Romanian–Russian Journal of Scientific Research in Economics

BUCHAREST UNIVERSITY OF ECONOMIC STUDIES
SAINT-PETERSBURG STATE UNIVERSITY OF ECONOMICS
Romanian–Russian
Journal of Scientific Research
in Economics
Editura ASE
Bucureşti
2015
~1~
“Romanian-Russian Journal of Scientific Research
in Economics“, Volume 1, Issue 1/2015, Copyright 2015
To be cited: “Romanian - Russian Journal of Scientific Research in Economics“,
Volume 1,
Issue 1/2015
PUBLISHERS:
Faculty of Theoretical and Applied Economics, Bucharest University of
Economic Studies
www.ase.ro, economie.ase.ro
IN PARTNERSHIP WITH:
Russian Language and Culture Centre – Russkiy Mir
Address:
Piata Romana nr. 6, Sector 1,
Bucharest010374, Romania
Tel. +4 021 319.19.00; +4 021 319.19.01 int 132
Fax: +4 021 319.18.99 E‐mail: rectorat@ase.ro, international.ase.ro
Editura ASE
All rights reserved
The publishers are not responsible for the content of the scientific papers and opinions
published in the Volume. They represent the authors’ point of view.
EDITORIAL BOARD
Editor in Chief: Associate Prof. Ph.D.Grigore I. Piroșcă
Bucharest University of Economic Studies, Bucharest, Romania Prof. Ph.D. Nicolae Istudor Prof. Ph.D. Angela Rogojanu Prof. Ph.D. Alexandru Tașnadi Associate Prof. Ph.D. Florina Mohanu Associate Prof. Ph.D. Liana Badea Associate Prof. Ph.D. George L. Șerban‐Oprescu Lecturer. Ph.D. Ramona I. Dieaconescu Saint‐Petersburg State University of Economics, Saint‐Petersburg, Russia Prof. Ph.D. Dmitry V. Vasilenko Prof. Ph.D. Elena F. Tarasenko Associate Prof. Ph.D. Sofia I. Rekord
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Dear readers!
Current publication is one of the substantial results of the cooperation
between Saint-Petersburg State University of Economics (UNECON) and the
Bucharest University of Economic Studies: selection of articles of master students is
devoted to various aspects of current Russian-Romanian economic relationships and
further development of socio-economic research in our countries. Understanding of
the present state of interrelations between Russia and Romania, is of vital importance
for young students' generation in this very moment, while economic cooperation lies
within the "Procrustean bed" of the EU-Russian sanction - counter-measure
relationships, and there is a threat to turn to this negative "path dependence" on
"lose-lose" strategies. Nevertheless, students research shows that there is sufficient
potential of Russian-Romanian business projects on the latent stage and undiscovered
fields of scientific collaboration, taking into account the history of economic thought
in both countries.
Articles of the 1st-year students of the UNECON Master program
"International Economy" cover various aspects of current and potential RussianRomanian economic relations, including energy issues, development of agricultural
business, recreational services, and other potential fields. Attention is also paid to the
role of China as a growing trade partner for both countries.
Scientific projects on the students level will always be prioritized, laying in
the heart of inter-university cooperation, providing fresh, non-trivial views on current
gaps and potentials of economic cooperation between Russia and Romania.
Hope that current publication will become a springboard for joint scientific
projects of students, post-graduate researchers and distinguished scientists of both
partner universities.
Sofia Rekord
Dr. Econ. Sc., Associate Professor,
Head of the Chair of World Economy & International Economic Relations,
Saint-Petersburg State University of Economics
~3~
Dear readers and authors!
This scientific journal is structured with an eye toward its economic policies
potential, being also a very important vector of academic Russian-Romanian
cooperation in the field of economic studies; even it is mainly dedicated to master
students’ publication. We consider the articles published in this collection as a
common and long time expected result of a excellent relation between two academic
worlds, already interrelated in the past and suitable for further development in the
future. Saint-Petersburg State University of Economics and Bucharest Academy of
Economic Studies are probably among the most important economic universities from
Russian Federation and from Romania, therefore the authors and the scientific board
should have felt to be under the huge pressure of underpinning their enormous
prestige. Nevertheless, the articles from the very first issue have just proved that
friendship, enthusiasm, dedication, good will, openness and hard work are sometimes
strong enough to accomplish great achievements.
Aside the scientific coordination of the articles by academic staff from both
universities, this journal was forged by dedicated master students who sacrificed their
spare time, holidays, and study or rest periods of time, students who let go their
current and usual professional activities in favor to write these articles only to
sustain the academic cooperation between two great friend universities. Thank you
all for your commitment!
At a more fundamental level, the journal represents a challenge to rethink
our patterns of knowledge and conceptual frameworks. I hope too that this
publication will be seen from the perspective of its brilliant future evolution.
Grigore Ioan Piroşcă
Associate Professor, Ph. D.,
Dean of Faculty of Theoretical and Applied Economics,
Bucharest Academy of Economic Studies
~4~
Bairamova Elmira Ramisovna Байрамова Эльмира Рамисовна
St. Petersburg State University of Economics
Санкт-Петербургский Государственный Экономический Университет
Master program “International Economy”
Программа «Международная экономика»
e-mail: emma14@mail.ru
RUSSIAN-ROMANIAN RELATIONS IN ENERGY SECTOR
РОССИЙСКО-РУМЫНСКИЕ ОТНОШЕНИЯ В СФЕРЕ ЭНЕРГЕТИКИ
JEL: F14, Q48
Аннотация: В статье рассмотрены отношения между Россией и
Румынией в газовой и нефтяной промышленности, а также проанализировано
дальнейшее развитие политических и экономических аспектов взаимодействия
двух государств. Российско-румынские отношения можно охарактеризовать
достаточно напряженными, однако развивающимися в некоторых отраслях,
таких как энергетика и металлургия. Постепенная нормализация двусторонних
отношений оказывается для обеих стран сложным процессом, прежде всего, изза геополитических факторов, которые также рассмотрены в рамках данной
статьи.
Abstract: The Romanian–Russian relationships can be characterized as
functioning according to a strained dynamic, which occasionally escalates to outright
tension. This dynamic is the product of deep historical and geopolitical factors. The
gradual normalization of their bilateral relationship is proving a slow and difficult
process due to mutually hostile perceptions and seeming politically incompatible
national interests. In the article relations between Russia and Romania in gas and oil
industry are described as a determinative factor of the development of the national
economy of both countries.
Ключевые слова: российско-румынские отношения, энергетика, газовый
вопрос между Россией и странами Европейского Союза, Южный поток,
энергетика Румынии, товарооборот между Россией и Румынией.
Key words: Russian-Romanian relations, energy, the gas issue between
Russia and the countries of the European Union, South stream, energy of Romania,
the trade turnover between Russia and Romania.
Romania and Russia have many common features, including religion, the
origin of the national language, life and culture. Nearly two decades after the Cold
War, the Russian-Romanian relationship continues to be strained, and occasionally
tense. The main problems in relations between the two countries began in XXI
~5~
century because of the persistent interference of some Western powers in Romanian
politics.
Following the 2004 presidential elections in Romania, the winner expresident Traian Basescu launched the thesis that Romania’s foreign policy needed to
be diversified immediately. The entry of Romania into the European Union (EU) in
2007 has created more problems in bilateral relations. Russia was faced with the
necessity of overcoming the limitations of preferences and new barriers in relations
with a member country of the EU.
However, the liberalization of the political climate in bilateral relations
between Russia and Romania after signing in 2003 the agreement, which was aimed
at building friendly relations and cooperation and was the impulse for the expansion
of business contacts between countries. In 2005-2007 on the agenda of the
Intergovernmental Commission on Economic and Scientific-Technical Cooperation
the issues of improving relations between the two countries were also discussed. On
the IX meeting of the Commission, particular attention was paid to the problems of
participation of the Russian companies in the privatization process of the Romanian
enterprises, opportunities, and business structures on mutual markets, creating a
favorable customs regime in terms of membership of Romania in the EU [2, p. 4].
In addition, the current trade turnover between the two countries is stable but
the structure of Russian exports was monotonous and based on raw materials. As far
as imports of Romanian made goods are concerned they are significantly less than
Russian exports. Now Russia occupies the 20th place in the Romanian exports with a
specific gravity of 0.6%. According to the Romanian customs statistics, in 2014 the
volume of foreign trade of Russian-Romanian turnover amounted 4998,3 million
dollars, increased by 0.2%, Russian exports decreased by 3.1% and imports increased
by 5.96% compared with the same period in 2013. While Russia's positive balance of
mutual trade decreased by 15.9% and amounted to 1099,3 million dollars (table 1,
fig.1).
Table 1: Structure of Russian trade with Romania in 2000 and 2013 (%)
Product group
Food and agricultural raw materials
Fuel and mineral raw materials
Chemical products, rubber
Textiles, textile products, leather, shoes
Metals and metal products
Machinery, equipment, vehicles
Russian Export
Russian Import
2000
0,1
89,0
3,0
0,1
6,5
0,5
2000
1,8
3,1
62,9
1,4
14,7
5,0
2013
1,2
76,9
12,8
0,1
1,6
3,5
2013
2,5
0,4
19,9
8,0
5,6
53,2
Source: Data of Customs Statistics of foreign trade of the Russian Federation for 2004 and 2013.
~6~
Souurce: made by the
t author usin
ng the data of Federal
F
Custom
ms Service, Russsia.
Figgure 1: Russian
n exports to Romania, 2006--2014 (in milliion USD)
One of the biggestt parts of coooperation between
b
Russia and Rom
mania is
colllaboration inn energy seector. Romaania has siggnificant oill and gas reserves,
r
subbstantial coall deposits an
nd it has suubstantial hydroelectric power
p
installled. The
Rom
manian goveernment con
nsiders nucleear energy a priority of the nationall energy
straategy. Howevver, Romaniia imports oil and gas from
fr
Russia and other coountries.
Russsia, in returrn, has the laargest oil andd gas reservees and now is the largesst energy
suppplier in the world.
w
45
40
40
0
39
39
40
4
40
40
35
35
35
36
35
31
Mtoe
30
25
20
15
10
5
0
200
03 2004 2005 2006 20
007 2008 2009 2010 2011
2
2012 2013
Souurce: made byy the author using
u
the dataa from World Energy Conssumption Report 2013,
Eneerdata
F
Figure
2: Tota
al Energy Con
nsumption in Romania,
R
20033-2013
~7~
The current industrial potential and the structure of production, refining and
transportation of oil and products generally satisfy Russia’s global interests in the
world energy markets and its domestic demand. Russia exports are primarily low
quality commercial oil products with a minimum added value. According to
Romanian statistics, the supply of oil and oil products, gas and coal amounted to
85.5% of Russian exports to Romania, the value of which is largely determined by the
price factor. Compared with pre-crisis 2008, in 2013 Russian oil deliveries to
Romania decreased from 2.1 million tons to 1.2 million tons, natural gas – from 3.1
billion cubic meters to 2.5 billion.
The decline of the role of energy in Russian exports to Romania was
accompanied by some changes in the pattern of trade, including through a more stable
development of trade in such industries as chemistry, difficulties in the development
and trading experienced metallurgy. In 2013, Russia accounted for less than 40% of
imported oil country (in 2010 – 60%). Russia is almost the only supplier of natural
gas to Romania. Total imports 22.7% of the consumption of energy resources of the
country (in 2011: 25%). [7, p. 2]
The estimated national consumption of natural gas in Romania dropped by
over 50 percent during last 30 years, while imports halved (figure 1). Romanian
companies have imported 1 billion cubic meters of natural gas from Russia in 2014.
In previous years the annual average stood at up to 6 billion cubic meters.
Consequently, Romania’s bill has dropped from USD 2.5 – 3 billion in 2006 and
2007 to half a billion dollars in 2014 [1, p.254].
Source: International Energy Statistics, February 2015
Figure 3: Dry Natural Gas Consumption in Romania (in billion cubic feet), 1980-2013
~8~
In the period before the crisis, the level of natural gas imports from Russia
reached 6 billion cubic meters, at an annual consumption of 18 billion cubic meters.
The main reason for the drop in consumption and imports was the readjustment of the
industrial sector, especially of the chemical and petrochemical industries, which was
the biggest consumer of natural gas in Romania, surpassing household consumers.
The desire to reduce monopolistic position of Russia in the Romanian gas
imports for a long time defined the country's policy on European energy - energy
market as a solution to the problem of diversification of gas supplies to Romania were
associated with the European project "Nabucco". The development of a new gas
deposit in the Black Sea with estimated reserves of up to 84 billion cubic meters
began in 2012 on the basis of the agreement with the American company Exxon
Mobil. New developments aimed at an expansion of the participation of Romania in
the European energy market that affects the capabilities of its relations with Russia in
the energy policy [1, p.238].
The relations of countries in the gas industry develop normally, but there may
be problems with the next signature of the contracts because of the new European
regulation, eliminating the concept of "transit" in the calculation of tariffs. This
technical mishap increases political pressure, designed the fact that the energy policy
of the European community will not allow Russia's influence on geopolitics with
dominance in the energy market.
Liberalization of the gas market in Romania to 2018, which is carried out
under pressure from the European Commission and the International Monetary Fund,
the organization of energy trading, increasing the level of rents on concessions, the
growth of tariffs and taxes aimed at empowering presence on the European energy
market. The needs of the country in increasing gas imports objectively grow,
affecting the prospects of relations with Russia and its position as a source of both providing gas. The main player in the Romanian gas market in the export policy is
“ОМ V. Petrom”.
One of the biggest issues is the problem of gas transportation and the
participation of Romania in the South Stream project. The dialogue on this topic
started in 2009 because of the expiration of the 1996 Agreement on the expansion of
gas pipeline and gas supplies to Romania.
During the negotiations on cooperation, including on accession Romanian
company “Transgaz” to the South Stream project, agreements were reached and
implemented by the Romanian government, the conditions of preparation of technical
documentation necessary for construction and drilling activities in the Black sea.
Participation in the project aroused great interest in Romania. Therefore, the decision
of Gazprom, which gave an expression of preference Bulgarian variant, caused a
marked disappointment of the Romanian engineers. However, the issue of transit
opportunities of Romania remained open.
According to the Romanian press, "Romania is the ideal direction for
Gazprom, as it shortens the route to Hungary, and has capacity for gas storage, which
are not available in Bulgaria, Serbia, Hungary".
~9~
Positive assessment of the Russian project has a growing impact on the
position of Romania in the issues of the energy policy. According to Romania, the
project is expensive, but worth it, and its rapid implementation is necessary,
moreover, that the manufacturer is seeking to avoid losses, associated with the
establishment of the energy strategy.
However, Romania continues to be a supporter of reducing Russian influence
in the European energy market (the Russian Federation brings 34% of gas imports
and 33% of oil imports to Europe), despite the fact that the country has the lowest
level of energy dependence in the EU (2%) [1, p. 275].
The main motive remains the desire to negotiate lower prices for natural gas,
including through negotiations of exploitation of natural gas storage facilities or gas
supplies in the joint construction of Thermal Power Plant. Romania is a supporter of
the transition to the prices of stock trading on the gas.
The most important condition for solving problems of cooperation in the
energy sector was the remake of the 1996 agreement between Russia and Romania
about importing gas, the agreement on the creation of gas storage facilities in
Romania and the possibilities of accession to South Stream after discussion at the
meeting of the Intergovernmental Commission in 2011. The change in the concept of
gas supplies to Romania has influenced the approaches to solving the problem. The
new agreement eliminated the clause about the impossibility of resale of gas to third
countries without the permission of Gazprom. Moreover, the agreement recognizes
the right of re-export of gas, increases gas supplies from Russia to Romania until
2020 up to 10 billion cubic meters. At the same time, the company "Romgaz" has
completed negotiations with Gazprom on permission to the construction on the
territory of Romania 10 gas storage with the volume to 5-6 billion cubic meters of
gas. However, question on setting up a joint company for this purpose remains
unresolved [4].
The new conditions allow Romania to expand participation in the
development of the European gas system, engaged in a process of unification by
building a reverse jumper by pipeline from neighboring countries: Hungary, Bulgaria,
Serbia and Moldova. An important outcome was the possibility of establishing direct
contractual relationships in the supply of natural gas.
There is also the other issue – the involvement of Russia in the creation of
energy capacity. The Ministry of Economy of Romania presented the proposals of the
investment project "greenfield" for the construction of HPPs on the Romanian rivers
such as Mures and Arges, cooperation in the construction of electric power plant
Ttarnica-Lapustesti, modernization of CHP Hunedoara, underground mining of
National Coal Company, in the exploration of new oil deposit. Easing the pressure on
Russian business in Romania provides Gazprom an expansion of presence on the
Romanian market. Through its controlled company "NIS" Gazprom acquired the right
to open 50 petrol stations and create its own network of implementation of
petrochemicals. The development of a gas network in the Balkans is a priority
~ 10 ~
strategy of the company, and Romanian part of it becomes an important step for its
implementation.
The group "Gazprom Neft" has also acquired the shares of the Romanian
society of “Marine Bunker Balcan" JSC which supports marine transportation with
fuel. The fuel supply is carried out in Constanta and other ports with Russian and
Serbian oil preventing plants.
In the field of oil refining the company "Lukoil – Obergas owned by Lukoil is
involved. According to the concession agreement with the National Agency of
Mineral Resources of Romania, the company acquired the right to exploit the oil
fields "Rhapsody" and "Trident" in the Black Sea in partnership with the American
company “Vanco International”. Lukoil has implemented the renovation of acquired
ownership “Petrotel” and provided fuel production according to European standards
for Romania and other countries of EU.
To sum up, active development of Russian-Romanian relations recent years
indicates a growing interest of both countries in the development of reciprocal
markets. The desire of the business community to increase communication and the
tendency of the political leadership to weaken the negative influence of political
contradictions created the basis for increased understanding in the field of
cooperation. However, at the present stage, the future development of bilateral
relations of the countries is faced with problems caused by the Ukrainian events.
Romanian politician, involved in the system of Euro-atlanticism, rejected the
heightened geopolitical role of Russia and follows in the Wake of estimates and
interests of Western policy.
As emphasized by the Romanian ex-president Traian Basescu, Romania
argues that the dialogue with the Russian Federation is one of method to coordinate
the EU's interests with the interests of Moscow. Romania is interested in political and
diplomatic contacts with Russia and Ukraine, Georgia, Azerbaijan, and Central Asia.
At the same time, the process of tightening the position of the Romanian
politicians in the assessment of Russia's actions in the countries of the former Soviet
Union – Abkhazia, South Ossetia, Ukraine. In addition, the definition of accession of
Crimea to Russia may have impact on the issues with Transnistria, Moldova and
southern Ukraine.
In a nutshell, Romanian–Russian relations continue to be hampered by the
perceptions on both sides that they have incompatible political values, as well as by a
specific set of diverging strategic interests. As a consequence, Bucharest and Moscow
continue to talk past each other in strategic-political affairs. Despite the fact that
Russia remains one of Romania’s ten largest investors and economic partners, and
that it is the most heavily-armed and aggressive great power in Romania’s immediate
vicinity, Romania’s focus on democratic values and Russia’s geopolitical pragmatism
and authoritarian government are not a good match.
Romania is using less natural gas now than at any time in the past 10 years,
and it is looking to expand domestic exports, reducing its reliance on gas supplied by
~ 11 ~
Russian giant Gazprom, according to Interfax Energy. Romania cut its gas imports by
61 percent in 2014, according to preliminary data prepared by the National Institute
of Statistics and BP.
The growing tension in the political relations inevitably determined affects
economic relations, especially because Romania clearly holds the line to reduce the
role of Russia in its energy sector. Nevertheless, Russia and Romania have all the
means to increase the quality of their bilateral relations.
References
1.
2.
3.
4.
5.
6.
7.
The basic tendencies in mutual relations between Russia and the Central Eastern European
countries / Ed. by I.I. Orlik. M.: Institute of Economy, Russian Academy of Sciences, 2015. –
426 c.
The Romanian-Russian bilateralrelationshipin the Still Talking Past Each Other: Romanian–
Russian Relations / Simona R. Soare.: Russian analytical digest - No. 125, 25 March 2013
p. 40
Romania’s euroatlantic Integration / drd. Simona Soare. [Online Resource] URL:
http://www.academia.edu/855932/The_Romanian-Russian_Bilateral
Relations_in_the_aftermath_of_Romanias_Euroatlantic_Integration
"Memorandumul Romgaz-Gazprom a fost prelungit pana in mai 2011" (in English). Wall
Street Journal. 2010. Retrieved 2010-09-13.
International Energy Statistics 2014 [Online Resource] URL: https://yearbook.enerdata.ru
Federal Customs Service, Russia. [Online Resource] URL:
http://www.tradingeconomics.com/russia/exports-to-romania
Hot News – Romanian Business Report. 5 march 2014. [Online Resource] URL:
http://english.hotnews.ro p.2-5
~ 12 ~
Berezovskaya Anastasiya Arturovna
Березовская Анастасия Артуровна
St. Petersburg State University of Economics
Санкт-Петербургский государственный экономический университет
Master program “International economy”
Программа «Международная экономика»
e-mail: aaberezovska@gmail.com
ПЕРСПЕКТИВЫ ВЫХОДА РОССИИ НА МУЗЫКАЛЬНЫЙ РЫНОК
РУМЫНИИ
PROSPECTS OF RUSSIA'S ENTERING THE MUSIC MARKET OF ROMANIA
JEL: L82
Abstract: This article discusses the problems and Russia prospects of
entering the music market of Romania, as well as analysis of basic trends and
dynamics changes in the structure of the music market in these countries. Through the
study it was proved that in the globalization era, modern Russia has all chances, using
creative resources and timely innovation, to achieve a high level of development of
the music industry of the country, and also to enter the Romanian market, which is
quite attractive because of the availability of vacant niches in business, the rapid
development of the music industry, the opportunity to work with all of Europe with
minimal cost and simple procedure of obtaining a visa.
Аннотация: В данной статье рассматриваются проблемы и перспективы
выхода России на музыкальный рынок Румынии, а также проводится анализ
основных трендов и динамики изменения структуры музыкального рынка
данных стран. Путем исследования доказано, что в эпоху глобализации у
современной России есть все шансы для того, чтобы при помощи креативных
ресурсов и своевременного внедрения инноваций достичь высокого уровня
развития музыкальной индустрии страны, а также выйти на рынок Румынии,
который является довольно привлекательным из-за наличия свободных ниш в
бизнесе, быстрого развития музыкальной индустрии, возможности работать со
всей Европой с минимальными затратами и простой процедуры получения
визы.
Key words: The music industry, the trends of the music business, economic
relations, Russia and Romania, Europe, globalization.
Ключевые слова: Музыкальная индустрия, тенденции музыкального
бизнеса, экономические отношения, Россия и Румыния, Европа, глобализация.
Currently there is a reassessment of values and priorities of doing business in
Russia and abroad, as well as changes in the structure of the world market when in
the total share of trade in the services sector occupies a large part of that trade.
The emergence and development of the music industry are a direct result of
reaching a certain level of income, when, in addition to meeting basic needs, there is a
need for additional services, and assets are available for these services to use.
~ 13 ~
With the development of society, the growth of the productive forces of the
observed increase in employment in the service sector, the growth of technical
equipment of labor, the introduction of increasingly sophisticated technology.
Currently the role of musical services, as one of the most important sectors of the
economy, is very high and relevant. Primarily, this is due to the fact that the economic
environment becomes more volatile and entertainment, as a social service is preferred
because of the desire to be healthier and to relax more actively. You can also say that
the role of music services in relation to goods wins due to speed delivery of services,
which increases every year with the help of technological progress.
We see that all changes in the company are a reflection of what is happening
outside – at the macroeconomic level. It is known that the modern business
environment is a lightning-fast change. In turn, these changes are created by the
following factors:
1. milestones global competition;
2. development of innovative technologies;
3. increasing demands for customer service.
In the current unstable economic situation in the world, it is necessary to
search for new ways of marketing. Russia is a dynamically developing country, which
has all chances to win the world music market. Given that, in our view, an attractive
investment is cooperation in the field of music with the European Union, we believe
it is logical to start with the development of the Romanian market. The advantages of
the geographical position of Romania, the presence of large navigable rivers and
ports, as well as the corresponding transport arteries (channel Danube - Black sea,
European highways, extensive train service) provide many opportunities of service
flows between Russia and Romania.
You can also highlight following advantages of entering the music market of
Romania: the presence of vacant niches in the business, developing the music
industry, the work opportunity with Europe with minimal cost, simple procedure of
obtaining a visa.
Given that in Romania in recent years there has been a tendency to increase
the performance on the music market and, according to American analysts, Russia has
a serious intellectual and technical potential, we believe in a logical expansion into
the music market of Romania, which determines the relevance of the study.
The aim of this work is to identify problems and prospects of Russia entering
the music market of Romania, as one of the most dynamic and unusual structure the
development of the entertainment industry at the present stage of globalization of
world trade.
It is known that currently the music market is rapidly evolving and changing.
Now significantly reduced the volume of sales and production of music on physical
media, and in turn grow sales of music content to mobile and Internet networks, as
well as changing regional structure – increases the rating of Russia in the global
music business. This is confirmed in his works, Norman lebrecht, who also claims
that the era of classical music ends, William Krasyliv and Jonathan Feinstein, who
say that the present century and the next two are the peak of the music industry,
Mario De Angelo, who investigated the effect of globalization on the world's music
~ 14 ~
industry and prospects for the control of musical institutions in Europe, Peter Smuk
and Ulrich Dolata that justified the need for innovation and creative component in the
music business 7, 8, 10, 11, 13, 14.
World music business is a part of the economy and public life, which brings
together companies and individuals, earning money by creating and selling music.
IFPI interprets the music industry, as the production and distribution of sound
recordings 3.
In the Russian music business involved a large number of people and
organizations: the musicians creating and performing pieces of music; the companies
and professionals involved in the recording and sale of music (including producers,
recording studios, sound engineers, record labels, music stores and collective
organization the management of rights); the organizers of the tour (booking
managers, promoters, concert venues); television and radio network, working in
music format (music television, music radio station); music journalists and critics;
manufacturers of musical instruments and many other 1, p. 13-14.
Main sectors of the music industry include concert activity (poster concerts
and private paid events), physical media sales, digital sales (Internet and mobile),
recording activities, production and management.
In addition to traditional industries, the music business is a fundamental or
affects other manufacturing industry: the production of mp3 players, movies, media,
trade, transport, and even politics and religion.
Studying dynamics of the structure of the music business in Romania (20112013), we see that in General there is a tendency to increase the music market in
2013. For Russia in 2013, a decrease from the previous year offset by an increase in
concert activity (table. 1) 15.
Table 1. Dynamics of the structure of the music industry in Russia and Romania,
2011-2013 million
Romania
Russia
The sector of the market
2011
2012
2013
2011
2012 2013
Poster concerts with paid admission
200
230
235
800
1000 1100
Closed entertainment (only costs associated
with the concert part)
330
335
358
600
800
1000
Physical media sales legal
100
115
127
400
300
185
Sales of physical media pirate
125
133
140
510
300
111
9
12
18
38
75
78
Revenues of radio stations
112
116
128
517
366
407
Other income copyright holders associated
with music
158
169
172
80
95
120
Total
1034
1110
1178
2945
Digital sales (Internet and mobile phones)
~ 15 ~
2936 3101
Let’s annalyze the dep
pendence of the level of GDP
G
and devvelopment off the
muusic market inn Romania fo
or 2003 – 20113 (Fig. 1.) 66.
Figure 1. The dependence of the level of GDP
G
and total revenues of th
he music indusstry in
Russia,, 2008 – 2013
So based on the chaart data, we can
c concludee that, despitte the crisis, in 2011,
wheen GDP felll by almost 2 %, the peerformance of
o the musicc market hass clearly
impproved with 911 million. in 1034 milllion in 2011. This suggests that the economy
e
is oon the "soul"" was not an
nd moreover, it can be assumed
a
thatt the rapid growth is
parrtly linked to the develop
pment of the music markeet in Romannia – one of the
t main
inddicator of the social level. And, as a coonsequence, improve
i
the quality
q
of life
fe.
Consideer the supply and demandd in the musicc market of Romania
R
(Figg. 2.).
Figure 2. Su
upply and deemand in thee music markket of Roman
nia, in the peeriod
2003 – 2014,
2
billion.
d was the groowth of dem
mand for music products. In 2003,
We see that the rapid
the demand excceeded the su
upply, which, in the first place,
p
because of small nuumber of
muusical productts. The samee situation is observed annd in 2014 22. We can conclude
c
thatt music Rom
manian mark
ket is a seller market – when demaand exceeds supply,
resuulting in com
mmodity pricees may rise.
Pricing on this music market takes into accouunt changes in
i market connditions,
nam
mely the chaange of stylees and the method
m
of delivery
d
of music
m
producct to the
~ 16 ~
connsumer – from
m digital to Internet
I
saless. Also greatlly influencedd by the imagge of the
muusic group andd the recording quality.
Althouggh the future of the globbal music inddustry is now
w entirely asssociated
witth digital nettworks and teechnologicall solutions off the last tim
me has almosst erased
the line betweeen Internet an
nd mobile coommunicatioon. We see thhat sales of physical
meddia in Romaania are nott reduced, it talks aboutt the econom
mic attractiveeness of
worrking in the music
m
market of the counntry (Fig. 3) 6.
Figure 3. The
T average number of CDs
C purchased in the yeaar in Russia and
Romaania, PCs.
mber of purchhased discs is not reducedd, which
We see that in Romaania the num
is a good trend. This suggestts that the muusic on physiical media is still relevantt.
y
on
Backgroound: In 2014 in Englaand each loocal resident buys per year,
aveerage, 7 CDs,, USA – 4, Germany
G
and Japan – 3, Frrance – 2, Chhina – 1 12.
Romanian music is presented as
a a folk meelodies, and creations off famous
com
mposers. Am
mong the classsical figures it can be noted
n
Georgge Enescu annd Iancu
Dum
mitrescu.
m
perform
mers. The
Romanian contemporary music is also repreesented by many
most famous caan be called Michel Cretuu – founder of the groupp Enigma. Roomanian
o the band O-Zone.
O
At the
t time theyy were very popular
p
in Russia.
R
In
sonngs and hits of
Eurrope known Romanian
R
so
ongs Akcent.. Another fam
mous outsidee of the counntry team
is M
Morandi. Poppular Roman
nian songs todday represennted by such artists as Innna, Radu
Sirbbu and otherss.
We see that in 2014 Romania haave the highesst ratio of follk and pop music.
m
At
the time, as in Russia,
R
the laargest markett share have academic claassical and rock they
m than halff of the market and won alll the other geenres (Fig. 4..) 6, 5.
tookk a total of more
Based on
o data from the graph, we
w can concllude that the similarity iss only in
the style of "poop music", su
uggesting thee possibility of entering the music market
m
of
mania with thhis direction..
Rom
Some off the most ob
bvious trendss that exist at the present stage
s
of deveelopment
of tthe music inddustry:
- the era of physsical media is completted, the volume of retail and
m
segm
ment ceases to be a
distriibution are reduced significantly, market
prom
mising and atttractive invesstment;
- grow
w sales of music content too mobile andd Internet netw
works.
~ 17 ~
- concert industry shows
s
a slighht trend upwaard;
- ratingg of Russia in the global music busineess is improvving, which is
i a good
trendd.
Fiigure 4. Genree comparison of
o Russia and Romania for 2014,
2
%
In Romaania, the situ
uation is som
mewhat differrent physicall media still continue
c
to bbe sold.
It is alsoo known thatt the share off the nationaal music foreiign products exceeds
thatt says about the conductt of governm
ment protectionist policiees, as well ass certain
muusical preferennces, making
g it difficult to
t enter the market
m
of Rom
mania (Fig. 5)
5 4, 6.
F
Figure 5. The proportion
p
of national
n
and foreign
f
music products
p
on th
he Romanian market,
m
20055 – 2013, %
Judging by the dataa, we see thaat the share of
o foreign prroducts in thhe music
marrket growingg, which indiicates attractiiveness and development
d
t of this markket. And
alsoo about the potential
p
for Russia to go
g out on thee music markket of Romaania. But
therre is also thee issue of Ru
ussia's enterinng the Romaanian market, which is too support
Rom
mania's NAT
TO that is con
ntrary to the policy of Ruussia.
