MINISTERUL EDUCAŢIEI ŞI CERCETĂRII
ANALELE UNIVERSITĂŢII DIN ORADEA
ŞTIINŢE ECONOMICE TOM XVII 2008 VOLUMUL II – ECONOMY AND BUSINESS ADMINISTRATION ISSN – 1582 - 5450
HONORARY COMMITTEE HE Jonathan Scheele – Dr.H.C. of the University of Oradea Prof. Aurel Negucioiu, PhD – Dr.H.C. of the University of Oradea Aldo Poli, PhD – Dr.H.C. of the University of Oradea Prof. Gheorghe Gh. Ionescu, PhD – Dr.H.C. of the University of Oradea Prof. José Cifuentes – Honrubia, PhD – University of Alicante, Spain Prof. Gheorghe Olah, PhD - University of Oradea, Romania Prof. Constantin Rosca, PhD – Dr.H.C. of the University of Oradea SCIENTIFIC COMMITTEE Prof. Marin Dinu, PhD – Academy of Economic Studies, Bucuresti, Romania Prof. Emilian M. Dobrescu, PhD – Academy of Economic Studies, Bucuresti, Romania Prof. Elena Hlaciuc – “Stefan cel Mare” University, Suceava, Romania Prof. Ioan Mihut, PhD – University “Dimitrie Cantemir” Bucureşti, Romania Prof. Tatiana Mosteanu, PhD– Academy of Economic Studies, Bucuresti, Romania Prof. Nicolae Pop, PhD – Academy of Economic Studies, Bucuresti, Romania Prof. Gabriela Prelipcean – “Stefan cel Mare” University, Suceava, Romania Prof. Petru Prunea, PhD – Tehnichal University, Cluj Napoca, Romania Prof. Ovidiu Rujan, Ph.D. – Academy of Economic Studies, Bucuresti, Romania Prof. Alina Bădulescu, PhD – University of Oradea, Romania Prof. Mihai Berinde, PhD – University of Oradea, Romania Prof. Elena Botezat, PhD – University of Oradea, Romania Prof. Gheorghe Ţară, PhD – University of Oradea, Romania Assoc. Prof. Maria Madela Abrudan, PhD - University of Oradea, Romania Assoc. Prof. Olimpia Ban, PhD - University of Oradea, Romania Assoc. Prof. Nicoleta Bugnar, PhD - University of Oradea, Romania Assoc. Prof. Daniela Zăpodean, PhD - University of Oradea, Romania EDITORIAL BOARD Prof. Ahmet Aktas, PhD- Akdeniz University, Alanya, Turkey Prof. Zoran Ivanović, PhD - University of Rijeka, Opatija, Croatia Prof. Kormos Janos, PhD – University of Debrecen, Hungary Prof. Eszter Lang, PhD - University of Debrecen, Hungary Prof. Piero Mella, PhD – University degli Studi di Pavia, Italy Prof. Nicola Mattoscio, PhD - Universita degli Studi „G. D’Annuzio” di Chieti e Pescara, Italy Prof. Giuseppe Paolone, PhD – Universita degli Studi „G. D’Annuzio” di Chieti e Pescara, Italy Prof. Egidio Rangone, PhD – Universita degli Studi „G. D’Annuzio” di Chieti e Pescara, Italy Prof. Mircea Maliţa, PhD – Member of the Romanian Academy Prof. Mircea Ciumara, PhD - General Director of the National Institute for Economic Research Romanian Academy Prof. Constantin Ciutacu, PhD – General Vice-Director of the National Institute for Economic Research Romanian Academy Prof. Marin Dinu, PhD – Academy of Economic Studies, Bucuresti, Romania Prof. Valeriu Ioan-Franc, PhD - General Vice-Director of the National Institute
for Economic Research –Romanian Academy Prof. Nicolae Pop, PhD – Academy of Economic Studies, Bucuresti, Romania Prof. Ioan Popa, PhD – Academy of Economic Studies, Bucuresti, Romania Luminita Chivu, PhD – Scientific Secretary of the National Institute for Economic Research –Romanian Academy Prof. Anca Dodescu, PhD – University of Oradea, Romania Prof. Adriana Mirela Tomescu PhD – University of Oradea, Romania Assoc. Prof. Adriana Giurgiu, PhD – University of Oradea, Romania Assoc. Prof. Ioana Pop Cohuţ, PhD – University of Oradea, Romania Asist. Mirabela Pop - University of Oradea, Romania SCIENTIFIC EDITORS Prof.Anca Dodescu, PhD Prof.Nicolae Pop, PhD EDITION PREPARED BY Lect.Ioana Pop Cohuţ, PhD. Ec. Cătălin Zmole TEHNOREDACTARE Ec. Cosmin Ştir Ec. Cătălin Zmole Ing. Czego Zsolt
REDACTION ADDRESS University of Oradea, Roamania Faculty of Economics University Street, no. 1 - 3 410087, Oradea – România Phone: 04059408109 – Dean Faculty of Economics; Phone: 04059408247 – Journal of Faculty of Economics; Fax: 04059408409 Site University of Oradea: http://www.uoradea.ro Site Faculty of Economics: http://steconomice.uoradea.ro Site Journal of Faculty of Economics: http://steconomice.uoradea.ro/anale
CUPRINS ECONOMY .................................................................................................................................. 15 THE EDUCATION ROLE FOR THE YOUNG PEOPLE INSERTION IN THE ACTUAL LABOR MARKET .................................................................................................................................16 Aceleanu Mirela Ionela.........................................................................................................................16 THE IMPLICATION OF EXTERNAL DEMAND IN PROCESS OF ECONOMICAL GROWTH IN ROMANIA .........................................................................................................................................21 Adamovici Silvana Biliana ....................................................................................................................21 Părean Mihai Olimpiu ..........................................................................................................................21 THE INFORMATIONAL VALENCES OF THE FINANCIAL SIGNALS SYSTEM USED IN THE EVALUATION OF COMPANIES GLOBAL PERFORMANCE ............................................26 Anghel Flavia ........................................................................................................................................26 Bucur Cristiana.....................................................................................................................................26 Radu Elena............................................................................................................................................26 THE DEVELOPMENT IN TRANSITION ECONOMIES IN EUROPEAN UNION PARTICIPATION PROCESS ...............................................................................................................31 Ateş İsmet ..............................................................................................................................................31 Özdemir Abdullah .................................................................................................................................31 THE EMPLOYMENT AND UNEMPLOYMENT IN ROMANIA- DECISIVE FACTORS ..........42 Bâldan Cristina .....................................................................................................................................42 Neacşu Mădălina ..................................................................................................................................42 FISCAL POLICY REFORM IN ROMANIA.......................................................................................48 Bercea Ioan ...........................................................................................................................................48 THEORETICAL-METHODOLOGICAL CONSIDERATIONS REGARDING THE ROMANIAN ENTERPRISE’S RESULTS AND PERFORMANCES ......................................................................53 Boncea Amelia Georgiana ....................................................................................................................53 Rabontu Cecilia Irina ...........................................................................................................................53 THE REACTIONS OF TERTIARY EDUCATION TO THE GLOBAL CHANGES .....................57 Bratu Anca ............................................................................................................................................57 Cornescu Viorel ....................................................................................................................................57 Druică Elena .........................................................................................................................................57 FACTS ABOUT DETERMINANTS OF ECONOMIC GROWTH ...................................................61 Cătăneţ Dan Nicolae.............................................................................................................................61 Cătăneţ Alina ........................................................................................................................................61 THE INTERNET AND THE BUSINESS ENVIRONMENT .............................................................68 Cioban Gabriela-Liliana ......................................................................................................................68 BEING PROACTIVE VERSUS REACTIVE – THE SOLLUTION OF SELF- GOVERNMENT 74 Costea Carmen .....................................................................................................................................74 Popescu Constantin ..............................................................................................................................74 Tasnadi Alexandru ................................................................................................................................74 Badea Liana ..........................................................................................................................................74 Stanciu Miltiade ....................................................................................................................................74 INTEGRATED QUALITY MANAGEMENT IN NATIONAL PARKS AS TOURISM PRODUCT ...............................................................................................................................................80 Costencu Mirela ....................................................................................................................................80 CULTURAL TOURISM PRODUCT ...................................................................................................84 Costencu Mirela ....................................................................................................................................84 Cristescu Ilie .........................................................................................................................................84 YOUNGSTERS INSERTION ON THE LABOUR MARKET. A COMPARATIVE ANALYSIS ROMANIA - EUROPEAN UNION .......................................................................................................89 Dobre Mihaela Hrisanta .......................................................................................................................89 DISCRIMINATION BY THE GENDER IN ROMANIA ...................................................................94 Dobre Mihaela Hrisanta .......................................................................................................................94 Trască Daniela Livia ............................................................................................................................94 4
THE SITUATION OF LONG TERM UNEMPLOYMENT IN BIHOR. FROM ILLUSION TO REALITY ................................................................................................................................................ 98 Dodescu Anca ....................................................................................................................................... 98 Pop Cohuţ Ioana ................................................................................................................................... 98 THE INTERNE, THREAT OR TOOL FOR TRAVEL AGENCIES? ............................................ 103 Dodu Silvia Patricia ........................................................................................................................... 103 THE BOUNDARIES OF THE FIRM.THE CASE OF OIL INDUSTRY IN ROMANIA ............. 109 Dudian Monica ................................................................................................................................... 109 Traşcă Daniela ................................................................................................................................... 109 Mitrache Andreea ............................................................................................................................... 109 Georgescu Adriana ............................................................................................................................. 109 THE FACULTIES OF ECONOMIC STUDIES – SUPPLIERS OF SERVICES FOR STUDENTS ................................................................................................................................................................ 115 Dumitriu Ramona, .............................................................................................................................. 115 Ştefănescu Razvan .............................................................................................................................. 115 Nistor Costel ....................................................................................................................................... 115 MACROECONOMIC IMPLICATIONS OF BRAIN MIGRATION ............................................. 128 Florea Adrian ..................................................................................................................................... 128 Maghear Diana Claudia ..................................................................................................................... 128 USING MACROECONOMIC INDICATORS FOR MANIPULATING ........................................ 135 Florea Adrian ..................................................................................................................................... 135 DIRECT FOREIGN INVESMENTS AND THEIR IMPACT ON ECONOMIC DEVELOPMENT ................................................................................................................................................................ 138 Fodor Alexandrina ............................................................................................................................. 138 ASPECTS OF IT RISK MANAGEMENT FOR A COMPANY ...................................................... 141 Fratila Laurentiu ................................................................................................................................ 141 Tantau Adrian ..................................................................................................................................... 141 THE ROMANIAN BUREAUCRATIC SYSTEM OF THE PUBLIC ADMINISTRATIONS ...... 147 Frâncu Laurenţiu Gabriel .................................................................................................................. 147 Paicu Claudia Elena ........................................................................................................................... 147 ROMANIAN CAPITAL MARKET – PEST AND SWOT ANALYSES ......................................... 152 Georgescu Adriana ............................................................................................................................. 152 Dudian Monica ................................................................................................................................... 152 NATIONAL CURRENCY INSTABILITY ........................................................................................ 159 Gherman Maria Anca ......................................................................................................................... 159 Huru Dragoş ....................................................................................................................................... 159 MONETARY STABILITY VERSUS FINANCIAL STABILITY ................................................... 162 Glăvan Bogdan ................................................................................................................................... 162 Anghel Flavia ..................................................................................................................................... 162 Bucur Cristiana .................................................................................................................................. 162 REGIONAL DISPARITIES OF ECONOMIC GROWTH IN THE ENLARGED EUROPEAN UNION ................................................................................................................................................... 167 Goschin Zizi ........................................................................................................................................ 167 Danciu Aniela-Raluca ........................................................................................................................ 167 Gruiescu Mihaela ............................................................................................................................... 167 THE CONNECTION BETWEEN LABOUR PRODUCTIVITY AND WAGE IN ROMANIA. TERRITORIAL AND SECTORAL APPROACHES ....................................................................... 178 Goschin Zizi ........................................................................................................................................ 178 Danciu Aniela-Raluca ........................................................................................................................ 178 Gruiescu Mihaela ............................................................................................................................... 178 EVALUATING THE COMPETITIVENESS OF THE TOURISM IN ROMANIA ...................... 187 Grigorovici Corina ............................................................................................................................. 187 YESTERDAY’S ACTIVISTS, TODAY’S ACTIVISTS? ORGANIZATIONAL CAREER AND COMMUNITY INVOLVEMENT IN PRESENT DAY ORADEA .................................................. 192 Hatos Adrian....................................................................................................................................... 192 EUROPEAN ECONOMIC INTEGRATION: AN ANALYSIS OF SMES ..................................... 198 5
Herman Radu ......................................................................................................................................198 SOME COMPARATIVE ASPECTS REGARDING CHILD LABOR AND STREET CHILD ...202 Hordau Anne Marie Andreea..............................................................................................................202 Pop Sitar Corina .................................................................................................................................202 EUROPEAN GOVERNANCE – THE STABILITY AND GROWTH PACT ................................206 Hrebenciuc Andrei ..............................................................................................................................206 Zugravu Paul ......................................................................................................................................206 THE ORIGIN OF FREE MARKET. AN INSTITUTIONAL PERSPECTIVE FROM A NONINSTITUTIONAL POINT OF VIEW ................................................................................................209 Iacobuţă Andreea-Oana......................................................................................................................209 Pohoaţă Ion.........................................................................................................................................209 THE FACTORS OF COMPETITIVENESS IN THE HOSPITALITY INDUSTRY AND THE COMPETITIVE STRATEGY OF FIRMS.........................................................................................212 Ioncica Maria .....................................................................................................................................212 Tala Madalina.....................................................................................................................................212 Brindusoiu Catalina ............................................................................................................................212 Ioncica Diana .....................................................................................................................................212 TOURISTIC DESTINATIONS LONG-TERM MANAGEMENT AND THE INCREASE OF THEIR COMPETITIVENESS ............................................................................................................218 Iordache Maria Carmen .....................................................................................................................218 Chitu Ramona .....................................................................................................................................218 Grigorescu Sorin.................................................................................................................................218 ASPECTS OF THE EUROPEAN ECONOMIC CHALLENGE FOR THE ROMANIAN HUMAN CAPITAL. THE CASE OF HIGH EDUCATION SERVICES ........................................................223 Jivan Alexandru ..................................................................................................................................223 SOME DETERMINANTS OF ECONOMIC GROWTH IN ROMANIA: FOREIGN TRADE AND FOREIGN DIRECT INVESTMENTS ...............................................................................................228 Jude Cristina .......................................................................................................................................228 Pop Silaghi Monica Ioana ..................................................................................................................228 THE NECESSITY OF APPROACHING THE SERVICES’ PROBLEMS IN THE CONTEXT OF THE INVISIBLE TRADE’S LIBERALIZATION ............................................................................235 Maniu Cristina ....................................................................................................................................235 Gogonea Manuela-Rodica ..................................................................................................................235 Marin- Pantelescu Andreea ................................................................................................................235 CAUSES OF PRODUCTIVITY SLOWDOWN IN THE EUROPEAN UNION ............................242 Marinaş Marius-Corneliu ...................................................................................................................242 Socol Cristian .....................................................................................................................................242 Socol Aura-Gabriela ...........................................................................................................................242 ON SCIENTIFIC IMPOSSIBILITY OF OPTIMAL TAXATION ..................................................248 Marinescu Cosmin ..............................................................................................................................248 EU KNOWLEDGE ECONOMICS: A SELF-ORGANIZING MAP ARTIFICIAL NEURAL NETWORK ANALYSIS ......................................................................................................................252 Mattoscio Nicola .................................................................................................................................252 Colantonio Emiliano ...........................................................................................................................252 Carlei Vittorio .....................................................................................................................................252 SOCIAL RESPONSIBILITY IN PUBLIC ENVIRONMENT .........................................................268 Mihai Roxana Lucia............................................................................................................................268 Hristache Diana Andreia ....................................................................................................................268 Vîrjan Daniela ....................................................................................................................................268 INTRODUCTION A LA METHODOLOGIE ECONOMETRIQUE CLASSIQUE...................273 Minică Mirela .....................................................................................................................................273 Florin Franţ ........................................................................................................................................273 LES MOTEURS DE LA CROISSANCE ............................................................................................278 Minică Mirela .....................................................................................................................................278 Franţ Florin ........................................................................................................................................278 6
ABOUT TRUSTS, CARTELS AND MONOPOLIES WITHIN THE WORK OF VIRGIL N. MADGEARU ........................................................................................................................................ 284 Mitoaica Ana Maria ........................................................................................................................... 284 ELEMENTS OF THE CONCEPT OF VIRGIL N. MADGEARU ABOUT THE STATE INTERVENTIONISM ......................................................................................................................... 287 Mitoaica Ana Maria ........................................................................................................................... 287 CLUSTERS IN THE ROMANIAN ECONOMY............................................................................... 291 Nagy Csaba......................................................................................................................................... 291 KEY EMPLOYMENT INDICATORS IN EU AND ROMANIA..................................................... 296 Neacşu Mădălina Nicoleta ................................................................................................................. 296 Bâldan Cristina Florentina................................................................................................................. 296 SOCIO-ECONOMICS POLICIES AND THE EFFECTS ON THE NATURAL CAPITAL........ 301 Negrei Costel ...................................................................................................................................... 301 Trica Carmen Lenuta.......................................................................................................................... 301 THE EDUCABLENESS. THE FACTORS THAT PRODUCE THE EVOLUTION OF THE HUMAN BEING ................................................................................................................................... 311 Niculcea Silviu Petrisor ...................................................................................................................... 311 SUBVENTIONS WITHIN THE MINING SECTOR AND REGIONAL ECONOMIC DEVELOPMENT ................................................................................................................................. 316 Niţă Dorina ......................................................................................................................................... 316 Drigă Imola ........................................................................................................................................ 316 THINKING AT THE INTERDISCIPLINARY FRONTIER. AN INSTITUTIONAL ANALYSIS ................................................................................................................................................................ 321 Olah Serban ........................................................................................................................................ 321 THE IMPLICATIONS OF INTERNAL DEMAND OVER ECONOMIC GROWTH IN ROMANIA ............................................................................................................................................ 334 Părean Mihai Olimpiu ........................................................................................................................ 334 Adamovici Silvana Biliana ................................................................................................................. 334 THE IMPORTANCE OF CERTIFICATION SCHEMES IN SUSTAINABLE DEVELOPMENT OF TOURISM....................................................................................................................................... 340 Peţan Ioana Cristiana......................................................................................................................... 340 THE TOURISM INDUSTRY AND THE USE OF INTERNET ...................................................... 344 Peţan Ioana Cristiana......................................................................................................................... 344 CENTRAL BANKS AND LIQUIDITY CRISIS................................................................................ 348 Piroşcă Grigore Ioan.......................................................................................................................... 348 Mohanu Florina, ................................................................................................................................. 348 Curea Ştefania Cristina ...................................................................................................................... 348 THE NEW EDUCATION IN THE NEW ECONOMY – NEW CHALLENGES FOR THE ROMANIAN ECONOMY ................................................................................................................... 352 Platis Magdalena ................................................................................................................................ 352 Popescu Gh. Cristina Raluca.............................................................................................................. 352 ROMANIA, BETWEEN ETHOS AND DEVELOPMENT .............................................................. 358 Plopeanu Aurelian Petruş................................................................................................................... 358 AN INSTITUTIONALIST OUTLOOK ON THE ORIGINS OF PROPERTY FROM THE PERSPECTIVE OF TRANSACTION COSTS.................................................................................. 364 Pohoaţă Ioan ...................................................................................................................................... 364 Iacobuţă Andreea-Oana ..................................................................................................................... 364 THE TAXONOMY OF THE SUBTERRANEAN ECONOMY ....................................................... 369 Pop Georgeta...................................................................................................................................... 369 INVESTMENT IN HUMAN CAPITAL FOR ROMANIA IN CONTEXT OF EUROPEAN UNION INTEGRATION .................................................................................................................... 374 Popa Raluca Andreea ......................................................................................................................... 374 PARADIGMS OF THE ECONOMIC GROWTH AND THE ECONOMETRIC MODELLING 379 Popa Suzana ....................................................................................................................................... 379 SIMILAR ASPECTS REGARDING THE INFRACTIONS WITHIN THE REGIME THAT IS ESTABLISHED FOR CERTAIN ECONOMIC ACTIVITIES ....................................................... 384 7
Popoviciu Laura Roxana ....................................................................................................................384 SUSTAINABLE DEVELOPMENT OF TRANSPORT SERVICES AS AN IMPORTANT PART OF THE TOURISM SERVICES .........................................................................................................388 Popescu Delia .....................................................................................................................................388 State Olimpia ......................................................................................................................................388 Marin- Pantelescu Andreea ................................................................................................................388 ARE REMITTANCES IMPORTANT FOR THE ROMANIAN ECONOMY? .............................395 Popescu Cristian C. ............................................................................................................................395 Juverdeanu Lăcrămioara ....................................................................................................................395 SENSE OR COUNTER-SENSE CHANGE IN THE CONTEXT CREATED BY THE NEW ECONOMY ...........................................................................................................................................400 Popescu N. Gheorghe .........................................................................................................................400 Popescu Veronica Adriana .................................................................................................................400 Popescu Gh. Cristina Raluca ..............................................................................................................400 THE DETERMINANTS OF HUMAN CAPITAL IN ROMANIA...................................................406 Popescu Cristian C. ............................................................................................................................406 Diaconu Laura ....................................................................................................................................406 ROMANIA FACING THE MONDIAL GOVERNANCE ERA .......................................................412 Popescu Silvia Elena...........................................................................................................................412 Adam Alexandra .................................................................................................................................412 Mihai Roxana Lucia............................................................................................................................412 Popescu Constanta..............................................................................................................................412 THE MANAGEMENT OF THE COMPANY THROUGH DIVIDEND AND THE ETHICAL DIMENSION OF THE DECISIONS TAKEN IN ETHIS FIELD....................................................417 Prunea Petru .......................................................................................................................................417 THE SPREAD OE ECONOMIC IDEAS AMONG ROMANIAN PEOPLE. CASE STUDY: BOGDAN PETRICEICU HAŞDEU ...................................................................................................421 Rogojanu Angela.................................................................................................................................421 Şerban-Oprescu George-Laurentiu ....................................................................................................421 Pirosca Grigore Ioan ..........................................................................................................................421 EUROPEAN INTEGRATION BY MEANS OF ENERGETIC INTEGRATION..........................426 Rotaru Marius-Petre ...........................................................................................................................426 SUSTAINABLE DEVELOPMENT AND COMMUNITY PARTICIPATION IN ORADEA .......432 Săveanu Tomina ..................................................................................................................................432 ANALYSIS OF SOCIAL ECONOMIC EFFICIENCY OF HYDRO TOURISM ON THE ROMANIAN BLACK SEA SIDE........................................................................................................437 Secară Mirela .....................................................................................................................................437 DECISIONS ET COMPETITIVITE SUR LE MARCHE UNIQUE EUROPEEN .......................440 Sîrghi Nicoleta ....................................................................................................................................440 Cismaş Laura ......................................................................................................................................440 THE ANALYSIS OF EQUITY-EFFICIENCY TRADE-OFF IN THE EUROPEAN UNION ECONOMY ...........................................................................................................................................445 Socol Cristian .....................................................................................................................................445 Socol Aura-Gabriela ...........................................................................................................................445 Marinaş Marius-Corneliu ...................................................................................................................445 WHAT IS WRONG WITH OUR SCHOOLS? A GUIDE TO EDUCATION REFORM..............452 Staicu Gabriel .....................................................................................................................................452 Marinescu Cosmin ..............................................................................................................................452 Pană Marius .......................................................................................................................................452 LA CRISE GLOBALISÉE DE L´ENVIRONNEMENT NATUREL ...............................................458 Stanciu Marieta...................................................................................................................................458 LE DÉVELOPPEMENT DURABLE – UN NOUVEAU TYPE DE DEVELOPPEMENT ECONOMIQUE ....................................................................................................................................463 Stanciu Marieta...................................................................................................................................463 Mangra Mădălina Giorgiana..............................................................................................................463 THE GLOBAL ASPECT OF THE UNDERGROUND ECONOMY...............................................469 8
Şchiop Cristian ................................................................................................................................... 469 THE KEYNESIAN THEORY OF PRICES ....................................................................................... 473 Şerban-Oprescu George-Laurentiu .................................................................................................... 473 Şerban-Oprescu Anca-Teodora .......................................................................................................... 473 EMIRICAL ANALISYS OF ROMANIAN PLANT’S DECISSION REGARDING POLLUTION ABATEMENT EXPENDITURE......................................................................................................... 478 Şova Robert,........................................................................................................................................ 478 Şova Anamaria ................................................................................................................................... 478 Nitica Ciubotaru ................................................................................................................................. 478 Cimpoeru Violeta ................................................................................................................................ 478 THE ECONOMIC UNIVERSITY EDUCATION – AN OPTION FOR THE HIGH SCHOOLS GRADUATES FROM ROMANIA ..................................................................................................... 483 Ştefănescu Razvan .............................................................................................................................. 483 Nistor Costel ....................................................................................................................................... 483 Dumitriu Ramona ............................................................................................................................... 483 ASPECTS OF THE SUSTAINABLE DEVELOPMENT IN ROMANIA ...................................... 492 Ştefănescu Florica .............................................................................................................................. 492 EVALUATION OF NATIONAL BANK OF ROMANIA MONETARY POLICY CREDIBILITY ................................................................................................................................................................ 501 Toader Valentin .................................................................................................................................. 501 Rus Veronica Rozalia ......................................................................................................................... 501 GLOBALIZATION, A COMPLEX AND CONTRADICTORY PROCESS WITH MULTIPLE MEANINGS .......................................................................................................................................... 507 Toboşaru Irina .................................................................................................................................... 507 COMPETITIVENESS IN THE AGE OF GLOBALIZATION. THE CASE OF ROMANIA ...... 511 Toma Sorin-George ............................................................................................................................ 511 Marinescu Paul................................................................................................................................... 511 Ianole Rodica ...................................................................................................................................... 511 ANALYSIS OF THE PENSION EXPENDITURES IN ROMANIA AND OTHER COUNTRIES ................................................................................................................................................................ 516 Tuţă Loredana .................................................................................................................................... 516 THE SOCIAL PROTECTION COSTS. SPHERE OF CONTENTS. COMPONENTS. ............... 521 Tuţă Loredana .................................................................................................................................... 521 Micu Cristina ...................................................................................................................................... 521 THE EVALUATION OF THE INFORMATIVE FUNCTION OF THE COMPLEX OF BALTILE MICI OF BRAILA ............................................................................................................................... 525 Trica Carmen Lenuta.......................................................................................................................... 525 THE GROWTH OF ECONOMIC COMPETITION AND THE DEVELOPMENT OF ECONOMY BASED ON KNOWLEDGE .......................................................................................... 531 Vechiu Camelia................................................................................................................................... 531 Enache Elena ...................................................................................................................................... 531 Morozan Cristian ................................................................................................................................ 531 CREDIT SCREENING AND THE LIMITS OF TRANSPARENCY AND COMMUNICATION IN ROMANIAN BANKING SYSTEM ............................................................................................... 536 Zamfir Ana-Maria............................................................................................................................... 536 Hornoiu Remus Ion ............................................................................................................................. 536 CORRUPTION IN SERVICE PROVIDING COMPANIES, IN THE CONTEXT OF ROMANIA’S INTEGRATION IN THE EUROPEAN UNION ....................................................... 541 Zdoroveţchi Cristina ........................................................................................................................... 541 GREEN CERTIFICATES MARKET ................................................................................................ 548 Zugravu Paul ...................................................................................................................................... 548 Gherman Anca Maria ......................................................................................................................... 548
BUSINESS ADMINISTRATION ............................................................................................ 553
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CONCEPTUAL ASPECTS AND INFLUENCE FACTORS OF TOURISTIC ENTERPRISE PROFITABLENESS.............................................................................................................................554 Asaloş Nicoleta ...................................................................................................................................554 Spãtariu Elena Cerasela .....................................................................................................................554 Grozea Cristina Mihaela ....................................................................................................................554 VARIABLES OF THE IMAGE OF TOURIST DESTINATION ....................................................559 Ban Olimpia ........................................................................................................................................559 L’ACCROISSEMENT DE L’ATTRACTIVITE DE L’OFFRE TOURISTIQUE BALNEAIRE ROUMAINE ..........................................................................................................................................565 Ban Olimpia ........................................................................................................................................565 Ardelean Sidona ..................................................................................................................................565 CORPORATE GOVERNANCE IN ROMANIA (I – STRUCTURAL DEVELOPMENTS IN THE COMPANIES AND FINANCIAL SECTOR IN ROMANIA) ..........................................................570 Bădulescu Alina ..................................................................................................................................570 CORPORATE GOVERNANCE IN ROMANIA (II – CONSIDERATIONS ON ROMANIA’S COMPLIANCE ON OECD PRINCIPLES ON CORPORATE GOVERNANCE) ........................576 Bădulescu Alina ..................................................................................................................................576 A HISTORY OF THE CONCEPT OF SUSTAINABLE DEVELOPMENT: LITERATURE REVIEW ................................................................................................................................................581 Bâc Dorin Paul ...................................................................................................................................581 SUSTAINABLE DEVELOPMENT – A THEORETICAL APPROACH .......................................586 Bâc Dorin Paul ...................................................................................................................................586 SUSTAINABLE DEVELOPMENT STRATEGIC DIRECTIONS FOR AGRICULTURAL HOLDINGS ...........................................................................................................................................591 Burja Vasile ........................................................................................................................................591 SYSTEM OF INDICATORS OF THE PROFITABILITY FOR COMPANIES OPERATING IN FOREIGN TRADE ...............................................................................................................................595 Căruntu Constantin.............................................................................................................................595 Lăpăduşi Mihaela Loredana ...............................................................................................................595 RELATION: FOODS QUALITY – RAW MATERIALS MANAGEMENT .................................600 Condrea Elena ....................................................................................................................................600 Constandache Mihaela .......................................................................................................................600 Stanciu Anca Cristina .........................................................................................................................600 THE CONSUMERS’ PROTECTION IN ROMANIA – AUTHORITIES’ PERMANENT PREOCCUPATION .............................................................................................................................605 Condrea Elena ....................................................................................................................................605 Popovici Veronica...............................................................................................................................605 Bucur Crina Raluca ............................................................................................................................605 PRODUCTS TRACEABILITY – NECESSITY OF THE MANAGEMENT OF THE DISTRIBUTION CHAIN .....................................................................................................................611 Constandache Mihaela .......................................................................................................................611 SOME LOCAL OPINIONS AND BUSINESS PHILOSOPHY OF SMES .....................................615 Crăciuneanu Viorel.............................................................................................................................615 Săvoiu Gheorghe.................................................................................................................................615 “TOURING NATURE: THE PAN-EUROPEAN ROUTES TO RURAL ECOTURISM – A GLOBAL METAPLAN AND IT’S LOCAL INFLUENCE” ............................................................622 David Gabriela ...................................................................................................................................622 THE ANTITRUST EFFECTS OF THE FIXED CONVERSION RATE. THE CASE OF GERMAN BANKS................................................................................................................................627 Dima Alina Mihaela ............................................................................................................................627 Pantea Carmen ...................................................................................................................................627 FINANCIAL MANAGEMENT IN CRISIS SITUATION, PILOT STUDY REGARDING ROMANIAN PRACTICE ....................................................................................................................632 Dumitrescu Dalina ..............................................................................................................................632 Rasca Lavinia .....................................................................................................................................632 Firica Oana.........................................................................................................................................632 10
THE IMPACT OF THE CRUISING INDUSTRY ON LOCAL DESTINATION ......................... 636 Dridea Catrinel Raluca ...................................................................................................................... 636 Gheorghe Camelia Monica................................................................................................................. 636 THEME PARK – THE MAIN CONCEPT OF TOURISM INDUSTRY DEVELOPMENT ........ 641 Dridea Catrinel Raluca ...................................................................................................................... 641 Strutzen Gina ...................................................................................................................................... 641 THE VIRTUAL FIRM AND THE ELECTRONIC BUSINESS’ PERSPECTIVES ...................... 647 Epure Dan .......................................................................................................................................... 647 FIRMS’ FINANCING POSSIBILITIES WITHIN THE EUROPEAN BUSSINES ENVIRONMENT ................................................................................................................................. 649 Epure Dan .......................................................................................................................................... 649 REGIONAL HEALTH MANAGEMENT – ESTABLISHING THE HEALTH REGION OF THE FUTURE ................................................................................................................................................ 652 Fastenmeier Heribert.......................................................................................................................... 652 Leuca Mirela-Florina ......................................................................................................................... 652 ENTREPRENEURSHIP AND PERFORMANCE ............................................................................ 657 Gust Marius ........................................................................................................................................ 657 Panoiu Laura ...................................................................................................................................... 657 Dobre Andreea ................................................................................................................................... 657 CORPORATE SOCIAL RESPONSABILITY - STRATEGIES IN EUROPEAN STYLE ........... 662 Grigore Georgeta ............................................................................................................................... 662 A GENERAL FRAMEWORK OF CORPORATE SOCIAL RESPONSABILITY ....................... 666 Grigore Georgeta ............................................................................................................................... 666 COMPETITIVENESS IN THE CONTEXT OF LASTING DEVELOPMENT IN THE EUROPEAN UNION............................................................................................................................ 671 Iancu Anica ......................................................................................................................................... 671 Popescu Luminita ............................................................................................................................... 671 CORPORATE SOCIAL RESPONSIBILITY IN THE ROMANIAN BANKING SECTOR ........ 675 Joldeş Cosmin ..................................................................................................................................... 675 Belu Mihaela....................................................................................................................................... 675 Iamandi Irina Eugenia ........................................................................................................................ 675 COMPARATIVE ANALYSIS............................................................................................................. 681 Kiraly Krisztina Paula ........................................................................................................................ 681 ETHIQUE, COMMUNICATION ET TOURISME .......................................................................... 686 Kiyindou Alain .................................................................................................................................... 686 Ţigu Gabriela ..................................................................................................................................... 686 LOGISTIC ACTIVITIES AND GLOBAL ECONOMIC ENVIRONMENT OF BUSINESS OF THE COMPANU, ORGANIZATIONS AND INSTITUTIONS....................................................... 692 Lăpăduşi Mihaela Loredana............................................................................................................... 692 ASPECTS OF THE IMPACT OF POPULATION AGEING ON HOSPITALS............................ 697 Leuca Mirela-Florina ......................................................................................................................... 697 Fastenmeier Heribert.......................................................................................................................... 697 CORPORATE GOVERNANCE IN CENTRAL AND EASTERN EUROPE: CONVERGENCE TO EUROPEAN CORPORATE GOVERNANCE? ......................................................................... 702 Lupu Iulia ........................................................................................................................................... 702 EXCELLENCY OR CHAOTIC GLOBALIZATION IN TOURISM? ........................................... 707 Mazilu Mirela ..................................................................................................................................... 707 Marinescu Roxana Cristina ................................................................................................................ 707 CERTAIN CONSIDERATIONS REGARDING THE METHODOLOGY OF INVESTIGATION OF THE TAX EVASION CRIMINAL OFFENCES ......................................................................... 712 Mihuţ Elena - Ana............................................................................................................................... 712 OBSERVATIONS REGARDING THE DISCLOSURE OF THE ECONOMIC SECRET .......... 717 Miheş Cristian D. ............................................................................................................................... 717 Ardeleanu – Popa Carmen Teodora ................................................................................................... 717 THE YOUTH TRAVEL OFFER AND THE FACILITIES GIVEN TO THE YOUTH WHEN PRACTICING TOURISM ON THE ROMANIAN MARKET ........................................................ 720 11
Moisă Claudia Olimpia.......................................................................................................................720 CORPORATE REPUTATION IN ROMANIAN SOCIO-ECONOMIC CONTEXT ....................726 Pantelică (Şerbănică) Cristina ...........................................................................................................726 COSTS INFORMATION SYSTEM AND DECISION PROCESS ..................................................733 Paraschivescu Dumitru Marius ..........................................................................................................733 Bucşă Radu Cristian ...........................................................................................................................733 LA QUALITÉ DU SERVICE – LES MODÈLES CONCEPTUELS ...............................................737 Paraschivescu Andrei Octavian ..........................................................................................................737 Căprioară Florin Mihai ......................................................................................................................737 EUROPEAN POLICY FOR QUALITY AGRICULTURAL PRODUCTS - STUDY CASE DAIRY PRODUCTS ..........................................................................................................................................742 Pop Cohuţ Ioana .................................................................................................................................742 Pup Anca .............................................................................................................................................742 EUROPEAN POLICY FOR QUALITY AGRICULTURAL PRODUCTS APPLIED IN ROMANIA FOR DAIRY PRODUCTS ..............................................................................................747 Pup Anca .............................................................................................................................................747 KEY DEVELOPMENT STRATEGIES FOR SMALL AND MEDIUM ENTERPRISES IN THE CONTEXT OF EUROPEAN INTEGRATION .................................................................................751 Purcarea Irina ....................................................................................................................................751 THE EXPANSION OF THE SERVICES FOR ENTERPRISES IN ROMANIA ...........................756 Rabontu Cecilia Irina .........................................................................................................................756 E-BUSINESS IN THE CONTEXT OF GLOBAL COMPETITION ...............................................761 Rogojanu Angela.................................................................................................................................761 Badea Liana ........................................................................................................................................761 INNOVATION – SOURCE TO OBTAIN THE COMPETITIVE ADVANTAGE IN THE GLOBAL ECONOMY .........................................................................................................................767 Şipoş Gabriela Lucia ..........................................................................................................................767 TAX-HAVEN COMPANIES ...............................................................................................................772 Teacă Mihaela ....................................................................................................................................772 Mihăilă Carmen Oana ........................................................................................................................772 LA DÉCISION STRATÉGIQUE ET SES IMPLICATIONS DANS LE DÉVELOPPEMENT D’UNE AFFAIRE: OPPORTUNITÉS, DANGERS, PROVOCATIONS ET RISQUES ...............776 Tureac Cornelia Elena ........................................................................................................................776 Turtureanu Anca Gabriela ..................................................................................................................776 LES DIMENSIONS DU MARCHE DES FUSIONS ET DES ACQUISITIONS EN ROUMANIE ................................................................................................................................................................782 Vancea Mariana .................................................................................................................................782 LES FUSIONS ET LES ACQUISITIONS- FORMES DE DEVELOPPEMENT DES ENTREPRISES .....................................................................................................................................788 Vancea Mariana .................................................................................................................................788 ARE YOUR SATISFIED CUSTOMERS LOYAL ? .........................................................................793 Viulet Nicoleta – Cristina ...................................................................................................................793 PLANNING AND IMPLEMENTING MARKET-SEGMENTATION STRATEGY IN TOURISM BUSINESS .............................................................................................................................................801 Viulet Nicoleta-Cristina ......................................................................................................................801
ECONOMIC STATISTICS ...................................................................................................... 806 OPTIONS FOR DATA COLECTION FROM THE MAIN STAKEHOLDERS INVOLVED IN THE PUBLIC HEALTH SYSTEM REFORM ..................................................................................807 Andrei Tudorel ....................................................................................................................................807 Călin Cătălina Liliana ........................................................................................................................807 Tusa Erika ...........................................................................................................................................807 Iacob Andreea Ilizia............................................................................................................................807 CARACTERIZING THE PUBLIC HEALTH SYSTEM REFORM USING THE STATISTICAL SURVEY APPROACH.........................................................................................................................813 12
Andrei Tudorel .................................................................................................................................... 813 Călin Cătălina Liliana ........................................................................................................................ 813 Tusa Erika .......................................................................................................................................... 813 Stancu Stelian ..................................................................................................................................... 813 THE ANALYSIS OF THE UNEMPLOYMENT SEASONALITY IN ROMANIA ....................... 819 Balan Christiana Brigitte ................................................................................................................... 819 Gagea Mariana................................................................................................................................... 819 THE ASSURANCE OF THE MACROECONOMIC EQUILIBRIUM – PRIORITY OBJECTIVE OF THE ECONOMICAL POLICY.................................................................................................... 825 Bălăcescu Aniela ................................................................................................................................ 825 Tomescu Dumitrescu Cornelia ........................................................................................................... 825 ANNUAL AVERAGE (LEI/USD) ....................................................................................................... 826 MIGRATION OF THE ROMANIAN WORKFORCE IN THE PERIOD 1989-2006 STAGES AND TENDENCIES ............................................................................................................................. 830 Begu Liviu-Stelian .............................................................................................................................. 830 MÈTHODES D’ANALYSE MULTIFACTORIELLE POUR L’INDICATEURS DE COMMERCE EXTÉRIEUR ............................................................................................................... 833 Boboila Cristea ................................................................................................................................... 833 ANALYTICAL METHODS FOR SEASONAL TRENDS OF ROMANIAN FOREIGN TRADE ................................................................................................................................................................ 838 Boboila Cristea ................................................................................................................................... 838 ABOUT RISK PROCESS ESTIMATION TECHNIQUES EMPLOYED BY A VIRTUAL ORGANIZATION WHICH IS DIRECTED TOWARDS THE INSURANCE BUSINESS .......... 844 Covrig Mihaela ................................................................................................................................... 844 Serban Radu ....................................................................................................................................... 844 PROGNOSIS OF MONTHLY UNEMPLOYMENT RATE IN THE EUROPEAN UNION THROUGH METHODS BASED ON ECONOMETRIC MODELS ............................................... 851 Gagea Mariana................................................................................................................................... 851 Balan Christiana Brigitte ................................................................................................................... 851 THE IMPLICATIONS OF COMPUTERIZATION IN THE CHANGES OCCURRING IN THE ROMANIAN HIGHER EDUCATION VARIATION AND STRUCTURE .................................... 857 Hapenciuc Cristian Valentin .............................................................................................................. 857 Zaharia Marian .................................................................................................................................. 857 Zaheu Ioana ........................................................................................................................................ 857 INCREASE OF CONSUMER PRICES IN ROMANIA IN THE FIRST YEAR AS A MEMBER STATE OF THE EUROPEAN UNION .............................................................................................. 863 Harja Eugenia .................................................................................................................................... 863 CHANGES IN ROMANIA’S POPULATION DISTRIBUTION ON LOCALITIES IN 1990-2007 PERIOD ................................................................................................................................................. 868 Harja Eugenia .................................................................................................................................... 868 THE INFLUENCE OF FINAL CONSUMPTION ON EMPLOYMENT IN ROMANIA ............. 873 Herman Emilia ................................................................................................................................... 873 THE INVESTMENTS IMPACT ON THE EMPLOYMENT IN ROMANIA ................................ 879 Herman Emilia ................................................................................................................................... 879 POVERTY ASSESSMENT AT HOUSEHOLD LEVEL USING A POVERTY COMPOSITE INDICATOR ......................................................................................................................................... 885 Ionescu Alina Măriuca ....................................................................................................................... 885 THE VOLATILITY OF THE FINANCIAL MARKET – A TEORETICAL APPROACH ......... 892 Meşter Ioana Teodora ........................................................................................................................ 892 THE VOLATILITY OF THE FINANCIAL MARKET – A QUANTITATIVE APPROACH ..... 898 Meşter Ioana Teodora ........................................................................................................................ 898 MACROECONOMIC MODELS OF ECONOMIC GROWTH BASED ON INVESTMENTS ... 905 Popa Suzana ....................................................................................................................................... 905 THE INFLUENCE OF THE INTEGRATION PROCESS IN EU ON THE ROMANIAN INFLATION DYNAMICS ................................................................................................................... 908 Savulea Dorel ..................................................................................................................................... 908 13
A STATISTIC ANALYSIS ON ROMANIAN SEASIDE HYDRO TOURISM AND ITS IMPORTANCE WITHIN ROMANIAN HYDRO TOURISM .........................................................914 Secară Mirela .....................................................................................................................................914 AUTOREGRESSIVE MODELS FOR ANALYSIS OF FOREIGN INVESTMENT IN ROMANIA ................................................................................................................................................................920 Şipoş Ciprian ......................................................................................................................................920 Boleanţu Mihai ...................................................................................................................................920 ECONOMETRIC MODEL WITH CROSS-SECTIONAL, TIME SERIES, AND PANEL DATA ................................................................................................................................................................926 Tomescu Dumitrescu Cornelia............................................................................................................926 THE OPTIMUM DIMENSION OF COMPANY FOR MAXIMIZATION OF PROFIT USING THE REGRESSION METHOD ..........................................................................................................930 Tomescu Dumitrescu Cornelia............................................................................................................930 Aniela Bălăcescu.................................................................................................................................930 THE IMPACT OF CULTURAL-CREATIVE INDUSTRIES ON THE ECONOMIC GROWTH – A QUANTITATIVE APPROACH ......................................................................................................934 Ţiţan Emilia ........................................................................................................................................934 Voineagu Vergil ..................................................................................................................................934 Todose Monica ....................................................................................................................................934 THE EXTERNAL PAYMENTS’ BALANCE AND THE ROMANIAN ECONOMIC GROWTH BETWEEN 1996 AND 2006 .................................................................................................................940 Turturean Ciprian-Ionel .....................................................................................................................940 Jemna Dănuţ-Vasile ............................................................................................................................940 ECONOMIC FREEDOM, GLOBALIZATION, CORRUPTION AND MACROECONOMIC RESULTS ..............................................................................................................................................946 Săvoiu Gheorghe.................................................................................................................................946 Cruceru Gheorghe ..............................................................................................................................946 PERSPECTIVES OF THE YOUNG GRADUATES ON THE LABOUR MARKET ....................953 Vîrjan Daniela ....................................................................................................................................953 Cretu Raluca Florentina .....................................................................................................................953 Militaru Marina ..................................................................................................................................953 CHAOS MODELS IN ECONOMICS .................................................................................................959 Vlad Sorin ...........................................................................................................................................959 STATISTICAL STUDY CONCERNING THE URBAN TOBACCO’S CONSUM, PREMISES OF THE CONSUMERS’ BEHAVIOUR CHANGES ..............................................................................965 Zaharia Marian...................................................................................................................................965 Cristache Silvia-Elena .......................................................................................................................965 Şerban Daniela ...................................................................................................................................965 Begu Liviu ...........................................................................................................................................965
14
ECONOMY
15
THE EDUCATION ROLE FOR THE YOUNG PEOPLE INSERTION IN THE ACTUAL LABOR MARKET Aceleanu Mirela Ionela Academy of Economic Studies Bucharest, Economy and Economic Policies Department, E-mail address:
[email protected], 0723.079.799 Abstract: Business leaders, politicians and academic researchers agree that in a world where materials, technology and even know-how are widely available and easily transportable, the factor which makes the significant difference is people. These are important times for education in all the countries. Therefore, Romania has to take into account the fact that the economy performances and the ability to stand against the international competing pressures, especially under the integration circumstances are directly related to the quality of the human factor and to the structural modification of the labour force. In this respect, an important role in attaining these objectives play the actions aiming the increase of the labour force training level, concomitantly with the re-qualification and re-orientation thereof depending on the existing and predictable demand on the labour market. The European context requires the necessity for Romania to adapt itself to the conditions of the new economy and to the knowledge society, in which the competing advantage is obtained by innovation and by a government management able and decided to increase the aggregate efficiency (economic, social, ecological) of the whole labour potential of the country. Key words: education, employment, labor market, knowledge society Changes in the modern workplaces, brought about by technology, management innovations and increased competition in the global marketplace, have led to many concerns about the adequacy of workforce skills. Therefore in the contemporary society investing in people and skills is essential. One important ingredient of investments in people is considered to be investment in education. Education consists in that fundamental social process of transmission of life experience to adult generations and of culture to children and youth generations, in order to prepare them for life, for their integration into society. Education is accomplished within the family, but also within an institutional environment (school, church, army, professional associations, sports, etc.). The educational process follows the formation of the human personality and is accomplished at different levels and areas according to the followed objectives. The contemporary specialists almost from all areas are preoccupied to find some adequate answers regarding the growing role of the education. Most of them reached the conclusion that there are two motifs which make social sciences to have an interest in education: (a) this is transmitted to the people, through its culture, no matter the practices, customs and manner of thinking; (b) the transmission is made through some institutions, some of them playing a bigger social role. Of this double process handles the ethnologists and the psychologists, and also the economists and sociologists. The former search and research the individual effects of the transmission of the education, the others of the social context of the functioning of the institutions and the manner in which the education contributes to the cultural progress and to the leap from one civilization to another. The need for education is real for all categories of people, because, “in the fight for adapting and changing it is necessary first to modify our way of perceiving and of understanding the things from the life we live in. In essence, it is about modelling together, by investing in ourselves, the character and also the entire personality, so that we may accomplish a balanced auto-renewal in the transition process …” Under the impact of the explosion of informational technology and the new economy, education suffers significant changes, as it becomes continuous and interactive, and on the other hand supposes the capacity to use efficiently, rapidly and creatively the knowledge, and the available information, easy to access, especially by means of the Internet. On the other hand it appears the tendency to accentuate the specialization on different domains. The pass from general education to the specialized one does not mean the abandoning of the former. While the 16
society is encountered in an ongoing change, generating new solicitations towards education means that the man in his turn, is almost seen as a receiver of the learning action. Thomas Friedman, in his paper Lexus and the olive, argued: “the dominant tendency in the universities and thinking factories is oriented towards a specialization more and more narrowed: entering in depth in one single field is more appreciated than the overview over more. But, without having the consciousness of the whole – without feeling that different means for accomplishing our goals or for frustrating us converge – we cannot talk of a strategy. And without a strategy, you can expect nothing else than a drift movement.” University education is organized around disciplines. However, in university education students acquire not only field-specific knowledge and skills but also general academic knowledge and skills. General academic knowledge and skills are needed to acquire a coherent body of specific-field knowledge. By learning about specific-field knowledge, students also acquire general academic knowledge and skills, which in turn increase the effectiveness of the learning process through which field specific knowledge and skills are acquired. Furthermore, general academic knowledge and skills, but also foster the development of other skills valued in the labor market. Educational and training have become crucial in the process dedicated to build a Europe of knowledge and a knowledge based society. Many studies have confirmed the importance of investment in education as a determinant of economic growth. If we look at a sorted list of nations with the highest level of secondary schooling we would notice these to be the richest countries in the world, based on GDP per capita. High rates of education are essential for countries to achieve high levels of economic growth. In theory poor countries should grow faster than rich countries because they can adopt cutting edge technologies already tried and tested by rich countries. But economists argue that if the gap in education between a rich and a poor nation is too large, as is the case between the poorest and the richest nations in the world, the transfer of these technologies that drive economic growth becomes difficult, thus the economies of the world's poorest nations stagnate. An important motivation for individuals to invest in education is that the acquired knowledge and skills tend to raise productivity and hence earnings potential. A further important motive behind acquiring more education is to gain a stronger foothold in the labor market and thus lower the risk of unemployment. Educated workers are more likely to participate in the labor market and their active working life is generally longer than for those with lower educational attainment. For example, the employment rate by highest level of attained, of EU countries shows this tendency. This indicator is calculated by dividing the number of employed people within age group 25-64 years having attained a specific level of education, by the total population of the same age group. Level is coded according to the International Standard Classification of Education (ISCED, 1997): . Pre-primary, primary and lower secondary education: levels 0-2 . Upper secondary and post-secondary non-tertiary education: levels 3-4 . Tertiary education: levels 56. The indicator is based on the EU Labour Force Survey (LFS), covering the entire population living in private households and excluding those in collective households such as boarding houses, halls of residence and hospitals. Table 1 1995
2000
2005
2006
EU (27 countries)
….
48.8
47.5
47.8
Germany
45.2
55.3
42.5
44
France
46.2
46.1
48
47.6
Italy
43.3
44.1
46
46.4
Austria
53.3
47.8
47.2
49.6
Hungary
….
29.1
28
27.6
Poland
….
28.1
23
23.3
Romania
…
53.9
39.6
39.6
17
Bulgaria
…
30.4
29.3
28.9
Finland
43.5
50
45.8
46
Sweden
58.9
55.7
52.5
53.3
Norway
…
60.8
47
55.6
Employment rate, by highest level of education attained (% of age group 25-64 years) Pre-primary, primary and lower secondary education
Table 2 1995
2000
2005
2006
…
68.3
68.4
69.3
Germany
69.2
69.9
70.1
71.5
France
67.2
69
69.2
69
Italy
60.7
63.5
66.8
67.9
Austria
74.6
73.7
73.4
74.8
Hungary
….
66.7
64.9
65.1
Poland
…
62.3
56.7
58.3
Romania
…
68.2
63.8
64.9
Bulgaria
…
59.3
65
68.1
Finland
64.5
72.4
72
72.9
Sweden
77.4
77.5
78.6
79.2
Norway
…
80.6
76.7
79.6
EU (27 countries)
Employment rate, by highest level of education attained (% of age group 25-64 years) Upper secondary and post secondary non tertiary education
Table 3 1995
2000
2005
2006
…
82.4
82.7
83.3
Germany
86.3
88.2
86.2
87.1
France
76.9
78.7
78.4
78.7
Italy
80.6
81
78.5
78.2
Austria
88.4
85.8
84.2
85.5
Hungary
…
82
82.5
81.2
Poland
…
83.8
81.1
81.7
Romania
…
83.9
84
86.1
Bulgaria
…
77.4
80.3
82.1
Finland
81.5
84
84.2
85
EU (27 countries)
18
Sweden
87.6
82.7
86
86.2
Norway
…
87.5
87.5
89
Employment rate, by highest level of education attained (% of age group 25-64 years) Tertiary education Source: Sustainable Development Indicators, EUROSTAT, http://epp.eurostat.ec.europa.eu The employment rate, by highest level of education attained is the lowest in the Czech Republic, Poland and is the highest in the Denmark, Iceland, Norway. This indicator has increased in the last years in Romania, but Romania has to follow current European trend, targets. Some studies shows that Romania labor force has lacks in qualification therefore the educational system must be reoriented in concordance with the demands on the work market. On a first view the demands on the work market can be covered through professional and high-school education. Though, beside the general knowledge obtained from the educational system is needed a professional guidance, where the role of the company that benefits of the work resources well qualified is critical. The circumstance of competition and competitiveness determined the companies to really imply in the guidance of their employees. The influence exerted by the education system over the labor offer does not apply only on qualitative side, especially on its diminishing as a result of the growth of those that are in different preparation forms, but is constitute in one of the most important factors in modeling the labor offer from a qualitative and structural point of view, representing also the place where the option of the young generation for a particular kind of activity is showed. In present in Romania the work world is pretty inflexible because they still function on the idea that once you graduate a form of education and you are placed in a specific job, that person should not learn or adapt to technical and technological changes for as long as they live. The labor market tendencies show something different. So that as long as they live the persons changes their jobs for at least 2-3 times. The Romanian education should deal with this fundamental issue that is responsible for the good going of the economy in general and of the work market in particular. Education is the most secure possibility of people to confront with an insecure future. This increases the chances to find a job, but it doesn’t mean is a guarantee in fighting with a possible unemployment. If, in the past, a person after having some professional knowledge or some qualification, had gained a job and did not suffer important changes during its active period of work, nowadays to be able to adapt to the new evolutions, the working force should start a professional continue and constant preparation process. Romania has the highest percentage of early school leavers in the region, with 23% of the population between 18 and 24 leaving all forms of education, and the lowest percentage of life-long training. Expenditure on education is one of the lowest among CEEs countries. Long-term unemployment among recent graduates indicates a mismatch between the skills the education system provides and the labour market demand. The education system is undergoing a comprehensive reform, which has already produced significant changes, especially in compulsory educations. For instance, beside EU countries, Romania is on the last places regarding population with tertiary education per 100 population (11,1% toward 22,8% - EU 25) and percentage of those that are participating in life-long learning per 100 population (1,6% toward 11% - EU 25). Assuring the professional preparation is a problem that concerns not only companies, employers but also governments. In this way, the state through Ministry of Labor, Social Solidarity and Family had decided to get involved in solution this problem so in National Development Plan from 2007 until 2013, that specify the Romanian domains that need major intervention into the human resources domain, had been elaborated a program that will bring the labor force to the Union standards. The general objective of the program is to develop the human capital, to make the durable adhesion on the labor market of a widely number of person. This can be possible through:
the grouth in education and professional preparation of human fund
to promote the entrepreneur culture
to facilitate the access of young people on labor market
to improve the access on jobs for unemployment people 19
the reinsertion on work market of inactive persons including rural areas
reforms in educational system. Public financial support for education increases the incentive to invest in education by lowering the cost of investment. Student loans and grants alleviate financing constrains and often involve a significant subsidy element. At the tertiary level, the average subsidy rate ranges from 50 per cent or less in Japan, Korea and the United States, to close to 100 per cent in some European countries such as Austria, Denmark, Iceland, The Netherlands and Switzerland. This process is possible in time, because the educational system hardly adapts to the market economy realities, its difficulty being a common factor in many economies that are in transition. Moreover, the people can not gather new capacities and knowledge easily. Even if the market asks, it takes time until the workforce can offer them. So, Romania has to follow current European trend and to take into account the fact that the economy performances and the ability to stand against the international competing pressures are directly related to the quality of the human factor and to the structural modification of the labour force.
References 1. 2. 3. 4. 5. 6. 7.
Marta Christina Suciu, “Investiţia în educaţie”, Editura Economică, Bucureşti, 2000 Michael Mlady, „Regional unemployment in the European Union, Bulgaria and Romania in 2005”, General and Regional Statistics 1/2006, htpp://epp.eurostat.ec.europa.eu Paul A. David, Dominique Foray: Fundamentals of the Knowledge Society, in Policy Futures in Education – An E-Journal, Oxford, U.K., 2002 Friedman, Thomas L.: Lexus şi Măslinul. Cum să înţelegem globalizarea, Editura Fundaţiei Pro, Bucureşti, 2001, p. 56 Dinu, Marin: Relevanţa raţională a paradigmelor difuze, în Revista AGER–Economie teoretică şi aplicată, Nr.1/Martie 2006, p. 112 ***The International Economic Conference Romania Within The EU: Opportunities, Requirements and Perspectives, Volume I, Sibiu, May 2007 ***Educaţie Economică. Actualitate şi perspective, Simpozion Ştiinţific Internaţional, Editura Economică, Bucureşti, 2003
20
THE IMPLICATION OF EXTERNAL DEMAND IN PROCESS OF ECONOMICAL GROWTH IN ROMANIA Adamovici Silvana Biliana Chamber of Commerce, Industry and Agriculture Timişoara, P-ta Victoriei 3, Timişoara, 300030,
[email protected], 0256/490766 Părean Mihai Olimpiu West Timisoara University, Faculty of Economics and Business Management, I.H.Pestalozzi Street, 16A,
[email protected], 0256/592562 International economical trade, external trade with consumption goods and investment goods creates the important factors of even growth of economy, and of the evolution of the macroeconomics indicators and of the external Balance of payments. Import and export play an important part in the overall evolution of national economy, in convening variants necessities of production or direct consumption, each of them creating both a premise but also a consequence of the effect of the economical-social progress. The commercial deficit, which is high, reflects, practically, the low competition of Romanian products and services outside Romania, this showing that there are good opportunities for offer growth, and for economical growth. Keywords: external demand, economical growth, competitively, commercial balance.
1. Economical activities Some specialists have an opinion that there is a law of external constraint that takes the shape of certain competitive conditions and underlines at the spur of the moment the nature of relations between the exchange partners. The determinants of this global demand size, called the determinants of external balance, are export and import, and are for talking into consideration the fact that in the vast majority of cases, the same factors, but with different sense influences, are determining the size of exports and imports. The volume and structure of economical activity and competitively are two main categories of determinants of external balance, which because of theoretical consideration can be analyzed separately. Industrial activities and even the ones in service market need important intermediary consumption. Imports can relate to an area of resource unavailability, as far example: energy is certain raw material, or can be related to the effects of international labour division, which takes shape in specializing certain economics; in producing certain components and/or pre-made products. Usually, when the production level increases, and so does the gross domestic product imports, components of intermediary consumption are missing as well. Even more, the export induces himself frequently the amplification of these imports. Import for intermediary consumption is a main reason of the existence of direct relation between the level of national production and the level of imports. National production, is in the same time a process of distribution of became between employers and enterprise. The wages paid and the saw operation revenue buying of end user merchandise and of equipment merchandise for enterprises. This can be considered the second reason of the existence of positive relation between the economical activity and import, knowing that a part of final consumption of householders and the demand of equipment for enterprises is satisfied by importing. One of the aspects that need to be analyzed is the effect of differences in the economical growth level, and this thing has to be taken into consideration as long as the different growth levels belong to different phrases of the economical cycle through which one or another economy passes. If we admit that an economy wants an independent relaunch, and it neglects so-called the feed-back effects, the effect of an isolated relaunch will be creating of a commercial deficit for the country where it freelanced itself in
21
Imports are driven by internal activity; the exports are destructed or determined by external conjunctive. If we suppose that this commercial imbalance is not income of national factors which operas abroad, for example the subsidence’s which operate abroad, make even by an surplus from certain tourism services, commercializing same patents, not even by a surplus of foreign investments in balance its local investments abroad, in this case, the commercial imbalance is as well an imbalance in payment balance of national economy with the rest of the world. This phenomenon corresponds to the so-called external restriction. If the local gross domestic product that backs up the commercial balance, then the reabsorption of unemployment can not be made only by sacrificing the external balance. As this type of sacrifice can not be accepted on a long term bases because it would concretize by an accumulation of commitments for the rest of the world, in these circumstances, in the end, the external balance will determine a restraint of the possibilities of internal growth. The exchange partners are usually constrained in the same way. What is difficult is the intensity of the constraints which he have to satisfy, and from here one of the empiric reason of growth different. The difference of gross domestic product growth offers the possibility of formulating same conclusion quite superficial, just by the correlation that is supposed to exist between the growth level, the factors in which the growth is based on and the national economical conjuncture, but the world one as well.
2. Product competitivity Competition can be looked at under two aspects: competitive price and a competitive those overalls the price. First aspect refers to the relative evolution of the product price, an foreign markets, while the second aspect has to be looked at as a final affect and this because its role seems to become more and more important. Competitive price takes into consideration the own price evolution, scaled with the ones on the international market, and it is obvious on its behavioral forms. A close study separates the competitive external by using the price, as long as the process of internationalization the commercial relations is being mentioned , in the competition conditions, in other words prices and quantities are different from country to country, for the faces of its own market mechanism to attenuate the differences. What has to be known is that we can not contest the complex behavior of the non-price competitively phenomenon. More than that, there is not a unique hierarchy by the prism of non-price competitively, more sort of different intensities of external constraint in balance with the trade partners. From the point of view of the competition, the quality of the specialization is one of the decisive factors, this way, a specialization offers the national economy high training skills. Such effects appear if the enterprises in the country are specialized an products for which the global request is dynamic or are orientated towards geographic areas which have a large increase in imports. The trade intensity of a country depends of induced barriers from the commercial policy area, but of geographic barriers as well. Commercial policy barriers are influenced by economical performance, while the geographic barriers distance from sea, from the other countries, population size are not affected by the economical performance. Frankel and Romer1 observed that the elements induced by geography in trade, affects the economic growth: the growth by 10% of commerce level in the gross domestic product determines the intensification of the rate of growth with 10-20%.If they are included, however, other variables, the positive results of economic trade growth within gross domestic product disappear. Rodriguez and Rodrik2 state that while commercial policies search to resolve the market failures, the commercial restrictions can consist a factor of growth. Even if, the commercial policies, with the geographic conditions affect the economic growth, the size of the effect of the two categories of factors is very different, because, for example, the technical progress offers another perspective over the distances. In a similar ways, the impact of custom over the commerce changed as long as foreign direct investments developed along with the externalization of the activities.
Crăciun L., Barbu M. C., - Poziţia geografică – determinant al creşterii economice? în „Revista tinerilor economişti” nr. 5/2005, Craiova, 2005, p. 148 2 Idem 1
22
Most countries that do not have sea exit are poor, with the exception of some countries in Western Europe strongly integrated in the regional economic market and connected from the zones of coast by cheep transport routes. Overall, at a worldwide level, there are 35 countries with a population of over 1 million of habitants without sea exit and 28 of these countries are outside Europe. From the 28 continental countries outside Europe, the best placed country in the richest nations worldwide is Botswana (47 in the world) which owns its riches due to well – managed diamond mines. It is followed by Paraguay on the second place For national economy, it is obvious s that at a certain time the process of degradation of specialization as an effect of certain conjuncture which takes into consideration the traditional preference for certain countries under development or by an insufficient specialization in products for which the request grows very fast on the worldwide market and on the internal one as well. Insufficient specialization (geographic and sectorial) can be corrected in dynamics, at least by the countries that have the capacity to modify the specialization in the way the global demand heads to.
3. Balance of trade The effect of dynamic global demand over the external balance is transforming in one of the main problems that have to be paid attention to when we put a solid bases the policy the international economic relations sector. So, the net export influences the aggregated request and the economic growth, especially when this is negative. CIF costs include transport and insurance the FOB costs do not include the transport and insurance. From table 1 we can observe that the whole period taken into consideration when we consider that it began to record economic growth in Romania, we can see the fact that imports increases more than exports each year, and so we can explain the depth of the economic trade deficit, by using an method of calculus. A special situation among other years we record in 2002, when we observe that the growth level of exports was larger than the imports, and even if so, the commercial trade balance was negative and not much lower that in the previous year, both for FOB-FOB relation, but especially FOB-CIP. Starting 2003 we can observe a larger depth of the commercial deficit from one year to another, ending with 2006 when the size of the deficit was 1.5 times longer than in the provides year. So we, observe a constant and important growth of the demand for external goods, which shows that there are major problems concerning developing and sustaining an efficient economic growth. This increase of the deficit of trading balance can determine in the future a drop in the aggregated demand. The rhythm aggregated demand. The rhythm of export growth (16,2 % in 2006) continued to be significantly exceeded from the import one (25,1%) in 2006, determined by: the effect of the nominal appreciation of the Romanian Level comparing to Euro; the brutal competition of Asian countries, mainly as a consequence of liberalization of world trade with textile goods; ternary activities in the Euro zone, especially in Italy and Germany, the main Romanian product selling markets in Europe. In these conditions, the commercial trade balance managed to head in 2006 at cca 10% from PIB. 2000
2001
2002
2003
2004
2005
2006
Mil. Euro
11273
12722
14675
15614
18935
22255
25850,5
%reported to last year
+41,3
+12,9
+15,4
+6,4
+21,3
+17,5
+16,2
Goods for import (CIF)
Mil. Euro
14235
17383
18881
21201
26282
32569
40745,8
%reported to last year
+43,4
+22,1
+8,6
+12,3
24,0
+23,9
+25,1
Imported goods (FOB)
Mil. Euro
13140
16045
17427
19569
24258
30061
36608,2
%reported to last year
+43,4
+22,1
+8,6
+12,3
24,0
+23,9
+25,1
Goods export
for
23
Haunch Commercial balance
FOB-FOB
-1867
-3323
-2752
-3955
-5323
-7806
-11757,7
FOB-CIF
-2962
-4661
-4206
-5587
-7347
-10305
-14895,3
Table 1 Commercial trade balance in Romania in 2000-2006. As well, the percentage of lohn in the total exports is big (68% in 2006), the lohn in easily industry being replaced step by step by the one in the machine constructions, chemical industry and the co-production. From graphic 1 we can observe the bigger rates of increasing the expert, comparable with the one of gross domestic product on whole analyzed period of time, so that the export behaved like a factor of growing national macroeconomics results. The main characteristics of external trade can be presented synthetically like this: Overall economy, the international relations took place with the developed economic countries, their percentage reaching at 73% of exports and at 60% from Romanian imports. The major contribution is being held by the EU member countries with a reach of 68% for imports.
Graphic1. The Dynamics of gross domestic product (GDP) and export Romanian export orientation towards the developed countries indicates their structure improvement as a result both for overall strategies, conjuncture advantages and for continuous adaptation of national producing for the demands of foreign markets. In the same time, the import of goods can be defined by high levels, determined both by the necessity of the productive system of economy, reflected in the strong growth of imports of capital goods, and in the unsatisfactory level of covering the consumption demand from internal production, determining extra imports of consumption goods Structurally, external trade is characterized by the presence of goods export from the equipment construction industry (30,8%) and of the easily industry (22,3%), while the imports are dominated as well by the goods from the equipment industry (37,5%) the mineral ones (14,8%), and the chemical ones (13,8%). The continuous growth of external trade in definitive costs (22, 8%) in the case of exports an and 22,8% when speaking of imports thing which determined a contribution to the total export of 55%, and for imports of 80%. In 2005, commercial trades took place in favorable market conditions, so for an increase of the unitary value at import of 103,6% the export managed to have a value of 108,2% resulting a value of external trade of 104,4%. 24
In real terms, the export growth (7,6%) held close to the head up recorded in 2005 (7,3%), but in exchange the imports increased the physical volume (20,7%), in increase with 3 percent over the last year. Growth difference influenced the deepening of trade deficit, even if the trade value was favorable. Some phenomenon is reflected as will by the reduction of the import level and exports one from 68,3% in 2005 to 63,4% in 2006. Export represents one of the engines that drive the economic growth. Romanian export based mainly on products with low taxes. The biggest volume of exports recorded in the textile industry, in which dominant is the activity of active perfecting (lohn), followed by metallurgy industry in which mainly there are produced inferior steel and less special steel. A visible thing is that the progress has been made also concerning export of goods of the equipment industry , radio appliances, television and telecommunications, machinery industry and electric appliances, and also the transportation means (especially automobile- auto industry, branches characterized by products with high taxes). The most significant commercial deficits (FOB-CIP) in 2006 were recorded for the following products: machinery and appliances, electric equipment and span parts 4636, 0 mil euro: mineral products – civil, gas and coil -3331,3 millions euro; means of transport and spare parts – 2165,6 millions euro; plastic material and products from this – 1435,0 millions euro; products for the chemical industry and related – 2062,2 millions euro; (pharmaceutical products – 1188,0 millions euro); food products – 927,0 millions euro: paper and cardboard – 634,4 millions euro; construction material – 561,6 millions euro. The trade deficit in the first third of 2007 exceeded 3 millions euro, a growth by 88% since the same time confronted by the previous year. High trade deficit reflects, practically, the low competitively of products and Romanian services, outside the country, this showing that that then are goods opportunities for offer growth, and so for economic growth. The growth of external deficit is caused by the repartition of profits and foreign companies revenues from Romania, added to the income chapter in the current balance. This recorded, in the first of 2007, a growth of 59% comparing the first third of 2006.Another cause of maximizing the external deficit this year is represented by payments made to budget of a European Union, which are not yet (in the first trimester)inbounds of European funds. This way, the current transfers (which include, at an entrance rate, the money sent in the country by Romanians abroad) increased only with 13% comparable with the first third of 2006, because of the payments made by Romania to the EU budget. The growth of the dependable degree of national production for imports has negative impact over the commercial trade balance, over the debiting degree of the country, and, implicitly, over a sustainable development for the country. Commercial trade is negative with all important commercial partners of Romania. This way, our country does not have to follow gaining exclusively the foreign balance (export of goods, foreign direct investments, structural balance), she has to became a source of investments. An opportunity is the asian market: for example, on the Chinese market it is very hard to sell products because there the products already have o low price (it is known that because of these low prices, the Chinese products become more competitive than the others, even on the countries that have will-developed markets), but we can realize investments, just because the labour is very cheap.
References: 1. 2. 3. 4. 5.
Angelescu Coralia, Stănescu Ileana, - Politica de creştere economică, Editura Economică, Bucureşti, 2004; Crăciun L., Barbu M. C., - Poziţia geografică – determinant al creşterii economice? în „Revista tinerilor economişti” nr. 5/2005, Craiova, 2005; *** - Anuarul Statistic al României 2007; *** - Dicţionar de ştiinţe economice, Editura ARC, Chişinău, 2006; *** - Strategia postaderare a României.
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THE INFORMATIONAL VALENCES OF THE FINANCIAL SIGNALS SYSTEM USED IN THE EVALUATION OF COMPANIES GLOBAL PERFORMANCE Anghel Flavia Universitatea Româno-Americană, Blv. Expoziţiei, Nr. 1B, sector 1, Cod 012101, Bucureşti,
[email protected], 0723234814 Bucur Cristiana Universitatea Politehnica, Splaiul Independenţei,
[email protected], 0722267047
Nr.
313,
sector
6,
Bucureşti,
Radu Elena Universitatea Româno-Americană, Blv. Expoziţiei, Nr. 1B, sector 1, Cod 012101, Bucureşti,
[email protected], 0726323835 Abstract For a long period of time the analysis of company’s performance has been approached preponderant or only for financial point of view, but in the last half of century, because of an environment characterized by intensified competition, there have been elaborated and developed a number of measurement tools, the goal of which is to reflect all the factors involved in a company’s performance.The practic goal of performance measurement, the standard it refers to and the measuring tools are tightly correlated with the objectives of each of the company’s stakeholders. In order to obtain a good quantification of company’s performance is necessary to use a system of indicators that may provide reliable information for evaluating the degree to which firm’s objectives are reached. In this system, financial indicators remain, an essential tool of management, regardless the changes which affect the company’s environment. Keywords: performance measurement, financial indicators, company’s performance, non-financial indicators, management, objectives
Introduction For a long period of time the analysis of company’s performance has been approached preponderant or only for financial point of view, but in our days the international settings where the company develops, they had reformed the mean of that analysis. The new analysis is based on the non-financial side, which includes some non-financial indicators, considered more efficient than those used in the second half of the 20th century. The most important indicators used were: in the ‘60s – the size of the company; in the ‘70s – the profitability and the return; in the ‘80s – the treasury; and in the present – “the performance is a competitive situation of company, which is achieved with a level of efficiency and efficacy.3 The structure, functions and in the importance of the financial performance’s indicators system in the actual business environment In the actual business environment it is inconceivable an approach of the economic and financial performance’s indicators system for a company without emphasize the interfered changes in the structure, the functions and in the importance of this compare to global performance. From the structural point of view the system of financial and economic indicators, this is the basic operational instrument of financial and economic analysis; it was structured by D Margulescu, in “The financial and economic analysis of commercial companies”4 as it follows: Niculescu, M., Lavalette G., Strategii de creştere, Ed. Economică, Bucureşti, 1999. D., Mărgulescu, „Analiza economico-financiară a societăţilor comerciale”, Ed. Tribuna Economică, Bucureşti, 1994, pp 32-36. 3 4
26
The indicators of the technical and economical potential of the company, such as: the indicators of capital goods, the indicators of fixed and circulating assets, indicators of human resources potential, the indicators for the capacity of research, the rates for the asset’s structure of a company. The indicators of financial potential, such as: the capital’s indicators, the indicators of patrimony, the indicators of the working capital, the indicators for liquidity and solvency of the company. The indicators of financial and economic statements, as the followings: the turnover, the added value, EBE, EBIT, EBITDA etc. The indicators of efficient use for the technical, economic and financial potential, such as: the efficient rate of fixed assets, the efficient rate of circulating assets, the working productivity, the turnover of circulating assets, the efficient rates of expenses, the profitability rates, the rates of financial statements, etc. Even though the financial and economic indicators are so diversified, this thing being emphasized by the complexity and the dynamic of the environment where the company develops, the classification above has the merit of answering to all actual and operational requirements of financial and economic analysis. But it is request for the research and for economic practices context, those introduce the concept of quality management, to indicate a new group of indicators alongside those shown above, and this new group has those quality indicators, which were constructed by an advice American company, named Stern Stewart. Starting from the objective of the company, which is the value making for shareholders; this objective becomes automatically major criteria of evaluation and analysis of company’s performances. The theory and economic practice have set a group of indicators that permit the wording of some pertinent valuations for the magnitude of shareholders returns, those being quantified by the following indicators:
EVA (economic value added);
MVA (market value added);
LVA (liquid value added);
The liquid profitability of investments;
The total shareholders profitability.5 Those indicators are constructed starting from the premise due to the fact that organizations are making value as long as they can succeed in remunerate the capital at a high rate of profitability than the cost of this. For the second aspect, represented by the applicability for the system of financial and economic indicators, we present three major functions of the financial measures of performance, and these functions are founded in theory and in the economic practice as well:
the financial management instruments;
the major objectives of the company;
the instrument of motivation and the control in organizations, confirmed by the existence of a strong relations for the interdependence between those three. The financial and economic indicators, in their capacity of being a management instrument, those represent the result of the treatment of internal and external information’s, in order to formulate some pertinent approaches for financial and economic situation of a commercial agent, the identification of factors, causes and conditions which have determined it. Another important thing is represented by the improvement of the result with the internal resources from the point of view of efficient usage for human resources, material resources, financial resources; and in this way it can be make up an essential element for foundation of operative, tactical and strategic decisions, looking for: the allocation, the measure the proportions and the efficient usage of resources. The variety of activities for a company and the complexity of the situations encountered for structure, level and financial and economic performances characteristics of this request the necessity of using a system formed by financial and economic indicators. The objective of the using this system of indicators is to offer for the organization’s management, information about the real situation, which is shown by the financial Gh. Vâlceanu, V., Robu, N., Georgescu, coord. “Analiză economico-financiară”, Ed. Economică, Bucureşti, 2005. 5
27
and economic performance’s level and also it is shown by those information requested for the control’s execution of the way of fulfillment’s charges and of the foundation of the future activity. The second function of the system leeway evidently from the fact that for the all functions of the company are created some objectives shown in a monetary way in order to realize in the next stages the evaluation and the control of realization’s level of this; those aspects are evidenced in the third function of the system. The organization’s objectives become attainable only if they obtain a concrete and positive size in the proportion management – return – value. Relative to the third function of the indicators’ system, the role of motivation reside from the determination “de facto” of the structure and the efficiency of the involvement’s function, which has a great impact concerning the concretization of the others managerial functions, such as: the foresight, the organization, the coordination and the control – setting. The motivation has an important impact on the characteristics and the applicability of the managerial system of an organization. The quality of decisions, the procedure of being operational, the methods, the techniques used, the managerial procedures and the general effects, the accuracy and flexibility of informational subsystem and also the applicability manners of organize of a company, these are conditioned by the motivation of the employees. „Therefore, the financial side can be found in all the elements of the managerial activity, that is:
in all of the management’s functions: forecasting, organization, coordination, and control;
in all of the management systems: the organizational system, the decision system, the system of methods and techniques, etc. Also, in all of the organization’s functions (research and development, production, commercial, human resources and financial), financial elements (required resources – cost – profit – value) represent esential variables for decision-making”.6 These assertions emphasize the interdependence among the three functions of economic and financial indicators, as they have been presented above.
Business performance measurement systems in the actual business environment In the last half of century, because of an environment characterized by intensified competition, there have been elaborated and developed a number of measurement tools, the goal of which is to reflect all the factors involved in a company’s performance. Each of these tools intends to be unique and comprehensive, and shifts the emphasize on non-financial indicators. We can mention here „The Performance Prism”, a tridimmensional model for performance measurement, elaborated by professor Andrew Neely from Cranfield School of Management and Chris Adams from Andersen Consulting, during a research project called „The Evolution of Business Performance Measurement Systems”. This tool has as its starting point what in the literatre is known as “stakeholder approach”. Stakeholder theory emphasize the difference between shareholders and stakeholders, who are social partners of the company, in an attempt to reduce the overwhelming importance of shareholders’ interests in the “management through value” concept. According to the shareholder theory, the interests of all of the company’s social partners are of equal importance, but they are treated differently, as the intensity of relations between firm and a certain class of social partners (customers, employees, local and central public administration, professional organizations, various ONGs, unions, etc.) requires. In this context, one of the management’s goal is to maximize the firm’s global value, taking into account the interests of all its social partners and the different relations between them and the company. Based on the shareholder theory, professors Andrew Neely şi Chris Adams have built „The Performance Prism”, a tri-dimmensional model of performance measurement which has five sides: 6. “stakeholders’ satisfaction; more precisely, who are company’s key stakeholders and what are theor needs and interests; 6
I., Bogdan, „Management financiar în afaceri”, Editura Universitară, Bucureşti, 2006, p.39 28
1.
strategies; what are the strategies the company needs to follow in order to fulfill the interests of its key shareholders; processes; what are the essential processes required by the implemented strategy; capacities; what are the capacities required by the operationalization of these processes; shareholders’ contribution; what is the contribution of shareholders in order to maintain and develop these capacities.” 7
2. 3. 4.
Figure 1 Performance Prism, Andrew Neely, Chris Adams, “Perspective on Performance: The Performance Prism”, The central element, the key point of “Performance Prism” is that all organizations have not only responsabilities, but also certain demands vis-à-vis their stakeholders. The company’s performance cannot be regarded from a uni-dimmensional perspective. Instead, all the interdependencies among the organization and its stakeholders need to be approached comprehensively. “The Performance Prism” attempts to reflect the hidden complexity that defines “the organization’s world”, desintegrating it into its basic constituents, like in physics a prism reflects the light, and emphasizes, once again, the crucial role of both financial and non-financial indicators in the fulfillment of company’s strategic goals. The practic goal of performance measurement, the standard it refers to and the measuring tools are tightly correlated with the objectives of each of the company’s partners. Table 1: The objectives of performance measurement for company’s stakeholders Stakeholder
The objective of performance measurement
Indicators used for performance measurement
0
1
2
Members of the Administration Council
Evaluating management quality and the capacity of sustainable growth.
-
Output indicators Efficiency indicators Specific indicators for sustainable growth
-
Resources indicators Efficiency indicators Specific indicators for sustainable growth Liquidity indicators Solvability indicators Cash-flow indicators
Establishing incentives for managers
Managers Creditors
Estimating strategic and tactic objectives Estimating the firm’s capacity to generate cashflows inorder to repay its due debt.
Andrew Neely, Chris Adams, “Perspective on Performance: The Performance Prism”, http://www.som.cranfield.ac.uk/som/research/centres/cbp/downloads/prismarticle.pdf 7
29
Employees
Establishing the type and level of remuneration Evaluating the stability of the company
-
Estimating the production quality Evaluating the stability of the company
-
Customers
-
Business indicators Efficiency indicators Specific indicators concerning the motivation of human resources Indicators concerning the production quality Total quality indicators
For shareholders, the objective of performance measurement is the estimation of the company’s value and the return of invested capital, the indicatorsused in this direction being net profit and ratios that can be built on it, and indicators that reflect the creation of value (EVA, MVA, CVA, etc.)
Conclusions The complex and always changing aspects of economic phenomena and the diversity of specific conditions in which a company conduct its business make the attempt to measure performance a very difficult undertaking. Therefore, in order to obtain a good quantification of company’s performance is necessary to use a system of indicators that may provide reliable information for evaluating the degree to which firm’s objectives are reached. In fact, this is the central role of the system of indicators measuring the company’s performance. In this system, financial indicators remain, an essential tool of management, regardless the changes which affect the company’s environment.
Bibliography 1. 2. 3. 4. 5.
Bogdan, I., „Management financiar în afaceri”, Editura Universitară, Bucureşti, 2006. Mărgulescu, D., „Analiza economico-financiară a societăţilor comerciale”, Ed. Tribuna Economică, Bucureşti, 1994. Neely, Andrew and Adams, Chris, “Perspective on Performance: The Performance Prism”, http://www.som.cranfield.ac.uk/som/research/centres/cbp/downloads/prismarticle.pdf Niculescu, M., Lavalette G., Strategii de creştere, Ed. Economică, Bucureşti, 1999. Vâlceanu, Gh., Robu, V., Georgescu, N., coord. “Analiză economico-financiară”, Ed. Economică, Bucureşti, 2005.
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THE DEVELOPMENT IN TRANSITION ECONOMIES IN EUROPEAN UNION PARTICIPATION PROCESS Ateş İsmet Adnan Menderes University, The Faculty of Economics, Tel: 90 3151974 E-mail:
[email protected] Özdemir Abdullah Adnan Menderes University, The Faculty of Economics, Tel: 90 3151974 E-mail:
[email protected] Transition economies are called in Literature as countries adopted capitalist economic system instead of communist system. Transition Economies which placed Central and Eastern Europe passed this transformation in the process of European Union participation. At the present day, the concept of development is not only considered in change of revenue but also in change of qualitative factors for human. It is called as human development in literature. European Union participation process was an important catalyst for transition economies in development of qualitative and quantitative. The transition economies found opportunities in this process to increase their macro economic indicators and the indicators of humanely life standards. Keywords: Development, human development, transition economies
INTRODUCTION The phenomenon of globalization promotes the competitive among the countries. One of the basic conditions of being exist is adaptation ability for competition in an entire world scaled economic system. The countries must have the sustainable competitive structure like companies. .The countries which want to take place in competitive international area, desire to position themselves in international integration. Nowadays, one of the most important integration forms is European Union. The countries which transforming from communist economic system in to capitalistic economic system also called as transition economies, to take place in a competitive and global world they aimed to join European Union. One of the results of joining EU will be to reach abundant resources provided by EU, the other is to discipline and develop their economies. This article aims to describe, what are the effects and additions of European Union participation process on development of Transition Economies by telling the milestones of transition process. Human development reports published by United Nations Development Programme (UNDP) are used to reach the aim of this article.
TRANSITION ECONOMIES Since the fall of Berlin wall in the fall of 1989, a sizable group of economists has been studying the process of transition from socialism to capitalism in former socialist economies. The field is called transition economics or sometimes transformation economics (Roland, 2000: 1). The transforming through the market economy is often called transition process. This transition is naturally multidimensional. It is a transition from “Central Planing Economy” to “Market Economy” in terms of economic transformation. The concept of transition from “Central Planing Economy” to “Market Economy” basically encloses; liberalization of economic activities, prices and market transactions, redistribution of sources to use them most efficiently, improvement of market oriented instruments for macro economic stability, to provide economic efficiency and effective corporation management by the agency of privatization, to provide economic efficiency by applying rigid budget discipline, property rights, rule of law and, to compose an institutional and juristic framework contains transparent regulation for market entrance (Ganmet, 2006: 19). Transition economy countries applied similar economic system because they were basically representative of socialist economic system. The structure creating socialist economic system was current all this countries. So the countries were similar in terms of economic order. In contravention of this similarity there were some differences in economic system applied in the countries (Musayev, 2007: 105). What happens on the “return journey” from socialism to capitalism? Removing the barriers to capitalism includes
31
providing constitutional safeguards for private property, officially encouraging free enterprise, promoting privatization, legalizing advocacy of pro-capitalist ideologies, and so on. Capitalism does not need to he imposed on society; there is no need for a genetic program artificially implanted by a political party. If nothing else had happened but, removal of the barriers. Capitalism would still start to develop sooner or later. Although the process would obviously have been much slower (Kornai, 2000: 31-32).
EUROPEAN UNION AND TRANSITION ECONOMIES The meaning of economic integration for countries is to maximize international cooperation as possible. So the Transition Economies which applied compatible politics with Soviets Union experienced an adaptation problem after finishing the cooperation with Soviets Union. They aimed to join a new form of cooperation by determining to reduce first than solve the adaptation problem. The new constitution was European Union where they take place. To join EU was considered by the countries as an important instrument to promote their development. The EU supported the newly independent Central and Eastern European Countries (CEEC) countries on their transition from planned economic system and communist regime to free market economy and pluralistic democracy by the end of cold war. First important decisions on CEEC were made in Rome Summit on 14-15 December in 1990. Council of the European Union put into force a financial aid programme about CEEC in this summit. CEEC demanded beyond financial aid and facilitated trade possibilities. CEEC expressed that to choice a third way except EU might create instability in the region and so EU had better to build a tighter cooperation with these countries. The relation between CEEC and EU entered a new phase in Copenhagen Summit held by the chairmanship of Denmark on 21-22 June in 1993. At this summit it is emphasized by top level that the Central and Eastern European Countries may be candidate to join EU and if a CEEC wants to join EU should create necessary economic and politic conditions. By the way a CEEC can become a member of EU. It was first time expressed by top level that a CEEC can be a candidate and some criteria determined to be a member by EU (http://ikv.org.tr). The relations between CEEC and EU are listed in the Table 1. Country The Date Beginning of Deliberation The Date of Full Membership Czech Republic December 1997 1 May 2004 Estonia December 1997 1 May 2004 Hungary December 1997 1 May 2004 Poland December 1997 1 May 2004 Slovenia December 1997 1 May 2004 Latvia December 1999 1 May 2004 Lithuania December 1999 1 May 2004 Slovakia December 1999 1 May 2004 Romania February 2000 1 January 2007 Bulgaria February 2000 1 January 2007 Croatia 3 October 2005 (Re-start) Macedonia 17 Aralık 2007 (Membership) Table 1: The chronology of the relation between Transition Economies and European Union
As seen on Table 1 Transition Economies first made their application to became a member of EU in 1997. The full membership became a reality for eight countries listed on the table about seven year later from first application. Romania and Bulgaria become full membership recent. Croatia had some problems to become a member because of their special problems. Relations between Croatia and EU first were frozen but, deliberation process was restarted on 3 October in 2005. Also Macedonia started the membership process to become full membership on 17 December in 2007.
THE SOCIAL AND ECONOMIC CHARACTERISTICS OF TRANSITION ECONOMIES The development of the factors belongs to Central and Eastern European located Countries are given following table below. So it will be easy to analyze the distance was covered by the countries entered to capitalistic economic system. The population development of transition economies located in Europe and attempted to become member are shown in the Table 2.
