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Economic Dynamics and Sustainable Development – Resources, Factors, Structures and Policies

Proceedings ESPERA 2016 – Part 1

by Luminita Chivu (Author) Constantin Ciutacu (Author) Valeriu Ioan-Franc (Author) Jean-Vasile Andrei (Author)
Conference proceedings 0 Pages

Summary

The book contains researchers’ scientific opinions and ideas focused on Romanian Academy Strategy 2020. The authors consider economic structures, trends and possible responses to globalisation and European integration challenges.This volume is dedicated to the recently deceased research fellow professor Constantin Ciutacu who was one of the initiators of the ‹‹Economic Scientific Research – Theoretical, Empirical and Practical Approaches›› (ESPERA) conference and a personality of the Romanian economic research.
ESPERA is initiated annually by the National Institute for Economic Research ‹‹Costin C. Kirițescu›› of the Romanian Academy. It aims to present and evaluate the economic scientific research portfolio and to argue and substantiate development strategies, including European and global best practices. ESPERA intend to become a scientific support for conceptualisation and the establishment of policies and strategies to provide a systematic, permanent, wide and challenging dialogue within the European area of economic and social research.

Table Of Contents

  • Cover
  • Title
  • Copyright
  • About the author(s)/editor(s)
  • About the book
  • This eBook can be cited
  • Part 1
  • Contents
  • Foreword
  • Opinions of the NIER Researchers on Romania’s Development Priorities (Constantin CIUTACU)
  • “Revenge” of the Globalization Losers (Napoleon POP / Valeriu IOAN-FRANC)
  • Migration between Blocking and Lasting Forever – A Component of the Way from Government to Governance and Back (Dan POPESCU)
  • Does Forecasting the Oil with Nonlinear Models Produce Nonlinear Forecasts? (Caraiani PETRE)
  • Mathematical Models for the Assessment of Collapse in Oil Prices (Muhammad SHERA / Vasile PREDA)
  • To What Extent are Country Rankings from Composite Indicators Relevant? Proposing an Alternative Method of Reporting Composite Indicators Results (Adrian OTOIU / Emilia TITAN)
  • Economic Development Based on Higher Education: Indian Growth and Global Norms (Pradeep KUMAR)
  • The Relations Between the USA and the Main Actors in East Asia from the Perspective of the New American Leadership (George-Cornel DUMITRESCU / Simona MOAGĂR-POLADIAN / Ion-Alexandru TĂNASE)
  • EU–China Food Trade Perspectives (Anton S. KOSTADINOV)
  • Food Security: A Challenge for China and Russia to Resolve in Northeast Asia (Vasili EROKHIN)
  • One Decade from Romania’s Accession to the European Union. A National Strategic Project Is Required (Valeriu IOAN-FRANC / Napoleon POP)
  • Convergence and Divergence Patterns in the EU and Romanian Regions (Mihaela-Nona CHILIAN / Marioara IORDAN)
  • Towards a European Youth Well-being Index (Alina Georgeta AILINCĂ)
  • State Aid Policy in the Post-Crisis Period: Implications for the Stability of the European Financial Sector (Andreea-Emanuela DRĂGOI / Prisecaru PETRE)
  • Bulgaria’s Capital Market Integration into the European Union (Julia S. STEFANOVA / Zachary K. WENNER)
  • Increasing the Republic of Moldova’s Security of Energy Supply through Integration with the Romanian Energy Market (Alexandru SANDULESCU / Filip CARLEA / Marta RUDI)
  • Elaboration of the Importance of Fast-Growing Companies Gazelles – New Evidence from Serbia (Mirjana RADOVIĆ / Zvonko BRNJAS / Vukica VULIĆEVIĆ)
  • The Romanian ICT Sector in the European Context (Irina ANGHEL / Steliana SANDU)
  • Financing the EU Agricultural Sector through Direct Payments: Implications of the CAP Reform (Andreea-Emanuela DRĂGOI / Ana-Cristina BÂLGĂR)
  • Responsible Governance of Tenure of Land: Towards Voluntary Guidelines in the Context of Food Security (Rodrigo CASTAÑEDA / Ignacio DE LOS RÍOS / Larissa DOMÍNGUEZ)
  • Farmland Affordability in Serbia (Jovan ZUBOVIĆ / Marko JELOČNIK / Jonel SUBIĆ)
  • Respiritualization of Basic Education – A Great Urgency in Romania (Constantin POPESCU / Vasile Miltiade STANCIU)
  • Disembodied Technical Progress and Structural Change in Romania’s Interwar Economy (Florin-Marius PAVELESCU)
  • Bank De-Risking Impacts on Finance and Development. The Case of Romania (George GEORGESCU)
  • Crisis and Monetary Policy – the Romanian Experience (Elena PELINESCU / Mihaela SIMIONESCU)
  • Central Banks’ Forecasts – An Orientation Tool for the Public and the Financial Markets (Iulia LUPU / Adina CRISTE)
  • The Financial Cycle and the Monetary Policy Conduct (Dorina CLICHICI)
  • Influence of Foreign Direct Investment on the Romanian Economy (Corneliu RUSSU / Daniel CIUIU)
  • Foreign Direct Investments and their Impact on Wages in the Romanian Economy (Maria-Ramona SÂRBU)
  • Strategic Options to Capitalize the Mineral and Energy Resources of Romania (Mihai-Sabin MUSCALU / Marius BULEARCĂ / Cornelia NEAGU / Cristian SIMA)
  • Evaluation of Natural Resources of Fossil Fuels. Mathematical and Economic Models, Estimates and Predictions (Stelian STANCU / Constanța Nicoleta BODEA / Mihai Sabin MUSCALU)
  • Establishing a New System for Petroleum Royalties in Romania (Marius BULEARCĂ)
  • Assessment of State-Owned Enterprises from Romania (Georgeta-Madalina MEGHIȘAN)