~ 18 ~
Despite the positive changes and increase Russian place in the global music
market, you can cancel and disadvantages of the system of promotion of the musical
product of the Russian Federation.
The main one is the imperfection of the regulatory framework, namely the
relations in the sphere of ownership of copyright and related rights. Another
significant problem is the lack of the necessary technical equipment recording studios
and the imperfection of the mechanism of promotion of the final product production
companies and music labels.
After the research we can say that the obstacle of Russian entering the music
market of Romania is not only a low level of production, but also distrust of the
country. In light of recent events, we see that the level of influence of the Russian
Federation is becoming lower.
So, after study, we can conclude that the main development of the music
industry, we see Russia:
- improvement of the regulation system of property rights;
- improve the technical level of the recording, including the use of better and
new equipment, and improved education of the staff of the recording areas;
- change techniques to promote music products on the market;
Priority we believe the introduction of innovations, both technical and
intellectual, and faster reaction to changing market conditions.
Based on the fact that in Romania the proportion in the whole structure of the
population – is a part of the young population (under 16 years) is 21, 5% for 2014 6,
9, and know that it is increasing, we believe that the only thing possible at the
moment by Russia's access to the music market Romania is the creation and
organization of children's music festival in Romania. According to the "Junior New
Wave in Artek, which is held annually. Among the guest stars will be local legends
and Russian performers in the ratio 1:2. But the total focus we propose to do for the
contest among children. The child population more receptive to memorization and
reproduction of music. Conclusion: from childhood, we will teach children to Russian
music, and their parents who will be attending this event that the result will lead to
the conquest of a considerable part of the music market in Romania.
References
1.
2.
3.
4.
5.
Evgeny Safronov, Alexander Tikhonov. The music industry of Russia at the turn of the
decades // Russian music Yearbook’13. — Moscow: Intermedia, 2013. — Pp. 13-34.
The entertainment industry in the world economy. Mode of access: Electronic resource //
http://www.webeconomy.ru/index.php?newsid=832&page=cat&type=news.
Official website of IFPI. Mode of access: Electronic resource // http://www.ifpi.org/
Official website of the International Monetary Fund available at: Electronic resource //
http://www.imf.org/external/index.htm.
Official site of Federal state statistics service. Mode of access: Electronic resource //
http://www.gks.ru/.
~ 19 ~
6. The official statistical site of Romania. Mode of access: Electronic resource
//http://www.reportlinker.com/r0792/Romania-industry-reports.html.
7. d'Angelo, Mario: Does globalisation mean ineluctable concentration ? in The Music Industry
in the New Economy, Report of the Asia-Europe Seminar, Lyon, Oct. 25-28, 2001, IEP de
Lyon/Asia-Europe Foundation/Eurical, Editors F. Roche, Marcq B., Colomé D., 2002, pp.
53-54.
8. d'angelo, Mario: Perspectives of the Management of Musical Institutions in Europe, OMF,
Musical Activities and Institutions Sery, ParisIV-Sorbonne University, Ed. Musicales Aug.
Zurfluh, Bourg-la-Reine, 2006.
9. IMF World Economic Outlook Database - Macroeconomic indicators for countries and
country groupings, access Mode: Electronic resource // http://www.imf.org/external/pubs/
ft/weo/2015/01/weodata/index.aspx.
10. Krasilovsky, M. William; Shemel, Sidney; Gross, John M.; Feinstein, Jonathan, This
Business of Music (10th ed.), Billboard Books.
11. Lebrecht, Norman: When the Music Stops: Managers, Maestros and the Corporate Murder of
Classical Music, Simon & Schuster 1996.
12. Richard Smirke, April 14, 2015). "Global Record Business Dips Slightly, U. S. Ticks
Upwards In IFPI's 2015 Report".
13. Tschmuck, Peter: Creativity and Innovation in the Music Industry, Springer, 2006.
14. Ulrich Dolata: The Music Industry and the Internet. A Decade of Disruptive and
Uncontrolled Sectoral Change. Research Contributions to Organizational Sociology and
Innovation Studies. Discussion Paper 2011-02.
15. UNCTAD Handbook of Statistics online Database on trade and investment, available at:
Electronic resource // http://www.unctad.org/Templates/Page.asp?intItemID=1890&lang=1.
~ 20 ~
Bradu Petru-Lucian Bucharest Academy of Economic Studies
Master program “Business Communication”
e-mail: pcbradu@yahoo.ro RELIGIOUS INTERFERENCE IN MULTINATIONAL COMPANIES
JEL: J21, J24, M21, Z120
Abstract: This research is meant to be an investigation, on nowadays,
possible interferences between religion and multinationals activities.
What motivated me to accept to write this article?
Passion for people! – This was the motto of the corporation I worked for 3 and
half years.
They have infused me this desire which suited very well my way of being.
After eight months, I was promoted and soon I found out that this passion for people
gradually was transform into a passion focused on the results, target achievement or
profit maximization.
But led by this passion for people I refocused myself towards a research of
human being, and the handiest way seemed to be a research from the religion
perspective, so I devoted two years of study in this regard. However, due to my
educational pathway, I felt that I can explore interdisciplinary and objectively the
interferences between homo corporations and homo religious.
I can foresee two perspectives of interferences, the first one from the simple
man as a person, and the second one from the corporation or cult point of view. The
first perspective is formed by the fact that in multinational companies are people with
their mixture of cultures, educations or religions. However, the organizational culture
of each company tries to align personal differences with the help of its own values1.
According to Mircea Eliade’s studies2, the man is by nature religious, so he
developed and explained the concept of homo religious3.
A second perspective starts deductively, from the position of the religious
organizations or corporations. Starting with 15th-16th centuries, i.e. the colonial
beginnings, which is considered to be the first historical common period, among
them, it was cooperation but tensions as well. Today, in the context of promoting
human rights and avoiding discrimination, there seems to be an acceptance or
ignorance between them, at least, at the declarative level in the developed countries.
1
2
3
PIROŞCĂ GRIGORE - The Communication and organizational culture course, ASE, 2015. ELIADE MIRCEA, Tratat asupra Istoriei Religiilor (Treaty of History of Religions), Humanitas
Publisher, Bucharest, 2008. ELIADE MIRCEA, Sacrul şi profanul (The sacred and the profane), Humanitas Publisher,
Bucharest, 1995, pg. 6. ~ 21 ~
Based on these assumptions, first the article will start with the presentation of
the most important and diversified religions that developed throughout time. It will
continue with details about the historical context in which the corporations appeared.
And the last part will submit situations that will highlight the religious interferences
within the multinational companies development of the national economy of both
countries.
Key words: multinational company, organizational culture, religious interference, corporations.
Introduction
The topics related to religion are regarded as delicate to dealing with them,
but it can be analysed in an objective manner when the research tries to see the socialeconomical causes and effects. A research cannot neglect this human reality, as it
exists in every country in the world influencing it more or less.
Along humanity evolution, religions throughout history, had a considerable
impact in the organization of various human societies. Basically, we can say that
religious manifestation appeared in the same time with man, as archaeological
findings about the first human traces are related to its reflexive positioning, facing the
nature and even of his own being.
Mircea Eliade’s book A History of Religious Ideas4, enjoys a world reputation
of a scientific research on religious phenomena manifested and developed over
time. Thus, in The Sacred and The Profane: The Nature of Religion he develops the
concept of homo religiosus5.
Moving towards the economic sphere we can state that the populations well
provided economically, more easily are likely to develop their own religions and to
expand the areas of cultural and spiritual influences in this respect. The great
colonization period was the boom birth of multinationals, because the traders were
from powerful countries and have found new opportunities for expansion and profit.
One must to neglect the fact that, the natives from the new conquered territories had
their own religion and culture with which they interacted with corporations. But these
conquerors were people with European, Oriental, especially Asian religions, having
their own spiritual leaders.
This historical situation clearly shows the interference between the different
religions found or brought over and the corporate.
Today there is a trend when the companies call speakers or spiritual
motivation leaders who develop the spiritual side of employees and there are not few
the cases when they turn to examples and ideas from different religions, traditional
spiritual or current leaders.
4
5
Idem. ELIADE MIRCEA, The sacred and the profane, op. cit. pg. 6. ~ 22 ~
This raises a further key situation, such as a CEO’s religion6. Can this
situation influence the activity of a multinational company positively or negatively?
For example, we can ask, without being biased, whether it is a link between global
success of Coca Cola, particularly in the Middle East in recent decade, the American
company whose people are mostly of Western cultures and religions and the current
CEO since 2009, Muhtar Kent, who is Muslim? Making a survey on the religious
tensions territories, we can say that the West is more tolerant with religious and it
respects the human rights, on freedom of religious adherence. Which for some
countries in Asia and Africa is a Western dream.
1. Religions - presentation and classification
Religion according to the Explanatory Dictionary of Romanian language,
2009 version, is a whole of ideas, feelings and actions shared by a group of people
and offering its members an object of veneration, a code of conduct, a frame of
reference in relation to intra group and the universe, religion or faith.
Etymologically derived from the Latin word religio, -onis. This provenance
has two interpretations: first re-legio - interpreted by Cicero as a re-reading, or
repetition of the sacred texts, and second, re-ligio - tie, reconnect, and restore the link
with divinity. These interpretations have been approached since the fourth century
BC by St. Augustine according to Lactantius7.
We can divide religions into two large categories. The first category in which
God, Allah or other God meets the man, and it is revealed by some prophets, chosen
people, shapes, divine appearances, as in Greek mythology, Judaism, Islam, and
Christianity by becoming even Man God; and the second category is the religion in
which man seeks THE divine, seeks to explain both the environment and themselves
through rational researches philosophy, certain thinkers, founders, masters, sages
a.s.o. especially in Indian, Central-Eastern, Asian and African cultures.
Thus, according to these two large categories we have the following groups
and religious way of manifestation: Abraham religions8, other Asian religions and the
rest of the world religions.
1.1 Abrahamic religions:
Among them the most widespread are the Christianity and the Islam, which
are the main religions in the world. But these two along with Judaism, the first
6
7
8
Chief Executive Officer: Director or general manager of global or regional multinational
company or a successful business nationally. Lactantius is the first non-Christian historian who has written about the phenomenon of
Christian Roman Empire in the centuries II-IV according to the book LACTANŢIU, Despre
moartea persecutorilor (About persecutors death), bilingual ed., tran. CRISTIAN BEJAN,
explanatory notes DRAGOŞ MÎRŞANU, Polirom Publisher, Iaşi, 2011. This name comes from the patriarch Abraham - Latin version or Avraham Greek version. I
preferred the first option, because it is used in most languages, and the English text uses this
word. ~ 23 ~
Abraham religion, historically speaking, have a common starting point: the patriarch
Abraham cf. Gen 11, 26 – 17, 5.
Judaism is the oldest Abraham religion, it is the religion of the people of
Israel and in Judea. This is based, primarily, on the Book of the Law, Torah (‫)תּוֹרָה‬, a
text that some Hebrew, believe it was sent by God to the chosen people through the
prophet Moses. This text with the rest of the Hebrew Bible together with the Talmud,
(úÇĚěŔîĺĚă), which, is the interpretation of sacred texts, is the central text of
Judaism. After the destruction of the Temple in Jerusalem in AD 70 the Hebrews
were dispersed throughout the surface of the Earth.
In 2010, there were around 13 million Hebrews, out of which 40% lived in
Israel and about the same percentage throughout the US9, the rest of them were
dissipated all over the Earth.
Christianity is based on the life and teachings of Jesus of Nazareth during the
first century, as presented in the New Testament. The Christian faith confesses that
Jesus is Christ the son of God, as Redeemer and Lord. Almost all Christians believe
in the Holy Trinity, the unity of Father, Son (Jesus Christ) and Holy Spirit as three
persons in one God. Most Christians share The Creed of the Nicene Council
summoned by Constantine the Great in 325 AD10. By becoming the official religion
of the Roman Empire, of the Byzantine Empire in the first millennium, after the
colonization of Western Europe, Christianity has spread around the world. The
highest Christianity classification according to the number of adherents is:
The Catholic Church, led by the Pope of Rome, in communion with the
Churches of the West Latin and the Eastern Catholic Churches, including the
Byzantine rites Alexandrian, Antiochian11, Armenian-Syrian East, some Eastern
European - and Oriental – Orthodox Churches that accept the communion with Rome.
Eastern Christianity which includes Eastern - Orthodoxy, such as the
Romanian Orthodox Church, Oriental Orthodox Churches, the Greek and Eastern
Churches, and especially the Russian Orthodox Church. They are in the communion
spirit and they accept each other as sister churches.
Protestantism which, broke from the Catholic Church during the Reformation
in the 16th century and which was divided into several names. The best known are
Lutheranism, Calvinism, Anglicanism and Reformed Church.
There are also neo-protestants religions such as: Restorations, Mormonism
and Jehovah's Witnesses.
Islam is based on the Koran, one of the books that Muslims considered that
are revealed by God or Allah, and Islamic teachings of the Prophet Mohammed, an
important political and religious figure of the 7th century AD. The Islam is practiced
in Southeast Asia, North Africa, West and Central Asia and in parts of South Asia,
9
10
11
http://www.cbs.gov.il/shnaton61/st02_27.pdf [accessed 15 Apr. 2015] http://ro.wikipedia.org/wiki/Primul_conciliu_de_la_Niceea [accessed 15 Apr. 2015] from the ancient city of Antioch. ~ 24 ~
Sub-Saharan Africa or South-East of Europe. There are also several Islamic republics,
including Iran, Pakistan, Mauritania and Afghanistan.
The two main Islam religion branches are:
Sunni Islam12 is the majority religion of Islam. Sunnis agree upon four main
reference sources: 1. the Koran, 2. for non-mentioned cases by Koran directly, Sunnis
use primarily the Prophet Mohammed facts, 3. Muslim law consensus and 4. Legal
deduction (Qiyas) of a law, provided it does not contradict the preceding three
references.
Shi'ism13 is the next largest religion of Islam prevalent in Iran, Azerbaijan and
Iraq. It is believed that the last prophet Ali is the founder of this branch. This is the
son in law and cousin of Prophet Muhammad. They are spiritual led by Imams who
are regarded as intermediaries between man and Allah. Imams have a divine aura for
many of the Shi'ites, a concept foreign to Sunni.
1.2. Others Asian religions
The Hinduism is a synecdoche14 promoting concepts and ideas, well known
the general public as karma, having the social organization on caste, belief in reincarnation, mantra uttering, astrological symbols and beatific appearances of
Darsan15. It is one of the oldest active religions practiced today with origins in the
prehistoric times16.
The Buddhism was founded by Gautama Buddha in 9th century BC.
Buddhists generally agree that Gautama aimed to help the conscious beings of their
alienation sufferings by understanding the true nature of dharma – meaning of life,
thus avoiding suffering and rebirth (Samsara) and reaching the state of Nirvana.
Related to Buddhism there are other forms that have evolved out of this
religion: Theravada Buddhism, Mahayana Buddhism, Vajrayana Buddhism17.
Overall, those who practice Buddhism, nearly 400 million people18, form the fourth
largest religion in the world.
12
13
14
15
16
17
18
http://ro.wikipedia.org/wiki/Sunnism [accessed 16 Apr. 2015] http://ro.wikipedia.org/wiki/%C8%98iism [accessed 16 Apr. 2015] Ac. DEX 2009 - Figure of speech which consists in expanding or restricting the meaning of a
word by using whole instead of part (and vice versa), the place of the individual in general, to
replace General with particular matter which is done a work place itself etc.– From lat.
synecdoche, ngr. sinekdohí, fr. synecdoque. DURKHEIM ÉMILE, The Elementary Forms of the Religious Life, George Allen & Unwin
Publisher, London, 1915, pg.10 SHORT DOROTHY (Editor), CHAMPION SELWYN GURNEY, The World's Great Religions: An
Anthology of Sacred Texts, Dover Publications, 2003, pg. 6 WILLIAMS PAUL, TRIBE ANTONY, Buddhist Thought: A complete introduction to the Indian
tradition, Routledge Publisher, 2000, pg. 194. http://www.infoplease.com/ipa/A0904108.html Source: Encyclopaedia Britannica,
www.adherents.com, [accessed 18 Apr. 2015] ~ 25 ~
The Sikhism is a monotheistic religion in the Punjab (today Pakistan)
beginning with the 15th century, founded on the teachings of Guru Nanak and the
successors ten of Guru Sikh. It is the fifth largest organized religion in the world with
almost 30 million followers19.
Well known East Asian religions are the Taoism and the Confucianism,
known as Korean, Vietnamese and Japanese religions influenced by Chinese thinking.
The Confucianism has not so many practitioners as it is well known.
1.3. The other religions of the world
We can classify rest of World Religions, developed over centuries as follows:
African traditional religions, indigenous and popular religions - these20 refer to the
category of traditional religions that may be characterized as shamanism21, animism22
and ancestor worship. These are religions associated with particular groups of people,
ethnic tribes, they usually do not have formal creeds or sacred texts23. Some are
geared towards different religions or syncretic practices such as Australian Aboriginal
mythology24. Other popular religions are those of the Native American25. They belong
to various American indigenous tribes which were discovered by the Europeans when
conquering the continent.
Finally, there are to be mentioned new religious movements, developed in the
20th century, such as Raëlism26, Unitarian Universalism27, Scientology28, Wicca29
and Druidism30.
19
20
21
22
23
24
25
26
27
28
29
30
ZEPPS JOSH, art. Sikhs in America: What You Need to Know about The World's Fifth-Largest
Religion, published in The Huffington Post, on 08 Jun. 2012, http://www.huffingtonpost.
com/2012/08/06/sikhs-in-america_n_1748125.html [accessed 18 Apr. 2015] http://en.wikipedia.org/wiki/Ethnic_religion [accessed 20 Apr. 2015] DEX 09 - Faith in exorcism, miraculous healing, contact with the world beyond, seen in some
populations of northern and central Asia and some tribes in Indonesia, Oceania, America and
Africa. - From fr. chamanisme DEX 09 - Faith that everything in the universe, and the universe itself, has a soul or a living. –
Din fr. animisme. Pew Research Centre (Dec.2012) The Global Religious Landscape. A Report on the Size and
Distribution of the World's Major Religious Groups as of 2010. The Pew Forum on Religion &
Public Life. http://www.pewforum.org/2012/12/18/global-religious-landscape-exec/ [accessed
20 Apr. 2015] cf. http://en.wikipedia.org/wiki/Australian_Aboriginal_mythology [accessed 20 Apr. 2015] cf. http://en.wikipedia.org/wiki/Native_American_religion [accessed 20 Apr. 2015] cf. http://en.wikipedia.org/wiki/Ra%C3%ABlism [accessed 20 Apr. 2015] cf. http://www.uua.org/beliefs/what-we-believe/principles/7th [accessed 20 Apr. 2015] cf. http://en.wikipedia.org/wiki/Scientology [accessed 21 Apr. 2015] FARRAR JANET, FARRAR STEWART, The witch’s God: Lord of Dance, Hale Pub., 1989, pg. 170
– 171 cf. http://en.wikipedia.org/wiki/Neo-Druidism [accessed 22 Apr. 2015] ~ 26 ~
2. Multinationals - history and perspectives
A company, corporation or transnational enterprise is an economic unit that produces
goods or services to generate profit and its activity goes beyond the borders of one
country. A multinational company is divided into several branches located on national
territory or even globally. Subsidiaries are fully or partially controlled by the main
company. These companies play an important role in globalization. The first such a
company was the Dutch East India Company, founded on March 20, 160231.
The Dutch East India Company (in Dutch Vereenigde Oostindische
Compagnie, VOC), was one of the largest trading companies in the world, owning a
fleet of hundreds of ships and having thousands of employees and offices in Asia and
six in Dutch cities. The company had a monopoly have their own currency, to build
fortresses or to wage war, being considered as the first multinational corporation in
the world economy history. In the 17th - 18th centuries it was among the largest
companies in the world32.
The history of multinational companies is closely linked to the history of
colonialism, as these first companies were established at the shadow of the colonial
expeditions via European traders33. We had an eloquent example given by the first
corporation, Netherlands VOC, as referred to above, which has broadened its
activities in the territories which were under their domination.
Then came the New Imperialism (Neo-imperialism) period which is
characterized by the expansion of the European colonial powers, United States and
Nippon Empire, which lasted until the late 19th, early 20th century. Most European
colonies were not only dominated by England, France, Spain and Portugal, which
were administered by cartels34, but also by the multinational corporations35 such as
British East India Company36, Swedish Africa Company and Hudson’s Bay
Company37. Many of these corporations, like the South Australia Company and the
31
32
33
34
35
36
37
cf. http://ro.wikipedia.org/wiki/Companie_multina%C8%9Bional%C4%83 [accessed 23 Apr.
2015] cf. http://ro.wikipedia.org/wiki/Compania_Olandez%C4%83_a_Indiilor_de_Est [accessed 23
Apr. 2015] JEFFREY ALEX, PAINTER JOE, Imperialism and Post-colonialism. Political Geography and
introduction to space and power, SAGE Pub., London, 2009, pg. 174-175. Charter: 1. (In the Middle Ages) Act intended to record some privileges and freedoms of
classes or social strata and to serve as a state constitution. 2. Manifest claims comprising a
political organization, social, professional etc. 3. Act underlying the organization and
functioning of an international organization. The United Nations Charter. - From fr. charters,
lat. Carta. (dex 2009) ROBINS NICK, "This Imperious Company". The Corporation That Changed the World. How the
East India Company Shaped the Modern Multinational, Pluto Pub., London, 2006, pg. 24-25 idem ROYLE STEPHEN, A Company, Crown and Colony: The Hudson's Bay Company and Territorial
Endeavour in Western Canada, I.B. Tauris Pub., London, 2011 ~ 27 ~
Virginia Company, played a direct role in the formation of colonies by creating and
maintaining the administrative power of the respective territories38.
Through a process of exploitation of resources and labour, the investment
profit result and the net income in the country of origin, without exceptions, these
first corporations have created a significant economic gap between the their countries
and colonial territories39. Of course, the outcome of this process was to enrich the
colonizers and to impoverish the colonized40.
Some multinational corporations such as Royal African Company, were
responsible for providing the logistic base, the ships and the ports for the Atlantic
slaves’ commerce, developing an extensive enterprise against human dignity41.
Thus, during the 19th century, the corporations formal rules on the large lands
they held, gave them the opportunity to control the colony states42, i.e. a corporatist
control over colonial economic aspects that persisted in most colonies43.
During the decolonization process, the Charter of European Businesses was
abolished together with the last final corporation Mozambique Company, dissolved in
197244. In any case, the economic impact of colonial exploitative corporations was
lengthy and far-reaching45. Some economists say that this impact is the main cause
for contemporary global inequality46.
Current criticisms made on multinationals are the outsourcing costs to thirdworld countries. This is because developed countries must withstand competitive
prices. These may be aspects of the colonialism, from which the corporate spirit did
not give away, in order to get a considerable profit. All this are in the detriment of
resources depletion and, in various forms, even human exploitation.
We can say that after 1970, we have a new form of colonialism (neocolonialism)47 where we have multinational corporations, which have a certain model
of exploitation and wealth differentiation, which operate with resources extraction
38
39
40
41
42
43
44
45
46
47
MICKLETHWAIT JOHN, WOOLDRIDGE ADRIAN, The company: A short history of a revolutionary
idea, Modern Library Pub., New York, 2003 HOWE STEPHEN, "Empire by Sea." Empire: A Very Short Introduction, Oxford UP Pub.,
Oxford, 2002, pg.77-80 ANGELES LUIS, "Income Inequality and Colonialism." European Economic Review, no. 51.5:
1155-176 , 2007, http://www.uib.cat/congres/ecopub/ecineq/papers/011Angeles.pdf [accessed
24 Apr. 2015] HOWE STEPHEN, work cit. pg. 67. ROBINS NICK, work cit., pg. 145. JEFFREY ALEX, PAINTER JOE, work cit., pg. 175 MICKLETHWAIT JOHN, WOOLDRIDGE ADRIAN, work cit. HOWE, STEPHEN, work cit, pg. 78-83 ANGELES, LUIS, work cit AZIKIWE ABAYOMI, BURKINA FASO, Masses Rise Up Against Neo-Colonial Rule, Global
Research, Centre for Research on Globalization, 04 Nov. 2014 ~ 28 ~
companies in favour of developing world such as Royal Dutch Shell and Barrick
Gold48.
We can conclude two ideas on facts presented so far, the presentation religion
and multinational companies: the first aspect, religions have greater historical
advantage, and the second aspect is related to the period of colonization, when these
two systems have interfered first as a common period. At the beginning it was
collaboration, each pursuing their own interests, praised and/or condemned aspects;
but in the end, they impeded each other because their own intentions, goals or
methods were clearly contradictory in many moments.
And if we refer to the new period, of corporations’ neo-colonization, we can
accept that the first phase it was collaboration, because otherwise it is difficult to
explain the expansion of companies like Coca-Cola and McDonald's in a strong
religious environment, especially in Asia where their penetration wouldn’t be
accepted either for their products or for the provenance country. As for the second
phase, the conflict one we must analysed it more deeply. Corporations will depend on
how they know to manage the potential conflicts; therefore, management risk and
conflict trainings are not at all accidental.
3.
Different economic situations at the boundary between business and
religion
Since I mentioned the names of certain corporations which succeed to
penetrate in countries with deeply religious culture, I will further expose some cases
of companies that their business faced factors related to the religious sphere.
Image 3.1
48
BAKAN JOEL, The Corporation: The Pathological Pursuit of Profit and Power, Ed. Free, New
York, 2004. ~ 29 ~
When Swedes from IKEA entered Saudi Arabia in 2012 they altered their
catalogue removing all pictures of women, because of religious preconceptions. This
has sparked a negative reaction in Sweden as well as globally, according to The
Guardian49. In image, 3.1 there are the pictures that have sparked this scandal, so
one can see the difference between European and Saudi Arabia catalogues. Due to
misinterpreted Islamic religious influences, those from IKEA have managed with
major difficulty this situation. Also in this article there is a specific information that
Coca-Cola and McDonald's trusts are suspected by Arab countries for US and Israel
imperialism. This imperialism which may endanger the culture and religion of this
Asian region.
Don Thompson, McDonald's CEO, until the beginning of 2015, was involved
in a situation in France, where he talked about gay rights, and that he is Christian.
Making a difference between France and the US, as one cannot talk the same in these
two countries, about the gay rights50.
Coca-Cola has opened one of the first manufacturing factories worldwide in
Asia, in the Philippines in 1912, before Europe 1919, France. The only two countries
worldwide where currently not marketed Coca - Cola products are Cuba and North
Korea51. However, Coca Cola had a company in Cuba since 1906 but after the Cuban
Revolution, Fidel Castro's government decided in 1960 to liquidate this company. An
unmatched record is North Korea as it is the only country in the world that Coca Cola
products did not officially penetrate.
Since April 2009 Muhtar Kent is President of Coca-Cola and its CEO52. He is
Muslim. Here arises an important question regarding the most widespread corporation
in the world. Does religion can positively or negatively influence the image and the
promotion of a company worldwide? The fact is that for developed countries, which
promote human rights, this is overlooked in most cases. And for most consumers
Coca - Cola in these countries this aspect does not matter. But for less-developed
countries, strongly influenced by religion, the image of the CEO can be an important
factor in accepting or not this company's products.
However, in the United States, a developed country, the reactions are against
him, related to his religion53, due to some advertising spots, even at the Super Bowl,
arguing that he is actively involved in the political debate on immigrants’ reform,
especially Muslims.
Going to Coca-Cola’s main competitor worldwide, we will talk about Indra
Nooyi, she is one of the few CEO's of large corporations in 2001 that had the courage
49
http://www.theguardian.com/commentisfree/2012/oct/02/no-women-saudi-arabian-ikea
[accessed 24 Apr. 2015] 50
http://www.cbsnews.com/news/how-not-to-advertise-burgers-mcds-ceo-turns-a-gay-molehillinto-a-culture-war-mountain/ [accessed 27 Apr. 2015] 51
http://www.businessinsider.com/myanmar-coke-2012-6 [accessed 26 Apr. 2015] 52
http://www.coca-colacompany.com/our-company/board-of-directors-muhtar-kent [accessed 27
Apr. 2015] 53
http://patdollard.com/2014/02/flashback-2013-coca-cola-ceo-writes-op-ed-pushing-immigration-reform/ [accessed 27 Apr. 2015] ~ 30 ~
to affirm her active religious faith. She is Hindu and believes in Ganesha and
Tirupathi gods. It seems strange that a person who leads a mammoth company to
declare her deeply religious beliefs, who is praying and 4-5 hours per day54. She is
considered by Forbes in 2014 the thirteenth most powerful woman in the world55. The
government of India forced Coca - Cola to leave this country in 1978. Pepsi got the
best of this situation and in 1985 began negotiations to get here, and six years later
after Pepsi entered the market, re-joined the negotiations Coca -Cola too. Starting
2003 till now, there are almost annual attacks on Indian farmers and producers of
pesticides cleared by the two companies. They continue to struggle to maintain a
good image facing the consumers of this important market56, as it is the second
country in the world when populations is concerned57. Does Pepsi have an advantage
against the main rival because of its CEO? And more than that she states being an
active Hindu. The fact is that Coca - Cola suffers the strongest attacks in India in last
years58, as it was set up and a national organization of farmers against it. Since Indra
Nooyi is involved in top of its business, Pepsi Co. knows a significant increase
against its main rival, Coca-Cola, but since Mahtar Kent was install as Coca-Cola
CEO it had in important come back according to Image 3.259.
54
http://desiceo.com/shinning-star-indra-nooyi/ [accessed 27 Apr. 2015] http://en.wikipedia.org/wiki/Forbes_list_of_The_World%27s_100_Most_Powerful_Women
[accessed 27 Apr. 2015] 56
http://www.slideshare.net/Yashaswini100/coke-and-pepsi-case-study-in-the-indian-businessenvironment [accessed 27 Apr. 2015] 57
http://media.imopedia.ro/stiri-imobiliare/top-10-tarile-cu-cea-mai-numeroasa-populatie-de-pepamant-20910 html [accessed 27 Apr. 2015] 58
http://killercoke.org/crimes_india.php [accessed 27 Apr. 2015] 59
http://www.businessinsider.com/coca-cola-vs-pepsi-timeline-2013-1?op=1 [accessed 27 Apr.
2015] 55
~ 31 ~
Another interesting point about religious interference would be, if we were to
refer to India, an important market for the company's future, is that the two global
giants’ CEO are worshipers of the two main religions in this country: Hinduism and
Islam. And in this part of the globe, in the last century, there were regrettable
religious conflicts between their leaders60. Conflicts that rarely appear, but they are
unfortunately still present, but not with the same magnitude of 200261, the most recent
one. We can conclude that the two companies have not only divided the soft drinks'
market, at least in India, but also that the two CEO’ religions may have a word to say,
if the customers would be aware of it as it is of their products. But to avoid this
conflict, the information is known but not promoted.
By presenting these situations was highlighted that the religious phenomenon
echoes penetrate in multinational companies. The diplomacy and the sensitivity with
which these interferences were managed it was and it will be an important factor for
evolution of companies by strengthening corporate culture.
Conclusion
Any conclusion arises the assumptions, transposition of the phrase ‘any
answer arises another question’.
By path taken by this article we remember us two fundamental ideas concerning the religious interference in multinational companies.
The first one is that starting from man and religion, i.e. man is naturally
religious, based on Mircea Eliade's concept of homo religiosus, observing this aspect
and religions evolution over time and their diversity, the religion is spread around the
globe no matter its name as shown in the first part of this article.
A second perspective concerns the economic factor, we can affirm, also from
the history of multinationals development, the consolidation of homo oeconomicus
concept62. Thus economic man became corporationis because we had to mobilize
and to manage new resources brought by Great Geographic Discoveries, where
different religious manifestations also are found and for that one had to manage it
with care or not, in order to expand. Maybe the corporations’ neocolonialism in last
decades is almost over, because the information circulating globally and
automatically negative reputation in a particular country may affect economic activity
generally.