32
Czech Estonia Hungary Poland Slovenia Latvia Lithuania Slovakia Romania Bulgaria Croatia Republic 1989 10,3
na
10,4
38,0
na
na
na
5,3
23,2
9,0
na
1990 10,3
na
10,4
38,2
na
na
na
5,3
23,2
8,7
na
1991 10,3
na
10,3
38,3
2,0
na
na
5,3
23,2
8,6
4,5
1992 10,3
1,5
10,3
38,4
2,0
2,6
3,7
5,3
22,8
8,5
4,5
1993 10,3
1,5
10,3
38,5
2,0
2,6
3,7
5,3
22,8
8,5
4,6
1994 10,3
1,4
10,2
38,6
1,9
2,5
3,6
5,3
22,7
8,4
4,6
1995 10,3
1,4
10,2
38,6
2,0
2,5
3,6
5,4
22,7
8,4
4,7
1996 10,3
1,4
10,2
38,6
2,0
2,5
3,6
5,4
22,6
8,3
4,5
1997 10,3
1,4
10,2
38,7
2,0
2,5
3,6
5,4
22,5
8,3
4,6
1998 10,3
1,4
10,1
38,7
2,0
2,4
3,6
5,4
22,5
8,2
4,5
1999 10,3
1,4
10,1
38,7
2,0
2,4
3,5
5,4
22,5
8,2
4,6
2000 10,3
1,4
10,0
38,6
2,0
2,4
3,5
5,4
22,4
8,1
4,4
2001 10,2
1,4
10,2
38,6
2,0
2,4
3,5
5,4
22,4
7,9
4,4
2002 10,2
1,4
10,1
38,2
2,0
2,3
3,5
5,4
21,8
7,8
4,4
2003 10,2
1,4
10,1
38,2
2,0
2,3
3,5
5,4
21,7
7,8
4,4
2004 10,2
1,4
10,1
38,2
2,0
2,3
3,4
5,4
21,7
7,8
4,4
2005 10,3
1,3
10,1
38,2
2,0
2,3
3,4
5,4
21,7
7,7
4,4
2006 10,3
1,3
10,1
38,1
2,0
2,3
3,4
5,4
21,7
7,7
4,4
Table 2: Population (Million) Source: http://transitionreport.co.uk The most crowded country among the Transition Economy was Poland in period of 1989-2006. Romania, Chez Republic, and Hungry followed this country. The least crowded country among the group was Estonia with a 1,3 million persons in 2006. Because of the group have relatively low population it would be an important advantage for group to integrate EU. The last members Romania and Bulgaria were effected both their economic conditions and relatively high population. The transition economies became member in 1994 relatively have less population than the countries became member in 2007. So it was easier to integrate to EU for less crowded countries. Macro economic indicators of transition economies in process of the entering capitalistic system are shown in Table 3. Years Under Communism
Foreign Dept in Pre-Transition Year, in Percent of GDP
Share of Agriculture
Natural Resource Endowment*
Bulgaria
43
50,6
11
0
Croatia
44
74,7
10
0
Czech Republic
43
12,2
7
0
Estonia
51
0
20
0
Hungary
41
64
14
0
Latvia
51
0
19
0
Country
33
Lithuania
51
0,2
27
0
Macedonia
44
0
12
0
Poland
42
63,4
13
1
Romania
43
2,9
14
1
Slovakia
43
6,8
7
0
Slovenia
44
0
5
0
Table 3: Macroeconomic Indicators in Transition Economies- Initial Conditions Source: Fischer and Sahay, 2000: 36. 1 Calculated by dividing PPP adjusted GDP by Total Production. * Natural Resource Endowment accoring to DDGT; O: Poor, 1: Moderate, 2: Rich.
According the data in Table 3, Estonia, Latvia and Lithuania lived longer period than other countries under communist economic system. Hungary was the country who applied socialistic system at least. Croatia had the highest foreign debt-GDP ratio. Hungary and Poland followed Croatia. Lithuania is most agricultural developed country among the transition economies. The other countries where agriculture is important are Estonia, Latvia, Hungary and Romania. Slovenia is the least agricultural characterized country. Transition economies are described as countries where natural resources are weak. Poland and Romania have the richest natural resources among the countries become member to EU. In order to compare countries it is also used the basic indicators such as GDP per capita. GDP per capita belongs to transition economies are given in Table 4. Czech Estonia Hungary Poland Slovenia Latvia Lithuania Slovakia Romania Bulgaria Croatia Republic na
3.041,5
2.147,4
na
na
na
3.351,4
2.319,1
5.238,1
na
1990 3.376,0
na
3.448,6
1.630,7
na
na
na
2.914,1
1.648,1
2.391,3
na
1991 2.480,7
na
3.230,7
2.037,4 6.339,9
na
na
2.051,4
1.244,4
887,5
3.691,5
1992 2.891,8
713,9
3.612,9
2.196,8 6.280,1
na
520,1
2.213,3
859,1
1.014,1 2.126,1
1993 3.385,8
1.167,5
3.751,6
2.233,6 6.370,1
939,6
726,7
2.510,6
1.158,5
1.280,7 2.202,3
1994 3.977,2
1.669,2
4.052,1
2.399,2 7.592,3 1.597,1
1.166,4
2.893,2
1.323,0
1.152,1 3.163,2
1995 5.362,4
2.635,3
4.359,5
3.603,3 10.193,8 1.953,2
1.768,1
3.615,7
1.564,3
1.563,1 4.029,0
1996 6.016,3
3.303,5
4.424,6
4.055,2 7.385,9 2.290,1
2.249,9
3.872,1
1.562,9
1.187,0 4.421,9
1997 5.545,1
3.546,1
4.494,9
4.065,4 7.502,4 2.542,7
2.763,5
3.935,0
1.565,1
1.257,2 4.398,2
1998 6.008,5
3.979,7
4.641,0
4.446,6 8.249,8 2.780,2
3.114,6
4.112,2
1.871,7
1.547,9 4.805,2
1999 5.832,9
4.040,1
4.757,4
4.345,3 8.765,3 3.039,0
3.065,5
3.780,1
1.584,8
1.582,0 4.371,1
2000 5.520,5
4.099,1
4.775,2
4.431,9 8.433,8 3.295,4
3.260,2
3.771,2
1.651,6
1.546,1 4.205,6
2001 6.059,1
4.528,4
5.238,0
4.930,6 9.227,7 3.518,9
3.478,4
3.910,4
1.793,1
1.723,3 4.742,5
2002 7.377,6
5.368,7
6.577,6
5.185,4 10.745,4 3.971,1
4.067,9
4.558,6
2.102,5
1.988,4 6.083,6
2003 8.947,0
7.071,6
8.344,3
5.676,8 14.021,3 4.799,0
5.360,0
6.130,5
2.738,0
2.561,8 6.666,3
1989
na
2004 10.726,0 8.619,4 10.116,8 6.625,2 16.650,4 5.935,1
6.518,1
7.810,6
3.484,5
3.175,8 7.943,3
2005 12.216,9 10.386,0 10.948,9 7.968,0 17.951,1 6.953,0
7.602,8
8.817,0
4.548,7
3.522,7 8.675,4
2006 13.896,1 12.209,1 11.127,8 8.939,9 19.218,5 8.760,5
8.770,8 10.250,8
5.616,8
4.088,7 9.582,0
Table 4: GDP per Capita (Dollar) Source: http://www.ebrd.com 34
Transition Economies had relatively lower GDP per capita levels in the period 1989-1991 which is considered as transition from socialist system to capitalist system. Total GDP is also important as fair revenue distribution for all citizens. Besides the fair revenue distribution the lower the GDP per capita rates are big problems for them. Transition Economies started to increase their GDP per capita rates since they start deliberation with EU in 1997. Most of the Transition Countries continued to increase their revenue since they became full member in 2004. GDP per capita rates in Transition Countries had increasing trend in 1989-2006 periods. As seen on Table 4 Slovenia has the highest GDP per capita rate. The following countries are, Chez Republic, Estonia, Hungary and Slovakia in order. Newly member countries to EU Romania and Bulgaria have the lowest GDP per capita rates among the Transition Countries.
HUMAN DEVELOPMENT IN TRANSITION ECONOMIES IN EUROPEAN UNION PATICIPATION PROCESS The GDP per capita is quantitative international comparison instrument in the literature of economic growth. But taking into consideration the life quality of people the general comparison instrument is human development index. Nowadays, as the development index, the concept and the index of the human development and the qualitative dimension of the development are being placed on the agenda of the societies. The literature on growth regressions for transition economies seeks to explain growth by miscellaneous variables that reflect e.g. economic reforms, initial conditions or economic shocks. A diverse range of variables reflecting factors of interest has been employed for right-hand side variables, while variables accounting for accumulation of human and physical capital are typically omitted. This approach owes its intellectual debt to the “new growth” literature of the 1990s (Staehr, 2003, s:8). Human development is defined as process to increase the people’s options. These options can be variable and endless but, three basic options sticking out; long and healthy life, right to information and, to get the satisfying financial sources. Political freedom, guarantied human rights, and self-respectability are among the other options except counted above. According to this apprehension revenue is an important indicator for human development but, it is not enough (Demir, 2006:3). In this context human development is a “process to multiply people’s options process” and it’s the main principal of human development concept. As it was told above these options are endless and can accurate by changing. People’s options has a wide scale from economic-politic, cultural to self-respective, to be productive, creative and to handle human rights. The ideal measure of humanly development must cover many options beside (Günsoy, 2005: 37). Human Development Index (HDI) also uses traditional revenue weighted measurements as embodying human development concept numerically. The development levels of countries are defined on benefits which produce for people. In this context, according the basic postulate of United Nations and United Nations Development Programme (UNDP) it is not possible to create quality human life and development only by economic inputs. Accession to personal, social, economic and political development possibilities are introduced as precondition for development of countries and peoples. The conditions of the individuals who have long and healthy life and taking place in social life where they live is passing through to get affordable revenue beside knowledge and health. In other words, the development of individual can not be possible only by economic growth. The main question is the national welfare whether creates development possibilities for individuals or not (Aldemir, 2003:21). Human Development Index (HDI) build up by existence or absence of healthy life, education and revenue possibilities for human makes clear the differences among countries in global scale and makes visible inter regional differences in national scale (DPT, 2001:223). In the Human Development Report published by United Nations Development Programme (UNDP) in 1997 the human poverty concept is based on the opinion of available funds for human development an humanly life beside to own some social, economic and cultural possibilities to supply basic requirements (Capabilities Approach). Therefore human poverty concept takes in to consideration required financial welfare more than minimum requirements (Aktan and Vural, 2002: 7). According the latest published Human Development Report 2007/2008 by UNDP GDP per capitas for the year of 2005 is accounted by purchasing power parity (PPP) are shown in table 5.
35
The place in ranking
Countries
31
Slovenia
34
Czech Republic
38
Hungary
41
Slovakia
44
Estonia
46
Lithuania
48
Poland
49
Latvia
51
Croatia
63
Romania
64
Bulgaria
Table 5: GDP Per Capita in Transition Economies –in 2005 (PPP US$) Source: UNDP, Human Development Report 2007-2008. According the Table 5’s data Slovenia is in the 31st rank in world with its biggest GDP per capita ratio among the Transition Economies. Chez Republic in 34t and Hungary is in 38th rank. Romania and Bulgaria the recent members of EU are sharing the last places in ranking of 63rd and 64th in order. Life expectancy at birth (LEB) is used an important indicator to measure human development. Life expectancy at birth for Transition Economies is seen on table 6. Ranking place
Countries
LEB (year)
1
Japan
82.3
34
Slovenia
77.4
39
Czech Republic
75.9
44
Croatia
75.3
46
Poland
75.2
53
Slovakia
74.2
63
Hungary
72.9
66
Bulgaria
72.7
69
Lithuania
72.5
75
Latvia
72.0
76
Romania
71.9
88
Estonia
71.2
177
Zambia
40.5
Table 6: Life Expectancy at Birth in Transition Economies (Years) Source: UNDP, Human Development Report 2007/2008. As seen on Table 6 Japan has the highest life expectancy at birth (LEB) with its 82,3 year in the world. Slovenia both has the highest GDP per capita rate and life expectancy at birth (77,4 year) among the Transition Economies. Transition Economies have close life expectancy at birth digits. But Slovenia where the life expectancy at birth is highest among transition economies is in 31st rank in worldwide scale. On the other hand Estonia where the life expectancy at birth is lowest among transition economies is in 88th rank 36
in worldwide scale. Zambia is the country where the life expectancy at birth is lowest in the world with its 40,5 year and 177th rank . The impacts of European Union membership process on development of Transition Economies are arranged to be seen clear in Table 7. Countries
Czech Republic Estonia Hungary Poland Slovenia Latvia Lithuania Slovakia Romania Bulgaria Croatia Macedonia
Life Expectancy At Birth (Years) 1970-75 70.1 70.5 69.3 70.5 69.8 70.1 71.3 70.0 69.2 71.0 69.6 67.5
2000-05 75.4 70.9 72.4 74.6 76.8 71.3 72.1 73.8 71.3 72.4 74.9 73.4
Table 7: The Changes of Life Expectancy at Birth in Transition Economies in pre and post period of transition. Source: UNDP, Human Development Report’s. As seen on Table 7 life expectancy at birth (LEB) digits are lower for Transition Economies in 1970-75 periods than 2000-2005 periods. Lithuania had the highest life expectancy at birth (LEB) digits in 1970-75 periods. All countries increased their life expectancy at birth (LEB) digits especially by additions EU funds in the periods 2000-2005. Slovenia reached the highest life expectancy at birth (LEB) digits in the post transition periods. Table 8 is prepared to show adult literacy rate in Transition Economies which is used as another indicator of human development. Ranking (in wold)
Countries
Adult Literacy Rate (%)
1
Georgia
100
3
Estonia
99.8
4
Latvia
99.7
5
Slovenia
99.7
6
Lithuania
99.6
22
Bulgaria
98.2
23
Croatia
98.1
26
Romania
97.3
139
Burnika Faso
23.6
Table 8: Adult Literacy Rate in Transition Economies and Ranking (% Ages 15 and Older) Source: UNDP, Human Development Report 2007/2008. Georgia has the highest rate of adult literacy rate in the world. Education and teaching has big importance in communist system naturally. According to this reality Transition Economies were the countries where education and teaching is important in the past and current. It is easily seen on table 8. Estonia and Latvia are in 3rd and 4th rank in adult literacy rate in order. Romania is in 26th rank with its 97,3 rate in worldwide. The worse rate in the world belongs to Burkina Faso. In order to show the impacts of EU membership process on Transition Economies’ adult literacy rate in 1985-1994 and 1995-2005 periods are given in Table 9. 37
Countries
1985-1994
1995-2005
Czech Republic
-
-
Estonia
99.7
99.8
Hungary
-
-
Poland
-
-
Slovenia
99.5
99.7
Latvia
99.5
99.7
Lithuania
98.4
99.6
Slovakia
-
-
Romania
96.7
97.3
Bulgaria
-
98.2
Croatia
96.7
98.1
Table 9: Adult literacy rate in Transition Economies (% aged 15 and older) Source: UNDP, Human Development Report 2007/2008. As explained above the importance of education and teaching given by communist system is seen on the rates of adult literacy. Also EU membership process continued to develop adult literacy rates in Transition Economies. All rates increased in post transition periods according the pre transition periods. The other basic indicator published in Human Development Report the development of schooling ratios are shown in Table 10. Ranking
Countries
Schooling ratio (%)
1
Australia
113.0
16
Slovenia
94.3
21
Estonia
92.4
23
Lithuania
91.4
25
Latvia
90.2
29
Hungary
89.3
38
Poland
87.2
42
Czech Republic
82.9
53
Bulgaria
81.5
59
Slovakia
78.3
70
Romania
76.8
87
Croatia
73.5
172
Niger
22.7
Table 10: Combined Primary, Secondary and Tertiary Gross Enrolment Ratio and Ranking Source: Prepared by using UNDP reports. Australia has the highest schooling ratio in the world. The highest ratio belongs to Slovenia among the Transition Countries. Estonia and Lithuania fallow this country. The lowest schooling ratios belong to Romania and Croatia. Niger is the country where schooling ratio is the lowest in the world. Human development index explains the development as life expectancy depending on the concepts of revenue of individuals, education given by schools and health service which people easily reach. The HDI ratios and ranking for 2005 are given in Table 11 and the trends of HDI are shown in Table 12. 38
Countries
HDI
Ranking
Iceland
0.968
1
Slovenia
0.917
27
Czech Republic
0.891
32
Hungary
0.874
36
Poland
0.870
37
Slovakia
0.863
42
Lithuania
0.862
43
Estonia
0.860
44
Latvia
0.855
45
Croatia
0.850
47
Bulgaria
0.824
53
Romania
0.813
60
Sierra Leone
0.336
177
Table 11: Human Development Index Ratio and Ranking in Transition Economies (2005) Source: UNDP Annual Reports. The most developed country is Iceland for 2005 in the world according the Table 11. The HDI ratio for Iceland is 0,968. When it is considered the maximum HDI rate is 1 it is easily can tell the humanly living conditions in this country is quite developed. The highest HDI ratio belongs to Slovenia among the Transition Countries. Chez Republic, Hungary and Poland are following this country. Romania has the last rank among Transition Economies ant it is in the 60th rank in the world. Sierra Leone is the last country in the world with its 177th rank. Countries
1975
1980
1985
1990
1995
2000
2005
Czech Republic
..
..
..
0.845
0.854
0.866
0.891
Estonia
..
0.811
0.820
0.813
0.792
0.829
0.860
Hungary
0.786
0.801
0.813
0.813
0.817
0.845
0.874
Poland
..
..
..
0.806
0.822
0.852
0.870
Slovenia
..
..
..
0.851
0.857
0.891
0.917
Latvia
..
0.797
0.810
0.804
0.771
0.817
0.855
Lithuania
..
..
..
0.827
0.791
0.831
0.862
Slovakia
..
..
..
..
..
..
0.863
Romania
..
0.786
0.792
0.777
0.772
0.780
0.813
Bulgaria
..
0.771
0.792
0.794
0.785
0.800
0.824
Croatia
..
..
..
0.812
0.805
0.828
0.850
Table 12. Human development index trends in Transition Economies Source: UNDP, Human Development Reports. The impact of EU membership process on Transition Economies is seen clearly in Table 12. As seen above Transition Economies have lower index value before transition and higher index value after transition. According the Table 12 all countries in the group growing faster their HDI index values especially after 1995.
39
CONCLUSION Transition Economies have promising macro economic indicators after transit from communist system to capitalist system. But, in order to give their people higher standards of life Transition Economies determined EU as a point of destination. There were three periods for Transition Economies in the journey to EU. The first period was before application for membership second was the deliberation process with EU and, the last one is full membership process. The first period was in sync with the beginning of transition period. The economies struggled to solve inflation and unemployment problems in this period. To become member of EU was mean for them to share wealth. In contrast it must not mean for EU members to share indigence. To this end countries struggled to better their economic performances. It was easier for governments of Transition Economies to cope with economic difficulties by using EU funds in deliberation process. Furthermore the problems of inflation and unemployment could be solved relatively and new employment possibilities created more production and economic growth. It is not possible to measure development only by growth of gross domestic product. The rise of gross domestic product is necessity but, not enough. In addition the quality of education and health services given citizens should be improved. The education legacy inherited from communist system made Transitions Economies’ obligations easier. Some precautions were taken to improve standards of health sector and life expectancy at birth digits increased. When the process of European Union membership is evaluated totally it can easily define as a process that Transition Economies managed properly. In the end the countries became members of EU as desired and by supplying more quality and quantity services to their citizens they reached higher human development ranks in the world.
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5.
6. 7. 8. 9.
10. 11. 12.
13.
40
14. Staehr, Karsten, (2003). “Reforms And Economic Growth In Transition Economies: Complementarity, Sequ-Encing And Speed” Bank of Finland Institute for Economies in Transition, BOFIT, Helsinki. 15. UNDP, (2006). Human Development Report 2005, Oxford University Press, New York, Oxford. 16. UNDP, (2007). Human Development Report 2006, Oxford University Press, New York, Oxford. 17. UNDP, (2008). Human Development Report 2007/2008, Oxford University Press, New York, Oxford. 18. http://transitionreport.co.uk/TRO/c.full/transition-report/volume2007/issue1/article107 (15 March 2008) 19. http://www.ebrd.com/pubs/econo/tr07.htm (22 March 2008) 20. http://www.ikv.org.tr/abgenislemesi.php
41
THE EMPLOYMENT AND UNEMPLOYMENT IN ROMANIADECISIVE FACTORS Bâldan Cristina University of Piteşti, Economics Faculty, Strada Aurel Vlaicu, nr. 43A, Piteşti, Argeş,
[email protected], 0724368690 Neacşu Mădălina University of Piteşti, Economics Faculty, StradaAleea Constructorilor, Bl. C, Sc. B, Apt. 8 , Piteşti, Argeş,
[email protected] , 0721134861 The employment, but also the efficient use of the available work resources is directly connected to the work market. It is an element that can not be separated from the other elements of the work market, especially from unemployment, because if one deals with them separately, one can not cover all the aspects, particularities and effects on the work factor. There are many causes for unemployment, causes that are to be found both at the macroeconomic level and at the microeconomic level. In most of the cases, in an analysis that aims at finding the causes that have generated the unemployment, many characteristics of unemployment are taken into account and they are analysed as “types” of unemployment. Employment, Unemployment, Wages, Intergenerational Income Distribution The employment but also the efficient use of the available work resources is directly connected to the work market. It is an element that can not be separated from the other elements of the work market, especially from unemployment, because if one deals with them separately, one can not cover all the aspects, particularities and effects on the work factor. Analysing the employment and unemployment, it can be noticed the fact that employment has three main channels:
The demographic channel: it refers to the young people who have reached the proper age for work, without having a professional training, as well as to the people that are looking for a job for the first time, as it is the case of housewives;
The “educational system” channel: it refers to the graduates of various education institutes, having professional training;
The channel of releasing the labour force working in the economic field as a result of the changes occurring in the stage of transition to the market economy( the limitation of activity, factory closures, retechnologization, reconverting); The three above mentioned channels are based on several sources which contribute to increasing unemployment because of:
The firing of a part of the working labour force because of the disappearance of some jobs, which is mainly caused by industrial reorganization ( we can mention the firings at S.C. Automobile Dacia S.A. after it was taken over by the Renault Group in 1999);
The slow development of the private sector;
The fact that the training structure does not comply with the employment structure, makes the educational system unable to offer the new graduates a training that will allow them to rapidly adapt to the new requirements. This lack of correlation, in the present circumstances, leads to deepening the imbalances existing on the work market because, whereas the tertiary industry is uncovered, the demand for professionals in the field exceeds by far the offer;
The slow increase of the number of jobs generates an increase of the number of unemployed, especially of the vulnerable parts of the population (the young people, the women). 42
The consolidation of the quasi-monopoly of some companies which has as consequence the non-flexibility of the work-market;
The deepening of the tendencies of divisioning and specialisation, of forming some groups and non-competing socio-professional categories as a result of the multiplication of the specialities and of the differences between the employers from the point of view of practice, skills, adapting capacity. There are many causes that generate unemployment, which are to be found at the macroeconomic and microeconomic levels. In most of the cases, in an analysis that aims at finding the causes that have generated the unemployment, many characteristics of unemployment are taken into account and they are analysed as “types” of unemployment (frictional, voluntary, structural, technological, natural, partly, total, etc.), characteristics that, in fact, cover the rather varied explanations of the incomplete use of the labour force in an economy. However, we can say that that there are also a few causes of unemployment that are not determined by the above mentioned characteristics and which can be found in Romania’s economy. These causes are:
The natural selection;
Psychology;
The changes in the economic structure and the employees’ difficulties to adapt themselves to theses changes;
The people’s will and behaviour;
The technical progress;
The budgetary expenses for “social protection” or “transfer payments” (unemployment benefit, poverty benefit, etc.);
The laziness and the individual’s failures;
The political system. Taking into account its causes, we can say that unemployment is an imbalance of the work market at the national level, a meeting point between the global work offer and demand. The work market is characterised by the fact that the work offer does not vary according to the changes that occur in the nominal wage and by the fact that the work offer does not evolve according to price and cost. The work market in Romania is characterised by a small number of jobs which are wanted and well paid, and a large number of jobs that are less attractive for the employees and do not offer advantages either to the employers or to employees. There are many causes that have generated the imbalances existing on the work market. The essential change that occurred in the Romanian economy consisting in opening the former socio-economic system to the world actually generated the process of connecting our country to the new evolutions occurring on the European and global markets. According to the classification published by the ”Institute of National Economy”, there are three main causes of the differences existing between the offer and the demand of the labour force. The evolution of the labour force offer and demand in accordance with different laws is one of the causes. The offer is mainly subjected to demographic laws, which do not belong to the economic field, and increases faster than the demand. The demand is a factor that belongs to the economic field being directly linked to the evolution of the national economy, to its performance indicators, to its competitiveness on the inner and external markets. Another cause is the lack of correlation between the work offer and demand, due to the inertial character of the professional educational system, whose structure answers some needs of the national economy, but whose product will be considered as output of a subsequent stage. In other words, there is a temporal discrepancy between the moment when the structure of the available jobs is foreseen by the educational institutions and the moment when the graduates will become labour forces. This makes the initial structure of the jobs offered by the educational system not to correspond to the reality existing in the Romanian economy. The technical progress, which has as consequence the increase of work productivity and efficiency, is another cause of unemployment, by firing a large part of the stuff. Thus, the unemployment, as a 43
consequence of the imbalances existing in economy with effects on the work market, is caused both by reducing the employment, as a result of the changing processes that occur in the transition to the market economy (the limitation of activity, factory closures, retechnologization, reconverting) and by admitting on the work market of the young graduates and of other persons who were included in the so-called “voluntary employment”. Year
Unemployment Rate (%)
1991
1,6
1992
5,4
1993
9,2
1994
11,0
1995
10,0
1996
7,8
1997
7,5
1998
9,3
1999
11,4
2000
11,2
2001
9,0
2002
10,2
2003
7,6
2004
6,3
2005
5,9
2006
5,2
The evolution of the unemployment rate since the apparition of Law no.1/1991 in the period 1991-2006 The increase of the real wages in certain periods was the reason for which the firms did no longer hire supplementary labour force. We must take into account the fact that these rises of the real wages are calculated by drawing a comparison with the previous year because, if we take into account the year 1990 as a fixed calculation basis, the wages have decreased (in the table “The evolution of the real wages and of the real pension in the period 1990-2004”) Year
The indicators of the real earnings
The indicators of the real medium pension of the retired persons who have national insurance
1990
100,0
100,0
1991
81,5
74,3
1992
70,8
63,1
1993
58,9
56,3
1994
59,1
55,0
1995
66,5
61,4
1996
72,7
63,1 44
1997
56,2
50,3
1998
58,4
49,2
1999
57,0
47,2
2000
59,4
44,0
2001
62,4
46,6
2002
63,9
48,2
2003
70,8
51,6
2004
78,3
57,7
2005
89,5
62,3
2006
97,4
68,1
The evolution of the real wages and of the real pension in the period 1990-2004 According to the classical theory, this means that the economy has self-adjusted because the wages decrease should contribute to increasing the number of employees, thus to reducing the unemployment. This fact is contradicted by the high values of the unemployment rate in the period 1990-2002. After 2002, these high values have decreased and in 2006 they were “only” 5,4%. The decrease of unemployment would have been possible only if there had been a general balance on the following markets: work market, goods market, money market. The absence of this balance as well as the basic theory of the classic liberalism which has in view an economy with full employment in which only the voluntary unemployment is accepted, makes this theory irrelevant for the situation existing in our country in the present, where the voluntary unemployment has a small share. From the point of view of the employee’s work offer, in Romania the voluntary employment was generated by the fact that some employees have decided that their effort at work is underpaid. The very moment they realised this they gave up working. Their number is low and refers only to that category of people that had other sources of revenue, because the employees that have the wage as only source of revenue, do not afford to abandon their work place “voluntarily”, even if the wages are low. A very important factor which caused the reducing of employment and increase of unemployment is the decrease of the effective demand, as Keynes used to say. Thus, the decrease of the purchasing power of the nominal wages had a negative effect on the population’s demand of goods and services. In this sense, it is to be noted the decrease of the real wages, which in 1997 had decreased with more than 43% and in 20004 reached the value of 78,3% as compared to the value in 1990 (table no. 2). The decrease of the pension in real terms also contributed to the decrease of the demand of goods and services, especially if we take into account the fact that the number of the retired persons has increased. Thus, if the value of the real pension in 1992 had decreased with 36,9%, in 2000 it decreased with 56% and in 2004 the purchasing power was a little higher than half of the value of the purchasing power in 1990 (in the table “The evolution of the real wages and of the real pension in the period 1990-2004”). Another major cause that generates and keeps the high rates of unemployment in our country is the volume of the heavy imports of products, which can be official and “unofficial”. The “unofficial” imports of products, the fact that that natural persons brought in the country products led to the production decrease in our country after 1989 because the respective products were sold at lower prices than the similar products in Romania. This situation lasted a long period of time and made our country addicted to the from the point of view of the supply with production factors. The heavy imports deteriorated the commercial balance and, therefore, the payment balance which created places of employment for the national economy and not for the foreign economies, which generated the increase of the unemployment. Therefore, the loss of the foreign markets as well as the diminishing of the dimension of the inner market had negative effects on the unemployment. The decrease of investments is another major cause. The increase of the inflation rate together with a high rate of the loans generated a high risk in the Romanian business environment with negative effects on the work market. A similar negative effect had the 45
diminishing of the internal saving potential caused by the decrease of the population’s real wages and the high level of the active interests earned. The low capacity of acquiring new technologies determined by the low investment ratio contributed to the low rate of reorganization. It also adapts itself to the few direct foreign investments. The lack of a proper legislative framework as well as the instability of the market after 1989 determined a low volume of investments. The investments that were made aimed the commercial sector. That is why their number has not increased. If investments had been made in the productive sector, new work places in other sectors (commerce, services) would have been created, apart from those in the production sector. Obviously, an important factor that hinders the volume of the investments is the high interest rates in the cases of the loans granted especially for the small and medium companies. The effects of the expensive money policy were cancelled by the companies by the expansion of the arrears. In spite of the constraints regarding the obligatory character of payments and the penalisation in case of deferring payments, the companies resorted to the “granting reciprocal credits” policy and to the deferring of payments, continuing to produce inefficiently and, sometimes, without having a sure turnover for their goods. All these factors contributed to the decrease of employment. The going up of prices made the trade unions to get rises in salaries that were not accompanied by an almost equal increase of the work productivity. Because the government controlled the increase of prices, throughout the four stages of liberalisation, by setting a maximum gross profit, the companies could not increase the prices above these maximum limits in order to recover the expenses with the labour force that increased. Thus, these increases in the salaries made the companies resort to one of the following solutions:
To increase the selling prices;
To reduce the number of the work places; The impossibility to resort to the former solution made some companies use the latter, which had as effect unemployment, and others to use both, which had the same effect. The intervention of the trade unions on the work market in Romania reduced the employment because the value of the wages was set by strikes and the cease of work and not by negotiations that were based on the correlation between productivitywages. The coming into force of the minimum wage Law can also be considered a cause for reducing unemployment. Thus, the minimum wage, having the role of social protection, expresses only the lower limit beneath which no wage can be set, neither in the collective negotiations between the employers’ association and the trade unions, nor in the individual relations. The effect on the companies was the following: by setting a minimum wage, the companies were forced to resort to two solutions:
They no longer hired labour force- because the companies could not hire labour force that produced under the wages they had to pay- the minimum wage.
The inefficient demand- because of the consumers’ low purchasing power- led to reducing the production. As a consequence, some companies could not offer the minimum wages (because of the lack of turnover of goods) for all the employees and resorted to dismissals. Resorting to the two solutions led to the increase of the involuntary unemployment. The impact on the labour force affected especially those that were looking for a work place and were offered the minimum wage in the circumstances in which they considered that their work was more valuable. They preferred not to hire because they could get the same sum of money without any effort. The result was the voluntary unemployment. To the above mentioned causes of unemployment mentioned above we can add others, such as:
The acquisition of new technologies in the case of certain companies eliminates a certain part of the labour force from the productive process;
The inefficient management by the Public Property Fund (in 2000, by the GR no. 296/30 December 2000, the phrase “Public Property Fund” was replaced by the phrase “The Authority for the Privatisation and Administration of the State’s Participation”, the present ASAR- The Authority for the State Assets Recovery) of the companies which are in the state’s property. 46
We can conclude that, in Romania, the unemployment is the result of several influences: physicalbiological, psychological, political-economical and juridical-legislative, which are interlinked and interdependent, generating the specific types of unemployment that are fount in the economy of our country.
Bibliography 1. 2. 3. 4. 5. 6. 7.
Ionel, Marian - The Occupation and Unemployment in the Transition Period in the Market Economy in Romania, PhD Thesis, The Academy of Economic Sciences, Bucharest,2005 Suciu, M. (coordonator) - Problems of Human Resources forming and occupation, Oscar Print Publishing House, Bucharest, 2000, Ungureanu, Emilia - Labor Market in European Context, Second Edition, The Didactical and Pedagogical Publishing House, Bucharest, 2005; *** - Romania’s developing strategy on average term, Bucharest, July 2000, www.cdep.ro; *** - Romania’s Statistics Directory, 2005, www.insse.ro; *** - BNR’s Annual Report 2000-2005, www.bnro.ro. *** - http://article2007\material\evolution_rate_unemployment_1991_2006.html.
47
FISCAL POLICY REFORM IN ROMANIA Bercea Ioan University of Oradea, Faculty of Economic Sciences Abstract: The scientific development of this article will follow the general characterization of the fiscal policy reform, determined by the transition to the market economy, by presenting the positive aspects as well as the negative ones in the period before and after Romania’s adhesion to the European Union. Key-words: fiscal policy, reform, fiscal facilities Fiscal policy offer to the state the power to influence the activity and the contributions of the tax-payers. This way, on a macro-economical level, it leads the micro-economical, individual objectives towards the purpose of reaching the global economic and social objectives of the state. Basically, it is about the “undeclared orientation” in a certain direction, according to the object followed at central level, the “free initiative” proposed by capitalism. Any decision of fiscal policy that produces the modification of the fiscal system one way or another has a quick influence upon the behavior of the rational tax-payers, individuals or corporate bodies, upon the economic decisions of them, that, if linked, will lead to the modification of the general economic life. This modification can be the sought one or it can be a different one, if we do not take into consideration all the un-fiscal factors that influence the behavior of the economic agents.8 As stated by Rodica Bălănescu and her collaborators in their paper “The Tax system” “the objectives of the fiscal reform are numerous and of course, not all the existent shortcomings can be put aside. This is also due to the fact that we cannot evaluate exactly the internal and external connections of our future economic evolution, as well as the effects of the introduction the market mechanism, especially if the elements and the institutions of the old leading administrative mechanism will persist and slowly disappear. Referring to the main objectives in basing the fiscal policy, the same author mentioned a great truth: “while the advanced market economies can afford a fine harmonization of the tax mechanism with their adjustment with the economic policy, we are in the opposite situation, the main motivation of the tax reform being: ensuring the compatibility of the tax system with the market mechanism (which produces the cancellation of direct payments specific to the centralized economy); ensuring, through the tax system the free circulation of capital, products and services; ensuring a balanced relationship between the GDP and fiscal task, to favor the accumulation and the aggregate demand”. 9 Analyzing the fiscal policies elaborated and applied in Romania, in the transition period that started in 1990 (and we consider it is still unfinished) we can observe that they have been characterized by a series of realizations (such as the modernization of the fiscal system) often shadowed by certain measures with negative effects (the instability of the legislative framework), resulted from the copying of some policies applied in other countries without adapting them to the local realities, in our wish to fiscal alignment to the European standards, without fulfilling the same objectives in the other plans of the economic life. The fiscal reform was characterized by a lot of incoherence, instability, modifications and continuous coming-backs; this caused a tough, rich legislation, through politics and infantile experiences in the field of fiscal facilities, inexplicable from the economic point of view and the public interest, probably judged according to the strictly personal interests of the governants. Trying to put down an evidence of the main realizations in the fiscal field between 1990-2007, they would be the following: - The introduction of VAT, in 1992 that aimed at improving the fiscal system and its alignment to the international standards, even if the Romanian variant of this tax was characterized by certain derogations from the practice of the other countries; Bălănescu Rodica, Bâlăşescu F., Moldovan Elena – Tax System (in orig. Sistemul de impozite), Economic Publishing House, Bucharest 1994, pag. 25-26 9 Idem 8
48
-
The reform of the social insurances system, that was realized together with the of Law 19 from 2000, as an objective necessity imposed by the socio-economical conditions of the period; - The introduction of the new tax system for the small companies in the year 2001, whose effect was the development of this category of economic agents; - The legiferation in 2001 of the introduction “de facto” of the fiscal record in order to fight embezzlement and increase the fiscal efficiency. Also, the implementation of the Fiscal Code, starting January 1st 2004, represents a real realization of the contemporary fiscal policy due to the realization under a unitary form of the fiscal legislation of Romania and the improvements brought to fiscality, such as the introduction of the reduced VAT amount, regrouping of the excises and the introduction of a more transparent way of administrating them and a more equitable taxation. In the same time, the implementation of the Fiscal Procedure Code and “the ethic code of the fiscal inspector” represents the main advantage of the grouping of legal regulations regarding the rights and obligation of the parts in the fiscal juridical relationships regarding the administration of taxes established by the Fiscal Code, an important field of fiscality in the present conditions, that, missing a proper fiscal consciousness of the tax payers’, call for an operational and effective system for collection and fiscal control. This aspect is very important because the fiscal discipline of the tax payers is, to a certain extent, a consequence of the public clerks that are part of the fiscal control and fiscal administration body. After Romania’s adhesion to the European Union, it continued the implementation of some measures that aim at the harmonization of the internal Romanian legislation with the one of the European Union. For example, in the field on the income tax, the EU Directives have been adopted in the Fiscal Code, Title II, regarding: the imposing of the fusions, divisions and transfers of actives and exchanges of mobiliary values between companies of different member states; the common fiscal regime that applies to mothercompanies and their branches from various member states; the imposing of the savings’ incomes; the common tax system applicable to the payment of interests and debts between associated companies from different member states; the reciprocal assistance between the competent authorities of member states in the field of direct taxation and imposing of insurance premiums. For the purpose of a more efficient administration of the income tax, a law was adopted for a 1% tax, as an anticipated payment, calculated on the income from transactions with title deeds and operations from buying & selling of foreign currency based on a contract and the establishment of a tax on the net annual income. Also, for the boost of the savings in a collective system for the locative system, there is a deduction from the taxable incomes from salaries of the basic expenses pertaining to this saving, limited to an amount of 300 Lei / year / person. Applied from January 2008, the taxable basis of the income tax was extended by including the incomes from agricultural activities, from the valorization of agricultural products after harvesting, in natural state, from the fields, in the category of taxable incomes. In the field of local taxes and other taxes, the legislative modifications aimed mainly at: the inclusion in the taxes for buildings owed by corporate bodies of the modernization works; the actualization of the land tax owed by individuals and corporate bodies, that is to adapt them to the real public expense performed by the local authorities; the offering of facilities regarding the tax on buildings and the land tax is over 500.000 Euro, for stimulating the investments and creating new jobs; creating two terms of payment instead of four, for a more efficient administration of local taxes and other taxes; the delimitation of the field of application of special taxes, meaning that they cannot be put in the responsibility of concessionaries of public utilities (natural gas, water, electricity) for the existence in the public/private field of the administrative – territorial units of networks of water, transportation and electricity and gas distribution. Another important measure negociated with the European Comission is the establishment of a new dispensation in the case of the Value Added Tax to the level of 35.000 Euro business figure (the limit used in 2006 was of approximately 57.000 Euro). Fiscal policy was characterized by some contradictory measures, linked with the evolution of the national economy, such as: - Setting the excises to a level similar to the one in the developed countries, without the real tax source (the income) registering the same tendencies; 49
-
The progressive reduction of customs taxes as a consequence of some international agreements in view of the stimulation of the external trade, that facilitated only the increase of the imports and undermined the internal production; - The early introduction, unjustified by the state of the economy of the tax on global income in the year 2001, which determined the increase of fiscal task supported by individuals. Starting with the pre-adhesion period, we can observe a certain improvement of the fiscal policy, transposed in a greater stability and more perseverance in following some objectives on longer terms then in the previous period, having as effect the increase of the fiscal incomes cashed by the state (see table 1). Nr.
Explanation
Currency
Years 2002
2003
2004
2005
2006
1
Direct incomes, of which
Mil. Lei
17.82
23.47
31.07
94.55
39717.40
2
Profit tax
Mil. Lei
3.02
4.42
6.48
6.07
7446
3
Income tax (central-local)
Mil. Lei
4.13
5.32
7.10
5.02
4954.40
4
Taxes
Mil. Lei
0.96
1.18
1.39
1.46
27046.00
5
Health Insurances Company (HIC)
Mil. Lei
9.71
12.55
16.09
82.0
271.00
6
Indirect incomes, of which:
Mil. Lei
14.63
20.96
26.13
36.78
28.87
7
VAT and excises:
Mil. Lei
13.69
19.67
24.51
35.11
27.04
8
Customs taxes
Mil. Lei
0.94
1.29
1.62
1.67
1.83
9
Total fiscal incomes
Mil. Lei
32.45
44.43
57.21
131.33
39746.27
10
The weight of the profit tax / total fiscal incomes
%
9.30
9.94
11.33
4.62
18.74
11
The weight of the income tax / total fiscal incomes
%
12.73
11.99
12.42
3.82
12.46
12
The weight of taxes / total fiscal incomes
%
2.95
2.65
2.44
1.11
68.04
13
The weight of HIC / total fiscal incomes
%
29.93
28.24
28.12
62.44
0.68
14
VAT weight and excises / total incomes
%
42.20
44.28
42.85
26.73
0.07
15
The weight of customs taxes / total fiscal incomes
%
2.88
2.90
2.84
1.28
0.01
16
The weight of direct incomes / total fiscal incomes
%
54.92
52.82
54.31
71.99
99.92
17
The weight of the indirect incomes / total fiscal incomes
%
45.08
47.18
45.69
28.01
0.08
Table nr. 1 – The structure of fiscal incomes of the general consolidated budget in Romania Source: data taken from the Statistic Yearbook of Romania, year 2006 and the Annual Report of the Nation Bank of Romania, year 2006. 50
In the year 2002, the total fiscal incomes were formed of 9.30% profit tax, 12/73% income tax, 2.95% taxes and taxes for the population, 29.93% the contribution to the social insurances (as direct taxes that represent 54,92% of fiscal incomes) and 42.20% VAT and excises and 2.90% customs taxes (as indirect taxes that represent 45.08% of fiscal incomes). In the year 2003 the total fiscal incomes were structured as follows: 9.94% profit tax, 11.99% income tax, 2.65% taxes and taxes for the population, 28.24% the contribution to the social insurances (as direct taxes that represent 52,82% of fiscal incomes) and 44.28% VAT and excises and 2.90% customs taxes (as indirect taxes that represent 45.08% of fiscal incomes). In the year 2004 the total fiscal incomes were formed of 11.33% profit tax, 12.42% income tax, 2.44% taxes and taxes for the population, 28.12% the contribution to the social insurances (as direct taxes that represent 54,31% of fiscal incomes) and 42.85% VAT and excises and 2.84% customs taxes (as indirect taxes that represent 45.69% of fiscal incomes). In the year 2005, the fiscal incomes were formed of 4.62% profit tax, 3.82% income tax, 1.11% taxes and taxes for the population, 62.44% the contribution to the social insurances (as direct taxes that represent 71.99% of fiscal incomes) and 26.73% VAT and excises and 1.28% customs taxes (as indirect taxes that represent 28.01% of fiscal incomes). In the year 2006, the total fiscal incomes were formed of 18.74% profit tax, 12.46% income tax, 68.04% taxes and taxes for the population, 0.98% the contribution to the social insurances (as direct taxes that represent 99.92% of fiscal incomes) and 0.07% VAT and excises and 0.01% customs taxes (as indirect taxes that represent 0.08% of fiscal incomes). We consider that this increase of public incomes (due booth to the economic growth and the increase of the fiscal pressure) can be put good use in the following years for the increase of the budget allowances for certain fields such as medicine, education, environment, infrastructure and others. In conclusion, we can say that the evolution of the fiscal policy in the past few years has not always been correlated with the conditions and the evolution of the national economy that to a misinterpretation of some purposes or benefic fiscal policies. Or in other case, they didn’t even materialize, being cancelled by some contrary measures of economic policies. In other words, fiscality tends to align faster and easier to international standards than the national economy. In the end, we consider that the following aspects are relevant and useful for the fiscal contemporary policy of Romania: - The necessity of a strong repression of underground economy, especially in what regards corruption, criminality or the fight against fiscal fraud; - Paying a special attention to the new economic tendencies, such as the expansion of the electronic commerce with the three parts: the trade between companies, the trade of services and intangible goods (has the most spectacular evolution due to the Internet), the electronic trade of physical goods; this one takes place in conditions that facilitate the avoidance of fiscal laws, it products overpass the boundaries without passing through the customs, thus representing a real risk of dodging. Another potential element that might facilitate embezzlement is represented by the development of the inter-temporary trade, respectively the present trading of future goods. - Without real chances of being applicable in practical life, from a theoretical point of view the introduction of the tax on wealth growth might be of interest, whose taxable substance should be given by the significant growth of he wealth of some people or social categories in a certain period of time; such a measure could be beneficent from a financial point of view, for the increase of public funds and the reduction of budget deficit, but also moral, considering the growth of the wealth (a little bit bothered by the taxation) of some individuals in the above-mentioned transitional period.
51
Bibliography: 1. 2. 3. 4.
Corduneanu Carmen – The fiscal system in the science of finances (in original Sistemul fiscal în ştiinţa finanţelor) CODECS Publishing House, Bucharest, 1998. Moşteanu, Tatiana, Dinu Sorin – The reform of the fiscal system in Romania (in original Reforma sistemului fiscal îin România), Didacti and Pedagogic Publishing House, Bucharest, 1999. Moşteanu Tatiana – Fiscal and monetary policies for the economic reform and re-launching the economic growth) Economic Publishing House, 2003 Văcărel I. – “Fiscal and budget policies in Romania 1990-2000” (in original Politici fiscale şi bugetare în România 1990-2000), Expert Publishing House Bucharest 2001.
52
THEORETICAL-METHODOLOGICAL CONSIDERATIONS REGARDING THE ROMANIAN ENTERPRISE’S RESULTS AND PERFORMANCES Boncea Amelia Georgiana University “ Constantin Brancusi” Of Tg-Jiu, Faculty Of Sciences Economic, Tg-Jiu City, Gorj County, street Susita, nr.9, e-mail:
[email protected], Tel:0723156732 Rabontu Cecilia Irina University “ Constantin Brancusi” Of Tg-Jiu, Faculty Of Sciences Economic, Tg-Jiu City, Gorj County, Street Olari, Bl. 12, Sc. 1, Ap.2, e-mail:
[email protected], tel:0743423320 ABSTRACT: Romania has been passed from the centralize economy to the free market economy. One of the crucial reason of this process of transition has been the lack of performance in the socialist economic system . The introduction and certification of the quality management system has important benefits for companies, respectively: the awareness of the improved quality, an increased trasparency of the division of the responabilities inside the company, leads to a higher involvement of the employees, to an internal efficiency, to the improvement of the company’s image, to the attraction of new clients and the attainment of their trust, facillitates the participation to auctions, the simplification of the export procedures and last, but not the least, leads to improvement of the company’s position on the market. Keyword: enterprise’s results, performances, free market economy Romania has transited from the centralized planning economy to the free market economy. One of the crucial reasons of this process of transition has been the lack of performance of the socialist economic system. After one and a half decade of transition, Romania’s economy has been internationally recognized as being a functional market economy, in continual perfection. Romania’s fundamental socio-economic transformations are not questioned. Even though, from a structural and functional point of view, there are a few problems, a few questions that the Romanian economical science didn’t equivocally answer. First and foremost, if the reorganization and the modernization of the enterprises from the Romanian economy went, as rhythm and sense, in accordance with the tendencies manifested in the developed countries of world? It is useless to find who’s responsible for the existence or non-existence of the convergence between the worldwide tendencies and the tendencies of the Romanian economy. It is important to prove if the orientation was right or wrong and to be able to action in order to find the road towards normalization. Secondly, if the Romanian enterprises’ results and performances, after 15 years of structural transformations, are superior to the 90’s, they equaled and they exceeded those performances? The search of the real causes that lead to the Romanian enterprises’ modest performances could better fundament the national strategies in this domain. Thirdly, if the decentralization of the economical activity and its government started to produce benefic effects for the entire society? It is not only about the economical effects, like the business plan and the profits, but also about the stability/instability of the prices, of the purchase power and of the population’s prosperity. Fourthly, if Romania’s pre-adhesion and adhesion to the European Union, has minimize the results and the performances of the Romanian enterprises? Fifth of all, , which is the stadium of the results and performances of the enterprises’ from the Romanian economy, reported to other European states which adhered and are about to adhere to the European Union and what should an efficient government do in order to enrich them? 53
The introduction and certification of the quality management system has important benefits for companies, respectively: the awareness of the improved quality, an increased trasparency of the division of the responabilities inside the company, leads to a higher involvement of the employees, to an internal efficiency, to the improvement of the company’s image, to the attraction of new clients and the attainment of their trust, facillitates the participation to auctions, the simplification of the export procedures and last, but not the least, leads to improvement of the company’s position on the market. The management systems’ certification (of the ISO 9000 quality, of the environment – ISO 14000, HACCP, OHSAS 18001, SA 8000, the information’s security etc.) and the certification of the products represents determinant factors for the increase of the competitivity of the Romanian organisations and companies, in free circulation of the goods/services, both on the Romanian market and on the international markets, especially the one from the European Union. If the introduction of the quality management system was perceived as a “passport” necessary for the companies in the commercialization of the products and services, destined to export, together with the closing of the process of adhesion and integration in the European structures, the process of taking over of European standards and implementation should be in the center of the Romanian companies’ major concerns. In other words, the “passport” becomes an “identification card” necessary for the companies in order to be able to exist at “home”, in Europe and in the world, in order to correspond to the global market’s exactingnesses [1]. The introduction of the quality management still remains a major challenge for the vast majority of the IMMs as long as 78% of the IMMs, according to a survey made by the National Agency for IMMs, declare that they did not introduce this system. The results of the survey show us that the quality management system has been introduced at 12% of IMMs. At just 7,6% from the interviewed companies, this process is in progress. This situation is even more concerning taking into consideration the fact that the EU integration process’ time sheet shows us a more rapid approach to the adhesion moment. None of the sectors is in a more advanced situation, even though the analysis emphasizes some important differences. The IMMs from agriculture just start to be preoccupied by this problem, taking into consideration the fact that none of the interviewed companies had those certificates of the quality management system, in turn 29,7% of them were in process of introducing the quality management system. The IMMs from the commerce, hotels, transports and communications succeed, to a short degree, in lining up to those standards. Their successes register under the medium hefts, on the sector’s ensemble. In the best situation, identified with the occasion of the survey, are the IMMs from constructions which, in proportion of 22,9%, had those certifications; hereupon is added an important heft of 14,1 % of the enterprises in process of introduction. The results of survey emphasize the fact that only 18,6% of the IMMs from the industry have obtained the certifications for the introduction of the quality management system, resulting from its nature, it constitutes itself in a signal of alarm regarding the competitivity of those 73,1% companies which succeeded in this respect, in the close context of the integration on the Internal Market. The middle sized companies are in the vanguard at the introduction of the quality management system, because 33,2%, of the interviewed ones, had already introduced it and 18, 5% are in the certification procedure. The worst situation is registered in the micro-companies category, were 80,5% of them didn’t take any steps in order to introduce the quality management. Then again, the results of the survey show that the direct correlation between the size of factory and the success in the introduction of the quality management system is respected. Taking into consideration the fact that the management and the quality assurance will became sine-qua-non conditions for the operation on the Internal Market, in the integration’s perspective, it clearly comes into evidence that the micro-companies from the industry remain the most vulnerable in what concerns the disappearance from the market. Even of those 12% IMMs which succeeded the introduction of the quality management system, have obtained these certifications in majority at a standard category and are left far behind at the environment management category. Thus, the vast majory of the certifications (75,3%) have been obtained at standard category (respectively ISO 9000), while only 4,7% of the IMMs obtained certifications from the
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environment management category. To note that a high enough number of respondents (12,4%) didn’t know how to respond to this more technical question. The IMMs, no matter which is the domain of activity, had obtained, to a small extent, certifications from the environment management category (ISO 14000, only the active companies in the commerce, in a proportion of 9,5%, followed by the construction sector with a heft of 5,5%). The IMMs which succeed in introducing the quality management system, no matter which is the domain of activity, are situated in the general characteristic mentioned overall, obtaining certifications from the standard category with range which varies from 100% for IMMs from transports and telecommunications to 75,1% for the industry sector and, respectively, 71,9% for those actives in the Other Services sector. By size categories of the IMMs, there are no significant differences as compared to the general characteristics previously emphasize. The dates also show the fact that there is no direct correlation between the size of enterprise , the domains of activity and the degree of introduction of some certifications from the superior category, respectively the one of the environment management. Thus, the small enterprises have reported, in a percent of 6,9%, the introduction of the ISO 14000, while only 4, 3% of the middle sized enterprises succeeded this, the same with the micro-enterprises. To be honest, in the situation of the interviewed from the micro-enterprises category, a high percent (13,6%) didn’t know how to make the difference or didn’t answer. This fact proves that all IMMs, irrespective of the size class, are overdue in obtaining these certifications, either because they aren’t well informed, or they are still adverse in what concerns the contractual approach in the business development. The middle sized enterprises have bigger chances to obtain a sub-command, as compared to the small sized enterprises or the micro-enterprises. Even though, the general note remains the lack of access. The overwhelming heft, which varies from 92,7%, in the case of the micro-enterprises, to 85,6% for the middle ones, comes to sustain the previous statement of the IMMs that didn’t obtain the position of sub-contractor in a public acquisition. The very low participation of the IMMs on the international market.10% of the IMMs has participated on the international market as importer, only 6% as exporter and, respectively, 6,9% as sub-contractor of some foreign companies. On this general background of the low participation, nevertheless, the IMMs from the industry detach themselves in the front of participation on the international markets, both as importers and exporters. Another characteristic is that the number of the IMMs from the Industry which participate on the international market as exporters (17,6%) slightly surpasses the number of the ones who participated as importers (16,7%). As expected, the analysis on sectors brings upon important differences. Another particularity is recorded among the IMMs from transports and telecommunications (14,1%), followed by the ones from constructions and other services which, in percents of 8,5% and, respectively, 11,4%, present superior hefts to the overall mean participating on the international markets as sub-contractors of some foreign companies, phenomenon known as “outsourcing”. The participation on the international markets looked upon from the perspective of the IMMs size category, show a cleat between micro-enterprises and the ones from the small and, especially, the middle categories. Thus, the fact that the micro-enterprises from Romania are not involved, ready and, in the long run, capable of capitalizing the advantages of the economical globalization, remaining preponderantly oriented towards the Romanian trade and services’ market is emphasized. We note the correlation between the size category and the degree of participation on the international market. Thus, only 4,5% of the micro-enterprises had been put in the position of being an exporter, while the heft grows up to 14,1% when it comes to small size enterprises and to 27,9% when it comes to the middle sized ones. The same tendency is also observed by analyzing the enterprises’ participation as importers by size categories. Taking into consideration the character of question with multiple variants of response, we can also obtain an indication with reference to the fact that very few of the IMMs were in both situations of participant on the international market, as importer and, respectively, exporter, thing that proves a stratification of the market, respectively, the orientation of the bigger companies towards the externalization of some activities to micro-enterprises and small enterprises[2]. Among the most frequent obstacles put in front of the exporters, were mentioned the lack of information about the external markets, to which was added the lack of capital in order to action on the external markets and financing for the activities destined to export. To all these observations we must add the fact 55
that an important number of companies never met obstacles which would make impossible their participation on the international markets. In the activity sectors’ structure, we can observe that the lack of information, in what concerns the external markets, constitutes a fundamental obstacle for the firms from the commercial intermediation, while the lack of capital and financing was the most important obstacle for the firms from Transports and communications. The lack of qualified expertise and competences was an untraceable barrier for the IMMs from Constructions. In the case of the firms from the industry, the causes of the more difficult access on the external markets were multiple[3]. Irrespective of the size category, the very multiple character of the causes that lead to the reduced participation of the Romanian IMMs on the international markets gets remarked. More than that, in 2002 Romania signed, together with the other candidate countries, at that point, The Declaration from Maribor, in which it engages itself to harmonize the competitivity sustaining politics of the autochthon companies with the stipulations of the Lisbon Chart. As an expression of this international engagements assumed by Romania, the directions and the measures which define the National Strategy of Sustaining and Promotion of the IMMs, for the horizon 2004-2008, reflect the small companies’ internal needs, and also respond to the preoccupations at an international level.
Bibliography: 1. 2. 3.
Andronic, B.C., Performanta firmei, Editura Polirom, Iasi, 2000. Borza, A.,Managementul intreprinderilor mici si mijlocii, Presa Universitara Clujeana, ClujNapoca, 2002. Russu, C., Managementul intreprinderilor mici si mijlocii, Editura Expert, Bucuresti, 1996.
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THE REACTIONS OF TERTIARY EDUCATION TO THE GLOBAL CHANGES Bratu Anca Phone: 0040.723.224.276,
[email protected] Cornescu Viorel Phone: 0040.722.560.850.,
[email protected] Druică Elena Phone: 0040.723.309.350,
[email protected] University of Bucharest, Faculty of Business and Administration Tertiary education exercises a direct influence on national productivity which largely determines living standards. Tertiary education institutions can play a critical role in offering appropriate education, training and research programs which in turn support knowledge-driven economic growth strategies. They have some essential functions such as: the capacity to train a qualified and adaptable labor force, the capacity to generate new knowledge, and the capacity to access existing stores of global knowledge and adapt it to local use. To fulfill these functions it is necessary to respond to changing education and training needs, to adapt to shifting tertiary education landscape and to adopt more flexible modes of organization and operation. Key Words: knowledge, information, tertiary education, university
Needs for changing in education and training Nowadays an important role in economic development, as it is widely recognized, is played by the ability of a country to acquire and apply knowledge. Knowledge-driven economies experience a stronger demand for higher skills in the workforce. Studies on the evolution of labor markets have evidenced the growing proportion of employees with tertiary level qualifications and the rising rates of return on tertiary education. Another dimension for change is the growing importance of continuing education in order to update one’s capacities and qualifications on a regular basis because of the short “shelf life” of knowledge, skills and occupations [8]. At the post-secondary level, for instance, the traditional approach of studying for a discrete and finite period of time to acquire a first degree or to complete graduate education before moving on to professional life is being progressively replaced by practices of lifelong education. Graduates will be increasingly expected to return periodically as adults to one or more tertiary education institutions to acquire, learn to use and relearn the knowledge and skills needed throughout their professional life. This phenomenon goes beyond the narrow notion of “second chance” for out of-school young adults who did not have the opportunity to complete much formal study. It has more to do with the updating and upgrading of learning required to refresh and enhance one’s qualifications to keep pace with innovations in products and services. An important consequence of the acceleration of scientific and technological progress is the diminished emphasis in tertiary education programs on the learning of facts and basic data in itself. There is a growing importance of what could be called methodological knowledge and skills, (i.e. the ability to learn in an autonomous manner). Today, in many disciplines, factual knowledge taught in the first year of university study may become obsolete before graduation. The learning process now needs to be increasingly based on the capacity to find, access and apply knowledge to problem-solving. In this new paradigm, where learning to learn, learning to transform information into new knowledge, and learning to transfer new knowledge into applications is more important than memorizing specific information, primacy is given to information seeking, analysis, the ability to reason, and problem-solving. In addition, competencies such as learning to work in teams, peer teaching, creativity, resourcefulness and the ability to adjust to change are also among the new skills which employers value in the knowledge economy. 57
A last dimension that we mention here refers to the growing attractiveness of degrees and credentials with international recognition. In a global economy where local firms produce for overseas markets and compete with foreign firms in their own domestic markets, there is a rising demand for internationally recognized qualifications, especially in management related fields. Many entrepreneurial university leaders have been quick to identify and capitalize on this trend, as evidenced by the multiplication and expansion of MBA-type programs throughout the world.
Diversification of the tertiary education system The appearance of a variety of new institutions alongside the traditional universities, such as short duration technical institutes and community colleges, distance education centers and open universities have created new opportunities to meet the growing social demand. A second wave of institutional diversification is now discernible, with the emergence of new forms of competition in tertiary education that transcend the traditional conceptual, institutional and geographical boundaries among organizations, segments, sectors and countries. The main new actors and institutions emerging in the “borderless” tertiary education market are: virtual universities, franchise universities, corporate universities, media companies, libraries, museums, and education brokers. On the heels of these new actors come software producers, publishers, entertainment firms and others seeking to tap the potential of an emerging international market in tertiary education [1]. The decreased importance of physical distance means that the best universities in any country can decide to open a branch anywhere in the world or to reach out across borders using the Internet or satellite communication links, effectively competing with any national university on its own territory. Distance education is sometimes delivered by a specialized institution set up by an alliance of universities. Franchise universities are another form of competition. In many parts of the world, but predominantly in South and Southeast Asia and the formerly socialist countries of Eastern Europe, there has been a proliferation of overseas “validated courses” offered by franchise institutions. The cost of attending these franchise institutions is usually one-fourth to one-third what it would cost to enroll in the mother institution. Corporate universities constitute a third category of new competitors with which traditional universities must increasingly reckon, especially in the area of continuing education. It is estimated that there are at approximately 1,600 institutions in the world functioning today as corporate universities, up from 400 ten years ago. Corporate universities operate with their own network of physical campuses, as a virtual university, or through an alliance with existing tertiary education institutions. Experts are predicting that, by the year 2010, there will be more corporate universities than traditional campus-based universities in the world, and an increasing proportion of them will be serving smaller companies rather than corporate giants. Media enterprises, publishing companies, libraries and museums and secondary schools have also extended their reach to the world of tertiary education, taking fully advantage of the new information and communication technologies. Although this new form of competition is more difficult to track, it is becoming significant at least in the US and the UK. Examples involve publishing companies providing services linked to curriculum design and the preparation of educational materials for online delivery, or museums and libraries offering continuing education courses. The last form of non-traditional competition comes from the new academic brokers, virtual entrepreneurs, often web-based, who specialize in bringing together suppliers and consumers of educational services in many different areas. This kind of companies build, lease and manage campuses, produce multimedia educational software, and provide guidance to serve the training needs of corporate clients world wide. Dozens of web-based companies act as clearinghouses between schools and prospective students, offering information about academic and financial resources.
New changes in structures and mode of operation Faced with new training needs and new competitive challenges, many universities have undertaken important transformations in governance, organizational structure and modes of operation. The main purpose is to increase institutional flexibility and to accelerate the adaptive capacity of tertiary education institutions and programs. Many changes are brought about or facilitated by the application of new technologies. These can be used as: a resource tool (i.e. an electronic library), a pedagogical tool to 58
transform the learning process, a communication tool supporting new modes of information sharing, an administrative tool to improve the efficiency and cost effectiveness of academic management processes. Such innovations in the way tertiary education institutions are structured and operate create in turn new challenges concerning the nature of the education experience, new dimensions of academic management, new patterns of governance and financing, new quality assurance requirements, and issues of intellectual property rights. The necessary reforms refer to the:
program offerings,
academic structure and organization,
pedagogical processes and modes of delivery,
physical infrastructure,
the teaching profession. The evolution towards lifelong learning means that young high school graduates will gradually cease to be the primary clientele of universities. As a result, universities must organize themselves to accommodate the learning and training needs of a very diverse clientele: working students, mature students, stay-at-home students, traveling students, part-time students, day students, night students, weekend students, etc. One can expect a significant change in the demographic shape of tertiary education institutions, with more students pursuing a second or third degree or a professional degree, and a larger share of students, young and mature, enrolled in short term continuing education activities [8]. As tertiary education systems move from elite systems to mass systems, from an emphasis on teaching to a focus on learning, students become more important actors as primary clients, consumers and learners. This requires the establishment of appropriate organizational and management mechanisms to handle their new roles and the new challenges that they represent. Tertiary education institutions need to develop, in particular, capacities to conduct beneficiary assessments, to inform and guide students concerning career choices, to accommodate the needs of students with special difficulties, and to maintain linkages with graduates as resources for student placement and fund-raising. Effective labor market feedback mechanisms, such as regular consultations with employers and alumni, are indispensable for the purpose of adjusting curricula to meet the changing needs of industry. There is no better linkage than when a new tertiary education institution is fully integrated into a regional development strategy. In terms of organizational structure, there is a need to articulate traditional disciplines differently as a result of the emergence of new scientific and technological fields. The new patterns of knowledge creation do not imply only a reconfiguration of departments into a different institutional map. Is more important the reorganization of research and training around the search for solutions to complex problems, rather than the analytical practices of traditional academic disciplines. This evolution is leading to the emergence of what experts call “transdisciplinarity”, with distinct theoretical structures and research methods [5]. This trend transcends hard science, and touches social sciences, as well. The introduction of new pedagogical approaches supported by alternative delivery mechanisms has just begun to revolutionize the way teaching and learning can occur in tertiary education. The possibility of concurrent use of multimedia, computers and the Internet can allow for meaningfully more active and interactive learning experiences, such as peer tutoring and self directed learning, experiential and real world learning, resource-based and problem-based learning, reflective practice and critical self-awareness, or any combination. Traditional frontal teaching can be replaced by or associated with asynchronous teaching in the form of online classes that can be either scheduled or self-paced. A new pedagogical model involves in particular an active engagement of the students rather than a passive reception of information, opportunities to apply new knowledge to real life situations, the ability to represent concepts and knowledge in multiple ways rather than just with text, learning as a collaborative activity rather than an individual act, and an emphasis on learning processes rather than memorization of information [7]. Anyway, modern technology is not a panacea. To create a more active and interactive learning environment, faculty must have a clear vision as to the purpose of the new technologies and the most effective way of integrating them in program design and delivery (experts call “instructional integration”). Then they must educate themselves in the use of the new pedagogical channels and supports. Quality online education is best achieved with relatively small class sizes, not to exceed 30 students. Moreover, it does not seem desirable to teach an entire undergraduate degree program only with online classes if 59
students are expected to learn to think critically and interact socially in preparation for professional life. Combining online and regular classroom courses gives students more opportunity for human interaction and development of the social aspects of learning through direct communication, debate, discussion, and consensus building. These pedagogical requirements apply also to the design and delivery of distance education programs which need to match learning objectives and appropriate technology support. The teaching profession is also evolving as a result of transformations in academic and pedagogical approaches. With a proper integration of technology in the curriculum, teachers can move away from their traditional role as one way instructors toward becoming facilitators of learning. The introduction of multimedia and computer-based teaching is indeed leading toward the separation of the traditional functions of professors: course design, selection of textbooks and readings, course delivery, and assessment. The need for tertiary education institutions to be able to respond rapidly to changing labor market signals and to adjust rapidly to technological change may also require more flexible arrangements for the deployment of academic staff and evaluation of its performance. Under a more radical scenario, the multiplication of online programs and courses could induce tertiary education institutions to contract independent professors not affiliated to any specific college or university to prepare courses designed for a particular person or a group of people.
Conclusion While it is not entirely sure that we will witness to the demise of the traditional pedagogical model, what is certain is that schools and universities are called upon to change drastically under the pressure of increased competition. But the successful integration of technology into the learning process will require a cautious approach. Despite the many advantages that modern technologies can offer, their effectiveness depends on a clear strategic vision of their role in support of a new pedagogical project. It is important to define first the new pedagogical approach that a school or a university wants to implement and then to look for the most appropriate technology to provide that pedagogy.
References 1.
2. 3. 4. 5. 6. 7. 8.
Bennell, Paul, and Terry Pearce. 1998, The Internationalization of Higher Education: Exporting Education to Developing and Transitional Economies. IDS Working Paper 75. Institute of Development Studies, University of Sussex,U.K. Burbules, N.C. (2000), Universities in transition: The promise and the challenge of new technologies, Teachers College Record, vol. 102 (2), p. 271-293 Castells, M. (2000), The rise of the network society 2nd ed., Blackwell Publishers Ltd Duderstadt J. J. (7 march 1997), The future of the university in an era of change, http://milproj.ummu.umich.edu/publications/change/download/change.pdf Gibbons, M., Limoges, C., Nowotny, H., Schwartzman, S., Scott, P., and M, Trow (1994) The New Production of Knowledge: Science and Research in Contemporary Societies. London: Sage. Hanna, D (1998), Higher Education in an Era of Digital Competition: Emerging Organizational Models, „Journal of Asynchronous Learning Networks (JALN)”, Vol. 2, No. 1, p. 66-95 Kozma, R. and J. Johnson (1991). The technological revolution comes to the classroom. Change. January/February 1991 Wagner, A. (1999). “Lifelong Learning in the University: a New Imperative?”, in Hirsch, W. and L. Weber, eds. 1999. Challenges Facing Higher Education at the Millenium. American Council on Education / Oryx Press, Phoenix, pp. 134-152
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FACTS ABOUT DETERMINANTS OF ECONOMIC GROWTH Cătăneţ Dan Nicolae Academy of Economies Studies from Bucharest, Faculty: Economy, 60A Siriului St., Sector 1, Bucharest - 014354, Romania ,
[email protected], 0747 226 746 Cătăneţ Alina Media University, the Faculty of Business Management, 7 Elena Caragiani St., bloc 2G, scara 4, ap. 43, sector 1, Bucharest, Romania,
[email protected], 0722 178 336 During 1961-2001some economies has raised their GDP for more than 10 times, and others have decreased their per capita GDP to a half from their initial level in 1961. Using the general framework developed by Barro on a panel date for more than 150 countries with observations computed 5 years, 10 years, 20 years, 40 years period, and annually, during 1961-2000, we found that economic growth is positively correlated with a higher level of health and education, and an increase in: savings, openness of the economy, development of the financial system, capital formation, FDI, and real interest rate. Therewith economic growth is negatively correlated with a higher level of GDP per capita, and an increase in: government consumption, inflation rate, budget deficit, fertility and population growth, unemployment, and current account deficit. Keywords: determinants of economic growth, economic growth, macroeconomic stability
Determinants of Economic Growth: A Short Summary of the Literature An important literature has been written on the determinants of economic growth in the last 20 years. Their analyses have recorded a real success explaining the differences in per capita growth accounted by countries over long periods of time. Barro (1991)(8), the initiator and developer of this theory, uses as main explanatory variables: the initial level of real per capita GDP, the school enrolment, the political instability, the deviation regarding the parity of power purchasing, the life expectancy at birth and fertility rate. Using a panel consisting in over 100 countries, Barro (1997)(7) found that the hypothesis of conditional convergence is valid. The lower is the starting level of real per capita GDP, relative to the long-run or steady state-position, the faster is the growth rate. Economies that have less capital per worker (relative to their long-run capital per worker) tend to have higher rates of return and higher growth rates. The convergence is conditional because it depends on the other determinants of the economic growth. This means for certain levels of the education attainment, health and other variables that reflect national characteristics, policies, and institutions, growth rate rises when the initial level of real per capita GDP is low relative to its long term level. Therewith, for a given starting level of real per capita GDP, the growth rate is enhanced by higher initial schooling and life expectancy, lower fertility, lower government consumption, better maintenance of the rule of law, lower inflation, and improvements in the terms of trade. The empiric evidences in the literature suggest that economic growth is positively related to: - the starting level of average years of school attainment at the secondary and higher level - Barro (1991, 1996, 1998, 1999, 2001, 2003), Levine and Renelt (1992), Benhabib and Spiegel (1994), Doppelhofer, Miller, and Sala-i-Martin (2000) - TFP (total factor productivity) - Sarel (1998), Crafts (1999), Easterly and Levine (2001), Iwata, Khan, and Murao (2002) - technological progress and technological diffusion - Romer (1986, 1987, and 1990), Lucas (1988), Rebelo (1991), Grossman and Helpman (1991), Gordon (2002) - investments in research and development - Grossman and Helpman (1991), Aghion and Hewitt (1992), Coe and Helpman (1993), Barro and Sala-i-Martin (1995) - improvements in the stock of capital - Romer (1986), Lucas (1988), Rebelo (1991) 61
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labor and capital productivity - Bergoeing, Kehoe, Kehoe, and Soto (2002) saving rate - Levine and Renelt (1992), Howitt and Aghion (1998), Bernanke and Gurkaynak (2001), Aghion, Comin, and Howitt (2006) initial level of life expectancy at birth - Barro (1996, 2003), Doppelhofer, Miller, and Sala-i-Martin (2000) investment rates - Barro (1989, 2003), DeLong and Summers (1991), Mankiw, Romer, and Weil (1992), Levine and Renelt (1992), Mankiw, Phelps, and Romer (1995), Hugo (1999), Bernanke and Gurkaynak (2001) institutional framework - Knack and Keefer (1994), Dhonte, Bhattacharya, and Yousef (2000) macroeconomic stability - Fischer (1993), Easterly and Levine (1997) better maintenance of the rule of law - Barro (1996, 2003) investments in infrastructure - Barro (1989), Canning and Fay (1993), Easterly and Levine (1997) maintenance of the property rights - Barro (1989) development of the financial and banking system - King and Levine (1993), Levine and Zervos (1996), Rajan and Zingales (1998), Demirgüç-Kunt and Maksimovic (1999), Beck, Levine, and Loayza (1999) foreign direct investments - Borensztein, De Gregorio, and Lee (1995). Economic growth rates are negatively related to: the initial level of real per capita GDP - Barro (1991, 1996, 2003) Mankiw, Romer, and Weil (1992), Levine and Renelt (1992), Doppelhofer, Miller, and Sala-i-Martin (2000) taxation level - Barro (1989) government consumption - Barro (1991, 1996, 2003) market distortions - Barro (1989, 1991, 2003), Fischer (1993), Easterly and Levine (1997) political instability - Barro (1989, 1991), Mankiw, Phelps, and Romer (1995) high inflation and inflation fluctuation - De Gregorio (1992, 1993), Barro (1995, 1996, 2003), Esterly and Bruno (1995), Sarel (1996), Easterly and Levine (1997) fertility rate - Barro (1996, 2003) budget deficit - Fischer (1993), Easterly and Rebelo (1993), Mankiw and Ball (1995).
General Framework for the Growth Determinants Analysis The general framework for the determinants of the economic growth, developed by Barro (1997)(7), follows the extension of the neoclassical model, which relates real GDP per capita growth rate (annual %) with two kinds of variables: initial variables and the control or environmental variables. As initial levels of the state variables, we shall be using the stock of physical capital as a logarithm of the initial level of real per capita GDP (PPP current international $ or constant 1995 US$), and the initial level of human capital, in the form of education, expressed by the secondary and tertiary school enrolment (% gross), and in the form of state of health, expresses by the logarithm of life expectancy at birth, total (years). As control variables, which characterize the governmental policies and the economic agents’ decisions, we use in all our regressions the following indicators: general government final consumption expenditure (% of GDP), gross capital formation (% of GDP), fertility rate (total births per woman), population growth (annual %), inflation rates (consumer prices, annual %), budget deficit (overall budget balance, including grants - % of GDP), market capitalization of listed companies (% of GDP), domestic credit provided by banking sector (% of GDP), gross domestic savings (% of GDP), unemployment ( total, % of total labor force), current account balance (% of GDP), foreign direct investment (net inflows, % of GDP), openness of the economy (as sum of exports and imports of goods and services, % of GDP), real interest rate (%), money and quasi money (M2) as % of GDP, and real effective exchange rate (index, 1995 = 100). The availability of data for the initial level of physic and human capital is unsure, especially for the countries situated under the development process, and the way in which an indicator is measured can be different from one country to another. In these conditions, we shall considerate, as Barro did (1995, 1997), that for certain values of the education and health, an increased initial level of GDP per capita reflects a greater stock of physical capital per person (or a larger quantity of natural resources). We write therefore, as a function, for a country, the growth rate of GDP per capita, for the period t of time as like Barro 1997 (7): 62
[1] Dy
F y* ; h* ;... ,
where y* and h* represent the initial conditions, respectively y* is the initial level of GDP per capita, and h* the initial level of human capital (expresses by the secondary school enrolment, the life expectancy at birth, etc.). The omitted variables, denoted by “…”, comprise an array of control and environmental influences. These variables would include preferences for saving and fertility, the government policies with respect to spending, and so on. In the empirical implementation we use the initial level of per capita GDP from the growth equation from above, under the form log(y*). The negative coefficient of this variable represents the convergence rate. For h* we shall be using the initial level of the secondary or tertiary school enrolment rate and the logarithm of life expectancy at birth as an initial level.
Data and Methodology We are using 23 indicators for 167 countries, from World Development Indicators 2002 and World Development Indicators 2007, World Bank. In order to exploit the temporal dimension of the data and to analyze the long term relation between the determinants and the economic growth we shall use panel data with annual, 5 and 10 years, 20 years, and 40 years observations. Thereby, the observations for control variables are computed as average (mean) values of the indicators on 5 years, 10 years, and 20 years periods, during 1961 - 2000. The variables which are representing the initial conditions are computed as observations from the beginning of each period. Economic growth is computed as the annual growth rate of real GDP as a mean for each period of the available data. In regressions we shall use the maximum number of countries and periods shown by the available information. The basic regression is: [2]
X Y ,
where the dependent variable Δ is the real growth of the GDP per capita, X is the matrix of the variables which express the initial conditions and Y is the matrix of the control variables. In order to study the relation between determinants and the economic growth we shall use the following type of equations: [3]
yit it x 'it i it ,
where i =1, 2,…,N represent the country and t=1,2,…,T, the time period. We use Pooled Least Squares and Feasible GLS (general list square) as econometric methods. Due to the variable variances of the residuals between countries, we shall use a feasible GLS that assuming the presence of cross-section heteroskedasticity. In order to allow variances within a cross-section to differ across time we shall use White Heteroskedasticity Covariance, which estimate covariances that are robust to general heteroskedasticity. We test the variable variances of the residuals with Bartlett, Levene, and Brown-Forsythe tests. In the literature Easterly (2000), Kraay and Monokroussos (2000) applied Pooled OLS analyses on panel data, Fischer (1993) and Barro (2003) used three–stage least squares, Levine and Schmukler (2003), Claessens, Klingebiel, Schmukler (2003) worked with FGLS. In order to use as much as possible data, due to the fact that there are some observations missing at some countries, we worked with unbalanced data in Eviews 4.1. 63
Results In over 30 regressions (like the one from the table 1) on economic growth, using the general framework described above we found the following: - initial level of GDP per capita is very significant and robust in all the regression and all types of computed observations (annual, 5 and 10 years, 20 years, and 40 years periods) and it’s negatively correlated with the economic growth, which confirms the conditional convergence predicted by the Solow – Swan neoclassic economic growth models. Therefore, the convergence for the analyzed countries varies depending on other determinants that are in regressions between –0.9% and –1.8% for the GDP PPP at the purchasing power parity, as can be seen below, in table 1 and 2. - the initial level of health, expresses by the logarithm of life expectancy at birth is very significant and positively correlated with growth in all the regressions, being a robust determinant of economic growth; - initial level of the education, expressed especially by the secondary school enrollment and by tertiary has a positive value in regressions and is significant; - saving is important and has a significant and positive coefficient in different regressions, but its value depend on the others variables used in regressions; - government consumption is negatively correlated with economic growth, having a significant values, lesser in regressions with observations computed in 20 and 40 years periods; - inflation is significant and robust, negatively correlated with growth in regressions. It has a low coefficient, which means it has a strong impact only at high levels. In a regression with growth using 40 years average observations it has the biggest R2 from of 0.185501 and a robust negative coefficient (-0.005113) which mean is very important determinant over long periods of time. - budget deficit has a strong negative impact on economic growth with a big coefficient, as can be seen in the tables 1 and 2; - the openness of the economy enter significant, in many growth regression, generally with a positive coefficient; - fertility and population growth have a negative impact upon economic growth because, as Barro (1996) said, the resources will be directed to increase the natality and create capital for new workers than to enhance output production and per worker capital; - development of the financial and banking system plays a very important role in an efficient allocations of resources in the economy and is positively correlated with growth through M2 monetary aggregate, domestic credit provided by banking sector, and especially through market capitalization of listed companies in GDP. - gross capital formation is positively correlated with growth, having a coefficient of 0.127; - foreign direct investments are positively correlated with growth, because investors chose those economies with favorable business environments and encourage technological transfer; - unemployment is significant negative correlated with growth in many regressions; - real interest rate is positively correlated with growth with a coefficient of 0.030353; - current account balance has also generally a positive coefficient in relation with growth; - real effective exchange rate is positively correlated with growth in some regressions but its coefficient is very close to 0. Dependent Variable: GDPCGR? Method: GLS (Cross Section Weights) Sample: 4 8 Included observations: 5 Number of cross-sections used: 94 Total panel (unbalanced) observations: 302 One-step weighting matrix 64
White Heteroskedasticity-Consistent Standard Errors & Covariance Cross sections without valid observations dropped Variable
Coefficient
Std. Error
t-Statistic
Prob.
C
-20.47142
2.268677
-9.023504
0
LNGDPP?
-0.924206
0.095567
-9.670808
0
LNLIFEE?
7.360633
0.684115
10.75934
0
SCHOSE?
0.009036
0.002087
4.329817
0
G?
-0.054177
0.007347
-7.373924
0
INFL?
-0.001929
0.000455
-4.2355
0
BD?
-0.103043
0.011448
-9.001083
0
(EXPO?+IMP?)
0.005681
0.000659
8.618753
0
UNEM?
-0.051539
0.010257
-5.024746
0
Weighted Statistics R-squared
0.83167
Mean dependent var
4.345779
Adjusted R-squared
0.827073
S.D. dependent var
6.988164
S.E. of regression
2.905989
Sum squared resid
2474.318
180.953
Durbin-Watson stat
2.035221
0.16552
Mean dependent var
1.858468
Adjusted R-squared
0.142736
S.D. dependent var
3.240077
S.E. of regression
2.999941
Sum squared resid
2636.897
Durbin-Watson stat
1.634752
F-statistic Prob(F-statistic)
0
Unweighted Statistics R-squared
TABLE 1 - REGRESSION ON DETERMINANTS OF THE ECONOMIC GROWTH These are estimation outputs in Eviews 4.1. Notations: GDPCGR? is GDP per capita growth rate (5 years average), C is the common intercept, LNGDPP? is logarithm of the initial level of real per capita GDP PPP (the first of in each 5 years period), LNLIFEE? is logarithm of life expectancy at birth (the first of in each 5 years period or the value from the previous year if the observations is missing for the first year), SCHOSE? is secondary school enrolment (computed as LNLIFEE?), G? is government consumption, INFL? is inflation rate, BD? is budget deficit, (EXPO?+IMP?) is the openness of the economy, and UNEM? is unemployment rate. The periods are 1961-1965, 1966-1970, 1971-1975, 1976-1980, 1981-1985, 19861990, 1991-1995, and 1996-2000. We reject absolutely the hypotheses of equality of variances between series for the residuals using the following tests: Bartlett (df: 93, value: 212.0552, probability: 0.0000), Levene (df: (93, 208), value: 8.984600, probability: 0.0000), and Brown-Forsythe (df: (93, 208), value: 4.716500, probability: 0.0000). In the analyses of economic growth on different ways of computing the observations the most appropriate one is on 5 years periods. For one year and 10 years periods the residuals of the regressions are, in general, with a positive serial correlation and a Durbin-Watson statistic under the normal accepted value of 1.8.
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Conclusion Economic growth rates vary dramatically across countries over long period of time creating big differences in the standard of living per capita of its residents. Although the annual growth of per capita GDP in the world wide economies was about 2.0% during 1961-2005, which correspond to an increase of 2.4 times for per capita GDP, some economies has raised their GDP for more than 10 times, having average growth rates of more than 5.5%, and others have decreased their per capita GDP to a half from their initial level in 1961 with average growth rates lesser than -1.5%. The difference between Botswana one the most growing economy and Niger one of the slowest growing economies during 1961 and 2005 was more than 20 times. The determinants of growth have an important role in explaining these differences. Empiric evidence confirms the conditional convergence and relates economic growth with tow type of variables: initial variables and the control or environmental variables. Using the general framework developed by Barro (1991, 1997, 2003) on a panel date for more than 150 countries with observations computed 5 years, 10 years, 20 years, 40 years period, and annually, during 1961-2000, we found that economic growth is positively correlated with a higher level of human capital through health, accounted by life expectancy at birth, and education in the form of secondary and tertiary school enrollment, and an increase in savings, in openness of the economy, an improvement in the development of the financial and banking system, a raise of gross capital formation, and foreign direct investments, an increase of the real interest rate. We also found economic growth is negatively correlated with a higher level of physical capital accounted by the level of GDP per capita, with government consumption, inflation rate, budget deficit, fertility and population growth, unemployment, and current account deficit. This finding confirm the relations between growth and its determinants from the previous literature on observations computed 10 years, 20 years, 40 years period and annually. In the analyses of economic growth on different ways of computing the observations the most appropriate one is on 5 years time period because is diminishing the influences of short term fluctuation and encompass the dynamics of growth and its determinants.
References 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.
Acemoglu D., "Introduction to Modern Economic Growth", Cambridge, MA: Massachusetts Institute of Technology, 2007 Aghion P. and Durlauf S., "Handbook of Economic Growth", North-Holland, 2005 Aghion P., Comin D., and Howitt P., “When Does Domestic Saving Matter for Economic Growth,” National Bureau of Economic Research Working Papers 12275, 2006 Barro R. J. and Sala-i-Martin X., "Economic Growth", New York: McGraw-Hill, 1995 Barro R. J., "Determinants of Economic Growth in a Panel of Countries", Annals of Economics and Finance 4, 231-274, 2003 Barro R. J., "A Cross-Country Study of Growth, Saving, and Government", National Bureau of Economic Research Working Paper nr. 2855, 1989 Barro R. J., "Determinants of Economic Growth: A Cross-Country Empirical Study", Cambridge MA, MIT Press, 1997 Barro R. J., “Economic Growth in a Cross Section of Countries,” Quarterly Journal of Economics 106, 2, 407-443, 1991 Easterly W. and Levine R., “Africa’s Growth Tragedy: Policies and Ethnic Divisions,” Quarterly Journal of Economics November, 1997 Easterly W. and Rebelo S., "Fiscal Policy and Economic Growth: an Empirical Investigation", Journal of Monetary Economics 32, December, 417-458, 1993 Fischer S., "The Role of Macroeconomic Factors in Growth", Journal of Monetary Economics, XXXII, 485-511, 1993 Grossman G. and Helpman E., "Endogenous Innovation in the Theory of Growth", The Journal of Economic Perspectives, Vol. 8, nr. 1, 1994 Jones C. I., "Sources of U.S. Economic Growth in a World of Ideas", American Economic Review, Vol. 92 (1), 2002 66
14. Krugman P., "The Myth of Asia’s Miracle", Foreign Affairs, Vol. 4 November-December, 1994 15. Levine R. and Renelt D., "A Sensitivity Analysis of Cross-Country Growth Regressions", American Economic Review, 82, 942-963, 1992 16. Levine R. and Zervos S., "Stock Markets, Banks, and Economic Growth", American Economic Review, 88, 537-58, 1998 17. Lucas R. E., "On the Mechanics of Economic Development", Journal of Monetary Economis 22, 3-42, 1988 18. Mankiw G., Phelps E., and Romer P., “Growth of Nations,” National Bureau of Economic Research, Brooking Papers on Economic Activity, No. 1, 1995 19. Mankiw N. G., Romer D., and Weil D., "A Contribution to the Empirics of Economic Growth", Quarterly Journal of Economics 107, 401-437, 1992 20. Porter M. E., Schwab K., and Sala-i-Martin X., "The Global Competitiveness Report 2007-2008", Palgrave Macmillan, 2007 21. Porter M., "The Competitive Advantage of Nations", New York: Free Press, 1990 22. Rebelo S., "Long-Run Policy Analysis and Long-Run Growth", The Journal od Political Economy, Vol. 99, nr. 3, 1991 23. Romer P. M., "Increasing Returns and Long-Run Growth", Journal of Political Economy, Vol. 94, No. 5, 1986 24. Romer P. M., "Economic Growth", The Concise Encyclopedia of Economics, David R. Henderson, ed. Liberty Fund, 2007 25. Sala-i-Martin X., Doppelhofer G., and Miller R. I., "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach", American Economic Review, American Economic Association, vol. 94(4), 2004 26. Sarel M., “Growth in East Asia. What We Can and What We Cannot Infer,” International Monetary Fund Working Paper 95/98, 1998 27. Solow R. M., "A Contribution to the Theory of Economic Growth", Quarterly Journal of Economics 70, 65-94, 1956 28. Young A. A., "Increasing Returns and Economic Progress", Economic Journal, Vol. 38, 527-42, 1928 29. Young A., "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience", The Quarterly Journal of Economics, Vol. 110, No. 3, 1995 30. *** World Bank, „2002 World Development Indicators”, 2002 31. *** World Bank, „2007 World Development Indicators”, 2007
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THE INTERNET AND THE BUSINESS ENVIRONMENT Cioban Gabriela-Liliana Universitatea “Ştefan cel Mare” Suceava, Facultatea de Ştiinţe Economice şi Administraţie Publică, Str. Universităţii nr.13 Suceava 720229, Universitatea “Al. I. Cuza” Iaşi, Facultatea de Economie şi Administrarea Afacerilor, Şcoala Doctorală de Economie,
[email protected] The technological progress made possible the accelerate development of the IT&C domain. On one hand it was developed the necessary equipment to sustain the computers’ network, and on the other hand, it was developed new types of transport. It is easy to imagine that the future business will have as support the Internet, and what happens today in the markets, well localized in space, will be transferred somewhere in the “ virtual space” where every meeting or negotiation of a transaction will be possible within seconds or more minutes… This diminishing of the distances and even their elimination, the time reduction for shopping in many cases, it makes that the definition given to the classical commerce not to be totally right. The Internet investment development and the appearance of new players are the results of the factors that contributed to the development of the electronic commerce. The Internet services have been developed fast at the world level becoming a real star in the services world. These contribute to the development of many existent domains such as: education, culture, science, health, entertainment, business, social and governmental domain by creating new approaches as: electronic mail, informational transfer in real time no matter the distance, electronic commerce and online publicity. Key words: Internet, Globalize, Router, Technologic process, Connection, Server
Introduction The Internet can be considered a huge library of available information or a mean to “bound” people all over the world and from another point of view it represents a worldwide network of computers. The Internet services represent a very dynamic domain at worldwide level. Its roots came from 1960’s and we can talk about several preparing moments such as:
The first transatlantic phone cable installed in 1858, but it became operational in 1886 and it functioned almost 100 years;
The Former Soviet Union launched the first artificial satellite of the Earth in 1958;
In the same period USA was looking for solutions as in the case of a nuclear attack to have a properly communication canal between the commando centres all over the USA territory. They became well known started from 1990’s when it began their opening to population and companies. In 1981 it was recorded 1 million PC’s all over the world and it appeared incorporated in the PC’s the first types of data transfer modems of 300bps. The Internet services appeared along with the development of the calculus equipments, the informational need increase in taking a decision, especially the bankers one, of insurance, transport and telecommunications, the deregulation of certain domains as telecommunications, transport and energetic system, the globalisation and the technological progress recorded the last decades. The deregulation leaded to the opening of certain markets for the competition. The most important deregulation market was that of telecommunications, especially the telephonic one. The telephonic companies had the biggest voice infrastructures. These infrastructures were transformed in data’s infrastructures, due to the competition from other domains (cable, fibre, radio suppliers), which leaded to the development of the data’s communication market. The opening of the other markets leaded to the increase of the competition on these markets and the companies to face the stronger competition; the companies accorded a special attention to the information and data that had to be accessible in a facile and quicker manner.