  • Side Effects of Subsidizing Renewable Energy Production in Romania (Victor PLATON / Andreea CONSTANTINESCU)
  • Part 2
  • Contents
  • The Quality of Life in Romania and Ethics of Social Action (Elena ZAMFIR)
  • Recent Developments in the Process of Consolidating Democracy in Romania (Ioan MĂRGINEAN)
  • What is Important in Life for Men and Women from Romania – A Comparative Study (Maria Livia ŞTEFĂNESCU / Ştefan ŞTEFĂNESCU)
  • Contributions to the Development of A Hierarchical Model of Human Resources Management (Dan CONSTANTINESCU)
  • Socio-Economic Support Granted to Elderly People from Romania at Present and in the Future (Mariana STANCIU / Adina MIHĂILESCU)
  • Economic Analysis of Hospitalization Costs in Trichinosis – Epidemiological Statistical Issues to Manage the Zoonoses (Delia COSTACHE / Cristea COSTACHE / Iudith IPATE)
  • Coordinates of Urban Culture in the Context of Sustainable Development of the Cities (Maria MOLDOVEANU / Paula NEACȘU)
  • Innovative Management and Priorities of Urban Policies (Maria MOLDOVEANU / Valeriu IOAN-FRANC)
  • Collaborative Consumption (Ileana-Andra MĂRCULESCU)
  • Harmonisation of the Financing Structure with the Objective of Sustainable Development at the Micro Level. Specific Aspects of Companies in the Real Economy of Romania during 2007–2014 (Mihail DIMITRIU)
  • Issues and Trends of Eco-innovation. Promoting the Green Economy in Romania (Simona FRONE)
  • Normative Economy and Interventionist Policies to Achieve Efficiency in the Field of Natural Resources (Otilia Teodora CIUTACU / Ioan I. GÂF-DEAC)
  • Identifying Commercial Risks by Means of an Anti-dumping Regulation, using as an Example the Republic of Belarus (Irina A. CHERVINSKAYA)
  • Entrepreneurship and Economic Growth (Sorin-George TOMA / Paul MARINESCU / Ionut CONSTANTIN)
  • Regional Shifts of Multinational Public Utility Companies (Marina BĂDILEANU / Svetlana CIUMAC / Luminiţa Izabell GEORGESCU)
  • The Link Between the Native Potential for Rural Development of a Territory and the Expectations of its Relevant Actors (Cosmin SĂLĂŞAN / Păun Ion OTIMAN / Vasile GOŞA / Nicoleta MATEOC-SÎRB)
  • Regional Competitiveness in Romania (Elisabeta ROȘU)
  • Spatial Analysis of Regional Variation in Self-Employment Density in Romania (Zizi GOSCHIN / Elena DRUICĂ / Ana-Maria GRIGORE)
  • Co-location and Economic Growth in Clustered Areas (Ioan I. GÂF-DEAC / Otilia Teodora CIUTACU)
  • Addressing an Environmental Risks Matrix (Gabriela-Cornelia PICIU / Iudith IPATE)
  • The Capital Market’s Actors and Financial Education. The Romanian Case (Cătălin VOICA / Mirela PANAIT / Corina ENE)
  • New Results on Creating Virtual Exhibitions in the Cultural Sector (Cristian CIUREA / Florin Gheorghe FILIP)
  • The Contribution of Total Factor Productivity, Capital and Labor Force to the Output Growth of the Romanian Manufacturing Subsectors (Andrei Silviu DOSPINESCU / Nicoleta HORNIANSCHI)
  • The Evolution of the Romanian Drug Industry – Past and Present (Raluca Elisabeta BOZGA / Daniela Nicoleta BĂLEANU)
  • Transports, One of the Key Pillars of the Romanian Development, 1918–1989 (Frantz Daniel FISTUNG / Teodor POPESCU)
  • Romanian Agriculture Support Scenarios for the Next 20 Years (Cecilia ALEXANDRI / Lucian LUCA)
  • Increase of Value Added for Agricultural Products – An Analysis of the Implementation of Measure 123 in the NPRD 2007–2013 (Camelia TOMA / Camelia GAVRILESCU / Crina TURTOI)
  • Food Citizenship and Community Gardens. A Case Study in Italy (Donatella PRIVITERA)
  • The Romanian Agriculture Challenges – Organic Products (Dan-Marius VOICILAȘ / Camelia Anişoara GAVRILESCU)
  • Organic Aquaculture to Meet Global Fish Demands: Feasibility and Opportunities (María RIVERA / Carmen GARCÍA / Miriam LÓPEZ / Raquel PASTOR / osé Antonio NAVARRO / Adrian TUREK RAHOVEANU / Magdalena TUREK RAHOVEANU)
  • Variability of Grain Production in Romania – A Regional Perspective (Mihaela KRUZSLICIKA)
  • Beef Availability in Romania – A Long-Term Analysis from a Self-Sufficiency Perspective (Mariana GRODEA)
  • Impact of Coupled Subsidies on the Romanian Soybean Market (Iuliana IONEL)
  • Predictions Regarding the Economic Implications, Market Development, Opportunities and Constraints of Capitalizing on Romanian “Mountain Products” in a Sustainable Vision (Radu REY / Adrian Radu REY)
  • Mountain Peasant Household Between Employment and Entrepreneurship (Vasile AVĂDĂNEI / Ioan SURDU / Lidia AVĂDĂNEI)
  • Mountain Economy Under the Impact of Information and Communication Technologies (Ion CUCUI / Dan Marius COMAN / Constantin Aurelian IONESCU / Mihaela Denisa COMAN)
  • Agglomeration Economies in Mountain Areas: Multi-Storeyed Montain Concentration in North-Eastern Romania (Ioan I. GÂF-DEAC / Otilia Teodora CIUTACU)
  • Solar Energy and Biotransformation Dynamics in the Bioeconomic Model of Food Production with the “Mountain Product” as a Case Study (Romulus GRUIA / Alexandru T. BOGDAN / George Florea TOBĂ / Radu REY)
  • Paradigm of Bioeconomic Animal Husbandry, as a Solution of Sustainable Development for Animal Breeding in Mountain Areas (Romulus GRUIA / Radu REY / Liviu GACEU)
  • Trends in the Medicinal and Aromatic Plant Market in Romania (Daniela Nicoleta BĂLEANU / Raluca Elisabeta BOZGA)
  • Economic Activity, Producing Entropy, Depleted Resources in the Biosphere of Deltas as a Closed System – Sustainable Management (Ecaterina Daniela ZECA)