The religion of a CEO, it is more or less known, depending on whose cult he
belongs. As we have seen the current CEOs of Coca - Cola and Pepsi, both are
declared religiously active. And they are competing also in spiritually way, we could
60
http://www.culturalsurvival.org/ourpublications/csq/article/ethnic-and-religious-conflicts-india
[accessed 28 Apr. 2015] 61
http://www.pbs.org/wnet/religionandethics/2002/05/24/may-24-2002-hindu-muslim-conflictin-india/12044/ [accessed 28 Apr. 2015] 62
http://www.homooeconomicus.org/ [accessed 15 may 2015] ~ 32 ~
say from this perspective, especially in the Asian market, especially India, because of
customers practicing the same religious cult.
The fact is that consumers of a brand or a product in a developed country do
not take into account aspects such as the religion of a CEO when they buy their
products. But it cannot say the same about customers of a country strongly influenced
by the religious cult. Maybe fewer employees know what the religion of CEO or
corporation leader is. Without any doubts we can say that the board and shareholders
know the religious details regarding employees and customers because they are
interested in profit, and every detail matters, especially related to the culture and the
reactions of consumers and employees in a certain country.
In addition, more companies offer their employees access to the motivational
speakers, at sessions or workshops that try to motivate and develop them spiritually,
because some of them lack spiritual support and they not efficient anymore. This
spiritual decline is due also to cults and or to the churches which waits for people to
come to them and instead of going out to meet them with projects to mobilize social
action and support for spiritual development and social relations.
To conclude I want to convey an autobiographical situation presented by
James Martin, (clergyman and journalist for CNN, NPR, Fox News Channel, Time
magazine, collaborator of The New York Times63), in his book In Good Company:
The Fast Track from the Corporate World to Poverty, Chastity and Obedience (Sheed
& Ward, 2000), the corporatist giving up his job to choose a path of the religious
ministry, disgusted at some point of this world of multinationals, in his case General
Electrics. It asserts that the loyalty value of a corporate, much trumpeted, only operate
unilaterally: from the employee to the company and not the other way. Maybe today's
developed organizational cultures of multinational companies suggest various human
values, but if endangerment profit demands they act against their: ‘Inveniemus viam
aut faciemus’ (We will find the way, or we make one) 64.
Bibliographical references:
1.
2.
3.
4.
5.
AZIKIWE ABAYOMI, BURKINA FASO, Masses Rise Up Against Neo-Colonial Rule, Global
Research, Centre for Research on Globalization, 04 Nov. 2014
BAKAN JOEL, The Corporation: The Pathological Pursuit of Profit and Power, Ed. Free,
New York, 2004
DEX 2009 - Explanatory Dictionary of the Romanian language.
DURKHEIM ÉMILE, The Elementary Forms of the Religious Life George Allen & Unwin
Publisher, London, 1915
ELIADE MIRCEA, Sacrul şi profanul (The sacred and the profane), Humanitas Publisher,
Bucharest, 1995
63
64
http://www.ercis.ro/actualitate/viata.asp?id=20140109 [accessed 16 may 2015] MARTIN JAMES, În compania Binelui. Drumul scurt de la lumea corporatistă la sărăcie,
curăţie şi ascultare (In Good Company: The Fast Track from the Corporate World to Poverty,
Chastity and Obedience) SILVIU Hodiş ed., Galaxia Gutenberg Publisher, Târgu – Lăpuş, 2013. ~ 33 ~
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ELIADE MIRCEA, Tratat asupra Istoriei Religiilor (Treaty of History of Religions), Humanitas
Publisher, Bucharest, 2008
FARRAR JANET, FARRAR STEWART, The witch’s God: Lord of Dance, Hale Pub., 1989
HOWE STEPHEN, "Empire by Sea." Empire: A Very Short Introduction, Oxford UP Pub.,
Oxford, 2002
JEFFREY ALEX, PAINTER JOE, Imperialism and Post-colonialism. Political Geography and
introduction to space and power, SAGE Pub., London, 2009
LACTANŢIU, Despre moartea persecutorilor (About persecutors death), bilingual ed., tran.
CRISTIAN BEJAN, explanatory notes DRAGOŞ MÎRŞANU, Polirom Publisher, Iaşi, 2011.
MICKLETHWAIT JOHN, WOOLDRIDGE ADRIAN, The Company: A short history of a
revolutionary idea, Modern Library Pub., New York, 2003
MARTIN JAMES, În compania Binelui. Drumul scurt de la lumea corporatistă la sărăcie,
curăţie şi ascultare (In Good Company: The Fast Track from the Corporate World to
Poverty, Chastity and Obedience) SILVIU Hodiş ed., Galaxia Gutenberg Publisher, Târgu –
Lăpuş, 2013.
PIROŞCĂ GRIGORE - The Communication and organizational culture course, ASE, 2015
ROBINS NICK, "This Imperious Company". The Corporation That Changed the World. How
the East India Company Shaped the Modern Multinational, Pluto Pub., London, 2006
ROYLE STEPHEN, A Company, Crown and Colony: The Hudson's Bay Company and
Territorial Endeavour in Western Canada, I.B. Tauris Pub., London, 2011
SHORT DOROTHY (Editor), CHAMPION SELWYN GURNEY, The World's Great Religions: An
Anthology of Sacred Texts, Dover Publications, 2003
WILLIAMS PAUL, TRIBE ANTONY, Buddhist Thought: A complete introduction to the Indian
tradition, Routledge Publisher, 2000
ANGELES LUIS, "Income Inequality and Colonialism." European Economic Review, no. 51.5:
1155-176 , 2007, http://www.uib.cat/congres/ecopub/ecineq/papers/011Angeles.pdf
ZEPPS JOSH, art. Sikhs in America: What You Need to Know about The World's Fifth-Largest
Religion, published in The Huffington Post, on 08 Jun. 2012, http://www.huffingtonpost.
com/2012/08/06/sikhs-in-america_n_1748125.html
Pew Research Centre (Dec.2012) The Global Religious Landscape. A Report on the Size and
Distribution of the World's Major Religious Groups as of 2010. The Pew Forum on Religion
& Public Life. http://www.pewforum.org/2012/12/18/global-religious-landscape-exec/
http://www.cbs.gov.il/shnaton61/st02_27.pdf
http://ro.wikipedia.org/wiki/Primul_conciliu_de_la_Niceea
http://ro.wikipedia.org/wiki/Sunnism
http://ro.wikipedia.org/wiki/%C8%98iism
http://www.infoplease.com/ipa/A0904108.html Source: Encyclopaedia Britannica,
www.adherents.com
http://en.wikipedia.org/wiki/Ethnic_religion
http://en.wikipedia.org/wiki/Australian_Aboriginal_mythology
http://en.wikipedia.org/wiki/Native_American_religion
http://en.wikipedia.org/wiki/Ra%C3%ABlism
http://www.uua.org/beliefs/what-we-believe/principles/7th
http://en.wikipedia.org/wiki/Scientology
http://en.wikipedia.org/wiki/Neo-Druidism
http://ro.wikipedia.org/wiki/Companie_multina%C8%9Bional%C4%83
http://ro.wikipedia.org/wiki/Compania_Olandez%C4%83_a_Indiilor_de_Est
http://www.theguardian.com/commentisfree/2012/oct/02/no-women-saudi-arabian-ikea
~ 34 ~
36. http://www.cbsnews.com/news/how-not-to-advertise-burgers-mcds-ceo-turns-a-gay-molehillinto-a-culture-war-mountain/
37. http://www.businessinsider.com/myanmar-coke-2012-6
38. http://www.coca-colacompany.com/our-company/board-of-directors-muhtar-kent
39. http://patdollard.com/2014/02/flashback-2013-coca-cola-ceo-writes-op-ed-pushingimmigration-reform/
40. http://desiceo.com/shinning-star-indra-nooyi/
41. http://en.wikipedia.org/wiki/Forbes_list_of_The_World%27s_100_Most_Powerful_Women
42. http://www.slideshare.net/Yashaswini100/coke-and-pepsi-case-study-in-the-indian-businessenvironment
43. http://media.imopedia.ro/stiri-imobiliare/top-10-tarile-cu-cea-mai-numeroasa-populatie-de-pepamant-20910.html
44. http://killercoke.org/crimes_india.php
45. http://www.businessinsider.com/coca-cola-vs-pepsi-timeline-2013-1?op=1
46. http://www.culturalsurvival.org/ourpublications/csq/article/ethnic-and-religious-conflictsindia
47. http://www.pbs.org/wnet/religionandethics/2002/05/24/may-24-2002-hindu-muslim-conflictin-india/12044/
48. http://www.homooeconomicus.org/
49. http://www.ercis.ro/actualitate/viata.asp?id=20140109
~ 35 ~
Chiţu Elena-Iulia
Costea Codruţa
C
Anaa-Maria
Bucharest Academy of Economicc Studies
p
“Inteernational Ecconomy”
Master program
ROMA
ANIA ON RU
USSIA’S MA
ARKET
JEL: F13, F15, F42, F52,
F
F53
t largest coountries in South-East
S
Euurope in
Abstracct: Romaniaa is one of the
term
ms of area, population and econom
mic economiccal potential. Russian-Roomanian
tradde and econoomic relations are constanntly developiing. An impoortant role in forming
thiss solid founddation was esstablished byy good neighhbourly relations played over the
cennturies becauuse Russia haad always suupported thee Danubian principalities
p
in their
struuggle for indeependence to
owards the Ottoman
O
Emppire and rulerrs as Stefan cel
c Mare,
Mihhai Viteazul have establisshed politicaal-military allliances. Alsoo Russia was the first
couuntry who reccognized the independencce of Romaniia after the Russo-Turkish
R
h war.
Key woords: Russian
n-Romanian relations, market
m
devellopment, muutual coopeeration
uction
Introdu
Russia was also th
he first indeependent statte admittingg Romania after
a
the
Russso-Turkish war, in 1877
7-1878, and even at 15 oct.1878,
o
thee Russian ennvoy, the
barron D.F.Stuarrt handed thee future kingg Prince Charrles I-the creedentials. This day is
connsidered the official datee of establisshment of thhe diplomatiic relations between
Russsia and Rom
mania.
Romaniia exported to
o Russia gooods worth EU
UR 1,392.3 million
m
in the first ten
months of the last
l year and imported gooods worth EUR
E
2.1332 billion, accoording to
the data from thhe National Statistics
S
Instiitute.
Compared
d exports maade by Romaania and Ru
ussia
~ 36 ~
The largest increase in exports was registered in the Russian market
(133.6%), thanks to the opportunities it offers for the Romanian businessmen. And
there is room for growth, given that interest markets "exotic" remains, very high due
to competition on the European market.
Compared imports made by Romania and Russia
Comparison trade balance recorded by Romania and Russia
~ 37 ~
Romania
a-Russia bilaateral trade developmen
nts
he huge markkets came bunndled with "tthe biggest challenge
The diffficulties of th
thatt you can reeceive now from a globbal business, namely to run a busineess with
natiional coverage in Russiaa," explains Florin
F
Tranddafirescu (CE
EO Inmarko) why he
didd not think tw
wice when hee was offereed a post in Russia.
R
The size of the business
thatt can coordinnate a manag
ger in Russiaa does not compare to annything else,, at least
nott in Europe (managers
(
saay that at thee moment onnly China would
w
bring them
t
the
sam
me satisfactioon).
Most Romanian
R
maanagers in Moscow
M
familliarize with Russia
R
directtly in the
midddle of Siberria, Russian knowing
k
amiidst people who
w spoke noo other languuage than
Russsian.
All muultinationals have compeeted here offten unbeatabble local prroducers,
whiich act as a state
s
within a state in theeir home areas, so for thoose who wannt to sell
ice cream, shaampoo, beerr or whateveer in Russiaa and has aspirations
a
t do it
to
d
natiionwide , it'ss like they want to impose themselvess in differentt states with different
straategies and inevitably
i
with
w
very diffferent resultts from one republic to another
proovince or regiion.
Romannian managers in Moscow
w may concluude peacefullly as they didd right in
com
ming here andd that from now
n on the dooors of the world
w
are opeen to them. May
M none
of tthem can telll he knows what
w
he willl do after thiis period of their lives annd don’t
havve to think abbout it now: the consumer market is rising and once
o
you starrt to feel
the adrenaline, you can harrdly turn on a calm markket. And wheen you see thhem and
" would
talkk to them, yoou shouldn’t be surprisedd when you’lll be hearing people say "I
nott come back in Romaniaa". Even if, as Marilen Kensington says, foreign myths
aboout Russia, frrom icy cold to the attitudde of the locaals sometimees not so deliicate, are
truee.
~ 38 ~
Romanian furniture, more appreciated in Russia. Romanian furniture
export- a good deal for intermediaries
The Romanian producers who tries the East Grand with their finger argue
that imposing on markets such as Russia will be a long and difficult process, but it
will be an alternative that will generate good profits. In addition, they hoped to
tradition they had in these markets during communism and that lasted until the early
90s. In those days, the Soviets were waiting six months for a Romanian set of
furniture.
Poliana Pasatoiu, furniture store representative: "Solid wood furniture, luxury,
lime and beech and oak. Expansion commercial and export markets in Russia and
former USSR countries 60 percent of the furniture."
These furniture manufacturers from Targu Jiu were oriented to antiquing
furniture, seeking those who appreciate vintage style. And 90 percent of their clients
are foreigners.
Daniela Banica, furniture producer: "We have furniture retro, from the ‘50’60, we tried to come up with a simple line, finishing transparent."
Aurica Sereny, president of the Association of Furniture Producers in
Romania: "Increasingly, more worn wood furniture, but classic- contemporary
furniture. The furniture that we produce in Romania is expensive furniture, which
places the population with incomes up environment. "
Therefore, three-quarters of the furniture produced in Romania goes to
countries like Germany, France, Russia, UAE and USA.
The figures show that 2014 was a good year and forecasts say 2015 will be
even better. Romanian export last year reached 1.3 billion euro, Romania being on the
13th in the world in export of furniture.
Did you know that?
In the total trade of Romania, the Russian Federation was:
• 7th trading partner of our country (after Germany, Italy, Hungary, France,
Turkey and Poland), with a share of 3.4%
• 9th export partner, with a share of 2.8%
• 6th import partner (after Germany, Italy, Hungary, France and Poland),
with a share of 4.1%
• 7th place (after Hungary, Kazakhstan, China, Poland, Austria, Germany)
among countries that contributed to the trade deficit
In Romania's trade with countries outside the EU:
• 2nd was trading partner of Romania, after Turkey, with a share of 13.15%
• 2nd Romanian export partner after Turkey, with a share of 9.18%;
• Romania's first import partner with a share of 17.6%;
• 3rd place after Kazakhstan and China, among partner countries that
contributed at the deficit of the external trial balance
~ 39 ~
The main groups of goods and their share in Romanian exports to Russia
in 2013:
- vehicule -33.75%
- machines and electrical equipment -25.7%
- Products from chemical industry 12.4%
- Various products (mobile) -5.08%
- Common-metal and articles thereof - 4.85%
- plastic materials -4.08%
- wood, charcoal products 3.98%
Main groups of goods and their share in Romanian imports from Russian
Federation in 2013:
- oil and oil products - 64%
- natural -gas 17.2%
- plastic materials -3.2%
- minerals-2,3%
- common metals and articles-2,3%
We export medicines in Russia, Georgia, Armenia, Mongolia
• Antibiotics: capsules, tablets and powder injection
• Creams, rheumatic gels
• Oral solutions, syrups, drops ORL
• Nutritional Supplements
Among the Romanian companies which are in the top export in Russia in
2013:
- Renault Industrie Roumanie, Arges
- Michelin Romania SA, Bucuresti
- Kronospan Romania
- Egger Romania
- Automobile Dacia SA
- ArcelorMittal Galati SA
- Pirelli Tyres Romania
- Terapia SA, Cluj
- Lafarge Ciment Romania
- Danfoss
- UPETROM S.A. Ploiesti,
- GSP – Grup Servicii Petroliere,
- SC CONFIND SRL Campina,
- ANTIBIOTICE Iasi,
- ROMFARMACHIM,
- SIMEX GROUP,
~ 40 ~
With the 1989 Romanian products began running on fumes Russian shelves.
And this is not because the Russians were reluctant to them, but because Romania
was the one who just lost interest in the Russian market sharply immediately
Revolution, deceived the West that made her look the advantages of tradition but the
reverse is not late to appear.
Perhaps the most relevant example in this story is the factory Vidra: the
largest factory of its kind in Europe and Asia, a colossus with over 3,000 employees
who process more than three million rabbit, mink and astrakhan skins annually. This
factory was neither more nor less than that dictated the fashion in socialist countries,
and this brought millions of dollars in treasury Romania.
The Russians were so passionate of the Romanian skins, that not infrequently
they constituted contraband goods and clothes and hats that were worn in Moscow
made here were worn by extremely important characters. Nobody would have thought
that success will set the factory again, but today nothing reminds of former glory, and
slowly, goods from Italy, Greece and Turkey have taken the place of the Romanian
shelves in Russia. Recently, the Chinese are taking market by storm, and that's
because they understood the fantastic potential of Russia, where furs are sold not only
through the year, but at exorbitant prices, over 2000 Euros.
As a conclusion, these relationships have existed and will exist regardless of
the evolution of the times. They are built every day between those hundreds of
thousands of people, Romanians, Ukrainians, Russians. Both at sea by the contracts
signed by managers in suit and briefcase, and at low levels, between those selling
mills, grinders, tools, fur hats and those who buy them.
Bibliography
1.
http://romanian.ruvr.ru/2013_10_21/Ce-trebuie-facut-pentru-dezvoltarea-relatiiloreconomice-ale-Romaniei-cu-Federatia-Rusa-9034/
2. http://romania.mid.ru/
3. www.dce.gov.ro
4. www.zf.ro
5. www.economica.net
6. http://www.tradingeconomics.com/russia/exports-to-romania
7. http://www.zf.ro/eveniment/topul-produselor-exportate-si-importate-de-romania-din-rusia9375126
8. http://www.insse.ro/cms/ro
9. http://mae.ro/bilateral-relations/4506#783
10. http://www.businessmagazin.ro/cover-story/romani-cuceriti-moscova-3344565
11. http://www.transport-business.ro/potential-mare-de-afaceri-in-rusia/
12. http://m.business24.ro/macroeconomie/cum-a-reusit-rusia-sa-devina-atractiva-pentruoamenii-de-afaceri-din-romania-1538154-font2
~ 41 ~
Kurguzova Evgeniia Valerievna
St. Petersburg State University of Economics
Master program “International economy”
jkurguzova@inbox.ru
Reshetova Alyona Viktorovna
St. Petersburg State University of Economics
Master program “International economy”
a-resh_@mail.ru
STUDY OF IMPLICATIONS OF CUTTING IMPORTS OF RUSSIAN
NATURAL GAS FOR ROMANIA
JEL: F14, Q41
Abstract: Although Romanian hopes for shale gas production have
recently disappeared, declining annual consumption of natural gas leads to the
drop in its reliance on Gazprom imports. The Russia factor also plays a role in
Bucharest’s approach to gas policy, with the government keen to avoid
dependence on Gazprom by upping indigenous production. This factors lead to a
decision in 2015 to abandon Russian natural gas, but is there any drawbacks of
this decision and what are they? This paper is examining possible outcomes for
Romania by using PEST- analysis approach.
Key words: Import of natural gas to Romania, Romanian production of
natural gas, Russian supplies of natural gas, Romania and Gazprom
agreements.
The major line of “Gazprom export” gas supply is West European market
including Turkey. Supply package equals 117,9 billion cubic meters in this
region while whole amount of supplies of “Gazprom export” all over the world
run at 146,6 billion cubic meters. More detailed information about supplies of
Russian gas in West European countries and Turkey is shown on Picture 1. As
you can see on the graph the highest level of demand on Russian gas is in the
Germany – 38,70 BCM, Turkey – 27,33 BCM, Italy – 21,68 BCM.
Сonsequently, this market amounts to about 80% of “Gazprom export” supplies.
It means that other energy outlers, such as Romania, have no significant
influence on Gazprom profits. But does the Gazprom have an impact on
Romania?
Evidently that imports into the EU from Russia is mostly consist of
various energy-related goods, such as oil, natural gas, coal, and etc. As a result a
fifth of the EU’s primary energy needs in average are met by energy supplied
from Russia. Roughly speaking Russian oil forms 9–10 per cent, Russian natural
gas some 5–6 per cent, Russian uranium 3–4 per cent, and Russian coal 2–3 per
cent of the EU’s primary energy consumption. As for its own production within
EU borders, we can outline that Denmark, Germany, Italy and Romania have a
~ 42 ~
Gazprom supplies into West Europe market (plus
Turkey), BCM in 2014
45
38,7
40
35
30
BCM
27,33
25
21,68
20
15
10
10,09
7,1
3,95
5
1,75
3,51
3,11
0,41
0,3
S
w
itz
er
la
nd
Fr
an
ce
Fi
nl
an
d
Tu
rk
ey
Ita
ly
N
et
he
rla
nd
s
D
en
m
ar
k
G
re
ec
e
G
er
m
an
y
A
us
tri
a
G
re
at
B
rit
ai
n
0
Country
Source: Gazprom
Picture 1. Gazprom supplies into West Europe market (plus Turkey), BCM in 2014
Gazprom supplies into East an Central Europe market, BCM in
2014
9,1
1,36
Slovenia
0,43
Slovakia
Serbia
Poland
Macedonia
Romania
0,33
0,05
Hungary
Bosnia and
Herzogowina
0,16
4,76
4,39
Czech
Republic
5,33
2,79
Bulgaria
10
8
6
BCM
4
2
0
Country
Source: Gazprom
Picture 2. Gazprom supplies into East an Central Europe market, BCM in 2014
limited amount of domestic production. Croatia, Hungary and Romania can be
affected by stop in the natural gas supply from Russia as they still don`t have the
liquefied natural gas (LNG) storage facilities and are poorly integrated into the
European gas transmission network, which provide reverse supplies. Despite
that dependence on Russian natural gas for Romania is less than 5% (Picture 3).
~ 43 ~
A beginnning of co
ollaboration USSR withh Romania started as early
e
as
19774. Suppliess of naturall gas conduucts since 1979 and their amount usually
addded up to 20-25% of all country connsumption. The
T gas markket was origginally a
selller's market. Even when
n the Soviett Union was building market relatioons with
the West. The meaning off these relattions was caalled "sellerr's market". Seller's
oviet Union in
i the gas trade with Euurope.
ma rket was useed by the So
Souurce: Liuhto K.
K The Econom
mic Dependennce of EU Mem
mber States on Russia
Piccture 3. EU M
Member State``s dependencee on Russian natural gas (The
(
share of Russian
gaas in primary energy consu
umption of EU
U Member Staates), %
T
gas
The sittuation has still remaained unchaanged as foor today. The
mo nopoly conccludes with European buyers
b
long--term contraacts where thhe price
is aagreed in addvance eitherr fixed in doollars or tiedd to commodity prices, oil. But
~ 44 ~
the most important condition is not the price but the volume, where volume is
determined in the terms of money in the first place.
The same principle of "take or pay", which Gazprom was committed to
until 2013, means that even if the buyer refuses to choose all of the gas that is
supplied, it would pay to Gazprom the same money as for all the contracted
shipments. Consumers may not waive the conditions of the seller, Gazprom,
because it is a monopoly.
At the present time, the principle of "transports or pay" applied by
"Gazprom" used for independent gas suppliers, using the company's gas
transportation system. Also, there was implemented a restriction of "buy or pay"
for customers who buy gas from these suppliers.
Russian gas monopoly is not going to lose its benefits not only from its
own customers, but also with the help of third-party suppliers. So, in 2013
"Gazprom" has abolished the rule of "buy or pay" that repelled many potential
buyers of Russian gas. Problems with Ukrainian consumers in the past few years
have been associated with this condition that was alleged by the contract.
Instead, take or pay conditions the company has introduced a concept
such as "ship or pay". This model is intended for other gas suppliers, which are
used to transport fuel GTS belonging to Gazprom.
Mandatory rule in the take or pay for consumers of gas supplied by thirdparty vendors, that is actually carried out the regulation of mutual relations of
third parties.
This position is explained by Gazprom`s technical difficulties associated
with an excess of gas in the gas transport system, constantly arising due to the
fact that consumers do not take the declared volumes transported by third
parties. This situation leads to the fact that ordinary distributors can no longer
provide their customers requests. The introduction of these conditions will be
performed suppliers, but significantly complicate the work of end-users to set
strict limits.
Besides the prices that offered by Gazprom, there is also so-called spot
prices, relatively speaking market prices, which are formed here and now,
depending on market conditions. These prices may be several times lower than
the prices of Gazprom. But market volumes are insufficient to cover all of
European needs. Plus, if we consider Iran, Iraq, Qatar, the Persian Gulf there is a
high risks and insecurity arise. If there suddenly it comes to war, Gazprom will
be still a reliable partner. More than thirty years it is supplying gas to Europe
without interruption under different circumstances. Although, Europe struggles
with seller's market the gas market remains the one.
Russian gas supplies are carried out through long-term contracts (with
WIEE and Сonef Energy) which imply gas supplies till 2030. Gazprom exports
gas to Central and Western Europe mainly under long-term contracts for up to
25 years, usually on the basis of intergovernmental agreements.
~ 45 ~
Long-term contracts related to the oil products` prices and the principle
of "take or pay" are the basis for the stability and security of gas supply. Only
such contracts can provide a producer and exporter returns on multibillion dollar
investments required for the implementation of major gas export projects, and
the importer guarantees reliable and uninterrupted gas supply for a long period
of time.
Today Gazprom`s portfolio of long-term contracts provides a level of
minimum sales commitments - 4 trillion cubic meters of gas to foreign countries
for the period until the expiration of the contracts.
The main features of the long-term contracts are the following:
● pricing formula, which takes into account changes in prices of
petroleum products during the preceding 6-9 months;
● conditions that prevent the unilateral termination of the contract,
except the cases of prolonged force majeure;
● principle of "take or pay" covers considerable volume and stipulate
that the buyer pays for undrawn amounts for the year and then can
select them with the appropriate surcharge after delivery of minimum
annual volumes provided for in the relevant contract year.
Long-term contracts are essentially service contracts that give a buyer
daily flexibility, irregularity of supplies by year and the obligations of the seller
to the buyer to fill in the following volumes, previously paid to them under the
conditions of "take or pay". In addition, long-term contracts give buyers a
guarantee gas supplies for a considerable period. Spot gas is, in fact, a
completely different product, and direct comparison of contract and spot prices
is illegal.
At the same time contracts related to the oil products` prices remain
valid. Oil indexation is an indispensable tool of long-term business plan, which
is in the interests of the buyer and seller of gas. It ensures the continuity and
stability of the investment cycle in the industry on all levels. Using oil product
indexation approbated by more than 40-year history of the global gas market and
is used by other major exporters. In modern conditions the oil products` prices
play the role of a universal deflator in the gas industry. Their presence does not
allow for gas prices to grow abruptly in comparison to the prices of other
energy-related goods.
In 2007, consumption was 18 billion cubic meters, of which one-third of
the total imported value of 4-5 billion dollars. After 2007, importers of gas spent
on the purchase of up to 500 million dollars a year. Romania imports gas only
from Russia. Also the country has it`s own gas fields. Data on gas storage in
Romania is usually not provided to Gas Infrastructure Europe, but according to
the Romanian energy expert Dr. Radu Dudau Romania has approximately 1000
mcm in storage that is more than enough to replace imports via Ukraine.
~ 46 ~
On the 6th of March Reuters reported an emergency meeting of the EU
Gas Coordination Group, at which the Romanian representative declined to give
detailed information about Romanian gas stocks, noting only that “Romania said
in the event of a fall in temperature, it could not help neighboring Bulgaria, one
of the nation between others that is most dependent on Russian gas”.
During the January 2009 crisis Romania was able to step up its domestic
gas production and draw on gas storage stocks. Despite the lack of explicit data
on Romanian gas storage, we expect that in the event of another suspension of
gas transit via Ukraine, the Romanian response would be similar. Demand on
gas is continuing to fall down in Romania and demand on “Gazprom ”`s supplies
is reducing too (Picture 4). As for 2014, Romania imported only 0,33 billion
cubic meters while in 2013 - 1,19 billion cubic meters. It should be metioned
that a share of Romania as a buyer of Russian gas is very low, it is more than in
twenty seven times less than Poland share. As it depicted on Picture 2, top
customer of Russian gas in East and Central Europe market is Poland, when the
lowest demand draw up Romania, Bosnia and Herzogowina and Macedonia. It
confirm the hypothesis that Romania as a gas buyer is not very significant for
Gasprom.
Gas demand in most European countries declined significantly since
2009, especially for the needs of power generation. This comes in addition to the
current relatively mild winter, which allowed to significantly increase the
current level of gas reserves in European stores. The decline in gas demand also
took place due to the growing share of renewable energy and structural changes
in the European market and the relatively low prices for coal, and as a result
many gas generating stations were mothballed.
Gas imports dropped by 61% year on year in 2014, according to
preliminary data from the INS statistics office in Bucharest, which also
indicated national demand has fallen yet again. Annual domestic consumption
has dipped sharply over recent years – from roughly 17.5 billion cubic metres in
2004 to a little under 11 bcm in 2014, according to BP and INS estimates.
Romania is the fourth largest gas producer in EU after the United
Kingdom, Netherlands and Germany. News about cessation of russian gas
supply initiated by Romania grab the headlines in the end of march 2015. For
the first time it became possible for Romania to cover inner supply for natural
gas on their own. Romania uses about 11 billion cubic meters of fuel per year
and only 330 million cubic meters are accounted for by Russia. And the country
was planning to decline the supply of russian gas even in April of 2015 and to
cope with demand by inner resorces in whole volume. According to Razvan
Nicolescu, Energy Minister of Romania, the country will have more gas than it
consumes by 2020.
~ 47 ~
Romania is gradually unfolding its long-term natural gas strategy. It
intends on becoming the major gas hub in the region and will exploit its
domestic reserves.
The Azerbaijan-Georgia-Romania Interconnector (AGRI) project, oftnamed the focal point of Bucharest's regional gas strategy, aims to open yet
another diversification route for the Caspian reserves into the EU markets by
passing not only Turkey but also Greece and Bulgaria. The project got an initial
kick-off in September 2010 when the participating states declared their intention
of proceeding with that project, which also includes a substantial LNG
infrastructure.
Gas is planned to be transferred from a terminal in Romania and then via
an upgrade of the domestic pipeline transmission system in Hungary and from
there it will branch out to the gas hub of Austria and further North to Slovakia,
Czech and Poland. It will be an integral artery of the newly conceived AegeanBaltic gas route.
Moreover, the Romanian Energy Ministry strategists have already
focused on upgrading indigenous production via the exploitation of potential gas
reserves offshore the country's Danube Delta that optimistically would start
producing gas by 2020 as well. Andrei Gerea pointed out that "Romania has
little import needs, mostly in winter period, thus when new gas volumes come
online in the next decade, new investments should be in place to boost the
capacity of the local transmission system in order to export excess amounts.
Thus, the acquisition of new compressors for the local pipeline system is a
necessity to run in parallel with the strategic diversification process the county
is investing into."
Romania is trying to speed up gas activities amid renewed interest for its
onshore and offshore potential. On Tuesday, E.ON Romania said that the
company maintains 2014 investment levels also in the current years. It intends to
upgrade a 550-kilometre pipeline system. The distribution networks still need
massive investments, because they were outdated in 2005 when we took over.
To make these investments, we need legislative and fiscal stability and
predictability.
Of the EUR 94 million to be invested in gas and power distribution
networks, over 36 million will be directed to the gas network.
The share of Russian gas in the Romanian primary energy consumption
was 4.5% in 2013, such amount could be easily dropped due to the decline in
consumption (Table 1). Reduction of demand for natural gas become possible
via cut of industrial gas usage (in fertilizer manufacturing and glass production)
and adoption of energy-efficient technologies. This is about
temporary
cessation of gas deliveries up to including autumn. It should be mentioned, that
nowadays Romanian gas is cheaper than Russian: 200 dollars against 380 dollar
per thousand cubic meters. And in considered period domestic gas will be used.
