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Romania’s economy faced extensive structural transformations after 1989, highlighting the transition to a market economy and integration into the Euro-Atlantic structures, factors that contributed to the intensification of the globalization process domestically. However, the indicators in the sphere of globalization of the Romanian economy recorded predominantly unfavorable developments in the second half of the post-crisis economic cycle, as it results from an economic analysis elaborated by Banca Transilvania based on data from Eurostat.
Thus, the share of exports to GDP has decreased in recent years, from a record level of 42% in 2017 to 37.3% in 2020 (the lowest level since 2011). This indicator is well below the level in the European Union (46.8% in 2020).
Also, the indicator of the share of imports to GDP decreased from a record level of 45.3% in 2018 to 41.7% in 2020 (the minimum of 2013), positioning itself very close to the one registered in the European Union (42, 8%).
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On the other hand, the foreign direct investment to GDP ratio has shown a downward trend in recent years, to a level of 0.85% in 2020, the lowest level since 1996.
“Foreign direct investment played a fundamental role in the development of the domestic economy, especially between the late 1990s and the Great Recession (the world’s worst economic and financial crisis since World War II),” says Banca Transilvania.
On the other hand, the indicator of the share of employees employed in multinationals in total employees recorded an upward trend in recent years, to a record level of 29.2% in 2018. At the level of 2018 this indicator recorded a level of 15.6% in the European Union.
Last but not least, BT draws attention to the high level of the share of gross value added generated by foreign-controlled companies in total gross value added: 44.7% in 2018, well above the level in the European Union (24%).
“In other words, we can say that we have witnessed a predominantly unfavorable evolution of indicators in the sphere of globalization of the national economy in the second half of the post-crisis economic cycle, and this trend intensified in the pandemic year 2020, in the context of the health crisis, an exogenous shock unprecedented worldwide in the last century. For the post-pandemic economic cycle, we expect changes in trends for the five indicators analyzed above, given the favorable prospects for productive investments. Thus, on the one hand, we anticipate the improvement of the share of exports in GDP and the revitalization of foreign direct investment. On the other hand, we expect a deteriorating evolution for the indicators of the share of multinational employees in total employees of the national economy and gross value added companies controlled by foreigners in total gross value added “, says Andrei Rădulescu Director of Macroeconomic Analysis, Banca Transilvania.