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Foreword

This edition is dedicated to Professor Constantin Ciutacu (June 3, 1946 – January 22, 2017), deputy general director of the “Costin C. Kirițescu” National Institute for Economic Research of the Romanian Academy (2007–2017) and one of the initiators and supporters of the ESPERA International Conference. Professor Constantin Ciutacu dedicated his scientific career of over 40 years to research and teaching activities that he successfully combined with practical experience in public service, in boards of directors of some companies and in consultancy to public institutions. His remarkable economic culture, his profound knowledge of the Romanian as well as European and world economic realities constituted the ground for his 55 books and over 300 papers published as author, co-ordinator or co-author in macroeconomics, economic restructuring, competition and state aid, labour market and industrial relations. This volume is opened by his remarkable speech delivered during the plenary session of the conference.

The present book contains the most valuable papers presented at the international conference “Economic Scientific Research: Theoretical, Empirical and Practical Approaches”—ESPERA 2016.

ESPERA, the fourth edition in 2016, is an annual event initiated by NIER in partnership with the National Bank of Romania, Centre for Economic Information and Documentation. In 2015, it was joined by the Romanian Cultural Institute, the Faculty of Economics and Business Administration, St. Kliment Ohridski University, Sofia, Bulgaria and the Institute of Agricultural Economics, Belgrade, Serbia.

The “Costin C. Kirițescu” National Institute for Economic Research (NIER) is an academic public institution for socio-economic fundamental scientific research. It also develops applied research financed by public or private internal and external sources, in accordance with the research strategy of the Romanian Academy and the National and European strategies and policies in the field of research and development.

The NIER network includes: a) five institutes with legal personality: Institute of National Economy; Institute of Agricultural Economics; Research Institute for the Quality of Life; Institute for Economic Forecasting; Institute of World Economy; b) four centres with legal personality: Centre for Industry and Services Economics; “Victor Slăvescu” Centre for Financial and Monetary Research; Centre for Studies and Researches on Agroforestry Biodiversity; Centre for Economic Information and Documentation; c) six centres without legal personality: Romanian Centre for Comparative Economics and Consensus; Centre for Macroeconomic Modelling; Centre for Demographic Research; Centre for IT Assistance of Decision; Centre for Promotion of Renewable Energy and Energy Effectiveness; Centre for Mountain Economy.

The aim of ESPERA is to present and evaluate the economic scientific research portfolio, to argue and substantiate development strategies, including European and global best practices. ESPERA intends to become a scientific support for the ← 9 | 10 → conceptualisation and establishment of policies and strategies and to provide a multi-sectional, systematic, permanent, wide and challenging dialogue within the European area of economic and social research.

The ESPERA 2016 edition attracted 375 participants in its plenary session and parallel workshops, which included over 50 foreign guests from Spain, Italy, the Republic of Moldova, Hungary, Bulgaria, Poland, Serbia, Egypt, India and Turkey.

This volume contains the researchers’ scientific opinions and ideas focused on a diverse, sometimes divergent, sometimes convergent set of subjects: sustainable development; natural resources; smart development and human capital; migration, labour market; economic structures; trends and possible responses to globalisation and European integration challenges; models, scenarios, and evaluations.

A comprehensive analysis of the papers reveals that most converge to three core subjects: transition to market economy, accession to the European Union, financial-economic crises and globalisation.

Editors

Luminița Chivu

Valeriu Ioan-Franc

Jean-Vasile Andrei

Bucharest, June 2017

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Constantin CIUTACU

Opinions of the NIER Researchers on Romania’s Development Priorities

Although many warning signals were given by academic institutions, world and national elites, the technical and scientific discoveries and the globalist geopolitics regarding their use and practical implementation worsened the increasingly visible depletion—especially in the last two decades of the 20th century—of the resources of the growth model that led to prosperity and development after World War II.

Mankind and the states have undergone profound changes to their rules and institutions, new practices of economic restructuring were promoted, and commercial, military, cultural, social and political interactions and connections have moved to another level.

The role and the functions of the national states and of the public and private enterprises are changing and a “new management” with more “volatile objectives”, especially in the short term, tends to be enshrined; budgets, programmes and prognoses are becoming increasingly fortuitous and medium- and long-term creations are becoming benchmarks of outdated thinking, growth linearity is being replaced with non-linearity, concepts for theorising and measuring the zero growth and negative growth are being formulated. We are now talking about crisis and post-crisis stages, economic recovery, management and optimisation of deficits and fiscal optimisation, stability and sustainability, sustainable development, security and safety (food, energy, military, environment), de-industrialisation and re-industrialisation, knowledge-based economy, robots and ICT, genetics revolution and renewable energy, climate change and greenhouse gas emissions.

In this context and to a different extent, actually in almost all countries we find mistrust in control and local institutions, dealing with interactions and relations between citizens and authorities (enterprises, public services, administration, state power institutions, school, church, media); local and national solidarity are being replaced with voluntary missions; centralisation is followed by decentralisation, NGOs and a civil society are being created to replace governments, etc.

