Romania and the Lisbon agenda: EU accession and economic competitiveness

In the process of its accession to the European Union (EU), Romania is guided primarily by the Copenhagen criteria aiming at establishing a functioning market economy. However, once accepted as an EU member, it has to be prepared for meeting the highly-ranked long-run goals of the common European market. In this sense, together with the pre-accession reforms concerning the transition to a market economy, Romanian policy-makers must also develop and introduce polices for the technological transformation of the economy from a factor- intensive level of production to an innovation intensive economic system in accordance with the priorities of the Lisbon Agenda.

The aim of the report is to acknowledge the progress made by Romania in specific areas of the Lisbon agenda as well as to provide a number of policy recommendations as to how Romanian capacity could be successfully improved and adapted in correspondence with the Lisbon agenda.

The main findings on the current trends in Romanian development indicate that:

• knowledge diffusion is more intense than knowledge creation
• liberalization has made significant progress in telecommunications, transport and financial services
• business start-up conditions have improved, although some market entry barriers still exist
• unemployment is quite low and a reform in the pension system is expected to be implemented
• industrial restructuring helps Romania comply with the provisions of the Kyoto agreement but additional investments are necessary for their long-run execution

The authors recommend the following:

• budget reform towards prioritization and redirection of public expenditures
• provision of state aid for stimulating innovation and technological development
• establishment of an independent advisory body for better coordination of the strategic and executive levels in the Romanian innovation system
• reduction of the non-wage components for labor costs
• expansion of the institutional capacity for effective implementation and administration of strategic environmental projects

The general conclusion is that Romania can succeed in its integration into the developed EU economies only through parallel acceleration of its catching-up strategy and broad implementation of targeted policy measures for long-run development.