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The world distances were reduced and we can say that the data transmissions services conducted to the significant decrease of the world distances and also it permitted the administration of the data in real time. The development of the Internet on the street level had been done by the network interconnectivity in different parts of the world. These interconnections were done step by step, started from the local level, than zoned, national, continental and world. The Internet services are characterized by the services proprieties: the inseparability, the variability, the perishable ness and the intangibility. The Internet services are done both through the equipment and people mediators. Due to their multitude of utilities, the Internet services tend to become a real starlet in the services world. These facts contribute to the development of many existent domains such as: education, science, health, entertainment, business, social and governmental domain, creating new approaches as: the electronic mail, the real time informational transfer, disregarding the distance, the e-mail or the on line publicity. At the moment the Internet represents the support of two big categories of services: data transmissions and the Web services. The data transmissions are data packets propagated between two or more computers. Here are included services like: accessing web sites for information, e-commerce, radio and TV “streaming”, telephony, e-mail and FTP. The Web services can be structured in two major categories: the creation and the housing of the web sites. Regarding several criteria among them the economical and security ones, a web site can be hosted on a specialized server or on the firm server.
The internet evolution We can easily imagine that the future’s affairs will have as a support the Internet and what is happening today in real markets, well located in space, it will be transposed in a “virtual space”, where every meeting, negotiation, end of the transaction will be possible in several seconds or minutes at least… In 1992 the term “ navigation” is attributed to the Internet and also then the World Bank began its on-line activity. It recorded 1000.000 host servers, the most important one being Michelangelo. We can talk about an “ explosive” development of the Internet by the increased number of the hosted servers, the appearance of the first Internet browser called Mozaic, of the first radio station, which broadcast Internet programmes. It realizes the first commercial connection to Japan using a rental line. TWICS supplier began to offer dialup connections. Important institutes have begun their on-line activity: White House, United States Organization. Starting with 1994 began the first virtual malls; the first bank that offers services using the net, called “FIRST VIRTUAL”; it appears the first Internet “ banner” on the web.hotwired.com site which promoted an alcoholic drink called “ Zima” and the “AT&T” company, it spread the radio programmes on the Net; the NFS network traffic overcome 10 trillions bytes/month; many governs appear online: Japan, Great Britain, New Zeeland. We can say that starting with 1993-1994 Media and the Business Medium have become effectively interested by the Internet. In 1995 has appeared:
The first firms with the internet as a main activity and they are cited at NASDAQ exchange;
The domains recording are no longer for free;
It started the online activity other governs: Canadian and Vatican;
World Wide Web and the search engine are voted the year technologies; new technologies are developed: Java, Virtual environments (VRML);
New countries are recorded their domains: Ethiopia (ET), Ivory Coast (CI), Cook Isles (CK), Cayman Isles (KY), Anguilla (AI), Gibraltar (GI), etc.
The number of the host servers reached 4.652.000; 1996 brings new events: 69
Over 100 countries are connected to the net and transmit over 300 millions emails everyday;
The internet suppliers want to have the possibility to ensure their services for many users;
The Internet telephony attracts more and more the American traditional telephony companies that require the USA Congress to out law this new technology;
There is a real war between Netscape and Microsoft browsers through new technologies developed in several months;
The most wanted domains are: „com, edu, net, uk, de, .jp, .us, .mil, .ca, .au”.
It was a first “chat” session between the Malaysian Prime Minister the Palestinian Leader Yasser Arafat and the Philippines President Fidel Ramos; In 1997 there were 16.000.000 computers connected to the Internet. 1998 year:
The number of domains is continually growing. It has recorded this year the domain number 2.000.000, and the web pages is estimated between 275 and 320 millions for the first trimester;
In Canada has installed the first network with optical fibre;
Several important events are broadcasted on the Net, generating an important traffic: Olympics Games, The World Football Championship;
The year’s attacks have been done to the web pages of the American Commerce Department, the New York Times, and the Chinese Study Society for the Human Rights and UNICEF Organization.
New technologies: related to the Internet telephony;
The year viruses were: Melissa and Explore Zip.
The web pages are over 1 milliard
It recorded 100 million systems of calculus all over the world connected to the net with over 250 million people accessing the Net
1999 year:
In 2000:
The new technologies of the year 2000 were the Wireless equipments and the Ipv6 protocol, applied by Internet; In 2001 was broadcasted on the net the first movie „The Technophobe & The madman”. In 2002:
USISIP Association (USISPA) has recorded– the American suppliers association for the Internet services.
The Internet 2 network has 200 Universities, 60 Companies and 40 affiliate members
All the commercial sites from Spain must recorded to the govern due to important protests;
The French Minister for Culture forbid the use of the word “e-mail” by the French ministers and adopts the French word “courriel”. In 2003 were several viruses that affected the Internet networks; Network Solutions begin to offer domain records for 100 years In 2004 the no.1 problem the „Spam” –sending unwanted messages, and in China has launched a research network with 25 universities from 20 cities with a speed between 1 and 10Gbps. Year 2005:
The battle between viruses and the Spam;
Were launched better versions for security; 70
It continued the world level improvement of the networks, which leaded to a better speed for navigating on the Net.
It has significantly risen the number of Internet messenger users;
It were recorded web sites with hundreds of unique accessing;
Spam continue to represent a serious problem for the internet users;
Year 2006:
The online publicity has significantly risen at the world level. The Internet revolution of the affairs world was the platform of the appearance and development of the e commerce. The e-commerce represents an alternative of the commercial transactions unfurling against the traditional one. The e-commerce begins and knows the biggest evolution in the USA.
The internet evolution in Romania The Internet in Romania has begun in 1993, it was hard due to the insufficiency of the material support: computers and communication equipments. The evolution of the net would be influenced by the politics. Until present the monopole of the Net was part of the USA, being imposed the American culture and politics. In Romania the net appeared thorough the dial –up connections with 9,4kbps modems and calling the West Europe countries. Id.est the most popular service was the e-mail access; all the users had e-mail addresses with the endings like: “.nl”, “.de”, “.at”. The most important moment was in 1993 when IANA (Internet Assignment Numbers Authority) admitted the Romanian right to enrol to the root domain (Top Level Domain) “.ro”, the possibility of administration of a national domain registry and to record domains under “.ro”. It followed a continual development regarding the Net access as well as the domains number. There are many events that marked the Net evolution in our country but I will mention only several of them being important for the present level. In 1984 it realised the first data transmission network between distanced computers. The project was called RENAC/RENOD. In 1991 the Romanian Academy, the National Committee Of Informatics and The Ministry of Science and Education required the government the approval of the connection to the nods from ICI- The Central Institute of Informatics, IFA – the Atomic Physics Institute and IPB – Bucharest Polytechnic Institute at EARN (European Academic Research Network). The Internet access was done through phone calls in other countries, especially Holland, Germany and Austria. In 1992, ICI began the protocols to RIPE and IANA to record the root domain “.ro”, and in December it realised the first permanent connection in Romania by connecting ICI to Vienna University using a rental line of 9,6kbps. This year it established the RNC framework – The National Research Network with attributions in promoting and developing the Internet access for the academic media. In 1993, the “.ro” domain was recorded to IANA and ICI became the only organism to use the “.ro” domains opening the roads to the following types of domains “name.ro”, done through a single phone call. The first recorded domain in Romania was “mc.ro”. In the same year appeared in Romania the first Internet suppliers: ICI, EUNET (bought by KpnqWest and today used as GTS), PCNET (bought by RDS in 2004) and STARNETS (today EUROWEB). In 1994, ICI connected with PTT Austria using a 64kbps satellite connexion with PHARE funds. In 1995, the “.ro” domains are no longer free. In October 1996, it installed the terrestrial connexion Bucharest – Budapest for connecting RNC to Europanet also with PHARE funds.
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In 2001, it has constituted the National Association of the Internet Service Providers-ANISP and it functioned RONIX – Romanian Network for Internet eXchange, the biggest interconnection nod of the Romanian suppliers. At 25.09.2002 take part ANRC – the National Authority of Communication Settlement. We can mention the fact that when the first email addresses appear we can talk of the beginning of the Internet as an affair. ITCNet was the first Internet supplier, which provided the Romanian market with a free e-mail service with phone connexion. At that time on the market there were free emails but the user needed an Internet connexion to access it. The user needed a computer, a modem and a phone line and he could benefice of a free e-mail address and he could access all the web pages hosted on the ITCNet server. Nowadays the Romanian Internet market has a continual growth both as affairs and also as the client’s number. The affairs cipher has doubled every year, whereas the users number has no precise cipher due to several factors among it:
At the dial-up connexions the same cont can be utilised by several persons because the dial-up connexion implies knowing a cont name, a password and an access number, being a well known practice using it for “borrowing” to friends, relatives or using the work place cont at home.
There are apartments networks with no recordation to ANRC (the National Authority of Communication Settlement.) for not paying the taxes. There are such types of networks with hundreds of subscribers, which distorted the real number of the clients. Although we can estimate the number of the Internet users as 20% and 28% of the country population recorded the frequency of the Internet usage. Whereas the firms, we can mention that only 52% of the Romanian companies use the Internet. We can say that the Internet became in Romania very indispensably for several domains such as the stock exchange, the media, the online publicity or the VOIP communication (voice over Internet Protocol), and so on...
The business development on the internet The Internet remains a global phenomenon and to understand the Romanian market we must analyse the world one. The “Google” appearance brought a new development of the Internet life. A great merit of it is the opening door for the smaller competition and any web site owner can gain having his own page. The present development of the e-commerce will revolutionise both the affairs conduct and the commerce one, which will globalise more and more. The Internet raises the sellers’ field of action and destroys the barrels form the Net, even for the smaller and medium companies. The consumers have the possibility of choosing the products and the services and searching for the suitable ones form the market. They have rapid solutions which destroys the national or zone barrier. The internet approach as a business medium represents the consequence of several factors as the computers- telecommunications relation, the implementation of the www technologies, the advantages offered by the electronics business compared with the classical ones, the easiness of the information transmission and the advantages which are offered by the web network to the participants. Due to this technology both producers and consumer can beneficiate, because it opened the road to a new type of competition between organisations. Due to the www technology we can obtain a multitude of information as: text, audio, video and can become form a variety of sources. There are a lot of reasons why we buy products using the Internet: the rapidity of the transaction, the competitiveness of the prices, the selectivity, etc. The easiness of the users to press the button to look for a book (this book could be in Australia), the information is easily brought to him in several seconds. In this way we reduce the time and the space using the computers’ mouse.
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We realise that doing the electronic business we have many advantages comparing to the classical ones: it diminishes the transactional costs, new services for the clients, it improves the business medium, etc. the access to many information help the buyer to take important decisions in ordering the products. In this way the electronic market transactions became global. This market presents some disadvantages related to the human nature relation, to the need and custom of the clients to see, smell, taste or touch the products they buy.
Conclusions The specialists estimate a real explosion of the Internet market until 2010. The Romanian businessmen sense the Internet as a vital force for the 21st century marketing. Although the lack of education of the Romanian firms vis-à-vis of web is caused by the existent offer on the Romanian market. The interactive agencies and the software consultancy, as well as the web design agencies are the ones to “teach” the Romanian client in using the Internet. Whereas the Romanian web offer concentrates on a attractive design, sometimes abusive by Flash elements. A secondary motif is the lack of material resources that oblige the Romanian businessmen to pay no attention to the classical marketing instruments and to choose instead to promote their business among friends and relatives, to make deals with “relations” and to reduce the concept that “ the image counts” to the “ personal image, the car and the building counts”. In this environment where the recommendation and the relation primes, the necessary creativity to overcome the financial obstacle is no longer present. The Romanian businessmen want to include this new communicational canal in the marketing strategy. But they need a guide for this new territory and at the moment many Romanian web designs agencies are not prepared to assume such a role.
References 1. 2. 3.
4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
BOBIRCĂ Ana - Economia serviciilor internaţionale, Editura Economică, 2005, Bucureşti, CRISTUREANU Cristiana – Economia invizibilului. Tranzacţiile internaţionale cu servicii- Ed. All Beck, Bucureşti, 2004 ROŞCA Ion Gh., BUCUR Cristina-Mihaela, TIMOFTE-STANCIU Carmen, PAIU Octavian, VIŞEAN Mirela, - Comerţul electronic, concepte, tehnologii şi aplicaţii, Editura Economică, Bucureşti 2004. Revista Amfiteatru Economic – Ed. ASE, Bucureşti, nr. 21 din 2007 www.ibm.com. www.internetworldstates.com www.bizcafe.ro/articole/cine-face-marketing-online.html www.romcard.ro www.marketwatch.ro www.bnro.ro www.clubafaceri.ro www.afaceri-online.net www.mcti.ro www.metromind.ro www.google.ro www.business-online.ro www.siteaudit.ro www.eafacere.ro www.biblioteca.ase.ro www.efinance.ro
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BEING PROACTIVE VERSUS REACTIVE – THE SOLLUTION OF SELF- GOVERNMENT Costea Carmen Academy of Economic Studies, Faculty of Commerce, Romana Str. no. 6, email:
[email protected] ro Popescu Constantin Academy of Economic Studies, Bucharest, Faculty of Economy, Romana Str. no. 6, email:
[email protected] Tasnadi Alexandru Academy of Economic Studies, Bucharest, Faculty of Economy, Romana Str. no. 6, email:
[email protected] Badea Liana Academy of Economic Studies, Bucharest, Faculty of Economy, Romana Str. no. 6, email: nutu
[email protected] Stanciu Miltiade Academy of Economic Studies, Bucharest, Faculty of Economy, Romana Str. no. 6; National School of Political Studies and Public Administration, Faculty of Communication and Public Relations, Povernei Str. no.6, email:
[email protected] The one who wants to lead the others, first has to lead himself! Philip Massinger Abstract: Starting from selfknowing and the law of correspondence (the behaviour from the outside of one person is the reflection of its inside feelings) the authors try to define the meaning of proactivity. It is underlined that as we have the quality to be human beings we are responsible for our lives. The proactive persons do not blame the environment or the circumstances to justify their behaviour. As it was implanted in the literature of management, the meaning of proactivity is based on initiative, on responsibilities and actions; this gives priority to values in front of any feelings. Key words: proactive, reactive, responsibility, rationalism, hope, life fulfillment. In one of his most recent articles, Michael Gerber, the famous business advisor said that businesses do not fail because of “uncontrolled forces” (exogenous) as competition, lack of financial resources or employees less hardworking. It is presumed that they fails because only of internal causes. When going on with business development he says that a business “reflects” the person leading the business. To put it into other words the business persons have to lead their business and do not let their business to lead them. As a conclusion, he said: “If you want your business changes into a successful one it is you that has to change” 1 as a first priority. And Gerber is definitely right! In order to have success in whatever we do, to run a business, to rise and educate children, to train the judo team of the Academy of Economic Studies of Bucharest, we have to be the managers of our own life, not to let us be lead by our actions! That means to take the challenge of a proactive attitude that might be definitely oriented towards success and achievement. Our decision to be in the control of our life is the seed for our success.2. Controlling your own life is similar with „being proactive”. The proactive concept comes from the well-known words: pro (for); active (act). Act proactively is the sound of not sitting, passively, beside and look at it, but do something. A Volkswagen TV commercial uses to keeps our eyes busy telling that there are “two kinds of people on the road of life: drivers and passengers”. This commercial presents the drivers to us, in having the control of their own life. From this perspective, they are proactive people. In opposition to the rivers, the 74
passengers take only a walk. They are reactive people that behave as simple witnesses of their lives. You and us, together, we have problems if we think about the facts that we can not control:
Could the paper for Oradea be a successful one?
Could the evaluation for the Faculty of Economy be done according to the imposed standards?
Could we, the authors’ team, get the contract for „Social Stress” financed?
Could we be happier today than we were during the last years? All these are the fruits of our lives. Do we need to focus on them? No! Focusing on them could induce us more worries, fears, manipulation etc.3. Keeping on to thinking this way, the natural question could be: shat is the best way to face that reality? It is highly better and recommended to focus on things that we can control: a fair attitude, a high and determined strong persuasion, and a strong commitment. This is why, if we are able to focus, hold and use our emotional energy (our feelings) in a positive way4 the pro-activity will become really efficient. Specialists like to talk about the so-called „tree of life” and the different approaches in life. Thus, the proactive human beings are focused on the „roots” (the universal principles) while the reactive persons are focused on „fruits” (results). We can do a similitude between our inside battery that we use to face the reality or the flame of hope and our attitude as victims facing life. If we are proactive – using initiative and action – the flame of hope, our inside battery could give us energy. And us, as human beings, we have the possibility to choose. There are not too many ways to make our behavioral choice when the temptation is around:
We might choose to behave as persons that only react - and they will definitely become the future victims;
We might choose to behave as fighters, those persons able to take control of their own life and go for success.5 Talking about stress, a recent study emphasizes a particular definition referring that the stress is a normal part of reality6. The stress is that pressure that we feel it in our life as an important part of. We can react to stress in two ways: as victims – persons who suffer (reactions); as winners – persons who are active. For any people it is simple to manage their own lives, if we consider also the fact that life is usually given to any of us and we are not their possessors. The book „Rationality and hope” 7 develops the following axioms with regard at Life:
Axiom 1: Life is short (transition);
Axiom 2: Nature is stingy (rationality);
Axiom 3: Environment is uncertain (hope). Trying to put these statements into mathematical equations we understand and must agree that, each of us has a certain period of time (t) to spend on this earth, where: t = te – tb te – end of life time; tb – birth time (existing as a result of birth). During this period of time we can manage our patrimony, time, abilities, potential, and finances – all the gifts (assets) we were given at birth8. Too busy to life a common life, the great majority of people forgets about Axiom 1 and forget its essence. Ignoring the deep meaning of a potential miss they forget behaving in a responsible to preserve and save their life. This kind of people prefers to catch the general tendency of blaming the others for their own problems while expecting from them to have good initiatives, appropriate mainly for themselves9. Easy to understand, more difficult to accept this becomes easily the fundamental reason of the most people failure. Those people keep forgetting that controlling their own life has the significance of appreciating and using that quality that each of us was enabled with, by birth: to choose between the two fundamental ways of life. All that we have to do is to use better what we were given as a gift: life. The way to accomplishment, fulfillment and success is marked by change. And we need to learn the change and focus on what we can change. 75
Jim Rohn, the well-known business philosopher demonstrates that changing life means changing the way of thinking (life’s philosophy)10. Thinking this way he brings into actuality the confirmation of Solomon sayings about “we are what we think we are”. By this saying we consider that success is for everybody and it really is. But this success depends on self-government, and this last one is the way we run on our own existence. Peter Drucker, a great personality in the world of management, says the followings: „In fact are about an unprecedented change for the human beings conditions. For the first time – literally many people, and the numbers increase everyday, have the possibility to choose. For the first time in the history of human being, they have to face a great need, and that is self-government. But society is totally unprepared for this”11. The way how we lead (self-governing) our own life depends on the quality of principles of actions on which we build our life. They may last in the following 9 principles adding value: 1. Listen to every piece of information that can bring value to your future decisions and remember the old adage: People don't care how much you know until they know how much you care. It is still true today. Most people in business aren't impressed with what you know. They are more impressed with what you remember about them. Learn to listen more than talk. Most sales and customer service success stories involve successful listening skills. It has helped. 2. Do your homework. Today you have more information about people at your fingertips than at any time in human history. Use the internet to research every aspect of your client. I worked for a client one time that called me to do a presentation. I couldn't figure out what they did in their industry. Several clicks later I was an authority on their business. 3. Dress for success. What image does your clothing and appearance say about you and your business? Who would want to do business with someone who had a disheveled or lowly appearance? You shouldn’t only look great, feel great! 4. Always be on time. There is no excuse for showing up late for a meeting with a busy client. Never tolerate missed deadlines or late arrivals in your performance in business. It tells people they aren't important. Get a watch and check it frequently. Find out how long it takes to get to the appointment if you are traveling. Don't allow phone calls, drop-in visits or traffic to make you tardy for the most important meeting of the day. 5. Listen more than talk. This isn't a repeat of Step 1. This is for the actual meeting. Let your partner taking the lead in conversation. You can do this by asking questions that require more than one-word answers. Who is in control of a conversation: the person asking the questions, or the person answering them? Obviously the person asking the questions is in charge. Use the homework you did to ask great questions. It's been said that no one cares how much you know until they know how much you care. You show you care by asking questions about them and listening to the answers. 6. Remember people's names and details. People like hearing their name spoken. Again it makes them feel important. Don't over do it but use their name in the conversation at specific moments to emphasize points. They will appreciate hearing their name spoken. If you have trouble remembering names, use simple techniques like repetition, association or just write them down in a convenient place you can access discreetly. Use the research you have done in your homework to ask about family members, their history with the corporation or their life. Everyone likes talking about themselves and even more they like hearing that you are interested in them and their lives. 7. Be truthful. Never tell a lie or stretch the truth so that you have to spend the rest of your time covering for yourself. Most people can tell when you are lying to them. Tell the truth even if it is painful. They will appreciate your honesty in the long run. It will build a reputation for you that no resume or marketing campaign cal equal. Bind known in the business community as an honest man or woman endears you to ever person you come in contact with. The word of mouth that your honesty generates will come back to you exponentially. One lie told can ruin your reputation and your business may never recover. It is easier to just always tell the truth. 8. Find common ground. As you listen to your partner, look for similar interests or backgrounds. I met with a gentleman last month who not only grew up in my home town but in my suburb. Wow! We spent most of the time connecting with our common past and it made both of us feel better about doing business with one another. Common Ground = Trust. Trust is the foundation for an open relationship that will grow
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your (and their) business. Look for hobbies, sports, educational interests, cultural commonalities that will bind the two of you into a growing business relationship that will be that foundation for trust. 9. Show confidence. Be positive about your strengths without over-doing it. This will make a great impression on everyone you come in contact with. People can smell someone with low-self esteem. Your appearance says a lot but your remarks about yourself and your abilities can be sensed before you ever say a word. It is alright to occasionally use self-deprecating remarks in humor but once should be enough in any business arrangement. Just doing it twice leaves a negative impression. Don't bowl people over but show an air of confidence that leaves everyone thinking that you can be depended upon to deliver the goods you say you can. Never underestimate the power of a positive attitude in any situation and conversation. Use these steps the next time you want to make a great first impression. You will be surprised at the results they generate. Your business will improve and your bottom line will increase. Talking success and fulfillment many people bring into discussion the importance of the laws of physics that govern the Universe as the universal principles govern human existence. The principles are long lasting truth: universal, absolute, non-negotiable. They are as valid as the law of gravitation. Here are some of them: the law of cause and effect; the law of correspondence; the law of compensation; the law of attraction etc.12 We can not understand them, we can not accept them but all these things do not disable them. These principles do not vanish. All these principles remain stable on position. So, we have to choose:
We shall discover and totally accept them, and we may succeed in life as we wish;
We shall ignore them and fail, without knowing why we did fail. So, what we have to follow in our way to find success is truth, reflected by these Universal laws. The truth is more important than the „fruits” wished by many others (see figure no. 1)
power
prosperity popularity
position
pleasure
prestige
Figure no. 1: The fruits of life, wished by many people This is the „basket” of the six P. The only truth is the real source of the fulfillment of life. If we want to succeed in life we must passionately look for truth and find how we have to use it in our life13. This is wisdom. On a better analysis of the word we can see that „wise” means „having and sharing knowledge”. Learn from experience is another way to do the home work. And make a choice. As experience is a great but painful teacher, it might be some other better choices than to suffer and this may be given to them the benefit of some mentoring or coaching. This helps to face serious development and life decisions.” As Bud Bilanich says there five things all successful people have in common: 77
Successful people are self confident.
Successful people have powerful personal impact.
Successful people are outstanding performers.
Successful people have excellent communication skills.
Successful people are interpersonally competent. Many people do not make definite choices or decisions in their lives. Choose how you want your life to be. Choose how you want to be. Make a definite decision. It is only through making the choice, the decision that you will be able move towards what you want. If you do not do so, then you are going all over the place and dissipating your power. But when you do choose then you have formed a definite thought about what you want. With this definite thought in place you will start moving towards that which you want. Holding this definite thought in your mind, focusing on this thought is what makes it come in to being. You are empowered in your life if you make the choice and hold the definite thought in your mind for then you are have the power of your mind to make your life and yourself as you choose and want it to be. This is where your power lies. This is what meant by being empowered. This is all that it takes to be empowered in your life. It is simple, yet it takes effort. For you have a habit of thinking a certain way and you have to break the habit of those thoughts and form new thoughts. As you practice doing this and forming a habit of being cognizant of what your thoughts are then you will become empowered in your life. When you are accomplished at doing this, then you will have a mastery of your life. You have to be in control of your mind and thoughts. You have to be in charge and responsible for your self and not look to someone else or something outside of you to be so. You have the power within you through your thoughts. It is your inherent gift. If you want to be empowered in your life, if you want to change your life, use your gift. But they keep thinking that hearing or listening is the same with understanding while knowing could be transform into understanding. And as a rule we understand less than we know. For wiser it is easier to understand how to manage the own life. But there is also a time problem inside this idea. Now, today, have a serious and accurate meaning when deciding that with tomorrow you are ready to take your life in your own hands, you are in control of your life. That means you shall be in self-governance. It will be better for to forgetting that you have already said tomorrow meanings is less in front of today this one the first day of your life (Res(t)): Res (t) = ta – tk; k = 0, 1, 2….n Going back to our 1st axiom, in order to get in control of our life, first we must get in control of our time, so Res (t). This is not too much in reaching the best of the conclusions of the present case: Life each second of your life in the best proactive way!
References: 1. 2. 3. 4. 5. 6.
Covey, Stephen R, The 8th Stair of Wisdom. From Efficiency to Stateliners, Alfa Publishing, Bucharest, 2006, pp. 51-53. Drucker, Peter F. The Management of Future, ASAB publishing, Bucharest, 2004, pp. 260-274. Hedges, Burke YOU, INC. 10 Simple Principles to Dramatically Increase your FairMarket Value, Curtea Veche Publishing Bucharest, 2001, p. 11. Jenson, Ron, The Success Pyramid. Successful Organization by Successful People. Coaching Institute Publishing, Bucharest, 2004, p. 19. Maxwell, John C. Talent Is not Enough, Amaltea Publishing House, Bucharest, 2008, p. 17. Popescu, Constantin, Comşa, Marin, Social Stress and Economical Performance in „ Analiză şi Prospectivă Economică”, no. 1-2, Academy of Economic Studies Publishing House, Bucharest, 2005, pp. 64-78. 78
7. 8. 9. 10. 11. 12. 13.
Popescu, Constantin Rationality and hope, Renaissance Publishing House, Bucharest, 2006, p. 34. Roazzi, Vincent M. The Spirit of Success, Curtea Veche Publishing House, Bucharest, pp. 134135. Rohn, Jim The Five Essential Elements of Life. A Guide for Personal Success, Amaltea Publishing House, Bucharest, 2006. Taşnadi, Alexandru Rostiri de suflet, Academy of Economic Studies Publishing House, Bucharest, 2007, p. 24 Tracy, Brian Change Your Mind, You Will Change Your Life, Curtea Veche Publishing House, Bucharest, 2006, p. 119. Tracy, Brian Accomplish goals, Curtea Veche Publishing House, Bucharest, 2005, p. 28. Tracy, Brian The 100 Absolute Laws of Success in Business, Amaltea Publishing House, Bucharest, 2003.
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INTEGRATED QUALITY MANAGEMENT IN NATIONAL PARKS AS TOURISM PRODUCT Costencu Mirela Universitatea „ Eftimie Murgu” Reşiţa, Facultatea de Ştiinţe Economice şi Administrative, Reşiţa, jud. Caraş-Severin, P-ţa Traian Vuia, nr. 1-4,
[email protected],0721469363, 0255-210214 Abstract: The management plan aims at becoming a framework for integrating issues connected to nature preservation and protection and those of social and economic development within the national park, as well as triggering a dialogue between the institutions managing the natural and human resources of this area. The management plan of the park is an instrument for determining and presenting all the park policies.Quality needs to be assured all along the tourism chain from first marketing messages through to the provision of accommodation, food, information, orientation.Each one of the ecotouristic products can make an important contribution to the overall level of visitor satisfaction. So it talks about Integrated Quality Management. Key words: management plan, integrated quality management, ecoturistic destination, national parks National parks represent a compromise solution between the local actors and the decision-makers at superior levels with the purpose of promoting the socio-economic development in correlation with the principles of environmental protection. The management plan aims at becoming a framework for integrating issues connected to nature preservation and protection and those of social and economic development within the national park, as well as triggering a dialogue between the institutions managing the natural and human resources of this area. The park management plan intends to integrate the goals of preservation and protection of natural resources into the preoccupations of local actors and promotion of their common opinion. The management plan of a national park represents a document co-ordinating and regulating the use of park area resources and the building of the set-ups necessary to the development of human communities and tourism. The management plan also aims at creating an optimum framework for the training of the personnel able to participate in the process of informing the public and local authorities, in order to obtain their permanent co-operation. The management plans are used in the decision orientation, and in some cases for creating certain multitask specialised planning teams. They should establish the basis of the park operation as eco-touristic destination Thus, among the goals of the management plan we may mention: - Protection and preservation of habitats and species of community and national interests; - Integration of protection goals of the national park to the central focus of local actors with the observance of the local autonomy; - Supporting the sustainable development of human collectivities with the observance of the natural and cultural values of the park; - Promoting the inter-institutional co-operation with the purpose of efficiently solving the problems occurred within the national park area. - Creating an informational framework for the local population and for their involvement in decisionmaking. The management plan of the park is an instrument for determining and presenting all the park policies; it has a comprising character. The plans of the park contain a variety of topics, among which: how to manage tourism, how to reduce the impact and to to opportunities to good use. Developing a tourism plan of the national park, as eco-touristic destination requires that it should be integrated into other plans for the protected area, such as the management plans of the fauna, area and flora. Although these plans are often 80
strong points in terms of the way natural resources are managed in the park, they are often weak points also when it comes to describing the touristic goals and the way these goals can be reached. Consequently the issue of tourism in protected areas is very important, to be found in the management plan, in tourism and recreation-oriented policies. Although one requires a separate plan for tourism in protected areas, its detailing level depends on the complexity of the issues considered. Such a plan may only present in detail the specific touristic management practices to be used, the location facilities, the policies of touristic guiding policies, the level of tariffs for the tourism operations, etc. The topic can be developed in the future with the help of several specialised plans or strategies with the purpose of managing tourism and recreational activities within the protected area. For instance the visitors’ organising plans, the management process of the visitors’ activity, the management model of tourism optimising, the limits of an acceptable exchange, the management plan of the visitors’ impact. Due to the complexity of the marketing plan, it is important that the policies and plans be integrated with those at other levels, but the relation between them should be clear, so that all the management actions from different plans be co-ordinated. Several basic principles that may be used in order to guide the policy of tourism development within the park: - the natural and cultural environment within the protected area should form the basis for the other values that affect the park and its management. These fundamental aspects should not be neglected; - tourism in the protected areas depends on maintaining the environment quality at a high level and on the cultural conditions in the area. This is essential in order to support economy and life quality through benefits brought by tourism; - the management organisms of tourism in protected areas have the role to protect the values for which the area was initially established, but have other purposes also: active management of tourism and tourists, sharing the management responsibilities with the tourism operators, local communities and visitors, providing the opportunities for the economic tourism potential; - visitors of protected areas hope to find facilities, programmes, opportunities of learning and recreation, but not all requirements can be satisfied, as certain expectations may be incompatible with the park goals and purpose; - visitors actively search the best quality services they can afford. They do not obligatorily search for the cheapest available opportunities; - visitors look for diversity in the recreational opportunities they can afford, but not all parks can or should provide any desired service; - planning should be performed from the inside with the awareness of the regional context of the protected area particulars. This means that different touristic opportunities allowed in other protected areas should consider the tourism requirements and provisions of the neighbouring areas; - the management process reunites the responsibility of the park managers and of other tour operators. Another essential aspect when we think of integrated quality management in national parks regarded as eco-destinations refer to the importance of the services quality. Tourists demand more and more quality recreational services and opportunities. Those who benefit from quality services during the working days require the same thing from those who organise their spare time. They want guides who have a lot of knowledge and communication skills, they wish that their hosts make them feel welcome, comfortable and part of the community they visit. Ecotourism – as a constantly evolving form of tourism – means an increased demand of special recreational and hosting services, all focused on quality. Most park administrations have not set quality goals for those services, they do not have programmes for their monitoring , which casts a shadow of irresponsibility and primitivism on the activities carried on. The managers of protected areas and the representatives of the private sector should offer quality services to visitors, these challenges including a clear establishment of objectives of services quality, programmes for high-quality services providing and 81
the monitoring of programmes in sites. It is important that this type of sophisticated consumers recognise and appreciate the quality of services, being willing to pay for it. Providing a quality facility or service for tourists is a fundamental part of developing a sustainable product, especially when dealing with the smaller market segments based on natural heritage. Quality needs to be assured all along the tourism chain from first marketing messages through to the provision of accommodation, food, information, orientation. Each one of the ecotouristic products can make an important contribution to the overall level of visitor satisfaction. So it talks about Integrated Quality Management. This approach is based on two key elements: a focus on visitors and the involvement of local people and local tourism business in the management of the destination. The most obvious way of developing and advertising quality is to set common standards, which are recognised through labels or awards. Quality standards can be sector specific or generalised, they can be developed locally or form part of national or even international schemes. Under these circumstances we should refer to the issues connected to the quality strategies in tourism. For the companies with touristic activities it is not about competition at a local level, but at a regional or global competition. In order to implement a strategy focused on quality we should observe certain fundamental principles: - The close connection between the company and the client lies at the basis of a quality strategy ; - The company staff should be organised in multi-functional teams oriented towards the client; - Starting new processes, the necessary procedures in order to fulfil the tasks within the company and results; - Appealing to the clients in order to know exactly what they expect from the respective company, permanently studying the clients’ reaction; - Employing the best trained personnel and their continuos improvement at the company’s expenses; - The capacity of the firm, of its personnel, to adapt to any new situation occurring within the firm without waiting for guiding lines, the flexibility to act in the right place at the right time; - A permanent open attitude, a continuous desire of self-improvement from the part of the company’s personnel At present, the tourism companies’ managers consider that their main goals consist in improving the quality of touristic products and services they provide. The consumers – tourists will not settle for mediumquality services. For a tourism company intending to remain on the market and to earn profitableness, the unique solution is to adopt the total quality management: „quality is the best insurance policy for clients’ fidelity, the most efficient protection against outside competition and the only way to develop and earn profits”. There is a close connection among the quality of the services provided by a tourism company, the tourist – client’s satisfaction and the firm’s profitableness. Focusing on the client as the central element, quality represents the ensemble of traits and characteristics of a product or service, consisting in its capacity to satisfy the experimented or implicit needs. Total quality management is considered at present the most appropriate way to reach the tourist’s satisfaction and firm’s profitableness. The strategy of quality should be correlated with the permanent reduction of costs.
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References 1.
2. 3.
Costencu, M., Marketing strategies regarding the launching on the international market of the touristic product „national park”. Case study – The National Park Domogled –Cerna Valley. ,Doctoral dissertation, Bucharest, 2005 Costencu, M., Ecoturism. Touristic product – national park , Mirton Publishing House, 2007, Timisoara Costencu, M., Ecotouristic Marketing. Strategies regarding national park as touristic product, Mirton Publishing House, 2008
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CULTURAL TOURISM PRODUCT Costencu Mirela Universitatea „ Eftimie Murgu” Reşiţa, Facultatea de Ştiinţe Economice şi Administrative, Reşiţa, jud. Caraş-Severin, P-ţa Traian Vuia, nr. 1-4,
[email protected], 0721469363, 0255-210214 Cristescu Ilie Universitatea de Vest Timişoara, Facultatea de Ştiinţe Economice şi Administrarea Afacerilor, Timişoara, Str. Pestalozzi, nr.16,
[email protected], 0745080654 Apart from their tourism potential, the special events and festivals may lead to community development or to the development of arts; they may be considered entertainment opportunities and excellent ways of communication (due to sponsorship). Their importance and popularity is closely connected to their ability to reach multiple goals. A very important element of the cultural tourism product we wish to promote is the presence of authenticity , which means a genuine, undamaged thing, “a real thing”, the term referring to a motivation, “searching for an authentic cultural experience.” Key words: cultural tourism product, authenticity, community events, three events authenticity Tourism products are limited only about the creativity. Why that more and more events become ”tourism” products: holidays, shows, international fairs, Olympics, festivals and many other events and parties all over the world. In the future we will have to reconsider the essence of the holidays-looking back to underline our cultural dowry and inheritance, or looking towards the future underlining the importance of the holidays in our individual and collective life. How many of the events we are celebrating are really authentic and how much entertainment is it involved? Who and what gives importance to these special events? Are they organized for residents, tourists or do they target everyone? And what is the purpose of these events, are they considered attractions for the whole market or just alternative tourism? The theory we underline is that the tourism benefits are higher than the costs involved, especially those addressed to community events. When communities or cultural groups decide what is important to them and take control over the exchange process with visitors, than the authenticity may be preserved and also improved. It is said that the authenticity is “a product of the community” and its definition is given by the local community. Valee (1987) claimed that “Authenticity is a desired experience by the tourists and it is also seen as reflecting the genuine nature of every day life of the destination places.” Redfoot (1984) noted that some researchers believe that the modern tourist is not interested in the authentic element (e.g. Boorstin, 1961), whereas others suggest that tourists are interested in finding the authenticity (e.g. MacCannell 1976). MacCannell, in his famous book, The Tourist (1976), suggested that tourists are searching for authenticity because it is rarely found. The tourist wants a spontaneous experience which may discover or share everyday life aspects of a different culture or community, but he rarely finds it. MacCannell used the term “backstage” to describe the physical environment where a visitor may notice, find or share something authentic. Greenwood said that (1982), “all viable cultures are in a process of permanent rediscovery.” Pearce (1982) affirmed that the visitors’ satisfaction depends not only on the event’s nature (whether it is authentic or not), but also on the visitor’s perception connected to the presence or the absence of authenticity and his need of authentic experiences. Within the inheritance context, authenticity has a direct influence upon the way the buildings and places are preserved, repaired and interpreted. To an event planner and marketer this is an issue that targets a customer satisfaction and may be solved by a better product penetration on the tourist market. We can illustrate with the three events authenticity perspectives: community control and acceptance, cultural importance, tourists’ point of view. At the top of the pyramid, there is a traditional festival, noncommercial certainly based on a community high level control and acceptance. In the middle, there are 84
“invented” events or tourist-oriented events, may have at first a less cultural meaning, but this may change in time. The result may be a convergence of meanings, up to the creation of new traditions. At the basis of the pyramid there is the variable perspective of the visitor or tourist, whose perceptions and reactions may be unexpected. Those who are looking for authenticity high levels will be attracted by the top pyramid events and will refuse the other type of events. Strictly commercial entertainment events may be less authentic and less accepted by the community, but may still attract a lot of tourists. Tourism perspective is the subject matter of market research whose purpose is to match the proper event with the proper tourist. Presenting the three perspectives upon the events authenticity, community control and acceptance; cultural value; tourists’ perspective must define the cultural tourism product in order to be opened up in a constant competitiveness, attractiveness and sustainability. The inherited events, the historical and cultural dowry are extremely interesting to nowadays society. A group of events having historic themes and events dealing with a dimension of the inheritance of a cultural group are very important cultural tourism services offered. The inherited events are thematic, public festivals together with other special events celebrating community traditions, customs and values. They may have a certain topic linked to inheritance, commemoration, or other holidays. This is the reason why we especially appreciate the initiative of Cultural League for Romanian Unity all over the World, to celebrate the fulfillment of 1900 years from the conquest of Dacia by the Roman Imperial Army. For this event we developed an exceptional cultural tourism product “The Roman Road 1900”, a multinational tourism product thorough Europe. By a regional development of the event, a global tourism product, a series of sub products, of cultural tourism products may be also developed. Thus, we will show in the following paragraphs the exceptional cultural tourism product “The Roman Way-1900”; we will show the route of Roman troupes, from the entrance at Drobeta Turnu Severin –Traian’s bridge- to Sarmisegetuza passing through Timis-Cerna corridor. TURNU SEVERIN- DROBETA Drobeta was the first place in southern Dacia where the Romans entered. It was the most important center of southern Dacia. The Roman way from Dierna situated alongside Danube was passing through Drobeta and then through the middle of Oltenia to Romula. The large commercial and strategic road, coming from Upper Moesia, passing through Drobeta, was leading to Bumbesti and the valley of river Jiu up to Mures waterside where it was linked to the road to Sarmisegetuza Opia Traiana, the capital of Roman Dacia; to North passing Apulum (Alba- Iulia) Potaissa (Turda)-Napoca (Cluj)-Porolissum (Zaldu) it linked Rome to the Northen border of Dacia. The ruins of Roman Drobeta are spread on 2 km² surface, suffering important damage through centuries. In the 13th century when the new feudal fortress was built, the former Roman town became a real stone quarry. It was used until 1835, when the modern town was founded, the damage also continued on the whole area of the former Roman town being covered by private and public buildings even nowadays. Drobeta was attached to Roman Empire during Traian’s first expedition against the Dacs in 101-102. It was Traian who built the first naval harbor in Drobeta, dug the first Danube shipping canal; and the famous architect Apolodor of Damask built the great bridge across Danube, having a length of 137m and a width of 123m.It was entirely built with stone, the most impressive bridge in the south –east of Roman Empire. Today, in the park of Drobeta, there is a History Museum and there are preserved the Roman camp and the military camp built and dwelled by Roman soldiers of III Campestris, I Sagittariorum militaria equitata, Legio V Macedonia cohorts; the Roman Spas; private and public buildings are visited by many tourists. Drobeta received the title of “town” in 124 when the emperor Hadrian visited Dacia; the inscriptions discovered mentioning the town exact Roman name municipium Aelium Hadrianum Drobetensium. ORSOVA-DIERNA Dierna is mentioned as a Roman town ranked as “municipium” during the emperor Traian, within its name we can find an old Dacian toponymic written differently by many antique sources: Aiapva, Tierna, Zernis etc. Today both the antique Roman town and the medieval fortress are covered by the Danube and the Portile de Fier I dam (Iron Gates). The Roman town Dierna was not as developed as Drobeta; still it was an important place of road transport and naval traffic. At Dierna, the big imperial road turned to Drobeta, coming from Sarmisegetuza through Tibiscum, an important road for shipping the goods and wealth taken by the Romans from Dacia. From the administrative and economic point of view Dierna was one of the most important customs centre in Dacia, also mentioned as station Tsiernensis, a place where people used to pay taxes for the goods and the persons that got in and out of the country. Both
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Dierna and Drobeta were Roman and Dacian-Roman places, even after the Romans left Dacia in the 3rd and 4th century, maintaining a strong connection with the south Danube Romanist. BAILE HERCULANE- AD MEDIAM Baile Herculane, identified with the antique spa Ad Mediam. Romanian balneary and climatic place having arranged thermal springs, hot water pipes, thermae, private and public buildings, temples, sanctuaries, a Roman amphitheatre, and altars with many inscriptions dedicated to Health Gods and other Gods: Aesculap and Hygia, Hercules (Hercules Invictus Salutiferus, Hercules Sanctus), to Gods of Waters (Dis et Numibus Aquarum); to The Genius of the place (Lenus Loci), Venera, Venus, Mercur, Isis. It was the most important spa in Dacia, mentioned during the reign of Hadrian up to the 4 th century BC. There, it was the place where the Romans governors, commanders of Roman leagues and cohorts, important civil servants, soldiers and also the Roman-Dacian local community came for medical treatment or entertainment. Military units that brought their contribution to the construction and security of the Spa were: Claudia 7th legion, Flavia Felix 4th legion, Gernina 8th legion. Here, there are many visiting caves, maintaining traces from Neolithic to Romanian Middle Age; they are situated on river Cerna Valley: Diana Cave or Diana’s spring, Hercules Cave or Hygia; Thieves’ Cave, Steam Cave, Iorgovan’s Cave, Cumont or Traian Cave, Banitii Cave etc. MEHADIA-PRAETORIUM Mehadia village, Caras-Severin county identified with the Roman place Praetorium. Roman camp and civil Roman place, situated on the Timis –Cerna corridor at about 20 km from Baile Herculane, in Zidina. The Roman camp was established by the soldiers of cohort III Delmatarum during the reign of the Roman emperor Traian; it was also a house for the soldiers of Claudia 7th legion, Flavia Felix 4th legion, Gernina 8th legion and 8th Raetorum cohort. The roman camp had dimensions of 142/116, thick walls 1.30m, it can be easily seen even today and it is situated at about 100150m from the national road DN6. Between the national road and the left shore of Belareka river, there have been found many civil buildings, temples and thermae, altars, funeral stones, Roman thesaurus and Roman coins, dating second and fourth century B.C. DOMASNEA- AD PANNONIOS Domasnea village, Caras-Severin county identified with the Roman place Ad Pannonios. At the entrance of the village, at the right side of the national road, there is the spot called by the local people “ Coveiu lui Iocsa”, a Roman place, at the level of the ground there are some wall traces of certain roman buildings. At the North, on the Domasnea Hill towards Teregova, in 1828, it was discovered a military roman diploma, dated in 159 and issued by the roman emperor Antonius Pius. In the basement of Românu Nicolae from Domasnea have been discovered pieces of Roman pavement and Roman coins from the 2nd and 3rd century. At Mala Lunga, it has also been discovered silver Roman coins.On the Cetate hill is localized a ground medieval fortress situated on the left side of the railway. TEREGOVA- GAGANIS Teregova village, Caras-Severin county identified with the Roman place Gaganis. At the exit from Armenis pass , where Timis river meets Hideg river, at the crossroad to Rusca Montana, at 50m on the right side and on the right side of the national road , at a 2 km distance from the entrance of Teregova village, there are: The 8th Raetorum cohort Roman camp whose walls can be easily noticed. The archeological discoveries revealed a monetary thesaurus from the 4th century. At the western side of the camp, on the left shore of Hideg, there have been discovered thermae and other civil roman buildings. On the terrace of the spot Znamen, situated on the south, there is a Roman place dated from 2 nd and 3rd B.C. SATU BĂTRÂN In Satu Bătrân, Armenis village, Caras-Severin County, in the place named “Dealul Bisericii”, there are localized traces of Roman places and some funeral stones having Latin inscriptions. Here we can also find a medieval church from the 4th and 5th century B.C. SLATINA TIMIS In Slatina Timis, in a place not very clearly defined, there is a funeral stone raised by Publius Aelius Ariortus’ son and grandchildren, an important civil servant in the administration of Drobeta, murdered by Dacian-Romans soldiers. BUCOŞNIŢA On the terrace from the right side of Timis river, pretty close to DN6, thre are some traces of Roman walls, a spot full of Roman bricks with the inscription MID. PETROŞNIŢA-MASCLIANIS At „La Lunca”, a spot situated close to DN6, a Roman tower has been discovered.Here one can easily notice some Roman buidings belonging to a Roman establishment. It is possible to be the ancient place Maselianis. 86
VĂLIŞOARA On the high terrace, in front of the Valisoara railway station at “Seş” and ”Ogaşul cu Ţigle”, different Roman buildings have been found , just across the spot ”La Lunca –Petrosnita”.This may be the ancient Roman establishment Masclianis. CARANSEBES Inside and outside Caransebes town, many Roman traces have been discovered, traces of an important rural establishment from Roman times. Thus at Mehala and Câmpul lui Poşta, Câmpul lui Andrei many villa rustica from the 2nd and 3rd century have been identified and in Câmpul lui Corneanu there is a Roman temple. It has also been identified the crossroad of the Roman ways. One road is heading towards the capital of Dacia and the other one towards North, to Roman town Tibiscum-Jupa, then to Lugoj reaching the left shore of Mures river in front of Bulci town. JUPA- TIBISCUM The most important town from the south –west of Dacia and the historic Banat, in the 2nd and 4th century. It is situated at about one kilometer away from Jupa village, on the left side of Timis River. In this place, The Archeological Reservation Tibiscum- Jupa covers 17 ha, having a scientific research institute and also a museum. Here, there are preserved two Roman camps, a military camp with more than 15 buildings, private and public Roman buildings, Roman thermae etc. On the right side of Timis river, at Troian , La Drum,Dâmp, there is a Roman establishment with many Roman buildings, a temple of Apollo, and two Roman places. There have been discovered many traces of Roman existence, even after the Roman administration withdrawal from Dacia, dated 3rd and 4th century B.C. The big Roman camp at Tibiscum has the following measures 320/170 m and it used to belong to the following military camps: ZĂVOI- AGNAVIAE At the village entrance, on the left side of the national road, there is a big ground Roman camp built by the Roman soldiers during the first Dacian-Roman war between 101-102. Around the cementery there have been spoted Roman buildings, built by the I Sagittariorum cohort’s soldiers. VOISLOVA On the terrace in front of the railway station, it is preserved a small Roman camp with walls of stone, 43\37 m, and there is also a civil Roman establishment. It has been also discovered a votive altar dedicated to Mars God, for the health of Septimius Severus and Antonius Pius. This altar was built by the Roman general Caius Gallus, the governor of Dacia. MARGA- PONS AUGUSTI The village Marga ,Caras-Severin county identified with the Roman place Pons Augusti is situated at about 15 thousand steps before Ulpia Traiana Sarmisegetuza.Probably here there has been a customs point, used for all the people who were crossing the mountains to the south of Danube. At Marga, we can see another votive altar dedicated to Nemesis Goddess. It was built by Aelius Diogenes and his wife Silia Valeria for their sons’ health. Aelius Diogenes was a Greek, the leader of the leather bags manufacturers. Also at Marga there are goldfields from Bistra River. BOUTARI- BOUTE Some historians mention an ancient Roman establishment called Boute. BUCOVA-TAPAE A place situated at the border between Caras- Severin and Hunedoara County, where it is located the ancient establishment Tapae. There, two famous battles took place, the Dacian army lead by Decebal against the army lead by Domitian. 87 B.C. and also in 102, against Traian’s army. At Santuri, there are many Dacian fortresses. On Prigor Hill there is an ancient marblefield since the Roman times. SARMISEGETUZA ULPIA TRAIANA AUGUSTA At about 30 km away from Transylvania Portile de Fier (Iron Gates), there is an ancient establishment Tapae- Bucova. According to an old inscription, this was first established “by an order of emperor Cesar Nerva Traian Augutus, the son of divine Nerva and by Decimus Terentius Scaurianus, governor, they established Dacica Colony.” (CIL, II, 1443). The foundation of the new Dacian capital between 108-118, took place on a ground where there was no other Dacian establishment. The population of Sarmisegetuza counted about 15000-2000 inhabitances on a surface of 1500 ha. Today tourists can visit historic places such as: amphitheatre, Augustans Palace, the Roman Forum, Roman thermae, suburban villas, and temples dedicated to warship Gods: Jupiter, Dolichenus, Dis Pater and Proserpina Liber and Libera, Aesculap and Hygeia, Mitras, Nemesis. In Sarmisegetaza village, identical name with the former Dacian capital, there is a Museum which offers the visitors the old image of political, economic and spiritual life of the inhabitances of Dacian Roman capital Sarmisegetuza Ulpia Traiana August. We consider that this global tourism product “The Roman Road 1900” is necessary to be taken over by central and local authorities in order to value it (statues, inscriptions, scientific conferences, mass-media releases, organizing trips by different governmental and non governmental organizations, private 87
organizations) at level of the authenticity, showing a part of Romanian history, a history of those places, a history of the fact that we are an integrated part of Europe. Thus, we have to create a promotional mix, a communication strategy for tourism marketing both at the central level and at the local one. This can be achieved with the help of students attending the classes of Management and Marketing Master. This is also an exceptional tourism product that is suitable for the national and international tourism demands.
Bibliography: 1. 2. 3. 4. 5. 6.
Cristescu I., Costencu M., Authenticity of Cultural Tourism Product – Event “The Roman Road 1900 Drobeta –Sarmisegetuza”, Conferinta Internationala Universitatea de Vest Timisoara, 2005 Cristescu, I., Miracolele Cernei, Editura Hercules, 2000 Tudor D, Orase, târguri şi sate în Dacia romană, Editura Buc., 1968, Benea D., Dacia sud-vestică în secolele III-IV, Timişoara, 1999, Gudea N,Ghiurco I, Din istoria creştinismului la romani, Oradea, 1988, Răut O, Bozu O, Armata romană din Banat, în Banatica, 7, Reşiţa, 1978;
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YOUNGSTERS INSERTION ON THE LABOUR MARKET. A COMPARATIVE ANALYSIS ROMANIA - EUROPEAN UNION Dobre Mihaela Hrisanta Academy of economic Studies Bucharest, Faculty: Economics, Address: Piata Romana, no.6, Bucharest, e-mail:
[email protected], Phone: 0722461378 The insertion of young people into the labor market represents an important issue amongst all the countries within the European Union and this process is studied differently from one country to another. At present the European Union counts about 75 million young people with the age between 15 and 24 years old. This article main objective is to study insertion rate of young people the labour market as well as it deals with their problems. Key words: labor market, insertion rate, unemployment rate Professional insertion should be seen as a process taking place in time as there is a convergence as well as divergences in the dynamics among learning and work. The methods concerning the transition between school and labour evolved lately becoming far more complex and even longer.
Theories about insertion of young people on the labour market :
Initially, insertion of young people on the labour market was explained by taking into consideration the main features/factors such as: age, gender, social origin, etc.;
Thurow10 (1975) explained insertion of young people on the labour market starting with the theory of competition for a job which allows a better understanding of the role of education in the hiring process, as well as the compatibility among job requirements and the level of the preparation of a person;
Diambomba (1995) and Paul (1989) explained insertion of young people on the labour market starting with the theory of human capital focusing on the year of studies;
Vincens (1989) and Diambomba (1995) consider that the process of insertion of young people on the labour market could be explained by the mechanisms of labour market ;
Lepage (1987) and Vinces (1981) explained insertion of young people on the labour market starting with the theory of ‘job search’ which is focused on studying the behaviour of people while looking for a job; However, each analysis concerning the insertion of young people on the labour market takes into account the period of time between obtaining a diploma and searching an employment. In the process of professional insertion could be involved several actors such as: graduates- their evolution depends on the influence of various actors during this process, as well as their behavior do not submit to a strict economic rationality; employers and universities – education.
Main characteristics of young people: In Romania as well as in the European Union was noticed a pattern according to which the insertion of young people become a very difficult process which involves longer period of time after graduating and actually finding a suitable job. Currently, in the world there are around 1 billion of young people with age among 15 - 24 years, 85% of them live in the developing countries. The participation rate among young people decreased at world level
M. Bruyere, Ph. Lemistre, “La specialite de formation: un “signal” de competences specifiques et generales”, 2006, pag.6, 10
89
from 59, 3% to 54, 4% between 1994 -2004 due to longer period of time for education. Currently, within the EU there are around 62 billions of young people, which represents 12, 7% of the entire population. Table 1: Young population in European Union, year 2006 % out of total population 2006 less than 15 years
15-24 years
% out of forecasted total population 2050 less than 15 years
15-24 years
UE27
15,9
12,7
13,4
9,7
UE25
16,0
12,6
13,4
9,7
Belgium
17,1
12,1
14,7
10,6
Bulgaria
13,6
13,6
11,5
8,2
Czech Republic
14,6
13,2
12,6
9,0
Denmark
18,7
11,2
15,7
11,8
Germany
14,1
11,8
11,9
9,2
Estonia
15,1
15,6
14,8
9,7
Ireland
20,5
15,2
16,0
10,2
Greece
14,3
12,0
12,3
8,9
Spain
14,5
11,9
11,5
8,2
France
18,4
12,8
15,8
11,0
Italy
14,1
10,4
11,2
8,4
Latvia
14,3
15,7
14,8
9,5
Lithuania
16,5
15,6
13,7
9,7
Hungary
15,4
12,9
13,8
10,0
Malta
17,1
14,4
14,5
10,7
Poland
16,2
16,2
13,0
9,4
Portugal
15,6
12,2
13,1
9,3
Romania
15,5
15,2
12,5
8,9
Slovenia
14,1
13,1
12,8
9,1
Source: www.eurostat.org The table above shows that Poland, Slovakia and Cyprus have the larger segment of young population (among 15-24 years old). In the opposite direction are Italy, Luxembourg and Denmark. In 2006, Romania recorded a percentage (15,2) above the European average (12,7%). However, according to the estimates until 2050 the number of young people will drop significantly to 8, 9%. According to INSSE there is a similar trend/pattern concerning the evolution of young population until 2025. It is expected a significant drop of young population to 29,3% ( 5,6 billions of young people) until 2025 (if fertility rate remains constant). The main explanations are: a drop in number of deliveries, longer period of time for education, social mobility, woman emancipation, etc. At urban regional level the young population will be around 10,8% (the lowest level) in Bucuresti-Ilfov in 2025 and 12,8% in North-Est.
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Table 2: Evolution of young population during 2004-2025 2004
2015
2025
Urban
14,4%
13,5%
11,6%
Rural
18,3%
16,4%
15,6%
Source: Projection of Romanian population per area, until 2025, page 19 The unemployment rate was 23,4% among young people in January 2007 ( Romania), with Greece being the only one who recorded a higher rate - 24,7%). The rate is 3 times higher that the unemployment rate at the entire population level. Table 3 shows that EU member state recorded higher percentage for young people. Table 3: Education level and occupation level Level of Education
Unemployment Rate 2007
Unemployment Rate 2006
20-24 years
25-64 years
15-24 years
Total
15-24 years
Total
UE27
77,4
69,3
16,8
7,5
36,0
64,3
UE25
77,5
69,1
16,5
7,5
36,9
64,6
Denmark
77,1
81,0
6,5
3,3
63,7
76,9
Poland
91,1
84,8
26,2
12,6
23,5
53,9
Portugal
49
26,5
17
7,6
36,1
68
Romania
76
73,1
23,4
7,5
24,9
59,6
Slovenia
90,5
80,3
10,2
5
35,3
67,1
Slovakia
91,8
87,9
23,4
11,2
25,7
59,3
Greece
84,1
60
24,7
8,7
24,5
61
Ireland
85,8p
65,2p
9,4
4,4
48,0
68,1
France
82,6
66,4
21,3
8,4
28,8
63,0
Source: www.eurostat.org On the one hand, the current situation could be explained by lack of concordance among level of education (a theoretical one) and the demands of labour market and on the other hand by the desire of companies to hire more qualified personal. The importance of the diploma at the beginning of career is higher as the unemployment rate is smaller among the young people with a higher level of education compared to other categories as well as the period of time for finding a job is shorter for an educated person. Occupational rate among young (15-24 year) is smaller than overall population as many of them are caught in the educational system and do not have a job. For the young aged 19-24 years was noticed an increase in education level (university level) from 26,7% in 1998 to 51,2% in 2005. In 1997 to 2006 occupational rate in Romania dropped from 36% to 24% while in UE was noticed an increase (less for 2005 year). Graphic 1 : Occupation rate
Source: www.eurostat.org 91
There was an increase of the gross rate for higher education mainly for women during 1996 - 2007. (Table 4). Table 4: Rate for higher education 1996/1997
1999/2000
2002/2003
2005/2006
Superior
22,2
28
38,9
47,5
Women
23,3
30,8
44
54,4
Men
21,1
25,2
34,1
40,9
Source: www.insse.ro The phenomenon could be explained by an increase in private educational offer at university level as well as by higher qualifications requirements form the employers’ part. The labour market requirements shaped the students profiles. This is the reason why there is a drop in the number of students with technical degree as well as an increase in numbers of students for other profiles both for men and women. (Table 5). Table 5: Students distribution by profiles 2000/2001
2005/2006
Profiles
F
B
F
B
Total
53,5
46,5
55,4
44,6
Technical
28,4
71,6
29,4
70,6
Economic
60,9
39,1
62,6
37,8
Juridical
52,7
47,3
49,3
50,7
Medico-pharmaceutical
64,6
35,4
69
31
University
67,7
32,3
67,5
32,5
Arts
54,9
45,1
55,8
44,2
Source: www.insse.ro The change was caused by the desire of higher incomes or a higher wage for a short period of time. According to a research made by INCMPS11 the most wanted jobs are in the field of: marketing, sales, human resources, IT etc, and in many cases university degree is neglected in the favor of the opportunities in the market. According to the Euro barometers of 2007 the most wanted jobs within EU are in the field of: commerce and administration (20,1%), engineering and constructions (13,3%), IT (10,2%). The main methods12 used by people at the beginning of their career in searching for a job are through: specialized web sites (40%) and acquaintances (22,86%) . Table 6: Methods to search employment for the current job 2007
11 12
acquaintances
22,86%
web sites
40%
newspaper
14,29 %
jobs fairs
2,86 %
recruitment firms
8,57 %
another
8,57 %
http://www.mmssf.ro/website/ro/rapoarte_studii.jsp Data from a research made for the PhD paper “Romanian labour market”, author Mihaela Dobre 92
Based on indicators/ indices above could be concluded that the insertion of young people represents a major challenge, reason for why Ministry of Work and Social Protection took several measures aiming at: increasing occupational rate among young, human development, improving social status of young population, etc. According to Lisbon declaration there is a substantial effort towards diversification of educational system and developing of an European educational system focused on vocational training and involvement of firms in preparing the young even from university.
Bibliography: 1.
2. 3. 4. 5.
6. 7. 8. 9.
Delors, J., L’éducation, un tresor est caché dedans: rapport á l’UNESCO de la Commission internationale sur l’éducation, pour le vingt et unième siècle, Paris, UNESCO et Ed. O. Jacob, 1996; Givord Pauline, L’insertion des jeunes sur le marché du travail entre 2002 et 2004, http://www.insee.fr/fr/ffc/docs_ffc/IP061061.pdf; Insertion des jeunes sur le marche du travail et nature du contrat d'embauche: une approche par la theorie des jeux repetes;http://econpapers.repec.org/paper/fthparima/1998-17.htm; Analyse Jeunes Français, jeunes Allemands :regards croisés sur les premiers pas dans la vie professionnelle, http://www.strategie.gouv.fr/IMG/pdf/NotedeVeille47.pdf;, 27.feb 2007; "L’insertion professionnelle des jeunes d’origine maghrébine en France : des difficultés spécifiques Yaël Brinbaum (Lasmas-IdL, CNRS) et Patrick Werquin (OCDE) http://www.ulb.ac.be/soco/colloquerabat/papiers/articles_definitifs/RS3_Brinbaum_et_Werquin.p df Resultants de l’enquete 2007 sur l’insertion des jeunes diplomes, http://www.cge.asso.fr/presse/Enquete%20Insertion%20CGE%202007.pdf, L’insertion des jeunes par la formation et l’emploi, martie 2007, http://www.cesrchampagneardenne.fr/actualites/actualites/78876_1synthese.pdf; www.cereq.fr http://www.mmssf.ro/website/ro/rapoarte_studii.jsp
93
DISCRIMINATION BY THE GENDER IN ROMANIA Dobre Mihaela Hrisanta Academy of Economics Studies, Faculty of Economics,
[email protected], 0722461378 Trască Daniela Livia Academy of Economics Studies, Faculty of Economics,
[email protected], 0721441446 Generally discrimination appears when some individuals that have a certain feature (for instance belong to religion, race, gender, etc) are discriminated against because of this no matter what their labor productivity might be. Discrimination emerges also when two individuals with the same productivity are paid differently and these differentials correspond to some non-economic features (age, gender, nationality etc). According to the ‘Global Report on Gender Discrimination’ 2006 published by World Economic Forum total equality between men and women still reaches low levels. From 115 countries included in the top ranking, Romania is on the 46th with the same score as Ukraine, Uganda and Trinidad-Tobago. Romania is ok regarding education and health. In this paper we analyse the main differences between women and men, and also the measures which must be taking for eliminate these disfunctions from european integration point of view. Keywords: labor market, statistical discrimination, discrimination, uncertainty, demand for labor The main literature in this field analised the way in which the gender divide the power between men and women taking in account the age, race or other variables (H.L.Moore), in a firm frame, to explain or understand the role of the culture diversity (U Hannerz 1992, M Gullestad, 1991) or the interdependences between cultural and political representations. By discrimination one understands any distinction, exclusion, restriction, preference, different treatment that puts a person or a group to disadvantage when compared to other persons /groups in similar situations. The discrimination reasons are several: race, nationality, ethnicity, religion, gender, sexual orientation, language, age, handicap, etc. In this case we speak of multiple discrimination.(“Ethnographical research showing multiple discrimination”, 2007, ANES). Regardless of its basis, discrimination is forbidden by law in Romania as well as in the other European countries. Discrimination is a general feature of social life and it is rooted into preconception. By preconception one understands rejecting the “other” as member of a group which is invested with negative feelings. Allport (1954) defined preconception as a negative attitude towards a group or towards its members, attitude that stems from a rigid and erred generalization. The social groups defined in terms of “us” versus “them” are the product of one of the most fundamental processes of the human being, namely: the social categorization (Taijfel, 1981). Discrimination is to be considered from both sides: the one of the worker who is discriminated against and the one of the employer who does the discrimination. Modern economic theory of discrimination started with Becker (1971) and was later developed by Arrow (1974). They consider that people have certain attitudes towards their co-workers, towards people they supervise and also towards people they buy things from. Consequently they demand some sort of compensation for working with the members of the discriminated group. Arrow and Phelp (1972) were the first to study statistical discrimination which is founded on the imperfect information in the labour market, determined by the employer’s inability to know exactly how productive his workers are ( that means that two people with the same productivity level but belonging to two different ethnicities will develop differently from a professional point of view.) This particular idea was later on developed by Arrow (1998). Special attention must be paid to the discrimination model proposed by Welch, (1967). He considered that coloured and white workers are hired together due to the complementarity of production. Thus, cooperation among workers of different ethnicities imply a fixed cost that depends only on the number of members in each group and can be influenced by certain discrimination preferences of any group members and by communication problems. The cooperation costs are paid by the minority race and the efficiency of 94
education is decreased among the minority workers if they are hired together with majority workers. Consequently, the educated minority workers will tend to work with members of the same group only. D.J. Aigner and C.G Cain (1977) consider that discrimination based on ethnicity and on gender is a consequence of group discrimination and the latter is inevitable among the individuals of any group. The two researchers define discrimination as the situation in which average salaries are not proportional to average productivity, in other words: the groups with the same average productivity do not receive the same average compensation. Since different salaries are paid to different groups in which the educational standards are identical (by educational standards we refer to the level of training that the workers have before entering the labour market) the balance in the labour market is a discriminative one. Statistical discrimination models are used for explain the inequality from the group. The main vision is that the race or gender can be a sign of productivity taking in account that, productivity is noticed imperfectly and correlated with the identity of the group. Also, if the workers are impatient and they are improving their productivity through the investments in human capital, than the groups which are similar with exception of observable identity of the group can be treat differently at equilibrium. (P. Norman, 2003). In those models this aspect is explain through the fact that workers in minority are hamper because the firms think that, is very probably that those workers to have low skills and because of this the firms will invest lower in human capital because they think that the workers are hamper on the labor market. The discrimination by the gender can be parse also from the anthropology point of view. So, the british anthropologist H.L. Moore(2002) state that according with the feminist anthropology, in different social context the differences are important. Taking in account the eurobarometer realized by the European Comission in july 2006 in Romania, the most prevalent forms of discrimination is due to hindrances (48%), folowed by the sexual orientation (47%) and the last is due to the religion or faith (25%). In European Union, the most important shape of discrimination is due to race (64%), followed by that based on hindrances (53%). The main shapes of discrimination in EU and Romania EU
Romania
Race
64%
39%
Hindrances
53%
48%
Sexual orientation
50%
47%
Age
46%
46%
44%
25%
40%
32%
Religion faith
or
Gender
Source: www.eurostat.org As regarding the life expectancy at birth, we see from the table below that women live much more than men and differences between the two genders declined in period 1998-2005 from 7, 8 years (1998) at 7,3 years (2005). The life expectancy at birth Year
1998
1999
2000
2001
2002
2003
2004
2005
Women
73.3
73.7
74.2
74.8
74.9
74.8
75.1
75.5
Men
65.5
66.1
67
67.7
67.6
67.4
67.7
68.2
differences between women and men
7.8
7.6
7.2
7.1
7.3
7.4
7.4
7.3
Source: HDR, 2007 95
As regarding the gross enrolment ratio for secondary and tertiary education, from the table below we can see that as well in the tertiary education as in the secondary education, women record a high level of enrolment in education. The growth of enrolment ratio for tertiary education is due to growth of educational supply from tertiary private education and also to the high skills enforce on the labor market. In last years, the number of students from the technical education declined. Gross enrolment ratio for education 1998
1999
2000
2001
2002
2003
2004
2005
Gross enrolment ratio for secondary education (%) women
69
70.8
73
76.9
77.1
76.4
78.3
76.2
men
66.6
68
70.4
73.4
73
73
75.1
74.4
1.04
1.04
1.04
1.05
1.06
1.05
1.04
1.02
index Gross enrolment ratio for tertiary education (%) women
27.9
30.8
35.7
39.6
44.9
46.8
49
54
men
23.1
25.2
28.4
30.8
34.1
30
37
40.9
1.21
1.22
1.26
1.29
1.32
1.56
1.32
1.32
index
Source: HDR, 2007 As regarding the employment rate, we can see from the table that for the women this indicator is much lower. Employment rate 1998
1999
2000
2001
2002
2003
2004
2005
women
63.5
61.5
63.5
61.7
60.9
58.7
58.1
59
men
66.6
68.9
70.4
73.4
73
73
75.1
74.4
Source:UNDP.org United Nations Development Programme calculate a gender-related development index (GDI) taking in account three indicators: life expectancy at birth, education level and the level of wages. This index is between 0 and 1. The index 1-GDI measure the gap toward a real equality between gender. Year
GDI
1-GDI
1998
0.761
0.239
1999
0.758
0.242
2000
0.765
0.235
2001
0.778
0.222
2002
0.787
0.213
2003
0.791
0.209
2004
0.8
2005
0.801
0.2 0.199
Source: UNDP and own calculations 96
We can see that the distance that our country has to cover declined in the period 1998 and 2005. According to the ‘Global Report on Gender Discrimination’13 2006 published by World Economic Forum total equality between men and women still reaches low levels. From 115 countries included in the top ranking, Romania is on the 46th with the same score as Ukraine, Uganda and Trinidad-Tobago. Romania is ok regarding education and health. But women’ representation in politics reaches low levels and Romania’s country profile shows that the ratio between a woman’s wage and a man’s wage is 0.64. Within the EU opportunity equality between women and men was marked in 2006 by two major events: the adoption by the Commission of a framework to follow for equality 2006-2010 and the adaptation by European Committee of an agreement for opportunity equality between women and men. In the spring of 2006 the European Committee highlighted that its policies aimed at opportunities equality between women and men are essential instruments for economic growth, prosperity and competitivity. In this way they have in mind:
swiping out gender differentials in labor market;
favoring a better equilibrium between women and men by sharing private and family responsibilities;
warranting total support for the policies of opportunities equality between women and men by cohesion and rural development policies;
warranting the enforcement of the law framework that will swipe out discrimination in labor market.
Bibliography: 1. 2. 3.
Becker, G. (1957), The Economics of Discrimination, Chicago, University of Chicago Press; Baudelot and A. Lebaupin, Wages from 1950 to 1975, Economics et Statistics, July,1979; Dennis J. Aigner, Glen G. Cain , Statistical Theories of Discrimination in Labor Markets, Industrial and Labor Relations Review, Vol. 30, No. 2., 1977; 4. Kevin Lang, A Language Theory of Discrimination, The Quarterly Journal of Economics, Vol. 101, No. 2. , 1986; 5. Kenneth J. Arrow, What Has Economics to Say about Racial Discrimination?, The Journal of Economic Perspectives, Vol. 12, No. 2., 1998; 6. Norman P., Statistical Discrimination and Efficiency, The Review of Economic Studies, Vol. 70, No. 3., Jul., 2003; 7. J.M. Plassard, Discrimination sur le marche du travail et information imparfaite, Editions du CNRS, 1987 ; 8. Perrot. A , Les nouvelles theories du marche du travail, Edition. Decouverte, Paris. 1992; 9. http://www.weforum.org/pdf/AnnualReport/2006/ 10. http://ec.europa.eu/public_opinion/archives/ebs/ebs_263_sum_fr.pdf-la discrimination dans l’Union Europeenne. 11. www.pnud.org
13
http://www.weforum.org/pdf/AnnualReport/2006/ 97
THE SITUATION OF LONG TERM UNEMPLOYMENT IN BIHOR. FROM ILLUSION TO REALITY Dodescu Anca University of Oradea, Faculty of Economics,
[email protected], Pop Cohuţ Ioana University of Oradea, Faculty of Economics,
[email protected] Around Bihor county, there has lately appeared this “myth”of a very low unemployment rate (values below the average in the Community, among the lowest in Romania). The trans-border migration, the presence of a high occupancy in the rural area, especially within an agriculture of subsistence are just a few aspects behind this myth. The long term unemployment is, at the same time, an important aspect that calls forth a realistic investigation. The necessary and inevitable restructuring in the regional economy will lead in the near future to major challenges in the field of occupancy. This study undertakes not only the investigation of the theoretical and operational approaches of the LTU in Romania and EU, but also the apparently favourable situation of the LTU in Bihor in the last three years, in order to identify the real problems and shape up a strategy that would allow active measures adapted to the individual situations and needs identified. The study presents preliminary results of the research within the project “eWork today – training program oriented towards adaptation / orientation of the active labour force to the requirements of the informational society”, financed through the Program PHARE 2005. The data used were disclosed, on the basis of a collaboration agreement within the aforementioned project, by the AJOFM BIHOR. Keywords: unemployment, long-term unemployment, active labour force, active occupancy measures, regional development, local development.
Introduction Even if the unemployment rate in Romania is situated below the community average, fact explained first of all by the relatively high rate of occupancy in the rural area, the high level of unemployment with the youth (15-24 years old), the long term unemployed as well as the persons looking for a job in rural areas and the persons working in agriculture for low incomes represent structural “disfunctions” of the unemployment in Romania, whose defeat represents the key issue to approach, according to EU Directive Lines of the strategy of Labour Force Occupancy and to the objectives of the National Strategy for Labour Force Occupancy 2006-201014. The necessary and inevitable restructuring of the Romanian economy especially the restructuring of agriculture and services will demand human resources able to meet the transformation of the economy and of the labour market, improvement in the quality of the labour force by substantial investments in the development of the human capital. In this circumstance the long term unemployment issue is more difficult as it requires active measures adapted to the individual situations and needs15. According to the operational approaches of the long term unemployment both in Romania and in EU we include in this category of long term unemployed: young unemployed (15-24 years old), after 6 months from the moment of getting out of work and the adult unemployed (25-64 years old), after a period of 12 months from getting unemployed. This work undertakes to analyse the situation of the long term unemployment in Bihor in the last three years.
Several aspects behind the “myth” of the very low unemployment rate in Bihor Around Bihor county, there has lately appeared this “myth”of a very low unemployment rate (values below the average in the Community, among the lowest in Romania). In May 2008 the unemployment rate in Bihor is situated at 2.5%, under the European and national average (average unemployment rate in EU 14
National Strategy for Labour Force Occupancy 2004-2010, published in Monitorul Oficial no. 834/2004; National Action Plan for Labour Force Occupancy, published in Monitorul Oficial no. 698/2006 15 Short and medium term strategy for the continuous professional training 2005-2010, published in Monitorul Oficial no. 747/2005 98
6.9% at the end of 2007, unemployment rate at the end of May 2008 at a national level 7.4%), Bihor being one of the counties with the lowest unemployment rate in the country. Starting with 2000, in Bihor the unemployment rate has been decreasing: 4.6% in 2000, 3.2% in 2002 and 2.7% in 2005, 2.2 % in 2007. The trans-border migration and the existence of an important occupancy in the rural area especially within the agricultural subsistence are only some aspects behind these generally positive data and evolutions. Another relevant aspect emerges if we analyse structurally the situation of unemployment and it is related to the vulnerability of the age and the qualification level of the categories most affected by unemployment: people aged between 30 and 49, both in general and in what the female population is regarded; young people between 18 and 24, respectively workers. The long term unemployment is, at the same time, an aspect requiring realistic investigation. In the current terminology, the long term unemployed that come to register at AJOFM are classified in two categories: o those that come from work, had benefited from unemployment benefits but exceeded this period of 6,9 or 12 months; o those that do not come from work – and thus could not benefited from unemployment benefits, but come to register themselves at AJOFM just to receive a certificate proving their registration. On the basis of this certificate, according to Law 416 concerning the guaranteed minimum income, they get money allowance from the residence town hall. This aid is provided, in short, with the following conditions: those apt to work have to be registered with AJOFM and to perform 72 hours for the community. If they refuse the workplace they are sent to by AJOFM they do not get a certificate and, implicitly, they do not get a financial aid. Hence, once in 3 months, they regularly come for the certificate. In what regards the implementation of the active measures of occupancy concerning the long term unemployment, the problem is the high rate (over 99.5%) of long term unemployed of the second category, that do not come from work and do not wish to get employed, being very little receptive to the active measures of occupancy and, implicitly, the low rate (under 0.5%) of the unemployed of the first category – whose period of unemployment benefit had expired and who usually find a workplace because they come from work. The project “eWork – today” was based on these very aspects, identified as risk factors within the Bihor County Development Plan 2007-2013, namely low unemployment rates with the population aged 30 to 49 and, at the same time, high unemployment rates with the youth and the workers, a problem that requires attention from the educational system, with a special emphasis on the life long education and the vocational orientation16.
Project “eWork – today” The project “eWork – today – training program oriented towards adaptation / orientation of the active 17 labour force to the requirements of the informational society” tests an innovative and complete educational solution based on modern devices (eLearning platform, multimedia laboratory) on a target group formed of 40 unemployed persons: 20 young unemployed aged 18 - 24, with a low qualification level that do not meet the requirements of the labour force, with a view to obtain a qualification in order to get a well-remunerated work place and 20 long term unemployed aged 30 - 45 with a view to re-enter the labour force market, more active and better qualified. The project “eWork – today” has started from the idea that the motor forces, that can trigger the change in the regional reality in order to fulfil the general objective of appropriate regional development of the labour force market, are: mastering basic technical knowledge and insuring a degree of confort in using them, on one hand, as well as proving soft abilities 16
see http://www.cjbihor.ro/plan.php#- - The Bihor County Development Plan 2007- 2013 “eWork – today - training program oriented towards adaptation / orientation of the active labour force to the requirements of the informational society”, Program PHARE 2005, Contract: PHARE 2005 / 017553.04.02.01.01.612 Active occupancy measures. Period of implementation: 03.01 – 31.12. 2008; Total grant: 118080 euro; Project Manager: prof. Anca Dodescu, PhD, Project Scientific Director: lecturer Ioana Pop Cohuţ, PhD. 17
99
that would insure the person’s adaptation to the new forms of work – presenting labour offer compatibly with the demand, understanding modern organizational culture and a spirit of entrepreneurship, on the other hand. The two notions that represent the basis of the program of professional training are – an organizational culture in concord with the new economy and the entrepreneurship spirit that could support the economic development in the context of the integration to the single European market, extremely competitive. In this respect, the program of continuous education and training, eWork, includes modules designed for developing competences of the hard skills type: Computer ABC module, Module of using modern technology in performing the economic activity (administration, economic control, database operation - reporting) and soft skills type: Module Organizational/Entrepreneurship Culture, Module Preparing a professional CV and going for an interview, the services being personalized. The end goal of the project is successful placement on the labour market of at least 50% of the trained unemployed persons as well as the stimulation of their entrepreneurial spirit aiming at their starting own businesses that could be administrated according to the competences gained.
The situation of the long term unemployment in Bihor county from January to April 2008 The current study was called forth by the escalation of the difficulties emerged in the identification and selection of the target group formed of long term unemployed persons in Bihor county within the aforementioned project “eWork today”. The study presents the preliminary results of the research. The data used were disclosed, on the basis of a collaboration agreement within the aforementioned project, by the AJOFM BIHOR. According to the data provide by The County Agency for Labour Force Occupancy (AJOFM) Bihor, valid for April 2008, there are currently 6108 unemployed persons in the county, 2597 of whom are women. The number of those receiving an unemployment benefit comes to 1688 and of those not receiving one to 4420. From the statistics disclosed by the AJOFM it can be seen that the total number of unemployed persons arising from the private sector is 2663. The number of the long term unemployed persons is 943. Regarded structurally, the situation of the long term unemployed persons in Bihor county in the years 2006, 2007, 2008 is presented in Figure no. 1. Fig. no. 1. Situation of the long term unemployed persons in Bihor county in 2006-2008 Indicator
April 2006
April 2007
April 2008
TOTAL LTU adults registered from which:
1780
763
943
LTU adult women
711
286
355
LTU adults benefiting from L.416/2001
1780
763
943
LTU adults of Romani ethnic group
1460
610
773
LTU adults from rural environment
1530
671
801
LTU adults participating in an active measure
251
301
181
From which women
72
107
74
Source: AJOFM – Bihor, April 2008 The number of long term unemployed persons registered with AJOFM was of 1780 in 2006, 763 in 2007, respectively 943 in April 2008, which indicates a decrease with approx. 42.86% in 2007 as compared with 2006, respectively a growth of 23.59% in April 2008 as compared with 2007. As for the structure of the long term unemployment, we can note the following evolution, namely: the percentage of LTU adult women registered a slight fluctuation during the three years analysed from 12% in 2006 to 11% in 2007 and a recovery to 12% in 2008 as we can see in Figure 2,3 and 4.
100
Fig. 2 Situation of LTU in Bihor county, April 2006
Source: AJOFM – Bihor, April 2008
Fig. 3 Situation of LTU in Bihor county, April 2007
Source: AJOFM – Bihor, April 2008
Fig. 4 Situation of LTU in Bihor county, April 2008 At the same time we may note that the number of LTU adults participating in an active measure altered significantly from 251 people in 2006 (4%), increased to 301 in 2007 (11%) and then decreased quite substantially to 181 people, i.e. a percentage of only 6%. It is also relevant to observe the large number of persons benefiting from Law 461/2001: 1780 in 2006 (32%), 763 persons in 2007 (29%) and this year’s substantial increase to 943 people.
Source: AJOFM – Bihor, April 2008 What is worrying for the years 2006, 2007, 2008 is the percentage of 100% of long term unemployed persons benefiting from L. 416/2001 and the very low percentage of those benefiting form active measures. The explanation is related to the high percentage of long term unemployed people of the Romani ethnic group – over 80% (82% in 2006, 81.19% in 2007, 87% in April 2008) and over 85% people from the rural areas (86.97 % in 2006, 87% in 2007, respectively 85% in April 2008), both categories replying very hardly, almost not at all, to the formative measures. As a matter of fact, the percentage of those that benefit from active measures, counselling, mediation, training courses etc. is quite low – 10.81% in 2007 and 19.19% in 2008 but although they registered for these measures for occupancy they do not participate except from a very small percentage; at the same time they manifest a low interest in the unqualified jobs they are sent to by the AJOFM. The only aspect that is not worrying is connected to the percentage of women in the category of the ling term unemployed, fewer than 50%, in all the cases considered. Taking into account these data, for the mentioned project, aiming to select the target group – long term unemployed people aged between 30 and 45, we focused on the 943 long term unemployed people in Bihor county. At a closer analysis we noticed that in this age category there are approx. 30%, from who only a percentage of approx. 8.66% have as completed education form at least a complementary training for apprentices, a professional school or specialised highschool. From these, a percentage of 7.69 (i.e. 2 people) were willing to meet the representatives of the project, neither registering for the free courses offered, though. 101
These peculiar problems could become the basis of some active measures of occupancy that would answer the need featured by the long term unemployed. By now, the programs addressed to the long term unemployed have not considered these particularities and the special programs have not yet been implemented in Romania. In our opinion, a more intensive use of the active measures focused on the professional formation, as well as a promotion of occupancy local partnerships to identify the vulnerable groups and secure their inclusion in the labour market are possible solutions to be applied, at this very moment, in the issue of the long-term unemployment.
Orienting bibliography: 1.
Program PHARE 2005, Contract: PHARE 2005 / 017-553.04.02.01.01.612 Active occupancy measures, “eWork – today - training program oriented towards adaptation / orientation of the active labour force to the requirements of the informational society”, Period of implementation: 03.01 – 31.12. 2008; Total grant: 118080 euro; Project Manager: prof. Anca Dodescu, PhD, Project Scientific Director: lecturer Ioana Pop Cohuţ, PhD. 4. *** Strategia Naţională pentru Ocuparea Forţei de Muncă 2004-2010, published in Monitorul Oficial no. 834/2004; 5. *** Planul Naţional de Acţiune pentru Ocuparea Forţei de Muncă, published in Monitorul Oficial no. 698/2006 6. *** Strategia pe termen scurt şi mediu pentru formarea profesională continuă 2005-2010, published in Monitorul Oficial no. 747/2005 7. *** Planul de dezvoltare al judeţului Bihor (2007 - 2013) 8. *** Anuarul Statistic al Judeţului Bihor pe anul 2007 9. *** Anuarul Statistic al României pe anul 2007 10. *** Direcţia Judeţeană de Statistică Bihor 2007 11. *** Agenţia Judeţeană de Ocupare a Forţei de Muncă – Bihor 12. *** Legea nr. 107/ 2004.
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THE INTERNE, THREAT OR TOOL FOR TRAVEL AGENCIES? Dodu Silvia Patricia Universitatea Româno-Americană, Facultatea de Economia Turismului Intern si International, B-dul Expozitiei, Nr 1B, Sector 1,Bucuresti,
[email protected],telefon: 0722547662 The popularity of the Internet changes the way the travel business is conducted, changing the patterns of traditional distribution of tourism services and products. The Internet represents a tool for travel agencies but can also be a powerful weapon against the traditional distribution. The process of breaking the usual distribution channels is known as disintermediation. Nowadays, in the travel industry, the majority of the travel agencies and tour operators have developed into “brick-and-click” organizations – traditional operators who expanded into the e-commerce area, named cybermediaries. The competition between travel intermediaries is based on the need to reach the clients as directly and fast as possible, and the Internet comes to fulfill this issue. Suppliers attempt to use the Internet as a device to promote their products and services directly to end-users and thus try to avoid the commissions paid to intermediaries. Keywords: tourism distribution channels, travel industry, Internet, travel agencies, disintermediation.