Inequalities are worsening and economic growth is being “metropolised” and clustered, while the development poles compete against the poverty poles.

These developments seem to ignore the traditional opposition between the governing parties and the second-place parties.

In real life, there is an increasing opposition between: young and elderly, rich and poor, urban and rural, regional cultures, common good and individual good, public economy and private economy, public employees and private employees and self-employed individuals, centralisation and decentralisation, monarchy and republic, domestic capital and foreign capital, etc. ← 11 | 12 →

While living is worsening and the population is increasing in number, individualisation and self-employment are expanding; after the Church separation from the state many people are separating from the Church; while family has been a key institution of support and solidarity, it is becoming more fragile, and socialisation is mostly based on the internet.

Romania, a long-time European country and a member of the European Union in 2007, is influenced by all global economic and geopolitical phenomena and has to manage the 1990 system change that has caused disturbances to be felt in the near future as well.

In this domestic, European, regional and global context, the researchers of the “Costin C. Kiriţescu” National Institute for Economic Research were asked to comment on the identification of three issues considered to be essential for Romania’s future development.

Our request received answers in writing from 87 researchers whose contribution adds scientific value that might provide support for policy makers and for the economic culture sorely needed for understanding and individual and social action in a very complex a complicated economic, social, political and geopolitical environment.

1. Considering the frequent mentioning of the issues concerning the population, the human capital, the workforce and training, education and health, these aspects may be ranked first among the researchers’ opinions.

In this respect, we may cite opinions such as “population ageing and emigration endanger the future sustainability of the nation”. Among others, this means recovering the human capital by offering incentives for returning home, motivating people with well-paid jobs, supporting birth rate increase, revival and the recovery of domestic labour.

Also, rhetoric formulations such as “who is to pay the bill for low wage policy?” were considered, since emigration is a short-term gain and a long-term loss.

Losses in the number of doctors, professors, engineers, researchers, high-skilled workers, youths, etc. represent a red line for the Romanian authorities and the top vulnerability for Romania’s national safety and security.

2. The issues concerning the development and supporting of education and scientific research were mentioned (from various perspectives) by over 30 of the 87 researchers.

They refer to scarcity of resources and more funding for education and research or to paying higher wages to the educators and the educated; without the above actions any investment means a loss to the others.

The labour training for other markets means a huge budget cost to Romania and, consequently, state aid to other EU member or non-member countries. Similarly, the training of students in other universities is an engine for internalising the increasing cost of training and an engine of free externalisation of future gains and sources of economic growth for other enterprises, companies and economies in competition with Romania. ← 12 | 13 →

Moreover, Romania is confronted with chronic underfinancing of fundamental and applicative research. While other member states provide between 1.5 and 3% of their GDP for research, Romania has provided 0.4–0.5% for about 20 years, and the national RDI system has actually collapsed, as companies and the business environment do not invest in research.

Smart development is now only a topic for scientific meetings; it is not even discussed in election campaigns.

3. A total of 14 researchers mentioned the failure to draw up a country project, a consensus-based strategy for Romania’s development and a programme for economic development.

Among others, they suggest creating a strategic planning body, formulating a strategy on the 2050 horizon, setting up an institution specialised in Romania’s economic development—the Institute for Economic Studies and Strategies—and ensuring the coherence and correlation of sectoral policies, etc.

4. Another set of issues and proposals points out that the sustainability of economic growth is based on specialisation in unfavourable exports (low value added and low processed products requiring low skilled labour), as well as de-industrialisation; proposals are made for developing the capacities destined to capitalise the domestic resources, to support the market and to stimulate the consumption of Romanian products, for defining and identifying the national interest, for re-industrialisation and development of local industries, for promoting an industrial policy compatible with the EU policies, for sustainable utilisation of resources and taxation of the natural resources (there is a remarkable comparative study on the regime and way of collecting royalties), for finding opportunities to use the export potential of some regressing industries, etc.

5. The issues of agriculture and rural development have been approached by over 20 researchers.

The topics cover a wide range of problems from workforce ageing and the need for support for young farmers or the rural youths’ access to education, to the subsistence farm, rural poverty, the need for professionalisation, association, cooperation, cadastral survey, the development of irrigation and infrastructures, technologies and agricultural equipment, etc.

They also cover the topics of food safety and security, trade balance improvement by means of agricultural products, regaining the national market, bio production and export of organic products, biodiversity management and support for rural development, rural area development and increasing the national budget resources to be added to the aid offered through the Common Agricultural Policy.

6. Infrastructure is approached by many researchers who explain the worsening quality of the national and local road networks, lack of highways, the low number of express roads, the collapse of railway infrastructure and the low railway speed, the poor condition of the equipment and the selling of over 110,000 goods, passenger wagons and engines as scrap iron, the disappearance of the national sea transport fleet, etc. ← 13 | 14 →

In this context, they mention the still unused capacities of modernisation of the road and railway transport infrastructures by means of European funds.

The quality of the transport infrastructure is a critical point of vulnerability that has a great impact on the economic growth by tourism (the contribution of tourism to GDP ranks Romania among the last EU member countries, although the country enjoys an exceptional landscape in Europe), agriculture, services and industries.

The third modernisation of Romania can be achieved only through a programme for the transport infrastructure (which remains as it did at the beginning of the 20th century).

7. The quality of the central and local administrations’ overgrown bureaucracy and the functioning of the institutions of the state of law, poor absorption, bureaucracy and instability of the public procurement rules regarding the European funding, corruption among the policy makers and institutions profoundly influence economic growth and the market economy mechanisms.