~ 48 ~
Table 1. EU Member States` dependence on Russian natural gas in 2013 (The share of
Russian gas in final energy consumption of EU Member States)
Share of natural
gas in final
energy
consumption
Share of Russian natural gas
in overall natural gas supply
Share of Russian
natural gas in
final energy
consumption
Austria
17,2%
61,9%
10,6%
Belgium
24,8%
1,1%
0,3%
Bulgaria
14,6%
96,8%
14,1%
Croatia
23,4%
0,0%
0,0%
Cyprus
0,0%
0,0%
0,0%
Czech Republic
23,6%
63,3%
14,9%
Denmark
10,2%
0,0%
0,0%
Estonia
3,4%
100%
3,4%
Finland
4,3%
100%
4,3%
France
20,3%
17,9%
3,6%
Germany
23,3%
45,6%
10,6%
Greece
5,3%
66,3%
3,5%
Hungary
33,7%
82,5%
27,8%
Ireland
15,0%
0,0%
0,0%
Italy
30,5%
34,3%
10,5%
Latvia
9,8%
100%
9,8%
Lithuania
26,2%
100%
26,2%
Luxembourg
14,3%
25,0%
3,6%
Malta
0,0%
0,0%
0,0%
Netherlands
26,3%
5,1%
1,3%
Poland
16,1%
57,3%
9,2%
Portugal
9,6%
0,0%
0,0%
Romania
29,4%
15,3%
4,5%
Slovakia
28,6%
100%
28,6%
Slovenia
12,0%
72,4%
8,7%
Spain
16,3%
0,0%
0,0%
Sweden
1,8%
0,0%
0,0%
UK
30,6%
0,0%
0,0%
EU
22,1%
26,7%
5,9%
Source: Liuhto K. The Economic Dependence of EU Member States on Russia
~ 49 ~
Source:: BP Global
Piicture 4. Ro
omanian gass production
n and consumption, BC
CM
In wintter, with thee increase inn fuel consuumption, gaas purchasess can be
resuumed.
Source: World
W
Bank
manian GDP, billions
b
of US
SD
Piicture 5. Rom
~ 50 ~
Source: Donald Marron http://dmarron.com/
Picture 6. Energy security cacophony in Europe
Analysts Bloomberg, as well as BP announced disappointing forecast for
Europe: its dependence on gas imports by 2035 will not decrease, but rather will
increase from 50% to 71%. Now the share of Russian oil in the energy balance
of the continent more than 25%, gas - 30%. According to the forecast the
company BP, the global demand for gas over the next 20 years will grow by an
average of 2% per year.
According to the company Ernst & Young, the potential cost of shale gas
production in Europe is higher than in the US. Also in the EU developed
infrastructure of gas pipelines, which will have to compete with shale projects.
In general, analysts Ernst & Young believes that the development of gas
production from shale in Europe will not accept such a large scale as in the
United States. A similar situation faced and Romania. It was assumed that the
shale gas in the country can be 51 billion cubic meters. feet that would provide
the domestic demand for a century. The forecast turned out to be false. In
February this year, the American Chevron abandoned the project for exploration
and production of shale gas in Romania, saying that substantial shale gas
reserves were not found. The development of shale was not only unprofitable,
but also dangerous to life and health. One further potential avenue for boosting
domestic output would have been the exploitation of shale gas, but Chevron
decided to withdraw from its concessions recently – marking the full departure
of the once-committed unconventionals explorer from Central Europe.
~ 51 ~
Souurce: Donald Marron http:///dmarron.com
m/
Picture 7. Fuel
F
mix of m ember states
“In 2014, drilling of the firrst exploratiion well inn the Barlaad shale
conncession in northeast Romania
R
wass completedd, as was a 2D seismicc survey
acrross two of the threee concessioons in souttheast Rom
mania,” a Chevron
C
spookesman tolld Interfax, confirming the decisioon to depart from the license.
“Thhis is a busiiness decision which iss a result off Chevron’s overall assessment
thaat this project in Romania does noot currently compete faavorably witth other
invvestment oppportunities in
i our globaal portfolio.”” The US suupermajor has
h been
besset by protessts at rural sites
s
stretchiing from Zuurawlow in southeastern
s
n Poland
to B
Barlad in Romania,
R
bu
ut it appearss simple ecoonomics werre to blame for the
deccision ratherr than goveernment pollicy failure or public protest.
p
“Chhevron’s
botttom line lasst year was hit
h hard by the
t decline of oil pricess, and possibbly they
diddn’t find muuch potentiaal reserves to
t make futuure investm
ments in expploration
wo rth… a channce. The ov
verall initial estimates for
f shale gass in Europe seemed
to bbe heavily overstated.
o
I don’t thinkk Chevron’ss decision haad much to do with
the protests,” Nutu
N
said. According
A
too Koneska, much
m
like elsewhere in Central
Eurrope, the shaale gas “hyp
pe did not coorrespond to the situation on the groound”.
~ 52 ~
Source: CBO
Picture 8. Energy sources and uses
On the Picture 4 is presented Romanian gas production and consumption
in BCM. In this scheme is depicted that consumption of gas in Romania
decreased after a financial crisis in 2009, then was increasing for several years
was recovering from the crisis. Finally, the consumption of gas decreased via of
usage innovation technologies in production. It should be mentioned that
according The World Bank, GDP is expected to reach 207.61 USD Billion in
2016. Of the EUR 94 million to be invested in gas and power distribution
networks, over 36 million will be directed to the gas network. Romania’s Deputy
Finance Minister Dan Manolescu said the government will send a draft law on
royalty taxes for the oil and gas sector to parliament in September. According to
Reuters, the country is expected to tender 36 new concessions for onshore and
offshore hydrocarbon licenses.
Last week, while Kiev voiced its interest to import gas from Bucharest,
Bulgaria, Hungary, Romania and Slovakia declared their support for more
efficient interconnections. The four countries signed a document recording
common political intent to further integrate their gas markets.
~ 53 ~
The prediction made using an autoregressive integrated moving average
(ARIMA) model calibrated using our analysts expectations. The World Bank
models the past behaviour of Romania GDP using vast amounts of historical
data and we adjust the coefficients of the econometric model by taking into
account our analysts assessments and future expectations. This forecast for
Romania`s GDP was made on Friday, May 29, 2015.
So, we can conclude that consumption of gas in Romania in 2016 will
increase in comparison of the value in the 2014.
For a more detailed understanding of the principles of developing
cooperation between Russia and Romania in the gas sector we will conduct
PEST - analysis of Gazprom supplies on Romanian market.
PEST (STEP) analysis - a strategic analysis of social (S - social),
technology (T - technological), economic (E - economic), political (P - political)
factors in the external environment of the organization. It is used in the process
of strategic planning and management of large companies, as well as for the
purposes of assessing investment risk.
When it comes to significant investments or decisions about the
company's future strategy, we must understand by no means that in the case of
adverse losses can be enormous and even up to a complete cessation of the
whole activity planned. To begin with we estimate the impact of political
factors. The analysis determined factors influence the political situation on
business activity, investment climate, stability and development prospects. In
this situation, these include the negative attitude of Bucharest towards Russian
Federation, maintenance anti-Russian sanctions and liberalization of gas market.
The economic factor is studied as a key to identify investment
opportunities and prospects of development of markets, purchasing power, etc.
The distribution of economic resources in the scale of the state is also taken into
consideration. As a part of PEST- analysis we identified the following economic
factors: volatility of oil prices (gas prices are tied to oil prices), reduction of
price of Romanian gas in comparison with Russian, economic growth in
Romania predicted by the World Bank (it was considered more precisely earlier
in this paper).
Social factors determine the dynamics of consumer preferences,
distribution and structure of social groups, age and gender structure. These
include historically not quite positive that is to say diplomatic relationships
between Russia and Romania, and at the last time strongly correlated with the
negative influence of mass media. Diplomatic relations between Russia and
Romania established on October 15, 1878 and they were formed not entirely
smoothly. To clear up what is meant by such a statement, we give a little
historical background. The main problems in the relations between the two
countries began in modern times. A role they played hidden but quite persistent
interference in Romanian politics by the Western powers like the United States,
~ 54 ~
France, Britain and other NATO countries. Also negatively on the Russian Romanian relations reflected Romanian intervention in 1918 and the subsequent
occupation of Romanian Bessarabia, which has caused some anti-Romanian
rebellions, which were supported not only by Russians, but many Moldovans
either. Later, during World War II: the country got up on the side of Hitler, then
to the side of the Allied Powers, which also worsened the relations between
Romania and the USSR. Everything else, after the war were taken in the USSR
treasures of the cultural heritage of Romania. This includes accusations against
Russia for the imposition of communism in Romania, supposedly democratic,
but Ceausescu himself was an ethnic Romanian, the movement for the
unification of Romania and Moldova, the Transnistrian conflict and support of
NATO by Romania. As we can see, there were and still are a lot of socio cultural issues in Russian-Romanian relations.
The last factor is the technological component. The purpose of this study
is the identification of trends in technological development, which are often the
causes of changes and the loss of the market, and the emergence of new
products. As it was mentioned above, Romania adopts energy-efficient
technologies in different sectors especially in fertilizer manufacturing, glass
production. That is to say, technical factors contribute to reducing the
consumption of natural gas. Results of PEST – analysis are shown in Table 2.
Table 2. PEST – analysis of Gazprom supplies on Romanian market
Factor name
Points

Political Factors to Consider




Economic Factors to Consider


Socio-Cultural Factors to Consider


Technological Factors to Consider
~ 55 ~
negative attitude of Bucharest
towards Russian Federation
maintenance of anti-Russian
sanctions
liberalization of gas market
volatility of oil prices
reduction of price of Romanian gas
in comparison with Russian
economic growth in Romania
historically not enough positive
diplomatic relationships between
Russia and Romania
influence of mass media
adoption of energy-efficient
technologies in different sectors
especially in fertilizer manufacturing,
glass production
As a conclusion, we could say that there has been significant progress in
the direction of opening the Romanian gas market to exports and any barriers –
be it legal or lack of infrastructure, will be abolished in a few years. Moreover,
given the recent discoveries in the Black Sea Romanian gas exports seem to be
closer than anyone would have expected. Taking everything mentioned above
into consideration, we can conclude in this paper that Romania is less dependent
on Russian gas supplies and, given a fairly large reserves of natural gas on its
territory may abandon it for a while, especially if we pay attention to policy of
reducing energy consumption in the country that are held nowadays. This policy
became possible because of the abolition of the principle of "take or pay", which
Gazprom has adhered to until 2013. But on the other hand, the expected
economic growth could lead to an increase in consumption of natural gas in the
country.
References
1. BP Global 2014, accessed 25 May 2015, https://www.bp.com/.
2. Congressional Budget Office 2010, accessed 25 May 2015, Congressional Budget
Office www.cbo.gov/.
3. Eurogas 2014, accessed 25 May 2015, http://www.eurogas.org/.
4. International Energy Agency 2014, accessed 25 May 2015, www.iea.org/.
5. Gazprom 2015, accessed 25 May 2015, www.gazprom.com/.
6. World Bank Group 2015, accessed 25 May 2015, www.worldbank.org/.
7. Liuhto K. The Economic Dependence of EU Member States on Russia //The War in
Ukraine: Lessons for Europe, 2015, accessed 21 May 2015,
<http://appc.lv/wp-content/uploads/2015/05/War_in_Ukraine.pdf#page=78>.
~ 56 ~
Kuznetsova Alexandra Mihailovna
Кузнецова Александра Михайловна
St. Petersburg State University of Economics
Санкт-Петербургский государственный экономический университет
Master program “International economy”
Программа «Международная экономика»
e-mail Alexandra.Kuznetsova@maersk.com
AGRICULTURE RELATIONS BETWEEN ROMANIA
AND THE RUSSIAN FEDERATION
JEL: Q17, F14
Abstract: The article is devoted to the problem of development of agriculture
relations between Romania and the Russian Federation. Author analyses its current
status, allocates the key issues in increase competitiveness, highlights key aspects in
the development of agriculture.
Аннотация: Статья посвящена перспективам развития РоссийскоРумынских отношений в сфере сельского хозяйства. Автором произведен
анализ его текущего состояния, выделены ключевые проблемы в повышении
конкурентоспособности, освещены основные аспекты в развитии сельского
хозяйства.
Key words: Russian-Romanian relations; Agriculture; Russia; Romania;
economic development; international relations.
Ключевые слова: Российско-Румынские отношения; Сельское
хозяйство; Россия; Румыния; внешнеэкономическое развитие; международные
отношения.
The Romanian–Russian relationships can be characterized as functioning
according to a strained dynamic, which occasionally escalates to outright tension.
This dynamic is the product of deep historical and geo-political factors. The gradual
normalization of their bilateral relationship is proving a slow and difficult process due
to mutually hostile perceptions and seeming politically-incompatible national
interests[1].
One of the most profitable investments in the European Union right now
could be agricultural land in Romania in Eastern Europe. That likely doesn’t surprise
people with long memories. Before World War II, Romania was the second-largest
grain producer in Europe — after France — because of its abundance of rich
agricultural farmland.
But when the country became part of the Soviet bloc after the war, privateproperty ownership was replaced by collectives. As a result, the country’s farmland
became fragmented and productivity sharply declined.
~ 57 ~
The dismal economic performance of the Communist regime in Romania
meant that there was no money to invest in machinery or new farming techniques.
Most agricultural duties were performed using obsolete methods and machinery.
The end of the Communist era in 1989 led to land and other reforms in
Romania. But the legacies left over from those years have complicated farming in
Romania, which joined the European Union in 2007. Property rights are still a thorny
issue — land deeds bought from present owners might be challenged in court by the
descendants of those who held the land before it was confiscated by the Communist
regime. Good property records exist, but legal assistance is often necessary to help
investors clearly establish who is the rightful landowner and whether there are
additional claims on the land.
Crime is another problem. Due to the high level of poverty in the country
(compared to average EU levels), irrigation pipes are frequently stolen and resold as
scrap metal. Some landowners have given up on irrigation and rely entirely on
rainfall; others employ security guards. But lack of proper irrigation is a problem
even without the thefts. And the Romanian government has launched a program,
expected to be completed in 2016, to rebuild the secondary irrigation
infrastructure.[2]
Change has been slow, but it is beginning to impact crop production. In 2013
the country produced 22.1% of all grain maize, 8.6% of all cereals, and 6.9% of all
industrial crops in the EU. Romania has recently become the top wheat supplier to
Egypt (the largest wheat importer in the world), displacing France and Russia. This
year Romania is expected to become the third-biggest wheat exporter in the EU and
the 11th worldwide, as well as the second-largest corn producer in the EU.
In the past five years, the country’s grain exports have more than doubled.
Constanta, a 2,600-year-old Romanian port on the Black Sea, is set to become the
biggest grain transport hub in Europe after US agribusiness giant Cargill more than
doubled grain capacity at its Constanta terminal this summer. Moreover, due to its
strategic position and depth, Constanta is the port that benefits most from regional
increases in agricultural output. Hungary, Serbia, and Bulgaria have also seen grain
production increases. [2]
This increase in crop production is being reflected in agricultural land prices,
which have more than tripled since 2007. Nevertheless, given the abundance of
available land and low prices, land is still extremely affordable. Beginning in January
2014, Romania opened its land market to foreign investors. Though foreign investors
had access prior to this, some legal acrobatics were required to exploit existing
loopholes.
~ 58 ~
Table 1. Main agricultural indicators of Romania
Indicators
Output of the agricultural industry (% of
GDP)
Agricultural output prices (index, 2005=100)
Agricultural input prices (index, 2005=100)
Agricultural income (Indicator A)
(index, 2005=100)
Agricultural employment
(% of total employment)
2010
2011
2012
2013
2014
12,3
13,7
11,0
12,5
11,3
85,1
94,5
89,2
98,1
91,7
99,8
86,3
95,9
79,1
91,5
97,1
122,2
157,5
123,0
134,0
31,6
30,0
30,5
30,0
-
Source: Eurotat.
Critics claim that the picture is not yet rosy. In terms of productivity, Romania
still lags far behind other countries. According to Eurotat figures, Romania had the
highest number of farms in the EU, meaning the industry is highly fragmented.
Indeed, the output per hectare is dismal even by regional standards.
Because much of the country’s agricultural land is made up of small farms
that are individually owned, potential investors seeking a large plot of land must
negotiate and close deals with hundreds of individual peasant/farmers. Critics of
agribusiness giants also are raising concerns about the consequences of displacing
millions of local farmers with foreign investors having no ties to Romania.[4]
Romania has historically been known as the ‘breadbasket’ of Europe, with
one of the largest and most fertile agricultural sectors in Europe. Today, after many
years of neglect and under-investment, the agricultural sector in Romania is again
attracting interest from farming businesses all across Europe. Large-scale farming
enterprises and International investment funds are increasingly seeking opportunities
in the Romanian agricultural sector, where low land values combine with significant
potential yield improvements to provide strong investment returns.
The agricultural sector has been at the centre of EU affairs and policy since its
inception, and the large size of the agricultural sector in Romania means that sucess
in this sector is vital for Romania’s prosperity.[6]
However, yields in Romania are actually more variable than those in Russia,
Moscow-based SovEcon said, using wheat, a widespread crop in both countries, as
the comparator.
In Russia, the average wheat yield, between 2008 and 2012, varied between
1.84 tons per hectare and 2.39 tons per hectare, on World Bank figures, with the data
giving a so-called standard deviation, a much-used measure of volatility, of 0.26.
For Romania, the wheat yield varied between 2.36 tons per hectare and 3.99
tons per hectare, giving a standard deviation more than twice as big, at 0.61.
Furthermore, Russia allows more easily the purchase of huge areas which
enable more efficient farming, and at prices of some $500-600 per hectare for black
~ 59 ~
earth land, compared with $3,000-4,000 per hectare for comparable farmland in
Romania.
In Romania, it is hard to control much land. A large farm will be one of more
than 5,000 hectares.
In Russia, a big farm would be more than 50,000 hectares, with the largest at
500,000 hectares.
If you want to invest in large-scale farming in Europe or the Black Sea
countries, of 50,000-100,000 hectares or more, the only options are Russia &
Ukraine.[3]
According to leader world experts in agribusiness Russian agriculture faces
with the following 4 basic problems.
The first problem is climate in the country. Only 30% of Russian territory is
situated in favorable and predictable weather conditions. Harvest in Russia is affected
by negative climate once in 2-3 years. And, for example, in France colds or draughts
happen only once in five years.
The second problem for Russian agriculture is financing. The state support
level in the country is well below than financing in European countries. And even
founds allocated within the World Trade Organization do not always reach farmers
and agricultural organizations. Moreover, this money sometimes is not used
effectively.
High extent of exhaustion and shortage of agricultural machinery is the third
problem. Russian farmers are not able to compete with European indicators because
of low machinery productivity. This problem may be solved only after solution of a
problem with financing.
And finally the 4th problem is human factor such as problems with
management and knowledge. Not all managers and chiefs are aimed at efficiency. As
a result in the same climatic zone and the same region yield in one farm can be
significantly higher than in other collective farm.
Fortunately, all these problems are solved by arrangement of favorable and
concessionary conditions of agribusiness leading. That step will join active part of
populations to Russian agriculture.[5]
Rather reluctant to strong economic links with Russia, which has turned its
trade into an instrument for its expansionist ambitions, Romania is less hit by this
ban. Its impact on Romanian producers is rather indirect, generated by the imbalances
in other EU markets. The Romanian Agriculture Minister Daniel Constantin says
sales to Russian importers are worth little over 40 million euro, that is, less than 2.3%
of Romania’s foodstuff exports. The losses of the Romanian farming sector so far
only amount to 10 million euro, Constantin added. What he fears however is that the
Romanian market may be flooded by vegetables and fruit originally intended for
Russia, and Romanian producers may face what he called aggressive competition.
In an interview to Radio Romania International, Commissioner Cioloş said
that part of the domestic yield could be distributed free of charge, with the losses
~ 60 ~
subsequently covered from European funds. Brussels has already decided to earmark
125 million euro to preserve what Cioloş called a market balance of supply, prices
and therefore of farm revenues. He added that all fruit and vegetable producers who
can no longer export to Russia are eligible for support, whether or not they are
affiliated to a farmer organization. In Bucharest, Minister Constantin views that
amount as too small, and says the European Commission should consider other
support measures as well.[4]
Russia, a net importer of agricultural products, saw the gap between imports
and exports stretch up to 20 billion in 2013, mainly due to reduced agricultural
exports (-12% to €8.4 billion), although agricultural imports were also slightly down
(-1.4% to €28 billion).[7]
In 2013, Russia’s top destination for agricultural exports became the EU
(19%), leaving Turkey second (15%).
Russia exports mainly commodities, which account for around half of Russian
agricultural exports. Wheat alone makes up one third of exports, but its sales were
down by 26% in 2013. Due to a good crop, Russian wheat prices were lower in 2013
but the export quantity remained nevertheless below 2012 levels. Barley exports are
also important for Russia, and these declined by 41% in value. On the other hand, fur
skins exports (to EU and China) went up by 44%.
On the import side, Russia relies on supplies of meat, cheese, fruit and
vegetables, alcoholic beverages and tobacco products. The biggest import increases in
2013 were in cheese, citrus fruit, wine and tomatoes, while nearly all meat products,
spirits, apples and pears showed a decrease. Imports of sugar, which had already in
2012 shrank to about a quarter of the 2.1 million tonnes imported in 2011, went down
even further to 530 000 tonnes. Potato imports also barely reached one third of the 1.5
million tonnes in 2011, a record potato import year for Russia.[8]
Russia remained the EU's second export market, with an export share of 10%,
unchanged since 2009. For the first time China was positioned third (6.1%),
overtaking Switzerland (5.9% share). EU's agricultural exports to Japan in 2013 were
2.3% lower and its share in exports fell to 4.2%.
The EU - the biggest supplier of agricultural products to Russia - slightly
increased its share in Russian imports to 42% in 2013 (far ahead of Brazil with 7.8%).
Russia is the second biggest export market for EU with 10% of total food exports.
However, although EUs food exports to Russia continue to grow, the speed is slowing
down. In 2013, exports in value went up by 4.3%, compared to 9% and 14% in the
preceding years. Yet, EU export gains in Russia were €0.5 billion, higher than the
additional €0.3 billion increase in the US. The agricultural trade balance with Russia,
which is largely positive, continued to increase and reached €10.2 billion, up from
€9.5 billion in 2012.
The structure of EU exports to Russia is similar to those to the US, with final
products accounting for 83% of the total. Top export products to Russia have
remained the same over the last years: fruit, cheese and pig meat. Half of the value of
~ 61 ~
fruit exports can be attributed to apples and pears, worth over €0.5 billion. Also,
Russia is the destination for around 46% of EU's apples and pears exports.
The sales of pig meat, which had declined in 2012, showed a 19% increase to
370 000 t in 2013. The corresponding value of these exports was nearly €1 billion.
Sales of other meats and meat products were worth €0.8 billion, and total meat
exports accounted for 15% of EU agri-food exports to Russia.[8]
After another increase in exports in 2013, cheese attained a share of 8% in EU
exports to Russia. Stronger prices for milk powders pushed their exports and other
dairy products (whey, butter) also sold well, bringing the share of dairy products
above 11% of total food exports to Russia.
Potato exports to Russia were strongly influenced by the seed potato ban; thus
potato sales plummeted from €228 million in 2011 to €40 million in 2013 (from 605
000 t to 94 000 t).
The biggest absolute export gains in 2013 were recorded for pig meat (+€194
million, or +25%), cheese (+€75 million, or +8.3%), wine (+€54 million, or +11%),
non-specific food preparations (+€50 million, or +11%), tomatoes (+€50 million, or
+24%) and malt extract (+€47 million, or +22%).
On the other hand, animal products were also among the top losers. Exports of
live animals, also influenced by a ban put in place by Russia for sanitary reasons,
were cut by half (-€75 million) compared to 2012. Pig and poultry fat, which in 2012
sold for €315 million in Russia, saw a setback of 16%. Pig and beef offal exports
declined by 20% (-€40 million). Losses in other products were led by lower seeds
exports (-€37 million or -17%).
References
1. Simona R. Soare. Still Talking Past Each Other: Romanian–Russian Relations/ RUSSIAN
ANALYTICAL DIGEST No. 125, 25 March 2013 – P. 14 – 18
2. Aristide Oana. Romania: Making the Most of Agricultural Wealth in Eastern Europe. – 2014.
3. http://bs-agro.com/index.php/news/romania
4. Bogdan Matei. Romania and the Russian import ban. URL: http://www.rri.ro/en_gb/
romania_and_the_russian_import_ban-21333
5. Economic profile, overview. Romania. URL : http://moscova.mae.ro/en/romania/316
6. Russia` 2014: Statistical pocketbook/ Rosstat. – Moscow, 2014. – 62 pp.
7. Shagaida Natalya "Agricultural land market in Russia: Living with constraints," Comparative
Economic Studies, 47(1) - 2005: 127-140.
8. Agricultural trade in 2013: EU gains in commodity exports. URL: http://ec.europa.eu/
agriculture/trade-analysis/map/2014-1_en.pdf
~ 62 ~
Petriceanu Andreea Catrinel
Bucharest Academy of Economic Studies
Faculty of Accounting and Management Information Systems
Henter Győző Zorán
Bucharest Academy of Economic Studies
The Faculty of Business Administration – English section
RUSSIAN LANGUAGE BETWEEN THE TRADITIONAL AND THE
MODERN ECONOMIC ISSUE
JEL: F13, F15, F42, F52, F53
Abstract: In the second half of the 9th century it has raised a new written
language named old Slavonic or Paleoslavonic. This language appeared at the same
time as others cultural languages of Europe as Latin and byzantine Greek.
The foundation of old Slavonic language are Slavonic dialects from the
eastern part of Balkan Peninsula, especially, those from the proximity of Thessalonica
where brothers Cyril and Methodius were born, the founders of Slavonic writing.
Because of her phonetic aspect and grammatical structure, the old Slavonic bore a
striking resemblance to common Slavonic which is the root of Slavic languages. That
is why old Slavic languages study is very important for a historical comparison and
also for a reconstruction of them.
Key words: Russian language, culture, economic relations, development.
A foray into the past
Old Slavonic was the first Slavonic written language that used two alphabets:
the Glagolitic and later the Cyrillic one.
As a cultural tool, Old Slavonic was widespread in Great Moravia (on Czech
and Slovak territory), Old Great Bulgaria, Serbia, Croatia and Old Russia.
Subsequently, this language was adopted as cultural language in countries that were
not Slavic, namely in Romanian countries and Lithuania.
Due to the local Slavic dialects influence, Old Slavic language changed and
thus it has come to existence so-called Slavonic variants or editions of Old Slavic
languages: Moravian, Serbian, Croatian, Russian, Bulgarian and – later - Ukrainian.
The relationship between old slavonic language and romanian language
In Romanian space Old Slavonic language was influenced by Romanian
language, particularly in vocabulary, which led to the appearance of Romanian
~ 63 ~
Slavonic edition. Texts from this period have been called by researchers SlavoRomanian texts or Romanian-Slavic texts.
Regarding the era and the Cyrillic alphabet adoption forms, there are
conflicting opinions.
Slavonic and Cyrillic writing replace Latin language and Latin alphabet in
Romanian church in 10th century and strengthen in the following centuries as a
consequence of their enforcement by the Bulgarian empire and, also, as a reaction
against the Catholic propaganda.
However, Dimitrie Cantemir, in Descriptio Moldaviae written in 1716 in
Latin asserts that the Latin letters were used in writing until the Council of
Florence(1432) took place – near upon 400 years after the Great Schism (1054).
Voivode Alexander the Good, advised by his metropolitan bishop, ordered that all
latin books and texts should be collected and burned and replaced by the Cyrillic
alphabet and the Slavic language for preventing the spread of Catholicism in the
country. Mihail Kogălniceanu asseverated this theory in 1838 in Alăuta Românească
Magazine.
In the second half of the 19th century, scholars as Timotei Cipariu, bishop
Melchisedec, Bogdan Petriceicu Haşdeu, Dimitrie Onciul and others declared that
Slavic language was introduced in Romanian countries before the Council of
Florence – 10th and 12th century – after the baptizing of Bulgarian people. To support
this theory, they brought historical and philological sources.
History run
Old written Slavonic language has got in the Roumanian territory in the 10th
century and that was proved by the oldest medieval Slavic inscription found in
Bucov, Prahova county (902-911).
In a more developed state, the Slavonic one, this language was widely spread
in the princely chancelleries, in monasteries and in churches from the 14th century.
The Romanian Slavonic was, as well as the Latin language, used for writing until the
turn of the 16th century when it has aroused the first original and translated Romanian
works. Thereafter, Slavonic kept being used for another two centuries simultaneously
with Romanian but has been losing gradually its utility.
The entry of the Slavonic in Romanian countries is explained by the political,
cultural and religious ambience present in the South-East Europe. Therefore, after a
first phase in the Latin form, the Christianity was spread in Greek language and from
the 9th century in Slavonic.
A lot of religious books were copied in Slavonic in Romanian countries and
also a large number of legal, didactic, philosophical, historical, philological and
literary writings. More than that, it has been written original works such as
Letopiseţul de când s-a început Ţara Moldovei /Letopiseţul lui Ştefan cel Mare
(The Chronicle of Stephen the Great of Moldavia) – the forms dating back to 15th
and 16th century –, Învăţăturile lui Neagoe Basarab către fiul său Theodosie
~ 64 ~
(The advices of Neagoe Basarab to his son Theodosie) , Chronicles of Makarios,
Euthymios and Azariah (16th century).
Also, there were edited lots of internal and external documents, inscriptions or
slavonic notes between 14th and 16th century and even in 18th century in restrained
areas.
From the 6th century, religious book used by romanian people were written in
Old Religious language – Paleoslavonic of Cyril and Methodius – and the graphics
haven’t changed throughout many centuries. The orthography follows the rules
emitted by patriarch Târnovei Eftimie’s reform (annex 1). He was a well-known
scholar of 14th century.
It is worthy of mention that the first certified romanian document is Scrisoarea
lui Neacşu din Câmpulung (The Letter of Neacşu from Câmpulung - 1521) to
Johannes Benkner from Braşov (anexa 2) announcing a Turkish invasion. The letter
has a medieval style of writing with introducing and final wording taken from
Slavonic.
Regarding the historical importance and cultural identification the first
Romanian prints realized in Slavonic since 1508 are very significant too.
After the major development from 11th century, when the Old Slavic culture
gets a great territorial extension being spread in Bulgaria, Russia, Croatia, Serbia and
Romanian Countries, the new texts elaborated or translated in this period don’t
belong anymore to Old Slavonic language but to the Slavonic redactions. The Cyrillic
alphabet of Old Slavonic language was available for Romanian writing from 16th to
18th century when it was replaced by the Latin alphabet.
Transition period
In the first half of 19th century, Ion Heliade Rădulescu published a study
about Romanian grammar (1828) in which he suggested simplifying the Cyrillic
alphabet and constructing a mixed alphabet (annex 3).
The Latin alphabet reinsertion in Romanian writing was suggested by the
Transylvanian School in ca. 1780 and officially adopted in 1881. Before it, the
Cyrillic alphabet, the Greek alphabet and extremely rare the Latin alphabet were used
in different ways and forms and adapted to Romanian sounds. It is true that during the
Alexander John Cuza reign, after the transition period, the Cyrillic alphabet is
replaced by the Latin alphabet but what is important to specify is that the Cyrillic one
kept being used until 1860 when Romanian language was officially regalement.
Cyrillic texts
The oldest Cyrillic writings aren’t manuscripts but historical, funeral or
religious inscriptions.
1. The oldest Slavonic medieval inscription discovered in the country at
Bucov, Prahova county (902-911)
2. The inscription from Dobrogea (943) – locality Mircea Vodă
~ 65 ~
3. Mostici’s inscription from Preslav – undated but it is supposed to be older
than the tsar Samuil’s inscription and could be referred to period 927-969
4. The tsar Samuil’s inscription (993) discovered in the proximity of lake
Prespa (Macedonia)
5. The tsar John Vladislav’ s inscription (1015- 1016) is a Cyrillic inscription
from Bitola (Macedonia)
6. The inscriptions from Murfatlar (Basarabi) dating from 10th-11th century
were discovered in Dobrogea
7. The inscription from Bucov (Ploieşti) dating from 10th century was
discovered on a smithy workshop’s wall
Slavic money circulation on romanian territory
11th – 13th century: coins issued in Serbia
14th – 15th century: Romanian coinage had a correspondence with the
Bulgarian coinage; silver coins belong to different coinages: Serbian and Bulgarian
groats, Hungarian dinars, banal dinars and then Slovenian regal coins.