The tourism distribution channels revolution The future trends affecting the travel industry, such as demographic developments, changes in consumer demand, changes in product development and distribution channels, but also the climate changes and new tourism flows, can significantly transform the business travel in the coming years. Tour operators and travel agencies must understand these changes and adapt their business way of thinking to the needs of tomorrow’s travelers: how people will travel, how they will want to spend their time on trips and holidays, the future alternatives for transport, accommodation and other services available, the boost in those motivations for travel that are less important today, all these questions about tomorrow’s travel must get an answer today. Identifying the business strategies to cope with all these evolutions and trends will be the best guarantee of success for the market players savvy enough to use them in their advantage. Between all these aspects, the progress of technology brings in a number of issues for travel agents and tour operators to deal with, especially those related to the distribution of the tourism products and services. The distribution revolution that occurred a few years ago impacts the travel supplier sector, creating a new reality that companies in the field must face.
‘‘In tourism, the position of the distribution sector is much stronger: trade intermediaries (travel agents and tour operators of course, but also charter brokers, reservation systems and other travel distribution specialists) have a far greater power to influence and direct demand than their counterparts in other industries do. Since they do, in fact, control demand, they also have increased bargaining power in their relations with suppliers of services and are in a position to influence their pricing, product policies and promotional activities’’(1) Tourism distribution channels can be either direct or indirect: direct channels normally link suppliers and consumers without the aid of intermediaries, while indirect distribution channels involve a wide range of intermediaries such as tour operators, wholesalers, consolidators, travel agents, corporate travel departments, incentive travel companies, as well as diverse organizations or associations. All of these channel operators have the potential to significantly influence the travel patterns and behaviors of specific travel markets. Generally, the closer the destination is to the consumer in physical, product awareness and experiential terms, the more direct the channel of distribution becomes. But, in the past years, Internet has significantly changed the distribution channels in the travel industry. Traditionally, travel agencies give advice on destinations and make arrangements for transportation, hotel accommodation, car rentals, tours, and recreation, but at the same time, travel agents have to provide information on many other aspects, such as destinations, types of packages available, weather conditions, attractions, visas, and currency exchange rates. Also, they have to study a large number of sources for information on departure and arrival times, fares, hotel ratings and accommodations, but also organize famtrips in order to check the quality of the hotels and restaurants and evaluate the standards of comfort and cleanliness of the services they recommend to their clients. Tour operators are those who assemble holiday 103
packages, and, in Europe, those who contribute to the development of the tourism industry by generating tourist flows and by providing access to affordably-priced vacation packages. Tour operators are creators of vacation packages focused mainly on the leisure segment, with a role of intermediary between suppliers of tourism services and end-users of such services, a role that is fulfilled by assembling the various elements of supply (accommodation, travel, food, and entertainment services) and distributing them either directly or through travel agencies. We can argue that tour operators are the key intermediaries across the entire chain and their role is decisive in moving the tourism product from suppliers to end-users. Other players like wholesalers and consolidators are more recent on the market and rely on the use of various IT platforms. But, what has the most significant role in distribution channel nowadays is the Internet and the way it changes the pattern of traditional distribution, shocking the market by the rapid transformations which it generates across the whole industry. The popularity of the Internet led to new companies entering the market, creating an explosion of virtual operators. Therefore, the Internet must not be treated simply as a promotional aid or distribution device, but as a major force in itself that profoundly changes the way tourist business is conducted. Indeed, the Internet represents a tool for travel agencies and tour operators to develop their business, to market it, to get information and partnerships, but it can also be a powerful weapon against the traditional distribution.
The major threat for travel agencies is disintermediation Right now, traditional travel agencies are being threatened not only by integrated tour operators, which control their own distribution channels, but also by the expansion of alternative distribution channels such as the Internet, Teletext, call centers, and even travel TV channels. This process is called “disintermediation” (2). Disintermediation means suppliers getting closer to their customers and eliminating all types of intermediaries that impede this process and add needless costs. The competition between travel intermediaries is based on the need to reach the clients as directly and fast as possible, and the Internet comes to fulfill this issue. Suppliers have the opportunity to use the Internet as a tool to promote their products and services directly to end-users and thus try to avoid the commissions paid to intermediaries. The airline industry already took a number of important measures regarding the level of commissions paid to the travel agencies for their services (capping or reducing these commissions – these days zero commission is the norm – represented a strong blow for ticketing agencies that used to rely on the reservation fees charged to airlines). Airline companies encourage customers to call the airline directly, saving commissions and disintermediating their travel agents. Hotels also create their own websites to reach their clients and more than that, they can now employ various price policies and loyalty programs that yield a higher price transparency and more user-friendly interfaces. Suppliers believe they no longer need an intermediary to sell their products. Direct marketing on the Internet is cutting into the traditional intermediaries’ business. Using information technology to develop and tighten supply chain relationships can reduce costs and bring higher quality travel products to the market. This technology can also contribute to minimizing transaction costs, lowering uncertainty, sharing market information, and aiding in distribution channel efficiency. Providing computer systems that integrate travel businesses with suppliers, distributors, and retailers is the crucial first step toward developing a successful e-commerce business model(3). Now, the suppliers rely on GDS systems (Global Distribution Systems) for connecting their products to the travel agencies networks, which subsequently, distribute them to the final consumer. As the Internet developed, several alternative distribution systems have emerged (among which, giant search engines such as Kayak.com, Sidestep, Inc., and Yahoo/Farechase), offering travelers multiple possibilities to choose and book their travel, while traditional suppliers only have access to their own offering of products and services posted on their websites. At the same time, some GDS have been moving into the direct distribution of these services, using their own websites: Expedia, Travelocity (owned by Sabre; Travelocity, the European online travel leader also owns several well-known brands, such as lastminute.com, holidaysauto.com, Site59, Travelocity Business, Travelocity on Location, etc), Orbitz (part of Travelport). The strategy of these companies focuses on the continuous adaptation to the evolution in market demand, relying on several research studies that suggest that the future of the travel industry belongs on the Internet. Nowadays, in the travel industry, the majority of the travel agencies and tour operators have developed into the “brick-and-click” organizations – traditional operators who expanded into the e-commerce area. Also, a 104
few years ago, new companies appeared on the market; these cybermediaries are the new Internet-based intermediaries who have arisen and are independent of travel agents and airlines (although, in some cases, the more traditional players invest in them). In fact, when an intermediary offers its services over the Web, it is called a cybermediary. With the wide adoption of e-commerce in travel and tourism industry, the Internet has become an important travel service delivery channel, and the traditional travel agency has been under a severe disintermediation threat. A good example of Internet disintermediation in this industry was represented by the companies like Expedia, Priceline, Travelocity, which put out of jobs an important number of travel agents virtually overnight.
Rapid growth of online travel These days, the online travel market is experiencing a profound evolution. Information and communication technologies on one hand, and tourism/travel on the other are among the largest and fastest developing industries in the world. Online travel markets in the US, Europe and the Asia-Pacific region are at various stages of development. The US is the world’s largest and most mature market; growth is strong, but it is slowing down. Europe, less than half the size of the US market, still has much upside potential. While the UK, France and Germany are approaching maturity, Southern and Eastern Europe have untapped potential (4). Tabel no. 1 US Online Leisure / Unmanaged Business Travel Sales
Year 2003 2004 2005 2006 2007 2008 2009 2010
(2003 – 2010) Billions USD Increase vs. prior year (%) $ 41.0 100.0 % $ 52.3 27.6 % $ 64.9 24.1 % $ 78.8 21.4 % $ 93.8 19.1 % $ 109.7 16.9 % $ 126.9 15.7 % $ 145.8 14.9 %
Source: eMarketer, March 2007,http://www.emarketer.com/ According to eMarketer, US online sales of leisure and unmanaged business travel (consisting of airline, hotel, rental car, cruise and vacation package reservations) will reach $108 billion in 2008 and is estimated to reach $126.9 billion by 2009. Sales will remain strong out to 2010, although growth rates will steadily decline. Tourism in U.S is mainly domestic and 90 percent of sales are made online. In the meantime, in the European market, online travel sales reached EUR 49.4 billion in 2007. A further increase of about 18% during 2008 to about EUR 58.4 billion may be expected (22.5% of the market). The European online travel market could increase by another 8.5 bn. EUR or 15% in 2009 to reach EUR 67 bn (5).
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David Roche from Expedia submits that the online European travel market is still immature, with millions of e-buyers entering the market annually, with very little web experience, perhaps placing a brake on the level of innovation that firms can undertake.”(6) But, in Europe, the Internet is now nearly twice as important generally compared to travel agents as an information source, although the travel trade is still very important in terms of travel distribution. And, given the rise in dynamic packaging offered directly by tour operators to clients booking online, the travel trade is not about to lose its importance as a distribution channel (7). The European online travel market is not following exactly the same pattern as the US, Europe remains a package holiday market (nearly 60% of Europeans opt for a package, or create their own as shown in IPK reports) with consumers buying traditional packaged holidays as well as dynamical packaged breaks via the Internet. Tabel no. 2
Breakdown of European pre-bookings (Jan. – Aug. 2007) Packages 59 % Accomodation only 16 % Transport only 24 % Others 1% Source: IPK International's European Travel Monitor, November 2007. The figures show that concerning online travel sales by channel, the largest share is held by supplier web sites (56%), and only 12% by tour operators. Tabel no. 3 Online Travel Sales in Europe, by Channel, 2006 (% of total)
Percentage (100%)
Supplier Web sites
56%
Online travel agencies
32%
Tour operators
12%
Source: PhoCusWright, "Europe Online Travel Overview" preliminary results, April 2007 In 2007, the breakdown of the market by type of service was as follows: Airtravel 57%; Hotels (and other accommodations) 17%; Package tours 14½%; Rail 7½%; Rental cars (and car ferries) 4%. The European online travel market (including the 12 newest EU member countries) may reach EUR 67 bn. by 2009, which is about 25.2% of the total market for selected travel and tourism services.
The future of travel agencies Numerous marketing research studies forecast for 2008 some interesting changes in the customer behavior. “The online travel industry has reached a point where 80% of travelers are online and growth for online 106
bookings, which currently stands at $112 billion, has virtually stalled – with only single-digit gains. Satisfaction with online bookings is decreasing as only 49% of online bookers feel it’s enjoyable to book a trip online, down from 53% last year. 24% of people feel it’s more convenient to research travel offline, versus 20% last year”(9). But despite the fact that travel and tourism products can easily be distributed and sold on the Internet, and despite the impressive growth rates of the online travel market shown above, the market share of online travel sales in the total travel market still remains relatively small, being estimated by Marcussen at 19.4% in 2007 and 22.5% in 2008. Despite the rise of online travel sales, the travel agency distribution channel represents a large and dynamic opportunity. Travel agencies must focus on consulting and niche markets. Those who are experienced in the trade are now freed up from completing basic tasks and can concentrate on planning complex itineraries and using their expertise to sell. The role of agents has changed from taking reservations to offering advice and consulting services for customers. Travel agencies now look out for a consumer’s best interest by using IT resources to help them find the best products. In the future, travel agents will increasingly become agents of the travelers rather than agents of the suppliers, focused on customizing travel packages and services. As the Internet increasingly becomes the standard tool for travel planning, travel agencies can use the Internet opportunities not only for promotion, but also for new purposes, such as collecting and researching information and gaining access to new business partners, suppliers, and services. At the same time, the Internet is primarily used as a source of information and product & price comparison instrument, especially in Europe. Not all individuals visiting travel websites also book online, while others, from the very beginning, prefer the personal contact either face to face, or via phone or e-mail. Due to the increase of Internet technologies, more traditional travel intermediaries are adopting IT to provide added value to travel consumers. “IT has thus become a vital competitive advantage for travel agencies, as they use ecommerce development strategies to retain performance advantages. Therefore, ecommerce creates opportunities for the re-intermediation of the on-line travel agency”(10) The level of experience, knowledge and expertise of travel agencies already convinced some customers willing to pay for the extra value incorporated into the tourism services and products they are looking for. In their role as information consultants, many agents now have access to a far wider audience than they have had traditionally. Currently, travel agents tend to market to local consumers, but the Internet gives travel agents the opportunity to market to non-local consumers who wish to travel to those agents’ own vicinity. The incoming agents will be able, more than anyone else, to handle the travel plans of non-local customers. It’s obvious that now it’s much harder, but not impossible, for travel agencies to sell and compete. Tour operators and other players at the wholesale level in markets that traditionally rely heavily on retail sales through independent travel agents will start launching websites offering the possibility of direct bookings, thus bypassing the travel agents. For example, airlines are increasing their percentage of direct sales that bypass the travel agents. Thus, the survival of threatened intermediaries depends on their ability to differentiate themselves in areas other than those in which economies of scale are the sole distinguishing feature. Research indicates, for example, that much of what travel agents do for airlines is routine and transactional, providing little added value, and thus easy to disintermediate. “As the use of the Internet becomes second nature for travelers, they will expect capabilities well beyond simple rate search and reservations. These include features such as electronic folio access, virtual concierge and integrated trip planning”. (11) What travel agencies can do is enter the online travel segment and add value to the products they recommend to their customers, and also adopt survival and adaptation strategies based on new technologies that will allow them not only to stay in business, but also to thrive in the new competitive environment.
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Bibliography 1. 2.
WTO, Distribution channels, World Tourism Organization, Madrid 1975 PRO€INVEST, Profile of the tourism sector in the EU and opportunities in relation to the Caribbean Region, Deloitte Touche Tohmatsu Emerging Markets (UK) Ltd, 2004 3. Vesna Loborec- E-Business Opportunities Amongst Slovenian vs. Croation Travel Agencies: A Five Year Comparison, High School for Hospitality and Tourism in Ljubljana, Slovenia, http://www.phdworkshop.org/papers/Loborec-Vesna.pdf 4. Jeffrey Grau, Online Travel Worldwide: A Mosaic of Separate Markets, August 2006, eMarketer 5. Carl H. Marcussen, Trends in European Internet Distribution - of Travel and Tourism Services, Centre for Regional and Tourism Research, Denmark, Updated 28 January 2008 6. David Roche, Vice President, EMEA, Expedia, as quoted in EyeforTravel, June 2006 7. IPK International, A World Travel Trends Report, Message from the PisaForum, 2007November. 8. Carl H. Marcussen, ibidem. 9. Henry Harteveldt, vice president & principal analyst of Forrester Research, keynoted the conference with a presentation titled “Successfully Navigating Uncharted Waters.” 10. Vesna Loborec: ibidem. 11. Paul Chiu, Managing Partner, Accenture, April 2006, quoted in Online Travel in the US:Pursuing Customer Loyalt, eMarketer, July 2006.
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THE BOUNDARIES OF THE FIRM.THE CASE OF OIL INDUSTRY IN ROMANIA Dudian Monica Academy of Economic Studies, Faculty of Economics, Address: Bucharest, Piata Romana 6, Romania, Email:
[email protected], Cell phone: 072323506 Traşcă Daniela Academy of Economic Studies, Faculty of Economics, Address: Bucharest, Piata Romana 6, Romania, Email:
[email protected] , Cell phone: 0724365352 Mitrache Andreea Academy of Economic Studies, Faculty of Economics, Address: Bucharest, Piata Romana 6, Romania, Email:
[email protected] , Cell phone: 0726685320 Georgescu Adriana Academy of Economic Studies, Faculty of Economics, Address: Gral Constantin Budisteanu, Nr. 28C, Sector 1, Bucharest, Email:
[email protected] , Phone: 031 407 90 42 The economic theory of the firm has met an exponential growth in the last decades different from the traditional neoclassical approach. In the first part of the paper we are skimming through the most spread approaches, namely the theory of incomplete contracts and evolutionary school. In the second part we apply the explications on integration provided by the economics of transaction costs with an example on the oil industry in Romania. A brief qualitative analysis reaches out the conclusion that cutting transaction and agency costs is one of the factors that leads to integration within the studied sector. Keywords: transaction costs, agency theory, evolutionary economics, integration, oil JEL Classification: D23
Introduction The fast organizational and technological changes of the last years, globalization and the more noticeable restrictive character of resources have lead to the reconsideration of the economic theories of the firm and development of new approaches. But what are the reasons that lay beyond the existence of the firm? How much can it develop? These are opened questions to which microeconomics provides a large offer of answers, in the form of a system of new theories or just interdependent hypotheses. The movement of the borders of the firm in the global economy due to mergers and acquisitions carried on at global, regional or just local level leads to the increase of the degree of horizontal or vertical integration. As an example, in the region of Central and Eastern Europe in 2007 mergers and acquisitions summed 192.6 billion dollars of which 4.4 % carried on in Romania increasing by 83.8% compared to 2006. By these processes similar or different interdependent activities are placed under the roof of the same firm. Studying the causes of integration can’t be separated from the analysis of the nature of the firm even though in this paper our goal is to explain the limits of the development of firms. The causes of integration as economic theory presents them can be grouped in a few categories and these are: acquiring or increasing market power and monopoly profit, protection against competition, cutting transaction costs and agency costs, correction of market imperfections, skipping some regulations, increasing the degree of security in supplying production factors. By the present paper we don’t realize an exhaustive presentation of the nature and limits of the firm but the most important features within the theory of incomplete contracts that includes transaction cost economics, theory of property rights and agency theory. Yet while exposing the economic literature in this area we’ll refer to other approaches, too for a clearer delimitation of the topic against contemporary theoretical background.
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Theoretical Background It was in 1926 when Pietro Sraffa in his article “The laws of returns under competitive conditions” that questions the model of perfect competition. But the paper to be the cornerstone of what today we call economic theory of the firm is “The nature of the firm” published in 1937 by Ronald Coase, in which the author asks himself why the firm exists if according to the model of general equilibrium shows that the market allocates efficiently the resources. Coase argues that using the mechanisms of prices is not for free in a world dominated by uncertainty and information asymmetry. The Nobel winner calls transaction costs “the costs of carrying out a transaction by means of an exchange on the open market or simply marketing costs”18. The transaction is seen both as a transfer of rights of use on goods and services between separable technological units (Menard, 2000) and a potential source of conflict that assumes a transfer of social rights within a certain institutional framework (Commons, 1934). Transaction costs mainly include negotiation and contracting costs, the reduction of the number of contracts inclusive, costs corresponding to potential conflicts and costs as a result of the authorities differentiate approach of transactions. In his paper published in 1988, Coase suggests that studying and understanding the structure of an industry implies explaining from the perspective of transaction costs the relations between the firm with the lowest cost and the market, relations between firms and the interdependencies between different activities carried out within the same firm. The limit of the firm “is set where its costs of organizing a transaction became equal to the cost of carrying it out through the market”19. Transaction costs economics, research-orientated by Coase’s papers, is developed and consolidated by the reference papers of Oliver Williamson. The latter defines three features of the transaction, considered the cornerstone of the analysis in microeconomics, interdependent and these are: frequency, uncertainty and asset specificity against the background of two behavioral hypotheses limited rationality (according to H. Simon) and opportunistic behavior. Between the frequency of transactions and the probability of integration there is a direct correlation since there are many opportunities for the moral hazard to appear and therefore much more potential losses to compensate the internalization cost of that transaction. To support this statement there are a few empirical proofs (Majumadar and Ramaswamy, 1994) or a few studies that have shaken it (Anderson and Schmittlein, 1984). Uncertainty, direct correlated to the probability of integration (empirical proofs are provided by Lieberman, 1991 and Majumadar and Ramaswamy, 1994) has 2 shapes: an environmental uncertainty, a pre-requisite of the business environment and behavioral uncertainty, the most important, a result of bilateral dependence and information asymmetry. Asset specificity is the main characteristic of a transaction. Williamson shows that: “asset specificity has reference to the degree to which an asset can be redeployed to alternative uses and by alternative users without sacrifice of productive value”20. Asset specificity is important against the background of behavioral hypotheses mentioned above since the take the form of sunk costs in case of contract breaking. After the parties of a contract, incomplete by its nature, sign the contract that has as object a specific asset takes place what Williamson calls “fundamental transformation”: if initially the parties have chosen the partner from a competitive market, after signing the contract their relation turns into a bilateral one. The continuation of the relation between the parties whose identity is now important produces quasi-rents established as a differential of the capitalized value of the asset controlled together and the sum of the values of the asset controlled separately by the two parties21. Depending on the characteristics of the transaction, three governance structures may appear: market, hierarchy and hybrids (such as franchising). Governance structures are supported by different forms of contract law. The market is based on the classical contract law in which the identity of the parties doesn’t matter, the continuation of the contract doesn’t add value and the contract complies with strict rules, well defined, possible disputes being solved by the Law Court. The hybrid has as cornerstone the neoclassical contract law and excuse 18
Coase R. H., The Firm, the Market and the Law, The University of Chicago Press, Chicago and London, 1988, pp. 6 19 Ibid., pp.7 20 Williamson, Oliver, The Mechanisms of Governance, Oxford University Press, 1996, p. 59 21 Holmstrom, Bengt, Roberts, John, The Boundaries of the Firm, Journal of Economic Perspectives, vol.12, no.4, 1998, p. 75 110
doctrine, in which the parties maintain their independence and to a certain extent depend one on each other. The contract is a flexible framework that allows post-adjustment and disputes are solved by arbitrage. The hierarchy is characterized by forbearance, more precisely by an internal juridical contract that stipulates that any post-adjustment will be made by hierarchical relations. There are other three elements that differentiate governance structures: the intensity of incentive tools, administrative controlling and adaptation to the unpredictable. The market is characterized by the highest incentive, no administrative controlling and an autonomous adaptation through price mechanism (walrasian model). If unpredictable changes appear, the negotiation may be expensive and the adaptation may fail (the transaction stops). The hierarchy is a structure within which the intensity of incentive is lower than in the case of the market, administrative controlling higher and the adaptation is a coordinated one: the individuals accept the decision of the superiors and cooperation since they consider it’s in their interest. This way are saved resources otherwise wasted by negotiation and solving disputes, possible sunk costs (if the adaptation fails) but with the price of a diminishing incentive and bureaucracy costs. Within the hybrid keeping the autonomy of the parties leads to higher incentives than in hierarchy but bilateral dependence and nonneglectable asset specificity assumes accepting some protective measures that lower the incentive towards market and increase administrative controlling and coordinated adaptation. It results that the costs corresponding to governance structures are mainly influenced by asset specificity. When the specificity is zero the market has an advantage since there are no potential losses to compensate bureaucracy costs specific to the hierarchy. As asset specificity raises governance costs raise faster that in the case of transactions through the market than those through the firm since the importance of the adaptation for prolonging the contract grows exponentially (the hybrid is in between the two). For this reason there is a given specificity level beyond which the organization as a hierarchy has the lowest transaction costs (for Williamson these are costs of the economic system functioning). The firm appears as a governance structure that allows minimizing transaction costs. The statement according to which asset specificity has a significant impact on vertical integration given the incomplete character of contracts and the need of adaptation form the paradigm problem of Williamson. Integration is a reply to contractual difficulties driven by asset specificity and explaining integration is in fact explaining why administrative coordination may be preferred to market coordination. Integration turns out to be a vehicle “to safeguards the gains that arise from exchange characterized by high physical asset specificity and human relationships”22 (quasirevenue). But why at one moment the expansion of the firm stops? The explanation offered by the economics of transaction costs is based on incentive issues and bureaucracy since integration drives distortions and specific costs. These arise especially because it’s impossible to keep within the firm the incentive intensity specific to the market therefore there is a permanent trade-off between bureaucracy costs and gains from adaptation leading to “disintegration” or “dismergers” as Coase argued. The analysis of transaction costs is linked to that of property rights: the existence of property rights makes the system of property rights to affect resource allocation and the efficiency of the allocation since like contracts are incomplete the same way property rights are defined incompletely. The way they are defined and allocated sets the diversity and characteristics of organizational structures. The firm is a nexus of contracts that stipulate a certain structure of property rights and “on one hand allows making use of the advantages of specialization and on the other hand to provide an effective incentive and controlling system”23. The idea of a firm as a nexus of contracts between the holders of resources (production factors) and clients is taken over by agency theory (Meckling and Jensen, 1976) that fills in the theory of property rights. The firm is a legal fiction, an environment of negotiation and contracting similar to the market: there is no opposition between market/firm but 2 forms of the market concept: the firm and the neoclassical market. Therefore there is no point to try to explain the limits of the firm but the contracting relations between individuals (that pursue to minimize agency costs) no matter the environment where they arise. A completely new vision is introduced by the evolutionary school that considers as cornerstone for the microeconomic analysis: Homo sapiens oeconomicus (HSO). Who is he? He is “Homo sapiens as a rule-
22
Majumadar, S.K., Ramaswamy, V., Explaining Downstream Integration, Managerial and Decision Economics, vol.15, no.2, 1994, p. 121 23 Coriat, B., Weinstein, O., Les Nouvelles Theories de l’entreprise, Le livre de poche, Paris, 1995, p.85 111
making and rule-using animal in economic contexts, such as production, consumption and transaction”24. One should make a difference between elementary basis-unit HSO and what evolutionists call a micro-unit itself, in the economic theory of the firm a socially organized productive unit with a knowledge base. The firm is a community based on rules (Nelson, 2005) within which knowledge is created, adopted selectively, learnt, adjusted and used repetitively. By repeated use rules appear, also called organizational routines. Routines seem to be specific assets, non transferable leading to differences between enterprises and different positioning on the market. The firm survives on the medium-long run due to a type of governing named generically governance different from governance structures mentioned above that evolutionists call operant governance. Generic governance takes care of the management of the knowledge base and therefore organizational changes within complex social network that the firm represents. As a result the dynamics of the firm is established endogenously and path dependency and routines lead to a certain technological path of the firm that will set the limits of the latter’s activity. Some synthesizing statements are required in the end of this short theoretical background: the research concerning the limits of the firm are interdependent with those on the nature of the firm; TCE suggests a present dichotomy between the firm and the market, the limits of the firm being given by incentive constraints; TPR and TA consider the market and the firm are two market forms that is transaction environment and contracting nexus so there is no point to study the limits of the firm; evolutionary school associates the firm with a knowledge and technologies integrated system formed by learning within which routines and learning processes lead to a certain technological path that will set the limits of the activity of the firm.
Short empirical application: the oil market in Romania The empirical applications of the TCE on the oil market that formed the base of the present study belong to O. Williamson (1996)25, Andrea Shepard (1993), Margaret E. Slade (1996). Our goal was to answer the question: are transaction costs a cause of the disintegration/integration of the activities on the oil market in Romania? In our empirical try we made use of the information public available on the websites of the corporations within the industry and official studies and statistics. The opacity of the information didn’t allow us yet to carry out a quantitative research therefore the conclusions that we’ll expose are based on a qualitative research. In the Romanian oil sector we could identify three big operators: Petrom (holds two refineries, Arpechim and Petrobrazi), Rompetrol (with two refineries, Vega and Petromidia) and Lukoil (Petrotel refinery). In our paper we focused on the first two players whose evolutions allowed us to identify some conclusions with reference to the target of the research. In short, the firms that activate in the Romanian oil sector may be represented like this: [RESOURCES(oil, gas)]=>REFINERIES=>RETAIL(own or autonomous)] + IDUSTRY SUPPIRT SERVICES The sketch drawn above is significant for the high degree of integration specific to the area. Thus the two selected firms carry out or are to carry out activities of exploration and production, refining, oil production and petrochemical products, retail, support services such as trading petrol and oil products, construction and positioning, quality management and so on. The evolution of the Rompetrol group by chain expansion to complementary transactions underlines the strategy of diversification of the latter in order to increase profit and reduce bilateral dependency and an organizational pattern named by Porter by two categories of activities: production/distribution and support. The development of the group started from a firm of intermediation of oil products transactions. Step by step this firm bought refineries (supplying with transacted products), fuel stations (supplying/expanded 24
Dopfer, Kurt, Evolutionary economics: a theoretical framework, in The Evolutionary Foundations of Economics, Cambridge Univerity Press, 2005, p.23 25
In the paperThe Mechanism of Governance published in 1996, chapter 5, the 6th part (Petroleum Exchanges), p. 137, O. Williamson draws a short analysis based on a sttudy with reference to the Canadian market, The State of Competition in the Canadian Petroleum Industry. 112
distribution both in Romania and abroad), and built new business units of transportation, maintaining, research, financial, quality and environment management. All the business units are specialized in oil industry, transact (with a few exceptions) mainly within the company (but also outside) and assume making use of assets specific to this industry. The integration pursued the profit but also according to us the specificity of physical and human assets had a key role. It is interesting to notice that specificity was twoway orientated: on the one hand because specific assets existed new business units were created in order to exploit competences and on the other hand because the new activities that the firm needed assumed asset specificity and the possibility of hold-up their integration was preferred to the free market. Concerning the uncertainty we could notice the acquisition in August 2007 by KazMunaiGas of 75% of the Rompetrol Group the stated target of the buyer being to enter European market. Before the acquisition the Rompetrol Group relied exclusively on imported oil, 80% of the costs of the group were driven by the mentioned imports. Starting from 2005 the oil price met a high volatility with an obvious increasing trend that significantly increased the uncertainty of the environment for Rompetrol with a negative impact on the financial results. The integration in KMG under the umbrella of the provider was the solution to reduce environment uncertainty proving a positive correlation between uncertainty and integration. Concerning Petrom-OMV its organizational structure is similar to that of Rompetrol but the independence of the business units seems smaller. Integration is technology-driven but in 2002 an event revealed the importance of transaction costs: at that moment Petrom decided to externalize maintenance services by setting an independent firm called Petroserv, later Petromservice. Later this firm due to asset specificity had an opportunistic behavior being reintegrated in 2006 in Petrom-OMV. The acquisition cost of Petromservice by Petrom-OMV, summing 328.5 million euro, offers an image of the quasi-revenue generated by specific assets corresponding to the transaction. In the relation between production and distribution the studies carried out for the fuel stations in USA and Canada showed the variety of contracting forms and significant differences between the ownership of the stations. In Romania there are two ways of organization: stations the ownership of the producers and dealer stations (for Petrom-OMV) or partner (for Rompetrol) with diverse activities (fuel and auto products marketing, cafeteria, carwash and so on). The resulted governance structure is of hybrid with a certain degree of dependence supplier-retailer. More than this recently Petrom has externalized the retail activity appealing to dealers showing that the integration of the activity within the company was a right decision because of diminishing incentives. By externalization the sales of carburant raised by 23% and those of complementary products by 76% in 2006/2007. As a result incentive reduction by internalization is a limit to the development of the firm. Some brief conclusions are required for this market in Romania: the theory of incomplete contracts is useful and applicable; asset specificity is a cause of integration together with the technological factor, the increase of security degree in resource supplying, entering external markets and increasing profit and monopoly power, the increase of uncertainty thrives integration and the statute of residual claimant for retailers considering a hybrid structure increases incentive without a negative influence on adaptation and controlling.
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Coase R.H., The Firm, the Market and the Law, The University of Chicago Press, Chicago and London, 1988 Coriat, B., Weinstein, O., Les Nouvelles Theories de l’entreprise, Le livre de poche, Paris, 1995 Demsetz, Harold, The Economics of the Business Firm, Cambridge University Press, 1997 Dopfer, Kurt, Evolutionary economics: a theoretical framework, in The Evolutionary Foundations of Economics, Cambridge Univerity Press, 2005 Holmstrom, Bengt, Roberts, John, The Boundaries of the Firm, Journal of Economic Perspectives, vol.12, no.4, 1998 Kim, Jongwook, Mahoney, Joseph T., Resource-Based and Property Rights Perspectives on Value Creation: The Case of Oil Field Unitization, Managerial and Decision Economics, Vol. 23, No. 4/5, Conversations on the Dynamics, Context, and Consequences of Strategy. (Jun. - Aug., 2002), pp. 225-245
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Majumadar, S.K., Ramaswamy, V., Explaining Downstream Integration, Managerial and Decision Economics, vol.15, no.2, 1994 Menard, Claude, L’economie des organisation, Editions la Decouverte, Paris, 2004 Rangan, V. Kasturi, Corey, E. Raymond, Cespedes, Frank, Transaction Cost Theory: Inferences from Clinical Field Research on Downstream Vertical Integration, Organization Science, Vol. 4, No. 3, Focused Issue: The Legalistic Organization. (Aug., 1993), pp. 454-477 Shepard, Andrea, Contractual Form, Retail Price, and Asset Characteristics in Gasoline Retailing, The RAND Journal of Economics, Vol. 24, No. 1, (Spring, 1993), pp. 58-77 Slade, E., Margaret, Multitask Agency and Contract Choice: An Empirical Exploration, International Economic Review, Vol. 37, No. 2, (May, 1996), pp. 465-48 Spiller, T. Pablo, Huang, J., Cliff, On the Extent of the Market: Wholesale Gasoline in the Northeastern United States, The Journal of Industrial Economics, Vol. 35, No. 2. (Dec., 1986), pp. 131-145 Williamson, Oliver, The Mechanisms of Governance, Oxford University Press, 1996 www.rompetrol.ro www.petrom.ro
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THE FACULTIES OF ECONOMIC STUDIES – SUPPLIERS OF SERVICES FOR STUDENTS Dumitriu Ramona, University “Dunarea de Jos” Galati, Faculty of Economic Sciences, 59 – 61 Balcescu Street, Galati, 800001,
[email protected], Ştefănescu Razvan University “Dunarea de Jos” Galati, Faculty of Economic Sciences, 59 – 61 Balcescu Street, Galati, 800001,
[email protected], Nistor Costel University “Dunarea de Jos” Galati, Faculty of Economic Sciences, 59 – 61 Balcescu Street, Galati, 800001,
[email protected] Abstract This paper approaches the services offered to the students by the faculties of Economic studies. We use the results resulted from an investigation of the students’ perceptions about these faculties. We try to find out the aspects that matter when students evaluate the universities. Based on certain aspects, we also try to compare the services offered by a faculty from a state owned university and its competitors, faculties from the private universities. Keywords: Education, Services for Students, Romanian Universities
1. Introduction In Romania the university education is in full change. Beginning with the 1990’s a reform began that aimed to adapt the Romanian Universities to the new circumstances of a democratic regime and to the market economy. Until now this process objectives were not achieved completely because of many incoherencies. Besides the changes implied by the reform, there are the effects of the Bologna Process that aims the European universities competitiveness increase. Among the objectives it is included a big degree of universities orientation towards the services beneficiaries – the students. In Romania some recommendations were issued regarding the increase of practical knowledge weight in the education process and the facilitation of communication between the students and the teachers. Moreover, when evaluating the teachers some results of questionnaires applied to the students were taken into consideration. For the Romanian universities, the concentration on the services offered to the students has significant financial reasons. Calling a high number of students represents a priority not only for the private but also for the state universities that receive low financing from the public authorities. In the recent years the important increase of the competition made many universities adapt their offer of services to the students’ requirements. The services offered by the universities made the object of different approaches. Some of these deal with the Bologna Process implications on the relations between the students and the universities (Capelari, Lucifora; 2008). Others describe the impact of the education reform from Romania on the quality of the services ofered by the universities (Marga; 2000). In this paper we approach the services offered by the Faculties of Economics based on the situation of the one from the University “Dunarea de Jos” Galati. This faculty succeeded in calling many students from Galati County and from the close counties, both for the classical type of education and for the Distance Learning. However, in the recent years it was felt the more and more intense competition of some faculties from private universities placed in the same area. Many students of the Faculty of Economics from the University “Dunarea de Jos” Galati, especially at Distance Learning, transferred to private universities. The explanations are found not only in the efficient policy of the private universities but in some deficiencies of the services offered by the public faculties. We try to describe the students’ perceptions about the services offered by the faculties based on the results of an investigation we did.
115
2. Data collection In order to study the perceptions about the services offered by the universities we used the results of an investigation we realized in the period October 2007 – March 2008. We used a sample of 236 students from the Faculty of Economics – University “Dunarea de Jos” Galati. In the sample we included students at different specializations and in different years of study (we did not include the students in the first year because we considered they did not have enough time to evaluate the services offered by the university and nor the students from the Moldova Republic because their perceptions are not relevant for this paper). When composing the sample there were also taken into consideration other aspect of the students’ perceptions about the services offered by the universities: type of education (classic or Distance Learning), the existence of the fee-paying places and of the public places, the fact that some students have jobs linked to the profession of economist (for example as accountants, salesmen, cashiers) a.s.o. The students’ perceptions were investigated firstly by group interviews (each group included 8 – 12 persons) and then the students were questioned under the protection of anonymity. 3. Relevant aspects for the offered by the universities services evaluation In the phase of the group interviews it resulted the students evaluated the services offered by the universities mainly from the perspective of obtaining a job after the graduation. The utility perceived for these services is given by several aspects:
a) b) c) d) e) f)
The faculty prestige; The utility of the knowledge supplied by the education process; The evaluation exigency; The receptivity of the teachers for the students requests; The studies programs administration; The material endowment of the universities (table 1). Aspect Prestige
Utility of the knowledge
Evaluation exigency
Receptivity of the teachers
Studies programs administration
Material endowment
Very big importance
119
87
95
92
94
21
Big importance
59
46
41
55
56
71
Medium importance
34
55
83
61
60
122
Little importance
16
29
13
23
21
19
Very little importance
8
19
4
5
5
3
Total
236
236
236
236
236
236
Degree of importance
Table 1 - The importance allotted to the relevant aspects for the universities services evaluation In order to facilitate the comparisons, the degrees of importance associated to the six aspects were transposed on a rating scale from 1 to 5 (1 for very little importance, 5 for very big importance). For all these aspects the values of Standard Deviation, Skewness and Kurtosis indicate a big distance from the normal distribution (table 2).
116
Prestige
Utility of the knowledge
Evaluation exigency
Receptivity of the teachers
Studies programs administration
Material endowment
Mean
4.12
3.65
3.89
3.87
3.90
3.37
Standard Error
0.07
0.08
0.07
0.07
0.07
0.05
Median
5.00
4.00
4.00
4.00
4.00
3.00
Mode
5.00
5.00
5.00
5.00
5.00
3.00
Standard Deviation
1.10
1.30
1.06
1.10
1.09
0.81
Sample Variance
1.21
1.70
1.12
1.22
1.19
0.65
Kurtosis
0.54
- 0.85
- 0.81
- 0.66
- 0.57
0.28
Skewness
- 1.17
- 0.54
- 0.41
- 0.57
- 0.61
0.10
Range
4.00
4.00
4.00
4.00
4.00
4.00
Minimum
1.00
1.00
1.00
1.00
1.00
1.00
Maximum
5.00
5.00
5.00
5.00
5.00
5.00
Sum
973.00
861.00
918.00
914.00
921.00
796.00
Count
236.00
236.00
236.00
236.00
236.00
236.00
Largest(1)
5.00
5.00
5.00
5.00
5.00
5.00
Smallest(1)
1.00
1.00
1.00
1.00
1.00
1.00
Confidence Level (95.0%)
0.14
0.17
0.14
0.14
0.14
0.10
Factor Indicator
Table 2 - Descriptive statistics for the relevant aspects of the services offered by the universities a) The faculty prestige For a big part of the students, the graduated university prestige has a big or very big importance from the employment point of view. The investigation of this aspect revealed significant differences between the students with jobs similar to the profession of economist and the other students (table 3). Categories of Degree students of importance
Students with jobs similar to the profession of economist
Other students
Total
Very big importance
17
102
119
Big importance
27
32
59
Medium importance
25
9
34
Little importance
11
5
16
Very little importance
5
3
8
Total
85
151
236
Table 3 - Students’ perceptions on the importance of the university prestige In the sample there were included 85 students with jobs similar to the profession of economist. The investigation revealed they are, in general, less interested than other students in the graduated university 117
prestige (table 4). The explanation is given by the fact that many of them do not intend to look for another job, but they prefer to consolidate their positions at the present jobs. Category Employed students
Other students
Mean
3.47
4.49
Standard Error
0.12
0.07
Median
4.00
5.00
Mode
4.00
5.00
Standard Deviation
1.13
0.90
Sample Variance
1.28
0.81
Kurtosis
- 0.49
4.21
Skewness
- 0.41
- 2.08
Range
4.00
4.00
Minimum
1.00
1.00
Maximum
5.00
5.00
Sum
295.00
678.00
Count
85.00
151.00
Largest(1)
5.00
5.00
Smallest(1)
1.00
1.00
Confidence Level (95.0 %)
0.24
0.14
Indicator
Table 4 – Descriptive statistics for the importance of the universities prestige perceived by the students b) The utility of the knowledge supplied by the education process For more than a half of the students, the utility of the knowledge offered by the education process has a big or very big importance and, in this situation, our investigation revealed significant differences between the students with jobs similar to the profession of economist and the other students (table 5). Categories of Degree students of importance
Students with jobs similar to the profession of economist
Other students
Total
Very big importance
4
83
87
Big importance
8
38
46
Medium importance
32
23
55
Little importance
24
5
29
Very little importance
17
2
19
Total
85
151
236
Table 5 - Students’ perceptions on the utility of the knowledge supplied by th education process A big number of the students with jobs similar to the profession of economist assign a little or very little importance to the practical knowledge offered by the universities. From the group interviews the results 118
show that the students consider the experience in their jobs offered enough practical knowledge. The scores obtained by transposing on a rating scale highlight the differences between the two categories of students. Category Indicator Employed students
Other students
Mean
2.51
4.29
Standard Error
0.12
0.08
Median
3.00
5.00
Mode
3.00
5.00
Standard Deviation
1.06
0.94
Sample Variance
1.13
0.87
Kurtosis
- 0.27
1.09
Skewness
0.32
- 1.26
Range
4.00
4.00
Minimum
1.00
1.00
Maximum
5.00
5.00
Sum
213.00
648.00
Count
85.00
151.00
Largest(1)
5.00
5.00
Smallest(1)
1.00
1.00
Confidence Level(95.0%)
0.23
0.15
Table 6 – Descriptive statistics for the importance of the practical knowledge supplied by the faculties perceived by the students c) The evaluation exigency A considerable part of the students assign a big or very big importance to the evaluation exigency. In the investigation significant differences were revealed between the students from the classic type of education and from the Distance Learning (table 7). Categories of Degree students of importance
Students from the classical type of education
Students at Distance Learning
Total
Very big importance
24
71
95
Big importance
29
12
41
Medium importance
74
9
83
Little importance
11
2
13
Very little importance
4
-
4
142
94
236
Total
Table 7 - Students’ perceptions on the evaluation exigency 119
From the 236 investigated students 94 are from the Distance Learning (DL). In general, they assign a big importance to the evaluation exigency meaning they would prefer passing the exams very easily. They explained they did not have enough time to learn (89 had a job) and they were disadvantaged in comparison with the students from the classical type of education who could obtain more information from the teachers. Anyhow, they do not necessarily want big marks but they are pleased with passing the exams. For the students at the classical type of education the number of those assigning a big or very big importance to the evaluation exigency is much smaller in comparison with the one of the students at DL. The students from the first category want not only to pass the exams but also to obtain big marks about which they consider useful for getting scholarships and attractive jobs after the graduation. The scores obtained after transposing the degree of importance in a rating scale reflect the significant differences between the two categories of students (table 8). Category Classical type of education
Distance Learning
Mean
3.41
4.62
Standard Error
0.08
0.08
Median
3.00
5.00
Mode
3.00
5.00
Standard Deviation
0.95
0.75
Sample Variance
0.91
0.56
Kurtosis
- 0.05
2.67
Skewness
0.09
- 1.90
Range
4.00
3.00
Minimum
1.00
2.00
Maximum
5.00
5.00
Sum
484.00
434.00
Count
142.00
94.00
Largest (1)
5.00
5.00
Smallest (1)
1.00
2.00
Confidence Level (95.0 %)
0.16
0.15
Indicator
Table 8 – Descriptive statistics for the importance of the evaluation exigency d) The receptivity of the teachers for the students requests A significant part of the students assign a big or very big importance to the receptivity of the teachers for the students’ requests. The investigation of this aspect revealed considerable differences between the students who pay fees and the students with the education financed from public funds (table 9). Students on fee – paying places
Students on public places
Total
Very big importance
84
8
92
Big importance
38
17
55
Medium importance
18
43
61
Categories of Degree students of importance
120
Little importance
8
15
23
Very little importance
3
2
5
151
85
236
Total
Table 9 - Students’ perceptions on the receptivity of the teachers for the students requests
From the 236 investigated students 151 are fee – payers. In general, they assign a much more importance to the receptivity of the teachers for their requests (concerning especially the accessibility of the courses and the orientation towards the knowledge they may use in the future jobs) in comparison with the students on public places. This situation was confirmed by transposing the degrees of importance on a rating scale (table 10). Category Indicator
Fee - payers
Public places
Mean
4.27
3.16
Standard Error
0.08
0.10
Median
5.00
3.00
Mode
5.00
3.00
Standard Deviation
1.00
0.91
Sample Variance
1.00
0.83
Kurtosis
1.30
0.06
Skewness
- 1.38
0.24
Range
4.00
4.00
Minimum
1.00
1.00
Maximum
5.00
5.00
Sum
645.00
269.00
Count
151.00
85.00
Largest(1)
5.00
5.00
Smallest(1)
1.00
1.00
Confidence Level (95.0%)
0.16
0.20
Table 10 – Descriptive statistics for the importance of the receptivity of teachers e) The studies programs administration An important part of the investigated students assign a big and very big importance to the studies programs administration. Our investigation revealed this time also significant differences between the fee – payers students and the students on public places (table 11). Categories of Degree students of importance Very big importance
Students on fee – paying places
Students on public places
Total
88
6
94
121
Big importance
35
21
56
Medium importance
19
41
60
Little importance
7
14
21
Very little importance
2
3
5
151
85
236
Total
Table 11 - Students’ perceptions on the studies programs administration In general, the fee – payers students are more interested in the studies programs administration than the students with public places. This situation is highlight by the descriptive statistics obtained by transposing the degrees of importance on a rating scale (table 12). Category Indicator
Fee - payers
Public places
Mean
4.32
3.15
Standard Error
0.08
0.10
Median
5.00
3.00
Mode
5.00
3.00
Standard Deviation
0.96
0.91
Sample Variance
0.91
0.82
Kurtosis
1.31
0.11
Skewness
- 1.39
- 0.02
Range
4.00
4.00
Minimum
1.00
1.00
Maximum
5.00
5.00
Sum
653.00
268.00
Count
151.00
85.00
Largest(1)
5.00
5.00
Smallest(1)
1.00
1.00
Confidence Level (95.0%)
0.15
0.20
Table 12 – Descriptive statistics for the importance of the studies programs administration f) The material endowment of the universities More than half from the investigated students assign a medium importance to the material endowment. Significant differences between the fee – payers students and the students on public places were revealed (table 13). Categories of Degree students of importance Very big importance
Students on fee – paying places
Students on public places
Total
19
2
21
122
Big importance
59
12
71
Medium importance
56
66
122
Little importance
15
4
19
Very little importance
2
1
3
151
85
236
Total
Table 13 - Students’ perceptions on the material endowment On the whole, the fee – payers students assign a bigger importance to the material endowment of the faculty in comparison with the students on public places. This situation is confirmed by the descriptive statistics resulted by transposing the degrees of importance on a rating scale (table 14). Category Indicator
Fee payers
Public places
Mean
3.52
3.12
Standard Error
0.07
0.06
Median
4.00
3.00
Mode
4.00
3.00
Standard Deviation
0.89
0.57
Sample Variance
0.78
0.32
Kurtosis
- 0.14
4.26
Skewness
- 0.23
0.43
Range
4.00
4.00
Minimum
1.00
1.00
Maximum
5.00
5.00
Sum
531.00
265.00
Count
151.00
85.00
Largest (1)
5.00
5.00
Smallest (1)
1.00
1.00
Confidence Level (95.0%)
0.14
0.12
Table 14 – Descriptive statistics for the importance of the material endowment
4. Comparison between the services offered by the faculties The services offered by the Faculty of Economics from the University “Dunarea de Jos” Galati were compared with those offered by the main competitors - faculties from private universities in Galati and in the close counties. For the beginning the students were asked to evaluate the services offered by the public faculties, taking into account six considered relevant aspects (table 15).
123
Aspect
Prestige
Utility of the knowledge
Evaluation exigency
Receptivity of the teachers
Studies programs administration
Material endowment
Very Big
12
4
84
5
-
7
Big
168
41
102
23
11
16
Moderate
48
94
31
46
37
61
Little
6
59
12
69
86
119
Very Little
2
38
7
93
102
33
Total
236
236
236
236
236
236
Mark
Table 15 – Students evaluations of the services offered by the FE from U ”DJ” Galati More than three quarters from the questioned students evaluate the prestige of the Faculty of Economics from the University “Dunarea de Jos” as being big or very big. This perception is given by the fact it is one from the oldest existent in the country. More than 40 % from the students evaluated the utility of the knowledge offered by the faculty as being little or very little. Most of them have jobs linked to the profession of economist and they consider some knowledge offered in the faculty would not be brought up to date. More than three quarters from the students thought that evaluation exigency was big or very big. However, most of the respondents noticed that the exigency decreased because of the teachers’ evaluation by the students. More than half of the investigated students evaluated the receptivity at the students’ requests as being little or very little. Most of the respondents consider that teachers’ evaluation by the students did not bring a plus in this field. The studies programs administration received the most unfavorable evaluations from the questioned students. In the group interviews they complained about some problems: they did not choose the optional matters, the delay in supplying the course for the students at D L a.s.o. More than half from the questioned students evaluated unfavorably the material endowment of the faculty. However, some of them said in the recent period there are changes in this problem. In order to facilitate the comparisons, the marks offered by the students were transposed on a rating scale from 1 to 5 (1 for very little and 5 for very big) (table 16).
Indicator
Prestige
Utility of the knowledge
Evaluation exigency
Receptivity of the teachers
Studies programs administration
Material endowment
Mean
3.77
2.64
4.03
2.06
1.82
2.34
Standard Error
0.04
0.07
0.06
0.07
0.06
0.06
Median
4.00
3.00
4.00
2.00
2.00
2.00
Mode
4.00
3.00
4.00
1.00
1.00
2.00
Standard Deviation
0.62
1.00
0.98
1.08
0.86
0.91
Sample Variance
0.38
1.01
0.96
1.17
0.75
0.82
Kurtosis
3.62
- 0.67
1.25
- 0.32
- 0.15
0.77
Skewness
- 1.34
- 0.08
- 1.16
0.76
0.80
0.79
Range
4.00
4.00
4.00
4.00
3.00
4.00
Aspect
124
Minimum
1.00
1.00
1.00
1.00
1.00
1.00
Maximum
5.00
5.00
5.00
5.00
4.00
5.00
Sum
890.00
622.00
952.00
486.00
429.00
553.00
Count
236.00
236.00
236.00
236.00
236.00
236.00
Largest(1)
5.00
5.00
5.00
5.00
4.00
5.00
Smallest(1)
1.00
1.00
1.00
1.00
1.00
1.00
0.13
0.13
0.14
0.11
0.12
Confidence Level (95.0%)
Table 16 – Descriptive statistics of the students perceptions about the services offered by the Faculty of Economics from the University “Dunarea de Jos” Galati The 236 students were invited to evaluate, with respect for the six relevant aspects, the faculties of economics from the private universities considered as the main competitors for the Faculty of Economics from the University “Dunarea de Jos” Galati. However, in this comparison it must be taken into consideration the fact that for some aspects the students are not enough informed for being able to express their opinions (table 17). Aspect
Prestige
Utility of the knowledge
Evaluation exigency
Receptivity of the teachers
Studies programs administration
Material endowment
Very big
-
5
-
8
108
64
Big
6
38
4
39
84
146
Moderate
61
87
42
55
41
24
Little
121
47
137
60
3
2
Very little
48
31
53
42
-
-
No answer
-
28
-
32
-
-
Total
236
236
236
236
236
236
Mark
Table 17 - Students’ perceptions about the services offered by the rival faculties It is obvious the students consider the studies programs administration and material endowment from the private universities better than the same aspects at the public universities. On the other side, they think the prestige of the public universities is much bigger than the one of the private universities and the evaluation is more severe in the first case.
Aspect Indicator
Prestige
Utility of the knowledge
Mean
2.11
2.71
Evaluation exigency
Receptivity of the teachers
Studies programs administration
Material endowment
1.99
2.56
4.26
4.15
125
Standard Error
0.05
0.07
0.04
0.08
0.05
0.04
Median
2.00
3.00
2.00
2.50
4.00
4.00
Mode
2.00
3.00
2.00
2.00
5.00
4.00
Standard Deviation
0.74
1.01
0.69
1.13
0.79
0.62
Sample Variance
0.55
1.02
0.47
1.28
0.62
0.39
Kurtosis
- 0.37
- 0.56
0.10
- 0.86
- 0.59
0.45
Skewness
0.20
- 0.12
0.33
0.22
- 0.65
- 0.33
Range
3.00
4.00
3.00
4.00
3.00
3.00
Minimum
1.00
1.00
1.00
1.00
2.00
2.00
Maximum
4.00
5.00
4.00
5.00
5.00
5.00
Sum
497.00
563.00
469.00
523.00
1,005.00
980.00
Count
236.00
208.00
236.00
204.00
236.00
236.00
Largest (1)
4.00
5.00
4.00
5.00
5.00
5.00
Smallest (1)
1.00
1.00
1.00
1.00
2.00
2.00
Confidence Level (95.0 %)
0.10
0.14
0.09
0.16
0.10
0.08
Table 18 – Descriptive statistics of the students’ perceptions about the services offered by the private universities In order to facilitate the comparisons, the marks offered by the students were transposed on a rating scale (table 18). Anyhow, the comparison based on the descriptive statistics is affected by the fact that quite many students did not express their opinions regarding certain aspects.
5. Conclusions In this paper we approached the services offered by the universities. As an illustration, we used the situation of the Faculty of Economics from the University “Dunarea de Jos” Galati. We analyzed the students’ perceptions about these services using the results of an investigation applied to 236 students. We found out six relevant aspects: the faculty prestige; the utility of the knowledge supplied by the education process; the evaluation exigency; the receptivity of the teachers for the students requests; the studies programs administration; the material endowment of the universities. With respect to these aspects we presented the students’ perceptions about the services offered by the Faculty of Economics from the University “Dunarea de Jos” Galati and by other rival faculties from private universities. It results that students assign a superior prestige to the state owned (public) universities and they consider these universities evaluate more severely the students in comparison with the private universities. On the other side, the private universities are superior in the fields of studies programs administration and of the material endowment. These perceptions may be linked with the competition increase between the Faculty of Economics from the University “Dunarea de Jos” Galati and the faculties from some private universities. The fact that in the recent years quite many students, especially at the Distance Learning, transferred at private universities may be the effect of the favorable perceptions for the studies programs administration, for the material endowment and also the effect of a lower exigency in the students’ evaluation. On the other side, the fact 126
that some students prefer to remain at the Faculty of Economics from the University “Dunarea de Jos” Galati may be the special of the superior prestige.
References 1. 2. 3. 4. 5.
Cappellari L., Lucifora C. (2008), The “Bologna Process” and College Enrolment Decisions, IZA, Discussion Paper No. 3444, Bonn; Cardoso A. R., Portela M., Sá C., Alexandre F. (2006), Demand for Higher Education Programs: The Impact of the Bologna Process, IZA, Discussion Paper No. 2532, Bonn; Georgescu D. (1999), Reforma învăţământului - o şansă pentru schimbarea de mentalitate, Editura Trei, Bucureşti; Marga A. (2000), Anii reformei: 1997-2000 cu o listă a reglementărilor învăţământului, Fundaţia de Studii Europene, Cluj-Napoca; Musselin C. (2005), Is the Bologna process a move towards a European Higher Education area?, Third Conference on Knowledge and Politics, The University of Bergen.
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MACROECONOMIC IMPLICATIONS OF BRAIN MIGRATION Florea Adrian University of Oradea, Faculty of Economics, 1 Universităţii Street, 410087, Oradea, Bihor , E-mail:
[email protected], Phone: +40259408410 Maghear Diana Claudia Bulevardul Decebal, Nr. 4, bl. B52, ap.
[email protected], Phone: +40745569492
29,
410197,
Oradea,
Bihor,
E-mail:
Increasingly, immigration policies tend to favor the entry of skilled workers, raising substantial concerns among sending countries. The ‘revisionist’ approach to the analysis of the brain drain holds that such concerns are largely unwarranted. Sustained migratory flows may be associated with an equally large flow of remittances, but also, migrants may return home after having acquired a set of productive skills. Finally, the ability to migrate abroad may boost the incentive to acquire skills by home residents. Brain drain, migration, human capital formation In a time when the economic development seems to be long awaited in Romania, one can notice an ever increasing tendency of the highly qualified labor force, and not only, had to choose to reorient their destiny towards more developed economies. It is, therefore, the migration phenomenon that we are currently dealing with and such phenomenon prevailed in Romania subsequently to the 1989 Revolution, and was favored once the country borders were opened to the population to leave. International economy analysts expected a considerable level of migration by both the Romanians and all other citizens pertaining to former communist countries, and yet it did not happen so, given the high expectations people seemed to have once freedom was regained and restored. Most East-European countries (former communist countries) seemed to have a certain economic development a few years after communism was eradicated. It was not the case for Romania, since reformation and reforms processes failed from the very beginning, which led to our country being positioned long behind other countries, economically speaking. It is only now that we could talk about a beginning of migration in Romania when the highly qualified labor force and trained professionals acutely experienced a lack of clear domestic opportunities. For the past few years, this phenomenon has been a major problem in Romania, triggered by the migration of the highly qualified labor force, actually of the specialized professionals that were supposed to get our country out of the economic dead-end. We shall further on explain the steps a future emigrant must take the concept of intelligence and brain export and we shall analyze both positive and negative effects as generated by this phenomenon, which seems to become more and more internationally spread. We shall, thus, start by explaining the role of the human capital for the countries of origin of the migration. This will assist us in understanding that the migration of the highly skilled and qualified labor force actually prevents the development process of emerging economies. Nevertheless, a new migration-related perspective started to be visualized regarding certain rather subtle benefits. The human capital acquisition is particularly relevant for the emerging economies that must catch up with the already developed countries. If considered from this point of view, the migration issue gains a new significance and the highly qualified labor force migration particularly turns into a sensitive issue with development –related implications. The brain drain concept refers to the international resources transfer as human capital, e.g. migration of relatively high-educated persons from emerging economies towards developed countries26. Although definitions do not always tend to have a uniform line, the “high education” concept generally refers to persons having obtained at least a bachelor level. The brain drain reduces the economic growth by actually “draining” the active human capital of the source country and additionally by the fact that education investment is not rewarded. The “brain gain” concept 26
http://www.cenpo.ro/files/08%20Migration.pdf 128
was first used at the end of the 60`s when developed countries started to absorb highly qualified and skilled personnel. Nowadays it is again a current event and issue, given that the highly qualified labor force migration fluctuation increased considerably as part of the brain “poaching” policy. 27 In order to underline the loss a country faces due to migration, we must commence by explaining the way that particular country trains its labor force by allotting a considerable amount of the state budget to education in all its stages and levels. If during communism the access to higher education was provided exclusively by the public education institutions, once communism was eradicated there were numerous private education institutions incorporated and which supported the development of the Romanian education system and, implicitly, the increase of the higher education graduates number. A survey that the CEPES (Centre Européen pour l’Enseignement Supérieur28) has recently performed on 7 European countries revealed that the number of persons having attended university courses increased between 1990 and 2000 by 182%. Table 1. Evolution of the number of persons having attended graduate courses. 1990
1991
1992
1993
1994
1995
1996
1998
1999
2000
Total immutably percentage
Bulgaria
31.1
30.3
31.4
33.2
35.4
39.4
41.2
43.96
42.72
40.82
31
Czech Republic
16
14.7
14.6
19.6
20.8
21.8
23.5
26.05
28.66
29.84
87
14.2
15.1
18.1
20.9
23.6
33.48
36.69
40.01
182
45.68
50.44
55.54
156
Hungary Poland
21.7
21.5
23.4
33.8
26.1
24.7
Romania
9.7
10.7
16.1
18.7
19.7
18.3
22.5
21.27
23.21
27.32
182
16.1
17.1
18.7
20.2
22.1
26.50
28.85
30.22
88
28.2
29.8
31.5
34.5
36.1
53.33
60.55
147
Slovakia Slovenia
24.5
27.8
Source: http://www.cenpo.ro/files/08%20Migration.pdf The preoccupations regarding the education adjustment process to the permanently changing society requirements as well as to those related to the European Union adhesion, led to significant modifications of the Romanian education structure, organizing and management. The main changes occurred after 2000 subsequently to the introduction of Act no. 268/200329 regarding the amendment and completion of the Education Act no. 84/199530. The new act regarding adult professional training (Act no. 375/200231) is focused on the accreditation of professional training providers to the purpose of quality increase of both public and private offer. By this Act, the National Council for Adult Professional Training32 is given the main role in the accreditation procedures. Also, the new Employment Code published 2003, stimulates the development of continuous professional training by forcing employers to provide periodical participations of employees to continuous training courses based on training programs as mutually agreed upon by employers and employees or union representatives.
27
http://www.cenpo.ro/files/08%20Migration.pdf http://www.cepes.ro 29 http://legislatie.resurse-pentru-democratie.org/84_1995.php 30 http://www.cdep.ro/pls/legis/legis_pck.htp_act?ida=6696 31 http://www.parlament.ro/pls/legis/legis_pck.htp_act?ida=37858 32 http://www.cnfpa.ro 28
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In this context we must also mention two social acts: Act no. 219/2001 regarding the opportunity equality when it comes to higher education attendance by means of study social grants, and Act no. 16/2003 regarding the approval of the Government Emergency Decree no. 96/2002 regarding the supply of I to IV grade pupils with milk and bread-related products.33 Therefore, given a continuously developing education system, with both lacks and advantages, after the 2007 international school Olympiads, the Romanian pupils obtained 12 gold medals, 30 silver medals, 14 bronze medals and 15 honorable mentions and also two 1st prizes, one 2nd prize and two 3rd prizes.34 These results obtained by the Olympiad participants become, in time, true performances and excellences in various lines of business and specialized fields, which places Romania among the countries that are recognized as real specialist’s sources. According to an IT IQ report performed by the Brain bench Company, Romania dominates Europe with it’s over 16.000 certified specialists. Research revealed that Romania occupies the 6th place worldwide and the 2nd place in Europe regarding intellectual competences and professional training. Said research was conducted based on qualifications in several fields of activity: software, general knowledge, medicine, industry, technology, foreign languages and communication, management and executive positions. Brain bench is the most important agency that performs online research regarding professional qualifications and skills.35 Romania occupies the 1st place in Europe as number of IT qualified and certified persons. IT Certifications in Europe Europa
Tu rk e y ea tB rita in Gr
Sp ain
ly Ho lla nd Po rtu ga l Ro ma nia
Ita
Fra nc e Ge rm an y Gr ee ce Hu ng ary
tia De nm ark
ria
Cr oa
Bu lga
Au s tr
ia Be lgi um
18000 16000 14000 12000 10000 8000 6000 4000 2000 0
Source: http://www.absoluteitsolutions.com/romania.php - visited at 15.04.2008 There are over 300 Romanians as well as an entire software specialist’s community working for Bill Gates in Redmond. The most eloquent proof of the Romanian specialized qualification as well as the professional potential thereof was the decision Microsoft made to purchase the RAV Romanian Company. Along with the purchase, Microsoft relocated part of the employees to the Microsoft USA Redmond headquarters. 40 Romanian specialists contributed along with the 200 computer programmers to the Windows 2000 operating system creation. In Germany, the Romanians occupy a third position as IT specialist’s number. In 2006, the Romanians incorporated more than 17000 companies in Italy, i.e. 25% more than they did in the year of 2005. Most of them have civil engineering and constructions as main line of business (75%), trade and commerce (7.6%) and production/manufacturing (5.6%). Most of the Romanian-owned companies were incorporated in Rome (2 700), in Torino (2400), Milan (1300) and Verona (900)36Migration plays a very important part within the contemporary social transformations and it is both the consequence of global changes and an impulse for future changes in the origin countries and the host countries. Migration has, first of all, a direct impact on the economic level but it also affects fields such as: employment, society, social protection system, national culture and policies, and international relations, and the inevitable outcome are the incredible ethno-cultural diversity in all countries.
33
www.edu.ro/index.php?module=uploads& func=download&fileId=2216 http://www.edu.ro/index.php?module=uploads&func=download&fileId=6807 35 http://www.edu.ro/index.php?module=uploads&func=download&fileId=6807 36 http://www.absoluteitsolutions.com/romania.php 34
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Job access opportunities in a member state stand for a fundamental aspect of the free movement of persons within the European Union. This freedom includes a person’s right to freely move from one state to another either for employment or residential purposes, as self-employed or as employee. The access to the member states employment market implies the right to the equality of treatment and chances regarding work conditions as well as the right to social, economic and cultural integration of the emigrant worker and his/her family in the host country. The workers’ right to free movement is completed and supported by a system of coordination of social security systems, as well as the mutual recognition and equivalence of diplomas and degrees. At the European Union level, legal immigration stands for a factor that favors the economic growth provided it is efficiently managed and directed towards deficit sectors. At the community level, there is no clearly defined policy; there are simply collective policies regarding certain migration-related aspects. Migration is actually regulated by means of standard decrees and legal instruments, which are updated in order to comply with the economic needs of the host countries. The origin countries also intervene in this economic migration process, despite the fact that most of the times, their contribution is a mere reaction to the regulations of the target countries and the main objective is to avoid, for example, an overly selective or an excessive employment flow. In compliance with the provisions as stipulated by Regulation no. 1612/1968 regarding the free movement of workers within the Community, in the European Union the social and fiscal advantages granted to migrant community workers are similar to those of that particular country’s citizens. The family of a worker also benefits from the same social advantages. The concept of social advantage as defined by Regulation no. 1612/196837 is different from the concept of social benefits as defined by Regulation no. 1408/197138 regarding the coordination of the social security systems. As an example of social advantage: the preferential tariff for the railways tickets or the application of the national regime of the minimum wage guarantee in order to provide living means, allowances for the disabled persons, allowance upon child delivery, etc. As to fiscal advantages, the European Community Treaty clearly forbids Member States to stipulate within their legislation that the wage income tax, paid-as –you-earn, be charged to the taxpaying worker when said worker only resides on the territory of that particular State for a certain period of time of the fiscal year. The family members of a Member State citizen that is employed in another Member State and the spouse thereof as well as the descendants under the age of 21 and who are financially supported by said worker, as well as ascendant line dependant relatives of the worker and spouse are entitled to settle down with the worker and to perform, respectively, any paid activity in that particular State, even if they might not be community citizens39. Brain drain has its origin in Antiquity when Athens inhabitants complained about their most brilliant minds having left the territory. The direct origin of the phrase is located in a report that the London Royal Society presented in 1962 concerning the migration of the scientists and specialists from Great Britain to the U.S. Bibliographical documents have been more and more available and abundant starting the ‘70s, particularly in the directly affected countries. The phenomenon was initially analyzed and scrutinized almost exclusively from the economic point of view, by considering the differences between “the muscle power” and the “brain power”. Once the role of the human capital within the economy was defined (and implicitly the influence of the “brain” migration) the concept of brain drain is suitable particularly from the sociological point of view40. The complexity of the brain drain concept is generated by the new specialist’s flows towards industrialized countries or emerging economies, due to the activity performed by the highly qualified personnel recruitment transnational agencies, which create their own migration network. While the specialized literature tends to focus mainly on the economic consequences, the “brain drain” impact goes beyond the economic level. The impact has significant implications for the development of the social and political sectors of the countries of origin and reveals the trajectories of the international qualified migration, which, despite its relatively reduced dimension as compared to the unqualified migration, is targeted on strongly developed geographic regions. An emblematic definition explaining the perspective of reports stating that “the irony of nowadays international migration is that many of those having legally migrated from poor 37
http://www.ectap.ro/articole/211.pdf http://www.mmssf.ro/website/ro/dms/281206reg1408_71.pdf 39 http://www.ectap.ro/articole/142.pdf 40 http://facultate.regielive.ro/referate/sociologie_economie/brain_drain_cauze_efecte_si_solutii-2810.html 38
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countries to developed ones are the ones that the Third World Countries cannot afford to lose because of their highly qualified skills and accumulated professional experience. Ever since migration turned into a real phenomenon, this brain drain not only stands for a loss of valuable human resource but may also seriously influence the Third World countries economic progress”41 As for the country of origin, the loss of a part of its highly qualified human capital represents an impediment of the economic development process. Public investments in the human capital professional training are made in order to have professionally qualified personnel, in all fields, and who may contribute to the economic development of the country in question. By leaving the country, the emigrant indirectly causes financial prejudice to the country since he/she leaves the country in order to work for the benefit and profit of another country. Emigration may cause the country a double loss: on the one hand, the loss of the emigrant person and on the other hand the loss, in most cases, of the family too. In time, the emigrant tends to influence the persons close to him/her (i.e. family members, friends, former co-workers) and persuade them into emigrating themselves. Another aspect that was noticed is the significant increase of student mobility. Students participate in a variety of activities in various countries, and most of these activities are funded by Romania in cooperation with other countries, to the purpose of acquiring new knowledge, to get familiar with other cultures and to promote teamwork. Lately it has been thought that this might actually be an emigration strategy, the country losing an ever-increasing number of qualified labor forces from the very period of training, since the students choose to continue their studies in a different country and they shall subsequently capitalize their knowledge in that new country. Despite the tempting idea of leading a higher standard of living, the emigrant leaves his/her country of origin for another country where the possibility of achieving their dream seems greater. The Romanian emigrant often ignores the consequences he/she might face, such as family break up and interruption of the relations with the Church. Immigrant workers are more often predisposed to compromises regarding the type of activity they are to perform abroad as compared to their professional qualification level and the professional skills as acquired in the country of origin. Interruption of specialized activities has a negative impact on the professional continuity as well as on the skills required in order to continue practicing the old profession when returning to their country. Immigrant workers are often confronted with the lack of knowledge or data regarding their rights or various opportunities they may have abroad. Emigrants may also be lacking information regarding life and employment conditions in the destination country and therefore they sometimes become the victims of human trafficking. Time is a resource the immigrant needs to learn how to be efficient when coming into contact with people belonging to different cultures. An immigrant may easily spend a considerable amount of money in a very short period of time: by losing certain contracts (provided the immigrant leaves the country based on an employment contract that he/she signed in his/her country of origin, e.g. Work & Travel), because of the inefficient relations with persons surrounding him/her, a low moral at the workplace, etc. The adjustment of both the life partner and the family is a widely spread problem. The emigrant may have excellent multicultural skills and may do very well at work, but research indicated that the family members encounter adaptability problems, which means that the emigrant himself/herself shall encounter problems that may lead to his/her prematurely losing the job. Upon his/her return to the country of origin, the non-community country migrant worker may not benefit from certain social security advantages or may not value his/her abroad employment seniority, because there are no bilateral agreements regarding social security issues. On the opposite side of the Brain Drain concept there is the Brain Gain concept, which refers to the migration positive effects. The concept was created following a symposium that took place in Canada in 2000, when many of the highly qualified Canadians were emigrating to the USA while many of the highly qualified people of various worldwide countries were emigrating to Canada. This phenomenon was given the name of “brain exchange”. We shall try and organize the migration positive effects in two categories, i.e.: the “before effects”42 (ex-ante- the notion was derived from Latin, meaning before the event) which refer to the positive effects that are identified before the migration takes place, and the “after effects”43, the effects that turn visible once migration began. Under the ex-ante effects, we may mention the fact that migration can be a strong 41
http://www.ad-astra.ro/library/papers/Aferro_Brain_Drain.pdf http://www.cenpo.ro/files/08%20Migration.pdf 43 http://www.cenpo.ro/files/08%20Migration.pdf 42
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stimulus for knowledge and skills acquisition that may be of help during the adjustment process and the professional accomplishment in both the origin country and the foreign country. Given how fast things work, at the end of the century Romania could not only be a “brain supplier” for foreign countries but it may also reach an education level way superior to the average, which may impact future generations. A child’s evolution as a person is not exclusively influenced by a well-developed educational system but also by the family that must be able to impact the child through its own educational positive environment. The imitation of their behavior as well as the development of certain positive convictions and attitudes clearly favors a harmonious growth of the child44. Among the ex-post effects (the after effects) we can include the combined effect of economic growth and migration, which led to an unemployment increase from 8.4% in 2002 to 6 % in the third semester of 2007. Romanian emigrants play a very important part in the economic growth of their country of origin, since the amounts they send home (approximately 3.4-4 billion Euro) are enough to cover almost half of the account current deficit in 2005. The economic pressure that motivates Romanians to emigrate keep decreasing since Romania’s economy recorded one of the fastest growth rhythms in Europe. Economy specialists believe that, given the current economic growth rhythm, it might take up to 20 years for Romanians to reach the Western European standard of living45. Another advantage for the emigrant worker is the contact with the specific civilization and the culture of that particular country. Thus, the new experiences, knowledge and customs the emigrant acquires may have a positive influence on their subsequent individual evolution. Another favorable aspect of migration: one can easily notice that when living in highly civilized countries, the migrating Romanians see and learn to develop a society –friendly behavior, to observe law and order, to keep clean and to respect their job-related duties, all these combined turned into one big gain for Romania. The employment movement facilitates the spread of technical knowledge and of modern work methods between the countries that are affected by the migration phenomenon. When returning to the country of origin, the migrant worker may take advantage in his/her experience abroad, thus chances are greater to get a job or becoming himself/herself the employer of other persons, and this fact has a major contribution to the unemployment rate reduction. The abroad experience also provides increased employment flexibility. An increase of migration shall determine an increase of the amounts the emigrants send to their country of origin. The extremely favorable implications on development result from the fact money sent by emigrants are the most stable currency source for poor countries which is their main destination. The State may have both financial-fiscal and social advantages due to the income of its own citizens that perform their activities on a foreign territory. Should the migration possibilities tend to decrease, Romania shall be left with significant brain resources, which will bring but gains. Educated people are more inclined towards emigration even when the income opportunities corresponding to their aspirations are low. At the same time, these people have less adjustment problems since they speak foreign languages and have better skills and competencies that allow them to learn fast. The increase of economic competitiveness is closely related to the importance of increasing technical and informational competences of the labor force. In a nut-shell, we may state that the reform of the vocational and technical education system must lead to the increase of high qualification offer and stimulation of pupils and students to acquire as high as possible a professional training. The specialists of the wealthy countries start emigrating and shall be immigrating more and more to poorer countries, in order to look for jobs that comply with their professional qualifications and expectations. We considerate that if, on one hand, the negative effects on Romania are of the short-term kind, on the other hand the positive effects are medium and long-termed. Up to present time, our country policies have been as mild as possible; we believe that the State is entitled to claim its investments in the professional training of the people who left the country. We propose the recuperation of the money invested by the Romanian state, in the education of the immigrations directly from the emigrants or from the countries in wich they emigrate. 44
http://articole.famouswhy.ro/influenta_climatului_familial_asupra_dezvoltarii_sistemului_de_valori_mor ale_ale_copilului/ 45 http://www.gandul.info/actual/emigrantii-romani-sustin-economia-propriei-tari-3-4-miliardeeur.html?3927;267968 133
Bibliography Beine M., Docquier F. and Rapoport H. (2001), ‘Brain Drain and Economic Growth: Theory and Evidence’, Journal of Development Economics, vol. 64. 2. Haque N. and Kim S (1994), ‘Human Capital Flight: Impact of Migration on Income and Growth’, 3. Maria-Madela Abrudan (2005), Managementul Resurselor Umane – Ed. Universitatii din Oradea 4. Martia Larionescu, (2008), Sociologie Romaneasca, volumul 4, Editura Polirom 5. Stark O., Helmenstein C. and Prskawetz A. (1997), ‘A Brain Gain with a Brain Drain’, Economics 6. Tereza Bulai (2006), Fenomenul migraţiei şi criza familială, Editura Lumen 7. Valeriu Rusu, “ Migratia fortei de munca in Europa” , Editura Arvin, Bucuresti 2003 8. www.edu.ro/index.php?module=uploads& func=download&fileId=2216 9. http://www.absoluteitsolutions.com/romania.php 10. http://www.ad-astra.ro/library/papers/Aferro_Brain_Drain.pdf 11. http://www.cdep.ro/pls/legis/legis_pck.htp_act?ida=6696 12. http://www.cenpo.ro/files/08%20Migration.pdf 1.
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USING MACROECONOMIC INDICATORS FOR MANIPULATING Florea Adrian University of Oradea, Faculty of Economics, 1 Universităţii Street, 410087, Oradea, Bihor, E-mail:
[email protected], Phone: +40259408410 The data of macroeconomics is very important for all actors of economic stage. Many times this data generates dissatisfaction, confusion, even revolt. We`ll try to identificate the limits of macroeconomic indicators, insisting on its manipulating character. For example the limits of the income per capita are quite numerous and may be organized by three main categories: the report variables related uncertainties, the effects of the exchange variations and the difficulties of a price system international comparison. Macroeconomic indicators, manipulate, limits, optimize Essential elements in achieving macroeconomic indicators are in facts microeconomics indicators which integrate at different structure levels of national economy. Through the market the value of the merchandises is achieved, their transfer from producers to consumers and anticipated level of utility on the consumption process. An identification macroeconomic result makes up one of the essential elements which leave its obvious mark on the national economy profile. Also, macroeconomics results represent the starting point and one of the most important elements on strategy substantiation and tactic over national economy development. They also represent one of the indicators through the agency of which one can establish the place a national economy absorbs in global economic system, same as in different state structures. National economics must be seen as multidimensional realities. Each of them has a certain dimension, an established structure; a certain potential; defines as a technological and technical level, and through some economics performances, level of urbanization, making progress system, etc. All national economy dimensions can be valued, measured and evaluated on an indexes system. For analyzing and comparing national economies, World Bank uses over 30 groups of indexes. As about Romania’s Statistic Yearbook, we find the presentation of GDP on different type of resources with the help of 20 indicators and 17 indexes, GDP on utilities – using 8 indicators and 5 indexes, institutional macroeconomic aggregate (7), the main macroeconomic aggregate per capita – with 4 indicators etc. Economical quantification of these results is sustained by a specific theory and methodological conception, according with market and planed economy. Now the science of economy is using two methodological systems for calculating macroeconomic results: a) The system of national accounts b) The system of material production National account system is based on the theory of the production factors and the way of recompense of each of them: labor – salary, land –rent, capital – profit This system is used especially in states with market economy, but also in some states with planed economy. The beginnings of this system is at the end of 17 century when national accounting system of developed countries calculated only national revenue and wealth of the nation. The system of national accounts after the Second World War became more complex, and starts to offer the main information for implementing strategies of development The system of material production is based on the theory o productive labor, where only the labor in the sphere of material production creates economical goods, in conclusion incomes too. Actually this theory knows two extremes: first consider that only the labor that creates material goods is productive labor, and the second extreme consider all human activities are productive. Both systems try measuring the economical results using synthetic indicators. Both systems have to accomplish the next three functions: 135
Instrument for statistical evidence
Instrument for economical analyze
Instrument for substantiation the decisions and strategies for economical and social decisions Between these two systems are also some differences. The most important is how they make the identification the sphere of national revenue. The limits of the income per capita are quite numerous and may be organized by three main categories: the report variables related uncertainties, the effects of the exchange variations and the difficulties of a price system international comparison.
Uncertain or ambiguous variables The GDP per capita is a two variable ratio regarded with certain doubts when it comes to emerging economies. A national accounting aggregate that underestimates the fortune production reality in such countries occupies the numerator position. First of all, the domestic consumption production activity, which is quite important in the rural areas, is hardly accounted for when it comes to book keeping, since it does not actually involve merchandises and it only generates few money flows. Besides, the informal economy is in itself hardly noticeable by the national accounting. Yet, this sector may stand for a very significant part of the economic activity, 30% of the non-agriculture active population in Latin America, 45% of the Indian urban occupation, 40% of the Peru’s GDP. The population number, occupying the numerator position, is also debatable. Both the accuracy and the reliability of demographic data highly depend on administrative capacities, which are weak in most part of the underdeveloped economies. The census, which is an irreplaceable instrument yet a very expensive one and extremely difficult to organize, already presents a reduced frequency in developed countries as well, and moreover in the emerging economies. The announcement regarding the fact the India has one billion inhabitants, that Nigeria has 120 million and Brazil has 160 million requires great precautions. One must also add that the population level and the GNP/ inhabitant may be conferred upon a political use. The result is that no indication is made available regarding the income distribution, which proves to be the central issue in various Southern economies. The calculation of the inhabitant income leads to an implicit hypothesis of an income egalitarian distribution. We obviously refer to a highly debatable hypothesis in such context. The very analysis of the Gini coefficient underlines the way the same income level may describe very different situations when referring to inequalities. Brazil and the Czech Republic have comparable development levels but Brazil is characterized by a very inequality distribution (0.634), which is definitely not the case for the Czech Republic (0.266). The same may be stated for both Kenya (0.575) and Bangladesh (0.283).
Exchange variations In order to compare data, it is necessary to convert the information resulted from various national accounting systems into one currency: the dollar. The evolution of bilateral exchange rates between each national currency and the dollar actually disturbs the significance of operated calculations. One modality is introduced when we shall observe and analyze the product per capita in current dollars throughout several periods of time. A country whose currency tends to depreciate, as compared to the dollar, shall see its product per capita facing a cut back without such situation signaling deterioration in the domestic fortune production. Conversely, any appreciation shall lead to an artificial increase of the living standard. Throughout the past 30 years, the dollar has registered irregular oscillations as compared to many world currencies. The obvious solution is to set a reference year for the bilateral exchange rates and such year to remain unchanged, which shall allow for longitudinal comparisons although the solution in question may not solve all issues.
Price systems The international comparison of living standards based on the product per capita criterion implicitly states that the price systems as applied for each national accounting system are comparable. If one is to reckon that one economy consists of two main sectors (the changeable goods sector and the domestic goods sector), it is easily provable that one positive way was introduced. We shall accept that the unique price 136
law is imposed for internationally exchangeable goods while the price of the domestic goods is itself endogenous as compared to the development level. The price level of non-exchangeable goods is inferior in the emerging economies as compared to the prices in the developed economies: this is what we call the Balassa-Samuelson effect. Thus, one understands that the current dollar-converted national income shall undervalue the actual living standard of developing countries. In order to assess the living standards one must evaluate the size of the accessible basket of consumer’s goods and to neutralize the issue involving the price at which goods are appraised. It is therefore our duty to rectify such disparities of price levels by taking into consideration the internal currency purchasing power, i.e. using the corrected bilateral exchange rates with the purchasing power parity and not the official exchange rates.
Bibliography 1. 2. 3. 4.
Azam J. P., „Theorie macroecomique et monetaire”, Nathan, 1986 Clower R., Monetary Theory, Penguin Books, 1971 Guillaumont, P., „Economie du developpement”, Coll. „Themis”, PUF, tom 1, 2005 Kakwani, Nanok C., „Income Ineqaulity and Poverty: Methods of Estimation and Policy Applications”, London, Oxford University Press, 1990
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DIRECT FOREIGN INVESMENTS AND THEIR IMPACT ON ECONOMIC DEVELOPMENT Fodor Alexandrina UNIVERSITY OF ORADEA, FACULTY OF ECONOMICS, STR.UNIVERSITATII, NR.1, ORADEA, E-mail:
[email protected], Mobile: 0040 740 180 989 This is a topic of great interest for society nowadays. When there is infrastructure in a country, it becomes an economic good in the following years that can be achieved only through direct foreign investments. Direct foreign investments are carried out by companies aiming at getting total or partial control over production, marketing and other activities within another national economy. Key words: marketing, corporation, multifunctional, law, prosperity, capital, competence, strategies, promotion, fiscal concerns.
In the post-war period, there was a vast expansion of international trade that accompanied economic growth and the reduction of barriers against imports. Thus, in the 1950s and 1960s, international competition was measured through the level of imports in national economies and the market quota of a state on the international level. Then, at the end of the 1960s and all through the 1970s, direct foreign investments grew remarkably. Direct foreign investments are carried out by companies pursuing total or partial control over production, marketing and other activities within another national economy. Investments may be materialized in services, in manufacturing industry, or in supplies production Direct foreign investments may entail either the acquisition of certain already existing economic activities (mergers or acquisitions), or the creation of new facilities (investments, such as Greenfield). The expansion beyond the borders of the country of origin is accompanied in most of the cases by international alliances with companies of other nationality. Direct foreign investments are used as part of a global strategy of the corporation to establish a permanent position in another economy. Once the beginning of the 1990s, most countries liberalized their regulations concerning foreign investments and actively encouraged foreign investments towards the interior. In the span covering 1991-1996, 95% of the 599 worldwide alterations to national regulations referring to direct foreign investments envisaged a progressive liberalisation. This trend was particularly important for investments in services, especially in financial services, where foreign companies had faced several national restrictions before. We may notice the impact of direct foreign investments on Romania through the massive growth of direct foreign investments of certain companies of different nationalities, crossed investments amongst national economies, and the growing integration of commerce. Direct foreign investments led to the disappearance of hostile attitudes. If there is a legal and political incentive, the development of direct foreign investments, the development on local, regional, and national levels have a beneficial finality. Lately, the trend of foreign investments in Transylvania and Banat has altered. Foreign businesspeople prefer the so-called Greenfield investment, which means the growth of factories from zero. So far, they used to invest more in purchasing and modernising plants built during the communist regime. This trend alteration was also encouraged by Law 332 of 2001 that supported important investors by granting certain fiscal facilities. One of the important companies that has entered on the market in Transylvania is the Austrian company “Holtzindustrie Schweighofer” that has invested since 2002 over 54 million Euros in the sector of wood processing in Sebes, Alba County, and has created 320 new jobs. The unit thus values the wood in the area of the Apuseni Mountains. SNR “Roulments” from France has declared investments in the field of car 138
industry of 60 million Euros and an estimate of 1,000 jobs in Sibiu. The factory might become one of the most important providers for the Renault factories in Romania and Russia. According to the ARIS statistics, there is a series of investors that are undergoing a process of achieving the announced investments; they are to be gradually finished by the end of 2008. One of them is the “Selgros” group that has investments in the main cities of the country to open 13 new units, as well as the German group “Tengelman” – which is specialised in retail – that announced the opening of 15 new units and a warehouse. Another investment in progress is the German company “Ina Schaeffler” in the field of fine mechanics that develops a factory in Brasov of 35 million Euros with 220 employees. “Celestica” from Canada may be framed here, as they invest 84 million Euros in Bors, Bihor County, in the field of electronics. They will create no less than 1,000 jobs in 2008. According to Law 332/2001, direct investments with significant impact in economy have a value exceeding the equivalent of 1 million USD and contribute to developing and modernising the economic infrastructure of Romania. They have a positive impact on stimulating economy and creating new jobs. These investments may be carried out in any walk of life, except for the financial, banking, and insurance sectors, as well as those with special regulations. Besides, local authorities may provide tax exempt for the land for these investments for a period of up to 3 years starting the beginning of works. At the same time, according to the Fiscal code, direct investments with significant impact in economics benefits from overwriting from a fiscal point of view in the month the investment is carried out of a 20% quota of the total value, as well as the possibility to use accelerated depreciation of the investments carried out, without needing to get previous approval from the territorial fiscal body in charge. The growing role of transnational companies (TNC) within global economy has become an extremely controversial topic. The supporters of transnational corporations consider them as beneficial for industrialised economies, as well as for those on their way to industrialisation, as they consider they contribute to efficient and productive use of world resources, which increases world assets and economic welfare. Internal economies are still a core feature of global economy and, at the same time, multinational companies and their investment activities have an incontestable impact on the location of the economic activities worldwide and the national growth rate and productivity. Transnational corporations are the main capital, technology and market access source for almost each and every country. Due to the benefits of direct foreign investments, transnational corporations have a considerable economic and political power, while their activities are legitimate objectives of concern for any society. Direct foreign investments have important distributive effects within internal economies, particularly upon the distribution of income between capital and labour force. According to the law concerning foreign investments in Romania, natural and legal entities may invest under a great variety of legal forms, such as: direct investments in economy, investments in state bonds, and so on. The authority competent in the field of foreign investments is the Romanian Agency for Foreign Investments (ARIS). The conception of the strategy to promote foreign investments by ARIS is based on a programme for 2005 – 2008 that assumes the following points:
establishing a strategy to promote foreign investments in tight relation with the private sector and the local/regional and central authorities;
promoting a new foreign investments incentive law;
placing ARIS as a central contact point for potential foreign investors, or already existing investors, in Romania. The agency is in charge with the project on “Romania, attractive destination for foreign investments” that suggests the revival of the Romanian business environment, so that the existing reserves of the investors may disappear. The introduction of the single tax of 16% for natural entities’ income and the profit of private companies is meant to strengthen fiscal order, to reduce bureaucracy and to build a friendly business environment. 139
The effective involvement of the foreign investors’ representatives in the decision-making process on a governmental level may contribute to eliminating obstacles and improving the investing climate. An efficient policy needs not only intelligence, it also needs money. Important privatisation finished in 2005-2006 and in 2007-2008 proactive investment policies are needed, where attracting investments of a Greenfield type is crucial. The ARIS activities, tightly related with the external promotion of the Romanian investing climate will be reorganised by adopting a system focused on target countries. Re-identification of destinations is based on the latest global evolution of the foreign capital exit flows and the trends of localisation towards the emerging markets, according to the flying geese Japanese model. Direct foreign investments are carried out by companies pursuing total or partial control over production, marketing and other activities within another national.
