned into a whole new state that after the efforts of the past governments and itscitizens was able to stand out like any other developed country of Europe. The competitiveness of the state among the others of the region had to be taken seriously into consideration. The geographic position of Romania is more than important, since it allows to the state to be part of three geographical and economical organizations: the European Union, the Black Sea region, the Black Sea Economic Cooperation (BSEC)and the Balkan Peninsula. This strategic positionhad attracted many investors thinking that the position would facilitate the transports and the communication with Europe and Asia, but the position itself is not enough for the competitiveness of a state.

Certain circumstances affect the competitiveness of the state and show the capacity of the state to support the creation of companies to its territories. Romania has a competitive economy, but till, there are certain pillars in which its

performance is not that satisfactory. Romania hasserious problem with the Infrastructure of the state showing that cannot provide any safety regarding the public services and buildings. For this reason, many problems have been faced to public schools, hospitals and railway stations. People cannot have certain services for their everyday needs sowing that a lot of money have tobe gathered in order the state to provide to the citizens a decent life. The educational system isin general close to the western model, especiallythe higher education that provide more specific knowledge, but the basic education is rather poorand does not provide to the students to possibility to create freely their character.

There are also other social problems that affect the competitiveness of Romania, like the health system and its supplies to the citizens that are poor and can create even bigger financial problems to the citizens in order to cover their needs themselves. Institutions suffer from the social and economic problem of corruption and so are not considered very well-functioning. On the contrary, Romania is able to offer some elements that are not present to the rest of the region. Its labor market is very efficient and the working force of the country is experienced in dealing with the agriculture and manual jobs generally. Lately, many efforts have been or the melioration of the innovation sector wishing to develop the most important pillar of the

competitiveness index and attract the investors that are interested in everything new that can affect the quality of the productivity with less cost. Another important element that affects competitiveness in a good way, is the wages in Romania that are relatively low with the other Europeans states and so is more interest for the investors who want the more productivity with theless cost.

Competitiveness as an economic factor is closely related to the ease in which the investors are able to open a company and create a firm. The Index of EDB shows exactly this procedure and canprovide the investors with all the useful information for the opening of a company. Romania’s bureaucratic system is quite time consuming, but not as much as in other countries.The procedures that have to be followed from an investor cost a quite big amount of money but do not differ from other states. For example, the electricity and the final acceptance for the building construction take many days and this maycreate problems to the whole investment. The import and export law is well set in order to facilitate the trade across the state borders andmost importantly, there have been made serious efforts for the protection of the minor investorsin the companies that own only a small number of shares and sometimes they have not even the rightto vote.

Even though there have been made efforts for the god performance of the Romanian state and the attraction of foreign investors, there a lot of other thing to be done for Romania in order to follow the western and modern standards of production and of living and make its economy even more competitive and more prestigious leaving the past behind. The funds from the European Union should be used wisely for the goodof the country and develop further the state economy and should be given privileges to the foreign depositors or to the measures to avoid the creation of a monopoly market which will harmthe state growth and will lead the economy to a total failure and show that all the sacrifices were in vain. The promotion of a market economy that functions as equally as possible for all thecompanies that exist in Romania according to the size of the company and the quantity of production, might be a successful plan for the growth and the competitiveness of the state making the state economy to flourish and attract even more companies that will lead to the evanishment of unemployment and the promotion of innovation and training in every certain periods of time ensuring the sufficiency of the working force and the quality of the production leading to more profit for the companies and the employees as well through their wages. This good economic situation will provide good loving standards for all the inhabitants and will free

the country from corruption and social inequalitythat leads to income inequality and frustration. The overall consumption is the possibility if Romania to offer everything that is needed to attract investors and meliorate its economy as much as possible. There have been made serious steps for this goal, but there important things that should be taken into consideration from the government for the economic development of the country and the prosperity of the country andits citizens.