16th – 17th century: By the 16th century, the base of the currency in
circulation from Romanian countries are the small coins such as half polish groats
(anew 4). After 1580, Turkish coins are replaced by triple polish groats which were
important more and more starting with the last decade of the 16th century. The
documents point out that coins because they are increasingly used in commercial
transactions from the first half of the 17th century. The huge production of triple
groats from the last decade of the 16th century allowed them to be the most important
in the small and middle coins category and to replace the Turkish coins. They would
be part of the currency circulation until the beginning of the 18th century.
18th – 19th century: In the 18th century, monetary circulation intensified due
to some new economic relationships. Prices were evaluated in lei (the main coin for
calculations) and in subdivisions of them (parale) while the payments involved gold
coins as well as silver coins (the Russian coins are included too – annex 5); at the
same time, the Polish denežka and the Russian ruble are used for commerce.
The heritage of the romanian language
Taking into consideration influence and the quantity of words that were
borrowed during the Romanising period, the words that have a Slavic origin still hold
a special place in the Romanian language. It is not only their number that is big in
comparison with other languages that have lent some of their words to the Romanian
language like Hungarian, Turkish, Greek and other Balcanic languages but the role of
Slavic words is very important as well. Other languages that have lent words come
from more specialized domains (cuisine, fashion, craftsman), these words are less
frequently used, but the Slavic words express basic notions and they are used rather
frequently even today.
~ 66 ~
There are many examples of Slavic words that have entered the principal
matter of the Romanian language (da - yes, ba -no ; nevastă – wife , prieten - friend ,
ceas - watch , grădină - garden , boală - sickness , muncă - work , dragoste - love ,
război - war ; bogat - rich , drag - dear , prost - simple ; a citi – to read , a vorbi – to
speak , a plăti – to pay ; iată - see , prea - very). The other borrowed words are part of
the more exceptional matter of the Romanian language (like the Hungarian a se gândi
– to think , or the Turkish haide – come on , or the Greek a sosi - to arrive , or the
Paleobalcanic copil - child ).
The importance of Slavic words has decreased considerably after the mass
take over of the words that originate from latin. Many Slavic words disappeared
completely and they were replaced by new latin ones, and others were kept, this is
how the notion of “double lexicalism” was born, when the replacement of the Slavic
word appeared but both of them were and are still in use.
In many cases even though the semantic doubles appeared to these words
their values wasn’t the same. This thing can be clearly seen when we look at different
expressions in the Romanian culture such as the following: “prieten de nădejde” with
a Slavic origin means a friend that helps when in trouble. Even though we can replace
the words in this expression with synonyms that have a latin origin: „amic la
speranţă” it loses its meaning and it can’t be understood.
Latin elements 71.66%
Total Slavic elements 14,17%, out of which:
• 9,18% old Slavic; 2,6% Bulgarian; 1,12% Russian; 0,85% Serbian Croatian
Words that were borrowed and have a Slavic origin : a iubi – to love,
nevoie - need, a zambi – to smile, zapada - snow, duh - spirit, iad - hell, granita border, magar - donkey, rai - heaven, scarba - disgust, sfant - saint, stapan - master,
veac - century, vreme – weather, a sfarsi – to end, a savarsi - to do, apostol - apostle,
calugar - monk, episcop - bishop, evanghelie – gospel, baba – old lady, boier governor, sticla - glass, steag - flag, veste - story, zid - wall, bolnav - sick, scund small, slab - weak, vesel - happy,indrazni – to dare, lovi – to hit, privi – to look, trăi –
to live.
Even though the Romanian language went through a Romanising process, the
old base of Slavic words still remained an integral part of the contemporary
Romanian vocabulary. Also taking into consideration the fact that these Slavic
expressions have changed drastically during the course of history the Romanian
language would be unconceivable without them. This Slavic side of the Romanian
language gives it a specific style in-between the Latin languages and it offers lots of
opportunities for a more varied form of communication.
Russian language in romania nowadays
During the communist era the Russian language was mandatory in schools
and after the revolution it disappeared almost completely from our society for 20
~ 67 ~
years only to start to reappear in the curriculum of Romanian schools. The Russian
financed foundations are directly involved in the development of this project.
To understand the situation of Russian language in Romania we must go back
in time . We shall start with the august of 1948 when the communist party who were
at power came up with an educational reform which stated that Russian must be
studied by all Romanian students and not as a foreign language but as the second
language of people starting from the 4th grade and until the end of high school. After
1965 Russian wasn’t mandatory but it still remained the most studied foreign
language in Romania.
Then came the revolution and as Axinia Crasovschi, the president of the
Association of Russian Teachers of Romania and pro dean of the Faculty of Foreign
Languages of the University of Bucharest said: „The Russian language had a very
difficult period of time after the revolution. There was an unofficial political
campaign that was directed towards eliminating the Russian language from the
educational system, and pressure was put upon teachers due to this ” Russophobe”.
Thanks to these actions the Russian language almost became extinct in the Romanian
schools.”
In 2007 Vladimir Putin signed a contract which founded the Russian World
Foundation ( Russkiy Mir), financed by governmental funds it has opened over 80
cultural centres in the world. This is how the Romanian centers were opened in 2009
and 2011, in Bucharest and in Cluj Napoca, in the Bucharest University of Economy
(ASE) and in Babes-Bolyai University (UBB). These two centres organize different
Russian courses and events that help spread the Russian culture in our society.
Since 2012 Russian is being taught in the „Virgil Madgearu” Economic
College of Bucharest and from 2013 another high school has followed this trend.
The efforts that have been made in order to promote the Russian language
have started to show off in the results of The International Russian Language
Olympics that are organized in order to motivate young people to study this
language. The event is organised from 4 to 4 years and in the last competition
Romania has won 21 prizes, in this way it won the first prize out of 30 countries.
Oportunities regarding the russian language
The chance of obtaining a job that pays well is the first motivation for young
students to study Russian. Many Romanian students work in multinational companies
where they have been hired thanks to their knowledge of Russian language (the big
companies are interested in seeing the Russian language out of line).
The ministry of education doesn’t know for sure how many students are
learning Russian besides those people who have it as their mother tongue, but the
approximate number is around 500 students who are studying it as a modern
language.
In Romania there are 35,790 Lipovans out of which 6721 are Russians and
from an ethnic point of view they have left the Russian Empire because of a religious
~ 68 ~
conflict that they had with the Orthodox church of Russia. The majority speak
Russian and live in Tulcea county.
The situation of the russian language in moldova
Besides the situation of the Russian language in Romania we must mention
Moldova as well, this one being a special case from many points of views.
The state language of moldova is romanian. Russian is also spoken in the
country as a primary or secondary language.
Ukrainian and gagauses are mentioned as a minority but with an official
status in the places where the speakers are in majority it is the official language for
students.
Population
of Moldova
Moldovans
(Romanians)
Russian
Ukrainanshttp://
en.wikipedia.org
/wiki/Ukrainian
_language
Gagaus
Bulgarian
Other
Mother
languages
2.588.355
76.51%
380.796
11.26%
186.394
5.51%
137.774
4.07%
54.401
1.61%
35.612
1.04%
First use of
language
2.543.354
75.17%
540.990
15.99%
130.114
3.85%
104.890
3.10%
38.565
1.14%
25.419
0.75%
The first language that is taught in Moldova is Russian and only after that the
pupils are studying English, but the laters popularity is increasing from one year to
another.
The most spoken languages in the world:
1. Mandarin
2. English
3. Spanish
4. Hindi language
5. Arabic language
6. French
7. Russian language
8. Malaysian-Indonesian
9. Portugese
10. Bengali language
~ 69 ~
The investors from volga regain interest in pushkins language
In the first years companies such as LUKOIL,LADA, Eurofarmacy or ZIL
have hired young people from over the Prut (Moldova). And because of this,
university courses in Russian have started to gain more attention than the high school
studies. Last year at the admission to the Russian section there were more then 3
people for one place and the last score was over 9,00. The main reason for this being
that students who speak Russian can find a job in their domain a lot easier in Romania
or even in other countries than those who don’t.
Expensive translation
An authorized translation from/to Russian is almost double the price than that
of an English or French (group I) and it is 50% more expensive than one from/to
German, Spanish and Italian (group II). In the translators field Russian is on the same
level of difficulty as finish, Swedish, Turkish, Serbian, Slovenian or Norwegian
(group III).
On the official sites of translators the prices differ and vary. In order to
translate on page from/to Russian one must pay between 25-40 RON, and in the same
time the same amount for group I languages is in-between 10-15 RON and group II is
up to 25 RON.
In some countries of the EU Russian is considered to be on the same level of
difficulty as Chinese or Japanese, their prices being even higher in comparison with
Romania.
Conclusion
From a geographical point of view Russian is the most wide-spread language
in Eurasia, the most spoken Slavic language in the world and the most wide-spread
native language in Europe.
It is the official language in Russia, Belarus, Kirghizstan, Moldova, Abkhazia
and it is a secondary language in many other countries of the former Soviet Union,
totally 33 countries. Also in Israel it is spoken by a major community of 750000
people, most of them being people who fled from the former Soviet Union. It is also a
known fact that Russian is on of the 6 official languages of the UN and its historical
roots go back till the 10th century as being one of the most influential languages in
history.
Approximately 164 million people speak Russian as their mother language
and there are over 114 million people who use it as a secondary language. Russian
became a language of international circulation once with the creation of the iron
curtain when all of the countries east of the curtain had to introduce Russian as a
mandatory language for young people.
All in all the Russian language has a deep history, it encompasses lots of
intercultural opportunities and it helps smoothen communication by making it easier
and more accessible in many countries.
~ 70 ~
References
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Bogdan Murgescu, Circulaţia monetară în ţările Române în secolul al XVI-lea, Bucureşti,
1996
Fr Király, Din istoricul ortografiei româneşti: secolul al XVII-lea, Editura Universitatea din
Timişoara, Facultatea de Filologie, 1986
Elena Linta, Din istoricul slavisticii româneşti, Universitatea din Bucureşti Facultatea de
Limba şi Literaturi Străine, 1982
(En) Glanville Price, Encyclopedia of the languages of Europe, Editura Wiley-Blackwell,
2000
Al. Rosetti, Istoria limbii române, E.P.L., Bucuresti, 1968
Lucia Djamo-Diaconiţa, Limba documentelor slavone din Ţara Românească în secolele
al XIV-lea – al XV-lea, Ed. Academiei, Bucureşti, 1971.
Ion Bogdan Lefter, Limba română speculată politic, Observator cultural, nr. 86, 16 octombrie
2001
I.D. Negrescu, Limba slavă veche, Bucureşti, 1961.
P.D. Bogdan, Paleografia româno-slavă, Bucureşti, 1978.
Costin C. Kiriţescu, Sistemul bănesc al leului şi precursorii lui, Bucureşti, 1997
Olteanu, P., + colectiv, Slava veche şi slavona romanească, Ed. Didactică şi
Pedagogică, Bucureşti, 1975
Pleter, T., Lambru, R., Puiu, C , Slavona românească. Culegere de texte, Editura
Universităţii din Bucureşti, 2002
http://ro.wikipedia.org/wiki/Republica_Moldova
http://www.evz.ro/sustinuta-de-vladimir-putin-limba-rusa-ar-putea-fi-reintrodusa-in-scolileromanesti.html
http://adevarul.ro/news/societate/limba-rusa-intoarce-fundatiile-finantate-putin-sustinreintroducerea-materiei-scolile-romania-1_53d944d20d133766a8e04e7b/index.html
http://en.wikipedia.org/wiki/Moldova#Languages
~ 71 ~
ANNEXES
Annex 1
Our Father Prayer in Cyrillic alphabet, dating from 1850
Annex 2
The Letter of Neacşu from Câmpulung to Johannes Benkner from Braşov, 1521
~ 72 ~
Annex 3
Part of the ‘Călătorii pe Dunare şi în Bulgaria’ (‘Trips on the Danube and in Bulgaria’) by
Dimitrie Bolintineanu, printed in 1858 with mixed alphabet (Cyrillic and Latin letters)
Annex 4
~ 73 ~
Annex 5
Gold russian coins , 18th – 19th century
~ 74 ~
Toader Andreea Bucharest Academy of Economic Studies
Master program “Business Communication”
e-mail: andreea_toader@yahoo.com
Ion Andreea Bucharest Academy of Economic Studies
Master program “Business Communication”
e-mail: andreea.ion01@yahoo.ro
Pavel Silviana Viorela Bucharest Academy of Economic Studies
Master program “Business Communication”
e-mail: silvianaviorela@yahoo.com
Ilie Ştefan-Alin Bucharest Academy of Economic Studies
Master program “Business Communication”
e-mail: ilie.stefanalin@gmail.com
AN ESSAY ON OF DUTCH DISEASE IN THE LIGHT OF
ECONOMIC CRISIS IN EASTERN EUROPE
JEL: E31, E32, E63, 65
Abstract: The phenomenon called by the experts as “Dutch Disease” refers to
the negative impact on an economy from anything that gives a sudden increase of the
inflow of foreign currency into it, such as the discovery of large oil reserves.
The Dutch Disease seems to affect those economies which are rich in natural
resources and that is because it creates a large income for these countries, and this
large income may be the result of an increase in foreign currency, an increase of the
natural resources prices or direct foreign investment that creates severe economic
problems such inflation, unemployment and an imbalance of international payments.
Key words: Dutch disease, national income, balance, export, industrial
development
Introduction
The excessive income from the primary exports is leading to a temporary
appreciation of the exchange rate of the country's currency which in turn reduces the
world demand for the exports of that country. Because the country is not likely to
~ 75 ~
adjust the nominal exchange rate downward to maintain the previous level, the
booming primary export will result in domestic inflation in excess of the rest of the
world's inflation rate, and this causes profit declines for exporters. As a result, their
profits will fall, exporters will reduce their output for exports, and this will reduce
incomes and employment in export industries.
In countries rich in natural resources the industry sector is harmful because
when natural resources are depleted or the prices are decreased the companies that
activated in those sectors could not recover so quickly or easily. The reason is that the
long periods of inactivity creates a comparative disadvantage in the sector.
Literature review
In Sachs and Warner’s model was found that the abundance of natural
resources has a strong negative impact on growth. In particular, they have
demonstrated that an increase of 10 percentage points in the ratio of natural resource
exports to GDP was associated with reduced manufactured export growth and with as
much as 0.4–0.7 percentage points lower annual per capita growth in GDP.
Natural resource prices and revenues tend to be volatile because of the low
short term supply elasticity of natural resource output. If government spending is
closely related to natural resource revenues, it also will become more volatile.
Spending volatility, in turn, will drive volatility in the real exchange rate. As a result
the economic growth declines.
High commodity prices in the 1970s encouraged many resource abundant
countries to use their resources as collateral to borrow abroad to finance large
investment projects and high public consumption. When prices plunged in the 1980s,
these countries were left with balance-of-payments crises and unsustainable external
debt levels.
Dutch Disease has a factor movement effect, a spending effect, and a
spillover-loss effect. A factor movement effect means a reallocation of factors of
production like capital and labor from other activities to resource extraction. When it
comes to resource boom, the increased labor force leads the production from lagging
sector to booming sector; this movement is called direct deindustrialization. The
resulting de-industrialization process makes the economy extremely dependent on
the resource sector, which can reduce the growth potential.
The spending effect arises from the increased aggregate demand created by
resource receipts, which if converted to domestic currency may create periods of
excess demand in the economy.
Another effect is the reduction of investments; in fact volatility in the price
of natural resources, and thus the real exchange rate may prevent more investment
from firms as they do not know the future conditions.
Spending policies can also help curb Dutch Disease. If the spending effect
works also through private expenditures, general policies toward improving
productivity of the private firms would help reduce the impacts.
~ 76 ~
Policies that are encouraging the demand for imports, for example, trade
liberalization, would help reduce demand pressure on the non-tradable sector and,
therefore, may be a part of the structural policy response to Dutch Disease.
The country also may undertake other reforms that enhance economy wide
productivity: improvements in business regulations, reductions in red tape, reduction
of monopolistic barriers that discourage innovation, and other improvements in the
overall business climate.
To the extent that the country continues to experience some real exchange rate
appreciation and other adverse effects of rising natural resource revenues, there may
be a case for orienting spending especially to investments that would help enhance
productivity in the non-tradable sector of the economy, such as investments in
transport and logistics infrastructure, expanded investment in education and skills
training to foster faster absorption of foreign technology and innovation.
For example, in Bhutan appears such an effect as a result of the extra revenue
brought in by its export of hydropower and generous aid from donors. The increased
demand for labor in the non-tradable sector from lagging sector determines a negative
effect in the agricultural and social sectors. The prices of the non-tradable goods will
increase, but the prices in the traded goods sector are set internationally, so they don’t
change. The imports are cheaper and the ngultrum will appreciate as more the
hydropower and foreign aid money comes in.
The spillover-loss effect lies in the loss of positive externalities associated
with the (crowded-out) non-oil traded goods sector.
There are two possibilities to diminish the Dutch Disease: stopping the
appreciation of the exchange rate of the country’s currency and through stimulation of
competitiveness in the production sector. The appreciation of the currency
disadvantages the exports which lead to a deficit of trade balance.
Collier and Goderis found that commodity price booms do have positive
short-term impacts on growth, but that the impacts are significantly negative in the
long term. These negative long-term effects exist only for “point source” natural
resources like oil and minerals, and only in countries with bad governance.
The literature considers that natural resource riches create or exacerbate
institutional weaknesses. The abundance of the natural resources can stimulate the
appearance of corruption or can provoke powerful interest groups to engage in more
intense political or bureaucratic actions for control and redistribution of natural
resource rents, leading even to armed conflict or civil war.
Countries that are rich in natural resources with inferior institutions are
thought to suffer a resource curse because institutions may be decisive for how
natural resources affect economic growths natural resources put the institutional
arrangements to a test.
The quality of institutions determines the growth in countries with natural
resources. There are two types of institutions: producer friendly institutions (where
rent-seeking and production are complementary activities) and grabber friendly
~ 77 ~
institutions (where a natural resource boom will attract resources to productive
activities).
The empirical evidence shows that government spending is correlated with
the increases in resource revenues. The government must have fiscal rules in order to
know how much of the resource revenues can be spent and how much saved in a
natural resource fund.
This fund, which depends on the purpose of reducing volatility, constraining
the spending effect, or investing in future growth, can be a stabilizing fund, savings
fund, or investment fund.
Incorporating the natural resources fund into the general budgetary system
helps making decisions on striking a balance between dealing with the impacts of
Dutch Disease and pursuing development objectives. Excessive public spending
appears to be at the heart of economic mismanagement in the wake of natural
resource booms.
Dutch disease
The disease is more likely to appear in an inflexible economy because there
are path dependencies, irreversible processes, lost spillover effects and inflexibilities,
thus the economy will suffer low capacity utilization in the after math of resource
depletion before it returns to general equilibrium. Whether a Dutch condition leads to
a real disease largely depends on the country’s policy responses to the boom.
For example, Norway did not suffer from Dutch Disease and Resource Curse
due to deliberate macroeconomic policy, the arrangement of political and economic
institutions, a strong judicial system, and social norms.
In Norway the factor movement effect was mitigated through income
coordination. A highly centralized wage formation system made it possible to make
the manufacturing sector the wage leader. This made it possible to limit wage
increases to all sectors from an expanding resource sector. The spending effect was
curbed because the government shielded the economy by fiscal discipline and
investing abroad. The spillover-loss effect was small because losses were substituted
for by gains in the highly techno logical offshore oil extraction sector, which requires
more capital than on-land oil extraction.
Many authors think that resource curse it is caused by rent-seeking and
corruption.
Auty argues that rent seeking turns into corruption, which discourages
investment and limits growth.
Russia, as many other countries, depends heavily on oil and on precautionary
measurement that can be taken to protect themselves against price falls. First, they
have to build the rest of the economy using oil money saturate. Russia was far-sighted
enough to do that. The second solution is to build a healthy stock of foreign exchange
reserves. For the Russian economy, the most important problem seems to be endemic
corruption in the Russian government and the judiciary system, which discourages
~ 78 ~
investment by undermining property rights and the enforcement of contracts. Even
before the Russian invasion of Crimea, Russian stocks were trading at a 50% discount
to other emerging markets.
The invasion of Ukraine exacerbated Russia's economic heavyweight.
Penalties imposed after the annexation of Crimea has blocked all investments in oil
companies and defense of the country. The sanctions also prevent Russia’s oil
prospectors from access to exploration, production and refining.
Putin wanted to outdo the Americans by encouraging foreign investment from
foreign companies in a low tax environment. The reason for not working is that
Russia is so corrupt and there is little incentive for investment in a highly competitive
field. Fundamental to restructuring the economy, Russia should fight corruption.
Unfortunately, those who are leading the country are corrupt as well, therefore there
is no sign of that happening. Power in Russia is not disputed. Russia has to
decentralize the government and give to the people from the middle and lower levels
authority to change the economy.
But Putin will not do this. That said, few of us predicted the collapse of the
Soviet Union and improbable things happening. It is possible that an economic crisis
could see the end of Putin. He was given credit for growth in the Russian economy
and he could be accused of collapse.
In the model made by Mironov and Petronevich was highlighted the fact that
eruptive flows of export revenues determine a significant appreciation of the real
effective exchange rate. The study took into consideration the period 1997-2013 and
has shown that an increase in export revenues by 1%, yields an appreciation of the
real effective exchange rate by 0.2%.
In other words, the oil prices affect the economy through real exchange rate.
The manufacturing sector has a weak, but positive growth during the period.
the growth rate was much less than in the other sectors, notably services and
especially wholesale trade, which finally led to a shrinkage in the share of
manufacturing in GDP to 15.6%.
In manufacturing industries, during the period of 1998 to 2005 was not a loss
of competitiveness despite the real appreciation of the ruble because Russian exports
of manufacturing products reached 1,1%3.
Furthermore, in the services sector the real effective exchange rate has a
positive and significant impact on employment rates. The reasons of the shift from
manufacturing and mining sectors to services are the appreciation of the real effective
exchange rate and the “Soviet disease” implying the reorganization of enterprises and
the rapid expansion of underdeveloped services sector since mid-90s. This shift has a
negative effect on the output growth rate in manufacturing sector.
The quick development of the services was partly due to the fact that services
were not put forward during the Soviet Union times.
~ 79 ~
Conclusions
The Victoria Dobrynskaya and Edouard Turkisch’s model discovered that the
total employment in the economy of Russia in period 1999-2007 was rising steadily,
but the employment in manufacturing industries and also in fuel industry declined
after 2002. In conclusion, the hypothesis that higher resource prices attracted labour
to the resource industry cannot be confirmed.
When it comes to salaries, these have grown unevenly in the different sectors,
but the productivity of labor has improved in every sector because the abundant oil
revenues and state policy in respect of wages.
In respect of monetary policy, the Russian Central Bank admitted to switch to
inflation targeting in the medium run, in order to make the exchange rate floating
more freely, but it is going slowly because there are uncertainties and difficulties in
evaluating the situation in the longer term.
References
1.
2.
3.
4.
5.
6.
Badkar, M., Everyone Who Is Gloomy About Russia's Economy Has The Story All Wrong,
Business Insider, 2014, http://www.businessinsider.com/what-everyone-gets-wrong-aboutrussia-2014-2;
Covi, G., Dutch Disease and Sustainability of the Russian Political Economy, European
Central Bank, 2014, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2529746;
DEPARTMENT OF ECONOMICS OxCarre (Oxford Centre for the Analysis of Resource
Rich Economies), Dutch Disease, Factor Mobility, and the Alberta Effect: The case of
federations, Hebrew University of Jerusalem, 2012;
Dobrynskaya, Victoria; Turkisch, Edouard, Is Russia sick with the Dutch disease?, Document
de Travail, France, 2009-2010
Mironov, V.V.; Petronevic, A.V., Discovering the signs of Dutch disease in Russia, Suomen
Pankki Finlands Bank,
http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Pages/dp0315.aspx
Larsen, E.R., Escaping the Resource Curse and the Dutch Disease? When and Why Norway
Caught up withand Forged Ahead of Its Neighbors, American Journal of Economics and
Sociology, Inc., 2006
~ 80 ~
Ivanova Anna Yurievna
Иванова Анна Юрьевна
Sarzhat-ool Vlada Vladislavovna
Саржат-оол Влада Владиславовна
St. Petersburg State University of Economics
Санкт-Петербургский государственный экономический университет
Master program “International economics”
Программа «Международная экономика»
e-mail annaivanovane@mail.ru
e-mail sarzhatool_vlada@mail.ru
ОСОБЕННОСТИ И ПЕРСПЕКТИВЫ РАЗВИТИЯ ПРЕДПРИЯТИЙ
МАЛОГО БИЗНЕСА В АГРАРНОМ СЕКТОРЕ РОССИИ И РУМЫНИИ
FEATURES AND PROSPECTS OF THE DEVELOPMENT OF
SMALL BUSINESSES IN THE AGRICULTURAL SECTOR
IN RUSSIA AND ROMANIA
Abstract: Agricultural policy is a crucial key component of the overall socioeconomic policy and agriculture - a strategic sector of the economies of most
countries. Agriculture occupies a special place not only in agriculture, but also to all
sectors of the economy. One of the key elements of the modern economic system is a
small business. It can combine different forms of ownership and management, thus
responding to global trends of market economy.
The article discusses the concept and criteria of small enterprises in the
agricultural sector. To characterize the basic tendencies in Russian agriculture and
Romania. The Russian Federation is projected deterioration in the labor market due to
the shortage of skilled labor because of the downsizing of the workforce. It is
predicted that food prices in the near future will increase substantially. Based on the
above, most types of agricultural production will be provided with effective demand
in the domestic and international markets in the long term. Today, Romania is going
through hard times in the agricultural sector. During the global financial crisis the
country experienced a heavy blow, and still its economy cannot get back to normal.
According to experts, agricultural modernization requires a significant financial
investment. In Romania, there are hundreds of thousands of hectares of fertile land,
and used only a small portion. Despite the fact that almost half of Romania's
population is engaged in agriculture, it accounts for ten percent of the country's GDP.
Аннотация: Аграрная политика является важнейшей ключевой
составляющей общей социально-экономической политики государства, а
сельское хозяйство – стратегической отраслью экономики большинства
государств. Сельское хозяйство занимает особое место не только в
агропромышленном комплексе, но и среди всех отраслей экономики. Одним из
~ 81 ~
ключевых элементов современной экономической системы является малый
бизнес. Он может сочетать разные формы собственности и хозяйствования,
таким образом, отвечая общемировым тенденциям формирования рыночной
экономики.
В статье рассматриваются понятие и критерии малых предприятий в
агропромышленном комплексе. Охарактеризованы основные тенденции в
сельском хозяйстве России и Румынии. В Российской Федерации прогнозируется ухудшение ситуации на рынке труда в связи с дефицитом квалифицированной рабочей силы по причине сокращения численности
трудоспособного населения. Прогнозируется, что цены на продукты питания в
ближайшем будущем существенно возрастут. Исходя из вышесказанного,
большинство видов производимой сельскохозяйственной продукции будут
обеспечены платежеспособным спросом на национальных и мировых рынках
сбыта в долгосрочной перспективе. На сегодняшний день Румыния переживает
не лучшие времена в сельскохозяйственной отрасли. Во время мирового
финансового кризиса страна пережила тяжелый удар, и до сих пор ее экономика
не может войти в нормальное русло. По мнению экспертов, модернизация
сельского хозяйства требует серьезных финансовых инвестиций. В Румынии
находятся сотни тысяч гектаров плодородных земель, а используется только их
небольшая часть. Несмотря на то, что почти половина населения Румынии
занимается сельским хозяйством, на его долю приходится десять процентов
всего ВВП страны.
Key words: agriculture, agricultural policy, small business, RussianRomanian cooperation
Ключевые слова: сельское хозяйство, сельскохозяйственная политика,
малый бизнес, российско-румынское сотрудничество.
The economic potential of the country, the structure of its social system and
quality of life were determined for centuries by the peculiarities of the agricultural
sector, especially the plight of the rural population. The specificity of the village that,
as at some point the foundation of society, it was the least prone to mass and even
more artificial socialization structures like regional industrial and sociopsychological. This is a certain conservatism of the village and at the same time its
vitality.
Compared to the agriculture industry - cost little benefit industry. This is due
to many reasons. For example, in rural areas there is always latent surplus population,
agricultural production is seasonal, is largely dependent on natural conditions, and so
on. D. Therefore, rural incomes from that is much lower than that of industrial
workers. In this situation, it is possible to obtain affordable and reliable sources in
order to stabilize the situation in the agricultural sector through the development of
small business.
~ 82 ~
Entrepreneurship as a socio-economic phenomenon emerged in the early
stages of development of society. But so far, among academics there is no established
point of view on the essence of entrepreneurship. As for the problems of
entrepreneurship in agriculture, then the question still remains poorly studied.
Competitive position of small business (MT) in the open credit market as a
whole can be described as unfavorable, which is largely due to the specific
organization of the economic activities of the small companies. In this regard, there is
a problem of limited credit financing small businesses, which is typical not only for
the transition economies, but also for developed economies. Overcoming this problem
is possible only through the implementation of the policy of state support of small
business and the development of effective models and mechanisms of lending the
sector in the economy based on a detailed study of the features a small business as a
subject of credit relations.
Targeting small businesses in the local market gives reason to see him as an
economic basis of local government. In this regard, support for small businesses by
local authorities is of particular importance for the regions.
Numerous studies confirm that the MB-defined boundaries is not uniform: on
the industrial structure, on the list of the main problems, according to the results of
the operation.
Currently, the EU, Japan, the United States already exists experience in
research of national and international levels on various aspects of the development of
small and medium-sized enterprises (SMEs).
There are examples of such studies in Russia and other Eastern European
countries1.
However, the data are quite fragmented. This is largely explained by the
different approaches to the definition of small and medium enterprises. However,
individual attempts to both foreign and local researchers to develop a common or
generic definition of small business, apparently doomed to failure. Because of the
variety of problems whose solution may require a formal definition of small and / or
medium-sized enterprises, as well as a variety of objective conditions for the
functioning of the macro environment of SMEs in different countries and regions
there will always be variations on this theme. On the practical impossibility of such
task notes in the economic literature, at the same time we emphasize that the solution
to some problems must be strict or formal quantification, and for other - quite
commonly agreed (informal qualitative) approaches.
The European Union has adopted such a classification of small and mediumsized enterprises: a micro enterprise refers to the number of employees not more than
9 persons; for small businesses - the number of workers from 10 to 49 people; to the
average - the number of workers from 50 to 249 people. For all categories of
enterprises turnover must be less than 40 million euro or the overall balance of less
1
Kolesnikov, Kolesnikov L. Small and Medium Business: evolution of concepts and problem
determination //Problems of Economics. 2006. № 7. p. 52. ~ 83 ~
than 27 million euro2. An important criterion is the economic independence of the
company. In Austria, for example, relate to small businesses with fewer than 50
people do not, they must have an annual income of less than € 5 million or the book
value of the assets up to 2 million euro. The share of foreign owners in the ownership
of a small business should not exceed 25%. In Italy, refer to the micro enterprises
with the number of employees less than 19 people, to small - with the number of
employees from 20 to 99 people, a medium-sized enterprises (small) - with the
number of employees from 100 to 199 people, a medium-sized enterprises (large) with the number of employees from 200 to 499 people. And in Romania, the number
of working - no more than 25 people; an annual turnover of between LEI 10 million
to 2 billion.
The International Organization for Economic Cooperation and Development
(OECD), which includes economically advanced countries, defines enterprises with
up to 19 people as "very small", to 99 people - as "small", from 100 to 499 people - as
"average" and more than 500 - as "large."
