A Look Into The Development of Romania

The Liberalization Dilemma

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Three Foundational Pillars for Sustainable Development

Economic liberalization dilemma

The Eastern European country of Romania has had a tremendous shift in its socio-economic structure. Romania transitioned from a socialist republic following the 1989 revolution to a unitary semi-presidential republic. This emancipation allowed for the nation to shift its communistic society led by dictator Ceaușescu to a full-blown liberalization of its economy. The 1990s represented a new golden age of discovery for Romania. Novel channels of distribution opened up from the West. Individuals unearthed rights, including international travel and private investment. Like many other ex-eastern bloc Soviet nations, this was a time of enthusiasm, admiration and accomplishment. Newly formed democratic governments would raise the population out of intense poverty levels. Investments on infrastructure, education and healthcare would sustain left-behind economies and allow for growth to endure.

Nevertheless, after 30 years of liberalization, Romania faces considerable challenges in the fundamental structure of its long-term development. The 1990s were a double edged-sword for the nation. On the one hand, rapid liberalization permitted foreign direct investments to enter the once isolated market of Romania and generated jobs, fresh supply chains and international trade. On the other hand, this rapid change could not be preserved and overwhelmed outdated public sectors as well as governmental institutions. Competition over who takes over and how political parties were formed became a continuous debate. Weak institutions could not understand nor had the capabilities to ensure sustainable governance over the newly liberalized society. Who ever said that democratization was not a dirty process until the light at the end of the tunnel is seen?

As a consequence, instead of having a gradual and cohesive transition, Romania suffered a chaotic spread of capitalism, as if a hungry animal freed out of its cage longing to escape. But once escaped, it had no idea what to do next and how to take care of itself. Chaotic capitalism presents a dilemma in the sense that Romania’s economic liberalization gave way to the creation of an uncontrolled rule of law. Too much restriction and stringent directives during Ceaușescu’s dictatorship was replaced by a form whereby individuals had their own little empires across all kinds of industries such as public, real estate, tourism, agriculture and logging, even football. Weak institutions could not keep track of this paradigm shift. Thus was the establishment of corruption and the root cause of an irregular and dysfunctional growth of the Romanian economy. Irony is therefore not without short notice. The Romania society wonder why today’s volatile governments and coalitions fail to deliver on promises made over the years and why the level of trust is grim between the common citizen and leadership.

It is true that Romania’s journey has been exceptional. The nation joined the North Atlantic Treaty Organization (NATO) in 2004 and the European Union (EU) in 2007. However, it failed on several occasions to reach the necessary criteria for the Schengen area, although Chancellor Scholz recently delivered a message of hope, stating Germany is getting ready accept Romania.

Unfortunately, we must identify several key indicators which still shows to this day that Romania’s corruption level remains relatively high. The corruption index in 2021 for Romania was 66/180 according to Transparency.org; +1 basis point since 2020. The Corruption Perceptions Index has Romania quoted at 45/100, 0 being highly corrupt and 100 being very clean. China has the same level of corruption as Romania at this stage which is an interesting perspective for comparison. Nevertheless, Romania is considered as less corrupt than the global average¹.

Diving into Romania’s challenge to fighting corruption, foreign investors have had difficulties dealing with over complicated procedures and uninformed application of rules arising from different stakeholders where from bribes may come from all directions. At times, it has become a common feature to solve administrative problems for unlocking business operations through the means of corruptive practices. Although the Romanian Criminal Code and other laws criminalize active and passive bribery, including cases with foreign officials, the government does not enforce anti-corruption laws effectively. Moreover, immunity instances have added further pressure to already weakened judicial organs. For instance, things were getting out of hand when in 2017 many Romanian protestors came out on the streets to show their discontent with a decree that would have protected officials from corruption charges; which later succumbed to the pressure and was withdrawn. Petty corruption is only the start of the problem, whereby in Romania irregular payments and bribes have become common practice in society as a whole. The law does not distinguish between bribes and facilitation payments, and gifts and hospitality is open to legal interpretation depending on who is being targeted and who benefits from such a transaction².

Several appalling cases of corruption can be identified across many domains. For instance, existent barriers in the real estate market prevent cohesive infrastructure projects to be adopted. These problems can be seen through the “real estate mafia” in Romania, whereby rule of law is frail. Local officials are susceptible to corruption. They allow private investors and companies to develop housing or commercial zones uncontrollably without regard to current infrastructural needs and regardless of the environment around the existing urbanized and natural areas. As such, there have been many cases of neighborhoods with barely enough water supply from cities, limited power and/or broadband connectivity. A simple observer would even find it ridiculous to notice how non-asphalted roads with no pipelines nor electrified power lines would provide access to terrain where developers would pump in millions of euros to raise luxurious apartment blocks. This would have ended up with highly disproportionate urban planning factors. One such example is the National Anticorruption Directorate’s prosecutors making ample investigations with regards to a suspicious real estate business. A criminal case was filed in the regional province of Prahova. Several business people, public notaries and city hall officials from the city of Ploiești are being investigated. The case is about a construction company which bought land to raise several big apartment blocks. However, the controversy began to surface when locals, living in their houses, realized that this company was developing buildings which would cast a daily shadow on their houses. Officially, this is an illegal practice. After a verification of official documents at the City Hall of Ploiești, the Urban Zone Plan (UZP) would have only allowed the construction of low-height buildings. But as soon as the land was acquired, the company known as Genial Transaction Cars SRL requested a modification on the UZP. More shockingly, the City Hall executed this request. The locals notified this at the Tribunal of Prahova in 2018. The magistrates have yet to finalize the judging of the case and still, the City Hall did not suspend any activity. Four years later, after the buildings were completed and tenants started to move in, only recently the National Anticorruption Directorate opened up a case at the request of the Minister of Justice³.

