Romania's economic policy: rulers' wisdom will lead us
Journal of Organizational Change Management
ISSN: 0953-4814
Article publication date: 1 November 2006
Abstract
Purpose
To highlight the key‐role of macroeconomic management in a dysfunctional emerging market economy.
Design/methodology/approach
The analysis – focused on the particular case of Romania, where the transition to market economy is underway – relies on two basic hypotheses. According to the former, the reform programs implemented during the 1990s failed to take into account some fundamental correlations such as the one between reform measures and the real state of the economy (more specifically, the presence or absence of distortions). Another important correlation must exist between various types of macroeconomic policies, whether designed to trigger changes in the real economy (e.g. transfer of ownership, etc.) or aimed at securing macro‐stabilization. According to the latter hypothesis, overlooking such correlations will jeopardize both macroeconomic equilibrium and the soundness of future growth.
Findings
The data illustrating the evolution of Romania's economy during 1995‐2003 confirm the aforementioned hypotheses. Although the economy started growing at a fairly‐high rate after 1999, growth has been mostly immiserizing and hardly sustainable since. This outcome can be illustrated by using well‐known models such as Bhagwati's generalized theory of distortions and welfare and Mundell's approach of macroeconomic policies under imperfect capital mobility.
Originality/value
The use of the “immiserizing growth” concept in depicting Romania's economic evolution after 2000 is most likely an element of originality. The paper might be valuable for emphasizing the imperfections of the Romanian “government‐central bank” tandem.
Keywords
Citation
Burnete, S. (2006), "Romania's economic policy: rulers' wisdom will lead us", Journal of Organizational Change Management, Vol. 19 No. 6, pp. 753-759. https://doi.org/10.1108/09534810610708404
Publisher
:Emerald Group Publishing Limited
Copyright © 2006, Emerald Group Publishing Limited