Although there are hundreds of strategies at the national, regional, local, sectoral and institutional levels, they are not accompanied by rigorous action plans and correlated with the objectives to ensure coherence and the convergence and there is no institution for monitoring and assessing ex ante and ex post a set of indicators of the implementation, impact, efficiency and effectiveness of the outcome.

Many researchers deal with issues regarding the difficulty of the practical fulfilment of the wishes and suggest analysing what hinders the implementation of public policy or setting up a centre for managing, controlling and monitoring the fulfilment of the objectives of the national plans and strategies, or a permanent entity for strategic planning and risk assessment (e.g., in France, we find the Commissariat for Development Strategy).

8. Researchers have also expressed many important opinions and made proposals for economic growth.

For example, they deal with topics related to the domestic and foreign financial framework: dependence on deficits and on financial institutions, the diminution of the Romanian bank capital, non-sustainability and tax evasion, profit transfer through offshore centres, rising public debt and the increasing debt of private companies, exceeding the alert level to the foreign funding proportions (24% of the GDP in comparison to the 15% alert limit; the proportion of the public debt of non-residents: 51% in comparison to 45%; the deteriorations of the net investment position: from -29.4% of the GDP in 2005 to -70.4% in 2012 and -57.2% in 2014, when compared to -35%, etc.).

We should avoid changing the strategic objectives, the institutions in charge and the rules during the same election cycle.

The economic growth seems to be followed by more poverty, social polarisation and more inequalities, deterioration of the education and health care systems and of the social protection and assistance systems, which may affect what has remained from solidarity, social cohesion, equal opportunities, non-discrimination and fair distribution of the economic growth products. ← 14 | 15 →

The above opinions show that the economic, sociological and social research along with the research on justice and quality of life may have substantial, fundamental and founded contributions to rebalancing and recalibrating economic growth and access to welfare.

There are many other opinions of the NIER researchers that could be a real thinking treasure.

We intend to carry on these actions and further publish the outcome of every annual scientific conference of the “Costin C. Kiriţescu” National Institute for Economic Research.

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Napoleon POP

Institute of World Economy, “Costin C. Kiriţescu” National Institute for Economic Research, Romanian Academy; Calea 13 September nr. 13, sector 5, Bucharest 050711, Romania; iemnapoleon@gmail.com

Valeriu IOAN-FRANC

“Costin C. Kiriţescu” National Institute for Economic Research, Romanian Academy; Calea 13 September nr. 13, sector 5, Bucharest 050711, Romania; cide90@gmail.com

“Revenge” of the Globalization Losers

Abstract: The management of the globalisation challenges and opportunities by the European Union shows some weaknesses and the strength of the tools used does not match the social capacity to assimilate them. The quality of the EU governance is a reason why globalisation and belonging to the Euro Zone has caused damage not only to some social groups, but to whole nations (Greece, Spain, Portugal, and Italy). The cause is not the financial crisis, but the neglect of the structural reforms. There have been long debates on the effects of failure, but no solutions have been suggested (systems of education, health care, pensions, labour productivity stimulation, etc.). Our paper, presented on other occasions1 as well, aims to explain the state of today’s globalisation, considering international trade.

Keywords: globalisation; unemployment; financial crisis; technological progress; middle class; labour market; structural reforms; classic reform policies; isolation and populism; International Trade; European Union

1. Preliminaries

The two-decade stagnation of real income, high unemployment, effects with an (already) permanent impact produced by the financial crisis on economic growth in the long term as well as the mix of globalization (visible everywhere) and technological progress (limited) caused the de-structuring of the labour force consisting of workers, in a traditional sense, and now it affects the high-skilled labour force of the middle class. The labour market reforms are only related to job destruction (France) and wage freezing (Germany), and their application on a national scale ← 17 | 18 → seems to have caused the Euro Area crisis. The successful reforms in Germany in the 2000s have brought about a cut in relative prices and export expansions, along with massive savings (budget and current account surplus) which (because of their individualism) caused a gap between the North and the South of the European Union.

If all countries had implemented structural reforms simultaneously (especially, national competitiveness improvement), there would not have been such different net gains among countries and not much of the present speech antagonising the EU countries would have occurred, and the social prevalence over the policies imposed by some countries on others (along with government changes) would have been lower.

The structural reforms of globalization (as some analysts say) produce much subtler effects than the handbook rules, and the correlation between the reform initiators and the implementation support for their parties have weakened. The result: globalisation has overwhelmed the classic reform policies and has been beyond the understanding capability of the existing establishment, and populism has expanded inside the western democracies (not only the younger ones). There is an increasing asymmetry among the EU countries involved in the integration ability of ensuring more compatibility, which requires other tools for re-routing the European integration project.

Isolation and populism caused by the political action of radicals in many countries are not solutions to the “unexpected effects”2 of globalisation (of integration, for some). Poor management, caused by lack of knowledge, delay and palliatives, is the reason why many EU members are de facto losers of globalization, in a context showing a different distribution of the economic power in the world.

The decision-makers think in terms of political costs, i.e. longer time in power, unfortunately irrespective of results, but are unable to see what happens. Any social survey may signal what happens, and the present repositioning in relation to the Transatlantic Trade and Investment Partnership (TTIP) could—according to some analysts—diminish one of the anti-EU factors. It does not mean heightening the negative effects of globalisation on the Europeans, but we should understand that both European integration and globalisation are competition fields for winners and losers.

2. Globalisation and International Trade

For a long time, globalisation has supported the international trade liberalisation, and equally the international rules guiding the world trade have helped globalisation. But the positive synergy reached its effectiveness limit when the globalisation effects (as perception and reality) affected jobs, incomes, and the redistribution of ← 18 | 19 → resources for social policies, especially in the developed countries confronted with the strongest global financial crisis.