This demonstrates that anti-corruption action is as much a time sensitive subject as it is a total adherence to the rule of law. It is thus crucial to set into place institutions with rapid reaction to any such instances, especially when infrastructure and real estate projects are on the line. These are time consuming, expensive projects affecting many stakeholders. One must look at the long term horizon in such projects and factor in all variables.

Similarly, the national pension system reflects the trend of citizen well-being up until retirement. It is difficult not to talk about pension in countries like Romania. The political debates seemed to have become a rhetoric without ends whereby politicians clash and do little to actually make any meaningful reforms. In this instance, corruption is not necessarily the source of the problem, but rather, it is the infirmity of the institutions. Governance is powerless to instill a sustainable pension system for the elderly population. Coupled with national debt, solving the pension issue is a never-ending vicious cycle. Reforming the pension payment system and applying a vigorous principle based on contributory guiding all revenues have long been overdue; the last reform took place in 2001 when the principle of contribution was introduced. “The average pension in Romania in 2021 was RON 1,799 (around EUR 350), a very low level as compared to the actual needs or with other EU countries, this being one of the reasons for the subsequent increases in the last years.”⁴ Pension expenditures rose at almost RON 80 billion from the public budget. This translates to about 6.6% of the GDP estimated for 2021, representing an increase of roughly 10.53% as compared to 2020. However, experts assess that actual retirement age is one of the lowest by European standards given the system of privileges under which certain occupational categories can retire at the age of 45. There are cases of pensions being higher than salaries. As such, the principle of contribution has not been such an effective system due to the establishment of privileged categories and the possibility of early retirement for them. This is a one of the causes which fueled an imbalance on the pension system. The National Recovery and Resilience Plan considers a repeal action in order to correct this problem. Intuitively, the pension system is susceptible to preferential treatments and abuse of power, in particular from state officials and those undertaking privileged positions, where from groups boycott resistances to such changes.

To add up, the socio-economic downfall from poor performance and weak institutions could also be reflected by the energy sector. Here, many poorly performing indicators show that Romania’s energy sector is infringed by bad socio-communal behaviors and the effects of climate change. For example, Romania’s illegal logging is another disquieting topic that needs to be urgently addressed. More than any other country in the EU, Romania has over 500,000 hectares of virgin and old-growth forests. It is reported that 63% of this area is protected as Natura 2000 sites. However, the reality is very different, whereby environmental laws in Romania are not up to standards with EU specifics. For instance, the Cernica Forest, not far from the capital Bucharest, rescinds due to rangers being paid by the state to cut the trees first and do an evaluations studies later, as pointed by a Euronews report. Experts state that, although biodiversity of trees are priceless, they do not escape the danger of the economics, because of the high price tags of such trees, easily reaching EUR 10,000 each. As a result, only a fifth of Romania’s forests are still old-growth trees. Sorin Banciu, the State Secretary at the Ministry Of The Environment, Water And Forests, also mentioned the fact that companies and the logging mafia in Romania are not your only usual suspects. Local villages and communities cumulating to about 3 million homes still keep warm with firewood, thus disregarding any legal issues on logging⁵.

GAN Integrity’s risk and compliance portal identified several factors fueling Romania’s corruptible tendencies. Although we saw cases in other domains, the most alarming and important factor is Romania’s judicial system, which was categorized as highly risky. Theoretically, the judicial system is deemed as an independent body. But it fails to maintain transparency and integrity given the strong influence of the legislative branch. There has been numerous cases of judges charged with bribery and trading in influence. To add up, Romania’s young judicial system reveals weaknesses in its institution, accentuated by a lack of experience and expertise from established courts. Companies dealing with cases also point out to a “lack of consistency and predictability in the jurisprudence of the courts”. Nonetheless, a major reform of the Judicial Inspection raises hope for combating such corruptible instances, which may bring Romania closer to reaching the Schengen zone’s acceptable criteria.

Nowadays, increasing competition between China and the US and the war in Ukraine resulted in a sharp return to fossil energies, adding up to the aftershocks of the pandemic and disrupting global supply chains. Renewables and innovation have yet to be scaled up to satisfying expectations. And the nail-biting process that is taking years in the making to transition to a greener economy is being interrupted as a result of these reactionary global forces. These macro trends directly affect localities in Romania, as in many other countries; all the more reason as to why it is crucial to build resilient and flexible governments. This should start at the domestic level. But in countries like Romania, an overall trend of weak institutions left discrepancies in the possibility for it to properly develop its economy, sustain the latter and nurture its society for growth. Several core public sectors illustrate such discrepancies. I shall give examples by outlying three main pillars for the foundational and successful development of a nation, comparatively to the human body’s anatomy.