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ASPECTS OF IT RISK MANAGEMENT FOR A COMPANY Fratila Laurentiu Academy of Economic Studies Bucharest, Faculty of Accounting and Management Information Systems, Piata Romana, nr. 6, Bucharest, email:
[email protected], phone: 0765.507.791 Tantau Adrian Academy of Economic Studies Bucharest, Faculty of Business Administration, Piata Romana, nr. 6, Bucharest, email:
[email protected], phone: 0728.201.937 In the computer age, management information system represent an important component for the management of a company, strong linked to the rest of management subsystems. Inside of this subsystem, IT (information technology) is a fundamental element, which allows for a company to survive or to growth on a global market. IT risk management is a continuous process, integrated in structure and culture of a company, that has as a goal to analyze and to find solution for minimize negative effects and maximize positive effects of risks. The paper develops these main aspects to analyze risk software and the direction to implement it in a company. Key words: types of IT risk, risk management, categories and impact of risks, control of risks, reporting systems of risks
Definition of IT risk In general, risk refers to those factors, both technical and managerial, that are elements to success or a major source of problems on software projects. From Wikipedia, risk is “a concept that denotes a potential negative impact to an asset or some characteristic of value that may arise from some present process or future event”. The American Heritage Dictionary defines risk as "the possibility of suffering harm or loss". Risk can be defined using an appropriate definition for the risk, based on two directions: proposal risk and performance risk. Proposal risk referred to those risks inherent in the venture and is associated with the contractor's approach. Performance risks referred to those risks inherent in the proposed approach as is associated with the contractor's track record. All organizations manage the two groups of risks: financial risks and operational risks. Operational risk, defined by the Basel II committee of the Bank of International Settlements is “the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events”. In the category of operational risk is included and IT risk. The types of IT risks using as criteria the business operating conditions that can produce them are:
Long-term IT risks - result from global circumstances and national and transnational legislation and regulation.
Medium-term IT risks - result from changes in the market and competition.
Short-term IT risks - result from interactions with customers, suppliers and partners.
Ongoing IT risks - arise from the normal use and functionality of processes, systems and networks. The period of time associated with these types of risks are: years, months, days and hours or minutes, respectively. Risk management is a process that includes the identification, analysis, planning, tracking, controlling and communication of risk [3]. In the vision of Donald Reefer, risk management can be defined as the process of identifying sources of the problems for the project, analyzing them, quantifying their effects, and implementing plans that counteract their negative effects [6]. 141
Barry Boehm defines the practice of Risk Management in two terms: risk assessment and risk control. Risk assessment includes:
risk identification - creating a list of all of the potential dangers that can affect the project;
risk analysis - assessing the probability of appearance and potential loss of each item listed;
risk prioritization - ranking the items from most to least dangerous. Risk control includes:
risk-management planning – setting the techniques and strategies to mitigate the highest ordered risks;
risk resolution - implementing the strategies to resolve the high order risks factors;
risk monitoring - monitoring the effectiveness of the strategies and the changing levels of risk throughout the project By analysis the software risk, Boehm determines 10 software risk items [1]:
Personnel Shortfalls;
Unrealistic schedules and budgets;
Developing the wrong functions and properties;
Developing the wrong user interface;
Gold-plating;
Continuing stream of requirements changes;
Shortfalls in externally furnished components;
Shortfalls in externally performed tasks;
Real-time performance shortfalls;
Straining computer-science capabilities.
IT Risk Management methodology – Symantec Corp. A lot of IT companies proposed different methods to manage the risk. Symantec Corporation is one of these, which propose Symantec Integrated IT Risk Management methodology [10]. This methodology offers to companies the possibility to control of IT risks from threat detection and prevention to the overall strategic direction of the business. Symantec has developed a five-step process to assist in the management of IT risk, as follows.
develop awareness of IT risks – implies understanding all defined main elements of the IT risk;
quantify business impacts – implies to quantify and measure the impact of all categories of IT risk over all stages of the business and identified the main risks for critical business;
design solution – implies to find/create the appropriate solutions to manage the identified risks;
align IT/business value and implement solution – implies to implement the designed solution to mitigate the identified risks, especially for the critical stages of business;
build and manage unified capability – implies to manage the risks in the general line of management of the company, at all levels of decisions.
Categories of IT risks The failure of the company in management of IT risk is generate by difficulties in one of the following directions: security, availability, performance or compliance. 142
Risk Category
Source
Potential Impact
Security Compromise of information, confidence in it and technology and processes for managing it
- External attacks - Malicious code - Physical destruction - Inappropriate access - Disgruntled employees - Proliferation of platform and messaging types
- Corruption of information - External fraud - Identity theft - Theft of financial assets - Damage to reputation and brand - Damage to assets
Availability Failure or delay in delivering IT processes or information needed for business transactions and operations
- Hardware failures - Network outages - Poor change management processes - Data center failures - Force majeure
- Abandoned transactions and lost sales - Reduced customer, partner, employee confidence - Interruption or delay of business critical processes - Reduced IT staff productivity
Performance Slow or inefficient operation of IT processes supporting business transactions and operations
- Poor system architectures - Network congestion - Inefficient code - Inadequate capacity
- Reduced client satisfaction - Reduced client or partner loyalty - Reduced user productivity - Interruption or delay of business critical process - Lost IT productivity
Compliance Penalties, fines and loss of reputation from failure to comply with laws and regulations, or consequences of noncompliance with IT policies
- Regulations unique to each jurisdiction, including: • Graham-Leach-Bliley Act • EU Data Protection Directive • Health Insurance Portability and Accountability Act (HIPAA) • Sarbanes-Oxley Act - Legal actions - Internal IT safeguards supporting compliance - Inadequate third-party compliance standards - Expansion from central to end-point compliance
- Damage to reputation - Breach of client confidentiality - Litigation - Executive productivity
Table 1: Categories of IT Risk, with examples of the sources and potential impacts associated with each (source: [11]). For IT applications, these categories of IT risks can be refine in more categories. Thus, appears two new categories: recoverability risk and scalability risk. The term of IT recoverability risk defines the activities of creating and testing IT backup solutions, in ways that minimize the risk. Known as a “disaster recovery”, recoverability takes two forms: backup and recovery tests. If backup implies to realize copies on different removable media and store them outside the affected area of an anticipated disaster, the recovery tests implies to restore the data and apply logs against that data to bring them to consistency at a particular point in time up to the last transaction in the logs. 143
In practice, the both forms are used together. Thus, is eliminated the danger that bugs or human error have corrupted the backups Scalability for IT risks can be evaluated from two perspectives [5]:
the ability to have an acceptable response time under increased load on the same system;
the ability to have an acceptable response time under increased load when using more hardware or software resources. Thus, we can conclude on a large definition of scalability, as the ability to utilize additional resources efficiently in order to maintain a required response time.
Figure 1. Level of Risk and Impact are critical facets of evaluation that should be considered when analyzing a portfolio of IT focus areas (source: [4]).
Control of IT risks The problem of control of IT risk is very important for a company. The control will be treated over three visions: threats, vulnerabilities and impact. These implies following aspects:
Controls that will detect threats and issues in good time and will anticipate or prevent them where necessary and appropriate
Controls that will enable vulnerabilities to be fixed and system weaknesses resolved
Controls to manage the impact of any issues or threats that have succeeded in exploiting vulnerabilities or unresolved weaknesses The responsibility for IT risk control belong to all departments of company, from the departments of IT services to the departments of Business Organization. For the IT departments, the main activities to manage the risks are: detection and prevention, vulnerability fixing and response and recovery. For the departments of business organization, the main activities to manage the risks are: strategic detection, program management and risk analysis. The responsibilities of the employees for the largest organizations are shown in the table 2. 144
Table 2: Responsibilities in relation to IT risk management (source: [10]). A performing reporting system implies three levels of reporting, as is shown in figure 3.
Figure 3: Reporting levels in relation to communities of practice (source: [10]). The primary information is data about the everyday issues that arise at each of control layers. Form the middle reporting model, data are processing as information about importance of the aspects taken into account and transformed in trending information. At the highest level, information are used to formulate strategic directions by benchmarking the organization’s risk, both internally and externally. We can make a connection between the four levels of reporting (data, information, trending and benchmarking levels) with their specific control layers and risk performance indicators as is shown in table 3.
Table 3: Key performance indicators for reporting levels across the risk control spectrum (source: [10]). 145
Conclusions Now a days, each company use computers equipments in every stage that suppose processing data. An effective and efficient using of IT is a key factor that differentiating successful firms from their less successful counterparts. Many companies understood the possibilities to exploit IT capabilities and made high IT investments without deriving any benefits from IT. But using a new IT system implies appearance of risks that must be managed and mitigated in order to control the evolution of business in the established limits. As a bigger company or more complexity activity, IT risk factors can occur. Using a performance IT risk management, the company must take into account the risk in every stage of the application development cycle in order to realize a significant improvement in their processes of design, develop, test and maintain the integrity of the applications. In the same time, there are positive effects in two directions: on one hand, a normalize development of the business/applications and maintenance the costs in the settlement limits, on the other hand, the raising the quality and the competitiveness of the business/applications.
Bibliography: Boehm, R., “Software Risk Management: Principles and Practices”, IEEE Software, Vol. 8, No. 1, January 1991 2. Jones, C., J., “Minimizing the Risks of Software”, 1998 3. Higuera, R., Haimes, Y., “Software Risk Management” – Technical report, Carnegie Mellon University, Pittsburgh USA, 1996 4. Kapuria, S., “Addressing IT Risks of Software Applications: A Risk Management Strategy”, Symantec Corporation, 2006, available at www.symantec.com 5. Makedonov, Y., “Scalability is a rather ambiguous term”, 2006, available at http://www.softwaretestconsulting.com 6. Reifer, R.,“Software Management, Fourth Edition”, IEEE Computer Society Press, 1993. 7. Van Scoy, R., “Software Development Risk: Opportunity, Not Problem”, Pittsburgh, Software Engineering Institute, Carnegie Mellon University, 1992 8. Young, P., Use of Earned Value Management to Mitigate Software Development Risk”, George Mason University, USA, 1997 9. Department of the Air Force, Software Technology Support Center, Guidelines for Successful Acquisition and Management of Software-Intensive Systems: Weapon Systems, Command and Control Systems, Management Information Systems, Condensed Version, 2003 10. Integrated IT Risk Management, Symantec Corporation, 2007, available at www.symantec.com 11. IT Risk management report, Symantec Corporation, 2007, available at www.symantec.com 1.
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THE ROMANIAN BUREAUCRATIC SYSTEM OF THE PUBLIC ADMINISTRATIONS Frâncu Laurenţiu Gabriel Academy of Economic Studies, Faculty of Economics, Piaţa Romană no. 6, sector 1, Bucharest, e-mail:
[email protected], tel. 021/3191900-int. 208 Paicu Claudia Elena Academy of Economic Studies, Faculty of Economics, Piaţa Romană no. 6, sector 1, Bucharest, e-mail:
[email protected], tel. 021/3191900-int. 208 In this paper I would like to present a few links between bureaucracy and economy. First of all the bureaucracy is always a cost to society, but this cost may be accepted insofar as it makes social order possible, and maintains it by enforcing the rule of law. On the other hand the bureaucrats are having a lot of access to much public information, but they are not always transmitting the information further to the citizens. Unfortunately they are the only ones who can transmit this information’s and in this case we can talk about the monopole over the public information’s. Also, in this paper I would like to present the problems that a businessman can have to invest in Romania because of the suffocating bureaucracy and the approvals that is obligated to get from the public administrations. Key words: bureaucracy, opportunity cost, corruption, artificial jobs
Introduction The origin of the term bureaucracy can be traced to eighteenth-century French literature (Albrow 1970). The early usage referred to an official workplace (bureau) in which individual activities was routinely determined by explicit rules and regulations. As modern systems of management, supervision, and control, bureaucracies are designed to rationally coordinate the duties and responsibilities of officials and employees of organizations. The delineation of official duties and responsibilities, by means of formal rules and programs of activity (March and Simon 1958), is intended to displace and constrain the otherwise private, idiosyncratic, and uniquely personal interests and actions of individuals. Bureaucratic systems of administration are designed to ensure that the activities of individuals rationally contribute to the goals and interests of the organizations within which they work. If the word “bureaucracy” appeared in the 18th century, it doesn’t mean that bureaucratic systems and bureaucracy appeared in the same time. It is known that bureaucracy was present long time ago in the ancient Babylon, Egypt, Greece and The Roman Empire. In ordinary usage, “bureaucracy” refers to a complex, specialized organization (especially a governmental organization) composed of non-elected, highly trained professional administrators and clerks hired on a full-time basis to perform administrative services and tasks. Bureaucratic organizations are broken up into specialized departments or ministries, to each of which is assigned responsibility for pursuing a limited number of the government's many official goals and policies — those falling within a single relatively narrow functional domain. The departments or ministries are subdivided into divisions that are each assigned even more specialized responsibilities for accomplishing various portions or aspects of the department's overall tasks and these divisions are in turn composed of multiple agencies or bureaus with even more minutely specialized functions (and their own subdivisions). Bureaucratic organizations always rely heavily on the principle of hierarchy and rank, which requires a clear, unambiguous chain of command through which “higher” officials supervise the “lower” officials, who of course supervise their own subordinate administrators within the various subdivisions and sub-subdivisions of the organization. In the literature dealing with bureaucracy we can often meet a continual shift between two points of view. The first point of view defines bureaucracy mainly as a tool, or a mechanism created for the successful and efficient implementation of a certain goal or goals. Bureaucracy is seen as an epitome of rationality and of efficient implementation of goals and provision of services.
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The second point of view sees bureaucracy mainly as an instrument of power, of exercising control over people and over different spheres of life, and of continuous expansion of such power either in the interests of the bureaucracy itself or in the interests of some masters. This point of view tends mainly to stress the process of bureaucratization, the extension of the power of a bureaucratic organization over many areas beyond its initial purpose, the growing internal formalization within the bureaucracy, the regimentation of these areas by the bureaucracy, and in general a strong emphasis by the bureaucracy on the extension of its power. In Marx's theory, bureaucracy rarely creates new wealth by itself, but rather controls, co-ordinates and governs the production, distribution and consumption of wealth. The bureaucracy as a social stratum derives its income from the appropriation of part of the social surplus product of human labor. Wealth is appropriated by the bureaucracy by law through fees, taxes, levies, tributes, licensing etc. Bureaucracy is therefore always a cost to society, but this cost may be accepted insofar as it makes social order possible, and maintains it by enforcing the rule of law. Nevertheless there are constant conflicts about this cost, because it has the big effect on the distribution of incomes; all producers will try to get the maximum return from what they produce, and minimize administrative costs. Typically, in epochs of strong economic growth, bureaucracies proliferate; when economic growth declines, a fight breaks out to cut back bureaucratic costs. Whether or not a bureaucracy as a social stratum can become a genuine ruling class depends greatly on the prevailing property relations and the mode of production of wealth. In capitalist society, the state typically lacks an independent economic base, finances many activities on credit, and is heavily dependent on levying taxes as a source of income. Therefore, its power is limited by the costs which private owners of the productive assets will tolerate. If, however, the state owns the means of production itself, defended by military power, the state bureaucracy can become much more powerful, and act as a ruling class or power elite, because it controls directly the sources of new wealth, and manages or distributes the social product. Bureaucracies emerge to mediate conflicts of interest on the basis of laws, but if those conflicts of interest disappear (because resources are allocated directly in a fair way), bureaucracies would also be redundant. Weber described the ideal type bureaucracy in positive terms, considering it to be a more rational and efficient form of organization than the alternatives that preceded it, which he characterized as charismatic domination and traditional domination. According to his terminology, bureaucracy is part of legal domination. However, he also emphasized that bureaucracy becomes inefficient when a decision must be adapted to an individual case. According to Weber, the attributes of modern bureaucracy include its impersonality, concentration of the means of administration, a leveling effect on social and economic differences and implementation of a system of authority that is practically indestructible. A bureaucratic official must exercise his judgment and his skills, but his duty is to place these at the service of a higher authority; ultimately he is responsible only for the impartial execution of assigned tasks and must sacrifice his personal judgment if it runs counter to his official duties. Because bureaucrats have more information than elected officials about what they are doing and what they should be doing, bureaucrats might have the ability to implement policies or regulations that go against the public interest. Because bureaucrats have so much information they have a huge advantage to us all: “the power of information”. If we wish to believe that we live in a democracy, then it must be true that appointed bureaucrats cannot act contrary to the interests of elected officials.
The Romanian bureaucratic system The Romanian bureaucratic system is a legacy of the communist regime and mostly the effects of bureaucracy can be seen in the public administrations where most of the employers (bureaucrats) work there from the period of the communist regime. But also there is a typical system which can be found in all the Balkan’s countries, mostly the behavior of the bureaucrats from the public administration and the corruption from this system. For example nowadays is becoming more and more difficult to open a business in Romania or try to invest in one. Therefore, a businessman must sacrifice most of his time and energy to get all the necessary approvals for opening the firm and must also enter in contact with the not so willing persons behind the desks. 148
The businessman starts his “journey” with lots of trust and hope for the future, but after passing through almost all the public administrations to get the approvals necessary for the function of the firm he gets overwhelmed due to the Romanian bureaucratic system. This bureaucratic system is driving away many foreign investors. Unfortunately not only the time that is losing by going to an public administration to another for getting the approvals makes the businessman to renounce but the time that is waiting for an response from them is very long. In this time he can try to do something ales because his not losing only time but money as well or he can invest his time and money in another country. In this case we ask ourselves how many gave up starting a business because of the bureaucracy and how many are willing to sacrifice their time and nerves running to obtain the approvals, stamps, signatures, not to mention the waiting in front of desks. That’s why the bureaucratic system can easily encourage corruption; many people who really want to start a business have to make this bride compromise that they are willing to give something to the bureaucrats instead of loosing weeks or even months waiting for the approvals. A solution to these problems would be opening more headquarters of these administrations, eventually all in one building so, people will not be forced to run from one place to another, or trying to solve the problem by offering an authorization to one administration which incorporates all the others, very difficult to achieve. Another solution can be the use of the Internet where the businessman’s can complete a form and sending it via Internet to the public administrations for obtaining the approvals. In this case they don’t have to go all the way there and they can resolve a problem that could take them a few hours or even a day in a few minutes. An effect generated by the bureaucracy is the opportunity cost because businessmen’s have to go to many public administrations in order to start a business and lose a lot of time as well as for common citizens. Time that they chose or sometime are force to lose by waiting in front of the bureaucrats desks’ instead to do something ales. I can mention that the citizen sits for hours waiting to pay his taxes to the sate, or to get some information, and we can say that the citizen have nothing to lose by sitting in line and waiting to get his turn, but the reality is quite different. This information offered by bureaucrats has its cost that is lost time and the things one can do in that time. Maybe in that time the person could produce something useful for other people or for himself. Therefore, in the happiest case I can say that bureaucracy and information cost time but we can also mention the loss by choosing to loose this time. What could they loose? That depends on each individual. Some could loose a few hours to relax; others could loose money, or the opportunity to open a new business.
Bureaucracy and corruption Unfortunately the most obvious problem is that bureaucracy encourages corruption especially because of this complicated way of solving simple problems that become complicated when dealing with bureaucrats. Since most of us don’t have any time to loose we arrive to certain compromise that is to offer a ”small attention” to bureaucrats, to get the necessary information in the shortest time or to solve a certain problem as soon as possible. The problem is that bureaucrats got used to the idea that they have a certain power, artificially created and for offering free information or services they ask something in return. Usually it is enough to offer some flowers, coffee, but of course it depends on the nature of the problem we must solve. If the problem gets bigger then the “gift” we have to offer to the bureaucrats must be bigger, must have a big value. It came to the point in which you have to give something in order to be taken into consideration or addressed nicely. Bureaucrats have an important influence although they are merely public clerks. From where or why they posses such power is very simple to realize. First of all due to the information they posses and give with difficulty although it is their obligation to do so (the monopole over public information), and second of all it depends on their good will how much time you must wait until they will help you solve your problem. When you wait in line in front of a desk you se that some people are served before you either they are friends or relatives of the clerks (being privileged) either they came with “gifts”. What bothers the most is that the employees do not even care that the others waiting in line see this improper conduct. We can refer even to nepotism in the case of bureaucracy because solving certain problems depends on being someone’s relative who works in the system. Knowing someone who works 149
“behind the desk” (bureaucrats) is an advantage that puts you on a privileged position. Mostly this is a frequent practice in the bureaucratic system. A solution can be the assembling of video cameras in all the areas where bureaucrats are working. Another solution can be a security system at the entrance in public administrations where the bureaucrats have to declare all the goods that they have in possession when they start the working day and all the goods they have at the end of the working day. In present in Romanians public administrations there is a security system that is trying to put an end to corruption, mostly by not allowing the persons to enter in bureaucrats offices with “gifts”.
The creation of the artificial jobs The bureaucratic system from our country (Romania) still creates a lot of artificial jobs. Those jobs are created to offer something to work to certain persons or not to fire others in the same position. A job is created or a task is divided between two employees (two employees with one responsibility) for both of them to have a job. In this case we can discuss about a suffocating bureaucracy. We can imagine someone who must get certain documents being forced to wait in line in front of three or four desks or offices for stamps, deposit and petitions. In one place petitions apply, in another they are approved and somewhere else they take signatures and stamps but it is possible to wait in two places for the last two. In a way those who work in that system are helped but the state must pay their salaries, which implies further costs for the institution. People who get in contact with this system have their loss by being forced to run from one place to another. This can imply certain costs for the citizens (for them this cost implicates the lost of time in front of the offices). The solution for this problem is very simple: the reduction of the employees that are having that job only because they have to work somewhere only because the government wants to reduce the unemployment.
The public administrations image influenced by the bureaucrats behavior Because most of the bureaucrats in Romania think that they have a lot of power in front of everybody they have a bad behavior when they get in touch with the citizens. Most of the bureaucrats are in the bureaucratic system since the communist regime and there behavior is an effect of that regime as well as an effect of the bureaucratic system. That’s why in many cases the way they are dealing the problems can reflect into the image of the organization in which they work. For example people are not treated with respect; mostly they are neglected, offended and looked down at by the clerks. The citizen looses time not only on his way to the public administration but in the public administration for different reasons:
The clerk is very slow and doesn’t pay interest in his work;
He speaks on the phone but not related to his job;
He takes lunch break and gets nervous if he is interrupted;
He is away solving personal matters in the working hours;
Only one desk is functional from the two or three existing. As an effect of bureaucracy we can mention the citizen’s health put at stake because of this particular moving from place to place and waiting for hours to solve his problems. The lack of trust citizen’s show to different public administration systems is due to the suffocating bureaucracy. And because of the behavior of the clerks (bureaucrats) the public administration can lose most of their clients or all of them and they can get inefficient from the economic point of view.
Conclusions The bureaucracy from the public administration can affect their image and in this case these administrations can have an economic disadvantage in front of other administrations. With a reduce bureaucracy the public administrations and the private administrations can have a bigger productivity and the economy of our country can develop better in the future. All in all the bureaucracy from a country can act like a barrier in the economic development if it is not stopped in time or at least if it is not reduced. That’s why the people who are working in public administrations must have all the new equipment and 150
technology in their domain of activity and a better communication system between them and the citizens (their clients). For example they can have an Internet page where you can find all the information’s you need in the shortest time and also you can use their Internet page for paying some taxes and incomes.
References 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.
Beetham, David – “Birocraţia”, Editura Du Style, 1998; Berger, Hilary – “Agile development in a bureaucratic arena – A case study experience”, International Journal of Information Management, 2007; Coyne, J. Christopher – “The Politics of Bureaucracy and the failure of post-war reconstruction”, Springer Science+Business Media, LLC, 2007; Draper, Hal – “Karl Marx’s Theory of Revolution”, Volume 1: “State and Bureaucracy”, Monthly Review Press, New York, 1979; Eisenstadt, S.N. – “Bureaucracy, Bureaucratization, and Debureaucratization”, Administrative Science Quarterly, Vol. 4, No. 3, 1959; Frye, Timothy, Shleifer, Andrei – “The Ivisible Hand and the Grabbing Hand”, The American Economic Review, 1997; Hery, Nicolas – “Administraţie publică şi afaceri publice”, Editura Cartier, 2005; Huber, F., Shipan, R. – “Deliberate discretion: The institutional foundations of bureaucratic autonomy”, Cambridge University Press, Cambridge, 2002; Moise, Florin – “Birocraţia între corupţie şi lipsă de reguli”, Economia şi Administraţia Locală, vp. 11, nr. 3, p. 15-17, 2006; Rusu, Georgel – “Birocraţia între necesitate şi exces”, Economia şi Administraţia Locală, vp. 11, nr. 1, p. 17-19, 2006; Scholz, A., Wood, J. – “Controlling the IRS: Principals, principles, and public administration”, American Journal of Political Science 42, p. 141-162, January 1988; Yang, Song – “Bureaucracy versus high performance: Work reorganization in the 1990s”, The Journal of Socio-Economics, 2007; Von Mises, Ludwig - “Bureaucracy”, Retrieved on 2006, (1944), (1962); Watson, Tony J. – “Sociology, Work and Industry”, Routledge, 1980.
151
ROMANIAN CAPITAL MARKET – PEST AND SWOT ANALYSES Georgescu Adriana Academy of Economic Studies, Faculty of Economics, Address: Gral Constantin Budisteanu, Nr. 28C, Sector 1, Bucharest, Email:
[email protected], Phone: 031 407 90 42 Dudian Monica Academy of Economic Studies , Faculty of Economics, Address: Piata Romana 6 Bucharest, Email:
[email protected], Phone: 0722323506 Abstract: the objective of this paper is a complete analysis of the Romanian Capital Market. In this respect we choose the “PEST” and the “SWOT” Analyses, which give the possibility of a complete overview from the perspective of the Political, Economic, Social and Technological factors, which are classified as Strengths, Weaknesses, Opportunities and Threats in a SWOT Analysis. The result of the analyses certifies that since the beginning of 2004 the Romanian Capital Market registered a sustained positive evolution. The main cause of this evolution was the acceleration of the liberalisation process of the whole Romanian market. The European Legislation introduces new rules in order to protect investors, safeguard market integrity by establishing harmonised requirements governing the activities of authorised intermediaries and promote fair, transparent, efficient and integrated financial markets, factors which will have a further positive impact on the capital market. Key Words: Romanian Capital Market, PEST Analysis, SWOT Analysis JEL Classification: E22
Introduction The “PEST” Analysis of Romanian Capital Market evaluates the external macro-environment of this market from the point of view of the Political, Economic, Social and Technological factors who can give us the possibility to understand market grow or decline, potential and direction for operations. These factors affect all firms belonging to the analyzed market, factors which usually are beyond the firm's control and sometimes present themselves as threats, but however, changes in the external environment also create new opportunities. The PEST factors are classified as Strengths, Weaknesses, Opportunities and Threats in a SWOT Analysis. The SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in market. This analysis is credited to Albert Humphrey, who led a research project at Stanford University in the 1960s and 1970s. The “PEST” analysis takes into consideration the following factors: a) Political Factors: Current legislation of the market, European legislation, regulatory bodies and processes, government policies, trading policies.
g) Economic Factors: Romanian economy situation, economy trends, general taxation issues, taxation specific to product/services, market and trade cycles.
h) Social Factors: Number of inhabitants, consumer attitudes and opinions, media views, law changes affecting social factors, buying access and trends, advertising and publicity.
i) Technological Factors: Information and communications, mechanisms/technology, innovation potential, global communications.
Conclusions of the analyses The conclusions of the “PEST” analysis of the Romanian Capital Market from the point of view of the Political, Economical, Social and Technological Factors are spitted in the four categories of a SWOT analysis: strengths, weaknesses, opportunities, and threats. The scope of using both of analyses is to analyze from all the aspects the Romanian Capital Market and to identify which are the strengths, weaknesses, opportunities, and threats on this market. 152
Strengths 1.
Weaknesses
Political Factors
1.
1. The situation of the Romanian capital market begins to become more stable through implementation of the European directives. The scope of the European Legislation is to protect investors, safeguard market integrity by establishing harmonised requirements governing the activities of authorized intermediaries and to promote fair, transparent, efficient and integrated financial markets.
2. Following the evolution of the stock exchange indexes on the Romanian capital market and of the evolution of the competition on the capital market, it can be easily noticed that beginning with the year 2004, the whole market has a substantial ascending evolution. The cause of this conjuncture was the liberalisation process of the market. The Romanian government published the stages of the liberalization process and the characteristics of the market open to competition:
1. The Romanian political situation is very tense. 2. Reject of the fusion between the Bucharest Stock Exchange (BSE) and the Sibiu Monetary-Financial and Commodities Exchange (BMFMS). The fusion between these Stock Exchanges, which was on discussion a long time, was rejected 2006 by the shareholders of the Bucharest Stock Exchange. Under these circumstances, BSE announced the launch in the near future of its own platform for trading the derivatives46, platform which will use the Bucharest Compensation House (CCB). As a consequence the BMFMS will also launch its own platform for trading stocks. 3.The country rating for Romania is staying at A4 also at the beginning of 2008 according to the Rating Agency Coface, although Fitch Ratings lowered in January 2008 its credit rating outlook from stable to negative for Romania, citing deteriorating economic imbalances. 2.
1st Stage (before 2003) Exclusive rights -partial liberalisation -few diversified offers -high costs
2nd Stage (20032004) Beginning of the liberalisation -liberalisation of each segment of the market -new competitors on the market
Political Factors
Economical Factors
1. Even if the main macroeconomics indicators registered in the last years a positive evolution, they have not already reached a stable point. The analysis of the main macroeconomics indicators (GDP, GDP, real GDP per 3rd Stage (2004Stadiul 3 real (2004capita,2005) inflation rate, unemployment rate etc.) 2005) in comparison to the indicators of other Acceleration of the countries from EU shows a big negative liberalisation Accelerarea difference. Romania started the process of process procesului de catching-up the other countries, but this -strong competition liberalizare process will last for a long period of time. -diversification of Competitie offers puternica 2. Dependence of Romania on the foreign -lower rates Diversificarea capital is growing.
46
Derivatives are financial instruments whose value changes in response to the changes in underlying variables. The main types of derivatives are futures, forwards, options, and swaps. 153
-big competition -lower rates
2.
-changes of the ofertelor whole market Schimbari 3. The- growing interest ale rate for credits and the intregii of piete depreciation the local currency (RON) will -accent on high affect- Taxe the mai budget quality and mici of companies and of households, because their debts will be innovation as - Se pune accent pe denominated in foreign currency. competitive calitate ridicata si pe advantages inovatie ca un competitor. 4. Theavantaj number of companies listed at BSE is low enough, 2007 being 59 companies.
Economical Factors
1. The main macroeconomic indicators registered a positive evolution in the last years, which will also have a positive impact on the capital market. 2. During the last years, the main stock exchange indexes on the Romanian capital market had a positive evolution.
The yearly performance of the BET Index remains stable in the last years in comparison to the medium interest rate for deposits on the Romanian market, being about 3 times more than this interest rate for deposits in the years 2006 and 2007. The increase by 22% of the BET index in the year 2006 is its most reduced yearly increase in the last six years. The composite index of the Bucharest Stock Exchange, BET-C registered an increase by 28,49% in the year 2006. The value of the transactions with shares listed on the Bucharest Stock Exchange increased 2006 only by 27% in comparison to the raise by 223% in the year 2005 and by 140% in the year 2004.
3.
Social Factors
1.The Investors’ access on the Romanian capital market became easier during the last years, but the transaction fees applied to the investors by the Brokerage and Financial Investment Companies are furthermore high. The same thing can be observed in the financial institutions which operate in Romania. Even if the number of these financial institutions rose in the last years, the charges billed, the services and the products offered to clients are far below the level of those offered in a developed country. More than this, the Brokerage and Financial Investment Companies which are a part of a bank group don’t offer the possibility to credit automatically the investment account by the bank giro account of the same person, both of the accounts being opened at institutions from the same group. 2. There are information sources on the Romanian capital market, but they are not as detailed as in the developed countries. Only a few Brokerage and Financial Investment Companies offer analyses of the Romanian capital market and of the companies listed at BSE. 3. The attitude of the most investors is a
154
Year
Evolution of the BET index
2003 2004 2005 2006 2007
28 % 71 % 46 % 22 % 23 %
speculative one. They want to obtain big Medium interest rate for profits in a short time. The raises and drops of the stock prices of a company listed on BSE deposits don’t reflect in the most cases the real state of (ROBID) that company. 16,33 % 17,9 % 6,57 % 7,50 % 6,84 % 4. Investors’ lack of basic know-how and of experience on the capital market.
3. The unique income tax rate by 16% (this rate is equally applied to income tax and to corporate income tax) since January 1st, 2005 is lower compared to other countries.
Opportunities 1.
4.
Technological Factors
1. There is no system on the BSE which could permit to route automatically the orders, so that the order via internet is automatically introduced in the trade system after its specifications were verified (market, quotes, price, pieces, validity date, if there are really the shares were are to be sold, enough money on the investment account in order to buy the shares). The systems presented as an on line trading system are only systems which can take over the orders on-line. Threats
Political Factors
1.
Economical Factors
1.The country rating for Romania is staying at A4 also at the beginning of 2008 according to the Rating Agency Coface. The country rating made by Coface shows the capacity of companies from a country to make the payments in due time. A4 corresponds to the Investment Grad and symbolize a low risk and a stable payment history.
1. Romania’s economic growth reached ia high level of (8,4%) in 2004 and 7,7% in 2006 as an effect of the effort made by Romania to be accepted in the European Union, but after the EU accession its level began to be lower (estimation for 2007 is 5,8% and forecast for 2008 is 5,2%).
Country Rating
2.The Government Budget Expenditures will grow this year because 2008 is an electoral year.
Countri es
Jan 02
Jan 03
Jan 04
Jan 05
Jan 06
Jan 07
Romania
B
B
B
B+
A4
A4
Ja n 08 A4
Czech Republik Hungary Poland
A3
A3
A2
A2
A2
A2
A2
A2 A4-
A2 A4-
A2 A4
A2 A3
A2A3
A3 A3
A3 A3 155
3. Fitch Ratings lowered in January 2008 its credit rating outlook from stable to negative for Romania. The main factors for this downgrade are:
increase of the negative balance of current account,
Slovakia Bulgaria
B B
A4B
A3 B
A3 B+
A3 B+
A3 A4
A3 A4
Turkey
C
C
B
B+
B+
B
B
Source: Rating Agency Coface 2. Though the implementation of the European Legislation, the companies which action on the capital market has the right to action on the entire European market without being necessary to apply for a new authorisation. Other advantages offered by the European Directives are: - Stability, - Fair, transparent, efficient and integrated financial markets. 3.Finalization 2006 of fusion between BSE and Rasdaq, which conducts to a better visibility both at regional and international level. 4.2006 was settled up the Central Depository which offers services as clearing, custody, depository and registry of titles traded on regulated markets and using the alternative traded systems, as well as any operations in accordance with the above mentioned services. 5.Other factors which influenced the capital market starting 2004 and the positive evolution of the BSE Indexes were: - beginning of the 3.nd stage of the liberalisation process, - the unique income tax rate is 16% (this rate is equally applied to income tax and to corporate income tax) since January 1st, 2005, - Presidential elections held in Romania on November 28, 2004 were won by Traian Basescu.
2.
requirements regarding the external financing,
rapid increase of government credits.
the
4.The international financial crisis began to have also consequences on the Romanian market.
5.The high oil price (forecast 150 EUR/barrel) will represent 2008 an important risk for the Romanian Economy. This increase will have an impact on the evolution of the fuel price and this will influence of course all the Romanian imports.
6. The Stock Exchange Indexes had 2007 a positive evolution, but a decline can be observed starting with the end of 2007. This happened also to other European and American Stock Exchanges, the main reason being the real estate crisis on the American market which led to a liquidity crisis on this market. As an effect of the liquidity crisis, the banks could refinance under very difficult conditions and at a higher price as before (for example the refinancing costs before the financial crisis were ca. 0,2% over the Euribor interest rate and at the beginning of 2008 they reached values of 0,6% - 0,8%). 7. The number of new companies listed at the BSE is very low, which can influence the volume of the transactions at the BSE.
Economical Factors
1.The unique income tax rate of 16% is an important opportunity for the capital market. 2.The value of transactions with shares listed at BSE rose 2006 by about 30%, from 2.152 Mil EUR in 2005 to 2.801,7 Mil EUR and by about 48% in the year 2007, the reasons being these one which determine the 156
Year
New companies listed at the BSE
1995
9
1996
8
1997
59
1998
50
evolutions of prices (lack of new companies listed at the stock exchange, reaching the correct prices for many companies listed at the stock exchange). 3.The market capitalization had the same dynamics as the value of transactions, registering an increase of 39,6% in 2006 as compared to 2005, but the increase registered 2007 was only by 14,88%.
3.
Social Factors
1. The Investors’ access on the Romanian capital market is very easy; they must just choose a Brokerage and Financial Investment Company. The number of these companies is 73 companies in the year 2007, the bigger one being the companies which are part of a bank group. The more such companies are active on the market, the lower their fees will be.
4.
1999
15
2000
1
2001
3
2002
1
2003
0
2004
3
2005
5
2006
2
2007
3
The higher number of new companies listed at the BSE was registered between 1997 – 1999, the main reason being the new formation of the Bucharest Stock Exchange which happened 1995.
Technological Factors
1. The fact that the investors can trade stocks and other titles via internet is a really important opportunity for the Romanian Capital Market. This is a common procedure in the developed countries. In summary, the Romanian capital market has good strengths and opportunities to record a medium- and long-term positive evolution. On the short term the capital market can be seen as less stable because of the causes described above.
Bibliography: Williamson David, Peter Cooke, Wyn Jenkins, and Keith Michael Moreton, “Strategic Management and Business Analysis”, Cambridge University Press, ISBN 0 521 41528 4, first published 1994; 2. Thomson Gale, „Carrying out a PEST analysis” (an article from Chartered Management Institute), 2005; 3. Grant M. Robert, “Contemporary Strategy Analysis: Concepts, Techniques, Applications (5 th Edition)”, ISBN 1-4051-1998-5, 2005; 4. www.bvb.ro 5. www.cnvmr.ro 6. www.bnro.ro 7. www.gov.ro 8. epp.eurostat.ec.europa.eu 9. www.hti.ro 10. Monitorul oficial al Romaniei 11. ec.europa.eu/internal_market 12. www.intercapital.ro 1.
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13. www.sncdd.ro
158
NATIONAL CURRENCY INSTABILITY Gherman Maria Anca Academy of Economic Studies, Faculty of Economics, Căderea Bastiliei nr1 Sect.1 Bucureşti,
[email protected] Huru Dragoş Academy of Economic Studies, Faculty of Economics, Căderea Bastiliei nr1 Sect.1 Bucureşti,
[email protected] The concept related to currency stability includes internal currency stability as intern price stability, the money demand and supply stability and the stability of the interest rate. Also it includes external currency stability through exchange rate mechanism. The equilibrium of national economy is determined by the evolution of inflation and by the evolution of nominal exchange rate mechanism as an expression of external stability. Key concepts: monetary policies; financial crisis; currency stability
The financial crisis from august 2007 tests the credibility of emergent economies and also the foreign investors’ attitude related to this crisis. As a consequence, the Romanian leu was the most affected currency in the European space. Posibila interventie valutara a BNR Grafic xxx Cursuri valutare in perioada ianuarie 2007 - ianuarie 2008 (moneda nationala pe euro; indice, 1 ianuarie 2007=100) 110
Criza financiara
100
90
Posibila interventie valutara a BNR Coroana ceha, CZK
Forint-ul ungar, HUF
Zlotul polonez, PLN
Leul romanesc, RON
Coroana islandeza, ISK
01/23/08
01/15/08
01/03/08
12/19/07
12/07/07
11/27/07
11/15/07
11/05/07
10/24/07
10/12/07
10/02/07
09/20/07
09/10/07
08/29/07
08/17/07
08/07/07
07/26/07
07/16/07
07/04/07
06/22/07
06/12/07
05/31/07
05/21/07
05/09/07
04/26/07
04/16/07
04/02/07
03/21/07
03/09/07
02/27/07
02/15/07
02/05/07
01/24/07
01/12/07
01/02/07
80
Sursa: European Central Bank
In the first half of 2007, the Romanian currency became very powerful towards euro (Graphic I), as a consequence of diminishing the risk prime for RON. Taking into consideration a decreasing rate of anticipated and effective inflation, but ignoring the tensions for the other half of the year, the Central Bank decides to reduce the rate of monetary policy from 8,75% to 7% (Graphic II). After the financial crisis has started, the Romanian currency registers a continuous depreciation, being not correlated any more with the other currencies (Polish zlot, Czech corona and Hungarian forint). Taking into consideration Graphic I there is a similitude between the evolution of Romanian and Islander currency, explained by some common elements from these two economies, even worse in Island, such as: flexible exchange rates, over 23% from GDP current account deficits in Island, 8% rate of inflation which is over the target and also the expansion of credit and of financial-banking sector. 159
Grafic II : Evoluţia ratei de politică monetară şi a inflaţiei, mai 2006-ianuarie 2008 Romania: Evolutia ratei de politica monetara si a inflatiei, mai 2006-ianuarie 2008 9
8
7
8 6
5 7
4 Rata de politica a BNR, axa din stanga Inflatia, IPC la 12 luni, axa din dreapta
Jan-08
Dec-07
Nov-07
Oct-07
Sep-07
Aug-07
Jul-07
Jun-07
May-07
Apr-07
Mar-07
Feb-07
Jan-07
Dec-06
Nov-06
Oct-06
Sep-06
Aug-06
Jul-06
Jun-06
3
May-06
6
Sursa: Banca Nationala a Romaniei
In spite the continuing economic growth process, some major intern disequilibria’s occur as inflation, salary increases over productivity level but also external disequilibria’s such as the increasing current account deficit. The fast national currency depreciation has three main causes: The unsustainable current account deficit The monetary and fiscal policies mix which was improper The use of national currency against the currencies in a fixed regimes from the neighbor Currency stability is the result of the economic evolution expressed both through price and exchange rate mechanism stability. The volatility of exchange rate mechanism is the result of intern economic evolution and of the economic policies measures but also of the economic evolution on the international markets. In Romania, the positive economic evolution having as a main characteristic sustainable economic growth, disinflation and continuous structural reform but also the adhere perspective to European Union has lead to an increase in confidence of the foreign investors having as a result an increase in foreign direct investments. This element led to a nominal and real currency appreciation, a phenomenon which deepened towards the end of 2006, following the complete liberalization of capital transactions. Financial markets turbulences urge the investors to re-price risks. During this process Romania comes to be considering a riskier destination than neighboring countries in what concerns foreign capital flows. Rating agencies pick up on this trend and act to lower the country grading, thus fueling a strong currency depreciation tendency. The monetary policy is the only instrument used to reduce the apparently ever growing risks the Romanian economy is subject to. The soar in inflationary pressures is brought about by a combination of external factors, internal policies and RON depreciation. Referring to the consequences of this unfortunate mix, it soon becomes clear that importers, being exposed to exchange rate changes, transfer the currency related risks to the consumer. Therefore, it is the consumer who bears the loss in case of depreciation, while any potential gains resulting from currency appreciation are retained by the importer. Even though the strong appreciation of Romanian currency taking place in mid 2007 seemed to have had a positive contribution in the inflation targeting process, this economic phenomenon should be rather regarded as a threat to the current account stability. This is precisely why the Central Bank took the option of halting the appreciation, despite its self imposed objective of directly targeting inflation, which ought to leave out any intervention on other elements, such as the currency in this case. 160
However drastic the efforts made by the Central Bank to contain price fluctuation, if monetary policy fails to be appropriately complemented by the fiscal – budgetary policy, the results will come short of expectations. The pro-cyclical fiscal policy applied by the Finance Ministry encourages the expansion of internal demand, implicitly touching upon price stability and external economic unbalance. A stable currency and a healthy economic evolution stand as prerequisites in the two stage transition process: firstly to a tighter currency regime – ERMII, and secondly to a fixed regime – the single European currency, the Euro.
Bibliography 1. 2. 3. 4. 5.
6. 7.
8.
9. 10. 11. 12. 13. 14. 15. 16.
Anca Paliu Dragu, Teza de doctorat „Stabilitatea monedei rezultanta a evoluţiei economiei naţionale ”. Gabriela Anghelache, „Piaţa de capital: caracteristici, evoluţii, tranzacţii”, Editura Economică, Bucureşti, 2004 Dorina Antohi, Oana Udrea, Horia Braun, „Mecanismul de transmisie a politicii monetare în România”, Caiete de studii nr. 13/2003, Banca Naţională a României Graeme Justice and Anca Paliu „Real Convergence Prospects”, Romania Selected Issues, Fondul Monetar Internaţional, Washington DC, 2006 Rupa Duttagupta, Gilda Fernandez, and Cem Karacadag „Moving to a Flexible Exchange Rate How, When, and How Fast?”, Economic Issues no. 38, Fondul Monetar Internaţional, Washington, DC, December 2005 Robert A. Mundell, International Economics, New York: Macmillan, 1968, pp. 250-271. Michael Mussa, Paul Masson, Alexander Swoboda, Esteban Jadresic, Paolo Mauro, and Andy Berg „Exchange Rate Regimes in an Increasingly Integrated World Economy”, IMF Occasional Paper no. 193, Fondul Monetar Internaţional, Washington DC, 2000 Kenneth Rogoff „Dornbusch's Overshooting Model After Twenty-Five Years”, Second Annual IMF Research Conference, Mundell-Fleming Lecture, Fondul Monetar Internaţional, Washington DC, ianuarie 2002) www.bloomberg.com www.bnr.ro www.cnp.ro www.ecb.int http://ec.europa.eu www.fmi.ro www.imf.org www.mfinante.ro
161
MONETARY STABILITY VERSUS FINANCIAL STABILITY Glăvan Bogdan Universitatea Româno-Americană, Blv. Expoziţiei, Nr. 1B, sector 1, Cod 012101, Bucureşti,
[email protected], 0723177820 Anghel Flavia Universitatea Româno-Americană, Blv. Expoziţiei, Nr. 1B, sector 1, Cod 012101, Bucureşti,
[email protected], 0723234814 Bucur Cristiana Universitatea Politehnica, Splaiul Independenţei,
[email protected], 0722267047
Nr.
313,
sector
6,
Bucureşti,
Abstract Studies on the importance of monetary stability for the achievment of sound economic environment have always been among the most searched economic works. The experience of last decades illustrates the fact that low inflation has not proved to be a hedge against financial instability. The question is if there is a trade off or contradiction between monetary stability and financial stability. Perhaps the most important lesson that need to be drawn from recent episodes of financial instability is that monetary authorities are much more impotent when it comes to prevent crises than we thought they are. Keywords: financial stability, monetary stability, monetary authorities, crises, financial markets, prices
1. Introduction Studies on the importance of monetary stability for the achievment of sound economic environment have always been among the most searched economic works. More precisely, “the question whether there is a trade-off between monetary and financial stability has been one of the most interesting areas of research for central banking for many years.” (Issing 2003, p. 16) The experience of last decades illustrates the fact that low inflation has not proved to be a hedge against financial instability. Recent banking crises have incurred costs similar to the losses suffered in the periods with high inflation. “In short, the successful war against inflation has not yielded as big a “peace dividend” as we might have hoped.” (Crockett, 2003, p. 1)
2. Monetary instability and financial instability: conceptual clarifications Even if notions like “monetary stability” and financial stability” are widely used in the academic literature, some clarifications of their meaning is needed. Monetary stability is currently associated to price stability. In turn, price stability means an inflation rate close to zero, i.e. keeping the price level aproximatively constant. Financial stability is a more difficult to define.47 It points to a monetary and financial system able to support, without systemmatic distorsions, an adecqate alocation of savings toward the most efficient investments projects.48 To the extent that the financial system vitiates the proper allocation of savings and thus sow the seeds of its own failure, it is characterized by financial fragility. It is important to note that financial stability is not incompatible with the occurrence of sporadic banking failure, or with a major fluctutation of a small group of assets. On the contrary, bankruptcy is the proof that market selection mechanism is working and that only the most efficient financial institutions survive to serve the public. We can speak of financial instability only when financial institutions are systematically endangered by insolvency. 47 48
See Schinasi (2004) for a more detailed presentation of this issue. Mishkin (1991) holds a similar perspective. 162
3. Prices and financial stability – a complex relation The conventional view is (or rather was until very recently) that there is no tradeoff between monetary and financial stability. Some economists maintain that price stability represents a sufficient condition for financial stability. Most people hold a slighty different view. They consider price stability as only a precondition for the achievement of financial stability. For example, M. Bordo maintains that a monetary regime that produces aggregate price stability will, as a by-product, tend to promote stability of the financial system.”49 According to these writers, inflation is an essential ingredient of financial instability. Rising prices, it is argued, affect economic calculation and send to economic agents false signals about the real relative return of various investment projects. By contrast, “stable prices and a monetary policy focused on that objective play an important role for stable financial markets… Price stability and financial stability tend to mutually reinforce each other in the long run. This widespread view is supported by empirical evidence that many financial crises were caused by major shifts in the price level. Moreover, historically most banking crises occurred during recessions often following periods of high inflation… According to the conventional view there is no general trade-off between monetary and financial stability.” (Issing, 2003, p. 17-18)
Anna Schwartz, for example, argues that a central bank "that was able to maintain price stability would also incidentally minimize the need for lender-of-last-resort intervention."50 Persistent inflation, says Schwartz, encourages speculative investments and indebtedness based on the expectation of rising prices. When inflation rate declines suddenly, as it happenned at the beginning of 1980s, debtors’ income can be insufficient to sustain the repaymentof past loans. The rising number of bankcruptcies reduces creditors’ capital and may lead to a higher rate of failure among financial institutions.
Quoted by C. Borio and P. Lowe, 2002, “Asset prices, financial and monetary stability: exploring the nexus”, BIS Working Papers 114, p. 18 50 Anna J. Schwartz. "Financial Stability and the Federal Safety Net," in William S. Haraf and Rose Marie Kushneider, eds., Restructuring Banking and Financial Services in America. Washington, D.C.: American Enterprise Institute, 1988, p. 53 49
163
According to most macroeconomists, the value of money is given by the general level of prices. Therefore, the monetary ideal could be achieved by price level stabilization.51 A monetary policy that maintains price stability in a credible and lasting way will make the best overall contribution to improving economic prospects and raising living standards”52, therefore the achievement and preservation of price stability is the iron principle of a sound monetary policy53.
4. From monetary stability to financial instability: historical perspective The most elocquent historical example of financial imbalance that developed in a non-inflationist environment is the Great Depression. In United States, the price level has declined by 10% between 1925 and 1930, a period otherwise characterized by a strong credit expansion. Although perhaps the most relevant case, because of its magnitude, the Great Depression is by no means the first financial crisis of the type we are discussing here. In 19 century several similar events occurred. We can mention the australian banking crisis of 1893, which represented the turning point of an artificial economic boom fueled by a considerable credit expansion, whose share in GDP has increased by 2/3 in a decade. In that period, despite a marked rise in real estate prices (which doubled), prices had an overall falling trend. Among the more recent examples, we can mention the case of Japan in 1980-1990. An insignificant inflation rate (zero between 1986 and 1988) has been accompanied by a skyrocketing evolution of stock and real estate prices. In this field, prices tripled in only four years (1985-1989). After this episode, Japan’s economy entered a long recession, with numerous bankruptcies and banking failures. The recession of Japanese economy has been preceded by a similar financial crisis that affected profoundly many south-east asian countries in 1997. In Korea, for instance, 1990s were years of significant disinflation, the rate of inflation declining from 11% at the beginning of the period to 4% before the crisis ocurred.Thailand, Indonesia and Malaysia experienced similar trends of the rpce level, but in all the region credit expanded strongly. The expansion of financial institutions has determined a boom in stock and real estate markets, exactly as it happenned in US during the 1930s and in Japan during the 1980s.
51
Among other economists, I. Fisher, M. Friedman have contributed significantly to the theoretical foundation of the stabilization policy. 52 ECB, Monthly Bulletin, January 1999, p. 39. 53 B. Bernanke, 2003, “An Unwelcome Fall in Inflation?”, paper presented at Economic Roundtable, University of California, July. 164
5. Causes of financial instability What all these episodes of financial imbalances have in common is a boom and bust cycle in lending. The idea that credit expansion (and a consequently artificial lower interest rate) is responsible for economic fluctuations is not new. Economists like Irving Fisher, Friedrich Hayek, Hyman Minsky, Charles Kindlberger and others have associated their names to it. A number of reasons explain the instability of lending. First, the modern financial system is based on fractional reserve banking. Diamond and Dybvig (1983) suggest that the maturity mismatch of bank assets and liabilities provides a source of instability within the banking system. Banks transform illiquid assets into liquid financial assets by offering liabilities with a different, smoother pattern of returns over time. The illiquidity of bank assets leaves banks vulnerable to depositor runs, however, and only the presence of a lender of last resort or deposit insurance can prevent banking panics. Secondly, asymmetric information, in which lenders are less informed than borrowers about the potential returns of alternative projects, provides an alternative source of financial instability. Lenders, unable to distinguish good from unsound loans, might ration credit or disproportionately discourage good quality borrowers by adding a lemons premium to interest rates. Heightened uncertainty, perhaps caused by instability of the price level, that makes screening of borrowers more difficult can worsen such adverse selection problems. Thirdly, central banks may increase the money supply by decreasing the interest rate and thus, they fuel a credit expansion. This process may not lead to open inflation, because deflationary pressures coming from the real economy may offset the effect of monetary stimulus on the price level.
6. Challenges for monetary authorities Perhaps the most important lesson that need to be drawn from recent episodes of financial instability is that monetary authorities are much more impotent when it comes to prevent crises than we thought they are. The merits of inflation targeting have become a myth. The strategy of inflation targeting, widely embraced by central bankers around the world in the last two decades, has managed to deliver low inflation and financial instability. From the fact that monetary stability is not synonymous with financial stability we can derive several ideas. 1. First, the monetary authorities may not be able to identify the financial imbalances sufficiently early and with the required degree of comfort to take remedial action. If so, attempting to respond to financial imbalances could add to the volatility of the economy. 2. Second, the risk of destabilising the economy may be compounded by the unpredictability of the effect of the policy response. Calibration may be exceedingly difficult. On the one hand, for instance, small interest rate increases may not be sufficient to contain financial excesses. It has even been argued that, paradoxically, they could be counterproductive if they help to dispel doubts about the central bank's credibility as a guarantor of price stability, thereby possibly fuelling market participants’ optimism about the sustainability of the boom. 3. Third, even if technically possible, any such response may be too hard to justify to the public. Political economy considerations militate against the use of the instrument. It takes a brave central bank to raise interest rates in the absence of obvious inflationary pressures, given the risk of being perceived as undermining prosperity.
Bibliography 1.
2. 3. 4.
Bordo, Michael. 2007. The Crisis of 2007 :The Same Old Story, Only the Players Have Changed. Remarks prepared for the Federal Reserve Bank of Chicago and International Monetary Fund conference; Globalization and Systemic Risk.Chicago, Illinois September 28. Borio, Claudio and White William. 2004. “Whither monetary and financial stability? The implications of evolving policy regimes.” BIS Working Papers No 147. Borio, Claudio and Lowe, Philip. 2004. “Securing sustainable price stability: should credit come back from the wilderness?” 165
5. 6. 7.
Borio, Claudio and Lowe, Philip. 2002. “Asset prices, financial and monetary stability: exploring the nexus.” BIS Working Papers No 114. Mishkin, F. 1991 “Anatomy of financial crisis”, NBER Working Paper, no 3934. Schinasi. Garry J. 2004. “Defining Financial Stability.” IMF Working Paper WP/04/187
166
REGIONAL DISPARITIES OF ECONOMIC GROWTH IN THE ENLARGED EUROPEAN UNION Goschin Zizi Academy of Economic Studies, Bucharest, Department of Statistics and Econometrics, Sos. Ştefan cel Mare nr.4, bl. 14, sc.B, ap.52, et.4, sect.1, Bucureşti, Tel. (021)210 75 37, Email:
[email protected] Danciu Aniela-Raluca Academy of Economic Studies, Department of Statistics and Econometrics, Bucharest, Calea Dorobanti, 14-15, Tel. 3191901/int.363, Email:
[email protected] Gruiescu Mihaela Romanian-American University, Bucharest, Calea Călăraşilor, nr.176, bl. 59, sc. C,et. 3, ap.13, sect.3,Bucureşti, Tel. 0744 526 609, Email:
[email protected] Abstract. The enlargement of the European Union by the entry of 10 new Member States in 2004 and another two in 2007 led to a significant rise of the economic regional disparities both in absolute and in relative terms. There are considerable and persistent regional contrasts between the old and the new Member States, although many of the regions with a low GDP per inhabitant in the new Member States are catching up fast due to a higher dynamics of economic development. There are some regions under EU-27 average growth rates of GDP per inhabitant, all them belonging to three NMS: Romania, Czech Republic and Bulgaria. Disparities in the levels of development in the enlarged European Union imply the need for assistance on the least developed regions and Member States, by means of an appropriate allocation of structural and cohesion funds. Key words: regional disparities, regional growth, convergence objective, European Union, Romania. Increase in regional disparities following the EU enlargement The enlargement of the European Union by the entry of 10 new Member States (NMS) in 2004 and another two in 2007 led to a significant rise of the economic regional disparities. Gross domestic product per inhabitant (in PPS) become about five times higher in the top 10 % regions than in the bottom 10 % of the EU-27, compared to less than three times bigger in the EU-15 (Eurostat data, 2007). The ratio between GDP per inhabitant in the top and bottom 25 % regions also moved upwards as a result of the enlargement, rising from two to three and the average GDP per inhabitant in EU-27 reduced by almost 12 % compared to EU-15 (Eurostat data, 2004). These synthetic measures of disparities, combined with the regional distribution of wealth among NUTS 2 regions in Map 1, are giving an overview of EU-27 development inequalities.
167
Map 1. GDP per inhabitant in PPS (% of EU 27) 2004
Source: Eurostat Regional Yearbook 2007 By using regional GDP per inhabitant (in PPS) relative to EU-27 average as a measure of economic development, we find a very large gap separating the 302.9% for the richest region - Inner London (in UK)- from the 23.58% of the poorest one- North-East Romania. Moreover, in most of the new Member States regions GDP per inhabitant is considerably smaller than in EU-15 regions, lying below 50 % of the EU-27 average in 31 regions out of a total 55 regions in NMS. There are only a few exceptions, Prague region in the Czech Republic reaching the highest GDP per capita (157% of the EU-27 average) in the NMS regions.
168
In order to measure the economic discrepancies we used Gini Inequality Index (GI), a statistical indicator initially employed for the analysis of income differences between individuals, but also appropriate for the territorial disparity measurements. Gini Inequality Index (GI) is given by the formula:
n (2i n 1) xi , GI i 1 n n xi i 1 where xi represents the regional values of the variable, in a non-decreasing order, and n is the number of regions. The values of Gini Inequality Index strongly amplified following EU last two enlargements, reaching a level of 0.2083 (2004 data). This is the consequence of higher discrepancies among the NMS than within EU-15 countries as proved by an overall value of 0.2286 for the Gini Inequality Index within the 12 new Member States NUTS 2 compared to the considerably lower 0.1478 value for the regions in the EU-15 countries (authors’ own calculations). The development gap between NMS as a group and EU-15 states also added to this result. Within each individual country inequalities are notably lower (see Table 1, column 4). Table 1. Statistic measures of economic disparities and convergence objective funding Country
1
GDP per inhabitant in 2004, Euro PPS
Highest / lowest regional GDP per inhabitant in 2004
Gini Inequality Index in 2004
2
3
4
Structural and cohesion funds, 2004-2006 mil euro
Indicative convergence allocations 2007-2013 mil euro
5
6
Bulgaria
7200
1.917
0.119
-
6674
Czech Republic
16400
2.628
0.155
2404
25883
Estonia
12300
-
-
615
3404
Cyprus
19700
-
-
108
213
Latvia
9800
-
-
1031
4531
Lithuania
11000
-
-
1379
6775
Hungary
13800
2.426
0.173
2837
22890
Malta
16400
-
-
81
840
Poland
11000
2.184
0.109
11202
66553
Romania
7200
2.734
0.159
-
19213
Slovenia
18300
-
-
423
4101
Slovakia
12200
3.054
0.246
1544
10912
Sources: Eurostat, 2007 and author’s calculations
169
The economic dynamics in EU-27 and the catching up process The increased economic development disparities in the European Union due to the entry of the NMS are counterbalanced by encouraging high dynamics of growth in these countries, leading to a steady trend towards narrowing the development gap. Map 2 captures the variation in economic dynamics in the 268 NUTS 2 regions of EU-27, measured by the annual average GDP growth by region considering the overall 1995-2004 period. Map 2. Annual average GDP growth in EU-27 by NUTS 2 level over 1995-2004
Source: Eurostat Regional Yearbook 2007 170
The highest rates of growth in the new Member States was recorded in the three Baltic States (above 6% average annual real GDP growth), followed by Poland, Slovakia, Hungary, Slovenia and Cyprus. Even the newest two Member States, Bulgaria and Romania, recovered after the long economic decline in the 1990s, achieving substantial growth rates after the year 2000. This above the average growth trend is leading to a rapid catching up process for many less developed regions in NMS. Although the time perspective considered when addressing processes of convergence at the European scale is too short, one can already see some signs of convergence. Eurostat statistical analysis revealed regional convergence at the EU-27 level based on the last years decreasing values of both Gini coefficient and the coefficient of variation (Eurostat, 2007). This proves that the initial increase in inequalities brought about by the enlargement of the EU was soon followed by a decreasing trend based on the bigger growth rates in most of the NMS. Economic convergence between the regions of the EU-27 in the last years is also proved by the fall in the ratio of GDP per inhabitant in the richest region -Inner London in UK- and the poorest one -North-East Romania- from 13.9:1 in 2002 to 12.8:1 in 2003 and 2004. Another encouraging evolution is the reduction in the number of regions with GDP per inhabitant lying below 40% of the EU-27 average: from 23 in 2002 to 21 in 2003 and 17 in 2004. As in the past, the disparities in economic levels of development measured in GDP, have been significantly reduced between the EU-15 Member States and the former ‘cohesion countries’ (Greece, Spain, Portugal and Ireland) there is hope of simply reproducing, across the NMS, the levels of economic development successfully achieved in the past evolution of these countries. According to Eurostat data the NMS are catching up with the EU-27 average growth at a rate of 0.8 percentage points per year (Eurostat, 2006). Unfortunately, there are still 15 of the 55 regions in the NMS growing at a rate of less than two percents annually, which is the EU-27 average dynamic. All these regions belong to three of the new Member States: Romania, Czech Republic and Bulgaria.
Regional differences within countries The variation in dynamics of economic development among the regions in one country can diverge almost as widely as among regions in different countries, as Map 2 points out. The highest gap is experienced by Romania, a country where the GDP per inhabitant - increased six times faster in the most developed region –Bucharest-Ilfov compared to the least developed one – North-East. In the new Member States, the highest regional GDP per inhabitant in a country is two to three times bigger than the lowest one (Table 1, column 3), regional differences reaching the peak in Slovakia. Most of the NMS are characterised by a marked economic dominance of their capital regions which concentrate most of the economic activity in the country, thus increasing the development gap. In all the NMS and in some of EU-15 countries the capital regions, have the highest GDP per inhabitant (see Map 1), a substantial share in the national economy, and bigger rates of growth. The bigger GDP per inhabitant mainly results from the notably higher productivity than in the rest of the regions. In-commuting, which provides larger labour force relative to the inhabitants of the capital region, is another explanation of their considerable economic power.
171
Map 3. Typology of performance of the EU-27 regions in 2000
Source: European Parliament, 2007
172
A hierarchical cluster analysis (European Parliament, 2007) for the 268 regions in the EU-27 reveals the existence of 7 types of regions (Map 3) each group having some main characteristics. • Type Low-1 (regions in Poland, Slovakia, Bulgaria and Southern Italy) indicates a very negative situation on all parameters and clearly identifies the most lagging regions in Europe, characterised by very low GDP per capita, high unemployment, low life expectancy and relatively low levels of education. • Type Low-2 is very similar to previous type Low-1 but with has the advantage of a relatively low level of unemployment rate. However the performance is smaller for indicators such as education or life expectancy. • Type Medium-1 is characteristic of regions with low-medium situations across all criteria except education. Displaying better levels of highly skilled labour force, these regions could base their future development on this specific advantage. • Type Medium-2 is also characteristic of regions with a medium situation in respect of GDP per capita and education, higher levels of life expectancy, but specific weakness relating to employment. They should therefore focus on the reduction of unemployment without diminishing the of social provisions indirectly revealed by the good life expectancy. • Type Medium-3 is comprising regions which are generally considered as being “without problems” as they have high levels of GDP per capita and relatively small unemployment. These regions are characterised by rather poor performances in respect of life expectancy and the share of people with a high level of education. Regional policy here should therefore focus mainly on the development of infrastructures for health and education. • Type High-1 includes regions with good global performance on all criteria, except employment, higher than the EU average. These regions can generally rely on good social conditions relatively high economic competitiveness. As in the case of type Medium-2 regions, their problem is how to reduce unemployment without breaking the good level of performance in respect of the other criteria. • Type High-2 is also experiences good global performance on all criteria but with some differences as compared to type High-1. The situation is clearly better in terms of employment (low levels) and slightly better in terms of GDP per capita. Performance levels are clearly less good than type High-1 however in respect of life expectancy and education.
Final remarks Large regional disparities in the levels of economic development already existing in the European Union were enhanced because of the last two enlargements, thus increasing the need for assistance especially for the least developed regions and Member States. Consequently the convergence objective was designed for the next programming period - 2007-2013 - as a tool for reducing the amplitude of the inter-regional disparities, by means of an appropriate allocation of structural and cohesion funds. Many of the regions with a low GDP per inhabitant in the new Member States are catching up fast, as was revealed by Eurostat periodic statistical analysis and confirmed by our own calculations of Gini Inequality Index. Economic convergence between the regions of the EU-27 significantly improved in the last years, based on significant above-average growth rates in most of the NMS and this trend is expected to continue if the NMS will be able to successfully make use of the structural financial assistance associated to the cohesion policy.
173
APPENDIX Country/Regions
GDP per inhabitant, in PPS, 2004 (in % of EU27=100)
Annual average % change in GDP 19952004
Objectives*
25,5895
1,40
Conv
BG32 Severentsentralen
26,42142
2,03
Conv
BG33 Severoiztochen
29,29375
2,73
Conv
BG34 Yugoiztochen
29,85669
2,00
Conv
BG41 Yugozapaden
49,06268
4,94
Conv
25,6211
1,90
Conv
CZ01 Praha
157,1132
3,83
RCE
CZ02 Střední Čechy
69,86933
3,83
Conv
CZ03 Jihozápad
69,58104
2,03
Conv
CZ04 Severozápad
60,68463
0,28
Conv
CZ05 Severovýchod
63,65526
1,46
Conv
67,3529
1,86
Conv
CZ07 Střední Morava
59,78916
1,32
Conv
CZ08 Moravskoslezsko
61,11449
1,23
Conv
Estonia EE00 Eesti
55,70194
6,83
Conv
Cyprus CY00 Kypros/Kıbrıs
91,3755
3,45
PI
Latvia LV00 Latvija
45,4593
6,37
Conv
Lithuania LT00 Lietuva
51,06963
6,04
Conv
HU10 Közép-Magyarország
101,5528
4,99
PI
HU21 Közép-Dunántúl
61,14363
5,52
Conv
HU22 Nyugat-Dunántúl
66,77693
5,16
Conv
HU23 Dél-Dunántúl
45,62485
3,18
Conv
HU31 Észak-Magyarország
42,49484
3,56
Conv
Bulgaria BG31 Severozapaden
BG42 Yuzhen tsentralen Czech Republic
CZ06 Jihovýchod
Hungary
174
HU32 Észak-Alföld
41,86695
4,03
Conv
HU33 Dél-Alföld
44,15043
2,93
Conv
Malta MT00 Malta
74,35278
-
Conv
Poland PL11 Łódzkie
46,73357
4,27
Conv
PL12 Mazowieckie
76,84177
6,18
Conv
PL21 Małopolskie
43,36250
4,23
Conv
PL22 Śląskie
57,01667
3,53
Conv
PL31 Lubelskie
35,19549
2,70
Conv
PL32 Podkarpackie
35,42153
3,45
Conv
PL33 Świętokrzyskie
39,26442
4,02
Conv
PL34 Podlaskie
37,89028
3,92
Conv
PL41 Wielkopolskie
54,54114
5,88
Conv
PL42 Zachodniopomorskie
47,19911
2,84
Conv
PL43 Lubuskie
45,41177
3,48
Conv
PL51 Dolnośląskie
51,67907
3,68
Conv
PL52 Opolskie
43,61174
2,79
Conv
PL61 Kujawsko-Pomorskie
45,37136
3,15
Conv
PL62 Warmińsko-Mazurskie
39,3841
3,97
Conv
49,56785
3,96
Conv
RO 11 Nord-Vest
32,98676
2,34
Conv
RO 12 Centru
35,47916
1,77
Conv
RO 21 Nord-Est
23,57835
0,73
Conv
RO 22 Sud-Est
30,74909
1,36
Conv
RO 31 Sud — Muntenia
28,41957
0,92
Conv
RO 32 Bucureşti — Ilfov
64,46439
4,50
Conv
RO 41 Sud-Vest Oltenia
28,75252
0,89
Conv
RO 42 Vest
39,04176
2,39
Conv
Slovenia SI00 Slovenija
83,33668
3,92
Conv
SK01 Bratislavský kraj
129,2922
3,43
RCE
SK02 Západné Slovensko
52,71793
3,98
Conv
SK03 Stredné Slovensko
46,6664
3,89
Conv
PL63 Pomorskie Romania
Slovakia
175
SK04 Východné Slovensko
42,33092
3,81
Conv
Sources: Eurostat regional yearbook 2007, Eurostat and DG Regional Policy estimates * Categories: Conv
Convergence regions
PO
Phasing-out regions
PI
Phasing-in regions
RCE
Competitiveness and employment regions
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References and Selected Bibliography 1.
2.
3. 4. 5. 6. 7.
8.
9.
10. 11. 12. 13.
14. 15. 16.
Camagni, R., “Competitiveness and Territorial Cohesion: The New Challenges for EU-25”, paper presented at the 17th European Advanced Studies Institute in Regional Science”, Split, Croatia, June 28-July4, 2004 Constantin, D.L., “Institutional Challenges to Romania’s Regional Policy in Line with Increasing the Absorption Capacity of the EU Funds”, paper presented at the 46th Congress of the European Regional Science Association, Volos, August 2006 Corves, F., Nijkamp, P., “Regional development and EU research policy”, in International Journal for Technology, Policy and Management, Vol. 4, No.3/2004, p.193-209 Council of the European Union, Financial Perspective 2007-2013, , December 19, 2005, Brussels,CADREFIN 268, Eurostat, Regional Yearbook, 2006 and 2007 Goschin, Z., „Spatial and Sectoral Analysis of Productivity-Wage Dissimilarities in Romania”, in Romanian Journal of Regional Science, December 2007 Hervé, Y., Holzmann, R., Fiscal Transfers and Economic Convergence in the EU: An Analysis of Absorption Problems and Evaluation of Literature, Nomos, Baden-Baden, 1998 Horvat, A., “Absorption problems in the EU Structural Funds. Some aspects regarding administrative absorption capacity in the Czech Republic, Estonia, Hungary, Slovakia and Slovenia”, National Agency for Regional Development of Slovenia, 2004 Jansson, G., “The Eastern Enlargement and the Political Rationale of the EU Regional Policy: The Case of Hungary and the Implementation of Partnership Principle”, Linköping University, March 2003, http://www.ep.liu.se/exjobb/eki/2003/impier/002 Kasman, A., Kasman, S. and Turgutlu, E., “Nominal and Real Convergence Between the CEE Countries and the EU: A Fractional Cointegration Analysis”, in Applied Economics, Vol. 37, No.21, 2005, 2487-2500 Leonardi, R., “Cohesion in the European Union”, in Regional Studies, Vol.40, No.2, 2006, pp. 155-166 Mairate, A., “The ‘Added Value’ of European Union Cohesion Policy”, in Regional Studies, Vol.40, No.2, 2006, pp. 167-178 Myrdal, G., Asian Drama: An Inquiry Into the Poverty of Nations, Random House, 1972 Petrakos, G., Rodriguez-Pose, A., Rovolis, A., “Growth, Integration and Regional Inequality in Europe ”, paper presented at the 43rd Congress of European Regional Science Association, Jyvaskyla, August, 2003 Press Releases Rapid, “Structural and Cohesion Funds: Acceeding countries need to further strengthen their administrative capacity, Brussels, July, 2003, http://europa.eu.int.comm/regional_policy/newsroom/index_en.htm “Regional disparities and Cohesion: What strategies for the future”, Policy Department Structural and Cohesion Policies, European Parliament, 2007. 176
17. http://ec.europa.eu/regional_policy/policy/fonds 18. http://ec.europa.eu/regional_policy/atlas2007 19. http://europa.eu/scadplus/glossary/index_en.htm
177
THE CONNECTION BETWEEN LABOUR PRODUCTIVITY AND WAGE IN ROMANIA. TERRITORIAL AND SECTORAL APPROACHES Goschin Zizi Academy of Economic Studies, Bucharest, Department of Statistics and Econometrics, Sos. Ştefan cel Mare nr.4, bl. 14, sc.B, ap.52, et.4, sect.1, Bucureşti, Tel. (021)210 75 37, Email:
[email protected] Danciu Aniela-Raluca Academy of Economic Studies, Department of Statistics and Econometrics, Bucharest, Calea Dorobanti, 14-15, Tel. 3191901/int.363, Email:
[email protected] Gruiescu Mihaela Romanian-American University, Bucharest, Calea Călăraşilor, nr.176, bl. 59, sc. C,et. 3, ap.13, sect.3,Bucureşti, Tel. 0744 526 609, Email:
[email protected] Abstract Labour productivity and wages are both essential economic factors and the way they interrelate is a constant concern for the economists, as well as for employers and policy-makers. The target of this paper to estimate to which extent is the variation of productivity consistent with the distribution of wages, employing two patterns of comparison: by region and by economic branch. For this purpose, we developed a revised form of the coefficient of structural changes, in order to determine the regional/ sectoral dissimilarities between productivity and wage. Key words: labour productivity, wage, disparities, Romania
Introduction This paper explores the inter-region and inter-sector labour productivity and wage variation employing transversal data sets for 2000 and 2005. The main idea is to determine the dissimilarities between labour productivity and wage, both by regions and by main economic branches. For this purpose, we developed a modified form of the coefficient of structural changes (Kazineţ, 1955, Tövissi, 1979), in order to enable comparisons between qualitative variables such as labour productivity and wage. This paper is structured as follows. Section 2 outlines the two major economic lines of thought that provide explanations for the relations between labour productivity and wages. Section 3 briefly describes the methodology used to work on our spatial and sectoral data. Sections 4 and 5 focus on the results of the regional and sectoral analysis of productivity - wage dissimilarities. Section 6 provides some concluding remarks on the topic.
Theoretical background The labour economics literature displays two main approaches to the connection between labour productivity and wages. In neo-classical theory the level of wages is supposed to be determined by the marginal productivity of labour. Firms are activating on a competitive market and the level of wages is established exogenously on the labour market, like other prices in the economy. From the standpoint of the profit maximizing goal, the decision to hire an additional unit of labour is entirely based upon its effect on the profits. Considering the wage as the cost of hiring one more worker and the revenue as the marginal productivity of the unit of labour, in order to maximize profit, the firm demands each factor of production until the marginal productivity falls equal to the real price of that factor (Mankiw 2003, p. 46-48).
178
This judgement establishes a clear link between wage and the average productivity of labour: the economic sector with bigger labour productivity would also have higher wages. Increases in labour productivity in one economic sector would magnify the demand for labour, thus producing an increase in wages, at least on the short run. In the long run, this wage surplus is difficult to maintain, since more workers will be attracted by the sector offering higher wages, thus increasing the supply of labour and exercising upon the wages a downward pressure that can bring them back to the average wage. Considering the supply of labour is mobile, from a theoretical point of view the long run effect will be the convergence of wages between sectors, together with an increase in employment in the higher productivity sector, owing to migration of workers. There is empirical evidence to support this theory derived from the standard neo-classical model. A research for Sweden and Finland, over 1950-2000 period, found that the dispersion (by economic sector) of labour productivity and wages develops in the same direction for the most of the period (Svanlund, 2007), Finland better fitting the neo-classical theory. Some authors consider this neo-classical theory about the relationship between labour productivity and wage is wrong (Bruce, 2002, Huizinga, 2004). First, they say there isn’t necessary a correspondence between output per worker and revenue per worker because, if decline in the demand for the output of a certain sector occurs, market prices will have to reduce too, thus causing a decrease in the revenue per worker, despite any presumable productivity gains. A higher labour productivity may produce a price reduction because it determines the increase of the total output of the sector and, by the laws of supply and demand, when supply rise, the price fall. This decline in prices furthermore produces a reduction in revenue per worker. The agricultural sector of the developed countries represents such an example, the farm incomes being under permanent downward pressure despite constant productivity improvements. Second, even if revenue per worker actually increase in the higher productivity sector, the consequent higher level of wages may not be sustainable on the long run because the increasing labour supply generated by the workers migrating from lower wage sectors puts a downward pressure on wages. To sum up, there may be only partial, time-limited connection between labor productivity and wages from the sectoral point of view. Empirical evidence supports these assertions. An example is a research employing statistical data covering 1961-1995 period for Canada, that discovered that regardless of an industry’s growth in relative multifactor productivity, relative wages remained unchanged Bruce (2002). Another made in Nederland’s showed that a wage push only temporary raises labour productivity in the short run, but it is inefficient in the long run (Huizinga, 2004). Therefore, the author concludes that it is probably best not to use wage policy at all as a tool to influence productivity, but it is very effective as a tool against unemployment.
Methodology The aim of this paper is to measure the dissimilarities between labour productivity and wage variations from the standpoint of their regional and sectoral values, as compared with the national average. We started from the coefficient of structural changes (Kazineţ, 1955, Tövissi, 1979) that measures the average variation in the structure of a population over a period of time using the quadratic mean of the absolute differences between the present (t) and the previous (o) shares owned by the elements (i) of this population:
t 0 n xi xi n n t 0 i 1 x x i i i 1 i 1 CS n
2
(1)
We developed the formula for a coefficient of dissimilarities (CD) that enables comparisons between the structures of two different variables. For qualitative variables, such as wage and labour productivity, 179
instead of the share of each unit i (
xit
) we employ the ratio between the value of the variable for unit i n t xi i 1 and the arithmetic mean, as in the formula below:
P W i i Wm i 1 Pm CD n
2
n
(2)
where:
Pi is the ratio between region/sector “i” productivity and the national average; Pm Wi is the ratio between the average monthly wage in region/sector “i” and the Wm national average monthly wage; n – number of regions/sectors. This indicator measures the overall dissimilarities between the spatial/sectoral distributions of wages and labour productivity and its values lays between 0 and 2n . For example, when territorial inequalities of labour productivity perfectly mirror the ones of wages, that is for each region i the position it holds against productivity national average is exactly the same as for the wage, there is no discrepancy between the two distributions and the coefficient of dissimilarities is zero. On the opposite, when the regional labour productivity hierarchy is totally different from the one of wages (e.g., the region with the highest wage has the smaller labour productivity) the dissimilarities reach their maximum level: CD 2n , where n stands for the number of regions. Romania has eight development regions, so the regional CD may vary between 0 and 4. Taking into account that we employed 12 main branches for our sectoral analysis, in this case CD may vary between 0 and 4.9.
Regional productivity-wage dissimilarities In this paper we first investigate the relationship between wage dispersion and labour productivity dispersion in the Romanian development regions. Absolute values of labour productivity and wage presented in the table 1 show little regional variation. In 2000, the territorial coefficient of variation for wages was 13.35% against the 16.31% variation of labour productivity. In 2005 the coefficient of variation for labour productivity recorded a sharp reduction, falling to 3.96%, but the wages variation slightly increased to 14.06%.
Table 1. Regional productivity-wage dissimilarities 2000 Regions (i)
Labour productivity (GDP/person in thou RON
2005 Wage (RON /person current
Pi Pm
Wi Wm 180
Labour productivity (GDP/person in thou RON
Wage (RON/ person, current
Pi Pm
Wi Wm
current prices)
prices)
current prices)
prices)
0
1
2
3
4
5
6
7
8
NorthEast
15.2208
185
0.8754
0.864
60.6997
663
0.9606
0.889
SouthEast
16.4368
217
0.9454
1.014
62.4436
702
0.9883
0.941
South
15.8948
208
0.9142
0.972
64.9609
716
1.0282
0.960
SouthWest
17.4566
226
1.0040
1.056
65.3714
734
1.0347
0.984
West
15.9466
204
0.9172
0.953
61.1393
718
0.9677
0.962
NorthWest
16.4948
191
0.9487
0.892
61.0493
679
0.9663
0.910
Center
16.2320
197
0.9336
0.921
61.1211
661
0.9674
0.886
Bucharest
23.9761
275
1.3790
1.285
67.1918
977
1.0635
1.310
Source: Romanian Statistical Yearbook 2006, Labour cost survey and authors’ calculations These divergent evolutions of labour productivity and wages explain the increase in the dissimilarities between the territorial distribution of their values since 2000:
CD2000 = 0.0551 or 5.51% CD2005 = 0.1031 or 10.31%. The level of this indicator is near the lower limit of its variation range, proving that the regional distributions of wages and labour productivity are highly connected. The ratio between the maximum and the minimum wage by regions was 1.49 in 2000 and 1.47 in 2005. For labour productivity, these ratios were 1.58 and 1.10 respectively. The evolution of the coefficient of dissimilarities shows a big increase in productivity-wage regional differentials in 2000-2005 period. Although it almost doubled, the regional productivity-wage dissimilarities are still very low, especially if compared with the ones by economic sectors.
181
North-East 1.5
Bucharest
1
South-East
0.5
Center
South
0
North-West
South-West West Productivity
Wage
Figure 1. Regional productivity-wage dissimilarities in 2005 Productivity-wage dissimilarities by main branches of economy In the second part of our empirical study we are testing whether differential levels of labour productivity across economic sectors are reflected in their relative wages. Starting from the wage and labour productivity levels of 12 main branches of the economy in 2000 and 2005 (table 2) we measure the overall dissimilitude between the distribution of these two indicators by using relation (1), where between the productivity of branch “i” and the national average and
Pi is the ratio Pm
Wi represents the ratio between the Wm
monthly average wage in branch “i” and the national monthly average wage. Firstly we measure labour productivity as gross value added /employee, by dividing the gross value added in each branch by its number of employees (table 2). Fundamental problems of labour productivity measurement by this formula arise in agriculture, hunting and sylviculture, where the employees are only a small part of the employed population. These leads to an unrealistic high value of labour productivity, as the gross value added is created by all the population employed in agriculture and the employees hold a smaller share of the employed population, as compared to other sectors of the economy. When labour productivity is measured as gross value added per person employed (table 3), the value of labour productivity in agriculture sharply decreases. The overall differences between labour productivity and wage distributions of values by branches are far bigger than the regional ones. The coefficient of dissimilarities is:
CD2000 = 1.1370 or 113.70% CD2005 = 0.9240 or 92.40%. Although the differences between sectoral distribution of wages and labour productivity are significant, considering the full range of variation of this indicator (from 0 to 4.9), there is still considerable productivity-wage connection.
182
Table 2. Dissimilarities between labour productivity (gross value added/employee) and wage by main economic branches 2000
2005
Labour productivity (Gross value added/person in thou RON current prices)
Wage (RON/ person, current prices)
Wi Wm
Labour productivity (Gross value added/person in thou RON current prices)
Wage (RON/ person, current prices)
0
1
2
3
4
5
6
7
8
Agriculture, hunting and sylviculture
45.40*
164
2.8844
0.7664
169.25*
438
2.9533
0.7312
Fishing and pisciculture
1.00
135
0.0635
0.6308
5.23
361
0.0913
0.6027
Industry
11.72
223
0.7445
1.0421
41.48
658
0.7237
1.0985
Construction
12.43
186
0.7899
0.8692
52.56
558
0.9171
0.9316
Trade
14.50
150
0.9213
0.7009
42.88
458
0.7482
0.7646
Hotels and restaurants
22.67
138
1.4402
0.6449
67.75
425
1.1821
0.7095
Transport, storage and communications
21.72
284
1.3797
1.3271
92.74
795
1.6182
1.3272
Financial intermediations
17.41
526
1.1064
2.4579
81.51
842
1.4222
1.4057
Real estate and other services
58.97
216
3.7466
1.0093
150.76
461
2.6305
0.7696
Public administration and defense
23.38
304
1.4853
1.4206
105.93
550
1.8483
0.9182
Education
5.71
205
0.3631
0.9579
26.06
515
0.4548
0.8598
Health and social assistance
5.17
177
0.3284
0.8271
23.59
443
0.4117
0.7396
Branches (i)
Pi Pm
Pi Pm
Wi Wm
Source: Romanian Statistical Yearbook 2006, Labour cost survey and authors’ calculations * This unusually high value is due to the low share of employees in the total population employed in agriculture.
183
If agriculture, hunting and sylviculture and real estate are excluded because of their extreme values which distort the results, the level of the coefficient of dissimilarities decreases to 54.27% for 2000, respectively 39.24% for 2005. Better results are obtained by measuring labour productivity as gross value added per person employed (table 3).
Table 3. Dissimilarities between labour productivity (gross value added/person employed) and wage by main economic branches
2000
2005
Labour productivity (Gross value added/person in thou RON current prices)
Wage (RON/ person, current prices)
Wi Wm
Labour productivity (Gross value added/person in thou RON current prices)
Wage (RON/ person, current prices)
0
1
2
3
4
5
6
7
8
Agriculture, hunting and sylviculture
2.49
164
0.3025
0.7664
9.115
438
0.3006
0.7312
Fishing and pisciculture
0.6
135
0.0728
0.6308
3.925
361
0.1295
0.6027
Industry
10.95
223
1.3287
1.0421
35.15
658
1.1593
1.0985
Construction
11.13
186
1.3502
0.8692
39.5
558
1.3029
0.9316
Trade
10.61
150
1.2876
0.7009
27.97
458
0.9223
0.7646
Hotels and restaurants
20.48
138
2.484
0.6449
45.84
425
1.512
0.7095
Transport, storage and communications
19.18
284
2.3265
1.3271
70.78
795
2.3343
1.3272
Financial intermediations
16.71
526
2.0269
2.4579
69.73
842
2.2999
1.4057
Real estate and other services
38.52
216
4.6726
1.0093
93.73
461
3.0915
0.7696
Public administration and defense
23.54
304
2.8554
1.4206
102.3
550
3.3725
0.9182
Education
5.53
205
0.6703
0.9579
23.09
515
0.7617
0.8598
Health and social assistance
4.62
177
0.5609
0.8271
20.47
443
0.6751
0.7396
Branches (i)
Pi Pm
184
Pi Pm
Wi Wm
Source: Romanian Statistical Yearbook 2006, Labour cost survey and authors’ calculations
Agriculture, hunting and sylviculture 3.5 Health and social assistance Fishing and pisciculture 2.5 Education
Industry
1.5 0.5
Public administration and defense
-0.5
Construction
Real estate and other services
Trade
Financial intermediations
Hotels and restaurants
Transport, storage and communications
Productivity
Wage
Figure 2. Sectoral productivity-wage dissimilarities in 2005 The ratio between the maximum and the minimum wage by branch was 3.90 in 2000 and decreased to 2.33 in 2005. For labour productivity, these ratios were 64.20 and 26.06 respectively. Based on this reduction of the distances between the extreme values of the distributions, the overall dissimilitude coefficient also decreased in 2000-2005 period:
CD2000 = 1.3349 CD2005 = 1.0978. The values of the coefficient of dissimilarities are relatively low, showing a significant connection between labour productivity and wages from the sectoral point of view.
Final remarks The relation between labour productivity and wages is an issue of great interest for economists. Against the neo-classical theoretical belief upon the strong connection between labour productivity and wages, empirical evidence reveals important differences in their variation. In this paper we investigated the cross-section relation between the dispersion of wages and productivity in Romania, both by regions and by economic activity. We found insignificant differences between the territorial variations of those two variables. However, the distribution of labour productivity across economic branches is in a much bigger dissonance with the sectoral distribution of wages. There is a tendency favoring the reduction of these differences in time, mainly due to a faster increase of labour productivity in the less favored branches of the economy, thus reducing the gap.