Undoubtedly, the above opinions on social aspects have a quantitative relevance (statistical indicators) stemming from the economic mechanisms governing the global model: externalisation, liberalisation and deregulation at all levels of competence interaction; investors, shareholders, creditors, consumers, etc. As a result of the national and international institutional interactions, and the financial crisis and its effects—especially their management (for many people, their intensity and structure of the tools were inappropriate)—there was an attack against the way of living of the individuals/citizens and their voting option that influenced globalisation itself.

The international trade as a whole and the preferential zones created inside it in accordance with the World Trade Organisation (WTO, 2015) rules represent one of the main channels of transmission of the rejected effects of globalisation, such as Brexit and the election of the US President. The competition created or distorted by the excessive liberalisation of the international trade, due to the contradicting action of the WTC global agreement and the regional agreements, the negotiated (European Union (EU) Single Market, the North American Free Trade Agreement (NAFTA), the Association of Southeast Asian Nations (ASEAN)) or the under-negotiation (TTIP or TPP) have caused an increasing reaction from ordinary citizens to politicians against globalisation. Without ignoring that the political usually takes advantage of the citizens’ dissatisfaction and strengthens emerging opinions (lack of trust, scepticism, search for alternatives, etc.), we notice that what stimulates the present confrontation between globalisation and international trade started long ago and now opposes the national to globalisation.

The new American administration seems to introduce an era of confrontation between bilateralism and multilateralism in relation to trade negotiations in a global economy, at a time of confrontation and plurilateralism. Some isolation of the United States of America (USA), revealed by some speeches critical of some important agreements on trade and investment in the Transatlantic and Pacific areas, shows that the USA opted for bilateralism to resolve its domestic economic problems.

Measures against Germany’s commercial and financial aggressiveness were directed against Volkswagen and Deutsche Bank long ago and consisted of fines amounting to tens of billions of euro. A reason—sharply criticised by EU and non-EU countries—was the fact that Germany succeeded during the financial and economic crisis to achieve budget and current account surplus, while other countries were collapsing under the foreign debt burden.

The loss of jobs among the American middle class, usually employed in increasingly delocated industries confronted with unfair competition, helped to easily attack the TTP, which although finalised after seven years of negotiations (affecting about 40% of the American exports) is not yet ratified by the Congress. The president’s order that the USA should break this agreement was an easy task, considering the criticism and the possible measures against the trade with Mexico (based on NAFTA) and the possible 35% increase in the customs duties on Chinese goods. Then ← 19 | 20 → the WTO was attacked, although 165 countries had succeeded to properly ensure the governance of international trade, following difficult and long negotiations, just under the American leadership.

So we come to sharply contest multilateralism in ordering and liberalising the international trade of the USA in goods and services, and the 2017 Commercial Policy Agenda, set by the United States Trade Representative (USTR), confirms the above-mentioned by the objective assumed: the USA will take future action so the trade expansion can be free and fair for all American citizens, focused mainly on: (1) bilateral negotiation (less on multilateral ones), and (2) on the efforts made by partners to open their markets. The USTR Agenda also mentions that the USA wants absolute control of the trade policy sovereignty, and any WTO decisions against the USA interests should be rejected. With regard to the USA’s major trade deficits, tough anti-dumping measures should be taken (China is clearly mentioned, doubting that it is a market economy).

Following such actions, the TTIP seems unlikely to be finalised as it is already blocked because of some issues regarding the agricultural products (very high European subsidies that distort competitiveness), cultural products (less protected intellectual property in Europe) or the safeguarding measures. The US attack against the TTP seems to have affected the multilateral negotiations during the Doha Round, already delayed as regards the objectives; the two agreements are considered to speed up the negotiations. As the USA has doubts regarding the two “mega-partnerships”, no other steps are taken to carry on the liberalisation of the foreign trade by tariffs (customs duties cut by 3.5% on average, following the General Agreement on Tariffs and Trade (GATT) liberalisation), along with the convergence of regulations for equal opportunities offered to foreign investors, to intellectual property, to the environment and to labour force.

While the international trade in goods is weakening, the international trade in services (more dynamic than the trade in goods) is also attacked, although it has greatly contributed to the gross domestic product (GDP) growth in the USA and many European countries.

3. The European Union in the present economic, political and social context

As for the EU, the challenges posed by a possible increasing protectionism worldwide should be viewed in relation to its status as a great exporter and importer of goods and services (one third of the EU’s GDP consists of the trade in goods and services).

The challenge to the EU should be also viewed by the contents of reports on the evolutions and trends in commercial policies, beyond the commitments (G-20) not to impose new constraints. It is true that in 2015 the commercial protectionism intensified both within the G-20 and globally, as the number of new constraints was the highest since the beginning of the financial crisis, along with a slow-down ← 20 | 21 → (already a state policy) of the market liberalisation. Unfortunately, even the European Union, through countries pertaining to the G-20 (France, Germany, Italy and the United Kingdom), is responsible for the protectionism within the G-20 and worldwide. Agnes Ghibuțiu, the coordinator of several studies conducted by the Institute of World Economy of the Romanian Academy, found out that the openness of the foreign markets regressed. While the set of protectionist measures identified by the EU has increased since 2008 to 1,059, and only 20% of them have been eliminated, “the initiatives related to the protectionist commercial policy of the EU’s trade partners exceed in number the liberalisation initiatives in a 3:1 proportion”. Half of the total number of new restrictive commercial measures against EU products in 2014 and 2015 were taken by emerging economies, especially China, Russia, Indonesia and India.

According to the EU representatives, supporting the WTO’s multilateral trade agenda is a basic aim of the EU commercial policy by adopting the trade liberalisation packages at the WTO’s meetings in Bali (Indonesia) in 2013 and Nairobi (Kenya) in 2015. As regards the weakening of multilateralism, the EU itself initiates plurilateral negotiations, complementary to the multilateral initiatives for trade liberalisation even within the WTO.