First Pillar: The skeleton and nervous system

The first foundational pillar for a country to properly develop its growth is infrastructure, and to a broader extent, the real estate industry. This pillar is what I call the skeleton and nervous system of a nation. Without a structure set in place and without the receptors to be able to transmit messages cohesively, the whole body collapses or becomes dysfunctional if pushed to its limits. Romania to this day still experiences significant infrastructural pressure to sustain its economy.

Indeed, a survey on the state of infrastructure in Romania by IPSOS indicated that 93% of the Romanian respondents are most unhappy with the highways in the country. This is because that are few freeways, compared to EU standards and to the global average of 50%. 87% said are unhappy with local roads, 86% unhappy on defense system against flooding, 85% unhappy on the railway network and 74% unhappy on water and sewage networks⁶. These highly negative responses suggest the infrastructural pressure has yet to subsidize population discontent.

For instance, in 2013 the government of Romania ditched a contract with the US construction company Bechtel to build a highway in Transylvania. The work began in 2004. In 2005, construction halted when the new government at the time was examining signed agreements by the preceding leftist government. Ten years of debate and legal fighting over failure of the government to pay back its debts resulted in asymmetrical work. Merely 52km of road was built out of the projected 415km. As a consequence, Romania spent approximately EUR 1.42 billion and compensated Bechtel a further EUR 37.2 million; i.e. the amount due for the work already Bechtel had done⁷.

Another example is the never-ending story of the Comarnic-Brașov highway connection. Numerous recycled feasibility studies on building this highway kept pouring over the years, which connect Wallachia with Transylvania at the Dâmbovița and Brașov counties, a popular region in the mountains for tourism and a highly congested area for commuters traveling between the two regions. The state spent EUR 100 million on only the studies for this highway of 53km in length which zigzags through the busy valley. The roadmap was revised on many occasions throughout several governments the last decades, and every time, the price tag for implementing the project kept growing, now estimated to reach EUR 1 billion. More discussions are being scheduled without any noticeably physical action. The parties involved estimate the cost of construction to be around EUR 1.8 billion, from which the state will pay annually EUR 325 million for 26 years, totaling EUR 8.5 billion for building, operating and maintaining those 53km of highway⁸. Mind you, these estimates were made before 2015. The highway is still non-existent in the physical, only on paper maps. Frustration of society gave way to despair, which gave way to anger, which then gave way to jokes, eventually becoming a cliché for sourcing comedy acts to entertain a society fed up with the current situation in Romania. In many other sectors and industries, the Romanian society has come to see reality through the lenses of comedic entertainment when it comes to serious subjects at hand, thus ending up with counterproductive mindsets.

Administrative and financial inconsistencies such as these examples showcase how weak governance leads to a rupture of growth and stable development, albeit intentionally good in nature. Even more, infrastructure needs to be treated and surveilled. Just like the equilibrium between osteoblasts and osteoclasts  on a healthy bone structure, entities such as law enforcement agencies must showcase that a highly trained personnel and be a strong competent section in public service to be able to ensure safety and security of the infrastructure. This represents the backbone of the development.

The police department is another factor considered to be high at risk in corruption. Slow enforcement of the rule of law, and in this case within the road code, outputted a chaotic rise in traffic congestion in overwhelmed cities and a shocking rise in car accidents which results in hundreds of deaths annually. Indeed, according to Eurostat, Romania experienced a rate of 85.1 people dead per million inhabitants in road car accidents in 2020; the highest in the EU⁹. As of 2022, Romania has barely over 981km of operational highways; an excruciating process that took 30 years to arrive to this small figure. In 2019, Bucharest with a population of just 1.83 million, was flagged as the “most congested city in the world based on the number of hours its residents lose in a year due to congestion” according to the 2020 Global Traffic Scorecard published by INRIX¹⁰. In 2020, it ranked number 11^th, with a total of 98 hours lost in congestion¹¹. To compare, Chicago ranked 6^th with 104 hours lost.

A skeleton needs to be well designed and the nervous system is a difficult labyrinth to navigate into. Hence the complexity of installing proper governance, transparent and free of corruption to be able to advance infrastructure initiatives.

Second Pillar: The organs and the blood flow

The second vital pillar for a healthy foundation towards sustainable development is the healthcare sector and financial system. Healthcare and finance represent the organs and blood flow of the body. These sustain life by purifying and processing the system. They help by positively catalyzing the integral functionality of the whole system. A nation cannot sustain itself without its workforce. Its workforce are its citizens. In essence, it is obvious that people need to be tended for.

According to Statista, Romania’s chief problem as an emerging nation is its healthcare system. A survey shows that in 2022, 40% of total respondents stated health concerns are the most important issues currently faced in Romania¹². Indeed, Romania’s public hospitals are barely kept in function by old infrastructure and poorly equipped facilities; remnants of the communist era. Now exacerbated by the COVID-19 pandemic, people with little budget or options are scared to end up at the hospital for fear of dying not of an illness, but due to poor conditions and the risk of infections. Medical procedures and consultations are not actualized as much as they ought to be. This creates distrust between staff, doctors and patients and adds on administrative and operational problems. A John Hopkins university study shows that Romania, who had one of the highest mortality rates in Europe during the pandemic, if not the highest at a certain time, was at 2.1% of mortality rate (or 348.08 deaths per 100K population)¹³.