185
References Bruce C. (2002), “The Connection between Labour Productivity and Wages”, Economica LTD, The Expert Witness, Vol. 7, No. 2. 2. Dunne T., Foster L., Haltiwanger J. and Troske, K.R. (2004), “Wage and Productivity Dispersion in US Manufacturing: The Role of Computer Investments,” Journal of Labor Economics, 22 (2), pp. 397-429. 3. Faggio G., K. Salvanes and J. Van Reenen (2007), “The Evolution of Inequality in Productivity and Wages: Panel Data Evidence”, CEP Discussion Paper No 821, London School of Economics. 4. Goschin Z. (2003), “Legătura productivitate-salariu în România”, Tribuna Economică, no.5, pages 68-70. 5. Goldin, C. and Margo, R. A. (1992), “The wage structure in the United States at mid century”, Quarterly Journal of Economics, vol 107, No 1. 6. Gothsalk, P. and T. Smeeding (1997), “Cross-National Comparison of Earnings and Income Inequality”, Journal of Economic Literature, vol 35. 7. Head K. and T. Mayer (2006), “Regional wage and employment responses to market potential in the EU “, Regional Science and Urban Economics, vol. 36, no.5, pp 573-594. 8. Huizinga F. and P. Broer (2004), “Wage moderation and labour productivity”, Netherlands Bureau for Economic Policy Analysis , series CPB Discussion Papers, nr.28. 9. Lazear E.P., 2000,"Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pp. 1346-1361. 10. Mankiw G. (2003), Macroeconomics, Fifth edition, Worth Publishers. 11. Svanlund J. (2007), “Wage differences, labour productivity and labour market institutions - the case of Sweden and Finland - 1950-2000”, UMEÅ Universitet, Institutionen för Ekonomisk Historia. 12. Tövissi L., E. Scarlat and Al. Taşnadi (1979), Metode şi modele ale analizei economice structurale, Editura ştiinţifică şi enciclopedică. 1.
186
EVALUATING THE COMPETITIVENESS OF THE TOURISM IN ROMANIA Grigorovici Corina ”Dimitrie Cantemir” Christian University, Faculty of International Business and Economics, Splaiul Unirii No. 176, Sector 4, Bucharest, E-mail:
[email protected] Abstract: The tourism competitiveness is a relative, multidimensional, complex concept when its applicability area includes national economies and tourist destinations, due to the variety of the economic, ecologic, social, cultural and political factors that provoke it. Therefore, the economic literature abounds in definitions and quantifications methods of competitiveness in tourism, most of them being independent, each expressing however different points of view and pointing out the preceding factors. The competitiveness of tourism is defined as being the ensemble of the policies and actions that sketch out the ability of a country of creating and maintaining an environment that supports the value for its companies and prosperity for its residents. The International Economic Forum has developed an index of the competitiveness of the tourist attractions that reflects, in this particular study, the facto state of the Romanian tourism. Key words: competitiveness, tourism, factorial endowments
1. Theoretical background The travel and tourism (T&T) competitiveness index is based on three categories of variables that determine the T&T competitiveness. These categories are summed up into three subindexes: (1) the regulatory frame of the T&T; (2) the infrastructure and the business environment; (3) natural, cultural and human resources. The first subindex catches the elements that will make the governmental politics become the object of discussion, the second subindex incorporates the elements of the business environment and of the infrastructure of each economy; the third subindex includes human and cultural elements of the factorial endowments of each country. Each of these indexes consists in exchange of 13 pillars of the T&T competitiveness. They are: (1) Regulations in the domain of the tourism policies; (2) Environment regulations; (3) Safety and security; (4) Health and hygiene; (5) Prioritization of travels and tourism; (6) The infrastructure of airway transportation; (7) Infrastructure of the terrestrial transportation; (8) The infrastructure of the tourist attraction; (9) Informational technology and communications infrastructure; (10) Price competitiveness in the T&T industry; (11) Human resources; (12) The perception of the national tourism; (13) Natural and cultural resources. The regulations in the tourism policies area refers to how much do the political environment influences the developing of the tourism and travels sector in each country. This pillar facilitates the foreign direct investments, the protection of the rights of intellectual property, the visa request as a barrier before entering a country, the opening for bilateral agreements of air service transportation. The importance of the natural environment in ensuring an attractive tourist location is incontestable, the environment regulations being a premise of the fact that a country will continue to be an attractive destination in the future as well. The safety and security are determinant factors of the competitiveness in the tourism and travel sector of one country. The tourists avoid the countries or the regions with a high degree of dangerousness, thus contributing at diminishing the attractiveness of tourism in these locations. In the case of this pillar, the criminality rate, the violence, the terrorism, and how the police gets involved in ensuring the protection against crimes, are evaluated. Health and hygiene are as well determinant factors of T&T, through the access within the targeted country, to tap water and sanitary system for the comfort and health of the travelers. Travel and tourism prioritization is concerned with clearly acknowledging the fact that the tourism and travel sector is a priority which has to be reflected in its budgetary priorities. 187
The infrastructure of the airway transportation is very important because it facilitates the access to tourist destinations. The airway transportation is appreciated both from a quantitative point of view – the number of departing plains, number of kilometers, the density of airports, the number of airway operators - , as well as from a qualitative point of view, including the domestic flights, as well as the international ones. What is essentially in order to move around in a developed country is the quality of the infrastructure of the terrestrial transportation. In this case, the quality of the roads, highways, ports comes first, as well as the way in which the national transportation network allows efficient movement and accessible to the main business centre and tourist attraction in one country. The tourist infrastructure includes the accommodation infrastructure (the number of hotel rooms), the existence of the rent a car type companies and the financial infrastructure (the ATMs’ availability). Given the growing importance of the online environment for a modern T&T industry, in order to plan itineraries and organize travels and accommodation, incorporating the ICT infrastructure quality becomes vital, in the structure of the competitiveness index of the tourism and travel sector. In this case, the rates of penetration of the informational technology and communication (Internet and phone lines etc) become the object of evaluation, namely the usage of Internet for doing business transactions in an economy. The price competitiveness in the travel and tourism industry is, obviously, an important element of the T&T competitiveness through the fact that the diminishing of costs increases the attractiveness in some countries for many tourists. In order to quantify the price competitiveness of a country, factors such as airport taxes, the price of the tickets, the level of the price for gas compared to other countries, the purchasing power parity, are taken into account. The human resources are evaluated through the level of health, education and training in each economy. The education and training evaluate the rate of participation to the early education, as well as the quality of the educational system in each country. From the perspective of the formal educational system, it is appreciated the involvement of the private sector in improving the human resources, including the availability of the services of specialized training. This subpillar practically measures the qualified work availability and evaluates the degree in which the employments and the firings are prevented by the regulations, and whether the work legislation facilitates or limits the employment of the foreign manpower. The health subpillar of the manpower takes into consideration a series of health indicators such as the prevalence of some specific diseases and the average life hope of the citizens of a country. The perception of the national tourism measures the opening of the society towards tourism and its foreign visitors. The general attitude of the population towards tourism and foreign travelers has a great impact on the T&T competitiveness. In this case, it is evaluated to what extent the population of one country has a positive attitude towards the foreign tourists, to what extent the business leaders are disposed to recommend rest travels in their country to the important business partners and the degree of the tourism opening (the tourist expenses and gains as a percent from GDP). The countries that are capable to offer the tourists access to their cultural or natural assets definitely hold a real competitive advantage. Within this pillar, are included the appreciation of the cultural heritage, quantification of the attractiveness of the environment and estimating the health risks, especially in the case of some tropical diseases.
2. Travel & tourism competitiveness index. The case of Romania Table no. 1. indicates the fact that Romania is positioned among the less competitive states in the world regarding tourism and travel, the 76th place held by our country out of 124 countries being due to, mainly, the deficiencies that characterize the airway and terrestrial infrastructure. In ensemble, Romania has totalized 3.9 points out of 7 compared to 5.6, the points obtained by the leader of the classification, Switzerland, and 2.6 given to Chad, that has occupied the last position, out country occupying the position between Azerbaijan and El Salvador.
188
Table no. 1. The T&T competitiveness index for Romania Rank/124 76 87
Scor 3.9 3.9
The regulations within the tourism policies area
67
4.6
Environment regulations
101
3.3
Security and safety
72
4.3
Health and hygiene
99
3.7
Travels and tourism prioritization
82
3.4
The infrastructure and the business environment
74
3.2
The infrastructure of the airway transportation
93
2.4
The infrastructure of the terrestrial transportation
77
3.0
The tourist destinations infrastructure
50
3.5
The ICT infrastructure
56
2.8
The price competitiveness within the T&T industry
87
4.2
Natural, cultural and human resources
71
4.7
Human resources
76
5.0
Training and education
52
4.9
The availability of the qualified manpower
91
3.9
The health condition of the manpower
76
6.1
The perception of the national tourism
95
4.4
Natural and cultural resources
46
4.6
The T&T competitiveness index The environment of the T&T regulations
Source: World Economic Forum, Travel and Tourism Competitiveness Report, 2007 The first places of the 2007 top are occupied by European states such as Switzerland, Austria, Germany and Island, followed by USA, Hong Kong, Canada, Singapore, Luxemburg and United Kingdom. Bulgaria occupies the 54th place, with a total of 4.3 points and France, the most popular tourist destination in the world, occupies the 12th position, situation which is determined mostly because of French people’s attitude towards foreign tourists. The most critical aspects that our country faces in tourism are the business environment and the infrastructure that have accumulated 3.2 points. The lowest credits have been given to the airway transport infrastructure (2.4 points), ICT infrastructure (2.8 points) and the terrestrial infrastructure (3 points). The airway transportation has received a derisory mark first of all because of the insufficient number of airports in our country and again, because of their limited area. The terrestrial transportation and ICT have received low scores because of the insufficient development of their infrastructure. Out of 13 categories taken into consideration in calculating the competitiveness index of the tourism and travel sector, Romania has had competitive advantages in only 6 categories: the natural and cultural resources (the evaluation takes into account the level of carbon dioxide, the number of national reservations and places protected by UNESCO) – 46th position, norms and regulations (the requirements for visa for tourist purposes and the opening for bilateral agreements of airway service transportation) – 67th position, tourism infrastructure - 76th position. The chapters where Romania faces difficulties are: safety and security – 72nd position, environment regulations – 101st position, health and hygiene – 99th position, tourism promotion – 82nd position, tourism tariffs competitiveness – 87th position, the weight of spending of the foreign visitors on the tourist services – 95th position.
189
Romania has been penalized in what concerns the regulations as well which have totalized 3.9 points. In this case, the environment regulations have received the lowest score, 3.3 points, at the other end being the rules and regulations in the domain of tourism policies with 4.6 points. Romania has received the highest score for the human, natural and cultural resources (4.7 points). Thus, the highest score has been given to human resources (5 points), followed by the natural and cultural resources (4.6) and national perception of tourism (4.4 points). The evaluation of human resources has taken into account the population percentage of elementary, secondary education, the existence and preventing of certain diseases, such as HIV and tuberculosis, and the life span hope. Romania occupies the 107th position by the importance that the government of our country gives to the tourism sector compared with the other domains of the national economy. According to the same criteria, Bulgaria occupies the 58th position. From the point of view of the importance that the government offers to the long term development of tourism and transportations, Romania occupies the 115th position, the first three places being held by Singapore, New Zeeland and Tunis. The promoting of the Romanian tourism has received a score of 3.4 points which has placed our country on the 82nd position in the world, and the low efficiency of the marketing strategies and branding have ensured us the 111th position in the world top. The competitiveness of the tariffs from the Romanian tourism has placed us on the 87th position, with a score of 4.1 points. The competitiveness of the tariffs has been calculated according to the airway transportation taxes, the purchasing power and the price of carburant. The amount spent by the foreign visitors on the tourist services in the country has placed us on the 95th position, with a score of 4.4 points. The access to improved sanitary facilities and to the adequate sources of potable water has placed us on the 85th, respectively on the 103rd positions. The airway and terrestrial transportation has placed us on the 93rd place in the world with a score of 2.3 points, respectively on the 77th place with a score of 3 points. The quality of the land transportation, ruttier and maritime has ensured for Romania the 111th place, respectively 54th place, and regarding the maritime infrastructure, Romania has occupied the 75th position. The Romanian infrastructure from the tourism and ICT sectors have placed us on the 50th position in the world, with a score of 3.5 points, respectively on the 56th position with a record of 2.8. Regarding the safety and security, Romania has occupied the 72nd position in the world with a score of 4.2, and for health and hygiene in the Romanian tourism, we have occupied the 99th position in the world with a score of 4.2. The taxes in Romania are relatively high given the specific conditions of the state, our country occupying the 108th position from this point of view. The lowest taxes are in Bahrain, and the highest in Brazil. The degree of freedom offered to the foreign properties in the country has ensured us the 81 st position, and respecting the property rights which concerns as well the financial assets, has placed us on the 76th position in the world top. The degree of trust in the police force concerning protecting the business in Romania has placed us on the 79th position, the first positions being occupied by Finland and Germany. The states with the most appreciated governmental rules for foreign direct investment are Singapore and Ireland, Romania occupying the 88th position after Ethiopia and before Greece. Regarding the people’s attitude towards the tourists, Romania occupies the 76th position. The analyze of regional competitiveness, based on the data offered by the Tourism World Council, makes a comparison between 8 countries close to Romania which are considered to be competing countries in tourism: Bulgaria, Croatia, Serbia and Montenegro, Hungary, the Czech Republic, Slovakia, Poland and Ukraine. The competitiveness index of the tourist industry has been obtained by calculating the arithmetic average between the following indexes: price, infrastructure, environment, technology, human resources, opening and social issues, whose values on a scale from 0 to 100 shows the performance of each country compared to the other states. The data sources for these indicators consist mainly of development indicators elaborated by the World Bank, but of UN and Tourism World Council reports as well. According to this calculation, the competitiveness index of the Romanian tourism industry is 58.91. In the plan of the tourist competitiveness, Romania is surpassed by the most representative that adhered to the European Union on the 1st of May 2004, Hungary (78.44), the Czech Republic (74.47), Slovakia (62.84), Poland (66.03), as 190
well as Bulgaria (68.57) and Croatia (68.04). Even so, our country keeps an advantage towards Ukraine, Serbia and Montenegro. Romania is more competitive compared to some of its competitors in the prices, environment, opening towards commerce and tourism and in the social areas, and less competitive in the technology, human resources and infrastructure areas. Compared to Bulgaria, Romania is more competitive when it comes to prices (regarding the fares for the hotel rooms, in 2004; the parity index of the purchasing power; the level of taxing in tourism), infrastructure (only regarding the roads and the railways – with superior indexes to Bulgaria), environment (less carbon dioxide emissions than Bulgaria, but a higher density of the population), technology (only for the high-tech exports chapter), social (for the TV sets and newspapers indexes). Compared to Croatia, Romania is more competitive in the prices area (only at taxing level chapter in tourism), environment (less carbon dioxide emissions than in Croatia, but a higher population density), international opening (only for the level of taxing in the international commerce) and the social domain (the TV sets and newspapers indexes). Compared to Hungary, Romania is more competitive only in the prices area (fares for the hotel rooms, in 2004 and the level of taxing in tourism) and social domain (only for the TV sets index). Compared to Slovakia, Romania is more competitive only in the prices area (fares for hotel rooms, in 2004), human tourism (only for the people’s involvement in the tourism), environment, technology (only for the high-tech exports), international opening area (visas) and the social area (TV sets and newspapers indexes). Compared with the Czech Republic, Romania is more competitive only when regarding the prices (fares for hotel rooms, in 2004 and the level of taxing in tourism) and the social domain (only for the TV sets and newspapers indexes). Compared to Poland, Romania is more competitive only when it comes to prices (fares for the hotel rooms, in 2004 and the level of taxing in tourism), human tourism (the economic impact in tourism), technology (only for high-tech exports), international opening (the index of opening in tourism and the index of opening in commerce) and the social domain (only for the TV sets and newspapers indexes). Compared to Ukraine, Romania is more competitive in the prices area (for the fares on hotel rooms, in 2004, the purchasing power parity and the level of taxing in tourism), human tourism (the population’s involvement in tourism), environment (less carbon dioxide emissions than in Ukraine, but a higher population density), technology (the number of Internet users, mobile telecommunication, high-tech exports), the international opening (visas, the level of taxing in the international trade) and the social domain (human development indexes, newspapers index, computers and TV sets indexes).
References 1. 2. 3. 4. 5. 6. 7.
Craigwell R., Tourism competitiveness in small island developing states, World Institute for Development Economics Research, Research Paper No. 2007/19, p. 11; Dwyer L., Forsyth P., Rao P., The price competitiveness of travel and tourism: a comparison of 19 destinations, Tourism Management 21 (1), 2000, p. 9-22; Dwyer L., Kim C., Destination competitiveness: determinants and indicators, Current Issues in Tourism, Vol. 6, No 5, 2003, p. 11; Glaesser D., Crisis management in the tourism industry, Butterworth-Heinemann, 2006; Mo C., Handy D., Havitz M., Testing an international tourist role typology, Annals of Tourism Research 20 (2), 1993, p. 319-335; ***World Economic Forum, Travel and Tourism Competitiveness Report, 2007; ***Strategia ANT, 01.08.2006, p. 10-12.
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YESTERDAY’S ACTIVISTS, TODAY’S ACTIVISTS? ORGANIZATIONAL CAREER AND COMMUNITY INVOLVEMENT IN PRESENT DAY ORADEA Hatos Adrian Universitatea din Oradea The article investigates the relationship between the organizational careers of residents of condominiums from Oradea – holding leadership positions before or/and after 1990, belonging to the regime’s organizations and their present day social activism. Data from a random sample of 300 shows that a rich organizational biography correlates with high level of community involvement. The results are discussed from a theoretical point of view and considering their consequences for politics of community development.
Introduction The studies on identification of characteristics associated to participatory behavior, political entrepreneurship (Frohlich, Oppenheimer, & Young, 1971) or leadership (Kouzes & Posner, 1997) are marked by several ambiguities, methodological shortcomings or unanswered questions. In Romania such questions are even more sensitive as the issue of participation has to be balanced with ethical problems as belonging to leading structures of the former regime or the moral nature of the qualities which defines a person as being active. This paper is trying to contribute to the explanations of the relationship between social activism of oradean adults and their functional positions through their biographies. With this aim we will investigate the relationship between community participation and the fact that they held leading positions before and after 1990, using survey data from 2007 conducted with 305 people.
Theoretical considerations To start our analysis we need to review several theoretical standpoints regarding the relationship between social activism and functional and associative career. A first relevant perspective to explain social activism is the one that attributes it to a psychological predisposition, talent or tendency. According to this theory, an active person is born with this predisposition, or at least activism is the result of deep socializing mechanisms, which occurred most probably during childhood and are hard to be controlled. Brady, Verba and Scholzman (1995) use these mechanisms to explain political participation rates, and support for this theory can be found also for Romanian studies (Dodescu, Hatos, Chioncel, Săveanu, & Titieni, 2004; Hatos, 2006). In political studies in the 70’s and the 80’s there was a popular approach to explain participation through the additional resources derived by a higher status. The lack of specification of causal mechanism which link socio – economical status with participation, besides the direct effect of money and time, was later completed by Brady, Verba and Scholzman (1995) who introduced the concept of civic competencies defined as “communication and management skills essential for political action” (p. 272), but which can be defined also as general competencies acquired during ones life which can be transmitted to other fields. There are several factors which explain the different investments of people with civic abilities. One is formal education which determines involvement in two ways: the better educated are more capable to understand their environment, to communicate and organize themselves, and also have more central positions in the social networks. More, work, voluntary associations and churches are institutional frames in which one can acquire civic competencies. In the field of social movements there have been gathered important data supporting the idea of a previous activism which raises the probability of a future activism. Even if the know-how obtained through direct participation can explain involvement, other intermediary factors were also investigates (McAdam, McCarthy, & Zald, 1988) (McAdam, McCarthy and Zald, 1988). For example, during participation in different voluntary associations one can develop an activist identity together with to correspondent role sets and searches to act accordingly. The longest to activism history, the more important is the role of activist in ones identity (Becker, 1963). 192
In light of these findings, a question less studied in Romania is the impact of previous involvement in voluntary associations on present activism, with an obvious reason: the short democratic history can not justify a significant history of association membership - as the communist organizations can not be considered voluntary so their impact on civic competencies and abilities is limited. In a recent article Marc Morje Howard (2003) proved the somewhat counter-intuitive correlation between the lack of activism in the communist period and the skepticism for involvement after communism in Eastern Germany and Russia. The reciprocal is also true: referring to members of communist parties from the former socialist republics from the East of the Iron Curtain Bahry and Silver (1990) noticed that these match, from several points of view, with the typical image of the western activist. Nevertheless, the impact of membership and activism in general voluntary organizations as the Communist Youth Union and the Communist Party are under-investigated. For most of Romanian adults aged above 35, these organizations where the only ones in which they could behave as activists. Did these organizations promote the acquisition of civic competencies and abilities which sustain future activism? Did they develop activist identities, people which always get involved in social dilemmas, which still act and motivate others? Or, on the contrary, consequent to the negative learning will consider the idea of voluntary actions as old-fashioned and illegitimate. Synthesizing these three perspectives the obvious empirical hypothesis is that there should be a positive relation between current activism and the positions held by a person in the past. Either that the past positions are merely a reword and a clue for a predisposition for activism, either that because the person acquired through these positions different civic competencies, we expect that between previous positions held and current civic involvement to have a significant relation.
Data The data presented in this section have as basis the results of a survey conducted in November 2007 in Oradea on a random stratified sample of 410 subjects. From these, about 66% live in flats from buildings built before 1990, these being the sub-sample on which I have conducted the analysis from this chapter
Variables a. Community involvement Community involvement was measured in our survey through three scales with a different referent: a factual scale regarding the subject, another regarding members of the family and one measuring subject’s disponibility for participation. Table 1. During the last 12 months have you participate at the following activities?
YES
It was not the I do not no case know answer
Participation at a public meeting regarding the 69,8 neighborhood’s problems
19,0
10,5
,3
,3
Participation at a public meeting regarding the 41,6 building’s problems
51,5
5,9
,7
,3
Voluntary contributions for the neighborhood
44,9
46,9
6,6
,3
1,3
Voluntary contributions for the building
75,4
13,1
9,8
,7
1,0
Making formal notices regarding neighborhood’s 77,7 problems
10,2
9,8
1,0
1,3
Church Donations
42,6
53,1
1,3
1,0
2,0
Help for poor
34,1
60,0
2,3
,7
3,0
Discussions with neighbors regarding solutions for 48,7 area’s problems
41,8
6,6
1,3
1,6
NO
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Table 2. During the last 12 months have anybody from your family participate at the following activities?
YES
It was not the I do not no case know answer
Participation at a public meeting regarding the 62,3 neighborhood’s problems
23,3
5,2
7,5
1,6
Participation at a public meeting regarding the 43,9 building’s problems
43,9
3,9
6,2
2,0
Voluntary contributions for the neighborhood
47,5
39,0
4,6
6,9
2,0
Voluntary contributions for the building
69,7
13,5
6,9
7,9
2,0
Making formal notices regarding neighborhood’s 72,1 problems
11,1
6,9
7,5
2,3
Church Donations
38,4
49,5
1,6
8,2
2,3
Help for poor
34,4
52,1
1,3
10,2
2,0
Discussions with neighbors regarding solutions for 49,8 area’s problems
35,4
3,3
9,5
2,0
NO
YES
It was not the I do not no case know answer
32,5
59,3
1,3
4,9
2,0
Public meeting regarding the building’s problems
19,3
75,7
,3
2,3
2,3
Voluntary work for local problems
40,3
48,5
1,6
7,2
2,3
Making formal notices regarding neighborhood’s 40,0 problems
48,5
1,6
8,2
1,6
Church Donations
16,4
77,0
,7
3,3
2,6
Help for poor
8,9
85,6
,7
3,0
2,0
73,1
,7
4,9
1,6
NO
Table 3. Would you participate at the following activities?
Public meeting problems
regarding
the
neighborhood’s
Discussions with neighbors regarding solutions for 19,7 area’s problems
The most frequent, in the case of the 305 people who live in flats, are the philanthropical actions which revels both socially altruist trends as well as respect for traditional social norms. A higher frequency for positive answer we have in the case of semi-voluntary collective actions in the neighborhood such as public meetings regarding the building’s problems or “voluntary contributions” for the building. Each of the questions sets are valid scales with high fidelity (alpha>0.7), obviously after adding median scores for missing cases for each item. The three scores are strongly correlated, which indicates the fact that community participation’s intensity characterizes in the same manner families as its members taken separately, and that these are indicated by the disponibility for participation. This result is significant as it allows the usage measures at individual levels for the family level. The items of the first scale and those from the third we can create a score with a high fidelity (alpha = 0.854, N = 305), which can be considered an individual community participation score. This score has an 194
range between 0 and 15, with a mean of 7.6 and a standard deviation of 3.8 points from the scale. This variable’s histogram reveals a bi-modal distribution, with a peak at the null value of the scale - indicating that there is a significant category of subjects which neither participate nor have the disponibility for it, and another peak for the high levels of the scale. b. Functional biography The relevant functional biography is indicated by the fact that one held leading positions and membership in political organizations of the communist regime. These were control structures for social activism and also promotion structures for higher status hierarchy, their capacity to indicate the adhesion to the communist ideology being obviously limited. As the social status is transmitted through family we introduced also items regarding holding leading positions for family members. Table 4. Functional biography (percentages) NO
YES
Not case
Did you hold a leading position before ’89?
82,3
10,8
6,9
Have you been chief for at least three people before ’89?
79,0
12,8
8,2
Currently, are you chief for at least three people?
84,6
9,5
5,9
Currently, some of your close relatives is chief for at least three people? 66,9
24,9
8,2
Before ’89, have you been member of Communist Youth Union?
66,9
22,6
10,5
Before ’89, have you been member of Communist party?
76,4
13,8
9,8
Before ’89, did you hold leading position in CYU?
86,9
3,3
9,8
Before ’89, did you hold leading position in the Communist party?
88,2
2,6
9,2
Before ’89 did you hold a leading position at your working place?
81,0
10,5
8,5
Before ’89 did you hold any other leading position?
86,2
4,9
8,9
After 1989 did you hold a political leading position?
94,1
1,0
4,9
After 1989 did you hold a leading position at your working place?
81,0
15,1
3,9
After 1989 have you been chief of your building?
91,5
4,3
4,3
After 1989 have you worked in tenants association?
91,5
4,6
3,9
the
I have presented the percentages in table no. 4 both to show that the organizational history of our apartment owners from our sample reflect known life stories, the distributions being dependent on the moment of life cycle at which the interview was conducted, as well as to warn about the fact that due to the reduced occurrence of some events (having political leading positions after 1990 or having leading positions in the communist party for example) some statistical tests will be difficult.
Relationship between community participation and functional biography Testing the influence of leading positions or the membership in organizations of the communist regime was done simply, by calculating t test of means difference between those that answered positively at functional biography questions and those who gave negative answers.
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Table 5. Moments of functional biography and community participation The mean score of community participation and t-test of differences between means NO
YES
Not the case
Did you hold a leading position before ’89?
7,51
9,06*
6,86
Have you been chief for at least three people before ’89?
7,58
9,10*
5,88
Currently, are you chief for at least three people?
7,62
8,76
5,94
Currently, some of your close relatives is chief for at least three people?
7,40
8,76**
6,12
Before ’89, have you been member of Communist Youth Union?
7,57
8,59*
5,94
Before ’89, have you been member of Communist party?
7,85
7,74
5,80
Before ’89, did you hold leading position in CYU?
7,81
8,30
5,83
Before ’89, did you hold leading position in the Communist party?
7,78
9,75
5,57
Before ’89 did you hold a leading position at your working place?
7,62
9,06*
6,00
Before ’89 did you hold any other leading position?
7,70
9,60*
5,85
After 1989 did you hold a political leading position?
7,62
9,67
7,40
After 1989 did you hold a leading position at your working place?
7,40
9,02**
7,17
After 1989 have you been chief of your building?
7,58
9,69*
6,62
After 1989 have you worked in tenants association?
7,57
9,86**
6,58
*p<0,05; **p<0,01 Each situation between the above items corresponds to higher scores of community participation. Yet, mostly due to big standard errors generated by the small number of cases with positive answers, the differences are not significant using t-test. We can thus say that if we could repeat the survey on a larger number of cases more of the comparisons from the above table would be significant.
Discussion and conclusion As expected, each situation of having a leading position or membership to communist party or communist youth union has a correspondent current score of community participation higher then in the cases when these situations were not recorded. More, people who say “it is not the case” to questions of functional biography have the lowest scores of community participation. This means that people from the generation of over 35 has the lowest disponibility for social participation. Diverse leading positions held before 1990, the positions held after the Revolution, as well as membership in the Communist Youth Union have the strongest links with the measure of involvement in solving neighborhood’s problems. From this result we can consider as explained at least one of the unclear social transformations of transition: the socially active persons from the present day are, generally, the same as those that were active in the old regime. The causes of this activism remain though unclear. The constant positive correlation between different functional moments and community participation suggest the manifestation of a general activism independent of political institutional or ideological context, consequent with the general participation mechanism developed by Conway and Hachen (2005). The same data support also the hypothesis of acquiring by the current participants specific civic competencies and identities at their work or in organizations in which they held leading positions. The important impact of social context, revealed by the significant score of the item “currently one of the close relatives is chief for at least three people” warns us, on the other hand, that understating activism as a 196
matter of strictly personal determination, maybe psychological is a mistake. This correlation indicates the fact that we can talk of socially active families, as well as inactive families from the same perspective. Overtaking the naïve determinism of heredity or common socialization we believe that a plausible interpretation is that the resources for participation are transmitted through families as in the case of socioeconomical status. The observation is more relevant as we know the fact that social involvement is influenced by actor’s status resources, as educational level or occupational status. Our results lead to several conclusions. First we find that holding a leading position before 1990 or the membership in the Communist Party is not necessarily the result of opportunism or ideological shortsightedness but rather the path of manifestation of a active personality under the conditions of that period. From this point of view, the communist organizations had, paradoxically, a rather positive effect on our lives. Second, we can think that any organizational responsibility or the mere participation in organizations can support the disponibility for social participation, either through acquiring civic competencies or by creating settings in which participatory roles can be learned and practiced. Third, it is highly probable that the participatory personality is not derived from a genetical heredity or mysterious psychoanalytical processes, but rather from social position - characteristic with an intergenerational reproduction trend - and specific with its culture. Studies of this type must be improved with through analysis which should investigate with refined means the impact of context and biographical variables on participation. Managing civil society organizations as well as the resources for activism and leadership, along with the efforts of development could benefit from such a research area.
References 1.
Bahry, D., & Silver, B. D. (1990). Soviet citizen participation on the eve of democratization. American Political Science Review, 84(3), 821-847. 2. Becker, H. (1963). Outsiders. Glencoe: Free Press. 3. Brady, H. E., Verba, S., & Schlozman, K. L. (1995). Beyond Ses: A Resource Model of Political Participation. The American Political Science Review, 89(2), 271-294. 4. Conway, B. P., & Hachen, D. S. (2005). Attachments, Grievances, Resources, and Efficacy: The Determinants of Tenant Association Participation Among Public Housing Tenants. Journal of Urban Affairs, 27(1), 25-52. 5. Dodescu, Anca, Hatos, A, Chioncel, N., Săveanu, Tomina, Titieni Roxana, (2004), Cum se învaţă cetăţenia activă?, Ed. Universităţii din Oradea, Oradea. 6. Frohlich, N., Oppenheimer, J. A., & Young, O. R. (1971). Political leadership and collective goods: Princeton, NJ: Princeton University Press. 7. Hatos, A. (2006). Lideri, participanti si pasivi: resurse individuale pentru participare comunitara. In C. Zamfir & L. Stoica (Eds.), O noua provocare: dezvoltarea sociala (pp. 179-196). Iaşi: Polirom. 8. Howard, M. M. (2003). The Weakness of Civil Society in Post-Communist Europe: Cambridge University Press. 9. Kouzes, J. M., & Posner, B. Z. (1997). The leadership challenge: Jossey-Bass San Francisco. 10. McAdam, D., McCarthy, J., & Zald, M. (1988). Social movements' in Neil J. Smelser (ed.), Handbook of Sociology: Newbury Park, CA: Sage.
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EUROPEAN ECONOMIC INTEGRATION: AN ANALYSIS OF SMES Herman Radu University of Bucharest, Faculty of Business and Administration, Address: Bucharest, str. Axente uricariul nr. 1, bl. 1 , sc. B, et. 7, ap. 47, E-mail:
[email protected], Telephone: 0723.174.199 Summary: The European Integration is a complex process that, in time, proved to bring advantages to all the member states. However, in order to get those advantages it is highly necessary for each economic operator to know, understand and respect the mechanisms of The Single Market and its exigencies. The European integration is confronted with two big challenges of the whole process developed on a period of 50 years, which are the 27 members expansion and the insertion of the unique coin. Keywords: Small and Medium Sized Enterprises; SMEs; entrepreneurship; European Economy.
Introduction The world we live in is marked of uncertainties because Europe is confronted with a deep ageing of population and a crisis of the social and health insurance system. We can talk of a New Industrial Revolution where we find a strong competition between U.S.A., Japan and China. Each extension of the market gives an economic advantage to the concerned parts in different ways. The little and weak economic countries will win by producing low quantities from the products they hold comparative advantages. These countries will export the products to the big sized integrated market which has the ability to absorb them. The integrated space will strengthen it’s power compared to the nearby competitors and to the world economic market.
Situation of European SMEs Spot-checking reflects that many Romanians have confidence in EU and have a realistic representation of it. When they think at EU most of Romanians associate it’s positive image with the success of the Romanian economy and with the expression of the liberty movement of persons as result of eliminating visas. When they are asked about the negative aspects of the integration of Romania in the EU few of them beware of the risks we assumed like the high-possibility of more unemployed persons because of the incapacity for some sectors to become competitive. Opening the new markets brings pressure to the enterprises, especially those operating in industrial fields with a long history. The accession to the European Union represents for the Romanian companies the access to a 450 millionconsumer market through the removal of the barriers to the free movement of goods and services. The business community must therefore understand that there are both long-term advantages and short-term risks and these must be optimally managed. We want the business community to be informed as well as possible about the procedure of alignment to the Community standards. To this end, the Ministry of European Union aims to reinforce communication with the business people and provide expertise on various sectors of the acquis, in association with the other institutions concerned and the employers associations. If business people are better informed, they will be able to prepare more efficiently for the Internal Market of the Union. The small and medium-sized companies have a major contribution to the success of the Romanian economy. This sector of companies constituted – in the last years – the principal pillar of the member states of EU. The small and medium-sized companies are the key sector that could generate economic growth and it’s durability. Compared with other states from the EU, the small and medium companies prevail in the Romanian economy – 99.5% from total companies, and have a substantial contribution in yielding GDP and to the degree of occupied labor forces. But, analyzing the density of the SMEs, Romania has a density of 20.38 SMEs / 1000 habitants (Source: Calculations based on information from Annuary Statistics, year 2006), 198
very much underneath Bulgaria (27.6 SMEs / 1000 habitants) or Czech Republic, Hungary or Poland with an average of 42.3 SMEs / 1000 habitants. (Source: Fezability study for gaining access to SMEs finances, start-up and micro-enterprises from Romania, Global Partners 2005). The small and medium companies represent the backbone of economy in all the countries of EU and they generate a factor of economic progress. They also absorb an important part of labor force (approx. 70% of labor market) and yield a generous part of GDP (approx.60%). They have the capacity to answer in real time to a competitive market and to adapt very fast to cyclic and structural economic changes. The European Entrepreneurial model will constitute the key to realize with success the European integration which was started last century. The major challenges for the European Model, the extension by acquiring new members, The Single Market and the Economic and Monetary Union – when €uro is introduced, will have chances of success only if the entrepreneur sector will be even more supported. The latest studies show that economic results of China are better than Japan, and is very possible that European Union will have weaker economic results than other regional groups. The small companies and especially the ones that have economic activity only in Romania, are less informed about institutions that work in the EU, they know few issues about the communitary acquis, and aren’t very well trained for achieving what they need in this direction. Companies expect information mainly from the Chamber of Commerce an Industry. In some cases the companies do not have sufficient initiative nor the chamber has a proactive campaign in informing SMEs.
Business support structures We must analyze the costs of direct modernization of the product capacities, how to raise the capacity of our products to be more competitive on the EU market. In this category of costs we find direct connected costs of modernization the product capacities in the economy sectors (increase the technological levels, increase the quality of products) without including the costs of modernization the equipments of production which can assure the standards of production , environment, and safety needed in the EU. We must analyze he costs like the „Indispensable investments” for the economic and social development of Romania but it is difficult to calculate distinct costs directly connected to the process of Integration. As you can see the majority of afferent integration costs of Romania to European Union exist because of the different institutional structures, priorities and national economic politics. At the micro level, the majority costs of integration to EU drift from a reduced level of competitivity of some sectors. The participation to European pan-nets for the purpose to establish new commercial relations is very recommended to increase the competitivity of small and medium companies. For example: new cooperation in the industrial sector or identifying potential investors. It is known that promoting this type of networks will have as result cheaper services for business. In 2005, were 36 authorized industrial parks law according, and supported by the Government and which benefit of certain fiscal exemptions settlements emitted from The Ministry of Interior and Administration Reform(MIRA): 9 private parks, 21 public parks and 6 public – private parks. The allocation of industrial parks to regions is disproportionate, from 1 park at West to 12 parks in The Center Region. We have 21 business incubators and most of them are located in the South-West region (24%) and in Center (19%). These incubators host approx. 11 SMEs, very much under the average of EU (34 business incubators). Most of Romanian incubators have a lack of resources and experience in business. The weak endowment with infrastructures, including utilities and the lack of spaces and of technologies of information and communication are the major problems of the structures that support business. In few cases, the industrial parks offer assistance in accessing founds from financial institutions. After analyzing the sources of finance, it was demonstrated that ponderosity of loans, leasing and factoring raised proportionate with the SMEs. Micro – enterprises use own sources of finances and this is the reason why they bankrupt very often.
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% Financing sources
Percentage in total SMEs Micro
Small
Medium
Own resources
79.53
74.30
77.95
Bank loans
37.84
59.78
72.44
Leasing
20.10
41.62
58.27
Loans from financial institution
1.74
3.35
7.87
Factoring
1.12
5.59
11.02
Guarantees from the Romanian SME Guarantee Fund
0.12
0.00
0.00
Other financing sources
0.37
0.56
0.79
SMEs financing sources by size classes Source: White Charter of Romanian SMEs, 2006
Entrepreneurship needs larger support Entrepreneurship contributes in creating places for labor force and economic growth. The new firms, especially the small ones are the main creators for labor force. The states that have a bigger rate of entrepreneurship record a smaller rate of unemployment. For example, in Holland, between 1995 – 1999, 8% first companies created 60% from the growth of workplaces. In U.S.A. 350.000 of companies with fast growth created 2/3 from the total number of workplaces between 1993 and 1996. The studies suggest that entrepreneurship has an important contribution to economic growth, even if the growth of GDP is influenced by other reasons. Entrepreneurship is vital for the competitivity. The initiatives of entrepreneurship must be oriented in creating a new company or transferring the property to another „stockholder”, or achieving a higher productivity. These actions stimulate the competitivity, determining other companies to react by improving their productivity or introducing innovations. The growth of productivity and innovations inside the companies, determines the organization, the technological processes, products, services or the commodity market, or has a result a stronger purchasing power. This process gives to consumers benefits because of more variate choices and lower prices. Entrepreneurship brings out to light the full potential of humans. A business it’s not just a way of earning money. Business men have also other criteria when choosing a career, like social security, the autonomy level or the general interests in the activity. A bigger salary determines bigger needs like personal satisfaction or autonomy. The British proved in their scientific studies that beside material motivations (money and social position), people choose to become entrepreneurs as a way for personal satisfaction (freedom, autonomy, challenge). For some persons, becoming entrepreneur can offer them a very comfortable position. Entrepreneurship can play a positive role in offering efficient services in health, education, and social system. Social economy encourages the participation of employees in providing social services with benefits like policies oriented to the large public.
Conclusion Romania’s integration into the EU has proved to be a tremendous process in terms of redesigning our strategy and our way to formulate public policies. We are already prepared to act in a responsible, European manner; we know how to establish short- or middle- term goals and objectives, we are able to set appropriate deadlines and define responsibilities. The real integration process, will inevitably mean shortterm costs. But the medium and long term benefits will prevail and will be as inevitable as the short term costs.
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Bibliography 1. 2. 3. 4. 5.
Dinu, M; Socol, C.; C. Marinaş; Mechanism of Convergence and Cohesion, Ph. Economic, Bucharest, 2005 www.elop.eu – European Integration Online Papers www.mie.ro – Ministry of Development, Public Works and Housing www.inforegio.ro – Regional Operational Programme ec.europa.eu – Analysis of competitiveness
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SOME COMPARATIVE ASPECTS REGARDING CHILD LABOR AND STREET CHILD Hordau Anne Marie Andreea Universitatea De Nord Baia Mare, Catedra De Discipline Economice, 76 Victoriei Street,
[email protected], 0745253343 Pop Sitar Corina Universitatea De Nord Baia Mare, Catedra De Discipline Economice, 76 Victoriei Street,
[email protected], 0742130678 One of the problems that many countries are facing nowadays represents child labor. In 2004 there were 218 million children working illegally in the eyes of international treaties. There are countries were this thing is happening due to the underdeveloped economic situation; children have no other chance except working from early ages more than 8 hours in a day for a small wage. In other cases we find different situation such as: child slavery, child trafficking, or more worst - child soldier’s .We all have seen more than once images with children who have switched toys with guns, bombs and mines. Romania is dealing during last years with the unpleasant situation of street children and beggars. Key words: child labor, street child, employment
1.1 International problems regarding child labor In 2004 there were 218 million children working illegally in the eyes of international treaties. Child labor is defined as all economic activity for children less than 12 years, any work for those aged 1214 of sufficient hours per week to undermine their health or education, and all “hazardous work” which could threaten the health of children under 18. Almost all child labor occurs in developing countries, largely in agriculture but also including domestic service, factory production and backstreet workshops. Despite a fall of over 10% in the figure since the last assessment in 2000, over 25% of children in Sub-Saharan Africa and 18% in Asia remain trapped within the cycle of poverty of which child labor is part. More than 126 million of these children are engaged in hazardous work, such as mining or handling chemicals, which is otherwise described as the “worst forms of child labor”. A further class within this latter description is known as the “unconditional” worst forms of child labor and refers to any form of slavery or coercion, trafficking, prostitution and military enrolment – no statistics are available for this category but the numbers are likely to be close to 10 million. There is an additional category of “working children” not included in these statistics because the profile of age, nature of work and hours is not regarded as harmful. For example, light work of a few hours per week could be regarded as beneficial; “child labor” by contrast should be eliminated. Poverty is the seed-bed of child labor. Poor parents send their children to work for reasons of economic expediency, the consequent denial of education setting in motion a mutually reinforcing cycle liable to pass down the generations. It is nevertheless over simplistic to attribute the problem solely to poverty; schools are often prohibitively expensive, of poor quality or inaccessible. Cultural pressures can undermine perception of the long term value of education, especially for girl children. The HIV/AIDS pandemic has regenerated the supply side of the child labor equation. Households where adult members suffer prolonged periods of illness suffer dramatic cuts in income and forced sales of assets which are compensated by withdrawing children from school and sending them to work. Africa in particular has seen a dramatic rise in the new phenomenon of child-headed households, brought on by AIDS mortality. An estimated 10% of all children orphaned by HIV/AIDS in Africa are heads of households, compelled to provide for siblings. There is evidence that the global fall in child labor is being reversed in African countries most affected by HIV/AIDS. 202
This supply of child labor is accommodated by the demand of employers for a cheap and flexible workforce, including small-scale enterprises whose owners exploit their own family members. It is a mistake to think of globalization as a force for improvement in labor standards. Although large-scale manufacturing industries may not directly rely on child labor, backward linkages created through subcontracting labor-intensive segments of the product may be less compliant. For example, corporations such as Monsanto and Syngenta have been accused of bidding down cotton seed prices to the point that farmers are unable to afford adult labor. Girl children are in demand for domestic service, the invisible nature of which adds to their vulnerability to exploitation and abuse. Absence from official statistics is even more likely for those girls kept away from school in order to work for their own families in the home or on the land. Unfortunately, 20 countries have not yet ratified the ILO convention, notably India and Nepal where child labor remains stubbornly widespread – estimates suggest there are up to 25 million Indian child laborers with many more millions unaccounted for, whilst in Nepal 42% of boys aged 10-14 are working. In 2006 India strengthened legislation by extending its definition of hazardous work to include domestic labor and catering establishments but there is deep skepticism that attitudes towards children will change. The worst form of exploitation of girls - child prostitution - is being fought in part by extra-territorial laws that permit prosecution of citizens who sexually abuse children in another country. For example nationals from many European countries and the US can now be charged at home for engaging a child prostitute in Thailand. Universally recognized children's rights are however insufficient means of combating child labor. Although almost every country has laws prohibiting the employment of children below a certain age, the legislation may exempt certain sectors - often the very sectors where the highest numbers of working children are found. In other countries, penalties for violating child labor laws are inadequate. And probably the most common obstacle to adequate legal protection for children is that legislation is not enforced.
1.2 Development Solutions The integration of child labor concerns into national development strategies is therefore the preferred route to a lasting solution. Reduction of chronic poverty through broad-based economic and social development, with a strong emphasis on human resource development, will create the environment for fundamental change in cultural attitudes towards children. Tanzania and Brazil are countries which have been singled out as adopting development strategies which recognize the importance of child labor.
1.3 Child Soldiers The grotesque abuse of children for military purposes survives seemingly beyond the powers of development strategies or human rights law. Programmers for reintegration of child soldiers call for complex psychological therapies rather than mere schooling. Children are vulnerable to this most extreme form of labor typically in countries suffering longstanding civil conflict, in regions of extreme poverty and a complete breakdown of central authority. The proliferation of lightweight but deadly small arms of sophisticated modern design – a child of 10 can be trained to strip down a Kalashnikov – enables a cheap, unquestioning and expendable army to be conscripted from children. Warlords will abduct or purchase child soldiers from their families with impunity. The UN lists 12 countries in which an estimated total of 250.000 children are found in military service, amongst them Sri Lanka, Uganda, Nepal, and Philippines. There may be as many as 70.000 child soldiers engaged in government and rebel armies in Burma. These countries are now under pressure to sign the “Optional Protocol” to the CRC which would compel new laws and reintegration of child solders into normal life. The International Criminal Court already considers the recruitment of children under age 15 for military purposes to be a war crime. Sub-Saharan Africa has the greatest incidence of economically active children – 26.4 per cent of all 5-14 year-olds, compared to 18.8 per cent for Asia and the Pacific and 5.1 per cent for Latin America. It ranks second behind Asia in absolute terms, with 49.3 million children working. All are children who have no fair chance for a real childhood, an education or a better life. Child labor persists even where it has been declared illegal, and is frequently surrounded by a wall of silence, indifference and apathy. The persistent
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challenges of widespread and extreme poverty, high population growth, the AIDS pandemic, recurrent food crises, and political unrest and conflict clearly exacerbate the problem.
Graph 1: Estimates of various forms of child work Source : www.ilo.org There are some 317 million working children in the world in the age group 5-17 years, an incidence rate of more than 20 percent of the child population in the age group. Unsurprisingly, in the fragile conflict
ridden Sub-Saharan Africa one in every four children below 14 years of age is economically active which is also home to nearly half the worlds out-of-school children. This is the only region where the number of children workers has actually increased since 2000. There has been progress in eliminating child labour, but it is still modest. Boys slightly outnumber girls amongst working children in the world in the ILO estimate. In fact it is generally accepted that the number of working girls is often underestimated by statistical surveys; however, reality says that a large proportion of children involved in child labour are girls, especially when the unregulated, informal sector such as domestic work is concerned.
1.4 General facts about situation from Romania A recent study concluded that about 8% of the country's 7 to 15 year olds work. According to the 1992 Population and Housing Census in Romania, about 9,000 children under the age of 15 worked. Street Children - A recent survey on street children found that the main types of work they did was agriculture, begging, delivery work, loading/unloading goods, car wash in the street or at the crossroad , sorting the junk scrap which can be recycle and prostitution. Street children can be very easy recognize due to their dirty , second hand clothes,a phisical nondevelopment due to a bad nourishment ,diseases and an exposure to dangerous and very toxic substances . From the point of view of communication it is very easy to observe that they are using just a few words ,short sentences , and jargon language specific for some categories . In most of the families ,kids are working because this is their contribution to the family budget , a part of it is spending mostly for food .A 35% of the girls interviewed during the research have confessed that were practising prostitution as an alternative for earning money . 204
Apart school abandonment , children who workers do not have the neccesary time to go to school, this having a negative impact because they have to switch between time for lessons with time for work.As a consequences of this fact a large percent of the stret children are illiterate . During last years , it can be observed a change regarding the level of employment by ages.The number of kids under 14 years was in 2002 , 3818 thousands , last years it was 3346,9 , a decrease of 14 %, a very good thing for our society . Children of 15 ages and up, who have the right to work legally, of course a number of hours per day, are no longer implied so many in economic activities, from the database provided by Laborista (www.ilo.org) . More than 5 % of them have droped out this kind of work .
1.5 Conclusions What is the most sad thing about this is the fact that children are representing our future.We all will have a better life after ten or twenty years if we are taking care of the new generation , which at its side will look after us when we will be old enough not to be able to work .If we don’t protect them , who should be more in charged to do it ?In our country the social systems has move on , even if we have a number of NGO , still it is not enough to say that children are now the beneficiaries of very good life conditions , that in a couple years we won’t see street children or beggars . Our lives are in our hand and their future depends of our actions .
References Edmonds E – Child Labor , NBER Working Paper Series , 2007 Koolnal G – Son Preference and Child Labor in Nepal :The household Impact of Sending Girls to work , SSRN, 2006 3. Pavnick N, Edmonds E – International Trade and Child Labor : Cross-Country Evidence , NBER Working Paper Series , 2004 4. Pavnick N, Edmonds E – Does Globalization Increase Child Labor ? Evidence from Vietnam , NBER Working Paper Series , 2002 5. Rosati F.C, Rossi M – Children’s Working Hours and School Enrolment : evidence from Pakistan and Nicaragua – CEIS Tor Vergata , Research Paper Series , Working Paper no 25 , 2003 6. *** - Report upon „Child Traffick „ Save the Children Organization , March 2004 7. *** - Costs and Benefits of Eliminating Child Labor , ILO,Geneva , 2003 8. *** - „Evaluarea rapida a situatiei copiilor strazi care muncesc in Bucuresti” a. IPEC Research , 2002 9. *** - www.ilo.org 10. *** - www.salvaticopii.ro 1. 2.
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EUROPEAN GOVERNANCE – THE STABILITY AND GROWTH PACT Hrebenciuc Andrei Academy of Economic Studies, Faculty of Economics, Căderea Bastiliei nr1 Sect.1 Bucureşti,
[email protected] Zugravu Paul Academy of Economic Studies, Faculty of Economics, Căderea Bastiliei nr1 Sect.1 Bucureşti,
[email protected] The Stability and Growth Pact was conceived in order to create a institutional uniform frame which could regulate the economic policies in the European Union. Even if it promotes strict fiscal discipline , in the last years the discontents over this document had an ascendant flow. Its reforming in the near future is undoubtedly necessary and represents one of the big challenges of the European system in the next years. Key words: Fiscal policy , global budget deficit , Multilateral Surveillance , Ecofin Is the Stability and Growth Pact an efficient instrument for the governance of the European economy? In order to back up or criticize this European Union measure of creating an uniform frame for the whole system , we have to understand the foresights and the objectives of this instrument. The European Community Treaty substantiates the coordination of the macroeconomic policies on three main levels:
a common monetary policy designed by ECB with the main objective of the price stability fiscal policies delegated to the authorities from the member states with the primary objective of respecting the excess budget deficit procedure the procedure of Multilateral Surveillance of economic policies substantiated by ECOFIN and implemented by DLEP ( Directive Lines of Economic Policies) If we would try to reduce the SGP objectives to a primary one , this would be the limitation of budget deficits and the prevention of eventual crises in the members economies. There are experiments in order to find new possibilities to coordinate the macroeconomic policies in the EU , because the inconsistency between the monetary policy and fiscal policy are extremely visible. Theoretically , any asymmetrical shocks should be adjusted by the monetary policy designed by ECB , while the symmetrical shocks should be regulated by the decentralized fiscal policies .In reality , things get more complicated. The history proved that an efficient monetary policy is tightly correlated with a high credibility of the monetary institution , in our case , the European Central Bank. Unfortunately , in the last years the ECB credibility suffered from various causes: 1. the lack of decisional transparency – There are voices who criticize the policy designed by ECB as being favorable to Germany while being unfavorable to states like France or Italy. This ultimate objective of price stability at any costs , seems to be in reality , the creation of a defensive instrument prepared to fight with the Germany nightmare – inflation. We should not forget that, in the last century from all the European countries , Germany suffered the most because of inflation ( It is known , that during the First World War, the burning of banknotes for warming became more economic than the purchase of raw materials for heating ). In this context , there is a real threat regarding the cohesion of the Monetary Union , especially because of the disputes between France and Germany on monetary subjects. The French authorities consider that ECB should use the rate exchange mechanism to equally stabilize inflation and secure economic growth , while Germany considers the price stability as the only viable goal of the monetary policy . 2. the economic growth of Euro Zone compared to the other rival commercial zones is relatively small (1%-1.5% - 2%-4% US and Japan or 8%-9% China)
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The SGP foresights
On short term - the budget could be in deficit , but cannot exceed 3% of GDP , while the structural budget deficit should be lower than 0.5% of GDP
On long term – the state, social security and local communities budget should be balanced or in excess In case a country runs a budget deficit bigger than the superior margin of 3% , and the budgetary situation isn’t improving , the state in cause will be penalized with a sum equal to 0.5% of GDP. In order to strictly follow the Pact recommendations , an eventual recession would bring negative consequences through the simple fact that the Pact stimulates pro-cycle fiscal policies ( Wyplosz ). What do we understand through pro-cycle fiscal policies? A short example could enlighten us : in case of entering into a period of recession , the Pact stimulates restrictive fiscal policies ( small budgetary expenses , high taxation level ) , it is known that the economic theory considers that in case of a recession , the state should intervene for stimulating the aggregate demand through high budgetary expenses or a reduced taxation level. For avoiding these contradictions in period of crises , the SGP should be suspended in case of extraordinary circumstances in the global economy. This document does not replace the fiscal policies of each member , in reality , through SGP the states only assume the consequences in case of infringement the 3% margin. In order to avoid these unpleasant situations , ECOFIN annually analyzes through Multilateral Surveillance the budget projections designed by the members through the Stability Pact ( euro zone members ) and Convergence Pact ( members outside the euro zone ) . In fact , Multilateral Surveillances , represents an economic policy guide designed by the Council , in which the economic performances of each member can be analyzed. Unfortunately , there are cases in which the projections created by the governments get a negative notification from the Council. For this purpose it is used an instrument named peer pressure which consists in preliminary warnings , the sanctions being strictly limited to the Euro Zone members.
Is the fiscal goal from SGP reasonable in the actual context? In the last years , the Pact was often criticized to the high-point in which Prodi referring to it used the description – Stupidity Pact . Most of the critics refer to the 3% global budget deficit mark .The theory reveals that global budget deficit is formed from the structural budget deficit and cyclic budget deficit. The specialists are annoyed that the document underlines the global deficit , maintaining that it would be more efficient to be analyzed the structural deficit . What fundamentals has this affirmation? It bases on the fact that by managing the structural deficit , the influence of the business cycles or other fluctuations would be eliminated and the underlining of the structural deficit would allow economies to not sacrifice public investments. At this point, it appears the second main critic , which states that referring to the same target of 3% for all the members is unfair because their level of development is not similar. Unfortunately , respecting the budgetary criteria is expensive from the economic growth and unemployment point of view , and also on the other hand , it decreases the possibility of states to react to shocks. The last 10 years analyze of the Monetary Economic Union , shows that the budget discipline was efficient. However , in the last years , after 2000 , most of the countries in the Euro zone didn’t succeed in running budget deficit close to the equilibrium . This thing was determined by the fact that the states from the Euro zone no longer benefit from the reaction of the financial markets to the chronic deficits , the budget deficit evolving in an interesting modality of budgetary expenses adjustment. The SGP credibility was deeply threatened when Germany and France violated the mark of 3%. It was an extremely strange situation because one of the initiators of the Pact , Germany , was amongst the first to infringe this document. It was a tensioned situation which had negative effects on the credibility , it was a new case of discretionary policy by the European Union , in which the states were treated different . Anyway , the Pact of Stability and Growth has a series of advantages:
Sustains budget discipline – The consequences could easily be recorded , in the actual context the European Union policy was restrictive , but less risky on the long term , compared to the US which created an economy of fabulous profits from the money market bubble to the housing bubble , with the cost of strong crises
A coordination modality of economic policies 207
Eluding the states conduct to adopt incoherent and risky budget policies to the whole system
Budgetary harshness from the angle of public finances balance affected by the ageing process
Proposals for reforming the Pact
The Pact should aim at the relation between public debt / GDP instead of budget deficit/GDP
Multilateral Surveillance should be enforced in all the states – studies show that foreseeing the GDP can produce errors and omissions of 1% from GDP , the countries that infringed the 3% mark had tried to justify the failure by involving the errors in order to escape of the consequences .
The theoreticians experiments of proving the compromise between inflation and deficit is no longer of present interest , the examples reveal that deflation is far more dangerous in the global context.
SGP should be less strict on the 3% mark – the deficit target should be adjusted in relation with the business-cycles , but unfortunately in this case , we need an efficient statistic foreseeing on medium term. Meanwhile , this mark can be easily affected by several consecutive adverse shocks. We should be aware that budget investments along with the private ones have an extremely important role in economic growth and reducing them because of the strictness of the fiscal target would negatively affect the member states
The creation of fiscal models by European Union’s specialists which can be used as viable examples for certain members that run an incoherent fiscal policy and adopt a clandestine passenger comportment – the actual form of the Pact encourage economies to reduce taxes and raise budget expenses in expansion periods , meanwhile in the recession periods it promotes the taxes raising and low budget expenses
SGP , in its actual context creates big discrepancy between the member states economies – Ireland profits of the ECB monetary policy combined with a loose internal fiscal policy , running strong economic growth and a housing boom influenced by massive credit. Meanwhile, countries like England , and recently Spain start to experience the shock caused by the American housing crises , their economies recording a slowing of the economic growth . But moving the fiscal policy competences from the member states to the EU would raise the membership costs . In contrast with national governments , the European institutions are subject of a limited democratic control and so ,the enjoy reduced democratic legitimacy (Wyplosz).
References 1. 2. 3. 4. 5. 6. 7. 8.
Dinu M , Socol C, Niculescu A , 2006 , Fundamentarea si coordonarea politicilor economice in Uniunea Europeana , Editura Economica Dinu M, Socol C , Marinas M , 2004 , Economie Europeana – O prezentare sinoptica , Editura Economica Munchau W , Mundschenk S , 2007 , Some thoughts about the future of the euro Murray M , 2004 , Whither the Growth and Stupidity Pact Pelkmans J , 2003 , Integrare Europeana . Metode si Analiza Economica , second edition, European Institute from Romania The Economist , article - Stupidity Pact Venkitaramanan S ,2002, Is fiscal stability a rational goal ? Wyplosz C , Baldwin R , 2006 , Economia Integrarii Europene , Editura Economica.
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THE ORIGIN OF FREE MARKET. AN INSTITUTIONAL PERSPECTIVE FROM A NON-INSTITUTIONAL POINT OF VIEW Iacobuţă Andreea-Oana “Al.I.Cuza” University of Iasi, Faculty of Economics and Business Administration, Bd. Carol I, nr. 22, 700505, Iasi, Romania, E-mail:
[email protected] , Tel: 0040726129580 Pohoaţă Ion “Al.I.Cuza” University of Iasi, Faculty of Economics and Business Administration, Bd. Carol I, nr. 22, 700505, Iasi, Romania, E-mail:
[email protected], Tel: 0040744511077 There are many factors which explain the origin and existence of institutions. One such factor refers to controversial human nature and also to the idea that each individual is a sum of pluses and minuses, of challenges and opportunities. Additionally, it is well-known that due to human nature, a strong negative tendency at the personal level cannot be neglected. Is there a solution to the undesired negativity which is within us? Adam Smith found it! It is the free market. Mises, Hayek, Kirzner, Buchanan, Hazlitt and others offer similar explanations; as well as all advocates of new institutionalism. The paper discusses the noninstitutional contribution to this issue. Key words: institution, market, human nature, division of labour.
Theoretical background Institutions generally appear as and with a role of rational mechanism in order to comply with the market imperfections, informational disorder, uncertainty, risks and transactional costs. Thus, they appear as instruments which are employed to make a decent living in an imperfect world. Remaining within the realm of institutional phenomenology but getting into further detailing of the general factors, we could say that institutions appears as a solution to undesired negativity but existent in human behaviour. North follows Adam Smith in explaining the origin of institutions defining the innate negativity of human nature.54 He includes the institutional construction to his view on the nature of human cooperation. His chapters entitled Cooperation: the theoretical problem or The behavioural assumptions in a theory of institutions aim at showing the fact that cooperation between people without institutions is possible only in a society formed of angels, in other words, without any constraint.55 If constraint is the key term used by North when he talks about origin of institutions, then his philosophy echoes what Thomas Paine thought when he wrote that government is the ‚product of our meanness’. We do not believe that what we have here is a sign of a limiting and revenging necessary meanness which is a characteristic of any governance56, but of something necessary as to intervene as to show the way and separate difficulties from opportunities or to make visible and notice what is unseen: general rules which are created for everybody and each of us (in hayekian sense) or, in one word, of that something necessary to create concordia and equilibrium.
54
Douglass North addresses several positive remarks to Marx. The author of Capital is acknowledged to be the pioneer in pointing out the role of social structures in production. For these reasons there are people who blame North for being a “left” supporter. We disagree because we consider their position to be fundamentally different both at the start and over time. North makes out of human cooperation not only the explanatory basis for institution building but also the support for economic and social progress. Marx sees the class struggle as the guide of progress. 55 We believe that even this type of “society” relies on rules. 56 Further explanations can be found in Ion Pohoaţă, “Argumente pentru studiul instituţionalismului şi reforma instituţională în România“, Economie teoretică şi aplicată, Nr. 7(502), 2006, p.4; 209
The philosophy of ‚necessary evil’ used to explain the origin of institutions takes us to “philosophy of the wall” envisaged in the famous poem Mending Wall by Robert Frost. Silent dialogue between neighbours separated by the wall offers indirectly the meaning of it and, thus, of any constraint, named institution in a world populated by people. Arguments in favour ( a solid wall offers protection and safety) and against (any wall separates and limits freedom, and not only in terms of space) could be very well used to explain origins of any institutional constraint. We know that our existence not being similar to that of Robinson Crusoe, the place where we produce and consume needs resources for functioning. Referring to this truth, our attitude to law as to that of tax evasion is contradictory. We feel comfortable and safe when we realise that such a rule forces everybody to common contribution for the benefit of the entire community; the benefit which offers common goods and services (roads, schools, hospitals, etc). As taxpayers, we are not as happy about tax deadlines or penalties, when we have to prove our obligations as members of community by paying taxes and fees. Something in us (the human behaviour) tells us that we could interpret law and have a lower level of rent or income disclosed to authorities. The same human qualities as described by Smith contributed to the negative image attributed to tax agents and official receivers. Rules still apply and are obeyed. As old English saying “good fences make good neighbours” points out, similarly, good rules make the cooperative effort possible and our whole existence and especially the economic one. In conclusion, rules also appear as to balance evil character of people, as to stop the exaggerated drive towards evil, selfishness and individualism. The awareness of evil, in a way, solves the problem. Obeying rules, we behave as the two neighbours that need the wall even though they are ready to respect each other’s property.
A special case. The origin of competitive market Without ever pretending to be the creator of any theory on how and why market appeared, Adam Smith, followed by the same tradition by mill and Ricardo, is still a genius in his inspiration to look for origin of this fundamental institution within man’s behaviour. Adam Smith did not dedicate any special chapter to this issue. His philosophy on rational self-interest and existence of free market – can be followed in his entire work, especially from The Theory of Moral Sentiments and The Wealth of Nations. He starts from natural order and individual. Smith keeps from physiocrats the natural order with its non-contractual meaning. The natural order refuses to be organized as it is more in the nature of things. Its “invisible hand” intervenes to help human nature. This is where the problem appears. Human nature is not composed just of a set of qualities, pluses, but a set of contrasts. The desire to work is intertwined with idleness, accumulation with selfishness and affects generosity and altruism. Smith finds a solution. As a professor of the History of Moral Thought he was aware of the tendency towards evil, a tendency of the individual more towards bad than good. Ho offered one solution to individual – market competition which forces individual in developing just his good side in order to survive. Competition forces him to be rational and efficient, obey contractual obligations and follow the rules established by competitors. Even if, affectively he does not enjoy it, the individual is sent to market instinctively and objectively. This happens because man always needs help of other people’ (Smith, 1962, p. 13). He is forced to accept that there is a natural division of labour, that he cannot do everything and need others for survival. Thus, he needs the products of other people’s work and vice versa. „Anybody who offers to somebody something needs to do the following: give me what I want and I’ll give you what you want. This is the meaning of any offer of this kind and, thus, we get fro each other best services for what we need” (Smith, 1962, p. 13). The example of needle manufacturing is famous for emphasizing the role of labour division in increasing productivity and satisfying needs at the highest level. Smith’s conclusion is valid even today. A good answer to the question: What should be done for better living? We should use our skills in fields and places where we could use them better. And where else but on the market. The competition market stratifies socially and put everybody where he or she belongs under the work efficiency criteria. Market gives compensation to those who deserve it and punishes idleness, failure, bankruptcy and lack of initiative. Smith still inspires modern approaches to economic analysis of the origin and role of institutions. The Austrian school still follows his model. Mises, Hayek, Kirzner regard market in new terms but still in Smith’s tradition. Buchanan follows the same line of thought as well as Henry Hazlitt with the principle of “invisible hand” which, in his view, leads to spontaneous market order. 210
If we start with Mises, with his work Human Action, he tells us that human action under labour division is the source of human cooperation, as without cooperation, life itself is an empty metaphor (Mises, 1985). He starts from labour division, as Adam Smith, in which he sees „a fundamental institutional arrangement” determined by both natural factors and societal. All these factors, establish both seen and unseen rules as to allocate a definite place foe everybody in the machinery of human energy. The fact that each person does something else forces people to cooperation. Only within this framework, human effort could flourish. Even if human action is individual, it is socially recognised. Work is individual but it needs other people’s work and vice versa. The role of exchange is a necessary aim and the market appears to coordinate this complex and contradictory phenomenon where independence of individual movement is conditioned by the effort of the others. Even to Buchanan, market is „the institutional process by which individuals cooperate voluntarily (as a result of individual, separate aims)” (Buchanan, 1986, p. 87). Cooperation is, thus, fundamental; the market is its expression. It is worth noticing the contradictory meaning of this institution. Along with private ownership and free association, market defines free world and is one of its main pillars. At the same time, as an institution, it also has a normative component; it is created to ensure coordination of human activity. Conflicting reality of the market is not irrevocable. Society would seize to exist if such a conflict did not have a solution (Hazlitt, 1988). In Austrian tradition, Hayek presents the market as the main institution of a free society, and the only one meant to optimize human action. Passing from archaic world based on ‚precise rules’ to civilized world of “Great Society” based on „abstract rules” was an objective process. This happened not because precise rules weren’t good, but because life had become too complex to be depicted by simple, visible rules. Market is the only institution capable of adjusting individual action by feed-back. These „abstract rules” were seen by Hayek as an alternative to planning. Accepting the role of market in coordinating individual human action, Hayek refused, even a complementary role, of macro planning (Hayek, 1990). Surely the image of market as abstract synthesis of a network of relations which condition human activity could be criticized. We refer here especially to the Hayekian affirmation that the market is the only institution with the role of optimization. Specialized literature offers critical opinions (Lachmann, 1986; Ege, 1992). It is true that L. Lachman, one of the critics, is correct when he sustains that we talk about “types of market”, market producers and consumers, market with perfect competition or monopoly; local or regional, national market, etc. Generally, we refer to market, an institution with a set of rules. Once they have been respected, cooperation and valorisation of human effort, becomes possible. It is also true, that only in an illusory perfect competition market gets closer to Hayekian optimizing ideal. It still has its imperfections, recognized by the most fervent advocates of free market economy. With all its shortcomings, compared with centralized planning, it is a solution. We do not know whether it is the best one but till now humankind has not invented anything better. Hayek has foreseen it and those who have had the experience of planned economy know that he was right.
Bibliography 1. 2. 3. 4. 5. 6. 7. 8.
Buchanan, J., Liberty, Market and State, New York Universitz Press, 1986. Ege, R., “Emergence du marché concurrentiel et évolutionnisme hayekian”, Revue Economique, 1992. Hayek, Fr., The Fatal Conceit: The Errors of Socialism, London: Routledge, 1990. Hazlitt, H., The Foundations of Morality, Landham, MD: University Press of America, 1988. Lachmann, L.M., The Market as an Economic Process, New York: Basil Blackwell, 1986. Mises, L., L 'Action Humaine: Traité d'Economie, Paris: Presses Universitaires de France, 1985 Pohoaţă, I., “Argumente pentru studiul instituţionalismului şi reforma instituţională în România“, Economie teoretică şi aplicată, Nr. 7(502), 2006, pp. 3-7; Smith, A., Avuţia naţiunilor. Cercetare asupra naturii şi cauzelor ei, vol. 1, Ed.Academiei Române, Bucureşti, 1962.
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THE FACTORS OF COMPETITIVENESS IN THE HOSPITALITY INDUSTRY AND THE COMPETITIVE STRATEGY OF FIRMS Ioncica Maria Academia de Studii Economice, Bucuresti, Facultatea de Comert, Piata Romana no. 6, sector 1, Bucuresti,
[email protected], 0721 749 741 Tala Madalina Academia de Studii Economice, Bucuresti, Facultatea de Comert Piata Romana no. 6, sector 1, Bucuresti ,
[email protected], 0722 875 852 Brindusoiu Catalina Academia de Studii Economice, Bucuresti, Facultatea de Comert, Piata Romana no. 6, sector 1, Bucuresti ,
[email protected], 0723 264 987 Ioncica Diana Academia de Studii Economice, Bucuresti, Facultatea de Relatii Economice Internationale, Piata Romana no. 6, sector 1, Bucuresti ,
[email protected], 0721 481 200 The present study is based on the results of research conducted in 2007 by a group of researchers in the Tourism-Services Department of the Commerce Faculty in ASE Bucharest. In the first part of our paper the complexity of the concept of competitiveness, the factors of competitiveness as well as its particularities in the hospitality industry are highlighted. The factors that influence competitiveness in the hospitality industry, as apparent in specialized literature, are outlined and explained. A strong point of our study is represented by research on the relation between strategy, competition and competitiveness. The research method chosen was the survey based on a questionnaire on a representative sample of hotels in 7 cities of the country. The paper presents the main results of the research, as well as the elements (the main levels) of the competitiveness model in the hospitality industry, a model created on the basis of the results of this research, as well based on the synthesis of research existent in specialized literature. Competitiveness, the factors of competitiveness, the hospitality industry, the competitiveness model, competitive strategy
Introduction The current context marked by globalization and the increasing recognition of interrelations has imposed new rules of conduct: the prosperity of nations is based on competitiveness on international markets, and that of enterprises, on the integration in the worldwide value chains. Therefore, the competitiveness issue has become a topical subject for all the actors in economy, from the regional level to the organizational one. Defining competitiveness has preoccupied both renowned names in economic thought as well as scientific centers and associations. A few definitions are listed below (Hornianschi , 2004):
Porter (1990): ‘the only complete indicator that defines the concept of competitiveness at a national level is national productivity’; Management Forum (1994): ‘competitiveness on an international level is the capacity of the country or firm to coordinate economic growth with the external balance; at the basis of the external performance of industrialized countries lies the fundamental importance of international trade. At an international (global) level, the World Economic Forum has perfected the modalities of assessment of competitiveness to reflect the remarkable evolutions of the global environment. The report entitled « The Global Competitiveness Report 2006-2007 » is at its 27th edition and it defines the competitiveness of a country as being the result of the totality of factors, policies and institutions that determine the level of national productivity. Competitiveness therefore represents 212
the global expression of medium and long term development being the result of three main categories of factors regarding: the competitiveness of the national macroeconomic environment, the quality of the activity of public institutions and the positive results of the policies they promote, along with the technological efficiency and receptiveness to new technologies (WEF, The Global Competitiveness Report 2006-2007, p.3). At the level of the European Union, a strategic reference in the defining of competitiveness is represented by the Lisbon Strategy. According to this strategy, the competitiveness of European economies represents the main objective of the EU, an objective to be reached by 2010. In the services’ competitiveness, the most important aspects refer to: liberalization, intensiveness in knowledge, financial services, the increase in the quality of public services and the efficiency of administration, educational services, human resources formation and sustainable development.
Particularities of competitiveness in the hospitality industry Tourism is a sector in which the structure of supply is extremely volatile and the solid and consistent part is the demand. Tourism exists only because, for various reasons – pleasure, business etc. – people want to travel and are willing to spend money; consequently, they create demand for tourism products and services. Thus, the decision to travel precedes the acts of consumption (Keller, 2005). Travelers are willing to consume a large variety of goods and services produced and supplied by various industries, among which the most important are transports, hotel and restaurant services or segments of activity related to entertainment, culture and sports. The fact that competition is firstly between destinations becomes obvious, since this is what visitors choose in the first place. Only after this choice another form of competition occurs, that between the suppliers of products and services at the respective destination. We can therefore speak about a duality of competition forms, with the following implications: the competitiveness of destinations is an essential topic, and it can depend, for instance, on the existence of specific attractions visitors are willing to pay for; the tourism firms that contribute to the formation of the package of goods and services consumed by visitors on arrival benefit from the uniqueness of the destination; at a certain destination, firms (e.g., hotels) can be competitive on the basis of specific advantages that differentiate them from the rivals and give them an advantage. Another duality of tourism markets – which includes the hospitality industry – is structural. Numerous destinations are dominated by small firms that offer hotel and restaurant services and leisure activities etc., forming the SME segment. On the other hand, tourism is a very dynamic sector in the world economy and one of the most internationalized, which lead to the formation of large companies operating on a global level. This development was possible especially because of important innovations, such as charter flights, the forming of hotel chains – some originating in family businesses, rent-a-car services, debit and credit cards that easily allow for international money transfers etc. At the same time, the innovations of the kind mentioned allowed for a high degree of standardization of services, so that the segment of the large international companies can offer clients quality services at affordable prices. Standardization does not mean, however, the elimination of the services supplied by small firms, since a lot of tourists prefer the life experiences they offer.
Referring strictly to the hotel services sector, in most cases a strong brand competition is manifest. However, along with the basic monopolistic competition, other types of market structures can exist on various segments, for instance oligopolies (Ioncică and Stănciulescu, 2006). Therefore, a specific analysis of the relevant markets is necessary, as they should be defined both form the point of view of the product as well as geographically, because on certain sub-markets the situation can be different form free competition, and anti-competitive behavior could be noticed. 213
The relation competitiveness – strategy in the hospitality industry Changes in the political and economic environment in the last century had strong effects on the way companies operate. Turning from a production economy to a market economy and globalization have confronted companies with new realities based on competition in which they needed new tools to succeed. The key to attracting and making clients loyal is offering an unforgettable experience and not just accommodation; hotel chains innovate to create a unique environment, from hotel rooms to lobbies and the restaurant. Thus, changes in the design of Marriott restaurants and in the menus – so as to reflect the particularities of different regions – have lead to up to 50% increases in sales recorded in rapport to the number of rooms occupied (Hotels, 2004). Along with innovation, technology is an important strategic asset that allows hotel chains to improve their performance and competitiveness. On a global scale, the role of technology in strengthening the competitive advantage of a hotel is recognized, hence its contribution to the hotel’s success (Nyheim, 2004). Since the hospitality industry, as any other branch of services, is capital intensive, human resources can represent a source of competitive advantage for a company. Failite Ireland, in the research conducted among 3, 4 and 5 star hotels in Dublin to analyze successful practices in hotels underline the fact that the industry depends on the know-how of personnel, of the knowledge and understanding of the clients’ requirements that would make the client feel at home. Another source of competitive advantage can be found in the management of the acquisition-delivery chain. As Harold Sirkin notes for the Boston Consulting Group: the acquisition-delivery chain can enhance the performance of a company by developing advantages in specific sequences: quality, trust, flexibility, agility and cost efficiency. The achievement of improvements by observing this order will ensure long term benefits that will offer a sound foundation for future improvement initiatives and a better positioning of the chain to successfully deal with future challenges (Henkoff, 1994). Another strategy recently adopted by some hotels is integrated in the current trends that aim at making tourism a sustainable activity. Thus hotels are encouraged to adopt new methods for protecting the environment in their daily operations and to help the local community.
Factors that influence competitiveness in the hospitality industry The hospitality industry is increasingly confronted with the intensification of competitiveness at a global level, the rapid advance of technology and higher expectations form clients. Among the most important factors of influence highlighted by research are the ones described in the following. 1. Interaction abilities (Rodríguez-Díaz, M.&Espino-Rodríguez, T.F., 2006). These are understood as superior abilities to manage resources shared by several companies. Methodologies of developing the capacity to interact have already been outlined, consisting of a 4 stage process. The first targets the internal analysis of the resources and capacities of the organization. The second stage is represented by the analysis of relations between activities. Stage three is represented by the integration process. Stage four consists in actually developing the ability to interact that targets the degree of cooperation and the integration process attained. 2. ‘Learning organization’. Transforming the hotel in a learning organization represents a new globalizing strategy (Bayraktaroglu and Kutanis, 2003). 3. Human resources. People represent the central point in all aspects of activity in the hospitality industry, from creation and design to the development and delivery of services (Lashley, 2001; Mullins, 2001; Failte Ireland, 2005). 4. Technology and information technology. Technology represents an important strategic asset in obtaining competitiveness (Nyheim et al., 2004; O’Connor, 1999; Siguaw et al., 2000). 214
Research on the relation strategy – competition – competitiveness In 2007, in the project ‘Modeling the determining factors in the relation competitiveness – competitive strategy in the hospitality industry’ research was undertaken, with the following objectives: - knowing the degree to which the concept of competitiveness is understood and valorized by managers in the hospitality industry in Romania; - identifying a set of determining factors in the increase of the competitiveness of firms in the hospitality industry; - identifying strategic concerns of firms in the hospitality industry in Romania, so as to establish the connection between the strategy and the competitiveness of firms in this sector. From the total sample of 282 hotels, the number of respondents was of 108 in 7 cities: Brasov, Bucharest, Cluj-Napoca, Constanta (including Mamaia), Iasi, Sibiu and Timisoara.
The conclusions of research: Regarding the perception of competitiveness, most respondents (49%), especially managers of 3 and 4 star hotels, have associated competitiveness with the concept of competition, referring to it directly or using the notion of comparative advantage. The second group of respondents (26%), represented by 2 star hotels, associate competitiveness with profit. Only 17% of the hotel units related competitiveness with the capacity of being present on the market on the long term. We can notice a fairly wide variation and a certain degree of imprecision in the conceptions regarding competitiveness among managers in the hospitality industry. One of the important questions in the questionnaire aimed at identifying the factors of competitiveness in the hospitality industry that hotel managers considered important in obtaining current results. The main external factors mentioned (in the order of importance) were the following: - the level and evolution of demand; - the competitive environment; - the location of the hotel; - legislation in the field; - general infrastructure (access, communications, public utilities etc.). The major internal factors are (in the order of importance): - the quality of services; the diversity of services offered; costs control; the level of tariffs; promotion; the brand; the capacity to innovate. The analysis of the competitiveness factors in the present is completed by the perception of factors associated to competitiveness on the long term, in the future. In this respect, the key success factors in the view of actors in the hospitality industry in Romania are: - quality (68 respondents), costs control (55 respondents), - the capacity to innovate (47 respondents), - legislation (41 respondents) and the quality of human resources (38 respondents). As to the measures by which the hotels questioned could ensure the increase of competitiveness in the future, out of a list of 9 specific to the hospitality industry, the following three were chosen, in order:
Improving the standards of accommodation/ food services (48 answers).
Increasing marketing efforts (33 answers). Increasing marketing efforts was mainly indicated by managers of independent hotels. Although their budgets are generally lower, there is a higher awareness of the role played by the image on the market and by the notoriety of the hotel name.
Flexibility towards clients’ demands (30 answers). We must notice the recognition of the role of clients in the very existence of the business. Thus, hotel managers show interest in their demands and are willing to adjust their supply to the clients’ needs. Regarding the relation between competitiveness and competition, answers highlighted the managers’ perceptions on the evolution of the hotel. Thus, managers see the business they run as being in a development process (48, 2% of respondents) or stable (30, 4%); only 21, 4% see the business as declining. Regarding the current level of competitiveness: 38% of answers point to a ‘high level’ of competitiveness, and if we add all the values that indicate at least a medium level, the share of hotels increases to 70,5%, almost two thirds of the hotels questioned. Regarding the assessment made by managers for competition on the market, most of them see the intensity of competition as being medium. The second question that arises refers to the adequacy of answers regarding the level of competitiveness, since, without being subjected to a stronger pressure from rivals, hotels might overestimate their own competitiveness. Hotel managers identify their competitors especially based on spatial proximity, and similar degree of comfort. In the future, the vast majority of hotel managers tend to forecast an increase in competition.Even in the conditions of an increase in competitiveness, most respondents are optimistic regarding the resources they have to face competitors. They appreciate that relatively reduced efforts are needed to adapt resources so as to face competition. (53, 8% of respondents 215
think they need minor adjustments). This attitude shows a high level of confidence in the elements that ensure their market position. Competition is not to be feared, on the one hand because of the fact that differentiations can be easily copied, and on the other hand because of the increasing demand for hotel services. In general, managers of 4 and 5 star hotels are the most optimistic, while managers of 1 and 2 star hotels are the most pessimistic. Regarding the existence or lack of existence of an explicit strategy for the future of the business, answers describe the following situation:
hotels of 5* (2), 27 four* hotels and six 3* hotels have a strategy formulated for more than 3 years
42 three* hotels have a strategy formulated for an interval of 1-3 years
17 two* hotels have a strategy formulated for maximum one year
three 3* hotels, eight 2* hotels and the three 1* hotels have no strategy at all. When the problem of indicating strategic objectives and the temporal framework for achieving them was put forward, from the answers received one can notice that these are formulated quite imprecisely (for instance, maintaining the brand, consumer satisfaction, training personnel), and they are also focused especially on investments in endowment and expansion (for instance, buying a pool table, setting up a computer room, building a new wing, a pool, opening new hotel units). Therefore, following the collection, analysis and processing of data, a series of conclusions were obtained that further contributed to the elaboration of a radiography of the situation existent in Romania. Thus, a lot of specific aspects, certain less than correct interpretations and some unprofitable practices were noticed. Competitiveness, according to the research, is based on four determining factors, i.e. human resources, innovations, services and costs that influence all the operations in the hotel. Each determining factor comprises a different number of attributes as was shown by the results of the research. Determining the competitiveness factors and their attributes represents a first level in elaborating the competitiveness model. A second level consists of including the attributes of the competitiveness factors in the processes and operations in the organization with a view to reaching the objectives and obtaining a competitive advantage. The third level of the model shows the dimensions of competitiveness as a social and economic impact, namely: clients’ satisfaction, the position on the market and the social internal and external responsibility. As a conclusion, we should underline that integrating the competitiveness model in the strategy of Romanian firms would contribute to an understanding of the dynamism involved by obtaining and maintaining competitiveness in hotel organizations. At the same time, adopting the right behavior in reaching competitiveness is a complex process and is determined by both internal and external factors.
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TOURISTIC DESTINATIONS LONG-TERM MANAGEMENT AND THE INCREASE OF THEIR COMPETITIVENESS Iordache Maria Carmen Universitatea Constantin Brâncoveanu Piteşti, Facultatea Management Marketing în Afaceri,
[email protected], tel. 0727857717 Chitu Ramona Universitatea Constantin Brâncoveanu Piteşti, Facultatea Management Marketing în Afaceri,
[email protected], tel.0740052191 Grigorescu Sorin Universitatea Constantin Brâncoveanu Piteşti, Facultatea Management Marketing în Afaceri English Abstract: Global trends and priorities are changing so that, nowadays, the biggest challenge for tourism is to be both competitive and long lasting, taking into consideration the fact that, on a long-term basis, competitiveness depends on durability. Moreover, climate changes represent nowadays a fundamental aspect that requires tourism industry to diminish its activities that contribute to pollution and destinations to comply with the demand and the types of tourism they provide. A proper balance between tourists wellbeing, natural and cultural environment needs, as well as destinations and companies development and competitiveness calls for a global and integrated political approach, where all interested parties should share the same objectives: economic development, social equality and cohesion, protection of natural environment and culture. Key words: durability, competitiveness, sustainable management, cooperation. Tourism represents one of the economic activities with the highest potential of generating development and more jobs in the EU. According to some estimates, at presents, tourism has a contribution of 4% to the European Union GDP, having different values between 2% - in a certain number of some new member states – and 12% in Malta. Actually, tourism indirect contribution to GDP is higher, that is more than 10% of the European Union GDP, assuring at the same time more than 12% of the existent jobs. Tourism also has a special importance regarding the jobs offer for the youth, who are two times more numerous in tourism field than in other economic departments. Having in view the number of jobs in the tourism field, it has been obviously that tourism has brought its contribution significantly to the objective from Lisabona, that is, to create more and better jobs. Tourism importance within the community economy should be increasing, as one may expect an over 3% increase in the yearly demand. To find the proper equilibrium between the autonomous development of destinations, as well as their environment protection, and the development of a competitive economic activity can represent a real challenge. Tourism can, more than any other economic activity, develop processes closely related to environment and society. And this is possible due to the fact that touristic destinations development depends on their natural environment, on cultural features, social interaction, security and the local population wellbeing. These characteristics make tourism the main engine of preserving and developing destinations, both directly, by supporting income, and indirectly, by offering an economic justification for providing other types of support. Global trends and priorities are changing so that, nowadays, the biggest challenge for tourism is to be both competitive and sustainable, taking into consideration the fact that, on a long-term basis, competitiveness depends on durability. Moreover, climate changes represent nowadays a fundamental aspect that requires tourism industry to diminish its activities that contribute to pollution and destinations to comply with the demand and the types of tourism they provide. In the near future, European tourism will focus on the quality of tourists experience – they will realize that the destinations which give much attention to environment, employees and the local communities are the 218
ones that are more likely to show more concern for tourists needs. The interested parties will protect competition advantages that make Europe the most attractive destination in the world – they will protect its intrinsic diversity, as well as the landscapes and the culture. By approaching sustainable development matters in a responsible way from the social point of view, tourism industry will be able to provide new products and services, of a high quality and increased value. A proper balance between tourists wellbeing, natural and cultural environment needs, as well as destinations and companies development and competitiveness calls for a global and integrated political approach, where all interested parties should share the same objectives: economic development, social equality and cohesion, protection of natural environment and culture. These objectives should also guide the interested parties in their policies and activities that influence the impact of the European tourism, as well as in supporting tourism as a tool for sustainable development in the holding countries. Destinations sustainable management is essential for tourism growth, especially by planning the efficient use of land, as well as by checking the development way and by the decisions of investing in infrastructure and services. Guarantying the fact that the new tourism development is proper to the needs of the local community and the natural environment, long-term management can enforce the economic performance and the competition position of a certain destination. This requires a support team that should involve all interested parties on regional and local level and an efficient structure that should facilitate partnerships and efficient leadership. A main requirement for enterprises is to stay competitive. The activities developed in this view should be considered as part of the effort to create a long-term character, one of the most important competition advantages. Hence, in order to assure its competitiveness, viability and prosperity on a long-term base, enterprises should focus more on integrating these concerns within the making-decision process and within their management tools and practices. An important role in this process is held by services and support associations of enterprises. Finally, in order to progress more steadily, the demand, both on the part of spare-time activities and on that of enterprises, should send more powerful signals. First of all, it is necessary to make tourists sensible for being able to develop and enforce their ability to make choices in favor of the long-term development. Making them sensible about durability and ethics can facilitate of some responsible individual attitudes and practices to arise on the tourists’ part. Consumers increasing undurstanding of the concept of durability can influence enterprises to show their interest in this respect and take proper actions. In order to achieve the purpose of a competitive and sustainable tourism, all activities should respect the following principles:
A global and integrated approach – In the process of tourism planning and development one should take into consideration all types of impact that can arise. Tourism must also be well balanced regarding the activities with great impact on society and environment.
Long-term planning – the sustainable development refers to protecting the needs of our present and future generation. a sustainable planning calls for the ability of supporting different types of actions in the course of time.
Finding a proper rhythm for development – The level, the rhythm and the form of development should reflect and obey the character, the resources and the needs of communities.
All interested parties’ involvement – A sustainable approach requires a serious participation to the making-decision and applying process on the part of all interested parties.
Using the best available knowledge – The activities and policies should be drafted on the base of the best available knowledge. The information concerning trends and effects in tourism, as well as competences and experiences, should be disseminated all over Europe.
Diminishing and managing risks (the caution principle)- If there are any doubts concerning the results, an overall assessment should be done and certain measures should 219
be taken for preventing and avoiding harmless effects on the environment and the society.
