Monica Raileanu Szeles, Ph.D., Faculty of Economic Sciences, Transilvania University of Brasov, B-dul Eroilor no. 29, Brasov, 500036, Romania
Objectives
This paper explores the actual stage of Romania’s real convergence to the EU and the implications of this process on the achievement of macroeconomic performance on middle and long term.
It has been shown that the real convergence may lead to nominal convergence over time and therefore the real convergence can be seen as a pre-condition for participation to the EMU (Lein-Rupprecht, León-Ledesma and Nerlich, 2000). The participation to the EMU must be therefore partially based on the achievement of real convergence. The recent financial crisis may be seen as a new challenge for all EU countries, which can generate negative consequences for the real convergence and also for fulfilment of nominal criteria across the EU. In the new context, the re-consideration of the nominal convergence criteria and the speed-up of the integration into the EMU of the Central and Eastern EU member states represent a hot issue. This new challenge generates a complex debate, but also asks for a good knowledge of the actual stage of the real convergence process.
Data/ Methods
The paper is organized into two sections. The first section has an empirical focus and is aimed to analyze the Romania’s real convergence to the EU and the main determinants of its economic growth, in a dynamic (longitudinal) perspective. The second section advances some new challenges that have occurred to Romania in the process of catching up, in the context of the international financial crisis. Subsequently, the fulfilment of the nominal convergence criteria, in the new global financial context, is also discussed.
The β convergence theory (both conditional and unconditional models) is used to assess the real convergence within the EU and to determine Romania’s speed of convergence to the EU and the EMU. As econometric model, the paper uses panel regressions not only to test for conditional convergence in Romania between 1998 and 2008, but also to study the determinants of GDP growth in this period. We expect to find out to what extent the changes in the level of GDP per capita, openness to trade, macroeconomic policies and the speed of transition reforms over time influence the economic growth.
Expected results
The results of the paper are about the new perspectives of Romania in the convergence process towards the Euro adoption, in the context of the financial crisis and after the progress made by now, i.e. the changes in the speed of convergence, determinants of per-capita GDP growth, governmental policies etc.