In a 2019 report, the World Health Organization (WHO) published a comprehensive country health profile on Romania. Spending on healthcare in Romania is the lowest in the EU, with a per capita basis of EUR 1,029 against an EU average of EUR 2,884, and a proportion of 5% of its GDP against EU’s 9.8%. With a significantly underfunded health system, Romania’s death rates from preventable and treatable causes are among the greatest in the EU (4^th highest). Preventable causes of mortality in Romania was at 310 per 100,000 population (age-standardized mortality rates), whereas the EU’s average was at 161. And the treatable causes of mortality in Romania was at 208 per 100,000 population (age-standardized mortality rates), while the EU’s was at 93. The main causes of the of preventable mortality was identified as ischemic heart disease, lung cancer, alcohol-related deaths and accidents, whilst mortality’s rate from treatable causes (highest in the EU) were from ischemic heart disease, stroke, pneumonia and colorectal cancer. According to the WHO report, Romania has a highly centralized Social Health Insurance (SHI) system, whereby the Ministry of Health oversees overall governance and the National Health Insurance House administers and regulates this system. Both of these agencies have local representations, named district public health authorities (DPHAs) and district health insurance houses (DHIHs) and healthcare services are offered in 41 districts (județ) and Bucharest. DHIHs acquires services from health care providers locally and these get paid by the Ministry of Health under national Health Programs. Employers did not directly contribute to the SHI system in Romania until a 2017 reform. Before, they would have had to transfer a part of SHI contributions to the NHIH on behalf of their employees; but this model was not always met by the employers¹⁴.

Health spending in Romania is the lowest in the EU, both in per capita terms and as a share of GDP. EU’s average for Purchasing Power Parity (PPP) per capita was around EUR 2,900, whereas Romania’s was merely EUR 1,000. As a percentage of GDP, EU’s average was about 9.5% and Romania’s was only 2.5%. Moreover, health care financing skews towards inpatient care, with 42% of total spending, approximate EUR 432 PPP per capita (EU’s average is EUR 835 PPP per capita), and 18% of total spending for outpatient care (EU’s average is EUR 858). Most worryingly, Romania has fewer doctors and nurses per capita than most EU countries. The report draws a 2017 figure of 2.9 practicing doctors per 1,000 population, the 3^rd lowest in the EU (with an average of 3.6) and 6.7 nurses per 1,000 population compared to the EU average of 8.5. One main cause of this discrepancy is the exodus of doctors and nurses leaving the country for finding better careers and remunerations abroad. This eventually resulted in a domestic shortage of health professionals, which negatively impacted care accessibility. Although governance has stepped in over the years in response to this crisis, such as increasing pay in the chronic health workforce shortages, barriers still remain high around budgetary constraints and infrastructure for modern facilities. To add up, the report shows that outpatient care remains under-utilized, with a rate of roughly 5.3 doctor consultations per individual and approximately 208 discharges per 1,000 population. The EU’s average was at 7.5 doctor consultations and 172 discharges, suggesting that Romania has a high inpatient use with a low outpatient use. As a consequence, unmet needs are much higher and more unevenly distributed than EU averages, with low income households reporting that about 7.5% have unmet medical needs for care, and EU’s average low income households was at about 3.8%. The uneven distribution of doctors is also noticeable in the regions of Romania, further exacerbating access issues to households. For instance, the Western region of Romania has a rate of 3.7 physicians per 1,000 population, whereas its South Muntenia region was quoted at 1.52. Looking at its resilience, the healthcare system in Romania shows a correlation between low health expenditure and avoidable deaths from treatable causes. With a health expenditure of about EUR 750 PPP per capita, Romania outputs a rate of over 200 treatable mortality per 100,000 population, whereas the EU’s was EUR 2,050 for a treatable mortality rate of less than 100 per 100,000 population¹⁵.

As it can be seen, Romania has a lot more work to do with regards to its healthcare system. A healthy workforce provides a resilient society for a robust economy. Thus, the nation must ensure the workforce is kept healthy and its welfare prosper. A resilient healthcare system makes sure people get the must-needed treatments. Good governance puts health-related issues on top of their policy agendas. If workers¹⁶ gets sick, they will not continue working anymore. Hence, the worker will not be able to contribute to the nation’s gross domestic product (GDP). Putting things into perspective, these workers would most probably only think about healing themselves first and foremost before anything else. Essentially, Maslow’s base of the pyramid for basic needs is the first layer of protection for every individual. It is therefore not only unethical, but purely irrational from an economic perspective for a nation to artificially disregard its national healthcare system. The same principle applies for the financial system and the pension programs available in said nation.