As is clear from the definition, small business - a business carried on by the
subjects of the market economy under certain prescribed by laws, the criteria
(indicators) that constitute the essence of this concept. Typically, the most common
criteria indicators, based on which actors of the market economy are small businesses
are the number of staff (employed workers), the size of the authorized capital, the
amount of assets turnover (profit, income), etc.
From the standpoint of economic theory, under the small business - as
opposed to large - usually understand this form of enterprise that differs connection in
one of the owner and manager. The small business owner is usually the company not
only invests its own funds, not only controls the direction of their use, but also
personally supervises all major processes (marketing, fundraising and investment). It
carries all the risks and ruined in case of failure3.
Small business is characterized as a special, innovative, anti-bureaucratic
style of management, based on a constant search for new opportunities, focus on
innovation, the ability to attract and utilize for the task resources from a variety of
sources; entrepreneur - a man who spends all this necessary time and effort, takes on
full financial, psychological and social risk, receiving the reward money and the
satisfaction achieved.
Under the small business in agriculture, defined as individuals engaged in
entrepreneurial activities without forming a legal entity (individual entrepreneurs) and
legal persons (commercial organizations) which satisfy the conditions for inclusion in
the category of small enterprises.
2
3
Prokhorov V.A. Big problems of small business // Entrepreneur. 2007. № 3. p. 27. Small business in Russia: Past, Present and Future / Ed. B.G. Yassin, A.Y. Chepurenko,
V.V. Buoys. M .: Fund "Liberal Mission", 2010. ~ 84 ~
Regarding commodity households noticeable that law private farms of the
population recognized as a form of auxiliary noncommercial activity4.
However, it is estimated the All-Russian Institute of Agrarian Problems and
Informatics among this group 20%, that's 2.5 million. Farms constantly carry out
market sales5.
Accordingly, it would be logical to include the population of commercial
farms to small forms of entrepreneurship.
Thus, there is no difference between the peasants and farmers. And he and the
other term (as well as farm, family, labor economy) is used to define the same type of
organizational form of agricultural activity, free enterprise, the essence of which most
fully reveals the farm. The multiplicity of names is due to more local, national
characteristics.
The organizational structure and the activity conditions of peasant farming we
farm and in foreign countries, there are some differences, such as the nature of
specialization, logistics and others. But these differences do not affect the
fundamentals of this form of management.
To determine the place of small business in system of agrarian relations, it is
important to point out that, in addition to a substantial share of total agricultural
production, it is great value in solving social problems of the village, establishing
sustainable rural development, providing employment and maintaining rural incomes.
Because of the collective farms in the 1990s. dismiss more than 5 mln. people. In this
situation, small family sector has played the role of social shock absorber, allowing
the state to save on programs to combat rural unemployment and poverty, but the
problem is far from solved. The total number of unemployed in rural areas is around
1.8 million. People, including registered and receive benefits only 320,000.
The remaining support its existence mainly due to an unregistered small
businesses and conduct individual farms, without resorting to the employment
services.
In economic literature, the question of the business environment as a whole
rather actively discussed. However, with regard to the agricultural sector, where the
activities of businessmen linked to the use of land as the main means of production,
as well as other living organisms, where it is necessary to have special forms of
organization and conduct of the proceedings, the issue is still not enough studied.
Formation of the business environment in the agricultural sector in the
country is creating a favorable socio-economic and political situation, providing
economic freedom capable citizens for entrepreneurial activities in the production,
processing and marketing of agricultural products, services, works designed to meet
4
5
Russian Federation. Laws. On a personal part-time farm of 7 July 2003 № 112-FZ // Meeting
the legislation of the Russian Federation of July 14, 2003 № 28.
Petrikov A. State support for small business in the agricultural sector and rural development //
AIC: economy management. 2003. № 1. P. 10. ~ 85 ~
the demands of end users and obtaining business income at the level required for
expanded reproduction.
The concepts of "small" and "large" agricultural production in our country
and in the West are quite ambiguous by the scale of farmland, livestock and
production volumes. The fact that what in the EU, North and South America is called
"large farms" in Russian is "fine."
The main area of farmland in the Russian Federation is in the use of large
agricultural enterprises. They remain large land and separate from the goals and
objectives of sustainable development of rural areas, civil society institutions and
local governments.
State management structure, direct executors of work processes in business
entities not engaged in agribusiness and are not interested in the outcome of the
markets. Controls on the ground do not bear any responsibility for the financial and
economic activities of collective enterprises, peasant (farmer) farms and rural
households.
At the same time, farm managers are not titular owners, but with little or no
participation of labor collectives are personally commercial transactions, manage,
contrary to the law, the land, fixed assets, assets and human destinies. There are also
modern collective farms of the legal form of corporate governance with a proven
management6.
From the above it can be identified as follows:
1. Small businesses in the agricultural sector due to the limited scale of
operations, relatively small markets, and sales resources, as well as other
specific features aimed primarily at meeting the local needs for goods and
services.
2. Under the conditions of market relations the issue of sustainable
livelihoods of villagers can be successfully addressed through the
development of small agro-business, maintaining its national economic
functions (production of agricultural raw materials and food, nonagricultural goods and services, public goods, preserving the rural way of
life, social control over the territory, expanded reproduction population
growth in the quality of his life, maintaining the ecological balance in the
biosphere).
3. Selection of areas and activities for small business is largely determined by
the economic, geographic and climatic conditions of the area of their future
performance.
4. Significant strengthening of inter-regional differences in people's incomes,
which is a hallmark of the current stage of economic development of our
country, has a significant influence on the demand for the products of
small firms.
6
Kenikstul V., V. Sedniv management to small and medium agribusiness // AIC: economy,
management. 2007. № 2. pp 11-14. ~ 86 ~
Small business - one of the fastest growing segments of the socio-economic
life of the state. Small business owners are a large stratum of private owners and by
virtue of its mass play a significant role not only in socio-economic, and political life
of the country. For small forms of management include: (peasant) farms, small
agricultural businesses, individual entrepreneurs and family farms. Taken together,
the sector provides more than 62% of the total gross output of agriculture. It is worth
noting that to date small farms in Russia produce more than 50% of the total volume
of agricultural products, including more than 50% of meat and milk, potatoes grown
88% and 78% - vegetables. In recent years, characterized by reduction in the number
of small enterprises engaged in agricultural production, and the increase of the
occupied area (per farm) that it is connected with the process of consolidation and
selection of the most powerful economies. Improvement of legislation creating a
civilized legal framework for the activities of small businesses, the actions taken to
normalize the financial and credit support of small business led to an increase in the
basic indicators of the functioning of small business in the country.
Russia - a country that has an incomparably larger area as compared to other
countries. Accordingly, there is great scope for the development of agriculture.
Economic reforms in Russia have affected many sectors of the economy. The
worst situation in agriculture. More than 20% of farms remain unprofitable. Salary
residents of the village is 2.5 times lower than the average for Russia. A great concern
is the situation in animal husbandry. Reduced livestock and dairy production. It is
becoming increasingly evident that without rapid and efficient development of small
businesses do not raise a village. Its successful development would be the basis for
the formation of local budgets suffering from a lack of tax revenue. In the long term,
there are divergent trends in economic development. On the one hand, traditional
forecasts suggest that annual average GDP growth rate in 2020 of 4.4%. After 2020
economic growth due to increased environmental and climate constraints, and as a
result the effect of reducing the gap between the developed and leading developing
countries could fall to 3% per year. On the other hand, the current global financial
crisis may lead to a slowdown in economic development, the recession in the market
and in the extreme, to a violation of the existing world system of prices for resources
and commodities.
"The main objectives of the state policy in the sphere of small enterprises in
rural areas is the increase in production and sales volumes of agricultural products
(peasant) farms and personal, and increasing rural incomes," - this is the position of
Minister of Agriculture of the Russian Federation EB Skrynnik.
The main characteristics of economic development in the next 10-15 years
could be:
- The spread of modern technology in the main engine of economic growth;
- Increasing the impact of demographic challenges;
- Accelerating the development of innovation;
- Energy efficiency and increased use of alternative forms of energy;
~ 87 ~
- Strengthening growth restrictions related to environmental factors, lack of
fresh water and climate change.
The Russian Federation is projected deterioration in the labor market due to
the labor shortage due to the reduction in the working-age population of 8-10% every
5 years beyond 2010 skilled and quality workforce is chronically lacking. According
to the Washington-based research institute engaged in the study of the food situation
in the world, food prices in the near future will increase substantially. The reasons for
the inevitable rise in food prices two: global warming and the increase in food
consumption. We should not forget about biofuels, the production of which is also
reducing the amount of raw food. Based on the above, most types of agricultural
production will be provided with effective demand in the domestic and international
markets in the long term.
Small businesses in agriculture, presented by enterprises of various
organizational and legal forms, such as KFH, SP, SPK, Ltd., and others, is the basis
of the agrarian economy of the Russian Federation. It accounts with micro-enterprises
and households of the population (LPH), accounting for over 62% of domestic
production of food.
Unfortunately, today there is a tendency to reduce the number of small
enterprises in the agricultural sector. From 2012 to the present time, the number of
peasant (farmer) farms decreased from 308,000 to 216,000.
Table 1. Criteria for defining small and medium-sized enterprises in the
provision of state support
Small forms of
management
Agricultural
producers
SMSP, in accordance with the Federal Law of 24.07.2007, ą 209-FZ
"On the development of small and medium enterprises in the Russian
Federation"
Enterprises
Indicators
Medium
Micro
Small
Agricultural
consumer cooperative
Share of the other
Individual
entrepreneur (SP) and
a peasant (farmer's)
economy (KFH)
The average number
of employees for the
preceding calendar
year, people.
101 - 250
not more
than 100
not more
than 15
people
Other business
Sales (excluding
VAT) for the
preceding calendar
year, million rubles
1000
400
60
agricultural
organizations
Personal part
economy
not more than 25
entities%
Form of noncommercial activity
~ 88 ~
The main factors reducing the number of small businesses in the agricultural
complex are as follows:
- Unavailability of funds of state support, with low subsidy costs are
constantly growing;
- Lack of access to credit, high interest rates and inefficient subsidy
mechanism;
- Difficulties with sales of agricultural products;
- Strong administrative pressure from the regulatory authorities unlawfully
stringent requirements and regulations which are difficult feasible for small
businesses.
At the end of 2014 subsidy per hectare received the support of 32 925 farms,
representing 14% of the total number of registered individual farms and 30% of those
who apply for subsidies. This low percentage is due to the establishment in the
Russian regions of excessive demands by artificially restricting the circle of recipients
of decoupled support. In particular, from the farmer need help to increase the wages
of employed workers carrying out activities agrochemical and fertilizer, purchase
only certified seeds, the absence of evidence of burning stubble, holding the
agronomic and environmental studies of the soil, the availability of tax debt, even if it
is 50 cents, and so here in after.
These actions of regional authorities put a small agribusiness in unequal terms
with large companies that have a large staff of attendants.
To eliminate the unequal conditions of the Government of the Russian
Federation need to consider simplifying the requirements for document management
in the design of subsidies per hectare support for small agricultural producers by
establishing a single procedure and a ban on further binding conditions at the regional
level.
Currently, small agribusiness credited as a residual. Given the shortage of
funds in commercial banks lending to small businesses in the agricultural sector,
which is a diversified segment of the agricultural economy, virtually stopped.
On the one hand, banks are in no hurry to give resources, preferring months to
coordinate the application and display requirements threefold pledge. On the other
hand, businessmen are afraid to take loans because the interest rate is initially high
and the interest subsidy comes with a considerable delay, which can reach up to 9
months.
In addition, farmers difficult to achieve equal rights in matters of interest rate
subsidies, especially for investment loans. If the size of the investment loan of less
than 10 million rubles. KFH can not get the subsidy.
Poor infrastructure sales forces small agribusiness dealers to sell
manufactured goods at low prices. As a result, the entrepreneur does not receive the
level of profitability necessary to maintain the expanded production and development
enterprise.
~ 89 ~
To display the small agricultural production to the market you need to build a
system of its movement from field to counter through the organization at the
municipal level storage infrastructure, part processing, and packaging of agricultural
products. This can be done with the help of the consumer of agricultural cooperatives.
The development of such infrastructure, ultimately, will improve the profitability of
small farmers and at the same time reduce the price of food for consumers.
In the absence of such infrastructure, created with the participation of the state
support for wholesale and distribution centers (CRC) will not fulfill their duties to
improve access to markets for small businesses, to be filled with domestic products
and imports will be forced to sell in order to recoup their costs. The downside here is
an example Agropromparka created in Kazan (APT), where the interests of big
commercial business went against the interests of small farms (farms, peasant
farmsteads, agricultural consumer cooperatives). As a result, the APT has been
corporatized and the access of small farms is limited, due to the high rents.
Public funds allocated under the State program of development of agriculture
in the creation of large ORC need to reallocate the creation of logistics centers with
municipal legal form "of agricultural consumer cooperatives", and implementation of
projects on construction of major regional and inter-regional wholesale distribution
centers with the participation of state agents to begin in the regions of Russia, where
the municipal system built logistics centers.
Anxiety farmers is the possible adoption of amendments to the Federal Law
"On the Road Safety" (in terms of limitation deadlines for the use of vehicles),
providing for a ban on the operation of freight transport over 15-25 years.
In addition, in 2015, resulted in benefits to small entrepreneurs on insurance
premiums to the Pension Fund, Social Insurance Fund, a fund of CHI. Cancellation of
benefits will significantly increase the costly burden that often for small businesses is
daunting.
Romania - is one of the European countries, which are still used traditional
methods of farming and preserved genetic diversity of crops and animals. Romania is
the second largest country in the region of Southeast Europe (SEE), both in area (23.0
mln. Ha), and population (21.6 mln.).
She joined the European Union in 2007. Although the share of agriculture in
Romania's GDP declining, while other industries were developed, agriculture still
plays an important role in the rural economy and of society in Romania, providing
jobs for 32% of the working population. The average farm size is 3.4 hectares, and
their low productivity explains why the average income in rural areas is 27% lower
than in urban areas.
With regard to the membership of Romania in the EU and the impact on the
agricultural sector after the accession of Romania to the EU under the blow was
agriculture, critical for Romania. It must comply with strict rules EU agricultural
policy (for example, produce "too much", will certainly buy products from other EU
countries), the permissible support - only 50 euro per hectare (in France - 500 euro).
~ 90 ~
As a result, the number of livestock has fallen by half, and the village moved to a
patriarchal life (manual labor, one tractor in the village, seasonal work in the cities).
Today, Romania is going through hard times in the agricultural sector. During
the global financial crisis the country experienced a heavy blow, and still its economy
can not get back to normal. According to experts, agricultural modernization requires
a significant financial investment, but at the moment, Bucharest can not provide
them. In Romania, there are hundreds of thousands of hectares of fertile land, and
used only a small portion. State authorities can not attract large investors, therefore
forced to sell land to foreign farmers. In turn, only 10% of the land owned by
foreigners employed for agricultural purposes, otherwise, people are buying up land
to later resell it much more expensive. Despite the fact that almost half of Romania's
population is engaged in agriculture, it accounts for ten percent of the country's GDP.
At the same time, the majority of farmers are at a loss. The government must
immediately take a number of relevant actions to improve the situation. Otherwise,
changes for the better can be expected.
Small farms, which account for 79 per cent of national agricultural
production, are the basis of the Romanian farmers. Deputy Prime Minister and
Minister of Agriculture of Romania Daniel Constantin announced the adoption of a
series of new measures to support family farms for the period up to 2020. In
accordance with the National Rural Development Programme country, family farms
have access to new funds, which will help them to upgrade machinery and equipment,
to enter new markets and develop alternative forms of income in rural areas, such as,
for example, agro-tourism.
Recently there has been reduction in the number of farms in the EU. Reduces
the number of farms of small size, half farming has no employees. Developing
organic agriculture and irrigated agriculture. In the European Union farm owners are
increasingly hiring managers, in 2013 only 25.3% of the owners of farms engaged in
agricultural production as the main activity, 9.4% - combined with the work in other
sectors of the economy.
One of the main ways of increasing the efficiency of the farm - the
development of diversified production. If we consider the EU, the more farmers
engaged in additional activities: agrotourism (1.4% of the total number of farms),
handicrafts (0.1%), energy production (eg, in the Netherlands, some owners of farms
is also owners of windmills, 0.5%), processing of agricultural products (8.0%), wood
(0.3%), fishery (0.1%), contract (2.1%) and other (2 , 9%). On average in the
European Union the share of farms with diversified production ranges from 1.0%
(Lithuania) to 43.2% (Romania).
Small business is currently playing an important role not only in agricultural
production but also in solving social problems. However, for the success of farms and
other small businesses is not enough to state support. Much depends on the individual
qualities of entrepreneurs, farmers, which should be good managers who know the
latest technology, the organization of marketing, financial transactions, to be able to
~ 91 ~
build relationships with subcontractors agribusiness. Small businesses by their very
nature has a strong regional orientation. Small farms build their activities based
primarily on the needs of the local market, the volume and structure of local demand.
In terms of the economic independence of regions is small business should be a major
factor in optimizing the structure of the regional economy. The role of small
businesses is to mitigate social tensions because small business is the basis for the
formation of the "middle class" and contributes to the weakening of the market
economy inherent tendency toward social differentiation. The purpose of creation of
small businesses - overcome the decline in production, especially in animal
husbandry, and the creation of prerequisites for a successful recovery in the future.
The functioning of the local market, rapid response to changing conditions of the
market, a direct relationship with the consumer, specialization in a particular segment
of the market of goods and services, the opportunity to start their own business with a
relatively small start-up capital - all the dignity of small businesses, increases the
stability of the domestic market . But under certain conditions, it becomes a
disadvantage, limiting their development. On the one hand, rapid response to
changing conditions of functioning of the market makes small business more mobile
and adaptable, and on the other - depending on market conditions, the dynamics of
the external socio-economic and political conditions. Relatively small capital narrows
the scope of production, limits the possibility of attracting additional resources
(scientific, technical, financial, industrial, labor, etc.). The limited scale of production
and a small number of employees are responsible for the simplicity and efficiency of
management. However, combining the functions of the owner and manager in the
person of the owner of the enterprise, the establishment of personal relationships with
employees of the enterprise, the informal style of management, reducing
administrative costs can lead - to the self-exploitation and overtime.
The main ideas of the creation of small businesses based on the latest
agricultural technologies are:
- Re-establishment of a healthy lifestyle based on new technologies and a
completely different conditions;
- Healthy outflow of unemployed people from the overcrowded cities;
- Improving the social living standards of the rural population;
- Participation in solving the problem of food security.
Small businesses need to play a significant role in import substitution goods,
especially livestock products, they help to overcome the monopoly of the economy,
development of competition, introduction of scientific and technological
achievements in production. It should be noted that small companies are more
flexible in responding to changes in consumer demand, can use local sources of raw
materials, waste large-scale production, more fully take into account regional needs,
creating favorable conditions for the employment of all groups of the population,
maintenance of individual customers. Another important factor in favor of small
businesses: the small size of production is favored normalization of the ecological
~ 92 ~
situation in the regions. It is also important that small businesses are established
informal relations in the workplace, it is easier to pick up psychologically compatible
staff, people really feel their involvement in enterprise management, pay close ties
with its results. Another characteristic of small businesses is an active innovation
activities and accelerate the development of various sectors of the economy. These
qualities in the mass development of small businesses promote social and economic
growth and make it possible to save money in the short term for the sustainable
development of other sectors of the economy of the country.
You can also highlight the following trends in the development of a peasant
(farmer's) management, which, in our opinion, could be useful for the Russian and
Romanian agriculture:
- Withdrawal from the agricultural mono-employment in areas where there
remains potential for employment of the population, development of farm
diversification;
- Consolidation of holdings;
- Support is strongest economy of all types of special loans, tax benefits,
etc.;
- The use in the activity benefits large farms through the development of cooperatives of various types;
- Increase efficiency through ecological agriculture;
- Wide use of innovation (scientific and technological progress, the latest
developments, technologies and facilities aimed at saving technologies).
Summarizing, we can conclude that small businesses:
- Promote economic restructuring, to overcome monopoly producers;
- Are testing the competitiveness of products on the market, mobility and
cost-effectively adopt new technologies;
- Perform an important social function
- Provide employment, creating new jobs, form the "middle class", the wider
owners and entrepreneurs;
- Contribute to a better use of resources, waste production;
- More mobile than large enterprises, and is much easier to adapt to the
conditions of new markets;
- The organization of different lack of need for large initial capital (provided
by the high rate of turnover of capital).
Thus, the development of small businesses today can be seen as one of the
priorities of the regional economy for countries such as Russia and Romania. For the
operation of such enterprises in virtually every region of the country has the
necessary resources to enable to provide a relatively short period of return on the cost
of establishing the farm, fodder development and obtaining high-quality products to
the public.
~ 93 ~
References
1.
2.
3.
4.
5.
6.
Kenikstul V., V. Sedniv management to small and medium agribusiness // AIC: economy,
management. 2007.№ 2. pp 11-14
Kolesnikov, Kolesnikov L. Small and Medium Business: evolution of concepts and problem
determination //Problems of Economics. 2006. № 7. p. 52.
Petrikov A. State support for small business in the agricultural sector and rural development
// AIC: economy management. 2003. № 1. P. 10
Prokhorov V.A. Big problems of small business // Entrepreneur. 2007. № 3. p. 27.
Small business in Russia: Past, Present and Future / Ed. A.Y. Chepurenko, B.G. Yasin, V.V.
Buoys. M .: Fund "Liberal Mission", 2010.
Russian Federation. Laws. On a personal part-time farm of 7 July 2003 № 112-FZ //
Collection of the legislation of the Russian Federation of July 14, 2003 № 28.
~ 94 ~
Meng Xin
Мэн Синь
spencerxman@163.com
Alexander Sadikov
Александр Садиков
sadicov91@rambler.ru
Санкт-Петербургский государственный экономический университет
St. Petersburg State University of Economics
Программа «Международная Экономика»
Master program “International Economy”
THE IMPACT OF CHINA ON ROMANIA’S FOREIGN TRADE SYSTEM:
COMPETITION AND MUTUAL BENEFIT
РОЛЬ КИТАЯ ВО ВНЕШНЕЙ ТОРГОВЛЕ РУМЫНИИ: КОНКУРЕНЦИЯ
И ВЗАИМНАЯ ВЫГОДА
JEL: F14, F13
Abstract: The history of bi-lateral trade between China and Romania can be
dated back to hundred years ago. In 2012, China become the European Union's first
largest trading partner. According to WTO statistics, the EU continued in its role as
China's first trading partner. Though after join the WTO, the tariff and non-tariff
barriers of China been lower than before, and on the other hand, Romania need to
face the challenge between China and Romania’s foreign trade. In this paper, we’re
trying to show that even though the unbalanced for Romania’s external trade exist
and will exist for a long time, but there is still a chance to find a mutual zone to selfbenefit.
Аннотация: История внешней торговли между Китаем и Румынией
насчитывает сотни лет. В 2012 году Китай стал крупнейшим торговым
партнером Европейского Союза. По статистике ВТО, ЕС продолжает выступать
в роли первого торгового партнера Китая. Хотя после вступления в ВТО,
тарифные и нетарифные барьеры Китая был ниже, чем раньше, Румынии
необходимо решить проблему румынско-китайской внешней торговли. В этой
статье мы попытаемся показать, что, хотя во внешней торговли Румынии и
присутствует несбалансированность, для нивелирования которой потребуется
длительное время, но тем не менее существует возможность достичь
взаимовыгодных компромиссов .
Key words: foreign trade, China, Romania, EU, challenge
Ключевые слова: внешняя торговля, Китай, Румыния, ЕС, вызов
~ 95 ~
1. History and data on Romania-China bi-lateral trade
The history of trade between Romania and China can date back to Han
Dynasty(206 B.C. - A.D. 220) - The Great Silk Road.
The silk road was a foreign trade network founded by the Emperor Wu of
Han—— Liu Che (who was a cold turkey to his family but a dark horse to his
country). He posted Zhang Qian travel to the Western Region twice, this two serves
as an envoy abroad opened up the transportation access between Central Plains
culture and Western Regions culture, which linked the origin commerce from ancient
China to the world. The distance of silk road more than seven thousand mils, ran the
length of India, Russia, Egypt, Greece, Romania etc.. The silk road brought tea, gold,
silver, poclain and silk to the world. It was very hip to dress the Chinese silk robe if
you were an ancient Greece noble. And maybe when Julius Caesar was stabbed to
death in 44 B.C. he was accidentally wearing the silk dress which stamped “Made in
China” label.
And meanwhile, the silk road was connecting China to Romania, exchanging
goods, ideas and culture values.
In the modern times, after established diplomatic relations on October 5th
1949, the exchanges between Romania and the People’s Republic of China are more
frequently than before.
From 1970s, stared the economic and technical tie-up between these two
countries. During this period, China provided Romania with interest-free loans in the
form of commodities, convertible foreign exchanges and complete sets of plant
equipment, particularly in the year 1978, the two countries bulited up an InterGovernment Committee on Economic and Technological Cooperation as a regular
convention held annually.
For quite some time, after 1989, Sino-Romanian relations have maintained
continuous development ever since. In 1994, it was renamed the Inter-Government
Economic and Trade Committee. The trade volume between the two countries
reached a record high of US$1.094 billion in 1979, and then gradually decreased.
The figure touched the record low of $ 0.194 billion in 1999. Without joint
efforts from both countries, the trade volume has been on the increase since 2000. It
amounted to $ 0.296 billion in 2000 and $ 3.436 billion in 2012, reaching an increase
of 1060 percent from the year 1999, of which Romania’s export was $ 57.8 billion
and import $ 68.9 billion. In 2012, China was Romania's main commercial partner in
Asia, the total value of bilateral exchange reaching $ 3.4 billion. Romanian imports
represented $ 2.74 billion, while exports accounted for $ 696 million (Table 1).
~ 96 ~
Table 1. Romanian external trade by major countries and regions partners
-Millions of US dollarsRomanianExports
1999
2000
2004
2006
2010
2012
Total, of which:
9560
11400
25300
33900
48200
57800
Europe, of which:
7440
8800
19900
26100
38300
44200
Africa and middle east
379
454
522
767
1420
2550
America
614
644
1146
1554
1688
2520
1133
1468
3654
5509
7681
8537
42
107
266
253
572
696
10300
12800
3240
50700
60400
68900
8360
10100
2550
38500
48100
55600
82
88
187
298
493
570
540
694
1582
2119
1618
1858
1286
1633
5024
9692
10231
10836
152
189
1100
2440
3390
2740
Asia-Oceania of which:
China
Romanian of imports from
Total, of which:
Europe, of which:
Africa and middle east
America
Asia-oceania of which:
China
Source: The Observatory of Economic Complexity, https://atlas.media.mit.edu/zh/
It is used that the trade balance to be unfavorable to Romania, although there
was a wide array of export opportunities on the Chinese market. Romania used to
have a fragmented and insignificant demand on the Chinese market.
In June 2006, over 4,100 Chinese nationals were recorded as resident in
Romania, mostly investors in various sectors and businesses. So far, there have been
nearly 8000 Chinese companies registered in Roman with a total investment of US$
210 million, 2.3 percent of the total investment Romania absorbs from foreign
countries. The Chinese entrepreneurs have started trading companies, wood
processing factories, cigarette production facilities and a bicycle manufacturing unit.
2.
The Impact of EU Membership into the Romanian International
Foreign Trade with China
2.1. The European Union and China
EU-China Bilateral Trade and Economic Relationship can be traced two
hundred years ago,by that time, China was the largest economies in the world. But in
the year 1978, its share of global GDP had fallen to 0.5%. Since then, because of the
China's policy of “Reform and Opening-up”,that kind of policy has unlocked
unprecedented levels of growth and development.
This policy improving the competitive strength of national economy,
enhances the living standards of the country and increased the role of the private
~ 97 ~
sector, After thhree decadess of reform,, China's ecconomy expeerienced onee of the
worrld's biggest booms. Agrriculture andd light industtry have larggely been privatized,
whiile the state still
s retains control over some
s
heavy industries.
i
Deespite the dominance
of state ownersship in finan
nce, telecomm
munications,, petroleum and other im
mportant
p
entreepreneurs coontinue to expand
e
into sectors
sectors of the economy, private
merly reserved for publicc enterprise. Prices have also been libberalized. Sinnce 1980
form
Chiina has enjoyyed annual av
verage growtth of 9% andd has seen its share of world GDP
exppand tenfold to reach 5% of globall GDP. Chinna's growth has resultedd in the
steeepest recordeed drop in poverty in woorld history. Per capital income
i
has doubled;
d
douubled and thhen doubled
d again, andd reaching a fifth of current
c
EU level in
purrchasing pow
wer parity1.
After enntering the WTO
W
in 2001, the world gave
g
China a big chance to make
its economy beetter than ev
ver, and thatt chance hass given a reemarkable grrowth to
Chiinese foreignn trade.
China has
h become th
he world's leeading exportter. Its total external
e
trade is now
more than threee times the co
ombined tradde of India annd Brazil. Exxports represeent more
o China's eco
onomy. How
wever, the majjority of Chinna's exports focus on
thann one third of
proocessed goodds with limiteed added vallue. The com
mmitments made
m
by Chinna in the
conntext of acceession to the WTO securred improvedd access for EU firms too China's
marrket.
manently
Import tariffs and other non-taariff barriers were sharpply and perm
redduced. We can see from picture
p
1, afteer entered thee WTO, the average
a
tariff
ff is from
16.85% in 20011 drop down to
t 4.4% in 20014.
Soource: Customss Information of
o China, http:///www.china-cuustoms.com/cuustoms-tax/
Figure
F
1. The average
a
importt tariff of Chin
na
1
B
Babucea Ana--Gabriela, Paliiu-Popa Lucia (2011), The International Trade in Goods of the
E
European Unioon Member Staates After Twoo Years of Crissis, Annals of Constantin
C
Brââncuşi din
T
Târgu Jiu, Ecoonomy series, Nr.
N 4/2011, pagg. 9-15.
~ 98 ~
As such, current EU investment in China takes place in a more attractive and
unpredictable business environment. WTO membership also accelerated China's own
efforts to promote transparency, fairness and openness more generally throughout its
trade regime.
Finally, WTO accession opened access for foreign companies to key service
sectors such as insurance and telecommunications, which to that point had been
closely monitored and restricted, if not completely prohibited.
Europe has a critical interest in China's transition to a stable, prosperous and
open economy. It recognizes that the openness of the EU market to Chinese exports
will be a key factor in China's further development. But Europe also stands to benefit
from China's growing market for advanced technology, high-value goods and
complex services. European consumers will continue to benefit from competitively
priced imports from China2.
The macro-economic benefits of China's export strength for European
competitiveness and growth are significant. These gains outweigh the losses suffered
in particular areas. China's integration into the global trading and investment system
has been beneficial for both Europe and for China.
The EU represents more than 19% of China's external trade. European
companies trading in China have brought capital goods, knowledge and technology
that have helped China develop its productive capacity.
Reciprocally, trade with China helps to promote growth and jobs in Europe
through increasing exports, continuing specialization in high-value products and
services and strengthening the global competitiveness of EU companies. China is the
single most important challenge for EU trade policy. EU-China trade has increased
dramatically in the past few years, doubling between 2000 and 2005.
Europe is China's largest export market; China is Europe's largest source of
imports. Even in 2006 the EU-China bilateral trade has increased more than 60 fold
since 1978, reaching approximately € 254 billion. From Pic.2 down below we can get
that sicne 2004 to 2014, the imports have tripled in the last ten years, and exports
have increased four times.
In 2012, China become the European Union's first largest trading partner.
According to WTO statistics, the EU continued in its role as China's first trading
partner (ahead of both the US and Japan). Chinese imports to the EU totalized
approximately $ 5460 billion during that period, representing a year-on-year increase
of almost 21%.
Likewise, EU exports to China increased by 22.5% to approximately $ 63
billion, accounting for overall bilateral trade of upwards of $ 5460 billion. Whereas
2
Lin, Justin Yifu, (2003), Development Strategy, Viability, and Economic Convergence,
Economic Development and Cultural Change 51(2), pp. 278– 308.