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http://www.eqavet.eu/gns/what-we-do/ implementing-the-framework/romania.aspx

https://iweb.cerge-ei.cz/pdf/gdn/ RRCV_19_paper_03.pdf

http://www.wseas.us/e-library/ conferences/2013/Dubrovnik/MATHMECH/MATHMECH-11.pdf

http://www.oeconomica.uab.ro/upload/ lucrari/1120091/41.pdf

http://ec.europa.eu/employment_social/ eie/pdf/Labour-market-indicators-Romania.pdf

http://ec.europa.eu/economy_finance/ publications/european_economy/2013/pdf/ee6_en.pdf

http://www.antena3.ro/en/business/ european-official-the-labour-market-in-romania-needs-improvement-the-employment-rate-is-only-63-190851.html

http://www.upet.ro/anale/economie/pdf/ 20100204.pdf

http://www.worldbank.org/en/country/ romania/brief/an-optimal-economic-development-vision-for-romania-must-have-people-at-its-core

http://www.aabri.com/manuscripts/ 09296.pdf

http://www.euromonitor.com/romania

http://reports.weforum.org/global- competitiveness-report-2014-2015/economies/#economy=ROU

http://www.doingbusiness.org/data/ exploreeconomies/romania/

https://www.cerge-ei.cz/pdf/gdn/rrc/ RRCV_19_paper_01.pdf

http://www.pwc.ro/en/publications/ assets/2013/taxbook_en.pdf

http://www.worldbank.org/content/dam/ Worldbank/document/eca/romania/rosc/ICR%20-%20ROSC_English_version.pdf

http://newdelhi.mae.ro/en/node/795

http://www.rebe.rau.ro/RePEc/rau/ journl/SU06/REBE-SU06-A8.pdf

http://www.worldpolicy.org/blog/ 2014/04/28/romanias-eu-membership-costs-vs-benefits

http://www.telegraph.co.uk/finance/ financialcrisis/10002050/Romania-abandons-target-date-for-joining-euro.html

https://ideas.repec.org/a/blg/reveco/ v62.3y2012i3p36-47.html

http://www.bnr.ro .

http://news.bbc.co.uk/2/hi/europe/ 8425001.stm

http://www.doingbusiness.org/data/ exploreeconomies/romania/#resolving-insolvency

http://www.doingbusiness.org/data/ exploreeconomies/romania/#trading-across-borders

http://www2.deloitte.com/content/dam/ Deloitte/global/Documents/Tax/dttl-tax-romaniahighlights-2014.pdf

http://www.doingbusiness.org/data/ exploreeconomies/romania/#getting-credit

http://egateg.usaid.gov/sites/default/ files/01.128.08BP7_Romania.pdf

http://www.eia.gov/countries/country- data.cfm?fips=ro

http://www.doingbusiness.org/data/ exploreeconomies/romania/#getting-electricity

http://www.doingbusiness.org/data/ exploreeconomies/romania/#starting-a-business

http://www.doingbusiness http://www.bstdb.org/countries/romania

http://en.wikipedia.org/wiki/ Economy_of_Romania

http://en.wikipedia.org/wiki/ 2007_enlargement_of_the_European_Union

http://www.euraxess.gov.ro/ strategy_EN.pdf

http://www.romania-export.com/ http://www.eurodatamanagement.ro/

article_details.php?link=2%7C2%7C45 http://europa.eu/youreurope/business/

start-grow/start-ups/index_en.htm#romania_

http://www.gpec.ro/blog/romanian-e- commerce-market-reached-eur-600-million-in-2013

http://data.worldbank.org/indicator/ FR.INR.LEND

http://www.ipe.ro/rjef/rjef2_09/ rjef2_09_10.pdf

http://www.tradingeconomics.com/ romania/labor-force-total-wb-data.html

http://link.springer.com/article/ 10.1007%2Fs00181-009-0256-z#page-1

http://en.wikipedia.org/wiki/ Active_labour_market_policies.

http://mpra.ub.uni-muenchen.de/20332/1/ MPRA_paper_20332.pdf

http://www.state.gov/j/drl/rls/hrrpt/ humanrightsreport/#wrapper

http://www.oecd.org/daf/competition/ Romania-Competition-Law-Policy-2014-EN.pdf

http://www.bechtel.com/training-in- romania.html

http://www.patrir.ro/ http://www.studyinginromania.com/

education-romania.html http://www.mae.ro/en/node/2176 http://epp.eurostat.ec.europa.eu/

statistics_explained/index.php/Educational_expenditure_statistics

http://www.expatarrivals.com/romania/ education-and-schools-in-romania

http://www.vice.com http://romania.usembassy.gov/acs/

health4.html http://en.wikipedia.org/wiki/

Telephone_numbers_in_Romania http://business-review.eu www.havocscope.com http://www.weforum.org

APPENDIX