Corruption in the healthcare system in Romania is regrettably no rare feature. Many cases of bribery, nepotism or preferential treatment have been recorded in this domain. For instance, a director at the emergency hospital Saint Apostol Andrei in the county of Galați was sent to court by the National Anti-corruption Directorate for supplying a candidate the topics during an interview process. The legal accusation states that no information is to be revealed to people not authorized in exchange of money, gifts or other improper benefits. The prosecutors noticed that Alina Grosu, financial-accounting director at the county hospital in Galați, was a member of the committee of examination for candidates for the competition to obtain a vacant post in the staff of TESA at the hospital. She had provided a candidate the subjects for the written exam and the interview; the conditions stating that information is not to be shared¹⁷.

This goes hand-in-hand with the issue of corruption in the country. The situation all together affects the population and thus raises barriers for sustainable wellbeing. Ergo, development is limited if not hindered by decaying systems being hammered by external factors. In other words, blood flow and breathing need to be purified in order for the human body to continue operating at a healthy condition.

Third Pillar: The brain and mind

The third and if not, the most important long-term prospect in sustainable development for a nation is the education sector. What is the mindset? What is the brain? What is legacy and heritage? What makes a country a Nation? There is no future of a Nation without thinking about the generations that are to follow. And so teaching and nurturing our children ensures the future of a Nation and its sustainable development. The human body needs a brain to understand what it needs, what are the wants and what messages can be received and interpreted. The idea of consciousness; the mind; applies to the conglomerate of a society and its Nation State. It is simply put a scaled-up version of a single individual. This is why the pillar of a strong educational system is paramount for positive growth.

Sadly, and in the same manner as the old communist-style system decayed over other public services, Romania’s education system has also been left behind. And it is not only about old buildings with classrooms barely fit for classes and poor sanitary conditions. The crisis is mostly accentuated by poor management and low-paid teachers. This is the perfect type of environment for corruption to flourish, the same way as all other areas under the administration of weak governance. A Romanian Journal article pointed out that a Eurofund survey ranks Romania first in the EU on corruption in schools¹⁸. The perceived quality of public services in Romania scored a 6.2 out of 10, whereas the EU28’s is marked at about 6.8¹⁹. Romania ranked 47 in 2021 out of 78 countries in terms of education ranks according to the World Population Review. In 2020, Romania ranked 40, which is a significant drop probably due to a sudden decrease in the quality of education throughout stringent restrictions during the COVID-19 pandemic²⁰.

Moreover, the number of educational units in Romania have dropped from 7,588 units in 2010, to 6,970 in 2020 according to Statista. It is however encouraging to notice the amount of budget allocated to education over the past 4 years. In 2017, the state budget for education was evaluated at RON 4,824.6 million (or about $965.5 million; current currency exchange rate). In 2018, this number has more than quadrupled; to RON 20,929.1. million (or about $4.2 billion; current currency exchange rate). Since then, the budget kept on slightly increasing with this year’s figure estimated to be $28.5 billion. Nonetheless, the issue of marginalized communities remains a challenge to be addressed on the longer run. In 2020, four out of 10 Romanians stated that education facilities in rural areas were fairly bad. To add up, expenditure on education according to Romanian law should receive financing worth 6% of the country’s GDP, a number which apparently was never achieved over the past few years. For instance, the budget for 2021 cumulated to barely 2.55% of the GDP, a decrease of 6.76% compared to 2020. Representatives from the Ministry of Education argued that the budget proposed for 2021 was the largest one in 30 years and that this increase was mainly due to the pandemic whereby online learning platforms required a much higher budget²¹. The efforts for driving a digitalization program in education is a start towards a good educational system.

Nevertheless, if we look at the demographic key indicators for education in Romania, it is detected that early leavers from education and training dropped by only 0.7% from 2009 to 2019 (16.6% to 15.3%, respectively). The EU-27’s rate dropped by 3.8% in the same time-frame (14% to 10.2%). Furthermore, Romania leans towards under performance in terms of underachievement in reading, mathematics, science, tertiary educational attainment and adult participation in learning. There are numerous concerning numbers, but taking the example of proportion of 15 year-olds underachieving in math at 46.6% in 2019, when the EU-27 was at 22.9% the same year, showcases the long road Romania still has to endure in upgrading its education sector²².

Looking closer at the early leavers indicator, the situation has become even more precarious as school dropout rates have increased over the years. More recently, the Education Ministry and the county school inspectorates have signed 42 agreements to enact measures for combating the school dropout rate. In essence, funding agreements are worth EUR 193 million from the first round of the National Program to Reduce School Drop-out. These would cover expenses such as services, salaries, events and trips, training for teachers and more. This comes at a time where the 2021 average for young people (18-24 years old) leavers from education and training in Romania was quoted at 15.3%. In contrast, the EU’s average stood at 9.7%²³. As a sign of investment into human capital, the European Social Fund aims at tackling Romania’s social challenges and poverty levels, in particular the marginalized communities. In the hope of cutting down on unemployment rate and raising the level of achievement in tertiary and vocational education, such an effort would allow for a dissociation from corruptible practices and toxic, old-fashioned managerial practices the Romanian society has gotten used to²⁴.