Setting and obeying limits (if necessary) – Certain sites and regions should admit their limit capacity, and if it is necessary, tourism development and the number of tourists should be limited. The interested parties should share their knowledge, making public their positive and negative results, with a view to enforcing the relation between knowledge dissemination and the application of sustainable and competitive practices. To this extent, the interested parties should have a recurrent cooperation at their most often activated levels – either on beneficiaries level or on regional, national or international level – and discuss the problem of sustainable development within these cooperation structures. An example for this type of cooperation is the social dialogue among employers and employees and the companies they are represented by. The European Commission is said to be available to finance in Romania (seen as a the EU member state) tourism development for the next period – 2007-2013 – by the means of structural funds (the European fund for regional development, the fund of cohesion, the social fund, the European fund for agriculture and rural development, the European fund for fishing). Between 2007-2013 Romania will be the beneficiary of 30 milliards. Structural Funds include the European Fund for Regional development, the Fund of Cohesion and the Social Fund.
The European Fund for Regional Development will provide tourism financial support by means of two operational programs:
The Operational Regional Program of Competitiveness where funds are given for tourism development on national level, for building center national networks for touristic information and promotion.
The Regional Operational Program for Regional Development – where funds are meant for tourism development on regional and local level by means of projects of the local public authorities and other projects for increasing services quality and developing the touristic environment.
The Social Fund will support human resources projects, including those for tourism jobs training.
The Fund of Cohesion will finance infrastructure and environment projects, including projects for protected areas management that also includes the tourism field.
The European Fund for Agriculture and Rural Development will support tourism projects that will contribute to activities improvement and reshaping and the labor force in rural regions. All these operational programs are now working for drafting complement programs that will decide on the ways of access to these funds. Mention should be also made of the fact that ANT is the beneficiary of the Regional European Fund for Development that will be used for promoting and preserving the cultural patrimony, will stimulate the private initiative and will support the policies in the field, will encourage transbordering change of experience, will stimulate inter-regional, domestic and foreign cooperation that contribute to economic development and operates in accordance with the legal provisions and the international agreement concluded in Romania. The Romanian Government together with the International Organization of Tourism has developed a Master Plan for tourism in order to establish a sustainable approach of tourism development in Romania. This Master Plan for tourism development refers to a 20 years period, until 2026. More specifically, it includes an action program on 6 years (2007-2013), together with the financial support offered by the structural funds, to which Romania is given access as a consequence of its integration in the European Union, in January 2007. The next project is to form a general framework of policies for the sustainable and competitive development of the tourism industry concerning natural and cultural resources and to present this project in the form of Master Plan, referring to 2007-2013.
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This Master Plan has included certain regions with valuable touristic potential, some of them being unique. such a region is Valcea county, able to provide a competitive type of tourism. This fact is supported by the following arguments:
Watering potential – Valcea is the only county in Romania where almost all types of affections can be cured, due to the wide range of mineral waters; here one can include three resorts of great touristic interest:57 Calimanesti-Caciulata, Govora and Olanesti.
Mountain tourism is less representative in Valcea county even though the mountain area has a significant percent of its territory.58 Due to this situation the highest chances for tourism development exist in all mountains.
Cultural-Historical-monastic tourism has the best chances to develop, taking into consideration the great number of touristic objectives, proper to this type of tourism, some of them included in UNESCO patrimony (Hurez monastery). Valcea county has the greatest number of churches, hermitages and monasteries in the country59, which, unfortunately, have not been included in any program international or national promotion.
Rural and agricultural tourism represents an alternative activity for agriculture and forestry in Valcea villages, having a large variety of forms.
Other forms of tourism such as transit tourism that includes the main driving roads that cross the county and that include places for having a rest, fishing and hunting tourism that takes place in the mountain lakes Bradisor, Calimanesti, Ionesti, week-end tourism that has developed lately due to a decrease in incomes – Malaia, Bradisor, Voineasa, Vladesti, Olanesti, Comanca, Govora, Horezu, scientific events tourism that usually takes place in Calimanesti Caciulata and in Rm Valcea, pupils and youth tourism, in school camps with national and international character – Caciulata, Bradisor, Voineasa.
Supporting tourism development on regional and local level and the improvement of its competitiveness requires human recourses training. To this extent, Valcea county provides a special educational system at Calimanesti Highschool, Economic College Rm Valcea, and different types of tourism faculties. All these components mean a certain potential of developing complex touristic products and opportunities for attracting foreign tourists. Tourism management and the resort authorities have to solve four weak points that risk to hinder the competitiveness of this field, that is, infrastructure, promotion, that is seldom done at present, lack of public and private partnerships and the staff age. Small and medium size enterprises play a fundamental role in Valcea county tourism, but they run the risk, due to their dimension, to be less prepared to integrate aspects related to sustainable development and to launch themselves on the market as a part of their activity. To this extent, more conferences should be organized and more research studies done to increase the awareness concerning some challenges, such as the access to structural funds in the field of tourism, to the working methods that could be applied on local and regional level (for example, a study concerning the impact of great cultural and sport events on the Small and Medium Size Enterprises based on tourism) or to professional courses that aim to improve Small and Medium Size Enterprises services and the human potential in the tourism field on destinations level. The commitment on local and regional level will be supported by different types of agreements among different types of destinations (rural destinations, mountain ones, town destinations) regarding the
57
An attraction index between 2 nad 3 (regions and present national and international interest) according to some tourism studies made by INCDT Bucharest, Valcea is on the first place in the top of mountain regions for its touristic potential 59 The National Institute of Research and Development in Tourism (2004) – study for the development of monastic tourism in Muntenia and Oltenia, coordinator T Simon, Bucharest. 58
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sustainable management. To encourage the exchange of good practises related to the sustainable management means to contribute significantly to the touristic destinations competitiveness. Turning Valcea county into a competitive touristic destination on the base of its natural and cultural patrimony that should comply with the European Union standards and attaining a sustainable development in the touristic field in a superior rhythm is not possible without involving Small and Medium Size Enterprises in public and private partnerships. Valcea county has also to become a touristic brand, both national and international, without a tough exploitation of the natural environment that renders it a unique area.
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Kotler Ph., Haider D., Rein I., Marketingul locurilor, Editura Teora,Bucureşti, 2001 Ritchie J.B.R., Crouch G.I., Quality, price and the tourism experience. Roles and contribution to destination competitiveness, St Gallen, 1997 Institutul Naţional de Cercetare Dezvoltare în Turism (2004) - Studiu pentru dezvoltarea turismului monahal în Muntenia şi Oltenia, coordonator T.Simon, Bucureşti
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ASPECTS OF THE EUROPEAN ECONOMIC CHALLENGE FOR THE ROMANIAN HUMAN CAPITAL. THE CASE OF HIGH EDUCATION SERVICES Jivan Alexandru Universitatea de Vest din Timişoara, Facultatea de Economie şi de Administrarea a Afacerilor, Str. I. H. Pestalozzi nr. 16 Timişoara,
[email protected], telefon: 0721.114.801 Abstract: The paper aims at critically analysing components, gains and costs of the economic action in the field of high education. Some cultural and national conditions and determinatives are shown. Starting from some didactic and knowledge principle, analysis is raising questions in the European integrated knowledge based economy, highlighting some actual aspects of the Romanian recently reformed high educational system (in comparison with the usual in Western education). In a correlative approach and in a multi-disciplinary view, special important features of the educational system in the market economy, European challenges and potential effects of some issues are considered, with their impact on our future within the European Union. Interesting and paradox conclusions concerning the natural regulation logics, corruption and lessons for improving the coherence of the reform processes result. Key words: education, market economy, principles, corruption
1. Some introductive (principia) differences The human principles, the high intellectual, spiritual and artistic search, the social relations, the effects for the environment etc. are the most important for science and knowledge. They make the difference between human people, as humans, and the other creatures. Even in that what concerns the activities for accomplishing the needs (named economic activities), they represent the main difference between the economy of the human society (developed by humans), on the one hand, and the economy that a lot of animal species are developing, on the other hand [6]; this could be a mean for keeping us as humans and for the goal of rising our individuals upper than the animal status: it should be done not just by techniques applied, but rather by the purposes they have in view and by the real humanism they should keep in mind and prove, by and to maintaining and encouraging the fundamental superiority of mankind inside the living kingdoms of the planet. In this area we can observe that, from its beginnings and through the times, mankind carried a permanent fight between humanism, moral, law, on one hand and instincts, animal bents and passions, on the other hand. The economy and economics is the single field that still is founding, also today, on hedonistic reasons, on the cult of primordial or degrading bents, on stimulating to the instinctual level or to under–conscious (and not mostly by conscious or intellectual). This state of economic conception still let the “market moral” to be promoted and generalising, even if the service society already created the conditions for re-coming to the adequate performing, to service for other people and for the whole environment (including society and nature). We called it [1] “the coming back to the genuine invisible hand”.
2. Most principles for the human capital forming In actual knowledge society, the issue of economic education is more important than never, but professional-economic elements remain the most easy to teach and to learn: that is because they are consistent rather to that what any living creature on the earth learns: they are in our instincts and need no special educative intervention: education in their direction does not need special efforts from individuals, being on a most „natural” line, from the point of view of the millenniums of surviving on this planet; special orientations and transformations of the human being are not necessary, because they are not mostly related to cultivation and to human personality development, but rather to surviving. But for human people, the human superior ones are essential, defining for our species (human type, by difference with other creatures). 223
Strictly speaking, the mercantile value is not a human value (at least it is not at all the most important human value; ancient Christianity even considered it a counter-value): it is just a tool for managing resources, in the purpose of more efficiently creating welfare and as a condition for the existing and developing high-level human spirituality. But today, in globalization, humanity and spirituality risk to loose high values because of overestimating economic principles in the detriment of other higher human principles (including moral). In the tradition of civilization, education consists in seven main components [2]: a) moral, social living principles, law;
j) spirit and spiritual-intellectual faculties development (including memory, logics); k) formation of artistic, sensible and soul values perception; l) sharing from the most human accumulations (culture in general, but also other aspects of spirituality, religious);
m) didactic principles (for learning further); n) scientific principles, science laws etc.; o) principles and professional and speciality details, in the purpose of future practical utility, necessary for economic work of individuals (for gaining their staff for living). Instincts, economic reasons and material interests tend to make the “money interest ethics” overwhelming. That is why humanity must mostly bank on intellectual activities rather than on money: they can produce also money, but they also can keep us human and they are our chance of re-coming to a genuine “normal” way of living and of making business, our chance of growing our superiority, and like a chance for maintaining humanity in a superior rising trend. We should adapt to the most recent developments of natural sciences and go further from the obsolete approach of economics on the industrialist bases. The care for young people education was mostly for cultivating the qualities that put and keep them over the animal kingdom (and not firstly the last ones). Even in the modern times of market culture, teaching should contain all the components, in different proportions, by its nature, level and speciality, it should not be partial, simplistic or conducting young people to perceptions that could badly make them not human (non-superior) beings. The above mentioned educational principles are defining the role and message of education. In the purpose of keeping formation a human one, people should care for principles, should guard and treasure them: mostly against of the market culture and “moral”. In the purpose of not jeopardizing the humanity’s chances of having a really human future, the human being must not be reduced to just some of its less noble features and components.
3. The economic challenge In theory, the market competition is usually approached like a fair play, by individual quality. Accordingly to such principles, in the market functional economies, the best ones are usually the best paid. Having bigger financial power than the public institutions (based on founds collected from the tax payers) and well paying, private teaching institutions gain the best teachers and have the most performing teaching tools. Image and fame of teaching institutions is consistent with this same hierarchy (in the favour of the private ones). In Romania, wages differences between private and state teaching were not so big after 1989: they could not counteract the image; and this is plainly in the favour of those having tradition – the state ones. Like railways and other big investments, national teaching organisation and expenses were made, in modern Romania, at the initiative and by the state: business-men preferred quick profits and not “national charity work”… (mostly if they are not extremely powerful from financial point of view). Unfortunately, in the poorest countries, the economy is not ‘suitable’ to the education and instruction. In Romania, for instance, this last one, which was very performing in the last century, in the last decade is not anymore: the “disagreement” between the high level of the teaching system and our doubtful economy of the last decades gave win to the underdevelopment level… After 1989, private teaching institutes are some too seldom big business: just a way for living of mostly little enterprisers. Most of them are organized at university level, addressing to clients having already their own incomes (and less to those supported by their parents). Those clients are business-men themselves, 224
thinking practically, materialistically, like in business. Therefore, if they pay, they want to buy something concretely: such individuals (honest buyers on the market) rather do not imagine to give money for watching some theoretical considerations of some “philosopher” of university professors; but they want to get a diploma by their money; because they do not think philosophically or at elevate intellectual principles level (that is what they are interested in, not in knowledge itself). Those preferences from the demand side may be generated by the market itself: because market economy reality are proving such a scale of values in what, too frequently, competition mechanisms (life fight) bring success for those having less or no real intrinsic value; and too often dissatisfactions, non-achievements, drawbacks, helplessness and problems are for some most hardworking, intelligent and cultivated ones. A university teacher may loose his or her job to a private university if keeps high professional exigency: market demand is ruling and such behaviour can make the institution loose its students (customers). Thus, market principles go to extreme in Romanian education, clients often having the conception that they buy not immaterial highly intellect-intensive services, but very material diplomas: they demand materialization, they request not “talking” in courses, but exams promotion and faculty graduating: concretely, thy want the piece of paper on what is written “economist” or, generally, “bachelor”. This is our market. And there where there-is private system, market works in priority to any supposed principles or imposed regulations: everything is sold and everything can be bought. We made some research and developments concerning corrupting, seducing, bribing, suborning etc. in resulting (we have not here the space for developing the matter., but we can say that even corruption can be thus also better understood) [3, 5 and others]. Unfortunately, from here results the inferior level of a big part of our private teaching; mechanisms of the same type – market mechanisms – can give high level quality, like in occidental teaching, but also the just mentioned under-level, like it happens sometimes to us. Worst is the fact that, by market competition, also the state teaching institutes, focusing on market demand and following this very demand, must supply that what is requested by the clients who pay; therefore they must diminish standards, they also and the general intellectual level of education. By this working and behaviour, a big number of candidates are admitted and promoted, and they are “graduating” most of them”. If state teaching institutions do not make it, private ones will gain the plus of potential costumers, because if there-is a market demand, entrepreneurs will always be to get it. The propensity to not learning in market economy (mostly in the far developed ones) is a paradox of education: the market system of reward gives incentives for economic activities, but not for learning at high levels. It means that the returns of the high level human capital are the diminishing returns of intellectual efforts in the market system, more diminishing than the returns of the material (physical and money) capital and of the medium qualified labour. Just less qualified labour “gain” less returns, but this problem is solved in the most advanced economies, by importing foreign labour from less rich countries. The extension of the market beyond economic limits, even over the teaching system, is shown by the (new) hierarchies into this system: they are often made by market criteria, the business-men are most successful (in obtaining incomes, but also in gaining university titles, in appropriating didactic and administrative functions and positions in managing educational institutions), than the real professionals of the field of science and education. Those last ones rather remain to their scientific research and high level didactic courses, but the first ones are assimilating the powers and leading of those organisations and institutions and thus are obtaining the best work conditions, are gaining the titles and image and have the best wages, get the paid contracts (grants) and develop their private connections. Also, the university research tends to diminish its level: grants are given for services and activities at the usual level of the industrial manufacturing enterprises; but the high level research is not appreciated enough anymore: the recent market system and the system of gaining grants are not rewarding enough such projects, but rather some not that profound (the short run most directly applicative ones are preferred). The highest level ones remain unpaid and, as a result, they are diminishing and the best high specialists are diminishing their qualification levels or they are living Romania, trying to valorise themselves elsewhere.
4. Some conclusive issues Ian Brinkley put in 2006 (in the paper “Defining The Knowledge Economy”) the question: “If knowledge economy is so economically important as it is supposed to be, why did we see until now such a little impact on growing productivity performance”. The answer to that question is: because the effects are on long run, 225
and because we should not expect just (or mainly) short term effects: the impact is much more profound and extended than the narrow productivity question. It is enough to think o servicity for enlarging our horizon of understanding. In just a few pages it is impossible to really well prepare and even to well enough present conclusions. Despite the efforts of limiting our expose, they still can be underlined some of the most important issues: Without doubt, economy in our days means market: market rations and interests, market rules, material principles and even market moral. All those are - at least beginning with 1990 - included in our economy, in our society, in our lives, in the Romanian educational system itself too. But despite this reality, the word European has a lot of meanings (and this one was not changed in 1989; even if in the last time the European authorities pointed out and underlined some features that make us – and also our economies – different from the most marketed one, like the American one, for instance: even if we speak about economy, the sense of the word European makes the economy not to be reduced to the restricted (narrow) economic meaning; but it involves a larger horizon, pluri- and inter-disciplinarity and makes our (European) economy to include also the care for the environment, and especially for the nature, the interest for the equilibrium, including the equilibrium between solving the developing problems (of the most poor people - and nations, on a larger scale) and the care for the future generation: the care for the poorness problem is a special challenge for knowledge in modern world, thus knowledge is no more reduced to most direct short run material individual interests, but may give us all its valences; in this approach, the core of the economy meaning knowledge based economy is much rich. That is why forming human capital means not just making most productive “human machines”, but educating means also haw we (teachers) are forming young generations of humans: and not just from the cold strictly scientifically point of view, but also from the angle of moral, of principles that we are inoculating in their souls or what we are proving our selves to them to be applied in their life and practice: we are not just saying, but proving them day by day, by our behaviour and own direct and implicit example. We must prove about noble and chivalrous behaviour, about merits, like from the antic Chinese meritocracy, about the difference between honour and bribery, about moral, humanism and high intellectualism. Agreeing with Manoilescu, we mean that the high quality of the economic activity is not given mainly by how much it can buy. It should be better by science, management, innovation and the new technology it invents (please see the concept of servicity in [6] and others). Human capital must be better created in the ethical ground of the market system based on the law state: it means people to apply accurately that what they learned; we need not “paper graduating”, but real professional specialists, who use their scientifically skills and who really want to put it in practice, not to let it in a “formal land”, else than the real world of work. We should be against abdication from noble principles of high intellectual spheres, in the favour of racketeer’s speculation. We do not speak about ignoring the commercial principle as a whole (including the honest fair way) but it must be done at high and professional (not mean petty) level, in a dignified manner, without rebate from the status of science, professional high competence, excellence and unchallenged integrity. Basing education on more efficient and solider sounder fundamentals must not be substituted by leaving it without economic support or to some inexpert-in-spiritual-field-businessmen’s will, neither conceptually, nor in practice. Teaching must bring to the individuals and to the human society the human capital they need. This is in the favour of the economy. But formation should bring not just the skills needed by business, but should go to the essence of this capital of mankind. In the knowledge society, the economy itself should not be a battle, a war, a destructing (or, at least, an isolating) confrontation or fighting competition, but an orchestra, a constructive common effort in the purpose of the wanted well being. It can be better realised by using well distributed functions and roles (and, of course, stimulating methods, including the market mechanisms). The well being should be conceived from the very beginning - and mostly realised - for all, for everyone through all, by the well being of the human society as a whole, well used; and it should not be for one from or in the detriment of the others, of the future and of the planet; the market should not be conceived and used like a destructive rivalry, but rather like a fair and constructive competition. The economy and formation should create a potential being adequate to the people culture, not by marginalizing the own culture of the nation, because by this mean people became culturally marginalized from the very beginning and by definition, transforming the nation in the periphery of other the dominating 226
nations or companies, also from the cultural point of view, not just from the economic point of view. In any decision, the whole society counts, not just the economy. The priorities we mentioned in the matter of knowledge theory are sustaining the profound scientific basis of the knowledge concepts in economy an in society as a whole (with accent on the formation role): in a correlative approach, reference should be made to main role of education in humanity (including the economy – if its basing on knowledge is actually and essentially considered). Hedonism stops to be the main criteria for the most elevated and cultivated people, keeping this role just for those who obeyed or surrender to the instinctual attractions and primarily motivations. The teaching centres which respect themselves (and what do not abandon themselves to the passing worldly values of the market) actually have the mission and task to conserve the true values of humanity and to promote them. They must be saved especially from the aggressiveness of the expansion of the economic ideology and moral in all the areas of mankind life; including in spirituality. In any case, the economic must stay remaining at its level of mean (way) for sustaining and developing humanity, and not transform itself from tool in purpose (goal), because it corrupts the human nature, taking it down to actions and features perverse for itself: not just pure selfish, not only un-human, but antihumanistic too. Else, in a country like Romania, the total subordination of superior areas – like health and education - to the economic, putting them at the back and call of business, would mean taking them down to the same underdevelopment like in the economic sphere. This could not be in the benefit of the best integration and coordination into the UE community.
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Jivan, A. (2007), “Market versus Law in Services. The Case of Teaching Services”, at 9th International Symposium in Management, Management & Competitiveness in Knowledge-Based Society (SIM 2007) Jivan, A. (2008), “From Teaching to the Essence of Human Capital: Romanian Faculties in Knowledge Society”, at the 4th International Conference Economy and Transformation Management, Faculty of Economics and Business Administration, "JEAN MONNET" European Centre of Excellence, University of the West, Timisoara Jivan, Alexandre (2003), “Ideology and Moral in Globalization”, at International Symposium Economic System of European Union and Accesion of the Republic of Croatia, Opatija, 10th May, 2003 Jivan, A. (1995), Economics of Intellectual Tertiary, Mirton Eds. Jivan, A. (2001), „Cultural Determinants of the Services Level. The case of Romania’s underdevelopment in services”, in volume LARGO International Conference on Service Management, Presses de l’Université d’Angers, page. 223-230 Jivan, A. (1993), Services and Servicity, S.W.F. Bulletin, no. 3-4 (December), 16-24.
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SOME DETERMINANTS OF ECONOMIC GROWTH IN ROMANIA: FOREIGN TRADE AND FOREIGN DIRECT INVESTMENTS Jude Cristina Babes-Bolyai University Cluj Napoca, Faculty of Economics and Business Administration, Theodor Mihali street 58-80, room 522,
[email protected], +40 742 045 991 Pop Silaghi Monica Ioana Babes-Bolyai University Cluj Napoca, Faculty of Economics and Business Administration, Theodor Mihali street 58-80, room 522,
[email protected], +40 722 837 987 Abstract: This paper presents some theoretical arguments for which trade and foreign direct investments can be considered among the main determinants of economic growth. Through foreign direct investments positive externalities inside the economy has to enhance the economic growth. The liberalization agreements of foreign trade with European Union stimulated exports and more intensively, imports of Romania with this group at which she belongs now. Whether or not the foreign trade and the foreign inflows contribute to the economic growth of the country remains an open question. We try by this paper to focus on these issues. JEL classification: F21, F14, O11 Keywords: trade, foreign direct investments, economic growth, regressions
1. Introduction After the communism, in Romania followed a period of transition and there has been a general positive view that the liberalization of trade and of foreign inflows can generate positive externalities inside the economy. It is important that this question should be addressed and solved as the answer can represent a good reference for the policy makers. In this paper we are interested to understand the theoretical arguments that exist about this relationship. In M. Pop Silaghi [2006] we were interested to see if trade can be considered a main determinant of economic growth from a causal point of view. Our results were not the most optimistic ones but they encouraged to further assess these issues and to try to extend the model. There are many studies that use regressions to explain the relationship. Even if regressions are considered spurious and can lead to positive associations thus causality would be preferred, for Romania little work has been done with both FDI and foreign trade in an integrated framework. Our paper is part of the literature that seeks to establish the determinants of economic growth. We will proceed as follows: in section 2, we will present some theoretical and empirical arguments regarding the relation between FDI- economic growth, respectively foreign trade-economic growth, in section 3 we will present some aspects of Romanian economy, section four we will run multiple regressions (with FDI, trade and growth)using yearly data and section 5 concludes.
2. Literature review The international exchanges bring gains of welfare and efficiency of which benefit all the countries, no matter what their initial situations, their level of development, their technological level or their natural resources endowment are. These gains are different with respect to their belonging and the specialization is being underlined by the classical theories of Adam Smith and David Ricardo or by the advantages of the large markets, implied by the new trade theories (see [Krugman & Helpman, 1988]). In sustaining this positive view, the empirical studies have a major importance. A high number of empirical studies were oriented upon the relationship between exports and economic growth identified in many cases with the increase of output or the increase of GDP ([Michaely, 1977]; [Tyler, 1981]; [Feder, 1983]; [Kavoussi, 1984]; [Balassa, 1985]). Most of the studies were based on simple 228
regressions between exports and growth and the results were in all cases the finding of a correlation. In the less developed countries, there was found a weak correlation and the problem which had been raised was to determine the minimum level of the economic development that has to be attained by a country in order to benefit as a result of the economic growth (see [Michaely, 1977]; [Tyler, 1981]). For example, [Tyler, 1981] worked over a sample of 55 developing countries and confirmed the positive relation between the expansion of the exports and the increase of production. But, during his analysis, he renounced to some countries from the sample due to the fact that he observed that it was necessary a minimum level of development for countries to benefit of the exports’ expansion, mainly of the manufactured exports. The author used a Cobb-Douglas production function, incorporating three production factors as: capital, labor and exports. In the conditions of an increased specialization, due to the comparative advantage law, the countries can use the abundant labor resources and the productive capacity, and the exports can also increase more rapid than in other situation, as Tyler [1981] states. The dimension of time was used in his study, all the variables being expressed in function of time. The author replaced in the initial function the total exports with the manufactured exports, and the impact on growth was also positive. More than that, under the assumption of neutral Hicks progress, it was observed that the manufactured exports were accompanied by a higher level of technological progress. The studies based on the relation between imports and GDP, even they were weaker in what concerns the statistical methodology, had also an important role in the strengthening of the global relation between trade and growth. As examples, we mention the study of Dominiguez [1970] which showed that if the countries are oriented upon the import policies, the import extent is determined by two important factors: their degree of production diversification and the way of allocating resources in these countries. The evolution towards a high productive allocation – associated with the high level of the incomes can influence imports in two different ways. Firstly, in an indirect manner, high levels of the income determine a more diversified demand and secondly, in a direct way, the level of imports can be explained by the need of completion the lack ness. This last effect is explained by the fact that the needs for primary goods are increased and they won’t be fulfilled through the internal disposable resources so it will result a high demand for the finite and intermediate goods, obtained in insufficient quantities. Grossman & Helpman [1991] demonstrated the important role of the imports of goods or of foreign equipments in the process of economic growth of a country. The role of these imports is to introduce foreign equipments which do incorporate foreign technology in the internal manufactured production of the country, in order to create a more efficient national production system. As a consequence, they will encourage the increase of the productive capacity, the increase of the global productivity of the factors in the final production and the development of the technological capacity of the importing country, through the international diffusion of the knowledge. Other studies that were oriented upon the import-growth relation were those of Perreira [1996] and Larre & Torres [1991] which also reached to favorable results of the impact of technology imports over the process of economic growth. Fogel [2006] proves the way in which can attain the desired objective of quadrupled rate of GDP till the year 2020. The author is interested to observe the interaction between economic growth and its main determinants in China. The richness of China’s objective in growth’ trajectory is facilitated, in the author’s opinion, by the improvement of the quality level, education, political stability, institutions’ quality. Constantini and Monini [2006] analyze the causal relation between human capital, natural resources and economic growth. The sample they worked upon was composed of developing countries as well newly industrialized countries. The first conclusion that they reached after a rigorous econometric testing was that for attaining a sustainable level of capital accumulation is a difficult task inside the first stage of economic development. The second conclusion was that the human capital accumulation represents a valid means of maintaining an equilibrated growth rate of consumption on long term. The positive role of the life’s quality correlated with the education level represent key elements in assuring a sustainable economic growth. The third conclusion was that a high technological level will transform the natural resource intensive economies in technology intensive economies and this thing will be correlated with a reduction of the process of degradation of natural resources and it will reinforce the virtuous circle of the economic growth and human development. Jones and Schneider [2006] realizes an interesting approach of the process of economic growth by the interaction with the human capital doing a survey in the psychological literature of the intelligence tests. The authors reached the conclusion that a proper measure of the human capital is revealed by the IQ tests. Using new national data basis, the authors show that in the regressions of the economic growth, which include robust control variables, the IQ coefficient is significant. in 99.8% of 229
those 1330 regressions, passing easily the Bayesian tests of robustness. A one-percentage growth of the medium national IQ is associated with a growth of 0.11% of the GDP. Using panel data for 14 transition countries, Funke and Ruhwedel [2005] are interested of the link between production variety and economic growth. The empirical calculus is based of HS 5 digit classification data posed at disposal by OECD. The study results show the fact that in the open economies; the economic growth attains higher levels than the closed economies. Walde [2005] starts from the current explanations given to the situation in which a country passes through periods of boom or recession as those based on the predictability of the research- development investments circles. Because this thing is empirically controversial, the author starts from a model of the endogenous growth cycles as the stochastic Poisson model in which there are analytical studied the determinants of the cyclical behavior of researchdevelopment investments. The providing of an explicit expression regarding the expected value of a cycle shows that the most frequent fluctuations can be explained in a proper manner by this model. Also, it is proved the way in which the reduced technological improvements can determine intense fluctuations. Concerning FDI, it seems to be generally accepted that the main channels through which they can contribute to economic growth are: technological transfer, capital accumulation, access to international markets, managerial and marketing practices and job creation (Lall [2000], Te Velde [2001], Borensztein [1998]). Another consensus is that FDI and growth are positively correlated under the conditions of existence of a minimum level of human capital, technology and infrastructure in the host country. This is what Blomstrom and Kokko [2003] define as the “threshold level of development”. According to Serbu [2007], FDI are given an enhancing role for growth by the characteristics of the country. Athukorala and Chaud [2000], and also Balasubramayaur et al. [1996] sustain that countries which promote open trade policies benefit significantly from the growth enhancing effect of exports- oriented FDI. Continuing this idea, Blomstrom [1994] identifies as a necessary condition for positive correlation a sufficient level of per capita income. Borensztein [1998] underlines the importance of human capital in attracting FDI inflows and therefore technological transfer, but also FDI’s crowding-in effect on domestic investment, private or public, advancing in an indirect way the overall economic growth. Another condition taken into consideration is the technological gap between foreign and local enterprises; a smaller gap should determine a greater spillover effect [Borensztein, De Gregorio, Lee, 1998]. Rajan [2005], more interested in policies, argues that local policies, instead of offering financial or fiscal incentives for FDI, should concentrate on improving the country’s absorption capacity, meaning better infrastructure, qualified labor force, technology and local management. Many studies concerning FDI and growth have shown a positive association between FDI and GDP, but the direction of the causality is not very clear. Is FDI encouraging economic growth or is the high rate of growth that attracts FDI, in search of high profits and new markets? On one hand, Carkovic and Levine [2002] argue that, once the country specifics and endogenous FDI inflows accepted, FDI has not a robust influence on long-run growth. On the other hand, Hansen and Rand [2006], using a sample of 31 transition countries, find that FDI causes significantly the growth of the GDP, also in the long run, and more important, the long-run impact is independent of the level of development.
3. Some aspects of Romanian economy The economic openness from the first years of transition found the Romanian economy unprepared from structural and competitive point of view. The economy has to put many efforts to adapt, in both the internal market and external market. The increase of demand determined a boom of imports for consumption and determined a high level of inflation. To increase competitiveness, it was a vital need for investments in new technologies, research-development and an increase in labor productivity The Agreements of liberalizations signed by Romania with EU contributed significantly to this fact. We computed the degree of openness and its composition in [Pop Silaghi, 2006] and we found out that it had been based more on imports than on exports in every year considered for the analysis. The openness was mostly due to the trade with the European Union. The comparative advantage indicator showed that Romania holds comparative advantage in sectors in which the inward processing system is high as textiles, furniture, so where labour costs are low. On long term we showed that these cannot be comparative advantage sectors as there always can be competitors and more, as member of European Union there will be in time a convergence in terms of wages.
230
It is very important to study the impact on economic growth of trade and more, to link it with the effect of FDI. Even in a regression country framework, there will be a step forward to analyze this relationship. Like most countries in the region, Romania has followed approximately the same path in transition, until a certain point. In the beginning of the nineties, production has dropped in all former communist economies, with positive economic growth rates since 1997. Romanian policies implemented at the beginning of the transition to regain economic growth have failed, mainly because they encouraged consumption instead of investment. Therefore, using FDI as a solution to current account deficit had highly diminished its role upon economic growth. During 1990-1995, there has been an increase of FDI inflows towards commerce and services, small size enterprises, in the context of fiscal incentives and low labour costs. After 1995, FDI increased in production sectors, having an obvious superior impact than those in services.. In recent years, Romania has become attractive to investors due to the increase of demand in retail, financial services and real-estate, it has reached a certain level of market stability and a significant reduction of country risk. Low costs, especially in labour, continue to be a strong incentive, but investors start to concentrate on value-added products. Low labour cost is expected to lose importance as an attraction factor, as Romania is expected to have a 12 % annual growth in labour costs. Compared with her neighbors and based on her economic potential, Romania has certainly attracted insufficient FDI.
4. Data and methodology We will use data for Romania during 1991: 2006, annual data, FMI databasis, Directions of Trade Statistics and Balance of Payment Statistics. All data are expressed in US dollars. We will consider the following regressions:
log GDP a log FDI 1 log GDP b1 log X b2 log M 2
log GDP b3 log FDI b4 log X b5 log M 3 Performing a descriptive statistics analysis, we observe that until 1997-1998, an interdependence relation can be detected between FDI and growth, but the trend changes around 1998, when FDI seems to become not only with neutral effect, but with a negative sign. The correlation seems to reappear after 2001. We performed the 3 regressions using OLS. The first one tries to capture the effect of FDI on GDP, isolated from other factors. The second one implies trade, and the third one combines the effects of FDI, exports and imports together. We expect to have a significant positive sign for FDI, as well as for exports. Results are presented in Table 1. Table 1. Interrelationship between GDP, FDI and Trade: Econometric results OLS Estimates Independent variable
Dependent variable GDP 1
2
1 =24.10584
2 =20.81977
(0.0000)
(0.0000)
(0.0000)
FDI
a=0.039741 (0.0035)
-
b3 =0.048884 (0.0003)
Exports
-
b1 =.205399
b4 =0.145719
(0.3563)
(0.3326)
b2 =.356891
b5 =0.163286
(0.1014)
(0.2167)
0.85
0.95
Intercept
Imports 2
R
0.47
3
3
*** Note: In brackets we have the p-values associated with the coefficients. 231
17.62928
Looking at the first equation, we find a positive coefficient, which is statistically significant. Our finding is consistent with our expectations, an increase in FDI stock will increase the GDP. The Durbin Watson statistics indicates a positive first order serial correlation in the residuals. In the presence of serial correlation, the OLS estimators remain linear and unbiased, but they are no longer efficient and standard errors are likely to be underestimated. A possible cause of serial correlation is omitted variables, the missing independent variables being contained by the disturbance term. We tried to improve the results by including trade in equation 3. The White test shows no important signs of heteroscedasticity. The second equation estimates the relationship between trade and growth. We found no problems of serial correlation or heteroscedasticity, but we are surprised by the negative sign of exports, even though it is not statistically significant. In other words, higher the exports, lower the GDP. This can mean that there is not an evidence in Romania of the minimum of development on which the literature on cross country regression is focused. The fact that Romanian exports are more concentrated on inward processing system is a possible explanation also of the negative correlation. The problem that appears is to determine the minimum level of economic development that Romania has to attain to benefit of a positive effect of the exports expansion on the economic growth. It may be the case of the first years of transition that were the most difficult period. Perhaps at a delimitation of periods using more performing techniques of eliminating shocks would have led us to more optimistic results. An interesting aspect is the positive coefficient found for imports although not significant. Grossman and Helpman [1991] proved the important role that imports of goods or foreign equipments have in the process of economic growth. The objective of these imports is to introduce in the manufactured production foreign equipments more productive which incorporate foreign technolgy. This will induce a system of the national production more efficient, the increase of the production capacity and the development of the technological capacity of the importing country, by the difussion of knowledge. For Romania, thus, i tis a step towards this theoretical direction although the imports so far are more oriented on consumption rtahre than on investments. The third regression brings together FDI, trade and GDP. The R2 is 0,95, suggesting a good explanation of the model, compared to the R2 of the first 2 individual equations. Exports have a positive coefficient, as we would expect, as well as imports, even though their coefficients are not significant. The errors are homoscedastic and considering a 95% confidence level, the Breusch Godfrey test shows no serial correlation in the residuals. The surprise comes from FDI, who enter the regression with a negative sign, highly significant. This comes in contradiction with our hypothesis that FDI induces growth. We found several possible explanations. A first explanation, of statistical reason, is that other explanatory variables have been left aside, and in the reason of sensitive transition data, it could have had a certain influence on the results. Secondly, the regression is not independent of correlation between the factors, especially FDI-led exports. We take into consideration, for a future study, to take as independent variable the ratio FDI/ GCF gross capital formation, since the main channel of generating growth seems to be capital transfer. According to the economic theory, investments capable of generating growth are investments arrived at a certain maturity level. Hence, Romania had a certain delay in attracting FDI, therefore the maturity level required has not yet been fulfilled. Another reason for these results that fact that we consider FDI as a compact variable, and in reality the impact of FDI should be detailed on the different types of FDI and different value-added sectors of the economy. As suggested in Serbu [2007] and other studies on transition countries, “greenfield” FDI should exceed acquisitions related to privatization process, in order to improve economic performance.
5. Conclusion In this paper we did a country regression analysis, using Romanian data on exports, imports, FDI and economic growth. We tested three simple equations in order to have a clue of potential relationships inside Romanian economy between these variables. The impact of FDI on growth is significant only when it is studied separately. The inclusion of exports and imports in the model change the results, FDI have negative coefficient and exports and imports has positive signs but no significance is found. This demonstrates that the omission of other determinants of economic growth affects the impact of FDI on GDP. FDI by themselves induce a false effect of growth. The third equation reveals the fact that Romanian level of 232
development is not sufficient to enhance a positive effect of the FDI, exports and imports on the economic growth of the country. The disadvantage of the statistical regressions is that they do not incorporate the time dimension in the analysis. The regressions do not take into account the order in which the incorporated data in the regressions are generated by the studied phenomenon. We consider at this stage our work as an exercise to test relationships without employing time series econometric tools. Although positive associations can be causes of spurious regressions, they can offer minimal clues about the nature of the relationships from a static point of view. It will follow the tests of causality by which we will try to determine from a dynamic point of view the nature of the relationships inside Romanian economy.
References 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.
14. 15. 16. 17. 18. 19. 20.
Athukorala Wasantha ,The Impact of Foreign Direct Investment for Economic Growth: A Case Study in Sri Lanka, the 9th International conference on Sri Lanka Studies, 2003 Balasubramanyam, V. N., M. Salisu and D. Sapsford , Foreign Direct Investment and Growth in EP and IS Countries, Economic Journal, 106, 434, 92–105, 1996 Blomstrom Magnus , Kokko Ari , The Economics of Foreign Direct Investment Incentives, NBER Working Paper No. 9489, 2003 Blomstrom, M., R. E. Lipsey and M. Zejan, What Explains Developing Country Growth, NBER Working Paper No. 4132 , 1994 Borensztein E. De Gregorio J, Lee J, How does FDI affect economic growth?, Journal of International Economics 45, p. 115-135, 1998 Carkovic Maria, Ross Levine, Does FDI accelerate economic growth?, working paper 2002 Constantini, Valeria, Salvatore, Monini, Environment, Human Development and Economic Growth, Nota Di lavoro 35, Department of Economisc, Roma Tre University,2006 Dominiguez, Loreto, Economic Growth and Import Requirements, Journal of Development Studies, 6(3), p.283-299, 1970 Feder, Gerhson, On Exports and Economic Growth, Journal of Development Economics, 12, p.59-73, 1983 Fogel, Robert, Why China is likely to achieve its growth objectives, NBER Working paper no. 12122, March 2006 Funke, Michael, Ralf , Ruhwedel, Export variety and economic growth in Est European transition economies, Economics of transition, Volume 13 (1), p. 25-50, 2005 Hansen Henrik, Rand John , On the Causal Links Between FDI and Growth in Developing Countries, United Nations University 2006 Jones, Garett, Schneider, Joel, Inteliggence, Human capital and Economic Growth: A Bayesian Approach Averaging of Classical Estimates (BACE) Approach, Journal of Economic Growth, volume 11, number 1, pag.71-93, March 2006 Jung, W. S., Marshall, P. J., Exports, Growth and Causality in Developing Countries, Journal of Development Economics, February 1985, 1-12. Kavoussi, R. M, International Trade and Economic Development: the Recent Experience of Developing Countries, in Journal of Developing Areas, no.19, pp.379-392, 1985 Krugman, Paul; Helpman,E., Imperfect Competition and International Trade: Evidence from fourteen Industrial Countries, Cambridge: Harvard University Press, p.28, 1988 Lall, Sanjaya, Foreign direct investment, technology development and competitiveness: issues and evidence, monograph, 2000 Larre, B., Torres, R., La convergence est-elle spontanée? Expérience comparée de l’Espagne, du Portugal et de la Greece, Revue Economique de l’OCDE, no.16, Printemps, p.193-223,1991 Michaely , Michael, Exports and Growth: an empirical investigation, Journal of Development Economics, 4, p.49-53, 1977 Perreira, A., Importacao de bens de capital e evolucao economica interna: os casos da Grecia e de Portugal, Banco de Portugal, Boletim Economico, December, p. 59-66, 1996 233
21. Rajan, R.S., Financing Development in the Asia-Pacific Region: Trends and Linkages, The Role of Trade and Investment Policies in the Implementation of the Monterrey Consensus: Regional Perspectives, Studies in Trade and Investment No.55, pp.21-65.2005 22. Serbu Simona, Investitiile straine directe. Determinanti, efecte si politici de promovare,Ed. Cartii de Stiinta, Cluj Napoca 2007 23. Velde, D.W. te (2001) Government Policies For Inward Foreign Direct Investment In Developing Countries: Implications for human capital formation and income inequality, paper presented at OECD Development Centre conference on FDI and human capital, December 2001. 24. Walde, Claus, Endogenous Growth Cycle, International Economic Review, Volume 46, Issue 3, pag. 731-1062, August 2005
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THE NECESSITY OF APPROACHING THE SERVICES’ PROBLEMS IN THE CONTEXT OF THE INVISIBLE TRADE’S LIBERALIZATION Maniu Cristina Romanian-American University, Bucharest,
[email protected], 0722592990 Gogonea Manuela-Rodica Academy of Economic Studies –Bucharest,
[email protected], 0213191901/187 Marin- Pantelescu Andreea Academy of Economic Studies – Bucharest,
[email protected], 0213191901/187; 0724006093 The world scale concerns are directed towards services and the protection of intelectual property, so that it is informed in due time, the intervention of some significant structural alterations within the international commerce so that there appear substantial growths within the service commerce, as a direct cause of the deepening of the globalization process of the contemporary economy. In this study we emphasize on the necessity of approaching the services’ problems in the context of the invisible trade’s liberalization through a systemic analysis of opinions and concepts that refer to the bonds that appear between services, the invisible trade’s liberalization and globalization, also describing the specifics and characteristics of the international service commerce, the influential factors, aspects such as the Directives of the Services adopted by the European Parliament, as well as the need for Romania to participate in the creation of multilateral commerce rules which also include the services. As a reflection of that certain interdependence, it may be considered as a necessity the on-going process of economic life’s globalization under the influence of impact reflection and the importance within the invisible commerce and the adopting of certain strategies within the economic policies on a world-wide scale oriented towards the deepening of the globalization process that can include the liberalization of the invisible commerce as the only contemporary civilised means of growth. Key words: globalization process, invisible trade, services liberalization
Introduction The worldwide economic exchanges contain streams of material values and money, of results of the science and technical creations also activities based on services. Taken in their close interconditional relationship, these streams contain activities that, through their specificity have as goals: 1. The object of exchange, which can be material values, money, spiritual or third-party activities or cooperation activities. 2. The geographical aspect, each stream appearing between partners of certain countries or global areas. 3. A certain frequency, value, volume and importance, which offers a certain individualization. The variation, amplification and emphasis on the interconnections between the world wide economic circuit’s streams and the increment of mechanisms’ complexity represents, this day and age, one of the world wide contemporary economy’s characteristics. The world scale concerns are directed towards services and the protection of intelectual property, so that it is informed in due time, the intervention of some significant structural alterations within the international commerce so that there appear substantial growths within the service commerce, as a direct cause of the deepening of the globalization process of the contemporary economy. The systemic analysis of opinions and concepts referring to the specifics and characteristics of the globalization process of econimic life include the reflection of impact and the importance of services within the invisble trade. 235
The liberalization of commercial exchanges is defined as „a sum of actions meant to eliminate or lessen the effects of the barriers which the external contractors are faced with at the market entry point or to diminish the discrimination towards them”. [3]
The globalization process The globalization process has, at its core, the actions, strategies and interests of the transnational corporations, those that have the economic power and that are present on a world-wide level. The competition within the global market is very tough. Rémi Kauffer writes about American Multinationals at War against Europe, and others consider that “nothing is more mobile these days than the assets. The international investments direct the commercial streams, transfers worth of billions at the speed of light decide the exchange rates, a country’s purchase power and its currency. No longer do we see as the engine of commerce the differences in relative costs. What matters now is the utmost advantage on all markets and all countries at the same time.” In this direction and in that of adopting an import policy, actions are taken on a world scale that include: goods that are not on national territory but which are consumed by individuals and legal entities that are abroad, goods destined to me re-exported with or without national-level entry, as well as services carried out on national territory, or abroad. The above-mentioned categories contain services that lead to invisible import (currency exchange and transfer, the expenses of various sports, cultural, economic delegations), the re-exporting activities (that imply spending and great efforts, as a commercial risk caused by re-selling) as well as another category which contains: transport services, banking services , postal services, telecommunications, technical assistance, juridical assistance, medical services, schooling, work in various fields, all with deep implications in activities that concern the growth of invisible trade. Re-exportation activities contain a wider area of utility because: 1. They assure the growth of production, of international economic relations 2. Lead to the growth of specialized import’s income In this context, the opportunity to establish numerous firms specialized in import operations appears, all concerning the re-exportation, having as object of activity: 1. Goods that can be kept and preserved in appropriate warehouses on a long term and which are sold in optimal periods from the point of view of economic situations (whenever there is a high demand). Also, other situations exist in which other possibilities of keeping and preservation are created when surplus productions are mentioned as opposed to actual demand, created on the intermediary exporter’s risk. 2. Goods that need an inferior processing and that need an improvement process for re-exporting (their value is increased). The globalization tendency recorded in more and more businesses in the services’ field highlights the vitality of this field of activity. The phenomenon of accentuated expanding of services is approached by more and more specialists which start proving the theories from the decisive factors which are presented in four categories, depending on their role within the international service commerce (figure 1) such as: 1. Decisive factors within the services’ expansion [8]; 2. Factors that stimulate the international services commerce [15]; 3. Factors that determine the growth of the international services commerce [2]; 4. Factors involved in the liberalization of transactions with services [3]; *TRIPS–Agreement on Trad-Related Aspects of Intellectual Property Commission, Canberra, May
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Figure 1. Influential Factors within the International Services Commerce
Negotiation issues regarding the liberalization of worldwide commerce within The World Business Organization (WBO) concern aspects about the “competition” of interests within the great economic powers such as the European Union or the U.S.A., as well as of the great agricultural exporters such as Brazil, Australia and poor countries that, in time, diminish the chance of a better life [13].
The importance of the Directive of Services The European Council, after years of negotiation, approved the Directive of Services which contains the problems of providing trans-border services through eliminating obstacles from the way of free circulation of services in the internal market. After the Directive is applied (countries that are members have as much as three years to apply the directive), an increase in the life standard of every citizen will be recorded because each European citizen will be able to provide services in any E.U. state, which will be reflected in an accentuated economic growth process. The Directive is concerned with the quelling of provisions about the temporary detachment of workers and, of the principle of country of origin which was, eventually, replaced with that of the freedom to provide services, creating as such a balance between the interests of the consumers, the workers and those of the providers of services.
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The freedom to provide services presumes respecting the rights of the provider to insure services and to give him the warranty of free access and free practice of a service on their territory, so as to, generally there won’t be the possibility to ask a provider to open an office in the country where the temporary establishment has been made and he won’t be forbidden to establish a “certain infrastructure” on that certain territory. The provider won’t be compelled to register within a professional body and he won’t be prohibited to use the equipment that he needs at his work place. Also, the Member States won’t have to resort to “contractual arrangements between provider and receiver”. On the basis of national laws, the participant member countries can limit this freedom of services, these arguments concerning the fields of public security, environment protection and public health. The Directive covers services such as: 1. Services that are specific of enterprises (counseling and management, certifying and testing, the office maintenance, advertising services or concerned with recruiting, services of economic units); 2. Services for consumers (specifically the tourism, including tour guides’ services, the leisure services, sports centers and fun parks). 3. Services provided to enterprises and consumers(juridical or fiscal counseling, housing agencies, services connected to constructions such as architects, distribution, the organizing of commercial fairs, travel agencies, car rentals); Among the services that are not covered by the Directive are: 1. Services covering general economic interest(water, gas, electricity) which are covered by the Directive’s provisions referring to establishing freedom. 2. General interest services that do not have an economic character (such as public education). 3. Some social services insured by the State or by the providers named by the State (social housing, aiding the individuals in difficulty, children’s aides). The Directive will not affect the fields already covered by other legal enforcement of the Union (such as financial services or transport services or others that will be the object of a special legislation in the future – such as health services). 4. Some occupations (such as the lawyers’ professions) are covered by the Directive but they are under the control of field regulations in the Union. The Directive is, as a consequence, complementary with the specific regulations, because it is applied only upon aspects not covered by the field directives. 5. The taxation policy is not covered by the new directive. In this context, one can observe that the European Council had as a primary objective finding a method through which to open even more the internal services’ market in the view of trans-border competition, without deteriorate the social European model. The possibility of each internal provider of services to compete with equal chances within a branch is the consequence of internal liberalization that can be triggered by the liberalization of the access of foreign providers in the market. In this state, the goods and services transactions can come under the spectrum of a reform of the external commercial policy, whose action is triggered on two levels as one can see in figure 2.
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Figure 2. Levels of external commerce policy reform actions
The Romanian place in the International Commerce In the actual context, Romania’s participation to elaborating a set of multilateral commerce rules appears as a necessity,the advantages of enforcing the multilateral commerce legislation on a national level as well as on an international way, imply a cooperation on a multilateral level on the following directions: constructing the rules of market economy at the same time as establishing a legal frame, predictable and stable in which the Romanian exporters can take actions in an environment of loyal competition. The negotiation of new multilateral rules in areas such as competition concerned with commerce, foreign investment, the transparency of public acquisitions leads to the creation of a multilateral legal frame more predictable and transparent, based on precise and clear rules, which will do only good for the Romanian national economy. These negotiation processes have, as outcome, the attraction of new investments, the respecting of competition principles, with advantages especially for the consumers and a better use of the public funding. The enforcement of the multilateral commerce system in Romania, with its quality as an original member of WBO, is made through the country actually participating in the complex activity of this organization. The commercial negotiations that take place under WBO, must lead to the achievement of a lessening or of the removing of financial fare borders or non-fare borders in the way of commerce. This process of modifying those certain borders constitutes an essential level in the way of the liberalization of the goods and services commerce in the conditions of globalization. Also, in Romania as well, at the same time with the regional integration process, the process of globalization is as well on-going along with the process of the enforcement of the multilateral commerce system, these processes becoming directly intertwined as a consequence of the phenomenon of mutual supporting. The association agreements or those of free commerce are completed with the following of the commerce regulation established multilaterally, the liberalization of the regional commerce being a premise for the active participation in the liberalization process within WBO. As an optimal method for the realization of the balance of the agreed-approved concessions, the agenda of 239
the Doha Conference contains the idea of a multilateral commerce round in Romania. In this direction, for the service commerce the development of the liberalization process was established considering the internal realities of each member. It is sought out that, through this liberalization, a process of incrementing the quality of services offered and practiced on the internal market is triggered, as well as the use of agreed openings in the market, in the direction of the growth of export in countries with less tradition in this field. The adoption of certain internal assistance means is imposed as well, through a better clarification of the commerce rules, so that the continuation of those that have a very reduced effect on the liberalization of commerce is permitted and to lead to the substantial lessening of all formes of subsidizing of exports, so as to eliminate them, depending on the degree of implementation of certain adequate policies in the country. Commercial multilateral negotiations within WBO, at which Romania took part as well, took place having as an objective the embrace of measures that will not determine the diminishing of the protection degree below that of the European Union, thus not influencing negatively our country’s integration process . As a developing country, Romania continuing to participate in the liberalization of the international services commerce, would have an important advantage that, in the field of this type of commerce would lead to the facilitation to the access of third-party markets for Romanian goods and services exports. This participation at those certain negotiations would amount to, on one hand to directly opening new potential markets for the Romanian services exporters and, on the other hand, indirectly to increasing the competition degree in the national fields. Actually, the indirect effect is reflected in a gradual availability of these facing the foreign competition, the national consumers benefitting fully from this process. A significant example is the expansion of the mobile phone market, which will generate, for Romania as well, a meaningful decrease in the prices of these types of services. The evolution of economy on a world wide scale reflects two tendencies of development: 1. The intertwining, association, completing, internationalization, integration, globalization of economic processes. 2. The in-depth dimensional diversification of the worldwide work division.
Conclusions The globalization can increase the growth and economic development of each country only under the conditions of the liberalization of invisible trade. Independent of the specifics of its development, this liberalization process of the invisible trade can have important economic advantages, participating in the international work division, being open to foreign assets and technologies. The intertwining of the globalization process with the mechanisms of the invisible trade’s liberalization creates consolidation opportunities for local, regional and international economic structures by orienting them towards: 1. World Wide Investment, where transnational companies have an important role; 2. The Accentuation of Informational and Technological Exchanges as a basis for efficient use of human, natural, material, financial resources; 3. Specialization and Re-specialization, within the international invisible tradeam de lucrua, by using, at a high standard, the principles of comparative costs by assuring the pay balance as well as choosing the most adequate means of improving activities concerning imports and exports; 4. Accentuating the workforce mobilization process and especially that of the service field, for a better functioning of the world wide work market; 5. The enhancement of the internationalization and institutionalization process by creating multiple international institutions. The economic policies’ strategies on a world wide scale must be oriented towards the deepening of the globalization process which has to include the liberalization of invisible trade as the only means of actual civilized development.
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11.
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Bari I. Globalizarea economiei, Editura Economică, Bucureşti, 2005 Bobircă A. Economia serviciilor internaţionale, Editura Economică, Bucureşti, 2005 Cristureanu C. Economia invizibilului. Tranzacţii internaţionale cu servicii, Editura All Beck, Bucureşti, 2004 Ghibuţiu A.Serviciile şi dezvoltarea, Editura Expert, Bucureşti, 2000 Giarini O.,Stahel W. Limitele certitudinii, Editura EDIMPRESS, Bucureşti, 1996 Hanson G, Feenstra R. Global production and inequality: A survey of trade and wages, NBER Working Paperseries No 8372 Ioncică M., Stănciulescu G. Economia turismului şi serviciilor, Editura Uranus, Bucureşti, 2004 Ioncică M., Petrescu E. .C De la creşterea economică, la dezvoltarea durabilă. Rolul serviciilor în procesul de dezvoltare, Revista Amfiteatru Economic, nr.18, nov..2005 Ioncică Maria Economia serviciilor, Editura Uranus, Bucureşti, 2004 Mann C.L. Globalization of IT services and white collar jobs: The next wave of productivity growth, Institute for International Economics, International Economics Briefing Paper No 19, March 17, 2004 Mitruţ C., Gogonea R.-M., Cristache S.-E. Evoluţii şi mutaţii structurale privind activitatea de comerţ intern şi servicii din România (1), Revista de Statistică B+, nr. 11/2006, editată de Institutul Naţional de Statistică, Bucureşti Mitruţ C., Gogonea R.-M., Cristache S.-E. Evoluţii şi mutaţii structurale privind activitatea de comerţ intern şi servicii din România (2), Revista de Statistică B+nr. 11/2006, editată de Institutul Naţional de Statistică, Bucureşti Munteanu B. Directiva serviciilor lasă statele UE să decidă singure câtă „liberalizare”, Ziarul Gândul”, 17 februarie, 2006 Patriche D. (coord.) Comerţ şi globalizare, Editura ASE, Bucureşti, 2003 Ţigu G. Strategii globale şi internaţionale în managementul serviciilor. Particularităţi pe piata europeană, Revista Amfiteatru Economic, nr.18, nov..2005 Zaharia Marian. (coord.) Economia Serviciilor, Editura Universitară, Bucureşti, 2005 Zaharia M., Stan R., Vădineanu C., Busuioc M, Economia Serviciilor. Aplicaţii şi studii de caz, Editura Universitară, Bucureşti, 2004 www.worldbank.org www.wmf.org www.oecd.org
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CAUSES OF PRODUCTIVITY SLOWDOWN IN THE EUROPEAN UNION Marinaş Marius-Corneliu Academy of Economic Studies, Department of Economics, Bucharest, Moxa street, nr. 11,
[email protected] Socol Cristian Academy of Economic Studies, Department of Economics, Bucharest, Moxa street, nr. 11,
[email protected], Socol Aura-Gabriela Academy of Economic Studies, Department of Economics, Bucharest, Moxa street, nr. 11,
[email protected] Abstract. In this study we have analyzed the evolution of the EU-15 labour productivity in the last years to identify the structural problems of the European economy. According to statistical data, the productivity per hour has decreased from 2% in 1981-1995 to 1.6% in the 1995-2000 period and then to only 1.3% in 2000-2006. The main causes of the productivity slowdown refer to lower investment, which caused a smaller increase of the capital stock and to smaller growth rate of total factor productivity. In the last thirteen years, labour productivity growth in Europe was below the level from United States, which leads to larger gap between the two economies. Key words: Hodrick-Prescott filter, potential growth, ICT capital, total factor productivity. The term “productivity” describes labour productivity, measured by real GDP per worker or by GDP per hour worked. According to Cobb Douglass production function form, labour productivity growth is influenced by capital stock accumulation, by stock of capital per employed person, and by total factor productivity (TFP). Among these three factors, capital deepening and total factor productivity change after a long time after investment or technological process, while employment is a variable production factor on short term. Otherwise, the employment may be more easily measured, while the other two factors are measured by more complex methodologies. For example, the capital stock accumulation results from net investment, assuming that there is a known initial capital stock. Also, total factor productivity may be interpreted as residual of the Cobb Douglass function, being equal with difference between output growth and the growth of labour, respectively capital stock. The sources of labour productivity results from the decomposition of national output, which can be expressed by use of a Cobb-Douglas production function with constant returns to scale:
Y TFP K L1 , where, Y denotes GDP; L is the number of persons employed; K is the stock of capital; TFP represents total factor productivity; β is the elasticity of output with respect to stock of capital, assumed to be constant over time. It results that labour productivity has the following form:
Y K TFP L L
If the above relation is logarithmed, it can be expressed the change of the labour productivity in change of the total factor productivity and in change of the stock of capital per employed person, according to below equation:
%(Y / L) %TFP %( K / L) .
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The trend of labour productivity in the European Union The growth of the labour productivity is mostly influenced by economic business cycle of a country. Thus, in a recessionary period, the economy produces below potential and the labour productivity will fall below trend. In this study we have used a Hodrick-Prescott (HP) filter to decompose the evolution of the output growth and of the productivity growth in two components – trend and cycle. The HP filter was used, for example, in the calculation of trend labour productivity growth for the euro area in European Commission (2006). The trend of labour productivity growth and economic growth rate is illustrated by Figures 1 and 2 in which we have presented the evolutions of the output and productivity growth in the European Union over the period 1980-2008. As can be seen, the two variables move closely together, with a contemporaneous correlation of 0.76.
Source of data: European Commission (2007) Figure 1. The HP trend of labour productivity in European Union
Source of data: European Commission (2007) Figure 2. The trend of economic growth in European Union In accordance with these figures, it results that the trend of the labour productivity was almost 1.8% during ten years (between 1984 and 1994), and has declined rapidly below 1.5% after euro introduction. The weaker performance in terms of the labour productivity can be explained both by decrease of the trend and by recessionary phase of the economy, as seen in figure 2. Concerning the potential growth rate of the 243
economy, it was relatively stable in the last fifteen years, being situated at 2% per year. Generally, the European economy has register a negative output gap especially after 2000 year. The actual evolution of the potential GDP (estimated by the HP trend of economic growth rate) is characterised by the increase of number of persons employed beginning at 2000 year that has compensated the reduction of hours worked per employer (about -0.3% per year contribution). The total factor productivity explains about half of the potential growth rate and the contribution of capital accumulation is stable around the 0.6-0.7 percentage points. In the graph 3, we have showed the decomposition of potential GDP (YP) , according to following equation:
YP TFP K ( L
H 1 ) %YP %TFP %K (1 ) %L (1 ) %( H / L) L
where, the labour contribution is evaluated by the total number of hours worked.
2 1.5 1 0.5 0 1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
-0.5 Labour
Changes in hours per employer
Capital
TPF
Source of data: European Commission (2007) Figure 3. The factors that influence the potential GDP in the European Union The significant decrease of total factor productivity growth in the EU since 1995 (as in the figure 3) has generated a reduction of labour productivity growth (in figure 1). If European Union will be characterised by same evolution in the next years, then long-run economic growth rate will reduce. This is calculated by the sum of changes in labour productivity and in employment. According to the three figures represented above, it can be concluded that European Union has interrupted the favourable evolution after Second World War, which has sustained a convergence with US level of productivity. Thus, in the 2006 year, the level of output per capita in European Union was at roughly 73 % of US levels, level similar with that existing in the 1970 year. It results that in the last thirty years it has not registered a convergence of the output per capita in European Union relative to United States economy. However, there is a good news about the labour productivity contribution. Such it is observed in the figure 4, labour productivity measured as output per hour worked has increased from 70% of US level to 103% in 1995 year, respectively to 92% in 2005 year. In the last ten years, European Union has lost around 20% of the gains obtained after the Second World War. Beginning with 1995 year, the gap between US and EU has increased, in context of the higher labour productivity growth rate in the first country. European Competitiveness Report (2001) considers that “the mid-1990s marked a turning point in this process. A rapid acceleration of productivity growth in the US coincided with a deceleration in the EU and led to a renewed widening of the productivity gap, thus erasing to some extent the convergence gains made. EU performance in the second half of the 1990s was not by itself especially discouraging, with GDP growth accelerating and employment rising”. 244
2007
120 100 80 60 40 20 0 1970
1980
1990
Output per capita
1995
2000
2005
Output per hours worked
Figure 4. Output per capita and productivity in the EU relative to the US (in PPP)
Effects of ICT on labour productivity In this section we have tried to explain the labour productivity gap between US and EU by slower propensity of the European economy to Information and Communication Technologies (ICT). Over the past few decades, ICT has become increasingly pervasive in development economies. Two main evolutions have spurred this uptake of the ICT technology. The first reason refers to rapid technological progress which has driven down the cost of ICT goods. The second reason refers to the ICT process enabled by this technological progress. There are at least three possible reasons why ICT has stronger effects on productivity than other capital stock, according to Ark and Inklaar (2005): - effects of ICT investment through ICT capital deepening; - rapid technological change in ICT producing industries leading to TFP growth; - Total Factor Productivity (TFP) growth in industries that make intensive use of ICT (knowledge spillovers) Ark and Inklaar (2005) consider that “total factor productivity (TFP) growth in ICT producing industries will quite naturally contribute to aggregate TFP growth and hence labour productivity growth. In a neoclassical framework, the contribution from ICT investment is also well defined: firms will invest in ICT up to the point where further output gains are equal to the marginal cost of the investment”. These economists have proposed a theoretical framework to analyze the contribution of ICT to economic growth, respectively to labour productivity. They have decomposed the capital stock of the country into ICT capital (KICT) and non-ICT capital (KN). The first type of the capital is obtained in industries such electronics, informatics, while the last is specific to traditional industries. They used a traditionally Cobb Douglass production function in which indluded the two types of the capital stock, as in the following relation:
Y TFP K N K ICT L1 .
K K Y TFP ( N ) ( ICT ) . L L L TFP growth can then be derived as the growth of output minus the growth of aggregate inputs:
%TFP %
K K Y %( N ) %( ICT ). L L L 245
To offer an another explanation of the ICT impact on labour productivity gaps, Ark and Inklaar (2005) made a decomposition of the TFP - originating in manufacturing industries producing ICT goods and other industries. Table 1 summarizes the main findings for the EU-15 and the U.S. for the periods 1987-1995, 1995-2000 and 2000-2005. The table shows a decomposition of labour productivity growth into the effects of ICT capital deepening, TFP growth from ICT producing industries, non-ICT capital deepening and TFP growth other than that from ICT production. “The main findings are that the EU-15 as a whole has been lagging behind the U.S. in terms of ICT capital deepening in each period” (Ark and Inklaar, 2005). The deepening of the ICT capital process has emphasized in European Union and in United States beginning with 1995 year, but after 2000 year its growth has returned to levels pre-1995. The intensity of the process was higher in United States and led to stimulate the labour economic growth rate, from 1.2% pre-1995 to 2.3% after this year. Despite the role of the ISC sector, the divergence between labour productivity growth rates was mostly influenced by higher TFP growth in other industries. Thus, the increase of this form of TFP was zero in European Union and 1.4% in United States. 19871995
1995 2000
20002005
Labour productivity growth in the EU, of which:
2.3
1.8
1.2
- ICT capital deepening
0.4
0.6
0.4
- non-ICT capital deepening
0.8
0.4
0.5
- TFP in ICT industries
0.2
0.4
0.3
- TFP in other industries
0.9
0.4
0.0
Labour productivity growth in the US, of which:
1.2
2.3
2.8
- ICT capital deepening
0.5
1.0
0.6
- non-ICT capital deepening
0.1
0.2
0.5
- TFP in ICT industries
0.4
0.7
0.3
- TFP in other industries
0.2
0.4
1.4
Source of data: EU KLEMS (2008) Table1. Sources of labour productivity in EU and US Based on the data included in the table above, Ark and Inklaar (2005) have concluded that “European
economy are still in a transition process towards a new phase of productivity gains from ICT usage, which the United States have already realized. To this end the direct relationship between ICT use and TFP growth at the industry level has been estimated, to identify any productivity spillover effects of ICT use. The European slowdown in productivity growth is a reflection of an adjustment process towards a new economic structure, which has developed more slowly in the EU than in the U.S.”. Therefore, these authors have identified a structural cause of the labour productivity weaker performance in the European Union, which can be neutralized by rapid diffusion of ICT in the European industries.
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Determinants of labour productivity In this section, we have summarized the most important factors to enhance labour productivity in the European Union, on the basis of the economic literature: 1. rising the education level of the employed population. Generally there is a positive correlation between the education and the living standard of the population. 2. ensuring a free competition in all the economic sector, inclusive in the service sector or in innovation sector. A free competition forces the firms to higher specialization process, which can lead to higher productivity. 3. stimulating the innovation process by tax burden reduction, by tax facilities, by promoting the entrepreneurship, respectively by rising of the research and development spending share in GDP. This factor is positive influenced by education and is into a concave relation with competition. Thus, innovation process increases at low and higher level of competition. 4. investing in physical capital, which rise the degree of the worker endowment and the level of their efficiency.
References: [1]
[2] [3] [4] [5]
[6]
[7] [8]
Ark, B. van and R.C. Inklaar (2005), ‘Catching Up or Getting Stuck? Europe's Troubles to Exploit ICT's Productivity Potential’, Research Memorandum GD-79, Groningen Growth and Development Centre, September; European Commission (2001), “European Competitiveness Report “ European Commission (2006), “Quarterly Report on the Euro Area”, Vol. 5, No 4, Economic and Financial Affairs DG, 2006; EU KLEMS Database, March 2008, http://www.ggdc.net; Gordon, R. J. and I. D. Becker (2005) ‘Why did Europe’s productivity catch-up sputter out? A tale of tigers and tortoises’, paper presented at the Federal Reserve Bank/CSIP Conference, San Francisco, November 18; Inklaar, R;, M. O'Mahony and M.P. Timmer (2005), "ICT and Europe's Productivity Performance: Industry Level Growth Account Comparisons with the US", Review of Income and Wealth; Schreyer, P (2006), "International Comparisons of Levels of Capital Input and Productivity", paper presented at the conference on the "Determinants of Productivity Growth", Vienna; Van Ark, B., M O'Mahony (2007), "The EU KLEMS Productivity Report", Issue 1, University of Groningen and University of Birmingham.
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ON SCIENTIFIC IMPOSSIBILITY OF OPTIMAL TAXATION Marinescu Cosmin The Academy of Economic Studies, Bucharest, Department of Economics and Economic Policies, No. 6 Piaţa Romană, Tel. 0722 778 108,
[email protected] The idea is to discover the economic science potential to „prescribe” an optimal taxation, both in taxation system (progressive vs. flat tax) and in taxation burden. I am going to demonstrate the myths of many popular ideas from the economic theory and public opinion: on the one side, that flat tax is the best way against fiscal discrimination and welfare redistribution in society, and on the other side, that flat tax is the modern source of economic prosperity. As any other social product, taxation must be considered, first of all, from ethical point of view. In Murray Rothbard’s terms, „Our conclusions are twofold: (1) that economics cannot assume any principle of just taxation, and that no one has successfully established any such principles; and (2) that the neutral tax, which seems to many a valid ideal, turns out to be conceptually impossible to achieve. Economists must therefore abandon their futile quest for the just, or the neutral, tax”. Key Words: Flat Tax, Optimal Taxation, Public Choice Theory
Is the fiscal burden a scientifically one? The idea is to discover the economic science potential to „prescribe” an optimal taxation, both in taxation system (progressive vs. flat tax) and in taxation burden. I am going to demonstrate the myths of many popular ideas from the economic theory and public opinion: on the one side, that flat tax is the best way against fiscal discrimination and welfare redistribution in society, and on the other side, that flat tax is the modern source of economic prosperity. The economic calculus argument reveals the arbitrary character of every fiscal policy. Which are the reasons on which bases the government proposed a unique tax rate of 16%? Why not 16,5%, or 20%, or 10%, so that being a whole number? Which is the calculation used, in general, when establishing the tax rate? Do we speak about that (optimal) tax rate, when the economy is prosperous and „goes” very well? Fiscal options of those governments that choose the unique tax rate reveal the great diversity of those used. Everywhere and successively we assist to the national fiscal systems reformation, by changing the tax rate nature and the level. The grounds are often found in the elections programs through which politicians intend to take advantage of the economic circumstances they are facing. Consequently, the fiscal system cannot be subordinated to a scientific, objective, based on universal law frame of economic science reasoning. This option is a political one, as Alvin Rabushka recognizes in an interview given after adopting the unique tax rate in Romania in 1st January 200560. Well, choosing a certain fiscal system is not and certainly cannot be an objective, scientific one. We do not speak either about assuring the economy „well doing” or about reducing the tax collection costs, as fiscal authorities often claim. Interests for reducing the expenses can exist only within private property frame because in such a medium prodigality is punished through losses or even bankruptcy. Unfortunately, we cannot imagine the government being bankrupted because of... „great expenses for tax collection” !! Some economists consider that, as taxation rationale is that of assuring the financing instrument for public goods, than the fiscal system must be subordinated to the necessity of producing public goods. For
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Alvin Rabuskha considers that choosing a unique tax rate of 16%, or of any other level, is determined by a few factors. One of them could refer to the need of producing certain returns necessary for financing the governmental expenses. Another one could be the wish to attract the investors and to stop qualified workers leaving the country. „Certainly – shows professor Rabuskha - if 16% is too small and, consequently cannot produce adequate incomes, it is more a matter of controlling the public expenses than the option for a certain tax rate”. It seems that, the present fiscal trend is adapting the taxes level to the already established public expenses, so that these “to satisfy” more and more persons. The Romanian government confirms that, presently, the fiscal reform – starting with reducing the public expenses in order to permit after a tax substantial reducing - is an out-of-date (or non-electing) one.
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example, Richard Epstein (1985) insists on the fact that taxation system should rather be proportionally than progressive because individuals do not have progressive access to public goods. But, if considering the „ public goods” rationale, than the solution should be, in fact, another one. It is revealed by the public goods nature: using them by a certain person does not reduce its availability for the others in the community. So, one could claim that, in the virtue of public goods non-exclusivity and noncompetition attributes, no one can benefit more than others from national army, public electricity, radio waves, etc. In this situation, could be the „unique tax” in forfeiter (tax in fix amount) amount the „most correct” financing system of public goods? Yes, indeed, as public goods usage is neither a progressive one, nor proportionally to everybody’s incomes, but identical for everyone. Being given these circumstances, how can someone calculate the tax everyone should pay? Very simple: dividing the public goods production costs to the number of persons in a certain community. So, forfeiter tax could reduce significantly the redistribution rationale that rules the government actions in the society and in the virtue of which the government gains the „sympathy” from that certain groups that take advantage of redistribution acts. Also, paying the same amount of money, as a tax, means that taxation is established according to the payment capacity of the poorest members in the society. This way the government would be obliged to manage only with the taxes collected by this system and increasing the governmental budget would necessarily be derived from the improvement of the situation of those less rich members in the society, in the spirit of the so-called John Rawls „social justice”. Forfeiter tax cannot either contradict the tax redistribution principle61 or solve the problem of the optimal taxation impossibility. Contrary to market relations, government actions towards producing goods, the so called by the later „public goods”, mean a non proportionate distribution of expenses and benefits. There is no reason to suppose that the government will „steal” its subjects’ property only when and in the proportion he manages to use these properties more efficient (for whom?) than their owners.
The Economic Jerry-built of Optimal Taxation Such an analysis, as I have already shown in the paper „Institutions and Prosperity. From Ethics to Efficiency”, produces amazing conclusions so far the governmental sector optimal dimension62. The public sector dimension does not represent the economic calculus result, as happens when speaking about a firm dimension, anytime, on the market conditions, because the impossibility of using the economic calculus criteria within an agency whose receiving (I prefer using this term compared to that of „incomes”) is obtained using (fiscal) coercion. The pure normative theory failure is represented by establishing the fiscal government needs in an exogenous way, according to a certain amount of public goods considered „optimal”. But determination of such an „optimal” cannot be subordinated to the objective criteria of economic rationality, but only to abusive judgments of supported, possibly by the majority vote, governmental decision makers. The public choice theory reveals the fact that the rules of democratic game enforce the government to maximize the resulted advantages from the public expenses increasing, sometimes even sacrificing the economic development, as demonstrated by economic history63. That is the reason why governments spend the maximum of resources received and even more than that by creating deficits and public debts. And the fiscal frame is inevitably subordinated to discretionary budget needs and public debts, within a world in which the majority of the economists continue, delusive, to speak about „optimal”. There is nothing „optimal” as far as public sector relative dimension is concerned. The great argument, referring to the impossibility of economic calculus in socialism, given by Ludwig von Mises, represents this explanation basis, as the public sector is, in fact, a „socialism island”. Being not given the market and 61
On the forfeiter tax conditions, property redistribution is done among tax payers, those who gains in the private sector, and tax consumers, those who form the state frame. 62 Cosmin Marinescu, 2004, p. 164-78 şi 208-9. 63 James Buchanan public choice demonstrations to be seen, Gordon Tullok, Richard Wagner, Geoffrey Brennan and also the theoretical and historical arguments of Douglass C. North (1990), who demonstrated the necessity of institutions integration in the economic science.
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prices, the „socialization” properties allocation using state budgets is a political one, whose viability reported to individuals needs is impossible to be verified. The public sector dimension cannot be dimensioned based on „profitability calculus”, otherwise said economic, but only manipulated depending on supposed winning political interests and programs, in fact electoral. This argumentation is also valid for unique tax. Even if the government should limit, in a miraculous way, to person and property protection and so the tax be restrained to this protection service, then how can the government determine the level of protection and what taxes to collect? More than that, as Rothbard shows, „…«protection» can refer to anything, starting with a policeman for the entire country towards a bodyguard and a tank for every citizen...Who is supposed to determine the protection level, being obvious that everybody will be better protected against theft and aggression in case having an armed guard? On the free market, each person voluntary changes are going to decide the amount and the quality of offered goods and services; but which criteria to be used when these decisions are to be taken by the government? The answer is that there are no criteria and these governmental decisions can be only abusive” (Rothbard, 1985). The level of protection and tax rate are not decided by economic calculus, but by political interests and potential success of different arrangements. Consequently, tax system is not a market economy (scientific) intrinsic aspect, but one of political system. So, the optimal taxation jerry-built to be a complete one, it must be said that, unfortunately, subordinated to the democratic logic of election process, governments „democratic” assumes new and new „public” interests spheres. These mean new and new taxation opportunities, which do not deserve to be neglected as in four years time a new politic administrator could take advantage of them.
Bibliography 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.
Brennan, G., Buchanan, James M., The Power to Tax, New York, Cambridge University Press, 1980 Buchanan, J., Tullock, G., Calculul Consensului [1962], Ed. Expert, Bucureşti, 1995 Ronald Coase „The Lighthouse in Economics", The Journal of Law and Economics 17, no. 2, octombrie 1974 Edwards, James Rolph, „Taxation, Forced Labor, and Theft: Comment”, în The Independent Review, vol. VI, no.2, 2001, p. 253-57 Edwards, Chris, „Catching Up to Global Tax Reforms”, în Tax & Budget Bulletin, Cato Institute, no. 28, noiembrie 2005 Epstein, Richard, Takings: Private Property and the Power of Eminent Domain, Cambridge University Press, 1985, 297-303 Friedman, Milton, Capitalism şi libertate, Editura Enciclopedică, Bucureşti, 1995 Gwartney, J., Long, J., „Is the Flat Tax a Radical Idea?”, Cato Journal, vol. 5, no. 2, 1985, p. 407-32 Mitchell, Daniel, A Brief Guide to the Flat Tax, The Heritage Foundation, 7 iulie 2005 Hall, Robert, Alvin Rabushka, „The Route to a Progressive Flat Tax”, Cato Journal, vol. 5, no. 2, 1985, p. 465-80 Hayek, Friedrich, Constituţia libertăţii, Institutul European, Iaşi, 1998 Marinescu, Cosmin, Instituţii şi prosperitate. De la etică la eficienţă, Ed. Economică, Bucureşti, 2004 Marinescu, Cosmin, „Mitul criteriului eficienţei în ştiinţa economică”, în Revista Analiză şi Prospectivă Economică, Ed. ASE, nr. 1-2/2005, p. 49-53 Marinescu, Cosmin (coord.), Economia de piaţă. Fundamentele instituţionale ale prosperităţii, Editura ASE, Bucureşti, 2007. North, Douglass C., Institutions, Institutional Change and Economic Performance, Cambridge University Press, 1990 OECD, Tax Rates Are Falling, OECD in Washington, 2001 Franz Oppenheimer, The State: Its History and Development Viewed Sociologically, Indianapolis: Bobbs-Merrill, 1912 Rothbard, Murray, The Case Against the Flat Tax, www.mises.org/rothbard/flattax.pdf 250
19. Rothbard, Murray, L’étique de la liberté [1982], Les Belles Lettres, 1991 20. Rothbard, Murray, Power & Market, Kansas City: Sheed Andrews and McMeel, Inc., 1970
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EU KNOWLEDGE ECONOMICS: A SELF-ORGANIZING MAP ARTIFICIAL NEURAL NETWORK ANALYSIS Mattoscio Nicola University of Chieti-Pescara , Department of Quantitative Methods and Economic Theory , Viale Pindaro 42, 65127 Pescara (Italy),
[email protected], +39 085 4537583 Colantonio Emiliano University of Chieti-Pescara, Department of Quantitative Methods and Economic Theory , Viale Pindaro 42, 65127 Pescara (Italy),
[email protected] , +39 085 4537577 Carlei Vittorio University of Chieti-Pescara, Department of Quantitative Methods and Economic Theory, Viale Pindaro 42, 65127 Pescara (Italy),
[email protected] , +39 085 4537577 The recent enlargements to new Member States are challenging steps forward in the development of the European Union (EU). Such developments, together with the achievement of a single market, require a new approach to the Knowledge economics. Nowadays, the concept of Knowledge as a source of economic development gains popularity, giving rise to the term “Knowledge Based Economies”. On the basis of the growing importance of the knowledge, it may be said that only those economies could compete internationally in near future who would develop and integrate the basic ingredients of Knowledge into their economic systems and models: research and development (R&D) activities, human capital, degree of openness to international trade and information and communication technologies (ICT) diffusion. Keeping in mind this view, the aim of the paper is to analyze clusters and distances existing among the EU’s member by using the Self-Organizing Map (SOM) artificial neural network methodology. The results seem to confirm the goodness of the underlying theoretical paradigm. Keywords: economic growth, development, knowledge economics, neural networks.
1. Introduction The economic implications of the EU enlargement, which reached its culmination in 2007 with the entry of Bulgaria and Romania, following the EU border extension to the East and the Mediterranean Sea in 2004 with the accession of ten new member states64, are still issues of debate. Preliminary studies highlighted that EU accession provided a boost to growth for new entrants, which – among other things – have benefited from structural funds for infrastructure development, research, firm promotion, environmental protection, tourism, education, etc. In spite of the doubts raised by some observers, the economic impact of enlargement on old member states was also not negligible, particularly as a consequence of trade with Eastern European countries. The widening of the European Union was indeed aimed at creating a broader and more integrated common market, able to offer economic advantages to old and new member states, by spurring economic growth. Actually, economists have always paid attention to the topic of growth and its main determinants. However, owing to the contrasting conclusions reached by scholars, there remains some disagreement over the identification of growth-determining factors. In the last few years, scholars have been increasingly focusing on the implications of new knowledge as a product of R&D activities, which would be capable of improving factor productivity and – as a consequence – raising per capita output levels. At the same time, a number of contributions has also been made in studying the role that human capital, the degree of openness to international trade and the information and communication technologies (ICT) may play in knowledge diffusion, generally recognized as the primary engine of growth.
64
Cyprus, Estonia, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia, Czech Republic and Hungary. 252
Following the dominant literature, we will argue that the amount of knowledge and the way it is used are the key determinants for productivity, whose increase exerts a positive impact on growth and development of the economic system as a whole. The main aim of the present paper is to test and demonstrate the robustness of the underlying paradigm, through the analysis of the economic structure of the EU’s member states in 1998 and 2005, respectively. In this regard, a brief overview of the relevant literature on economic growth, with a review of empirical evidence on its possible determinants, is provided (see par. 2). In the second section, a SOM neural network methodology, chosen as a tool for research, is set out (see. par. 3); to this effect, an analysis is made in order to spot patterns of multidimensional similarity among the EU’s member states (see par. 4). Finally, brief concluding remarks are made on the main results achieved by the analysis (see par. 5).
2. Key determinants of economic growth and development Recently, a soaring number of researches have been conducted on economic growth and its determinants. In the last few years, a growing interest has aroused with reference to knowledge contribution to increase in total factor productivity (TFP) and to consequential long-run sustainable growth. As highlighted in previous studies (Mattoscio 2005, Mattoscio & Colantonio 2005, 2006 and 2007, and Mattoscio, Colantonio & Carlei 2007), economic research on knowledge dynamics has been carried out along different lines. Particularly, several authors (among who Romer 1992, Aghion & Howitt 1992, 1998, now in 2004) have drawn attention to innovation systems and to R&D activities, which lead to new technology creation and may eventually positively affect per capita output increase. Even more recently, other researches have showed that innovation or technical knowledge development have a significant positive effect on economic growth and productivity increase (see Lederman & Maloney 2003, Guellec & van Pottelsberghe 2001 and Adams 1990). Starting from the most important contributions of endogenous growth theory, technological progress comes to be linked to investments in human capital. This concept is introduced by the economists from the Chicago School in the Sixties, Schultz (see, for example, 1961) and Becker (see, for instance, 1962 and 1964), to define the skills embodied in people. The subsequent work of Romer (see, for example, 1986 and 1990) and Lucas (see, for example, 1988), another leading figure in the Chicago School, further stresses the effects, both quantitatively and qualitatively, of human capital on growth rates. Nowadays, hundreds of empirical studies on economic growth include human capital measures (see, for example, Barro 1991, Cohen & Soto 2001 and Hanushek & Kimko 2000). Grossman and Helpman (1991) develop an approach of growth in the context of an economy open to international trade, in which they assume that technological know-how may be imported from abroad. Similarly, Coe and Helpman (1995) show, for a sample of advanced countries, that both domestic and foreign R&D activities have a positive effect on TFP; such a relationship is even more significant in presence of a higher degree of openness to international trade. Several more empirical studies, like those carried out by Frankel and Romer (1999), Gallup, Radelet and Warner (1999), Irwin and Tervio (2002), and Dollar and Kraay (2001), highlight the positive relationship between openness to foreign trade and growth rates. Another channel facilitating technological diffusions is represented by foreign direct investments (FDI) (see Barrel & Pain 1997). In 1993, Romer has already advanced such an hypothesis, implying that FDI might result in substantial positive spillovers not only for the single benefiting firms, but also for the economy as a whole (in this light, see also Rappaport 2000). A larger interconnection, a higher processing speed and a wider knowledge access are also encouraged by the new ICT. Though not directly generating innovations, ICT are regarded as the backbone of the knowledge economics and have been recognized as an effective instrument for promoting economic growth and development. Owing to their relatively low cost of use and their ability to scale distances down, ICT have revolutionized information and knowledge transfer all over the world. In such a regard, a number of researches show that the production ICT has made a major contribution to economic growth (see Jorgenson & Stiroh 2000, Oliner & Sichel 2000, Whelan 2000, Schreyer 2000 and Pilat & Lee 2001). Several studies have provided empirical evidence that productivity gains are also due to the simple use of ICT, at least at a country-specific level. As to the United States, for example, the 253
Economic Report of the President (Council of Economic Advisors 2000 and 2001), Whelan (2000), Oliner and Sichel (2000) and Jorgenson and Stiroh (2000) attribute a large part of increase in TFP to ICT-using sectors rather than to ICT-producing sectors. With reference to Australia, there exist evidence indicating that increased productivity levels are coupled with a larger use of technologies including ICT (Productivity Commission 1999). Other sectorial studies suggest that investments in ICT exert a positive impact on whole system productivity (for example, as to the distribution sector, see Readon et al. 1996 and Broersma & McGuckin 1999). Brynjolfsson and Kemerer (1996) and Gandal et al. (1999) find the existence of positive spillovers stemming from ICT capital at the single firm level. In addition, some authors (see, for example, Solow 1987) are skeptical towards such a perspective, though their analyses do not actually invalidate the critical assumptions on the crucial role of ICT in growth dynamics. In a nutshell, by referring to the above-mentioned contributions, we might postulate the existence of four preconditions necessary for knowledge to be the real engine of growth:
an effective innovation system, made up of firms, research centers, universities, and so forth, capable of raising the stock of knowledge and to absorb it and adjust it to local needs;
an educated and qualified population, able to create, share and use knowledge;
a good degree of openness to foreign trade, encouraging imports of technical knowledge developed abroad;
an adequate ICT infrastructure, facilitating information and knowledge transfer. In the light of this theoretical framework, a number of indicators representing the main aspects of the knowledge economics have been detected. The benchmark years under scrutiny are chosen as a consequence of the dual need to make use of complete and reliable datasets and to assess the economic performances of EU countries during the transitory period from industrial to post-industrial society till the New Economy experience (see Felice & Mattoscio 2005). In carrying out the analysis, we mainly used Eurostat database65, properly integrated with alternative official sources (particularly UN66) in order to fill missing values67. The choice of integrating different databases is determined by the need to have complete and reliable data at our disposal. In such a respect, by means of an empirical analysis concerning EU’s member states, we will investigate the economic performances in 1998 and 2005, respectively. The analysis we undertake is firstly concerned with a set of three indicators associated to the degree of a country’s socio-economic development. In this respect, the first variable considered is “GDP per capita (PPP US$)”68, which accounts for the differences in general price levels in different countries as well as for average exchange rates recorded by IMF, thus allowing a proper comparison in per capita income terms. A second indicator recording socio-economic development of countries is the “Human Development Index”, a composite measure developed within the United Nation Development Programme, which may assume values between 0 and 1. It allows to classify countries according to criteria linked to survival expectancies, educational attainment reached on average and life quality. Basic dimensions are identified by: 1. average life expectancy at birth, as a measure of a healthy and long life;
65
http://epp.eurostat.ec.europa.eu See tab. 1 and 2. 67 In the cases when it was not possible to fill missing values with data extracted from alternative sources, we considered a mean value of the indicator with respect to the sample of countries under investigation; such a choice was dictated by the need to avoid variable elimination or sample reduction. 68 This variable is expressed in purchasing power parity, so as to narrow the gap between countries: indeed, having poor countries a usually reasonable cost of living, their income is “revalued” by means of transformation in purchasing power parity. 66
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“Education Index”69, combining adult literacy (with a weight of two-thirds) and the number of students enrolled at different levels of education (with a weight of one-third), as a measure of the degree of education; 3. per capita GDP, which refers to the standard of life. The third and last indicator of socio-economic development is “Energy intensity of the economy - Gross inland consumption of energy divided by GDP (at constant prices, 1995=100) - kgoe (kilogram of oil equivalent) per 1000 euro”. This variable measures the ratio between Energy consumption (in kilogram of oil equivalent) and GDP (expressed at constant prices of 1995): it provides an indicator of a country’s energy efficiency. After illustrating some indicators concerning the socio-economic development of countries, we focus our attention on variables condensing innovation activity. It must be recalled that economic differences observed among countries may be explained – to a certain extent – in the diverse capability of generating new knowledge. Among the different indicators available in this regard, we considered “Total intramural R&D expenditure (Euro per inhabitant)”), independently of public or private source of funds. In order to make comparisons between countries, the considered values have been expressed in per capita terms. A second indicator concerning technological progress is represented by “Human Resources in Science and Technology (percentage of total population)”. The third and last variable considered for assessing technological development is “High-technology exports (% of GDP)”. As happens with domestic innovation activity, value can also be created by exporting or selling new technologies abroad. Among the variables usually employed for specifying human capital is included “Graduates (ISCED 6) from science, mathematics, computing, engineering, manufacturing & construction fields per 1000 of the population aged 25-34”. Another relevant variable is the “Ratio of Students to teachers (ISCED 3)” at secondary level, which is deemed to be a measure human capital quality by economic literature. The last indicator representing a particular aspect of human capital, “Total public expenditure on education as % of GDP”, was chosen in order to render comparable values of countries with different structural features. As underlined above, less developed countries may narrow the technological gap from more advanced economies, by importing or imitating technologies produced abroad; in this respect, the degree of openness to international trade and the flow of foreign direct investments appear to play a major role in growth dynamics. The first two indicators we considered are “Imports of goods and services (% of GDP)” and “Exports of goods and services (% of GDP)” (see tabb. 1 and 2). The third and last indicator concerning the degree of openness to international trade is represented by “Net foreign direct investment inflows (% of GDP)”. This variable is obtained as the difference between incoming capital flows and outgoing capital flows considered as a percentage of GDP. Empirical studies confirm the existence of positive effects of technology production and diffusion on economic growth. As a result, we consider three variables as proxies of the ICT stock: “Telephone mainlines (per 1000 people)”, “Cellular subscribers (per 1000 people)” and “Internet users (per 1000 people)” (see tab. 1 and 2). 2.
