Structural changes of Romanian economy

• Author: Duguleana C.
• Pages: 345-354

Bulletin of the Transilvania University of Braşov

Series V: Economic Sciences • Vol. 8 (57) No. 2 - 2015

Structural changes of Romanian economy

Constantin DUGULEAN1

Abstract: Economic activity in Romania has undergone significant changes over the last 20

years. Some of these changes can be classified as structural changes. Thus, in the national

economy, the share of some fields has increased significantly, and the weights of others were

significantly reduced. A shift has been in employment, with significant effects on revenue and

productivity. A structural change was also within the branches, to sub-branches with a higher

technological level. Other changes are qualitative, in order to improve the technical level of

production. Qualitative changes are reflected mainly by the significant increase in labor

productivity. The paper investigated both qualitative and structural changes. The aim is to

highlight trends in economic activity in Romania. This can be useful in establishing objectives of

employment and social policies, to accelerate the pace of development and to prevent imbalances.

Key-words: productivity, economic growth, technical progress, gross value added

1. Introduction

The objective of this paper is to provide a fresh perspective on the economic growth

of Romania after 1995. Economic growth was accompanied, on the one hand, by a

significant increase of the capital stock, and on the other hand, by the reduction of

employment. The cumulative effect of these changes was reflected in labor

productivity growth. Increasing productivity is an essential indicator of production

processes modernization. Economic growth which relies entirely on expanding the

capital factors contribution is an unsustainable growth.

Measuring the contribution of labor productivity growth to real GDP growth

has its origins in the work of Jan Tinbergen (1942, 1-8) and Robert Solow (1956,

65-94). They were the first who have proposed separate recording of factors

contribution and productivity to economic growth. In particular neoclassical growth

theory formulated by Robert Solow, defining stable growth path, it was a

sophisticated clarification of the role of productivity growth in the economic growth

process.

The concept of total factors productivity (MFP), as a measure of total

productivity was introduced by George Stigler (1974) and became an important

1 Transilvania University of Brasov, cduguleana@unitbv.ro