But such scandals do not stop merely at the local level. These go all the way up the food chain. Several poor decision-making moments have been reflected by the administration of Mr. Cîmpeanu’s staff and himself. For example, a student ended up suing the minister after giving the order to retract scholarships for student transportation. This move, the student said, would have a negative effect on young student commuters, and many of them would renounce going to school due to lack of resources. On average, children commuting pay between RON 300 and 1200 (about $59.36 to $237.45) to arrive to school. Once the Minister of Education stopped the allowance for transportation, the students from the most vulnerable mediums would be at risk of dropping out of school²⁵. But the cherry on the cake was Mr. Cîmpeanu’s resignation from office, following his accusation for plagiarizing a scientific work of his, according to a case by PressOne. Adding up to the scandal is the fact that two of his sponsored bills on education were intensely criticized by professors, deans, student associates with parents and education experts, that these were discriminating in nature against students and would favorize national colleges and launder plagiarism²⁶. Of course, the former minister is only one of many others who suffered the same fate, even worse. Former Romania’s prime minister Victor Ponta also plagiarized a piece of work. Others ended up in prison for corruption charges. Overall, Romania had about 8 prime ministers in the last 7 or so years. Even European Commission President Jean-Claude Juncker was stupefied by how many Romanian prime ministers he had to greet during his mandate²⁷. And so, since the third foundational pillar is based on the mindset and education of a Nation, one has to wonder what kind of message Romania is transmitting to observers. It does not go as a surprise to see a lack of caring for the education and long term prospects for the society’s children, if political squats and repetitive acts of ridiculous governance fall-outs are observed. A word could be used for such repetitive practices, and that is insanity. By law, insanity is “unsoundness of mind or lack of the ability to understand that prevents one from having the mental capacity required by law to enter into a particular relationship, status, or transaction or that releases one from criminal or civil responsibility”²⁸. Civil responsibility is therefore highly neglected.

Weak leadership employed by even weaker parties, flawed with corruptible and incompetent practices output weaker generations, susceptible to embracing radical ideologies. History echoes this vicious circle. Ergo, a limitation if not a complete stop and drop of socio-economic growth for a Nation could be at great peril. Proper governance and collaboration paves the way for a robust economy, which is quintessential to the sustainable welfare of a society. The sharing and safekeeping of knowledge through experience and education is the by-product of said robust economy and state of welfare of the society. Therefrom, a positive cycle would continue to input growth in the nation, as long as the education system remains primordial at all times.

Looking Forward

The corruption cycle pulling down Romania’s development remains a constant debacle, as is the case for all other nations, especially emerging economies. Corruption might have resulted from a societal root-cause undertaken throughout the communist era or as a consequence of the chaotic liberalization of the market after the 1989 revolution, or both. Weak institutions meant that weaker politics led to weakened rule of law in all sectors. And this process would negatively impact the society at large, therefrom spawning weaker mindsets in future leadership. The 1990s for Romania was like a phoenix bird being reborn. Nonetheless, this opened the door to capitalism which expanded uncontrollably. A sort of new “Wild West” in the east of opportunistic behaviors from all sorts of communities and individuals yielded the rise of private oligarchs and profiteers, ranging from real estate schemes to the installment of puppet state officials. These entities began developing their own set of rules and the institutions were either too powerless to do anything about it or gave into temptation, unwarranted by a set of laws too feeble to be able to break the contaminated development of uncontrolled expansion. Individuals such as businessmen thinking to be above the law influenced the corruptible behavior all the way to the political level. Today, the Romanian society even bitterly jokes about the existence of a “Parallel State” which give directions to politicians on driving policy.

Nevertheless, attention to Romania’s development efforts have been hiked over the last decade as it is a key NATO and EU member. Being a highly geostrategic country in Eastern Europe, Romania is at the crossroads of History and civilizations. Thus, it is no true wonder why more external investors come to the country to lend a hand in its development efforts. The Russo-Ukrainian war, happening right close to the border of Romania, has given even further exponential interest from other economies to invest into Romania. For instance, international organizations such as the World Bank have highlighted several key urban development projects, axed towards sustainability efforts, technological improvements and well-governed institutions. As such, the World Bank encompasses a comprehensive “Urban Development Portfolio in Romania”²⁹. The country also has not been short of receiving grants from EU funds for development. However, how is the flow of funds from said donors being monitored? How are the projects prioritized and who profits from these projects? Do these go to the right people in the first place? How much will the distribution of such funds reduce inequality between urbanized areas and the more marginalized communities in the countryside? These are the tough questions needing to be addressed by local leadership and a proper governance with abled institutions.

There are several encouraging notes from other nations, which have successfully implemented better public policies and governance Romania could take example from. Eastern European countries have had similar socio-economic shifts after the collapse of the Soviet Union. Yet, not all took the same path for sustainable development and growth. Although not perfect, it is worth noticing their advances on how they improved each foundational pillar.