3. Working methodology In this paragraph, we introduce the artificial neural network methodology, chosen to better represent economic clusters and gaps with respect the EU’s member states.
3.1. Non linear clustering through SOM neural networks Self Organizing Map is amongst the most important neural network architectures. It has been mainly developed by Teuvo Kohonen (Kohonen 1995). In SOM networks the characterizing element is a layer, called Kohonen layer, made up of spatially ordered Processing Elements (PEs). Such a PE layer evolves during the learning, specializing each PE positions as indicators of important statistic features of input data. This spatial organizing process for important statistic 69
Such an indicator was also developed within the United Nation Development Programme. 255
features of input data is also known as Feature Mapping. SOM realize the feature mapping by an unsupervised learning technique. Mapping made up by SOMs has interesting characteristics, in fact it’s not random, but it preserves topological relationships of input data and code them in a complex way into Kohonen map (Carlei et al. 2006). A first analogy between the biological system and the SOMs artificial one is based on the macroscopic way of working of the brain. During the growth, in human brain it happens a splitting into zones that act according to different input stimuli. Similarly in SOMs, during the learning, the Kohonen map splits itself into different regions, each responding to a particular region of the input space. Some are constituted by two layers: a mono-dimensional input one, with a PE for each of the N input components X = (x1, x2, …, xN), and a layer, typically bi-dimensional, said Kohonen layer, made of M = MC ∙ MR PE organized in a grid of MC PE per row and MR PE per column (see fig. 1). We will indicate the generic PE in the Kohonen layer with PEr with r = 1, 2, …, M. Input layer is completely connected to the Kohonen one: each PE belonging to the Kohonen layer receives values from all the PE of the input layer. Fig. 1 – SOM with N entries and M=MC•MR Pe in the 2-D Kohonen layer
1 Kohonen layer
1
2
. . .
. . .
...
MC
. . .
2
... ...
MR
...
Input layer
x1
x2
xN
Source: our own representation To the generic PE in the Kohonen layer is associated a vector whose element are the weights relative to connections with the input PE. The vector associated to the generic PEr in the Kohonen layer is indicated with Wr = (wr1, wr2, …, wrN). Input layer is just a buffer layer so its PE won’t operate any change in the input value they receive. Output is computed by the Kohonen layer. In this layer the PE work in a competitive way. In its basic version, each time an input is processed a winning PE is selected. In this case the output is the PE position in the grid, so it takes discrete values. This operation is also called vectorial quantization. Anyway, Kohonen layer can’t be defined simply as an output layer. It’s in fact the core layer of the network used by the competitive algorithm.
3.2. SOM learning and map construction During this process the input vectors (learning set) are introduced both in cyclic or random way, till an equilibrium state is attained. SOM learning is unsupervised, i.e. during this phase there are no constraints saying whether an output is right or not for the input data: the algorithm is such that the network self-organize itself correcting the weights values each time a new input is processed.
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Closeness of vectors can be computed in several different ways. A first way is using the scalar product Cr between Wr and X, choosing PEs as the PE which maximizes this value:
PEs : C s max C r X Wr r[1..M ]
N
x w i
ri
i 1
[1] Another way to measure closeness is through Euclidean distance Dr between Wr and X, choosing PEs as the PE which minimizes it:
PEs : Ds min Dr X Wr r[1..M ]
( xi wri ) 2 i 1 N
[2]
When the winning PE has been determined, the weights for the PE itself and for those who are close to it physically in the Kohonen layer (this set is called PE neighbourhood) are updated. Updating the weights of the entire neighbourhood is a feature that differentiates it in comparison to other competitive algorithms. It’s in fact, as we shall see, essential to preserve topological features of input data throughout the mapping. Several definitions of neighbourhood are available. Its definition is based on the Euclidean distance d, defined on the Kohonen layer, between the generic PEr and the winning PES. Basically, we define a function h(d) describing how the generic PEr will update under the updating W(d) of the associated weight vector Wr. This updating is of the following type:
W d hd X Wr
[3]
Usually, h(d) function assumes positive values, has a maximum for d = 0 and is strictly decreasing. Therefore, every time values are updated, PE weight vectors are moved toward the input data, with less and less intensity as the distance from the winning PE increases. Kohonen layer is therefore a matrix of PEs which are competing and whose associated vectors tend, iteration by iteration, to assimilate to the different input patterns. A first example for neighborhood function h(d), which shows all the general characteristics exposed above, is the Gaussian function:
hd He
d2 2 2
[4]
Such a function is defined on the entire Kohonen layer. As H and σ vary, the effects on the PE change and so do some of the learning features. The parameters used in the functions are usually changed iteration after iteration, so to optimize the features of learning.
3.3. Clusters mapping from SOM features As we already mentioned, SOM map an input space to a Kohonen layer showing very interesting features. Such features make this architecture as one of the most interesting within neural networks, and they results particularly indicated for the aim of this work. The first feature of SOM mapping is to logically split the input space into clusters. We have already told in fact, that Kohonen net maps each point of the N-dimensional space into a point of the discrete output space. For each PE in the Kohonen layer there is a set of input data which make it the winning. These input points define a region. Another fundamental feature of the learning of the SOM is self-organizing and input data ordering; this gives particular characteristics to the mapping. In order to show it, it results very useful visualizing the mapping performed by the Kohonen layer, using the so called virtual network (Buscema M. & Semeion Group, 1999). Such a network can be built in the input space drawing segments joining the points representing contiguous PE in the Kohonen layer.
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Before of the learning, the weighs vectors are dispose according to a topology bounded just by the initialization criterion. During the learning the algorithm tends to modify the vectors of weight, and this appears as deformation of the virtual network. Anyway, the neighbourhood is defined in the two dimensions space made up of PE of the Kohonen layer whatever are the dimensions of the input space. The learning criterion can’t be seen geometrically as invariant respect to the input space dimensions. We can better understanding what it means in term of virtual network deformation, and so of mapping, distinguishing two cases. The first case, the simpler one, is when input space dimensions and Kohonen layer dimension agree. The second case, the most complicated, is when the dimension of the input data are greater than the Kohonen layer one. There is a so called dimensions conflict. As in the previous case, points of the input data are mapped into PE. But in this case, what is mapped into close PE is a closeness that is defined on a higher dimensional space. A reduction of dimensions occurs. With this reduction of the input space, the principal component characterizing the data, i.e. the ones with highest variance in the input space, prevail. In other words we can say that only the main topological relationships between input data are preserved, being extracted and mapped into the PE grid.
4. A data analysis In this section, we address the cluster dynamics emerging during the 1998-2005 interval, within which EU enlargement process took place. The explaining features of cluster evolution and the causal relationship between topical variables of the knowledge economics are further investigated. The topological clustering, obtained by means of the above considered variables with SOM algorithm, provides results which are to be interpreted on the basis of two informative levels. At a first level of analysis, we explore the scenario transformation of European countries during the transition phase from 1998 to 2005. The study of these two historical moments allows to spot the some changes occurring in the relationships among countries, as highlighted by the alteration of topological structure of the Kohonen layer. In 1998, it is possible to detect three clear-cut groups of countries, having in common geographical features and socioeconomic variables. The first group (see fig. 2) is made up of Eastern countries and is situated in the hexagonal cells of the upper part of the map. The second group, lying slightly lower, is represented by Mediterranean countries, while the countries of Central and Northern Europe belong to the third cluster. The distance among these groups in terms of multidimensional similarity is rather wide: in the map on the left, it is possible to spot a U-Matrix (a unified matrix of distances) emerging out of the darker hexagons of Mediterranean countries, which shows a wider distance between Mediterranean and Eastern countries as well as Central-Northern and Mediterranean countries, thus rendering the latter a “middle land” among the three groups. The 1998 situation is therefore characterized by three homogeneous clusters both from a geographical and a socio-economic point of view. Probably, this is the last picture of Europe before the Union and it resembles the European region as inherited from the opposition dynamics between the East and the West during the era of the Berlin Wall and from the socio-economic features of Western Europe, split between Mediterranean countries and states from Central and Northern Europe. The 2005 situation (see fig. 3) large confirms the cluster topology emerged in 1998. Only the cluster of Eastern countries, particularly close-knit in 1998, turns out to be divided into two parts in 2005. In the upper part of the map, we find many Eastern countries, holding the same positions of the previous years; Slovenia and Estonia has progressed towards the Western model, moving downwards the map. But, in general, the used model seems to confirm a certain stability in clusters and distances among the EU’s member states, basing on the relevant aspects of the knowledge economics.
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Fig. 2 – SOM cluster in 1998
Source: our own elaboration
Fig. 3 – SOM cluster in 2005
Source: our own elaboration If we focus the attention on the basic structure of the maps, both in 1998 and 2005, moving from the upper part to the lower one, we can observe an increase in the following features:
GDP per capita 259
Human Development Index
Energy intensity of the economy
Total intramural R&D expenditure
Human Resources in Science and Technology
High-technology exports
Telephone main lines
Cellular subscribers
Internet users In other words, similarities and distances on a virtual vertical axis mainly seem to be due to socioeconomic development, R&D activities and ICT diffusion (see also fig. 4 and 5). Moreover, moving from the left part to the right part of the two maps, we can observe an increase in the following features:
Exports of goods and services
Imports of goods and services
Net foreign direct investment inflows Consequently, similarities and distances on a virtual horizontal axis mainly seem to be linked to the openness to international trade (see also fig. 4 and 5). Some of these indicators confirm a strong tendency to overlapping compared to other proxies. Other variables, particularly those related to human capital, exhibit non-linear relationships with respect to the order established by the other indicators. This is particularly true, for example, if we take into account variables such as Total public expenditure on education and Ratio of students to teachers: they do not appear to be overlapping, since the latter indicator is influenced by the sheer number of students. Actually, some countries, though with low investments in education (also owing to the low GDP per capita level) show a good ratio of students to teachers, probably due to a relatively low number of students. As said above, during the 1998-2005 period, the development indicators do not show substantial differences, confirming on the one hand the leadership of Nordic and central countries and the median position of the Mediterranean ones, and on the other hand the bottom position of recently acceded EU member states. The latter, however, are progressively departing from the cluster of 1998, in particular with Estonia and Slovenia slowly joining Italy, Spain, Greece and Cyprus.
260
Fig. 4 – SOM features analysis in 1998
261
Fig. 5 – SOM features analysis in 2005
Source: our own elaboration
262
5. Concluding remarks Economic theory assumes that knowledge is conducive to increase in TFP, thus exerting positive effects on economic growth. However, differently from traditional factors of production, knowledge does not wear out with use. As a result, knowledge creation, adoption and diffusion, in its many forms, may represent an engine for growth and development of countries. However, some conditions must be complied with in order for knowledge to be a positive determinant of growth. First, widespread innovation and capability of adopting advanced technological solutions are required. Second, a crucial role seems to be played by human capital, though further efforts must be made to find adequate indicators for its measurement. Finally, knowledge diffusion within a country can be furthered by a higher degree of openness to foreign trade and by the presence of modern infrastructures for information and communication. Consistently with the underlying theoretical framework, this paper was aimed at highlighting the distances among EU’S member states, focusing the attention on the growth levels and on the main determinants of economic development both in 1998 and 2005. By means of the adoption of SOM artificial neural networks, we showed that recently acceded EU countries, albeit beginning with low levels of economic development, have grown rapidly, thus reducing the gaps from more advanced countries. In other words, the changes brought about by enlargement, in particular wider market competition, provided a considerable contribution to economic convergence of new members, which have consequently laid the foundations for a modern knowledge-based society. The model we used has basically confirmed the evidence gained in previous analyses conducted with different methodologies and data (see Mattoscio & Colantonio 2007) or on different data (Mattoscio, Colantonio & Carlei 2007): we can therefore reassert the robustness of the underlying theoretical paradigm, which considers the dynamics between technological progress, human capital, international relationships and ICT diffusion as the main engine of growth for a country. Nevertheless, being the present model based on a comparative static analysis, further investigation is required to better explore the dynamics of the above mentioned factors on the growth of an economic system.
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Tab. 1 – Data base 1998
264
Tab. 2 – Data base 2005
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SOCIAL RESPONSIBILITY IN PUBLIC ENVIRONMENT Mihai Roxana Lucia Academy of Economic Studies, Faculty of Economics, Piaţa Romană no. 6, sector 1, Bucharest, e-mail:
[email protected], tel. 021/3191900-int. 208 Hristache Diana Andreia Academy of Economic Studies, Faculty of Economics, Piaţa Romană no. 6, sector 1, Bucharest, e-mail:
[email protected], tel. 021/3191900-int. 20 Vîrjan Daniela Academy of Economic Studies, Faculty of Economics, Piaţa Romană no. 6, sector 1, Bucharest, e-mail:
[email protected], tel. 021/3191900-int.106 This study is an analysis of the amount of problems regarding Social Responsibility in the Public Environment. Practicable in the institutional communication process of responsibility, it is not involved only by the social aspects, but also by other two adaptable components that comes to develop this segment: the moral and the political responsibility. In this way, the social responsibility problem must be reconsidered in a relation with the involving degree of institutional engagement in the social economic environment, typical to each human community. Today, we can see a tight connection between institutional image and the competitive advantage from a domain or another. Key words: public environment, communication, corporate social responsibility, social responsibility
Introduction Corporative social responsibility is become to have new dimensions at all European levels. This situation is generated by at least two major aspects: the global communication, as a dominant feature of the modern society, and the new challenges caused by social-economic and environment issues. These are the new confrontations of the modern business world. Not so long ago, the social responsibility was considered only a link between competition and continuity in each organisation. Today, the institutionalism and the social responsibility are unite and is seems to show brand new coordinates. This demonstration of the modern institutionalism, adequate with its own prerogatives, leads to the organisation need for creating an innovative identity and image. Stephen Downey (1983), consider as a major issue : “…the company obligation to early redefine its own image (identity), during all significant changes of economic, technological and demographic nature, related with business areas.” (Downey, St. 1983, page. 15).
Organisational environment and its new challenges The organizations incapacity to guarantee a coherent image, credible and stabile, can guide at an unrealistic projection of image management. As follows, is imperative to reconsider the corporate communication regarding not only the interaction of the organisation with the internal and external environment. More, the assembly of the organizational communication matrix means, in the first place, the organizational needs adjustment to the public preferences. Also, in the organizational environment level, new other challenges are emerging. These challenges are generated by the follows: The rapid changes of the public value system; the consultative requests released by the public targeting the corporations; the mass-media aggressive pressure; the high expectations from the public. To face these challenges, any organisation will establish its own objectives and real system politics. These corporate politics must be proactive but in the same time reactive. The corporate communication can not be any longer regarded as a monologue of a transmitter to its receivers. It becomes communicative in both directions, so, the communicational feed-back is essential. In the most cases, the big corporations are presently developing a new philosophy in analysing and processing of all informational system. In the first place is the public needed and therefore new monitoring systems are created to survey all the reactions in high details. The interaction between the business environment and the society is generating the 268
development of a full set of public politics. The public politics represent the essential element through assuring the communication at the modern democracy level. These are offering a large view and decent analyses to all the governmental institutions, and bring in the same time to the citizens, the possibility to exercise an important amount of control. Therefore, the public politics can declare the action or non-action directions that will be chosen by the public authorities as a communicational answer to a certain problem. “The public politics are the products of some collective decisions, accomplished through successive negotiations between many social players actively involved in a certain domain of the society. Thus, involved in decisions connected to the type and shapes of the public politics are not only the politic and administrative players but also all the other social factors from public, semi-public or private sector that activates in a specific domain. As a consequence, the public politics is not a pure politic or ideological product – it is also the result of the structural manner of interests of many social players.” (Pop, L.M., 2002, page. 702). Near by social players and also in vicinity to the mechanism of social knowledge, the public politics are representing key factors that give directions and self-adjusting creating a new kind of communication: the institutional communication. According with institutional communication precepts, the public organizations (governmental / non-governmental) which will conceive the public policies set that is needed to solve the community problems, are nominated as policy-makers. Analyzing this set of public policies from the institutional communication perspective, we can conclude that those policies will be absorbed also by other components of the society, the policytakers. Those organizations will use them in a specific conditions emulated by new situations and conditions. (Pal, L., 2001) We can show that the interactivity between government and corporations is isomorphic with interactivity between public and private sector and it is self conductive to the public policies debut. If we will look, under dynamic aspect, at the government-corporation interactivity, we notice that the business environment is solicited to draw the future public policies coordinates. Therefore it will not be necessarily to wait from the legislative structure to tardy adopt laws and norms. A new approach of the public policies is the institutional comportment perspective. The link between this and public policies already implemented and developed at a certain time on communitarian level, where debated by Mintzberg and Jorgensen. According with them,”…the public policies are the result of communication between institutions and civil society” (Mintzberg, Jorgensen, 1987, page. 214 – 229), by using so called emergent strategies. The emergent strategies are the result of corporative and institutional comportment joint. Through this, the politics of the organizations will be inserted in the public politics area, from local level at a certain point. This will help at the development of prestige in the institutional communication and also of authority for institutions. As a conclusion, the contents elements of a public policy can be resumed under three aspects: the define of the civil society issues; the purposes of the created public policy; the practicable instruments in policy-taker case. Even if, from logical point of view, the problem defined that will be at the base of the elaborated set of politics, is primordial, we can not neglect the previous determination which was at the conclusion – the public politics purposes. As a consequence, the public politics purposes are obligatory to be identified before the solving of the civil society issues, to be able on time, with the full set of specific instruments, to give the right orientation to these politics. By creating the link between these three base elements of a public policy, and by right functioning of them, will be realized the coherence of all public politics. A certain politics will have a high level of transparency and coherence, only if, will solve the citizen problems, and it is right recognized under the shape of help and support for the civil society. At the society level, the inserting of complete set of public policies able to assure the correct functioning needs the use at least one of the types of communicational coherence. The vertical communicational coherence – all programs, projects and activities included in the area of a public policy must result in logical order, and the institutions involved in these activities to communicate dynamic and flexible. The horizontal communicational coherence - based on building a communicational system of feed-back between the singular public politics, which correct manifests the vertical coherence, and the rest of public policies, from different domains, that working at communitarian level. The public policy must not be confounded with the inserted program or with the public employ that carry it on. The public politics are the result of a human mental construction, transposed at the institutional level and in society. A public policy is necessary and also just only if will end with the solutions for the majority issues that society is confronted, realising in this manner, a good communication between person state – corporation – society. 269
Social responsibility – between corporations and public environment Continuing analysing of this situation, we can observe that the negative elements appear at the corporatist social responsibility level. Therefore, we can conclude that we assist at a change of paradigm. The organizational identity is superpose with the institutional one and is transmitting to the public, through the corporative communication vector, the symbolic and also the material projection of the organisation. (Tasnadi, Al., Ungureanu, R., L., 2004). We ask our self’s: “Why is so attractive in those days, especially in European space, the concept of corporative social responsibility (CSR)?” Because, “CSR can contribute at the success of the public policies by: increasing trust and competitive actions, innovation, the developing of practice that can be applied beyond, by inserting a learning process for a future implementation. Also CSR can have a decisive contribution at the assuring social enclosure and the integration of labour market, the poverty reducing and carry out the objectives from Millennium Development Goals.” (Dodd, T., 2006) Referring only at the enclosure issue, we can observe a serious interest in the domain. UE treat the social enclosure in Lisbon Strategy where is perceive like a pro-active way of implementation of certain viable social politics. The acts taken in this field must not be regarded only as communitarian tasks. It must be extended in a variety of different shapes and approach modality’s, for each state, member of UE. In Romania, the social enclosure politics has as a prime objective the growth economy sustaining, in the advantage of the life standard of the population. The actions carried out by Romanian authorities, are: increasing the number of work places for young citizens; the support provided for the persons over 45 years old, to help their integration in the new labour market; creating new work places in the rural areas by developing local resources and traditions in services or industry field; organizing free courses for qualifying and re-qualifying for the applicants that need new work places; developing and diversifying the social services of general interest (The Ministry of Labour, Social Solidarity and Family, 2006) The social enclosure can be approached also from communicational perspective. At this point, the person is involving actively in civil social life, having in sharing equally the rights and the obligations. Starting from these motives, Romania has taken the obligation to sustain and promote the enclosure social politics. Therefore, the Ministry of Labour, Social Solidarity and Family, carry out the role of forum coordinator, suited with the Common Memorandum regarding Social Enclosure, signed in 2005. The process of implementation, sustainability and development of social enclosure, can not be separated by the social responsibility coordinates. So, at European level, the social responsibility is created from moral and politic point of view. “What is needed to implicate ethics and politics?” Because, is ethic that the durable development issue, the one of global worming or the economic growth, to represent the assembly of base activities included on work addenda of all members of UE. We can conclude that the implementation of social responsibility in European area is a necessity. For public and private sector it can be transposed into a veritable politic coordinate. We can observe the increasing need of collaboration and growth of the partnerships, between public and private sectors. In this case, the Public Private Partnership is considered by the specialists as the only viable solution necessarily for solving the problems that civil society is confronted. (Commission of the UE, 2003). Using Public Private Partnerships is necessarily because can conduct at the growing of the institutional consulting degree. If we observe only at the extremely complex problematic of social enclosure, we can conclude that those partnerships will be on the first page of UE members addenda. Regarding this, a series of major preoccupations exists at the Romanian authorities’ level. In the Strategic Report of Social Protection and Social Enclosure, presented in September 2006 to European Commission, Romania has exposed its main goals and coordinates regarding the implementation of the new institutional context, the opened method of coordination, sustained by UE in the field of social and enclosure protection. (Ministry of Labour, Social Solidarity and Family, 2006). Returning at the social responsibility issue, we can observe that fact, that Romania makes effective steps. For the development of programs regarding social responsibility, the Romanian companies have invested, only in 2005, over 10 millions of Euro. (Saga Business & Community, 2005) For Romania, CSR represents a solid base, necessarily for applying the Lisbon Strategy in UE. As follows we have the bases of partnership with: UNDP (United Nations Development Program), UNGC (United Nations Global Compact) and WBC (World Business Council) regarding the durable development issue in Romania. Referring to UNDP (2005), the Bulgarian business environment has same preoccupation as the Romanian counter part, in the implementation and development of social responsibility in community. Here, as in other Central and East European states, the business environment is involving the automatic 270
integration of all social responsibility processes, by activating the institutional component. Also, the social responsibility involves a serial of manifestations of civil society area. The civil society must action proactive, using: educational activities needed to the growing of civic spirit for CSR, the changing of self practice regarding this field, and the development of communication with other social players. In these conditions, we consider that the social responsibility is the connection between organisations, state and civil society. Today, according with Page and Bernays (1992), CSR is tending to develop only in the measure that social society is validating its activity by the growth of consume. Therefore, CSR “…is the expression of civic sense of the organisation. This is imposing the creation of superior quality products, to give trust to the consumers. On the other side, CSR is reflected also under the aspects of inter-human relationship, and is contributing in positive sense at the political and social-economical health of the society.” (Rogojanu, A., Hristache, D., A., Tasnadi, Al., 2004) CSR is the modality through the companies is voluntary integrating the social and environmental problems in their businesses and representing theirs shareholders. Meaning, at the level of organisations, and also at the European area, is shaped a new strategic vision: the finding of obvious modalities in assuring the equilibrium between business profitability and investments needed for the developing and protection of the environment that they operate. So, is appearing again the ethic issue of CSR. This is related with the normative and value system of individuals, companies and society where activates at a certain moment. We consider that CSR must not be percept as a unitary and universally accepted concept. It must be implemented, adapted to the culture, history and economical situation specific to each human community. Even if the new members of UE, as Romania and Bulgaria, are at the beginning of this process, must not mean that those countries can not recover the distance that separate them by the countries with tradition in this field. As an example, starting with 2006, in each spring and autumn seasons, in Romania is applying the program “Millions of people, millions of trees”. This communitarian program is requested to activate the CSR component at the level of Romanian companies, to send sensitive signals to public opinion, to educate it, in the natural environment issues. I chose this program as an example because of its objectives, which are extended at national level. PRAIS Corporate Communications (2006) is synthesising the objectives of this national communitarian program, on five essential coordinates: the growth of the role of the Romanian society in preserving and rehabilitating the surrounding environment; the contribution at the development of the civic spirit of young generations regarding the environmental problems; obtaining measurable results at national level, in the CSR area; realizing of a national ecological movement; the sustaining of national image in UE environment, regarding the involvement of the Romanian civil society in volunteer actions, determined by the recreation of environment. Desirable to intensify the CSR component at the Romanian society level, a series of governmental and nongovernmental organisations are supporting this project. Participants in this environment are a serial of powerful companies as: URSUS Breweries, Lafarge Romania, Quadrant Amroq Beverages, Smithfield Romania…etc. These companies, even if works in Romanian business environment, are not different as experience in the domain by the great international corporations that create them. We assist at a readjustment of the CSR component at the Romanian society level, by using the experience of the organizational culture of some important international companies that have developed business activities in Romania. In UE vision, the implementation, and later, the development of CSR, can be realized only by creating of an adequate economic environment. Therefore, the European Commission is declare the support for creating the “European Alliance for CSR”. Meaning an organisation opened to all companies from European Communitarian area that promote and encourage: the knowledge and good practices exchange between companies; support for initiative acts that involve more then two companies that are in partnership; the cooperation with member states of UE; the information and transparency in the relation with the consumer; the research and the education; IMM (Small and Medium Enterprises) and the international dimension of CSR (CEE, March 2006). Embracing the ideas formulated by European Commission regarding CSR, Romania has hosted, in 2006, the first “International Conference of Social Responsibility of the corporations from East Europe” – CSR06. At this conference was debated a serial of aspects concerning: CSR; the company’s behaviour in businesses; The relationship between companies and employees; The safety and health in labour field; The monitoring and commitment systems. Not at the last place, the need for creating a favourable social dialog between corporations and ONG (nongovernmental organisations) was brought for analyse. For this reason, many ONG, representatives in social environment, has come public with their opinions. Some of them are: Youth for Peace (YAP); Millennium 271
Centre; AIESEC, Leaders Romania, The Association for Lobby and Negotiation; CENTRAS. The massive participation to this international meeting, lead us to the conclusion that in the Romanian civil society environment new and deep mutations are happening and tending to situate the social responsibility at the same level with the institutional one , in the centre of activities. The social responsibility is tending to have more and more quality valence thru all European space. Meaning that, starting from 2006, the companies that will commit an active involving in the community life, and will develop the social and environment responsibility, will be able to be recognized by a standard of excellence for their activities – ISO 26000 (social responsibility). “What is the meaning of ISO 26000?” Is an international certification of involvement degree for organisations that are solving with success the problems of civil society. The purpose is to encourage the voluntarily assurance, by the business environment, for some social and environmental responsibilities, based on concepts, definitions and common evaluation methods.
Conclusions: We are in a period of new researching. The modern society is confronted by problems more and more complex, that can not be solved without the convergent action of all economical-social, political and psychological factors. Therefore, investing in CSR means education and continuous modernisation of business environment. The social responsibility and the institutionalism are constituted as base pylons of a modern society that is searching its identity.
Bibliography: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.
Commission of the UE (2003), Guidelines for successful public-private partnerships, Brussels, 2003 CEE (2006), ISO 26000 – Social Responsibility, eu-ro newsletter no.9/ 19.11.2006, www.euro Dodd, T. (2006), The International CSR Conference is the first event approaching the CSR (Corporate Social Responsibility) aspect in an integrated way, Nov. 2006, www.csr06.ro Downey, St. (1983), Nineteenth Annual Survey of the Profession, Part 2, PR Reporter, 26, no. 41, Oct. 1983 Ministerul Muncii, Solidarităţii Sociale şi Familiei (2006), Incluziunea socială – condiţie a creşterii economice, eu-ro newsletter no.8/05.11.2006, www.eu-ro Mintzberg, Jorgensen (1987), Emergent strategy for public policy, Canadian Public Administration, 30 (summer), 1987 Page, Bernays (1992), the Page Philosophy, Arthur Page Society Inc., Chicago, Illinois, 1992 Pal. L. (2001), Beyond Policy Analisys, Ed.II, ITP Nelson, Toronto, 2001 Pop, L.M., coord., (2002), Dicţionar de politici sociale, Ed. Expert, Bucureşti, 2002 PRAIS Corporate Communications (2006), Program de voluntariat:”Milioane de oameni, milioane de copaci”, EurAktiv, 16 Nov. 2006, www.milioanedecopaci.ro Rogojanu, A., Hristache, D.A., Taşnadi, Al. (2004), Comunicare instituţională, Ed. ASE, Bucureşti, 2004 Saga Business & Community (2006), Responsabilitatea socială corporatistă – 10 milioane anul trecut, EurAktiv, 30 Oct. 2006, www.euraktiv.ro Taşnadi, Al., Ungureanu, R.L. (2004), Relaţii Publice, Partea a 2-a, Ed. ASE, Bucureşti, 2004 UNDP (2005), Social Responsibility, www.eu-ro
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INTRODUCTION A LA METHODOLOGIE ECONOMETRIQUE CLASSIQUE Minică Mirela Universitatea „Eftimie Murgu” Reşiţa, Facultatea de Ştiinţe Economice şi Administrative, 320085Reşiţa, Piata Traian Vuia 1-4, Email:
[email protected], tel.0355410069 Florin Franţ Universitatea „Eftimie Murgu” Reşiţa, Facultatea de Ştiinţe Economice şi Administrative, 320085Reşiţa, Piata Traian Vuia 1-4,Email:
[email protected], tel. 0727799387 Résumé: L’article fait un sommaire présentation sur l’évolution de la scince econometrique et on synthétise la méthodologie scientifique sur sa forme classique. Mots clé: économétrie, méthodes quantitatives, conception.
1. Note historique
A la fin du XIX siècle deux courants méthodologiques s’affrontent en économie :
les adeptes de l’économie pure qui font de la « théorie sans mesure » :
les adeptes de l’Ecole historique allemande qui font de la « mesure sans théorie ».
En 1930 une Société Internationale d’économétrie (Econometric Society) est crée sur initiative de Ragnar Frisch et Irving Fisher. Son objectif (art. 1 des Statuts) : «… favoriser les études de caractère quantitatif qui tendent à rapprocher le point de vue théorique du point de vue empirique dans l’exploration des problèmes économiques… » vise l’unification de ces deux courants méthodologiques antagonistes.
En 1933 paraît le revue Econometrica, principal véhicule de la pensée économétrique.
Pendant les deux guerres, Jan Tinbergen élabore les premiers modèles économétriques dynamiques d’une économie nationale (Pays-Bas et Etats-Unis) pour étudier le cycle de l’activité économique.
En 1944, Trygve Haavelmo jette les bases de l’approche probabiliste en économétrie, développée dans l’immédiat après-guerre dans le cadre d’un ambitieux programme de recherche de la Cowles Commission consacré à l’économétrie des modèles structurels à équations simultanées. Pour la première fois, on développe un cadre conceptuel rigoureux et opérationnel permettant de distinguer la causalité de la corrélation et d’estimer des relations causales avec des données non expérimentales.
Pendant les années 60 et 70, sous l’impulsion du travail pionnier de Laurence Klein, cette méthodologie est appliquée à large échelle dans la construction de modèles macro économétriques nationaux destinés à la prévision et à l’évaluation des politiques économiques.
Les résultats empiriques décevants fournis par les modèles macro économétriques et les critiques épistémologiques formulées à leur encontre suscitent l’émergence de deux courants méthodologiques nouveaux.
Un courant économétrique de « mesure sans théorie », initié par C.A. Sims, propose de modéliser les séries économiques agrégées par des modèles de séries temporelles (autorégressifs vectoriels ou VAR) non structurés par la théorie économique. La causalité entre variables économiques est vérifiée dans ces modèles en s’appuyant sur la notion de causalité temporelle proposée par C.W.J. Granger. A partir d’une contribution « séminale » de ce dernier auteur se développe une méthodologie statistique (analyse de co-intégration) de vérification de l’existence de relations statistiques entre variables macro-économiques. 273
Daniel McFadden et James Heckman initient le développement d’une micro économétrie, qui adapte et étend la méthodologie de la Cowles Commission aux particularités des données économiques individuelles, collectées à grande échelle à partir du milieu des années 50.
Plusieurs Prix Nobel d’économie ont été décernés pour récompenser les contributions au développement de la méthodologie économétrique: 1969 Ragnar FRISCH et Jan TINBERGEN : « for having developed and applied dynamic models for the analysis of economic processes » 1980 Laurence KLEIN : « for the creation of econometric models and their application to the analysis of economic fluctuations and economic policies » 1989 Trygve HAAVELMO : « for his clarification of the probability foundations of econometrics and his analyses of simultaneous economic structures » Daniel McFADDEN et James HECKMAN : «In the field of micro econometrics, each of the laureates has developed theory and methods that are widely used in the statistical analysis of individual and household ehaviour, within economics as well as other social sciences »
2. L’econometrie au sense large « Experience has shown that each of these three view-points, that of statistics, economic theory, and mathematics, is a necessary, but not by itself a sufficient, condition for a real understanding of the quantitative relations in modern economic life. It is the unification of all three that is powerful. And it is this unification that constitutes econometrics. » Ragnar FRISCH “Editorial” Econometrica, 1(1), 1933 “ L’économétrie a pour but l’étude des problèmes économiques, tant sur le plan de la théorie que de l’application avec le même esprit constructif et rigoureux que celui qui s’est imposé dans les sciences physiques, et en employant les mêmes méthodes quantitatives à la fois d’ordre mathématique et statistique sur les plans théorique et empirique.” Maurice ALLAIS « Puissace et dangers de l’utilisation de l’outil mathématique en économique » Econometrica, 22(1), 1954. « …econometrics may be defined as the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference. » P.A. SAMUELSON, T.C. KOOPMANS, J.R.N. STONE “Report of the Evaluative Committee for Econometrica” Econometrica, 22(2), 1954. “…la véritable vocation scientifique de l’économétrie réside bien dans une synthèse de l’expérience et de la théorie à laquelle concourent l’économie mathématique et la statistique mathématique, mais que ni l’une ni l’autre ne sont capables de réaliser. » Luigi SOLARI « L’économétrie, recherche d’une synthèse entre expérience et théorie » Pour une méthodologie des sciences économiques, Publications de la Faculté des Sciences Economiques et Sociales de l’Université de Genève, 1965. 274
“ Econometrics is a branch of economics that unites economic theory with statistical methods to interpret economic data and to design and evaluate social policies. Economic theory plays an integral role in the application of econometric methods because the data do not speak for themselves on many questions of interpretation. Econometrics uses economic theory to guide the construction of counterfactuals and to provide discipline on empirical research in economics” James J. Heckman « Micro Data, Heterogeneity, and the Evaluation of Public Policy ; Nobel Lecture» Journal of Political Economy, 109(4), 2001.
3. La methode scientifique APPROCHE THEORIQUE
APPROCHE EMPIRIQUE
Objectif :
Objectifs :
Elaborer une explication des « faits » réels
Abstraction expérimentale
Conceptualisation Modèle (ensemble d’hypothèses)
Génerer des « faits »nouveaux Contrôler et préciser les hypothèses explicatives
Schéma expérimental
Phénomène (réalité)
Schéma d’observation
Déduction
Observation Conclusions théoriques
Faits réels
Expérimentation
Données empiriques
Déconceptualisation
Interprétation
Conceptualisation On décrit le phénomène par un ensemble de hypothèses sur les caractéristiques essentielles du phénomène et les mécanismes qui le régissent. Cette phase abouti à l’établissement d’un modèle conceptuel. 275
Abstraction expérimentale On planifie l’expérience contrôlée ou le schéma d’observation. Cette phase abouti à l’établissement d’un modèle expérimental.
Déduction On recherche au moyen de raisonnements logiques les conséquences théoriques que le modèle conceptuel contient implicitement.
Expérimentation / Observation On génère expérimentalement ou on observe les données empiriques.
Déconceptualisation On interprète ces conséquences théoriques en termes concrets.
Interprétation On extrait des données empiriques des « faits » réels relatifs au phénomène.
4. L’optique structurelle Pour coordonner les approches théorique et empirique, l’économétrie classique utilise les modèles mathématiques quantitatifs structurels. Un modèle est une représentation simplifiée d’un phénomène qui en retient les aspects jugés les plus importants. Son intérêt réside dans l’espoir qu’en manipulant le modèle on peut obtenir une connaissance sur le phénomène étudié sans encourir les dangers, les coûts ou les inconvénients qu’impliquent une manipulation directe du phénomène. Dans un modèle quantitatif structurel :
la connaissance théorique est traduite sous forme mathématique à l’aide d’équations entre variables (certaines et/ou aléatoires) ;
la connaissance factuelle est présente sous la forme de constantes empiriques. Dans l’optique structurelle, l’économétrie a pour but la mesure et la vérification des relations postulées par la théorie économique.
5. Conceptions de l’econometrie Au sens large, l’économétrie embrasse les problèmes qui se posent dans toutes les phases d’une recherche économétrique, depuis la spécification du modèle jusqu’à son utilisation (modélisation économétrique). Elle implique alors une démarche interdisciplinaire qui la distingue des disciplines dont elle emprunte les instruments, soit :
l’économie mathématique, dont l’objectif propre est la formalisation des théories économiques pour leur conférer une assise rigoureuse ;
la statistique économique, qui vise l’élaboration de concepts économiques mesurables et de schémas d’observation intégrés de l’économie (comptabilité nationale) ;
la statistique mathématique, qui élabore les procédures d’inférence pour l’estimation de grandeurs théoriques et la vérification d’hypothèses à partir de données empiriques ;
l’informatique, qui élabore les languages de programmation pour la gestion de bases de données et pour les calculs scientifiques ;
les mathématiques numériques et la recherche opérationnelle, qui développent des méthodes performantes de résolution d’équations, d’optimisation et de simulation. Au sens étroit, l’économétrie s’occupe seulement de l’interface entre modèle et données. Elle se rapporte alors essentiellement aux procédures statistiques d’estimation et de validation du modèle théorique. A ce titre elle relève des préoccupations de la statistique mathématique dans le domaine des données non expérimentales (théorie économétrique).
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Références 1.
2.
CARLEVARO, F., « Répères pour orienter une réflexion sur les « critères de vérité » en économétrie », in : M.Buscaglia et alii (éds.), Les critères de vérité dans la recherche scientifique : Un dialogue multidisciplinaire, , Maloine, Paris, 1983, pp. 31-39. SOLARI, L., « L’économétrie, recherche d’une synthèse entre expérience et théorie », in : Essais de méthode et analyses économétriques, réunis et présentés par F. Carlevaro, Librairie Droz, Genève-Paris, 1979, pp. 29-44.
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LES MOTEURS DE LA CROISSANCE Minică Mirela Universitatea „Eftimie Murgu” Reşiţa, Facultatea de Ştiinţe Economice şi Administrative, 320085Reşiţa, Piata Traian Vuia 1-4, Email:
[email protected], tel.0355410069 Franţ Florin Universitatea „Eftimie Murgu” Reşiţa, Facultatea de Ştiinţe Economice şi Administrative, 320085Reşiţa, Piata Traian Vuia 1-4, Email:
[email protected], tel. 0727799387 Résumé: On étudiera tout d’abord les influences que peuvent avoir le capital humain, les activités de recherchedéveloppement, le cadre macro économique et le cadre structurel de l’action des pouvoirs publics, la politique de commerce extérieur et la situation des marché s financiers sur l’efficience économique. Mots clé: croissance économique, capital humain, capital physique, politique budgétaire, inflation.
1. Les déterminants de la croissance économique Les ouvrages traitant de la croissance économique sont légion et, en particulier, les études politiques sur le sujet foisonnent depuis dix ans (voir Temple, 1999 et Ahn et Hemmings, 2000 pour une vue d’ensemble). Toutefois, il n’y a pas de consensus concernant les mécanismes qui relient les cadres politiques à la croissance. Par exemple, on peut admettre, conformément au modèle de croissance néoclassique standard, les hypothèses suivantes : des rendements décroissants des facteurs reproductibles, des taux d’épargne exogènes, une croissance démographique et un progrès technologique; dès lors, les politiques n’ont pas d’influence sur la croissance économique à long terme. Dans ce cas, les pays les plus riches croissent à un rythme plus lent que les pays les plus pauvres, si l’on ne tient pas compte des différences démographiques. Toutefois, ce processus de convergence inconditionnelle s’est avéré moins évident au cours des dernières décennies, au moins dans les pays de l’OCDE. Ainsi, le concept de convergence n’est compatible avec les données que si l’on adopte une convergence conditionnelle, c’est- à -dire si l’on admet une relation entre le taux de croissance et les conditions initiales après neutralisation des autres variables. Tempérer l’hypothèse du caractère exogène de l’épargne et de la formation de capital laisse à la politique la marge de manœuvre qui lui permet d’avoir une incidence sur la croissance à court et à moyen terme en influant sur l’épargne et sur le niveau et la structure de l’investissement. En effet, un certain nombre d’études suggèrent que la politique et les institutions ont un effet sur le niveau d’efficience avec lequel les ressources sont réparties dans l’économie. Néanmoins, dans de tels modèles, que ce soit par ses effets sur l’investissement ou par son impact sur le niveau d’efficience économique, un changement d’orientation politique isolé n’amènera qu’un changement passager dans la croissance de la production. Quand le stock de capital et la production ont augmenté dans des proportions telles que le nouveau taux d’investissement brut permet seulement de maintenir un ratio capital/travail constant plus une somme couvrant l’amortissement physique, la croissance revient au taux correspondant à l’état stationnaire. En d’autres termes, toute modification de l’orientation politique n’aura d’impact sur la croissance de la production qu’à court et à moyen terme, en modifiant le sentier de croissance, bien que le taux de croissance sous-jacent reste dé terminé par la croissance démographique exogène et le progrès technique (qui diffèrent potentiellement selon les pays). Une autre catégorie de modèles de croissance tempère l’hypothèse de rendement dé croissant des facteurs reproductibles. Certains auteurs additionnent le capital humain et le capital physique pour calculer un concept de capital « élargi » caractérisé par la constance, voire la croissance des rendements d’échelle (Lucas, 1988 ; Rebelo, 1991 par exemple). D’autres encore prennent en compte des externalités de l’accumulation du capital physique ce qui fait que les rendements d’échelle privés peuvent être décroissants, alors que les rendements sociaux peuvent être constants ou augmenter – grâce à l’apprentissage « sur le tas » (Romer, 1986 ; Young, 1991 par exemple) ou à la R-D (Romer, 1990 ; Grossman et Helpman, 1991 ; Aghion et Howitt, 1992 par exemple). En cas de constance (ou 278
d’augmentation) du rendement du capital (« élargi »), le taux de croissance à long terme devient endogène, dans la mesure où il devient dé pendant des décisions d’investissement, qui peuvent ellesmêmes être influencées par des facteurs politiques et institutionnels. Certains de ces modèles de croissance endogènes impliquent une convergence « conditionnelle » et d’autres non, selon les hypothèses formulé es quant à la spéci- fication de la fonction de production et de l’évolution de l’accumulation du capital élargi (voir les analyses de Barro et Sala-i-Martin, 1995 ; Durlauf et Quah, 1999). Seule une étude empirique peut apporter les éléments permettant de déterminer sous quel angle le lien entre politique économique et croissance est le plus pertinent, mais les résultats de telles études sont souvent ambigus. Les analyses globales, telles que celle que nous présentons ici, apportent certains éclaircissements, mais des données microéconomiques sont nécessaires afin de mieux évaluer les liens entre l’accumulation du capital et le progrès technologique. C’est dans cette optique que nous analysons l’influence des facteurs politiques et institutionnels sur le PIB par habitant, en estimant une équation de croissance et une équation d’investissement. L’équation de croissance du PIB par habitant vise à identifier l’effet d’une variable politique sur la production en plus de son impact potentiel sur l’investissement, alors que l’équation d’investissement vise à identifier l’impact potentiel de la variable politique sur le niveau d’investissement.
2. Principaux déterminants de la croissance : l’accumulation du capital physique et humain 2.1. L’accumulation du capital physique Le taux d’accumulation du capital physique est l’un des principaux facteurs déterminant le niveau de production réel par habitant bien que, comme nous l’avons souligné précédemment, ses effets peuvent être plus ou moins permanents selon que le progrès technologique a été plus ou moins intégré dans le nouveau capital. Quel que soit le mécanisme de transition entre l’accumulation du capital et la croissance, les différences notables qui existent entre le taux d’investissement des différents pays et au fil du temps en font l’une des sources possibles des écarts de production par habitant entre les pays. En particulier, le taux d’investissement moyen à long terme du secteur des entreprises est compris entre 10 pour cent et 20 pour cent du PIB. De plus, d’importantes variations du taux d’investissement dans un pays ne sont pas rares, ce qu’illustre bien la rapide augmentation du taux d’investissement aux États-Unis ces dernières années. Dans l’analyse empirique, nous considérons l’accumulation du capital physique par des agents économiques privés (représenté e par la part de l’investissement des entreprises dans le PIB). L’investissement du secteur public est également pris en compte dans les équations de croissance élargies afin d’évaluer son impact sur la production, comme l’a proposé Aschauer (1989), ainsi que son effet potentiel sur le coefficient estimé du taux d’investissement du secteur des entreprises.
2.2. Capital humain De récentes études sur la croissance partent également de l’hypothèse que la formation et l’expérience de la main-d'œuvre représentent une forme de capital (humain). D’une part, on pourrait affirmer que le capital humain fait l’objet d’une sorte de rendement dé croissant, de sorte que la main-d'œuvre plus formé e et qualifiée bénéficierait de revenus plus élevés à long terme, mais pas nécessairement d’un taux de croissance des revenus systématiquement plus élevé. D’autre part, l’investissement sous forme de capital humain (les dépenses pour l’apprentissage et la formation par exemple) pourrait avoir un impact plus permanent sur le processus de croissance si le niveau élevé de compétences et de formation va de pair avec une intensification des activités de R-D et une accélération du progrès technologique, ou si l’adoption de nouvelles technologies est facilitée par une main-d'œuvre hautement qualifiée. A l’instar du capital physique, seuls des éléments empiriques peuvent donner quelques éclaircissements sur le rendement social de l’investissement en capital humain et, par conséquent, aider à faire différance entre les théories concurrentes. Le capital humain est mesuré au moyen d’estimations de la durée moyenne de scolarisation de la population en âge de travailler, qui se fondent elles-mêmes sur les niveaux de formation atteints et sur l’hypothèse du nombre d’années de scolarisation que représente un niveau de formation donné .
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Il est vrai que ces estimations sont grossières et restrictives, dans la mesure où elles ne tiennent compte ni de l’aspect qualitatif de la formation scolaire, ni d’autres aspects importants du capital humain. La durée moyenne de scolarisation de la population en âge de travailler ne témoigne pas moins du fait qu’il subsiste encore, malgré une certaine convergence dans le temps, des différences considérables entre les pays concernant le niveau de formation atteint. En 1970, la duré e moyenne de scolarisation de la population en âge de travailler était comprise entre 5.7 ans (Espagne) et 11.6 ans (États-Unis), alors que les dernières études en date font encore état d’une fourchette allant de 7.7 ans à 13.6 ans (le Portugal et l’Allemagne respectivement). Ces chiffres indiquent également une progression moyenne de la durée de scolarisation de moins de six mois en dix ans (aux États-Unis par exemple) à plus d’un an en dix ans (l’Allemagne et l’Italie par exemple, cette dernière é tant partie d’un chiffre assez faible).
2.3. Recherche-développement Les dépenses de recherche-développement (R-D) peuvent être considérées comme un investissement dans le savoir, qui se traduit par l’élaboration de nouvelles technologies aussi bien que par une utilisation plus efficiente des ressources humaines et physiques existantes. En effet, on s’accorde plutôt à penser que la RD peut avoir un effet persistant sur la croissance, autrement dit, qu’une augmentation des dé penses de RD devrait entraîner, toutes choses é gales par ailleurs, une augmentation permanente des taux de croissance. Le montant des ressources allouées à la R-D peut être influencé par une intervention des pouvoirs publics. Plus particulièrement, les avantages potentiels découlant des nouvelles idées ne peuvent pas bénéficier au seul inventeur en raison des effets de diffusion, ce qui implique que sans intervention politique, le secteur privé se livrerait à moins d’activités de R-D que ce qui serait socialement optimal. Ce constat justifie une certaine implication des pouvoirs publics dans la R-D, aussi bien par des travaux ou des financements directs, mais aussi indirectement, par des incitations fiscales et par la protection de la propriété intellectuelle, afin d’encourager les activité s de R-D du secteur privé (voir les analyses de Nadiri, 1993 et de Cameron, 1998). Les dé penses totales de R-D en proportion du PIB ont augmenté dans la plupart des pays de l’OCDE depuis les années 80, reflétant principalement l’augmentation des activités de R-D des entreprises, qui sont généralement responsables de la majeure partie des dépenses dans ce domaine. En effet, dans la plupart des pays de l’OCDE, la R-D financée par des fonds publics a reculé ces dix dernières années par suite de la contraction des budgets de R-D à des fins militaires. Plusieurs facteurs doivent être pris en compte dans l’évaluation du rôle que joue la R-D dans la croissance. Premièrement, la relation entre R-D privée et publique peut être un lien de complémentarité ou de substitution. Deuxièmement, la R-D publique vise généralement à des progrès dans des domaines qui ne sont pas directement liés à la croissance, comme la défense et la recherche médicale ou dont l’impact éventuel sur la croissance de la production pourrait être diffus et long à faire sentir ses effets (voir OCDE, 1998). Ces considérations impliquent que toute analyse quantitative de la croissance doit tenir compte des activités de R-D en tant que forme supplémentaire d’investissement et différencier les types de dépenses de R-D. Compte tenu des données disponibles, nous examinons les dépenses de R-D totales (en part du PIB) et leurs composantes, à savoir les dépenses de R-D du secteur public et celles du secteur privé .
3. Politique macroéconomique et croissance Dans le cadre des études sur la croissance, trois facteurs sont généralement examinés en ce qui concerne le cadre de la politique macroéconomique: les avantages à établir et à maintenir un niveau d’inflation faible, l’impact des déficits des finances publiques sur l’investissement privé et les risques de répercussions négatives sur la croissance dé coulant d’un secteur trop important des administrations publiques (en raison de la forte pression fiscale correspondante nécessaire au financement de dépenses publiques élevées).
3.1. Inflation et croissance Parmi les arguments habituels en faveur d’une modération et d’une stabilité de l’inflation, on retiendra la moindre incertitude au sein de l’économie et l’amélioration de l’efficience du mécanisme des prix. Un recul de l’inflation pourrait avoir un effet global sur le niveau de l’accumulation du capital en cas 280
de distorsions fiscales (des abattements définis en termes nominaux, par exemple) ou lorsque les décisions d’investissement sont prises dans une perspective à long terme (changement de technologie, par exemple). De plus, l’incertitude lié e à une forte instabi- lité de l’inflation pourrait dissuader les entreprises d’investir dans des projets à fort rendement, mais dont le niveau de risques inhérent est également beaucoup plus élevé. Les éléments attestant d’une relation entre l’inflation et la croissance ne sont pas sans équivoque : alors qu’il est avéré que l’investissement pâtit d’une forte inflation, la relation est moins évidente en cas d’inflation modérée ou faible (voir Edey, 1994 ; Bruno et Easterly, 1998, par exemple). De plus, dans la mesure où l’incertitude réside dans la relation entre et l’investissement et la croissance, cette relation tendrait à préconiser de s’attacher aux variations de l’inflation. Compte tenu de la corrélation entre le niveau et la variabilité de l’inflation, les deux effets risquent néanmoins d’être difficiles à distinguer. Compte tenu des remarques précédentes, deux indicateurs de l’inflation sont pris en compte dans l’analyse empirique : son niveau et sa variabilité. Ces indicateurs sont inclus dans l’équation de croissance, qui intègre la part de l’investissement, de sorte que l’impact estimé sur la croissance s’exerce via les effets de ces variables sur l’efficience globale et sur le choix de projets d’investissement. Ils sont également inclus dans l’équation d’investissement, qui permet de vérifier l’existence d’un effet des deux variables sur le niveau de l’investissement.
3.2. Politique budgétaire et croissance La politique budgétaire peut influer sur la production et la croissance à moyen terme ainsi que sur le cycle économique. Plus précisément, lorsque les déficits publics servent à financer la consommation ou les transferts, l’argument habituellement avancé en faveur d’une action prudente des pouvoirs publics réside dans le souci de limiter les effets d’éviction de l’investissement du secteur privé. De plus, si la politique budgétaire apparaît contradictoire avec la politique monétaire, la crédibilité de cette dernière peut être compromise, ce qui entraîne l’application de primes de risque sur les taux d’intérêt et des pressions sur les taux de change, avec des répercussions sur l’accumulation du capital. On a pu affirmer que les impôts nécessaires au financement des dépenses publiques pouvaient également fausser les incitations, avec des répercussions négatives sur l’efficience de l’allocation de ressources et fausser par là-même le niveau ou la croissance de la production. La principale conclusion que l’on peut tirer des publications sur ce sujet est qu’il y a à la fois un effet de « volume » de l’intervention des pouvoirs publics ainsi que des effets spécifiques dérivés du financement et de la composition des dépenses publiques. Lorsqu’elles sont peu élevées, les dépenses publiques sont susceptibles d’avoir des effets productifs supérieurs au coût social de la mobilisation des fonds. Toutefois, les dépenses publiques et les impôts correspondants peuvent atteindre un niveau où les effets négatifs sur l’efficience, et donc sur la croissance, commencent à être prédominants. Ces effets négatifs sont sans doute plus manifestes dans les cas où le financement repose davantage sur des impôts produisant un fort effet de distorsion (les impôts directs par exemple) et où les dé penses publiques sont axé es sur des activité s « non productives ». Durant les années 80 et 90, la « taille » du service public a eu tendance à augmenter dans la plupart des pays de l’OCDE, à l’instar des engagements bruts des administrations publiques. Plus récemment, la situation financière du secteur public s’est nettement améliorée. En dépit de ces importantes évolutions, la part des dépenses publiques totales dans le PIB restait inscrite dans une fourchette de 40 pour cent à 50 pour cent dans un certain nombre de pays de l’OCDE en 1999. En outre, moins de 20 pour cent des dé penses publiques des pays de l’OCDE peuvent être qualifiées de directement « productives » (enseignement, infrastructures et R-D par exemple). Dans de nombreux pays, la part des dépenses publiques « productives » a diminué ces dix dernières années. Dans notre analyse empirique de la croissance et de l’investissement, les hypothèses relatives à l’offre qui établissent un lien entre la taille du secteur public et la croissance ont été vérifiées en examinant à la fois la fiscalité et les dépenses publiques. Le rôle potentiel de la structure du financement et des dé penses est étudié en analysant séparément les impôts directs et indirects ainsi que les différentes composantes des dépenses publiques. Dans ce contexte, la variable du capital humain, évoquée précédemment, peut être retenue pour représenter les efforts passés et présents des pouvoirs publics en faveur du financement de l’éducation. De même, les dépenses publiques pour la recherche281
développement sont clairement identifiées dans les modèles élargis qui tiennent compte de la R-D (voir ciaprès). En dernier lieu, les dépenses publiques ont été prises en compte en tant que variable distincte de la consommation, afin de vérifier si cette distinction est pertinente.
3.3. Développement financier et croissance Les systèmes financiers contribuent également à la croissance économique en apportant le financement nécessaire à l’accumulation du capital et en favorisant la diffusion des nouvelles technologies. Un système financier bien développé peut mobiliser l’épargne en orientant la petite épargne des particuliers vers des investissements rentables à grande échelle, tout en offrant aux épargnants une liquidité élevée. Il constitue également pour l’épargnant une protection contre le risque idiosyncratique au moyen de la diversification et permet de diminuer les coûts d’acquisition et d’évaluation des informations relatives à d’éventuels projets, grâce à des services spécialisés de conseil financier, par exemple. Tous ces services sont susceptibles de contribuer à la croissance économique, mais ils peuvent théoriquement avoir l’effet inverse. Par exemple, la diminution des risques et l’augmentation des revenus résultant de la diversification peuvent encourager les ménages à épargner moins si les effets de revenu l’emportent sur les effets de substitution. De plus, la croissance peut, dans une certaine mesure, être à l’origine du développement de systèmes financiers, auquel cas il pourrait y avoir un lien de causalité inverse. Idéalement, nous aimerions utiliser des indicateurs qualitatifs des possibilités offertes aux entreprises d’accéder à des financements externes et de la facilité avec laquelle les investisseurs peuvent en tirer des rendements intéressants. Mais les informations disponibles se limitent à des indicateurs quantitatifs (Leahy et al., 2001). Nous analysons notamment le total des crédits accordé s par les établissements de dépôts au secteur privé , qui permet de mesurer l’intermédiation financière via le système bancaire. De plus, nous analysons la capitalisation boursière (la valeur des actions coté es), qui est un indicateur approximatif de la facilité avec laquelle les entreprises peuvent lever des fonds sur les marché s d’actions.
3.4. Commerce international et croissance Outre les effets bénéfiques de l’exploitation d’avantages comparatifs, des théories ont souligné les effets positifs résultant du commerce du fait des économies d’échelle, de l’exposition à la concurrence et de la diffusion du savoir. Ces effets pourraient entraîner une augmentation à la fois de l’efficience globale et éventuellement du niveau d’investissement (si, par exemple, l’adoption de technologies étrangères nécessite d’investir dans de nouveaux types de capital). Les progrès réalisés par les pays de l’OCDE dans l’abaissement des barrières douanières et le démantèlement des obstacles non tarifaires tendrait par conséquent à dé montrer l’impact positif des échanges commerciaux sur la croissance. Cela étant, le commerce extérieur peut être endogène par rapport au processus de croissance. L’attitude relativement ouverte des pays de l’OCDE vis-à -vis des échanges commerciaux tendrait à montrer que le volume des échanges réalisés reflète des schémas de croissance (et dans une certaine mesure, la géographie, la taille et les coûts de transport) tout autant que les contraintes sous forme de barrières douanières et d’obstacles non-tarifaires. L’éventuel problème de l’inversion du lien de causalité dans la relation entre é changes commerciaux et croissance implique donc du discernement dans l’interprétation des résultats empiriques. Plus précisément, nous traitons l’intensité des échanges commerciaux dans l’équation de croissance comme un indicateur de l’exposition au commerce extérieur – en rendant compte de facteurs comme les pressions concurrentielles – plutôt que comme un élément ayant des répercussions directes d’ordre politique. En dehors de cette ré serve, l’analyse empirique doit également tenir compte du fait que l’exposition au commerce extérieur des petits pays est plus importante en soi, quelle que soit leur politique commerciale ou leur compétitivité alors que, dans les grands pays, les pressions concurrentielles viennent pour une large part de l’intérieur. Afin de mieux refléter les pressions concurrentielles globales, l’indicateur d’exposition au commerce extérieur a é té corrigé de la taille du pays par un calcul de régression de la variable brute d’exposition au commerce extérieur en fonction de la taille de la population et en retenant dans l’analyse les valeurs résiduelles estimé es ainsi obtenues comme variable (ajustée) des échanges. En définitive, les résultats montrent que les différences de PIB par habitant dans les divers pays de l’OCDE s’expliquent dans une large mesure par des disparités des cadres politiques et institutionnels et que les pays peuvent partager leurs expériences pour définir une stratégie de croissance optimale. Malgré les 282
différences persistantes de niveaux de vie, les récents changements de politique semblent jouer de façon positive sur la croissance. La plupart des pays ont fait des progrès significatifs dans le sens de la stabilité des prix et en évitant des fluctuations macroéconomiques excessives. Toutefois, alors que différents pays ont réussi à réduire leur déficit public, la pression fiscale reste globalement élevée dans plusieurs d’entre eux et elle s’est alourdie au cours de la dernière décennie. Sur le plan structurel, la plupart des pays de l’OCDE ont enregistré des augmentations sensibles de leur capital humain, en particulier du fait de l’intervention des pouvoirs publics. Même s’il peut exister un rendement social dé croissant de l’augmentation du niveau de formation, cette évolution a eu (et aura à l’avenir) un effet positif sur les schémas de croissance observés. En outre, le montant des ressources dévolues à la R-D a progressé, d’une manière générale, des années 80 aux années 90 – même s’il a quelque peu diminué ces dernières années en raison, essentiellement, d’une baisse des dépenses publiques affecté es à la défense. De plus, les ressources semblent être de plus en plus orienté es directement vers le secteur des entreprises, les différents secteurs jouant eux- mêmes un rôle croissant. Au-delà de ces considérations, des différences de taux de croissance considérables demeurent entre les pays, peut-être dues à des disparités des conditions générales (réglementation des marchés du travail et des biens, par exemple) qui n’ont pas été prises en compte dans ce document.
Bibliographie 1.
AHN, S. et P. HEMMINGS (2000), « Policy influences on economic growth in OECD countries: an evaluation of the evidence », Documents de travail du Département des affaires économiques de l’OCDE, no 246. 2. BASSANINI, A. et S. SCARPETTA (2003), « Does human capital matter for growth in OECD countries? A Pooled Mean Group approach », Economic Letters. 3. BASSANINI, A., S. SCARPETTA et P. HEMMINGS (2001), « Economic growth: the role of policies and institutions », Panel data evidence from OECD Documents de travail du Département des affaires économiques de l’OCDE, no 283. 4. DE LA FUENTE, A. et R. DOMENECH (2000), « Human capital in growth regressions, how much difference does data quality make? », CSIC, Campus de la Universidad Autonome de Barcelona. 5. GUELLEC, D. et B. VAN POTTELSBERGHE (2001), « Recherche-Développement et croissance de la productivité : analyse des donné es d’un panel de 16 pays de l’OCDE », Revue économique de l’OCDE. 6. LEAHY, M., S. SCHICH, G. WEHINGER, F. PELGRIN et T. THORGEIRSSON (2001), « Influences des systèmes financiers sur la croissance dans les pays de l’OCDE », Documents de travail du Département des affaires économiques de l’OCDE, no 280. 7. LUCAS, R.E. (1988), « On the mechanics of economic development », Journal of Monetary Economics, 22. 8. MADDISON, A. (2001), « L’économie mondiale : Une perspective millénaire », Études du Centre de développement de l’OCDE, Paris. 9. MANKIW, G.N., D. ROMER et D.N. WEIL (1992), « A contribution to the empirics of economic growth », Quarterly Journal of Economics, 107. 10. UZAWA, H. (1965), « Optimum technical change in an aggregative model of economic growth », International Economic Review 6.
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ABOUT TRUSTS, CARTELS AND MONOPOLIES WITHIN THE WORK OF VIRGIL N. MADGEARU Mitoaica Ana Maria Universitatea „Constantin Brâncuşi” din Târgu Jiu, Bulevardul Republicii, nr. 1, Târgu Jiu, judeţul Gorj, e-mail:
[email protected], tel.: 0253/214307, 0746/057474 During the time, the appearance, development and the political, economical, social, etc. influences of the trusts and cartels in the industry have been treated within the university courses taught by Virgil Madgearu, and by many other written works belonging to him. He has an original concept concerning the appearance, place and role of those influences in the economy of his life time. Being an authorized voice of the Romanian economical inter-war thinking, we consider as being of high interest the presentation of some aspects of his vision as a professor and as a politician regarding the trusts and the cartels. Key words: trusts, cartels, monopolies, imperialism, competition, market Virgil N. Madgearu (1887 – 1940) was a Romanian economist, professor, publicist and politician, educated at the German historical school. As a professor at The High Industrial and Commercial Studies Academy from Bucharest (the actual Bucharest Academy of Economic Studies) since 1916, he was a man of a vast culture of specialty initiating original specialty courses, well documented or argued (Course of introduction into the economic sciences, Course of political economy and industry, Course of agrarian economy and industry, The industrial and commercial enterprises study, Course of transports, etc). He was a general Secretary of the National Peasant Party, a parliamentary man and a minister in the peasant party’s governments. His main works are, as follows: Agrarianism, capitalism, imperialism, published in 1936, The Evolution of the Romanian economy after the World War I, appeared in 1940. As an original and profound thinker and a politician with democratic views, he couldn’t tolerate the extremism. He was killed in 27th of November 1940, by the same legionary team who assassinated Nicolae Iorga. Appeared toward the end of the 19th century, the trusts and the cartels have continued even nowadays to make felt their presence and influence in the economic social life. These economic formations (and not only), have incited the interest of the large public, of the politicians and economic thinkers together and have generated different attitudes, during the inter-war period, a while when Virgil N. Madgearu also activated. Without being a preoccupation of a high ampleness for Virgil N Madgearu, this one, as an economist, professor and publicist couldn’t have treated in his works the problems concerning the trusts, cartels and monopolies. In his courses he taught at the earlier (ex-) Commercial Academy, Virgil Madgearu sustained the formation of the trusts and cartels as a consequence of the economic depression between 1870 and 1890, as „simple agreements, without having reached to an organization form”, so that, before the World War I, these to be able to be framed within the economic organization of all the nations. In his concept, the appearance of the trusts and of the cartels „was born from the necessity of counterbalancing the results of the free competition at the public auctions (sales)”, because of the free competition and the big number of companies which were present at those public sales by auction (auctions) diminished considerably the margin of profit of the winners (winning bidders). He considered that the customs fees and the trade protectionism rule favored the formation of the cartels and the maintaining of the high prices on the inland market, as he asserted in his work „Agrarianism, Capitalism, Imperialism, within the chapter The Economic Imperialism and the Nations League: „…the politic of the protectionism favors the formation of the trusts and cartels” and further: The protectionism is the securest wave behind of it usually prosper the trusts and cartels which produce that transformation from the system of the free competition as a dominant one, to the monopoly system, within the economic organization.” Simultaneously, the massive concentration of the industrial capitals in bigger and bigger enterprises, has determined that the part of „fixed capital in an industrial enterprise reach to represent a significant quote” (benchmark), and a relative stable production becomes necessary for the capital depreciation, so that it 284
appears the idea of not allowing anymore that the production (output) to be under the influence of the market fluctuations. Virgil Madgearu sets the objectives of the trusts and cartels so: „the goal of the trusts is the achievement of their market-independent feature.” As the cartels are, on his opinion, agreements among the producers or manufacturers for the monopolist domination of market, they have an important influence concerning the price formation, which are going to align their selves depending on the average cost realized by the cartelled companies or on the highest cost within the organization. The conclusion of Virgil Madgearu is therefore that the prices are higher than the rule of the free competition, but there are also situations when the costs of production are diminished by closing the enterprises having old equipment, or generating higher costs. These measures may be also abusive, when in fact it is pursued the diminution of the production „speculating the consuming world”. The trusts differ from the cartels, says Virgil Madgearu, as the latter keep the individuality of the component enterprises, overtaking only the commercial function and they have a limited time life, while the first „are monopoly organizations of an industry branch, which possess directly or indirectly the power of absolute disposition upon the exploitations and enterprises reunited in the trust”, having simultaneously a life time much longer. Interesting are also his ideas about the trust forms: from the mixt companies, with a horizontal layout, too, to the portfolio societies, „holding company” and the private trusts. The monopolies are also the object of Virgil Madgearu’s lectures, for instance those ones created as an effect of the protectionist politics, which, through the customs fees create „temporary economic monopolies” for the national industry, or the privileged situation of the issuing bank from Romania, that has performed the credit and capitals monopoly. He exemplifies also the existence of the monopolies created by the state in the domain of the transports and communications, rightly appeared from „the natural necessity” of a unique exploitation, without forgetting the monopolies appeared as a following of „the absolute superiority of the exploitation”. Such enterprises, where the output optimum is carried out at an unusual large extension of the company”, by minimizating the price cost, obtain therefore the absolute domination of the market. Regarding „ the capitalist politic of the monopolies” as Virgil Madgearu asserts, „that politic doesn’t know the selection concerning the fighting weapons”, namely the means used for surmounting the competition comprise the whole range, from the supply of agreements, to the „aggression actions”. The monopolies have „a work politic”, so that it is much easier for the employers non- reunited in trade unions to proceed for massive dismissals during the periods when they have to decrease the output. The trusts, asserts further Virgil Madgearu, will always act toward increasing the output, and as a consequence of this, they are going to search new trade markets, therefore it wouldn’t be able to say that they (the trusts) are interested in pursuing the sale prices raise, for not limiting their selves their market. In opposition, there are known even situations when the trusts decrease drastically to eliminate like that their competitors or for gaining new markets (the dumping politic). The high importance which is assigned by Virgil Madgearu to the trusts and cartels results also from the fact that by dominating the market, or without being dependent on it, it is ensured a stability of the prices, it is set „a kind of order in this chaos”, although their appearance and development doesn’t mean that „they’ve disappeared” or there is a perspective to disappear the economic crises and the periodical cycles”, but it is only diminished the ampleness of the prices’ oscillations. „ It would be a mistake to consider the trusts and cartels as a pathological manifestation of the capitalist society”, asserts Virgil Madgearu in his Course of Political Economy published in 1944, delimiting like that the Marxist doctrine (Lenin’s tenet, more exact). The international trusts and cartels’ problems are also tackled by Virgil Madgearu in his university courses, without being able to clarify the causes of their appearance and their development and expansion modalities. But referring himself to the industry financing, he reached to the conclusion that „the European model” of financing of this one by the banks, a model that has spread in United States (of America), too, „forms the essential feature of the economic step nowadays, of the economic imperialism”. As a publicist and a politician he goes further, criticizing the formation of the banking trusts that dominate the international economy and stimulate the economic expansion: „The bank trusts, that perform the domination of the whole economic life, upon the industry, agriculture and commerce, which master 285
therefore the whole economic life of all nations, these have in their hands the imperialist conflicts…The impulse toward expansion is not given only by the merchandise export necessity of the industrial states, but also by the necessity of the capitals export”, asserted Virgil Madgearu in the „ Economic Imperialism and the Nations League.” At the same time, he considers that the capital export has begun simultaneously with the development in the big capitalist countries, of a system of the big banks, whose politic is based on the same monopoly principles, as the industrial trusts’ and cartels’ one. As attitude of the state against the trusts and cartels, Virgil Madgearu, from his perspective as a National Peasant Party-doctrinaire considers as the most appropriate method that one of nationalizing of those ones: „ or where can be formed a private monopoly, the peasant-party tenet, representing the interests of the producing (manufacturing) and consuming mass- majority, will prefer its transfer in the hands of the collectivity in economic form, proper for the output (production) interests„ (The peasant party doctrine, 1923). But later, within the program adopted by The National Peasant Party in 1935, this attitude changed: „The cartels and any agreements among the industrial companies, which are interested, by suppressing the competitivity or by other means, by speculating the consumers and restraining the industrial flourishing, are to be forbidden. Of course, that analyzing the work of Virgil Madgearu other interesting ideas can be detached (found out) concerning his opinion on the trusts and monopolies. The problems of these capitalist formations have generated a rich specialty literature and also a lot of controversies and attitudes. It is not less true that the subject is still one of actuality and it incites a lot of interest among the economical environments and not only those ones.
Bibliografie 1. 2. 3. 4. 5. 6.
Virgil Madgearu, Doctrina ţărănistă, în Doctrinele partidelor politice, Editura Garamond, Bucureşti, f.a. Virgil Madgearu, Curs de Economie Industrială, editat de IC Vasilescu, Bucureşti, 1927 Virgil Madgearu, Agrarianism, Capitalism, Imperialism, Editura Dacia, Cluj-Napoca, 1999 Virgil Madgearu, Curs de Economie şi Politică Industrială, lito AISCI, Bucureşti, 1937 Virgil Madgearu, Curs de economie politică, Institutul de Cercetări Economice „Profesor Virgil Madgearu”, 1944 Ioan Scurtu (coord.) „Istoria României între anii 1918 – 1944. Culegere de documente”, Editura Didactică şi Pedagogică, Bucureşti, 1982
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ELEMENTS OF THE CONCEPT OF VIRGIL N. MADGEARU ABOUT THE STATE INTERVENTIONISM Mitoaica Ana Maria Universitatea „Constantin Brâncuşi” din Târgu Jiu, Bulevardul Republicii, nr. 1, Târgu Jiu, judeţul Gorj, e-mail:
[email protected], tel.: 0253/214307, 0746/057474 The ideas debates from Romania, in the inter-war epoch included within their sphere the state interventionism, too. Appeared and considered on some people opinions, a reaction to the liberalism or a reaction to the socialism, or a result of the war and post-war recovery efforts, this reached to its apogee during the period of the great economic crisis between 1929 and 1933 (the great depression). Virgil Madgearu, an economist educated at the German school, an attentive scientist observer of his epoch (age) or a politician who should propose solutions for the crisis effects, he preoccupied himself with the problems of the state intervention into the economy, too. Key words: interventionism, capitalism, depression, economy, politic In the concept of Virgil Madgearu, who overtook the opinions of Franz Oppenheimer, the evolution of the interventionism was produced from the monetary-current considered an accumulation of precious metals aiming to support a numerous army for achieving the state expansion politic, at the first form of state interventionism- the mercantilism – „the interventionism extended upon all the domains of the economic life” with preoccupations and nation education. The appearance of the state interventionism as a reaction to the liberal doctrine was produced, on V. Madgearu opinion, as a result of the population growth, too, as an answer against the „wild” exploitation of the children and women in working. He thinks (thought) that the most vehement reaction was that one of the Marx-fans: „The whole construction ideology of Marx is based on the ascertainments made concerning the effects of the economic liberty (freedom) for the British industry development by the description of the results of the non – human exploitation of the children and women”1 creating a very powerful social fighting platform and the appearance of a new tenet: the socialism, which, „through the working parties…represents the most formidable reaction against the liberal idea as a state doctrine.”2 And as a reaction for the appearance of the military actions of the working parties, V. Madgearu sees the appearance of the „desk socialism”, considered as „a state interventionism doctrine” that is justified only through the necessity of the setting or ruling the output (production) reports and of eliminating the social disadvantages resulted from the free activity of the production forces. This doctrine appears, as V. Madgearu believes, from the necessity „of protecting the capitalism”, and within the domain of the social politic, it manifested by enacting the social health assurances, helping allowances in case of work accidents, old people and unemployment helps (allowances) etc. The interventionism as a state politic appeared under the confronting conditions of the capitalist economy with earlier unknown phenomena of the kind of the economic crises (depressions) and of the unemployment, which have affected globally the economy and the society. The beginnings of the state interventionism are placed during the period of the World War I when in the countries involved in the conflict it was necessary the unitary coordination of the war efforts and at the same time the concentration of those ones under a unique command (order), situations that couldn’t be solved than the state itself. So, the belligerent countries needed to concentrate at the disposal of the state a huge volume of resources and to lead them so that to be able to cope with the war effort. At the end of the first world conflagration, the necessity of the recovery of the infrastructure and of the economy, and also the restarting of the economic and social development were assumed as tasks charged to the state authorities. Therefore, under such conditions, the state involved itself in an important measure by its decisions aiming to supporting the economy setting and development, a fact that conferred to the taken measures an interventionist character 287
The apogee of the intervention politic which gave birth to the interventionist doctrine is considered simultaneously as being the period of the economic word depression (crisis) between 1929 and 1933, when the state had to abandon one of its liberal thesis of not involving much deeper in allocating, redistributing and using of the resources and also regarding the economic initiatives, a thing which earlier was an unconceived one. By confronting the economic crisis (depression) difficulties, the state extended its activity, including within its action sphere politics for counterworking the disturbing factors. Next to its traditional earlier assumed tasks or duties of the state, other new ones contoured which involved especially the correction of the negative impact upon the society as a whole, determined by the mistunings in the economic and social life caused by the economic depression (crisis). In this context, it came out a new doctrine, concerning the state in economy and in society generally, which enacted the increase of the role of the state in economy and society generally, known as the interventionist doctrine, called also the modern doctrine, comparing to the classic one. According to this doctrine, for counterworking the defaults and the imperfections in the economy and for setting the mechanisms of the market economy, it is considered admissible the involvement of the state not only in the economic activities for influencing the Gross Intern Product evolution (for ensuring to this one a balanced increasing tendency), but also within the social domain, for improving the material situation (wealth or wellness) of the persons affected by the disturbing phenomena appearance within the economy (crisis, depression, unemployment). Such a politic of balancing brought to the trends appeared in the economy turned out as being favorable to the attenuation of the amplitude of the cyclic oscillations, avoiding the profound disfunctionalities on economic, social and politic plan From such a perspective of the balancing measures which may be applied by the interventionist state, the doctrine of J.M. Keynes reasons the necessity and the possibility of involving the state in economy, not only by influencing the evolution of the private economic activities, but also by developing a powerful economic state sector. The concept of V. Madgearu concerning the role of the state has elements surprising similar, even if some of his theses are published by the means of the university lectures, few years before the Great Depression (the major economic crisis). So, in his Course of Transports, taught in 1924, he underlined that: „in a necessary way it intervenes in the activity of the collective economy, which completes or replaces that one of the individual activities.” By the „collective managing (administrating) activities” or the „state management” („state administration”) he understands in fact the state enterprise, which has as motto (slogan) and therefore as a working method, „the maximum of collective use with minimum costs (expenses)”. Along the same line of his concept about the state intervention in the economy, we have to notice another reason: „the state is the only factor that can foresee the future development, too and a plan for taking in account of the future necessities”, by this term understanding that the individual initiative cannot aim at the long time economic goals which may involve generations, the state must arrogate itself this obligation. On the other hand, we meet here the notion of planning, which already has passed the sphere of the interventionism, entering on the conducted or led economy. In his vision the state intervenes automatically at certain moments or on certain domains, V. Madgearu calling it „mechanical intervention”, namely the intervention on the domains where the private activity „is not active” or within, if the domain has a special importance for the society, in the system of the free competition the organizing by the state obtains what he calls „ maximum of collective use „and finally, there where it is necessary „a provision for the future developments”. The intervention manners of the state in the economy are classified by V. Madgearu as „adjuster” and „creative”. Regarding the state means considered as being proper for the activity setting, he asserts the possibility of acting in a negative way when the state laws prohibits certain individual activities which may be against the collective interest, in a positive sense, when they creates the legal framework within whose limits the game of the individual interests, may be performed for the general use.” It is, we think, important to mark such a kind of intervention, as „adjuster”, says Virgil Madgearu, referring himself only to the directing by the state authorities, by using a proper legal framework, of the private initiative within the economic domain. The motivation of such a kind of interventionism doesn’t succeed to 288
prevent from and attenuate the effects of the economic crisis, as in the Keynes’ doctrine, but it aims at the primates of the general interest of the society upon the individual interest, a thesis sustained by the representatives of the German school, too, representatives whose writings influenced on him for sure. What V. Madgearu calls „own creative state activity”, represents, we think, the economic initiative of the state, which must, on his opinion, to replace the private initiative, over there where the latter is not manifested, although „ it is possible and it would be useful for the economic general development”, or when the necessary financial means are much higher than the possibilities of the individual entrepreneurs, or when the public authorities consider that the private activity „ doesn’t correspond to the interest of the general wellness.” Practically, he enacts the state interventionism and from the point of view of the state as an economic agent, although, on the other hand, he has doubts regarding the capacity of the state of being a good administrator. Important argues (reasons) we find in the analysis of what he calls „in-fact monopoly”, a category that includes the organization and exploitation of the railways , telegraph, etc, about which he says that these are, „ by the nature of the things destined (meant) to the organization of the monopoly”, and not anyone, but a state monopoly, as, in addition of the consistent part of „immobilized capital”, which wouldn’t be handy for the private initiative, the optimal planning of the railways network can be performed only by the state. Concerning the specific means of „ the methodical influencing of the national economy by the state” in the Virgil Madgearu’s vision these can be systemized in four groups: 1. means of guidance (directing) the national economy – supposing an intervention of the state limited when placing at the disposal of the active economic agents of the necessary information for the „good guidance” of the economic activity. Within this category are included the investigations and the studies performed by the authorities about the existing economic situation, publishing of the gathered information from the Romanian consulates, the obliging under the law for publishing the balance-sheet of the economic agents etc. 2. „the helping of the economic forces to be able to work with maximum of effects”, by organizing the circulation of the exchanges, the creation of the national currency and the reglementation of its functioning, the formation of the communication and transport, post (mail), telegraph, railways institutions, means of stimulating the actions of the economic factors, the enacting of the right of the free choice and free performance of the profession. 3. the restriction of certain free economic activities, a category that includes the measures against the exploitation of the women and children, generally, of any form of exploitation, measures against the disloyal competition, against the usury (extortionate) by limiting the loan interest, measures against the exploitation of the forest and oil. In this way, as it is right, Virgil Madgearu asserted that, although there are activities very profitable for the private initiative, and the oil and wood were products with an overwhelming weight in the export provided by our country, the state, the „society” as he said, must intervene as there is the danger of the fast depletion of the oil reservoirs, and the massive and uncontrolled land clearing (grubbing) may have negative influence on the climate, agriculture and lands. His concept, we could say a modern one, of protecting the natural resources of the country has no connection with any ideology, but it denotes the preoccupation for an efficient exploitation of the resources, which anytime is actual. It is worthily to be noticed that Virgil Madgearu considers that the state intervention in the „free game of the economic forces” may have also negative effects, when it restrains the function of the Darwinist law of the natural selection, a law by which the companies with old technology and having too much energy consumptions should disappear, if they wouldn’t be helped by the state to survive, braking like that the economic progress. From this point of view, his opinion is placed along the line of a necessary limitation of the state intervention in the economy. 4. the overtaking by the state of some economic activities, in competition with the private initiative, or by excluding this one, by the state monopoly system. 289
Regarding the efficiency of the state intervention in economy, Virgil Madgearu considers it quite relative, the state interventionism is „the system without system”, especially after what happened during the Great Depression (the major economic crisis of the world) when he ascertained „the null result of these multiple interventions” and he considers that it must be decreed „the interventionism bankruptcy”, his conclusions being in favor of the conducting or directing (leading) as a state politic, conducting meaning a planned and methodical influencing of the national economy aiming at the renunciation of the „automatic functioning of the economic mechanisms” We don’t pretend to have depleted the exposure of the concept of Virgil Madgearu about the interventionism as a doctrine, about the state intervention in economy – which is necessary, possible, and limited too, but we consider that we have revealed some aspects we thought as worthing for paying the attention of whom it may concern.
Bibliografie: 1. 2. 3.
Virgil Madgearu, Curs de transporturi, editat de Ion Olteanu, AISCI, Bucureşti, 1924 Virgil Madgearu, Curs de economie naţională. Politica agrară, editat de IC Vasilescu, Bucureşti, 1937 Virgil Madgearu, Curs de economie politică, Institutul de Cercetări Economice „Profesor Virgil Madgearu”, 1944
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CLUSTERS IN THE ROMANIAN ECONOMY Nagy Csaba Mihai Eminescu University of Timisoara, Tourism, Trade and Services Management Faculty, Timisoara,Aries Str., N. 19, Phone: 0256-466360, 0723-170333, 0766-398166, E-mail:
[email protected] Clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field that are present in a nation or region. Clusters arise because they increase the productivity with which companies can compete. The development and upgrading of clusters is an important agenda for governments, companies, and other institutions. Cluster development initiatives are an important new direction in economic policy, building on earlier efforts in macroeconomic stabilization, privatization, market opening, and reducing the costs of doing business. In the last two decades the growth of national economies competitiveness was mainly based on regional development and growth of regional clusters competitiveness. Key words: cluster, company, competition, development, competitive advantage What is a cluster? At a conference of the Barcelona-based International Competitive Institute last year, a large subgroup debated the better part of a morning on the definition of a cluster. My well-circulated definition that follows represents the type of cluster that I refer to in this and future articles: " A cluster is a concentration of firms across several industries that creates quality jobs, exports goods and services, shares common economic foundational needs, and unites the public sectors of economic development, legislatures at all levels, universities, community colleges, the K-12 educational community, workforce development, support foundations, and all community economic stakeholders." A cluster is a geographic concentration of competitive firms in related industries that do business with each other. Each cluster includes companies selling primarily outside the region, as well as support firms supplying raw materials, components and business services. These groups of companies that compete or interact with each other are more important to the region's well being than any single, isolated firm no matter how strong or influential it may be. Clusters provide synergy, and that leads to competitive advantage. In clusters, the available pools of experienced workers are larger and more diverse. Suppliers tend to congregate for increased efficiency. A competitive spirit builds, stimulating rapid growth and innovative, energetic strategic alliances form. Business clusters fuel the region’s economy, and they are the best focus for economic development efforts. Building and strengthening our existing clusters and developing or introducing other clusters is what will move us profitably ahead in this new century. The prevalence of clusters reveals important insights about the microeconomics of competition and the role of location in competitive advantage. Even as old reasons for clustering have diminished in importance with globalization, new influences of clusters on competition have taken on growing importance in an increasingly complex, knowledge-based, and dynamic economy. Clusters represent a new way of thinking about national, state, and local economies, and they necessitate new roles for companies, government, and other institutions in enhancing competitiveness. Economic development regions have occurred naturally for centuries. Some examples are the first agricultural villages, naval powers, manufacturing industries of all sorts, and now in our time, the telecom regions. In studying the processes that made them successful, it is clear that the social groups that had the better knowledge and organizational skills played a dominant role. Historians have also often attributed the growth of successful societies to geographical location and proximity to transportation; to short-term economic factors such as gold, copper, oil, or other raw and natural materials; or finally to the availability of capital. The cluster concept, however, is provoking new research that challenges these long-held concepts, including the significance of capital formation as being dominant. Economic geography during an era of global competition involves a paradox. It is widely recognized that changes in technology and competition have diminished many of the traditional roles of location. Yet clusters, or geographic concentrations of interconnected companies, are a striking feature of virtually every national, regional, state, and even metropolitan economy, especially in more advanced nations. The 291
prevalence of clusters reveals important insights about the microeconomics of competition and the role of location in competitive advantage. Even as old reasons for clustering have diminished in importance with globalization, new influences of clusters on competition have taken on growing importance in an increasingly complex, knowledge-based, and dynamic economy. Clusters represent a new way of thinking about national, state, and local economies, and they necessitate new roles for companies, government, and other institutions in enhancing competitiveness. Clusters may work in conjunction with local, state offices, universities and community colleges. The clusters need not be focused only on technical industries: for instance, of the clusters in Arizona, three serve the tourism, food and fiber, and senior living industries.Today's cluster can be viewed as incorporating in a premeditated structure some of the processes of those formed in a more or less ad hoc manner. The principles are a plan, organizational skills, cooperation of the community stakeholders, the educational system, workforce development at all levels, transportation of the products more efficiently than others, competition in the local region, and the integration and modification of multiple foreign technologies. Successful economic development is a process of successive upgrading. As nations develop, they progress in terms of their characteristic competitive advantage and modes of competing. Following the Porterian model, we identify three stages of economic competitiveness: factor-driven economy, investment-driven economy and innovation-driven economy. We acknowledge that most of the Romanian economy of today is to a large extent factor-driven. We accept that the best way to increase Romania’s economic competitiveness is to enhance innovative activities, while reducing the dependency on factor prices. While we can be relatively certain that the factor-driven model of economic growth will eventually be upgraded, the process is a lengthy one, involving numerous stages and adjustments of the workings of the national economy. In addition, regardless of our ability to create an innovation-driven economy, it is obvious that losing the factor-driven competitiveness is not subject to choice: as real wages go up, the cost of labour in Romania becomes less and less attractive compared with other sites. There is thus a wide scope for improving economic performance through clustering, and for Romania, the case can be made that by adopting this approach it can “burn sta