~ 99 ~
Souurce: Eurostat Comext
C
http:///epp.eurostat.ecc.europa.eu/newxtweb/
Figure 2. European Union, Trade witth China (Mio €)
urplus with China at thee beginning of the 19800s, trade
the EU enjoyedd a trade su
w characterizzed by a sizaable and wideening EU defficit with Chiina. This
relaations are now
represents the EU's
E
largest bilateral
b
tradee deficit.3
In 20055, China wass the secondd largest benneficiary of 178
1 countriees of the
U's Generalizeed System of Preferences (GSP) scheeme, under which
w
the EU
U grants
EU
autoonomous trade preferencces to importss from develloping countrries. It has a share of
more than 10.3%
% of all effecctive preferenntial imports under the GSP.
2.2. Thee challenge of
o foreign trrade between
n Romania and
a China
Romaniia is a mem
mber of thee European Union sincee January 1st 2007.
Adooption and fuull implemen
ntation on EU
U Trade Policcy.
This is reflected on opening thee Romanian market
m
in ordder to free traade with
all the EU mem
mber countriies, but also with many other third countries which
w
are
parrtners in thosse 121 Free Trade
T
Arrangements signned by the EU,
E includingg China.
Thiis kind of tangible
t
oug
ght to bring lots of oppportunities and
a
chances for the
Rom
manian interrnational traade, owing to
t the new markets oppened for Roomanian
expports.
Nowadaays, the bigg
gest challennges for Rom
manian markket are the Chinese
prooducts and thhe Chinese im
mports. Becaause of the role
r
of Chinaa plays on thhe world
ecoonomic stagee, the modeern tech, thhe low pricee labor and advanced resource
chaannels, Chinaa has becamee an attractive character too the biggestt world multiinational
andd transnationaal corporations, includingg the major EU
E producerss.
3
P
Pastor A., Gossset D., „The EU-CHINA
E
Rellationship: A Key
K to the 21stt Century Order (ARI)”,
R
Real Instituto Elcano
E
de Estu
udios Internacioonales y Estrattégicos, 2005
~ 100 ~
The effect onto the EU market is that, most of its main companies off-shoring
their products to China. For all the reasons, the main purpose of “Produce in China”
phenomena is—Low cost high income. Although they prefer to produce in China,
their distribution market remains those of the developed markets like EU, and so that
it requirements to export their competitive products to EU. For this reason, they
urgently need the EU decision-making authorities and institutions to lower the trade
barriers in relationship with China, and to open the gate for Chinese imports.4
The investments in China has already allowed EU firms to remain
competitive by receiving gains from lower-cost inputs. There is a significant
expression on the value added of products "made in China" will communicate to the
European companies. There is also another benefit, it helped European business on
these spheres, for example preserve jobs and feasible economic activities in the EU
such as research, design, marketing, global management and complex manufacturing.
Some investments which carried out in China have permitted EU firms to profit
market shares in Chinese market and supported Romania’s exports.
The Chinese competitively priced imports have led to lower input prices for
EU businesses and lower prices for manufactured products in Europe which has been
transformed into lower prices for consumers generally. The total effect on inflation
was estimated by the OECD to be -0.2% for the euro zone for the period 2001-2005.
This in turn has helped keep low global interest rates. Savings generated as a result of
cheaper goods and inputs have been invested in other parts of the European
economy5.
2.3. Mutual benefits of foreign trade between Romania and China
Today China’s economy is the largest in the world. Since the 5th of October of
1949, China –Romania relations have reached a very high point. Today, two countries
opened a new chapter for the partnerships between China and Romania as well as
other Central Eastern European countries by signing the Bucharest Outline and the
Joint Statement on Deepening Bilateral Cooperation in New Situation between the
Government of the People's Republic of China and the Government of Romania on
June 6, 2014. The potential of bilateral cooperation in various fields, strengthen
cooperation in international and regional affairs, will bring both countries great
opportunities. Romania can become a bridge between China and Europe as a whole.
Of course, Romania should be able to find a considerable array of opportunities in
financing, project risk and quality management, infrastructure. Being a reliable
partner and friend of China, Romania has a great chance to play an important role in
promoting the development of EU-China relations.
4
5
Shafaeddin, S. M., „The Impact of China's Accession to the WTO on the Exports of
Developing Countries”, UNCTAD, Discussion Papers UNCTAT/OSG/DP/160, 2002
Ghizdeanu Ion, (2012), Romanian between sustainable development and real convergence,
Annals of Constantin Brâncuşi din Târgu Jiu, Economy series nr 4, vol II, p. 37-42.
~ 101 ~
Since agriculture is an important strategic industry for both China and
Romania, agricultural collaboration is an irreplaceable part of bilateral cooperation.
Both countries are interested in the development of the "Silk Road Economic
Belt», and trade cooperation can become the base of increasing the "One Belt and
One Road" program speed development in Europe. The key part of China’s
development strategy is the “One Belt, One Road” Initiative –the Silk Road
Economic Belt and the 21st Century Maritime Silk Road. The aim of the project is to
promote connectivity in infrastructure, resources development, industrial cooperation, nuclear power, thermal power, wind energy development, financial
integration and other fields along the Belt and Road countries.
One of the biggest geopolitical projects of the 21st century, that will bring
together China, Russia, Central Asia and Europe, can create not only well working
trade system and increase international level of experience exchange in financial and
agriculture aspects, but also comfortable transport infrastructure. Perspective
construction projects, that will follow The Silk Road Economic Belt besides creating
new workplace, will also increase average life level of people. One of many priorities
is port infrastructure construction promoting and co-operation in order to deliver
international transport facilitation. International logistics is going to become more
comfortable and safe. Romania can become a European pioneer in this project. The 1st
step is the most important – and Romania can take this step.
During the meeting of the 6th of June in Bucharest, Chinese Minister Han
Changfu said put forward a three-point proposal: first, to set up a China-Romania
High-level Working Group on Agricultural Cooperation as a regular mechanism to
facilitate two-way exchange and cooperation; second, to give a full rein to the ChinaCentral and Eastern European Countries Economic and Trade Forum and other
platforms, to promote trade cooperation and encourage enterprises in both countries
to carry out investment and cooperation; and third, to expand exchange and
cooperation in animal and plant disease prevention and control, farm-produce safety,
and so forth.
China experience in agricultural sector, wind energy and thermal power fields
can be priceless to Romania. The signing of the civil nuclear cooperation agreement
in 2013 and investment cooperation between Romanian state-owned nuclear company
Nuclearelectrica and Chinese CGN only proves the seriousness of China’s intentions
and long-term potential of China-Romania cooperation.
Efforts will be made to solve investment and trade facilitation problems. The
expanding and developing of modern service trade and e-commerce, the promoting of
trade through investment, strengthen co-operation with Romania in industrial chains
and encouraging of Chinese enterprises to participate in infrastructure construction
and creating industrial investments in Romania.
~ 102 ~
Undoubtedly, both countries will make efforts to strength educational and
cultural co-operation, including cross-nation student and education exchanges. Also,
one of the most important aims is to develop co-operation in tourism and to increase
mutual tourist exchange.
Romania can use Chinese FDI to encourage competitive industries to go
global. China is the 3rd biggest oversea investor in the world, and geographical
position of Romania makes it attractive for foreign investments.
According to the Department of Outward Investment and Economic Cooperation of the Ministry of Commerce, there are 35 co-operation zones in
Kazakhstan, Kyrgyzstan, Uzbekistan, Russia, Belarus, Hungary, Romania and Serbia
established by China. The Belt and Road project can create more development
opportunities, including industrial parks constructing, investment initiatives
facilitating and international trade level increasing.
Also, besides the increasing of the trade value level, China’s experience in
transportation infrastructure development, undoubtedly will be useful not only for
Romania, but for all European countries, especially Central Eastern Europe. Chinese
Premier Li Keqiang said, that China is ready to share its investments and technologies
for the construction of the high-speed railway between Romania and Moldova.
The cooperation between countries will provide Romania with new
development opportunities in the fields of nuclear power, thermal power, wind
energy, transportation infrastructure and agriculture. China will get access to the new
market for its goods and technologies.
Such cooperation will positively influence the development of China-EU
relations, as well as ensure the stability, unity and prosperity in Europe.
Conclusions
The open market of Romania brought a large contribution to Chinese
economic growth, and also benefited from the booming of Chinese market: the
competitiveness from Chinese low-priced products have helped keep inflation and
interest rates in Europe lower. Romania companies also gained from the investments
in China. But the competition are still there, the competition from China has raised
serious challenges for Romania in some important manufacturing sectors.
However, the "One Belt and One Road" program opens great opportunities
for both countries. Transportation infrastructure, investment and business activity,
nuclear power, thermal power, wind energy, agriculture and trade co-operation
development will upgrade Romania – China relationships to the next level.
The strengthening of cultural, political and social partnership will not only
keep the trade volume of countries on the present level, but will boost it and create a
strong platform for the further development. Friendship and mutual support will
increase the influence of Romania and China in Europe.
~ 103 ~
References
1.
2.
3.
4.
5.
6.
7.
8.
Babucea Ana-Gabriela, Paliu-Popa Lucia (2011), The International Trade in Goods of the
European Union Member States After Two Years of Crisis, Annals of Constantin Brâncuşi din
Târgu Jiu, Economy series, Nr. 4/2011, pag. 9-15.
Lin, Justin Yifu, (2003), Development Strategy, Viability, and Economic Convergence,
Economic Development and Cultural Change 51(2), pp. 278– 308.
Pastor A., Gosset D., The EU-CHINA Relationship: A Key to the 21st Century Order (ARI)”,
Real Instituto Elcano de Estudios Internacionales y Estratégicos, 2005
Shafaeddin, S. M., The Impact of China's Accession to the WTO on the Exports of
Developing Countries”, UNCTAD, Discussion Papers UNCTAT/OSG/DP/160, 2002
Ghizdeanu Ion, (2012), Romanian between sustainable development and real convergence,
Annals of Constantin Brâncuşi din Târgu Jiu, Economy series nr 4, vol II, p. 37-42.
One Belt, One Road, http://economists-pick-research.hktdc.com/
The tendency of the international trade of Romania and China, European Scientific Journal,
http://eujournal.org/index.php/esj/article/view/3379
Minister Han Changfu meets Romanian Prime Minister, Ministry of Agriculture of the
People’s Republic of China, http://english.agri.gov.cn/news/dqnf/201406/t20140610_22747.
htm.
~ 104 ~
Popa Bianca Alexandra Bucharest Academy of Economic Studies
Master program “Business Communication”
e-mail: biancalexpopa@yahoo.com
Bichiş Andrada Bucharest Academy of Economic Studies
Master program “Business Communication”
e-mail: andrada.bichis@yahoo.ro
Voicu Raluca Oana Bucharest Academy of Economic Studies
Master program “Business Communication”
e-mail: ralucaoanavoicu@yahoo.com
AN ESSAY ON CULTURAL AND NATURAL ROMANIAN
TREASURES LISTED IN THE UNESCO HERITAGE AS PART OF THE
NATIONAL IDENTITY OF THE COUNTRY
JEL: I13, Q56, Q57
Abstract: The article contains a short description of the Romanian cultural
and natural treasures listed in the UNESCO Heritage as part of the national identity of
the country. Romanian society may find them confused regarding the national identity
before and after the '89 Revolution, noticing the fact that the nineties find the
Romanian people isolated both from the Occident and from their own past.
Romanians do not know their own authentic culture, even though the communist
ideology failed so now we are confronted with a crisis of the values in lines of the
elder population.
A smaller part of the population conjures up Romania between the wars
looking up for a realm of normality, the cultural level after 1989 being raised up to
another level and recognized worldwide.
The national specificity remains one of the themes that can reorder the
intellectual history and thinking in terms of the cultural and natural values of sites
already listed and the ones unlisted that this country has to offer. The matrix of
identity as a nation is in fact the culture and the individuality that this beautiful
country contains regarding the history as a nation with an outstanding past.
Key words: national heritage, culture, natural resources, national treasure
~ 105 ~
Introduction
The values of the Romanian population number a series of factors as: the
territory, the language, the cultural life and education, the national proud, the legality,
the feeling of affiliation, Romanian treasure, archaeological treasure, the Dacia
legacy.
Each place in Romania’s Heritage has it’s own stories and legends to tell from
the dawn of the first millennium to the medieval times with churches, with villages
where people work and live traditionally till nowadays, with hand paintings, with
history in every place nearby. As a short description Romania sums the last vestiges
of European medieval planning and culture with a vast cultural landscape that
contains an exhibiting equilibrium between villages, fields, meadows, forests and
mountains.
Romania’s legacy includes tangible culture such as buildings, monuments,
landscapes, books, works of art, and artefacts; intangible culture such as folklore,
traditions, language, and knowledge, and natural heritage including culturally
significant landscapes, and biodiversity. Next will be listing some examples of
superstitions and beliefs from Romanian tradition such as a black cat crossing in front
of a pedestrian would bring bad luck; an owl seen on the roof of a house, in a
courtyard, or in a tree was a sign of forthcoming bad luck, including death in the
family or before serving wine, drops were poured on the floor to honour the souls of
the dead.
Cultural heritage is the legacy of physical artefacts and intangible attributes of
a group or society that are inherited from past generations, maintained in the present
and bestowed for the benefit of future generations. Keeping cultural heritage from the
present for the future is known as preservation. For Romania the deliberate act of
preservation is crucial because of the heaviness of the history, of the ancestors, of the
work and time spent to build every citadel, castle, village and for the luckiness of
having such a beautiful natural frame.
The term ‘cultural heritage’ has changed content considerably in recent
decades, partially because of the instruments developed by UNESCO. Cultural
heritage does not find it’s ending at monuments and collections of objects, it includes
traditions or living expressions inherited from our ancestors such as: oral traditions,
performing arts, social practices, rituals, festive events, knowledge and practices
concerning nature and traditional crafts of working the lands.
Cultural heritage is a resource that belongs to the humankind. Its value
transcends money and the economic universe. Meaning that inspires and fulfils
human beings therefore the investments in the preservation and valorisation of
cultural heritage are extremely important. Cultural heritage generates a series of
economic effects assessing this effects of investing in cultural heritage is complex
because of the difficulty to quantify them.
The divisions between cultures can be very fine in some parts of the world,
especially in rapidly changing cities where the population is ethnically diverse and
~ 106 ~
social unity is based primarily on location contiguity. 'Where are you from?' if you
find yourself in a foreign country this will most likely be one of the first questions
people ask you. Finding out about your cultural background and your cultural identity
seems to give people a general framework.
Cultural identity is often defined as the identity of a group, culture or an
individual, influenced by one’s belonging to a group or culture. Defined by the
identity or feeling of belonging to, as part of the self-conception and self-perception
to nationality, ethnicity, religion, social class, generation, locality and any kind of
social group that have its own distinct culture, in this way that cultural identity is both
characteristic of the but individual also to the culturally identical group.
The United Nations Educational, Scientific and Cultural Organization
abbreviated UNESCO is a specialized agency of the United Nations. UNESCO was
founded on 16 November 1945. The organization seeks to encourage the
identification, protection and preservation of cultural and natural heritage around the
world. By the means of an international treaty called the Convention concerning the
Protection of the World Cultural and Natural Heritage, adopted in 1972. Its purpose is
to contribute to peace and security by promoting international collaboration through
education, science, and culture in order to further universal respect for justice, the rule
of law, and human rights.
UNESCO's aim is to contribute to the building of peace, the eradication of
poverty, sustainable development and intercultural dialogue. UNESCO implements
it`s activities through the five programme areas of: Education, Natural Sciences,
Social and Human Sciences, Culture, and Communication and Information.
One major aim is to identify and protect cultural and natural sites that deserve
to be included in the common heritage of the world having an outstanding value for
humanity. By the present time 850 sites all over the world were subscribed in the
world heritage.
Until the end of 2004, World Heritage sites were selected on the basis of six
cultural and four natural criteria but nowadays to be included on the World Heritage
List, sites must be of outstanding universal value and meet at least one out of ten
selection criteria.
.
The selection criteria for a site to be included have the next attributes: to
represent a masterpiece of human creative genius; to exhibit an important interchange
of human values within a cultural area of the world, on developments in architecture
or technology, monumental arts, town-planning or landscape design; to bear a unique
or at least exceptional testimony to a cultural tradition or to a civilization which is
living or which has disappeared or is no longer used; to be an example of a type of
building, architectural or technological ensemble or landscape which illustrates
significant stages in history; to be an outstanding example of a traditional human
settlement, land-use, or sea-use which is representative of a culture especially when it
has become vulnerable under the impact of irreversible change; to be directly or
tangibly associated with events or living traditions, with ideas, or with beliefs, with
~ 107 ~
artistic and literary works of outstanding universal significance; to contain superlative
natural phenomena or areas of exceptional natural beauty; to be outstanding examples
representing major stages of earth's history, including the record of life, significant
on-going geological processes in the development of landforms; to be outstanding
examples representing significant on-going ecological and biological processes in the
evolution; to contain the most important and significant natural habitats for in-situ
conservation of biological diversity, including those containing threatened species.
UNESCO has 195 member states including Romania and Russia and nine
associate members. Romania adopted the convention in 1990 and along the years
sums seven sites world wide, six of them being cultural sites and one of them being a
natural one.
Listed as cultural sites are: The Churches of Moldavia (1993), Dacian
Fortresses of the Orastie Mountains (1999), Historic Centre of Sighişoara (1999) –
The Medieval Citadel, Monastery of Horezu (1993), Villages with Fortified Churches
in Transylvania (1993), Wooden Churches of Maramureş (1999); and the natural site
The Danube Delta (1991).
Churches of Moldavia
Date of inscription: 1993
There are eight important churches in Moldavia, that have external walls
covered in authentic and particularly well preserved fresco paintings represent
complete cycles of religious themes. They are considered masterpieces inspired by
Byzantine art, listed as: Beheading of Saint John the Baptist Church of Arbore
village, The Assumption of the Virgin and of Saint George's Church of the old Humor
Monastery, The Church of the Annunciation of Moldoviţa Monastery, Sacred Cross
Church of Pătrăuţi, Saint Nicolas' Church of Probota Monastery, Saint John the New
Monastery of Suceava (1993), Saint George's Church of the former Voroneţ
Monastery and Church of the Resurrection of Suceviţa Monastery.
The Church of the Holy is located in Patrauti Commune,Suceava. This
church is an orthodox one, built in 1487 by the ktitor Stephen the Great. In 1993,
UNESCO included The Church of the Holy on the World Heritage list, the group
Churches of Moldavia. This church is the oldest monument of Romania UNESCO.
The Church of St. George of the former Voronet Monastery was bulit in 1488
and is also founded by Stephen the Great. This church is probably the most famous
church in Romania both for its exterior frescoes, with a very intense light and colour
and preserved for hundreds of figures on the blue paint. The walls and the vault of the
exonarthex are covered by the 365 scenes of the Calendar of Saints.
The Church of the Beheading of St. John the Baptist was built as the
residence of the Governor of Suceava, Luca Arbore. In 1541, his granddaughter
ordered to decorate the church and then, it became the village church when the family
died out.
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Until the late 17th century, The three-apsed Church of St George, represented
the Metropolitan Church of Moldavia, but now it is the catholicon of the Monastery
of St John of Suceava. The interior paintings, although somewhat darkened, have
exceptional plastic qualities.
The Church of St Nicholas and the Catholicon of the Monastery of Probota
was built by Prince Peter Rares, in the village of Probota, in 1530 as a family
mausoleum. Probota Monastery functioned as a royal necropolis of Moldova(15221677). There are the tombs of Petru Rares, Stephen Rares, the Lady Elena Rares and
other members Moldova's ruling family. All the paintings are contemporary with the
church with the exception of those in the sanctuary, repainted in the 19th century.
About the Church of the Assumption of the Virgin of the former Monastery of
Humor we can say that it dates back to before 1415, but the present structure was
built in 1530 by the great Logothete Theodore Bulberg and Peter Rares wife,
Anastasia.
Finally we have the Church of the Annunciation of the Monastery of
Moldovita, that was rebuilt by Alexander the Good, but the present structure is
earlier.
Dacian fortresses of the Oraştie mountains
Date of inscription:1999
Dacian Fortresses of the Oraştie Mountains describes an unusual fusion of
military and religious architectural techniques and concepts, including: Sarmizegetusa
Regia, the capital of Dacia, Costeşti-Cetăţuie Dacian fortress, Costeşti-Blidaru Dacian
fortress, the strongest of the Dacian Fortresses, Piatra Roşie Dacian fortress, Dacian
fortress of Băniţa, Dacian fortress of Căpâlna.
Dacian Fortresses of the Oraştie Mountains are located in Alba, Hunedoara
and Region of Transylvania.
There are three components of Sarmizegetusa, the capital of Dacia: the
fortress, the sacred area, and the civilian quarter. The Grădiştea plateau is dominated
by the fortress, which was the centre of secular and spiritual government. The sacred
area is situated to the east of the fortress. Costeşti-Cetăţuie is one of the six Dacian
Fortresses of the Orăştie Mountains. The fortress was built in the first century BC
with the purpose of protection against Roman conquest. It is located near the village
Costeşti, commune Orăştioara, in Hunedoara.
Costeşti-Blidaru is the strongest and most spectacular of the fortresses
constructed to defend Sarmizegetusa, being stretched on a plateau almost 6000 sqm.
Grădiştei water guarding the left bank, as well as the city Costeşti fortress of Blidaru
actually comprises two chambers, united, together with six strong towers.
The Luncani Piatra Roşie is located at 832 meters, in the commune Boşorod,
in Orăştiei Mountains and was built and functioned between the first century BC and
first century AD. The plateau is located on top of a hill, surrounded on almost all
sides by precipices. The only access is from the eastern direction.
~ 109 ~
The Băniţa fortress was constructed on a steep conical hill in the Jiu valley.
The only side on which the summit was accessible was on the north, and this was
defended by a strong stone wall in murusdacicus style.
And the Căpâlna fortress which was designed as a complex military
construction, partly defended by thick walls of hewn stone. The ample fortification,
today ruined, lay on the terraces, surrounded by ditches. At the end of the precinct
wall was erected a tower-dwelling square in section, with sides of 9.5m. It is believed
that the chapel Dacian Fortress was built by Burebista BC.
Historic Centre of Sighişoara
Date of inscription:1999
Sighişoara – The Medieval Citadel was founded by Transylvanian Saxons
during the 12th century, Sighişoara (Schassburg in German) still stands as one of the
most beautiful and best-preserved medieval towns in Europe. Sighişoara is a city
located inthe county of Mureş, Transylvania. Designated as a World Heritage Site by
UNESCO, this perfectly intact 16th century gem with nine towers, cobbled streets,
burgher houses and ornate churches rivals the historic streets of Old Prague or Vienna
for atmospheric magic. It is also the birthplace of Vlad Dracula, also known as Vlad
Ţepes (Vlad the Impaler), ruler of the province of Walachia from 1456 to 1462. It
was he who inspired Bram Stoker's fictional creation, Count Dracula. His house is
just one of the many attractions here. Others include the Church on the Hill with its
500-year-old frescoes, the 13th century Venetian House and the Church of the
Dominican Monastery, known for its Transylvanian renaissance carved altarpiece,
baroque pulpit, Oriental carpets and 17th century organ. The strong defence system
provided with 14 towers and several bastions provided with gunnery directed to all
four cardinal points. Each tower was built, maintained and defended by a craft guild.
Among the most striking is the 14th century Clock Tower. This tower controlled the
main gate of the half-mile-long defensive wall and stored the city's treasures.
Sighişoara was not the biggest or richest of the seven Saxon walled citadels in
Transylvania, but it has become one of the most popular. A walk through the town's
hilly streets with their original medieval architecture, magical mix of winding cobbled
alleys, steep stairways, secluded squares, towers, turrets and enchantingly preserved
citadel, is like stepping back in time.
Sighişoara's Citadelisthe historic old city of Sighişoara, which is located on
the southern shore of the river Târnava Mare, on a hillside 850 m long on two
terraces: the lower terrace, Castle Hill, is located at an altitude of 350 m and the upper
terrace, School Hill, at an altitude of 429 m. The fortress is surrounded by a wall of
930 m. whose initial height was about 4 m.
The Citadel Square is a small square, bordered by houses of the 18th century,
where noble families lived. The Citadel Square lies at the heart of the citadel. In the
past, craft fairs, street markets and public executions were held here.
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The Clock Tower is another main point of attraction in Sighisoara, also
known as the Council Tower, built in the second half of the 14th century and
expanded in the 16th century. Overtime, it was used for council meetings and archive
storage and treasure Sighisoara. The two cadrene, diameter of 2.4 m, are pointing at
Lower Town and the other, to the Citadel.
The Church on the Hill is the only evangelical church with old crypt, from
Transylvania, where, in the walls, are 60 graves. Also, on the walls of the church is a
fresco from 1380, which depicts the Holy Trinity as a person with three faces.
Vlad Dracul's House is one of the oldest buildings and it is located in the
Citadel Square, close to the Clock Tower. The building was the official residence,
belonging to the royal mayor. Between the years 1431-1435, lived Vlad Dracul the
son of Mircea The Old. Currently, here it is a restaurant.
The Venetian House dates from the 16th century and is represented by a
simple structure, on two floors. Its name is due to the duble windows whose frames
imitating Venetian gothic Triconch.
Monastery of Horezu
Date of inscription:1993
Horezu Monasteryis dedicated to Saints Constantine and Helen, is located in
Horezu, Valcea County. It is the most important foundation of Prince Constantin
Brancoveanu martyr. Summary of the Romanian art of that time, was built between
1690-1693. The Monastery is known for its architectural purity and balance, the
richness of its sculptural detail, and its painted decorative works. In 1993, Monastery
of Horezuwas included on UNESCO World Heritage list.
Villages with fortified churches in Transylvania
Date of inscription:1993
Villages with Fortified Churches in Transylvania show the wold a picture of
the cultural landscape of southern Transylvania, listing: The site of Biertan with the
fortified church and a part of the town. Village of Câlnic, Village of Dârjiu, Village
of Prejmer, Village of Saschiz, Village of ValeaViilor, Village of Viscri.
These Transylvanian villages with their fortified churches provide a vivid
picture of the cultural landscape of southern Transylvania. The seven villages
inscribed, founded by the Transylvanian Saxons, are characterized by a specific landuse system, settlement pattern and organization of the family farmstead that have
been preserved since the late Middle Ages. They are dominated by their fortified
churches, which illustrate building styles from the 13th to the 16th century.
These seven villages are located in counties of Alba, Brasov, Harghita,
Mureş, Sibiu and region of Transylvania.
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Wooden Churches of Maramureş
Date of inscription: 1999
True architectural monuments, wooden churches are the best example of
wood working craftsmanship and artistic sense of Maramures. They reflectthe
important role that religion played in the life of the locals is proof of customs and
traditions hundreds of years ago and which still exist today. In recognition of the
uniqueness and value creations craftsmen from Maramures, eight of the
approximately 100 ancient churches in Maramures have been included in UNESCO
World Heritage.They are: The Church of the Presentation of the Virgin in the Temple
in Bârsana, The Church of Saint Nicholas in Budeşti, The Saint Parascheva Church in
Deseşti, The Church of the Nativity of the Virgin in Ieud Deal, The Church of the
Holy Archangels in Plopiş, The Saint Parascheva Church in Poienile Izei, The
Church of the Holy Archangels in Rogoz, The Church of the Holy Archangels in
Şurdeşti.
In addition to sites inscribed on the World Heritage list, member states can
maintain a list of tentative sites that they may consider for nomination. Nominations
for the World Heritage list are only accepted if the site was previously listed on the
tentative list., Romania recorded 13 sites on its tentative list: Slătioara Secular Forest
(1991), Byzantine Monumental Ensamble of Târgu-Jiu (1991), Rupestral Ensamble
at Basarabi (1991), Neamţ Monastery (1991), Historic Town of Alba Iulia (1991),
Cule from Oltenia (1991), Retezat Massif (1991), Pietrosul Rodnei Massif (1991),
Sânpetru Formation (1991), The Historic Centre of Sibiu and its Ensemble of Squares
(2004). and post-Byzantine churches of Curtea de Argeş (1991), Densuş Church
(1991), TreiIerarhi Monastery of Iaşi (1991).
The Church of the Presentation of the Virgin at the Temple (Bârsana) was
built in 1720 on the place of old was burned by the Tartars. Initially, the church
belonged to a monastery and only in 1806 was moved to the current site. The church
is built of oak, it has a double roof, tower open patio and a conical helmet.
The Church of Saint Nicholas (Budeşti) built in 1643, was never modified or
extended and is an example of the typical architecture of the historic Maramures.With
a height of 38 m, the church has roof in two stages all over it and impresses with
fourteen poles to support the roof.
The Church of the Holy was built in 1770 on the place of an old church. The
roof has two steps on the entire length of the building except the Altar. The painting,
made by Radu Munteanu in 1780 by post-Byzantine influences, is very well
preserved and depict scenes from the Bible.
The Church of the Nativity of the Virgin was built in the 17th century, around
1620. Some historians and ethnographers say the church dates from 1364 but the
elements and architectural style and building size or time of interior painting (1782)
shows the construction of the building at a more recent date.
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We also have the Church of the Holy Archangels (Plopiş), which was built
between1798-1805 and was consecrated in 1811. At the time of its construction, 49
families lived in the village and the cost of the construction was 49 ducats, one for
each family in the village.
The Church of the Holy Parasceve (Poienile Izei) was built in 1604 and it is
one of the oldest wooden churches of Maramureş. It is a small church with a roof in
two stages over the entire building. In the church there is no electricity and candles
can not be used for viewing the paintings, so that, the light is very weak.
The Church of the Holy Archangels (Rogoz) was built in 1663 on the site of
an old one burned by the Tartars in 1661. Built from elm wood, the church is
distinguished by the abundance of ornaments, but through the entrance on the
southern side and the roof of the unit, very broad and asymmetric.
Finally, the Church of the Holy Archangels (Şurdeşti), was built in 1766, by
master Ion Macarius and is considered the tallest wooden church in Romania - 54m.
Danube Delta
Date of inscription: 1991
The largest and best preserved of Europe's deltas, Danube Delta flow into the
Black Sea, hosts over 300 species of birds as well as 45 freshwater fish species in its
numerous lakes and marshes. The greater part of the Danube Delta lies in Romania,
while its northern part, on the left bank of the Chilia arm, is situated in Ukraine. The
approximate surface area is 4,152 km2 and of that, 3,446 km2 are in Romania. It
includes the lagoons of Razim – Sinoe located south of the main delta, the lagoon’s
complex is geologically and ecologically related to the delta proper and their
combined territory is part of the Wold Heritage Sites.
The Danube Delta Biosphere Reserve has the third largest biodiversity in the
world listing over 5,500 flora and fauna species. Is the most international river on the
planet; 3,450 animal species can be seen here, as well as 1,700 plant species.
After this brief overview of Romanian UNESCO sites we can conclude that
the value of both historical, cultural and natural sites is excellent to be measured. The
disordered and tangled past of the country left place for the preservation of the sites
making history each on its own. From the Danube Delta with disappeared species to
the fortified citadels and villages the landscape is outstanding including both
economical, intellectual, educational value. All sums up to be one important part of
the national identity that defines every Romanian aware of the proud to be a part of
this beautiful place.
~ 113 ~
Stan Raluca Elena Bucharest Academy of Economic Studies
Master program “Business Communication”
e-mail: ralu_seby@yahoo.com Şerban Alexandru-Cristian Bucharest Academy of Economic Studies
Master program “Business Communication”
e-mail: alexserban89@gmail.com FIGHTING BACK ECONOMIC CRISIS. THE CASE OF ROMANIAN
ECONOMIC POLICIES IN 2000s
JEL: H30, E62, E64, E66
Abstract: The global financial and economic crisis was the factor that
triggered the adjustment of macroeconomic imbalances accumulated in Romania until
the end of 2008. This paper is structured with an eye toward its economic policy
potential. The paper calls attention on highlighting the weaknesses of the Romanian
economy, the vulnerability of the economic system in front of the events occurred
abroad conventional borders.
In order to restore the sustainability of the public finances, it is required a
considerable/sustained effort of fiscal consolidation, doubled by deep structural
reforms in order to create favourable conditions for sustainable economic growth.