For better governance and transparency, Estonia’s digitalization program of its public sectors makes it one of the most advanced nations in the world in terms of innovative digital technologies. The Minister of Entrepreneurship and Information Technology of Estonia, Kristjan Järvan, stated that adopting a governmental culture of digital transformation saves the state of lot on expenditure. That is a considerable reduction in the administrative budget of the state, including less offices, less staff and less layoffs because it is a system designed to generate jobs on-the-need. Benefits come rapidly, such as the possibility for Estonians to declare their revenues online since 2000. That means no more waiting in long lines at state’s counter offices. Other benefits include ordering a new passport online, paying taxes or even establish your own company. All online. Even more, the problem of corruption is greatly tackled through this system because you would avoid interaction with civil servants would could be biased to corruptive practices. Online state services are based on three principals: an informational protocol which is the backbone of the Estonian digital society, a powerful information security system and most importantly an electronic identity card, which was introduced in 2002³⁰.

Looking at infrastructure efforts, Hungary’s modernized system is exemplary for other eastern European countries. Given its relative size, Hungary is one of the highest motorway densities in all of Europe and the third highest road density according to EU GO. Being strategically centered in Europe, the country also possesses an extensive railway network, with 20% of total freight for rail transport carries (greatly above EU average). Its geographical location also allows for international distribution centers to set up office in the region³¹. But just geographical location cannot give credit to Hungary’s infrastructural successes. It’s research and innovation (R&I) projects were extensive in terms of spending and comprehensive. With 52% of enterprises engaged in R&I projects, Hungary is largely driven by its policy documents, namely the New Hungary Development Plan called Szechenyi 2020 strategy. The Plan summarizes 15 Operational Programs (OP), including the Transport OP and the Economic Development OP. Research, development and innovation priorities are set as well for the Economic Development OP. As such, Hungary managed to distribute proportional funding for the various infrastructure branches. The airborne industry received 40% of EU funding, 37% for multimodal transport modes and 21% for roads. More specifically, EUR 127.75 million was spent on business R&D. Spending for various categorized topics at hand such as the Network and Traffic Management systems (NTM) (with about EUR 40 million for R&I as laid out by the Plan) have spiked considerably between 2015 and 2020, prior to the start of the pandemic³².

But it is not even the actual numbers that matter. In fact, it is the sophisticated planning system put into place. Developing a grand strategy for economic development with a long-term time horizon is what matters. A resilient plan would that resist political changes and external factors would ensure any future leadership would take on the reigns of continuation for growth in their country. It is thus vital to build, similar to a business plan, a framework for proper governance to be able to have the right access of resources (including funding) and implementation procedures through all involved stakeholders. It is all about developing a vision and mission statement, along with a detailed analysis about what are the values the state wishes to convey to society. This applies for all public sectors.

For the healthcare pillar, effective public health and prevention policies would need to be addressed by enhancing the role for primary care and improved access to services. This could substantially reduce premature mortality. A 2011 WHO report on Poland’s healthcare system shows that the country’s life expectancy at birth is the highest among the regional averages, that is the EU nations of eastern Europe, which increased from 72 years old in 1995 to 75.9 years old in 2009. This is above the average of the region of about 75 years old in 2009 (and 71 years old in 1995). The Article 68 of the 1997 Constitution of the Republic of Poland states that all citizens regardless of their financial circumstances, have the right to equal access to health services financed from public funds. And about 98% of the population is covered by the system of compulsory health insurance, which includes family members of individuals paying insurance contributions and some vulnerable groups whose contributions are financed from the state budgets. Current active laws in Poland which sustain the system’s legal framework are the 2004 Law on Health Care Services Financed from Public Sources, and the 2011 Law on Therapeutic Activity and on legislation aligning Polish law with that of the EU. A note worth pointing out is Poland’s overview of its healthcare system framework. This organigram, drafted in the WHO report, illustrates a visual representation of the hierarchical order of entities within healthcare, from governance and funds (e.g. National Health Fund Council and President – NHF) to providers (e.g. Voivodeship-level and specialist hospitals established by voivodeship). These entities are interlinked by a network of actions and duties associated to each. But it is true that we notice a sort of centralized system in place, where the government has more direct managerial responsibility for the whole system. Moreover, the GDP devoted to health, albeit increased by a small 1.9%, shifted from 5.5% to 7.4% (1995-2009). Health care expenditure (adjusted to PPP) per capita increased three and a half-fold from PPP $409.6 in 1995 to PPP $1394.3 in 2009. The 2008 Health expenditure in the WHO European Region for Poland was PPP $1,162, which was about the same level of the EU12 average for central and south-eastern Europe³³. Now more recently, Poland’s healthcare has undergone a vast digitalization process. Similar to Estonia’s paradigm shift, Poland introduced in January of 2019 an electronic-prescriptions system, and in less than a year, over 1 million were being issued every week. 220,000 e-prescriptions were sent daily, with an increase of 46% in August 2019 compared to July of that year³⁴. This acceleration phase of digital health solutions; and mind you, this is before the start of the pandemic; allowed Poland to curb chronic healthcare issues, the same we see in all countries. As such, innovation and the wonders of the 4^th Industrial Revolution demonstrate their ability to help reinforce and optimize the foundational pillars.