As for the bilateral and regional agenda of the EU as a top commercial power in the world, we notice that it has reached preferential agreements with 52 countries and is negotiating free-trade agreements and economic partnerships with 80 countries, including strategic economic partners, with China on top. Owing to the free trade agreements, the weight of that trade has increased from less than a quarter of EU trade (a decade ago) to one third at present, and this proportion will reach two-thirds after the conclusion of the agreements.

4. Conclusion

The official withdrawal of the USA from the TPP has created an economic void in the Asia-Pacific area, supposed to be filled by China. This movement, promoted through the America First Strategy, is considered as a way to undermine the USA pole in the region, which is contrary to the rebalancing from the Middle East to Asia-Pacific, initiated by Hillary Clinton and Barack Obama in 2011. Therefore, the Regional Comprehensive Economic Partnership (including the ASEAN, Australia, New Zeeland, China, India, Japan, and South Korea) aims to fill this economic void hoping that China does not put more pressure on the American market. At the same time, China seems to strengthen the relations with traditional partners of the USA, such as the Philippines and Malaysia, supporters of free trade.

A “free trade” based on bilateral commercial agreements, tariff barriers and home relocation of American companies and profit repatriation (Daniel Dăianu, 2016) is not only a change in the vision of the liberalisation leader, but also a clear invitation to major structural changes in international trade flows as regards their structure and intensity. To these changes one should add the changes in the way the emerging ← 21 | 22 → economic powers respond to the protectionist measures, as they are co-authors of some of them.

The main question is how to compensate “the losers” of the free trade, as there is a consensus between the political and business elites that the anti-globalisation trend reflects the reality: it produced winners and losers, as well. Dani Rodrik (international political economy professor at Harvard University) says that the answer to this question is not “stop globalisation”, but a way to compensate the losers and make them join the internationalisation trend. Nouriel Roubini writes: “the anti-globalisation struggle can be diminished and managed by compensating the labourers for losses and costs paid” (quotation from “Too Late to Compensate Free Trade’s Losers”); thus, the losers’ problem is brought to the individual level and not the state level. The states have “introverted” by the vote and/or support to the radical right-wing politicians; a nightmare hard to overcome after Brexit or the presidential elections in Austria and the parliamentary elections in the Netherlands. Losers must be brought back among the globalisation winners by redistribution policies for an equal increase in savings. Therefore, redistribution, having both economic and political reason, makes us conclude that from now on—as Rodrick says—trade partnerships are acceptable only if winners agree to share benefits with losers. We cannot envisage another policy able to maintain economies and open trade, unless it is supported by larger pro-globalisation agents.

The question is whether a compensation solution included in free trade partnerships is not too late. The answer seems to be “yes”, as this solution was viable two decades ago during the globalisation boom. Unfortunately, the benefits promised to all were directed—by successive liberalisations—to the people in power; thus, the globalisation was perceived as an evil by many citizens. Rodrick says that now it is necessary to reconsider the rules of globalisation to remain together.

Daniel Dăianu reveals the “mermaids” favouring protectionism: “The erosion of the position of the USA and other developed countries as regards the economic power distribution in the world; New technologies that destroy jobs and economic/public policies responsible for social unrest and displacement; The financial crisis that fragmented and divided the society and caused withdrawals; The crisis that forced the countries and the central banks to take ‘non-standard’, interventionist measures; Bad corporate practices, tax evasion, which cause reactions against globalisation; A widespread feeling that external (financial) markets exercise an excessive power on national decision-making” (Dăianu, 2017).

The above issues may also affect the legitimacy of those in power to manage the public affairs. Therefore, it is obvious that safety, and the protection of the citizens and of the state are priorities on the public agenda of the developed countries.

References

1. Costa, R. (2012). Ultimul avertisment. A venit timpul să ne gândim la pericolul dispariției, Editura Trei. ← 22 | 23 →

2. Davos (2016). World Economic Forum, retrieve from: http://www.ft.com/indepth/davos, accessed on: 22.09.2016.

3. Dăianu, D. (2017). Protecționism redivivus în lumea devoltată, retrieve from: www.ziare.com, accessed on: 06.02.2017.

4. Dăianu, D. (2017). The New Protectionism; Where does it come from and where does go, World Commerce Review, Spring Verlag.

5. De Montbrial, Th. (2016). Discurs la Banca Națională a României, cu prilejul aniversării a 150 de ani de la fondarea Academiei Române.

6. European Commission (2005), European Economic Forecast – Autumn, Institutional Paper 11, https://ec.europa.eu/info/publications/economy-finance/european-economic-forecast-autumn-2015_en2015.

7. European Commission: – 22 June 2015 – Five Presidents’ Report sets out plan for strengthening Europe’s Economic and Monetary Union as of 1 July 2015, Brussels.

8. International Monetary Fund (October 2015). Adjusting to Low Commodity Prices.

9. International Monetary Fund (April 2015). World Economic Outlook – Uneven Growth, Short and Long-Term Factors.

10. Ioan-Franc, V., Pop, N. (2014). Repoziționări ale actorilor economici”, in Caiete Critice nr. 12, pp. 66–72.

11. Maxton, G. (2011). Sfârșitul progresului, Cum ne-a înșelat așteptările gândirea econoică modernă, John Wiley & Sons Edition, Singapore Pte Ltd.

12. OECD. (November 2015). Economic Outlook.

13. Pop, N., Ioan-Franc, V. (2014). Globalizarea – o realitate a timpului nostru, in Caiete Critice nr. 1, pp. 70–76.

14. Pop, N., Ioan-Franc, V. (2015). O propunere de viziune strategică a Uniunii Europene (partea I), Institutul de Economie Mondială, Institutul Național de Cercetări Economice ”Costin C. Kirițescu”, Academia Română.