Through this paperwork we are trying to bring to the fore pre and post crisis
chronology of events, as well as the economic and fiscal measures undertaken during
this hard/challenging period.
Key words: anti-crisis measures, fiscal policy, sustainability, account deficit.
Introduction
A coherent and compelling view of evolution of the Romanian economy in
the last ten years headlights an emerging economy that passed through an overheating
phase and that nowadays is recovering, registering a service sector still below the EU
average, but also a shift in the economic structure, from industries with low added
value as agriculture to industries with high added value, which is benefic and
contributes to achieving real convergence criteria to the EURO zone, as appreciated
by the analysts.
Before the crisis, Romania recorded high rates of Gross Domestic Product
(GDP) growth, which proved to be unsustainable given the imbalances occurred on a
later date. The annual growth rate of the real GDP was on average 6.5% during 20012008, mainly due to the strong internal demand. Both consumption and private
~ 114 ~
invvestment grew
w, highly sustained by financial development
d
and bankinng credit
booom. In additioon, a pro-cycclical expansiionary fiscal policy suppoorted the growth.
The crissis had a sig
gnificant andd lasting imppact on the Romanian
R
ecconomy.
Mooreover, estim
mates show that
t
is unlikeely to achievee the potentiial growth raates from
the pre-crisis peeriod.
Hencefoorth, beginniing from 2009, the goveernment meaasures had the
t main
effeect of reducinng the negatiive effects off the econom
mic contractioon on populaation and
bussinesses – as the reduced
d fiscal spacee permitted, especially thhrough the efforts
e
of
reloocating expeenses of state institutioons which do not jusstify their existence
e
(goovernmental agencies
a
resttructure) or efficiency
e
to meet the gooals in relatioon to the
hireed staff – given that no new major taxes
t
were im
mplemented (as did som
me of the
surrrounding couuntries). Indeeed, towardss the end of 2009
2
and in 2010, the foocus was
on measures in order to stab
bilize the ecoonomy and too re-launch the
t economicc growth
ments. In this respect, the largest publiic expense inn the post-com
mmunist
throough investm
histtory of the country was allocated
a
for investmentss: 6.4% of the GDP in 20010 (LEI
34,2 billion - four
f
times more
m
than in 1999), 6.3%
% of the GDP
P in 2009 (L
LEI 31,6
1
billlion), 5.6% of
o the GDP in
n 2008 (LEI 28,45
2
billion)) :
Investm
ments budgeet out of GD
DP evolution
1
The Romaniann National Instiitute of Statistics – www.inssse.ro
~ 115 ~
Literature review
In the summer of 2007 the real estate bubble which had begun in the early
2000s, came to an end all over the world, once two hedge funds of Bear Sterns, one of
the most important five investment bank from the Wall Street have run into
bankruptcy. It was the beginning of last money rush from the 2000s, one about white
collars thought that will last forever. Markets ran out of money in a glimpse of an eye,
and the further lack of money made things to go out from their natural stream.
However, in Europe the tidal wave hit a little late, especially in the Eastern European
economies, poorer interrelated with international financial markets. The real collapse
of financial mechanisms came with the collapse of Lehman Brothers and the forced
rescues of AIG and German Hypo Real Estate in September 2008, which effectively
jeopardized the mutual trust of financial markets. Therefore, central banks throughout
the world got steam in a counter back along with government guarantees.
Nevertheless, even this action prevented the liquidity-based collapse of banks, and
their economies, the mutual trust was lost for a long period of time2. Loses from US
subprime market were accepted to be permanent, but at issue were not only market
prices, suitable for recovery in time, but non-recoverable loses as well. Thus, OECD
estimated that European banking sector loses rise to 400 billion euro. However, the
crisis marked differences between the euro-area countries. Within the large euro
states, as expected, Germany response was efficient and therefore it recovered
quickly, whereas Italy and particularly Spain have not been able to match the crisis
and lost their former growth. Of the smaller countries, Portugal, Ireland and Greece
were hit hardest. Particularly for the latest, the financial crisis emerged into a fiscal
crisis; therefore the crisis in euro-area became a fiscal crisis as well, requiring fiscal
crisis policies. Central banks from European Union mobilized in a unprecedented
coalition.
A central bank has a specific vital role in the economic mechanism. It sets the
framework regarding money supply, interest rate and inflation control. If necessary,
when menace of inflation comes, the central bank will act for controlling the amount
of cash, simply offering some millions in short-term government debt, in order to
restrain the amount of money from the market. If additional supply of money is
required on the market, central banks can do the opposite thing by offering more
money into the flow. Commercial banks will not need additional money anymore;
therefore the fund rate between them will be lower3. Central banks do not lend money
to commercial banks, but to sellers of government debt, in order to lend the money
forward to the banks. But if the interest rate is zero, it might be said that little
incentive will be found in order to have deposits to the commercial banks4.
2
3
4
(Tuori and Tuori, 2014: pp. 71-72).
(Krugman, 2009: pp. 101-209).
(Read, 2009: pp. 29-59).
~ 116 ~
Between August 2007 when Bear Sterns appeared to be in trouble, and the
collapse of Lehman Brothers on 15 October 2008, there were still hope that financial
markets will somehow get their steam back. But after Lehman Brothers fall, the
financial crisis took a definitive turn for the worse. At European level, European
Central Bank reacted quckly in order to prevent the liquidity crisis to emerge into a
solvency crisis5. On 7 October 2008, the Ecofin Council agreed on common policies
to counter the crisis. A concerted action plan was set on 12 October, whose main goal
was to maintain on track national banking sectors. Complementing the European
Central Bank measures, Eu institutions aimed financial stability and restoration of
mutual trust through the banking sector, with new regulation framework and
enhanced supervised attitude6.
The viewpoint of Maastricht constitution eventually make euro-area to avoid
the non bailout clause, according to whom Greece and the other European countries
hit hardest by crisis should be let alone to manage their problems. This would have
surely led to an unfortunately exit of Greece from the monetary union, and perhaps
from the European Union as well. The economic calculus showed a far bigger
disaster, therefore the European Central Bank, let alone the angry of German citizens,
decided to pay the Greece’s bills. The official explanation was that the menace of
contagion after the fall of Greece would have harmed the very structure of European
Union as a whole. However, the bailout of specific states was never discussed in the
early 2008, when no one really knew where the crisis will hit harder. Henceforth, the
aggravation of the Greek debt crisis in early 2010 caught the European central Bank
unprepared. Several rescue packages were approved for Greece, but this financial
rescue mission was not support by a fiscal policy shift. Thus, brinkmanship of
European Union based on unique currency is a current problem with no reliable
solution on the short and medium run.
Rescue packages and stability mechanism came into the light, but some little
member of the European Union, like Romania, did not need rescue packages, due to
moderate exposure of junk compartments of financial market and equilibrium via
austerity and fiscal policy.
Data
A straightforward set of policy implications is presented as follows. A
particular note is for Romania and, in comparison, for other European countries under
the menace of brinkmanship. A summary, a list of interventionist government
measures adopted during 2009-2010 could be detailed as follows7:
5
(Roubini and Mihm, 2010) (Tuori and Tuori, 2014: pp. 86-89) 7
(Tuori and Tuori, 2014: pp. 86-89), National Bank of Romania
6
~ 117 ~
Romania
 Cutting 25% of the public sector wages, including bonuses, allowances and
other remuneration.
 Cutting 25% of the salaries and labour rights of staff within the National
Bank of Romania, the National Securities Commission of the Private
Pension System Supervision and the Insurance Supervisory Commission.
By 25% are diminished both clergy and non-clergy salary rights.
 Reducing by 15% the unemployment benefit and child allowance.
 Freezing the pension point in 2010 and 2011.
 Increasing the VAT percent from 19% to 24%, after the Constitutional
Court’s decision that the measure of reducing the value of the pensions by
15% was ruled unconstitutional.
 Expanding the scope of the health insurance contribution of 5.5% for
pensions exceeding LEI 740 / month.
Interventionist measures were also been adopted by countries strongly
affected by the crisis, such as Greece and Italy, but also by countries with strong and
stable economies like Germany, as detailed below:
Greece
 Freezing and cutting salaries:
The Public sector salaries were frozen starting with 1st of July 2011 until the
introduction of the unitary pay law in the public sector.
The bonuses of civil servants, including in this category the employees of the
state companies were reduced in several stages, by 12% and 8%,.
Various bonuses were decreased by 50%, it were also registered a reduction
of remuneration for participation in the committees and the introduction of the single
salary scale in the public system.
 Reducing the number of employees in the public sector:
The public sector staff was decreased by 25% (150,000 clerks).
The number of employees on labour contract was reduced by 50% in 2011
and by 10% in each subsequent year.
 Freezing and cutting pensions:
Starting with 2011 the pensions were frozen and limited to a value of
maximum EUR 2,523 (compared to EUR 2,773).
The 13th and 14th pensions were replaced with Easter and vacation bonuses in
amount of EUR 200, respectively Christmas bonuses in amount of EUR 400. These
~ 118 ~
bonuses were granted only to pensioners with revenues below EUR 2,500 / month in
2010.
 Increasing the retirement age limit:
Starting with 2011, the retirement age limit was increased to 65 years,
requiring 40 years in work to receive full pension, and is calculated based on lifetime
contributions.
 Cutting other public spending in 2011:
The healthcare costs were reduced by EUR 310 mil. through rationalization of
prescriptions and the use of cheaper drugs. Mergers took place in hospitals: 10 of 133
hospitals merged.
The spending on education was reduced by the closure or merger of 1,976
schools.
The costs of social assistance were reduced by EUR 1.09 bln..
The investments were reduced by EUR 850 mio. and grants by EUR 500
mio..
The spending in all state institutions was decreased by 7% and implement of
electronic procurement system.
40 small government agencies were closed, other 25 agencies in the same
category merged and 11 large agencies merged or were restructured.
The disability categories were revised and how the disability pensions are
granted.
 Income taxes:
The personal income taxes for individuals increased: 45% for incomes over
EUR 100,000 (in 2011).
A "solidarity tax" was adopted: between 1% and 4% of high levels revenues
(salaries) starting with 2011. The fee is of 5% for ministers, lawmakers and other
categories of civil servants with significant revenues.
 Pension taxes:
A solidarity tax on all pensions over EUR 1,400 was approved, starting with
2010.
 VAT increase:
In 2010, the standard VAT rate was increased from 19% to 23% and the
reduced VAT rates were increased to 5.5% and 11%.
Since 1 January 2011 the reduced VAT rates increased from 5.5% to 6.5%
and from 11% to 13%. Starting with 1 September 2011, the VAT rate in the food
sector increased from 13% to 23%.
 Excise
The excise taxes on electricity were increased, except for renewable energy
products.
~ 119 ~
The excise taxes on fuel, tobacco and alcohol increased in two stages, with
20% and then 10%.
Italy
 Freezing and cutting salaries and pensions:
Salaries were frozen during the period of 2011-2013.
Pensions greater than three times the minimum pension (approx. EUR 1,402)
were frozen in 2012 and 2013.
 Increasing the retirement age:
The gradual increase in the retirement age and equalizing the retirement
conditions for all workers, both women and men, since 2012. It is estimated that in
2018 the retirement age will be 66 years and 7 months.
 Reducing the number of employees in the public sector:
The public entities with an organization comprising less than 70 employees
(excluding port authorities, professional associations, sports federations, management
structures parks and natural reserves) were shut down/closed.
The public sector employment was limited.
Public institutions were closed / reorganized.
 Reducing other public spending:
Operating costs were decreased.
Local authorities costs were reduced.
The Provinces as local public entities were shut down.
A mechanism of "spending review" was adopted in ministries to define the
standard cost of central administration institutions.
 Income taxes:
The revenue share of the public sector employees exceeding EUR 90,000 /
year was taxed with 5% and with 10% the revenue share of income that exceeded
EUR 150,000 / year. The measure applied from 1st of January 2011 – 31st of
December 2013.
The Parliament approved the measure of a solidarity contribution of 3% on
the share of income that exceeded the limit of EUR 300,000 / year.
 Pension taxes:
Since 2011 the share of pension exceeding EUR 90,000 / year was taxed with
5%, 10% for the share exceeding EUR 150,000 / year and 15% for the share of
pension exceeding EUR 200,000 /year.
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 VAT increase:
The VAT was increased in 2011 from 20% to 21%.
 Excise increase, 2012:
Excise taxes were increased on fuels: petrol (EUR 704.20 per 1,000 liters),
diesel (EUR 593.20 per 1,000 litters), liquefied petroleum gas (EUR 267.77 per 1,000
litters).
Conversely, the crisis inventory policies for the head of European Union was
resolute in the same trend, even the economic status has been far healthier than the
ones of PIIGS (Portugal, Italy, Ireland, Spain, Greece).
Germany
 Increasing the retirement age:
The retirement age increased from 65 to 67 years since 1 January 2012.
 Reducing other public spending:
The government spending was reduced.
The grants/subsidies were decreased.
The parental allowance was diminished.
Social benefits were reduced for long-term unemployed individuals.
The defence budget was reduced by EUR 8.3 bln. until the end of 2014 and
the German armed forces were restructured.8
In order to stimulate the economy growth a series of measures have been
adopted by the Romanian Government, meant to revive the consumption, namely:
 Measures to stimulate the demand by increasing: the purchasing power of
houses (I and II First House Programme; in this respect the VAT was
decreased to 5%), vehicles (“Rabla” program), supporting exports (the
capitalization of Eximbank), overall consumption by eliminating, reducing
and merging more than 100 non-fiscal taxes;
The First House Program concept tries to sustain the construction sector,
hardly affected by the economic crisis. Government estimates indicate that, from the
beginning of the program more than 9,000 jobs have been saved. But the overall cost
of these measures must be evaluated in terms of future potential costs versus benefits.
In February 2010 the government adopted an Emergency Ordinance (GEO 13/2010)
by which companies that hired unemployed individuals will be exempt for payment
of social contributions up to six months. Between 2006 and 2008, the share of the
construction sector in the GDP increased from 7.4% to 10.5%, occupying (official)
8.5% of the total workforce. In contrast, in the EU, the contribution of the
construction sector in the GDP is somewhere around 5-6%. The measure didn’t
8
www.gandul.info .
~ 121 ~
support directly new job creation (would have been very difficult due to the natural
contraction of the sector) as the program applies to the already built houses as well.
 Measures to stimulate investments (non-taxation of the reinvested profits,
investment in the thermal rehabilitation of houses, starting and developing
microenterprises by young entrepreneurs - starter companies, VAT
compensation and accelerating its repayment, deferred payment of overdue
obligations for operators affected by the economic and financial crisis,
accelerating the absorption of EU funds and increasing pre-financing and
guarantees, granting state aid and minimise aid up to EUR 200,000 for
Small and Medium Enterprises (SMEs). A new strategy called e-Romania
was adopted and the legislation for public-private partnership is under
review; setting up the National Investment Fund is considered.
 Measures in order to stimulate agriculture (the "First Silo", "The first
Tractor");
 Measures for stimulating the chemical and energy industries (with direct
effects on the agriculture supply with fertilizers at reduced prices, avoiding
massive layoffs, providing heat and hot water for the population at
reasonable prices);
 Social measures (increasing the guaranteed minimum income, a minimum
guaranteed social pension for low-income pensioners in two instalments);
 Measures to protect the labour market (technical unemployment,
implementing the program for employees: “Money for more employees,
more competent and healthier staff”, extending the period of granting
unemployment benefits by three months, retraining support). The net result
in 2009 of the above mentioned measures consisted of over 450,000 jobs
and over 12,000 companies saved from bankruptcy. 9
Results and analysis
In all, the Romanian government signed a multilateral financial agreement for
24 months with the International Monetary Fund (IMF), European Commission,
World Bank and other international financial institutions worth EUR 19.95 billion which allowed the orderly adjustment of the fiscal deficit and external deficit,
avoiding exchange rate depreciation, ensuring adequate external financing and
improving confidence in the Romanian economy's prospects. Its absence would
escalate into devastating phenomenon of impoverishment of the population;10
9
10
National Bank of Romania – www.bnr.ro .
The Romanian National Institute of Statistics – www.insse.ro.
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Nevertheless, in spite of all ambitious of the anti-crisis government programs in the
world, studies show that their real impact in the economy depends directly on
government efficiency and their ability to quickly inject more in productive resources.
Therefore, based on statements of intent, the results indicate success rates between 873% in emerging countries (in favour of Asian economies, in Chile, Poland and the
Czech Republic, but at the expense of Russia or Kazakhstan where after massive
incentives, over 10% GDP results were not accompanied by proportional results) 11.
However, the economic growth turned on a positive slope starting with 2011,
and it`s predicted to continue with this ascending trend in the 2015 - 2016 period.
The Romanian current account deficit has decreased in the last few years. It
has managed to rebalance, from a deficit that was over 10% of the GDP in 2006 - 2
008, at about 1% of the GDP in 2013, the adjustment being made in 2 steps. The first
adjustment was made in 2009, when the current account deficit reached a value of
4.2% of the GDP, due to reduced imports. After a stabilized period, the deficit
dropped again, hitting a value of 1.1% of GDP.
Additionally, the second adjustment was more comprehensive. This was
based upon important exports, stable imports and decrease of primary revenue.
Powerful growth of exports and the increase of surplus from trade with services, show
us the structural change made in the Romanian economy. The current account surplus
for 2014 in Romania was estimated at about 1% of the GDP, and it’s predicted to
stabilize in 2015 - 201612.
The current account deficit13, which in 2008 had a value of 11.6% of the GDP
compared to Greece that had a value of 14.7% of GDP, and the budgetary deficit
were two major structural unbalances that created a high economic vulnerability,
which explains the magnitude of the economic contraction in our country in 2009 2010. Before crisis and at the height, the current account deficit and the budgetary
deficit were about the same, both over 8% of the GDP.
Romanian economic policies have succeeded in many respects. A synthesis of
the last recovery years is presented below:
2013
The revised budgetary deficit for 2013 was of 2.5% of the GDP (the initial
value being 2.3% of the GDP) due to budgetary revenues that were under
expectations, affected by the poor profit tax collection. The cumulated budgetary
deficit for the first 11 months was of 9.78 bln. RON (1.6% of the GDP), thus reaching
the government’s target for the revised budget, even though the budgetary expenses
increased in the last 2 month of the year.
11
12
13
DB Research, 2009
European Commission – 2015 Romanian Country Report
www.consiliulfiscal.ro & ec.europa.eu/eurostat
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2014
Supported by 3 consecutive EU/IMF programs, Romania managed to reduce
the budgetary deficit to 1.8% of the GDP in 2014 (according to the European
Commission’s predictions in winter of 2015). The adjustment was focused at the
beginning of the period, but dispersed over a longer period of time, thus recording a
decrease from 8.9% in 2009, to 5.5% in 2011, and 3% in 2012, when the excessive
deficit procedure was repealed. After a good result in 2013, the adjustment slowed
down in 2014.
2015
The budgetary deficit is expected to drop at 1.5% of the GDP in 2015, due to
reduced goods and services expenses, as GDP percentage. European funds absorption
might have negative impact upon the Romanian budgetary deficit. In 2016, the
predicted budgetary deficit will maintain at 1.5% of GDP, if the current assumed
policies will be kept. Consequently, Governmental debt was predicted at about
38.7%, and in 2015 - 2016 it is expected to maintain somewhere below 40%.
Discussion
The framework for future Romanian economic policies includes in 2015 and
next years:
Romanian Fiscal policy in 2015
- Considering the revenues, results will be felt for previously agreed
measures such as the reduction of social insurance contributions by 5
(percentage points) pp for the employer, tax exemption on profits for the
reinvested profits, tax rate reduction on construction sector from 1.5% to
1%. It was also taken into account expanding the application of the
reduced VAT rate to 9% for food and restaurant services.
- Considering the expenditure side:
 funding increase for co-financing and for supporting the
implementation of EU funded projects
 increase of the minimum wage since the 1st of January 2015 to LEI 975
and since the 1st of July 2015 to RON 1,050;
 salary increase for the teaching and auxiliary staff by 5% since the 1st of
March 2015 and 5% since the 1st of September 2015;
 salary increase for the employees of the public health sector and public
social welfare system by LEI 100 starting with the 1st of January 2015;
 indexation of the pensions by 5%. In 2015, the pension point value
increases by 5% respectively from LEI 790.7 to LEI 830.2;
 social benefits increase for the poorest families, pensioners and disabled
people.
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On medium term, the Government has set as elements of fiscal policy
consolidation:
- For the revenues side:
 maintaining the social insurance contributions for the employers
decreased by 5 pp;
 tax exemption on profits for the reinvested profits, until the 31st of
December 2016;
 construction tax to be maintained at 1%;
 amending the legislation of oil fees and establishing a new tax in the oil
and gas field, which will replace taxation in oil and gas so that the
proceeds will register at least the maximum level in this area/sector;
 maintaining a VAT rate of 9% for food and restaurant services.
- For the expenditure side:
 maintaining a sustainable level of expenditure on wages and pensions in
the public sector;
 reorientation of the public investment expenditure in order to achieve a
gradual shift - from investments financed entirely from domestic
sources to investments co-financed from European funds;
 channelling the available resources to public investment in the fields of
infrastructure, rural development, energy and advanced technology;
 accelerating the spending of EU funds in order to improve the
absorption rate;
 rethinking the public acquisition system based on opportunity,
efficiency and priority criteria;
 continuing the state aid schemes in the period of 2016-2018, to help
create new jobs, to invest using new technologies, production of goods,
services, innovative technology, with effects on the economy growth
and macroeconomic stability.
In 2016, the promoted wage policy will be according to the recent evolution
of the intern and international environment, the legislative framework, and the fiscal
and budgetary measures to be implemented.
For 2016 it is envisaged:
- Gradual minimum wage increase like follows: 1st semester from 1050
RON to 1125 RON, and starting with the second semester to 1200 RON;
- Granting a wage increase for the teaching staff and auxiliary teaching staff:
5% starting April 1st and 5% starting October 1st.
The new fiscal code will have a positive impact over economy, especially
over private investments and consumption. The economic growth forecast in the
conditions created by the fiscal measures, expects a real GDP growth by 0.5 to 0.8
percentage points. Internal demand will accelerate, recording a contribution to the
GDP growth of about 4.8 percent annually.
~ 125 ~
Coverage of the extra internal demand will need amongst growing internal
resources, increased imports, so that the net export will have a more negative
contribution to the real GDP growth.
The new fiscal measures will be felt in social plan too. So, the additional
economic growth will generate on one side a greater number of employees, and on
the other side, an increase in population income, depending on the undertakings
behaviour.
Romanian government’s targets on medium term, by rewriting the fiscal code,
are as follows:
- Clarity and accessibility in application of the fiscal code, by restructuring
the fiscal regulations on systematic bases;
- Transparency in presenting the fiscal principles, concepts defining, notions
and methods used in construction and administration of the coherent tax
and social contribution system that are regulated by the fiscal code, so that
it is correctly understood;
- Insuring a correlation between the fiscal code’s regulations and the
rewritten fiscal procedure code’s dispositions, as well as the related
legislation.
- Increase of the administration efficiency in tax and social contributions
regulated by the fiscal code;
- Decrease of the administration costs in tax and social contributions
regulated by the fiscal code, as well as compliance costs supported by the
population;
- Free initiative stimulation and investments encouragement in Romania, by
removing the income tax on dividends.
-
ANEXES
Main measures revised by the new fiscal code project:
Reducing VAT from 24% to 20% starting January 1st 2016;
Reducing VAT from 20% to 18% starting January 1st 2018;
Establishing a differenced tax rate, depending on the employees number in
microenterprises;
Reducing dividend tax from 16% to 5% starting January 1st 2016;
Reducing income tax rate from 16% to 14% starting January 1st 2019;
Reducing profit tax rate from 16% to 14% starting January 1st 2019;
Reducing social insurance contribution supported by the employee from
10,5% to 7,5% starting January 1st 2018;
Reducing social insurance contribution supported by the state, according to
work conditions starting January 1st 2018, as follows:
 Normal work conditions: from 15.6% to 13.5%;
 Extraordinary work conditions: from 20.8% to 18.5%;
 Special and other work conditions from 25.8% to 23.5%
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- Introducing a ceiling of maximum 5 average gross salaries for the monthly
calculation basis of the health insurance contributions;
- Removing the special constructions tax starting January 1st 201614.
Conclusions
To sum up, the Fiscal-budgetary policy in Romania in the pre-crisis period
was pro-cyclical, characterized by a dominance of short-term political considerations,
ignoring the consequences upon public finance sustainability on medium and long
term. Further, restructuring public expenses and offering fiscal space for investments
should be a major concern for the governmental policies. Even though in 2009 - 2010
important steps were made to improve the unsustainable fiscal-budgetary policy from
the pre-crisis period, extra efforts are necessary to support the structural reforms that
are needed to re-establish the public finance sustainability and the economic growth.
In all, Fiscal-budgetary responsibility law 69/2010, adopted in March 2010, is
meant to improve the fiscal discipline and budgetary programming on long term
improvement. The law comes with a series of fiscal rules which should lead to
prioritized budgetary expenses, cautious fiscal-budgetary policy in the economic
growth periods, and preserve fiscal space needed for economic stimulation in
recession. Budgetary corrections are limited to 2 per budgetary year, and reporting
requirements that will increase the fiscal policy’s transparency are introduced.
Yet, fiscal policies mix was improved over the last years, whereas the fiscal
policy is changed frequently, hence the poor income collection. Thus, in recent
period, indirect taxes, such as VAT and Excise, gained weight in the fiscal policies
mix. The tax wedge on labor costs has been reduced in 2014, due to social security
contributions lowering by 5 percentage points at all levels, after an increase of 3
percentage points in 2009. However, frequent fiscal policy modifications still cause
disruptions in the business environment. Tax collection is still poor, and the VAT
collection deficit is at the highest level in EU 27, 44% of the GDP15.
To the extent that our thinking habits and values are related to economic
policies as strategic anti-crisis sector, a readiness to reconsider economics itself is
required for future progress in economic thinking.
Bibliography:
1.
2.
3.
4.
Krugman Paul, (2009) The Return of Depression Economics, W. W. Noron & Company,
New York. Read Colin, (2009) “Global Financial Meltdown”, Palgrave Macmillan.
Roubini Nouriel, Mihm Stephen (2010), “Crisis Economics”, The Penguin Press, New York.
Krugman Paul, (2009) The Return of Depression Economics, W. W. Noron & Company,
New York.
14
15
Romanian Convergence Program 2015-2018
European Commission – 2015 Romanian Country Report
~ 127 ~
5.
Tuori Kaarlo, Tuori Klaus (2014), “The Eurozone Crisis”, Cambridge University Press,
Cambridge, UK.
6. DB Research, 2009
7. Romania in figures, 2012
8. Chamber of Commerce and Industry – 2014 Romanian economic environment state
9. European Commission – 2015 Romanian Country Report
10. Romanian Convergence Program 2015-2018
Webgraphy:
www.bnr.ro (National Bank of Romania)
www.insse.ro (The Romanian National Institute of Statistics)
www.consiliulfiscal.ro (Romanian Fiscal Council)
ec.europa.eu/eurostat
www.gandul.info
www.hotnews.ro
www.zf.ro
~ 128 ~
TABLE OF CONTENTS
Bairamova Elmira Ramisovna ............................................................................
RUSSIAN-ROMANIAN RELATIONS IN ENERGY SECTOR
РОССИЙСКО-РУМЫНСКИЕ ОТНОШЕНИЯ В СФЕРЕ ЭНЕРГЕТИКИ
JEL: F14, Q48
5
Berezovskaya Anastasiya Arturovna ..................................................................
ПЕРСПЕКТИВЫ ВЫХОДА РОССИИ НА МУЗЫКАЛЬНЫЙ РЫНОК
РУМЫНИИ
PROSPECTS OF RUSSIA'S ENTERING THE MUSIC MARKET OF
ROMANIA
JEL: L82
13
Bradu Petru-Lucian ............................................................................................
RELIGIOUS INTERFERENCE IN MULTINATIONAL COMPANIES
JEL: J21, J24, M21, Z120
21
Chiţu Elena-Iulia .................................................................................................
Costea Codruţa Ana-Maria
ROMANIA ON RUSSIA’S MARKET
JEL: F13, F15, F42, F52, F53
36
Kurguzova Evgeniia Valerievna .............................................................................
Reshetova Alyona Viktorovna
STUDY OF IMPLICATIONS OF CUTTING IMPORTS OF RUSSIAN
NATURAL GAS FOR ROMANIA
JEL: F14, Q41
42
Kuznetsova Alexandra Mihailovna .................................................................... 57
AGRICULTURE RELATIONS BETWEEN ROMANIA AND THE RUSSIAN
FEDERATION
JEL: Q17, F14
Petriceanu Andreea Catrinel .............................................................................
Henter Győző Zorán
RUSSIAN LANGUAGE BETWEEN THE TRADITIONAL AND THE
MODERN ECONOMIC ISSUE
JEL: F13, F15, F42, F52, F53
~ 129 ~
63
Toader Andreea ...................................................................................................
Ion Andreea
Pavel Silviana Viorela
Ilie Ştefan-Alin
AN ESSAY ON OF DUTCH DISEASE IN THE LIGHT OF ECONOMIC
CRISIS IN EASTERN EUROPE
JEL: E31, E32, E63, 65
75
Ivanova Anna Yurievna ......................................................................................
Sarzhat-ool Vlada Vladislavovna
FEATURES AND PROSPECTS OF THE DEVELOPMENT OF SMALL
USINESSES IN THE AGRICULTURAL SECTOR IN RUSSIA AND
ROMANIA
81
Meng Xin
Alexander Sadikov ..............................................................................................
THE IMPACT OF CHINA ON ROMANIA’S FOREIGN TRADE SYSTEM:
COMPETITION AND MUTUAL BENEFIT
РОЛЬ КИТАЯ ВО ВНЕШНЕЙ ТОРГОВЛЕ РУМЫНИИ:
КОНКУРЕНЦИЯ И ВЗАИМНАЯ ВЫГОДА
JEL: F14, F13
95
Popa Bianca Alexandra .......................................................................................
Bichiş Andrada
Voicu Raluca Oana
AN ESSAY ON CULTURAL AND NATURAL ROMANIAN TREASURES
LISTED IN THE UNESCO HERITAGE AS PART OF THE NATIONAL
IDENTITY OF THE COUNTRY
JEL: I13, Q56, Q57
105
Stan Raluca Elena ...............................................................................................
Şerban Alexandru-Cristian
FIGHTING BACK ECONOMIC CRISIS. THE CASE OF ROMANIAN
ECONOMIC POLICIES IN 2000s
JEL: H30, E62, E64, E66
114
~ 130 ~
“Romanian ‐ Russian Journal of Scientific Research in Economics“, Volume 1, Issue 1/2015, Copyright 2015 To be cited: “Romanian ‐ Russian Journal of Scientific Research in Economics“, Volume 1, Issue 1/2015 PUBLISHERS: Faculty of Theoretical and Applied Economics, Bucharest Academy of Economic Studies www.ase.ro, economie.ase.ro Address: 6 Romana Square, District 1, 010374 Bucharest, Romania Tel. +4 021 319.19.00; +4 021 319.19.01 int 132 Fax: +4 021 319.18.99 E‐mail: rectorat@ase.ro Editura ASE All rights reserved The publishers are not responsible for the content of the scientific papers and opinions published in the Volume. They represent the authors’ point of view. EDITORIAL BOARD Editor in Chief: Associate Prof. Ph.D. Grigore I. Piroșcă Bucharest Academy of Economic Studies, Bucharest, Romania Prof. Ph.D. Nicolae Istudor Prof. Ph.D. Angela Rogojanu Prof. Ph.D. Alexandru Tașnadi Associate Prof. Ph.D. Florina Mohanu Associate Prof. Ph.D. Liana Badea Associate Prof. Ph.D. George L. Șerban‐Oprescu Lecturer. Ph.D. Ramona I. Dieaconescu Saint‐Petersburg State University of Economics, Saint‐Petersburg, Russia Prof. Ph.D. Dmitry V. Vasilenko Prof. Ph.D. Elena F. Tarasenko Associate Prof. Ph.D. Sofia I. Rekord ~ 131 ~