Lastly but not least, the OECD’s test score rankings of 15-year-olds around the globe highlighted Poland as the new education powerhouse in Eastern Europe. The score reveals that Poland earned spots in the top 10 in reading (10th) and science (9th). It is also heading towards a robust performance in math (14th). More impressively, the country outperformed much wealthier countries, from Britain to Sweden, and over passed Canada in science. Due its intensive education reforms following the end of the Cold War, Poland managed to redesign the system around the purpose of education young adults for jobs. Rigid tracking systems led to vocational or technical schools, and only 20% of students attended academic-focused secondary education³⁵. The World Bank confirmed that Poland’s PISA (Program for International Student Assessment) scores were above the OECD average and at the same levels as in countries such as Finland and Germany, all for a future generation of workers with good fundamental cognitive skills needed for 21^st century jobs³⁶. And indeed, this is the necessary requirement given the context of the 4^th Industrial Revolution. Global competition has been upped, costs need be minimized even more whilst not harming the environment. Nowadays, worldwide challenges thus must be met by a more readied and knowledgeable workforce, fit to today’s standards and innovative paradigm shifts.

Romania can reflect about its current position in the region and take note of each of these countries’ evolution. In the current status quo, Romania must modernize its foundational pillars at all cost by adopting innovative practices as showcased in the above examples. Romania can aspire to the technological wonders of the 21^st century, such as Information of Things (IoT), Cloud Computing and Artificial Intelligence to be able to further development. But in order to do so, the mindset of its workforce also requires modernization. This workforce must be well treated so that it can treat in return the Nation. This closes the loop in positive exchange of welfare and economic growth.

Ergo, not everything is grim and ugly. The evolution of the Gini coefficient for Romania has shown a positive trend. This has dropped 4.8 percentage points from 2006 to 2019; that is from 39.6% to 34.8% respectively. Romania’s Lorenz curve indicates a reduction of unequal income distribution, closing the gap between poorer and richer households. The cumulative percentages of total income received against the cumulative number of recipients shows that in a world where a Gini index of 0 represents perfect equality, while an index of 100 implies perfect inequality, demonstrates that Romania is on the right track³⁷. Romania is in a highly geostrategic location in the world. It has direct access to the Black Sea with a significant hub in the port of Constanța. Hence, it can become a new source for efficient European supply chains, linking the eastern coast with central Europe. And this requires proper infrastructure. Romania could bring great benefit to the EU rivaling Netherlands’ famous ports, given its much more reachable location to the Suez canal. Romania has tremendous agriculture potential with rich soils, able to rival France’s and its wine industry. But it requires proper infrastructure and scalability of the primary sector. Romania possesses some of the most biodiverse regions in the whole of Europe, with unexploited resources; for instance it can contribute immensely on the energy sector giving the current energy crisis due to its untapped natural gas areas in the Black Sea. The country also has one of the most diverse deposits of minerals in the world. The untapped potential that is Romania seems to elude current Romanian politicians and the society as a whole. Too many frivolities unfortunately can give way to undesired occurrences we do not want to experience in the development of a Nation, and corruption is the most recognizable symptom; a symptom which needs to be eliminated.

All of that is to come. But, on a more encouraging prospect, Romania is on the spotlight to joining the EU’s Schengen zone. After chancellor Olaf Scholz’s official declaration, stating that he supports Romania’s ascension, the prospects have increased significantly. The ambassador of Denmark in Romania also confirmed Copenhagen’s support and the Romanian prime minister, Nicolae Ciucă, reiterated France’s backing, with a few clarifications to be solved at the negotiating table³⁸. Nevertheless, there are still strong barriers to overcome in order to join the area. For example, the Netherlands still resist the backing of Romania to entering the Schengen area. And the explanation is simple: Romania has yet to reach all the required criteria, the most pressing matter being a reliable and transparent justice system for combatting corruption.

Romania’s society deserves to be a member of the Schengen area. However, the process of anti-corruptive actions should never cease as this plague inevitably resurfaces throughout a country’s socio-economic journey, regardless of its growth stages. How do we thus educate the mentality of a society for a resilient and just governance? Solving this could unlock Romania’s true potential as a strong Nation.

Although years in the making, Romania should have become one of the wealthiest countries in the world by showcasing it as a great competitive nation with a positive Balance of Trade (in 2021, this was $-16.08B; a 48.56% increase from 2020³⁹). In 2021, the Legatum prosperity index ranked Romania 47^th of 167, a move up of 3 places over a decade. The same index stated that Romania performed most strongly in Safety & Security and Personal Freedom. However, its weakest point is Social Capital (117^th)⁴⁰. This increase is slow compared to other European nations. Given all the incredible opportunities and its immense socio-economic and geostrategic positioning, Romania’s Social Capital should be worth much more than this mediocre rank. It is a shame to see how undervalued is Romania’s workforce and how little governance does to provide the necessary facilities and channels to be able to boost Romania’s Social Capital. The three foundational pillars are here to build consistency, reinforce, and optimize a society, and thus Social Capital. Proper governance should prioritize these pillars because these are the factors contributing to the identity of a Nation.

The Romanian society should be proud of itself by demonstrating the capabilities it has, and not be a docile and unreceptive society which has become disinterested in Romanian politics and foreign actors which allow bad politicians to say their say and do their wants. After all, Romania deserves its rightful patriotism and proudness that it is still, a European nation. Romania must show to the world what it is capable of. And Romanians are awakening.