15. Pop, N., Ioan-Franc, V. (2015). Resetarea viziunii strategice a UE în actualul context global și european, in Caiete Critice nr. 4, pp. 69–80.

16. Pop, N., Ioan-Franc, V. (2016). L’Europenisation de la Roumanie – un acte de recherché academique, in Review of General Management, vol. 23, 1, pp. 16–25.

17. Popescu, D. (2015). Nation, Communitarism, Peace and Globalisation: A Vulnerable Relationship in ESPERA Conference, ed. 3, Institutul Național de Cercetări Economice ”Costin C. Kirițescu”, Academia Română.

18. Rodrick, D. (2017). Too late to Compensate Free Trade’s Losers, https://www.project-syndicate.org/commentary/free-trade-losers-compensation-too-late-by-dany-rodrick-2017-04.

19. WTO (April 2015). Modest Trade Recovery to Continue in 2015 and 2016.


1 See also the paper on “Les conjonctures de la mondialisation”, presented at the 11th Meeting of the Royal Spanish Academy of Economic and Financial Sciences of 10 November, 2016.

2 We discussed the matter on the occasion of the ESPERA 2015 Conference organised by the “Costin C. Kirițescu” National Institute for Economic Research of the Romanian Academy.

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Dan POPESCU

“Lucian Blaga” University of Sibiu, Bucharest University, email: dan.popescu@ulbsibiu.ro

Migration between Blocking and Lasting Forever – A Component of the Way from Government to Governance and Back

”Unfortunately, mankind causes new problems faster than it can resolve the old ones”

Abstract: Migration is not a recent phenomenon. Since ancient times it has been a dramatic challenge: pushed by hunger, famine, and scarcity people have migrated to other lands for a better life. Today they do the same. It is a migration for economic reasons. It has produced emigrants. But what about the migration caused by religious, national and racial persecution, by domestic, regional or world wars, by huge natural cataclysms or by racial hatred? This kind of migration has produced no-country people, outlaws, better called “refugees”.

Keywords: globalisation, geopolitics, geoeconomics, emigration, immigration, economic and social governance

1. Introduction

One can hardly find a clear distinction between emigrants leaving for economic reasons and refugees determined to leave for the above reasons. In my opinion, persecutions of any kind—including those related to poverty—produce effects on the individual, family, national and global economic area. It is obvious that for centuries hundreds and hundreds of millions of people have migrated from one land to another, from one country to another.

It started in ancient times when Christians fled from the Roman Empire and Jews ran for their lives (Poutrin, 2016; Jacques Attali, 2011), etc. In modern times—but not only—religious migration is a major issue. Jews and Muslims alike have been forced out of Catholic Spain by tens of thousands or even more. Tens of thousands of Huguenots were expelled from France by Louis XIV following the cancellation of the Nantes Edict, which had reconciled the Catholics and the Protestants (issued by Henry IV about one century before) (See Popescu, 2015 b). During the early decades of the 20th century, hundreds of thousands of Russians, Jews and many others, deprived of their nationality or status, fled to other countries. That was the reason why the famous Norwegian explorer and diplomat Fridtjof Nanses conceived and issued—under the aegis of the newly established the League of Nations—the so-called Nansen Passport, granted to several nationalities (e.g., gipsies) (Kevonian, 2016). At the same time, Spanish republicans had to leave the country because of ← 25 | 26 → Franco’s terror; many Soviet people emigrated because of Stalin’s dictatorship; and many Germans fled under the Nazi terror. And these movements went on after World War II.

Soon, the United Nations Organisation (ONU) adopted a more humanitarian management of the phenomenon and created the High Commissioner for Refugees, mostly inspired by Nansen. But the phenomenon exceeded expectations. Soon, millions of Israelis migrated to their ancient homeland. Many Palestinians fled in 1948 in search of a home. Many other people left the Soviet–Communist Bloc, from Central and Eastern Europe, Asia, even Africa. The wars among the emerging African states turned many people into refugees in search of a better world. The wars in former Yugoslavia caused a similar migration (Popescu, 2014). The camps for the refugees are now undersized and have evolved into “towns” facing serious problems (Marianne Amar, 2016). What about the 1990s and the 2000s? The phenomenon went on.

A brief statistical search shows that over 65 million refugees now live officially outside their countries, cities or villages; a world-scale challenge. The European Union (EU), the United States of America (USA) and other countries as well as world institutions are called to take proper measures; a way—as a component—from government to governance and possibly back. This is assuming that the nationless, the outlaws and the refugees are nationally taken on. Of course, the solution is not simple. It implies tolerance and education, civic spirit and national spirit, individual conscience and global conscience, individual gains and social gains. In any case, only few refugees return to their old homes.

Nansen himself said the refugees’ problems should not last for ever, as any individual feels finally better at home than in exile. At the same time emigration had economic reasons; in both cases, Europe, the USA and Canada were “desired countries”, and not only them. So, let us detail the question of demographic migration.

Biographical notes

Luminita Chivu (Author) Constantin Ciutacu (Author) Valeriu Ioan-Franc (Author) Jean-Vasile Andrei (Author)

Luminita Chivu is the General Director of the National Institute for Economic Research, Romanian Academy. Ciutacu Constantin was General Deputy Director at the National Institute for Economic Research, Romanian Academy. Valeriu Ioan-Franc is General Deputy Director at the National Institute for Economic Research and head of the Centre for Economic Information and Documentation. Jean-Vasile Andrei is an Assistant Professor at the Petroleum-Gas University of Ploiesti, Department of Business Administration.

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Title: Economic Dynamics and Sustainable Development – Resources, Factors, Structures and Policies