Editing Economy of Romania (section)

==History==
===Before World War II===
The economy of Romania entered modernity with the [[Treaty of Adrianople (1829)|Treaty of Adrianople]] in 1829, ending centuries of Turkish control. Economic growth was stimulated by several milestones: the discovery and industrial exploitation of oil in 1857, the political union between [[Wallachia]] and [[Moldavia]] in 1859, land reforms, adoption of a local currency, the [[Romanian leu|leu]] (1867), the state independence (1877), as well as the building of an extensive rail-road system under king Carol I.

After the dissolution of neighbouring [[Russian Empire|Russian]] and [[Austro-Hungarian Empire|Austro-Hungarian]] empires following World War I, several Romanian-speaking provinces ([[Transylvania]], [[Bessarabia]], [[Banat]], [[Bukovina]]) united with the Kingdom of Romania, forming the Romanian state in its modern form. The application of radical agricultural reforms and the passing of a new constitution created a democratic framework and allowed for quick economic growth (industrial production doubled between 1923 and 1938, despite the effects of the [[Great Depression in Romania]]).

Until World War II, Romania was Europe's second-largest oil and food producer.<ref>{{cite news| url=https://www.telegraph.co.uk/sponsored/motoring/europa/7306099/Business-in-Romania-a-country-thats-fast-off-the-Bloc.html | work=The Daily Telegraph | location=London | title=Business in Romania: a country that's fast off the Bloc – Two years of EU membership have transformed the business face of Romania and savvy UK firms are reaping the rewards. Paul Bray reports. | date=24 February 2010 | access-date=2010-05-01}}</ref>

=== Communist period ===
{{Anchor|Economy during 1944–1989}}
{{main|Economy of the Socialist Republic of Romania}}
After 1945, Soviet-occupied Romania became a member of the [[Eastern Bloc]] and switched to a [[Soviet-type economic planning|Soviet-style]] [[command economy]]. During this period the country experienced rapid [[industrialisation]] in an attempt to create a "multilaterally developed socialist society". Economic growth was further fuelled by foreign credits in the 1970s, eventually leading to a growing foreign debt, which peaked at $11–12 billion.<ref>Klepper, Nicolae. ROMANIA An Illustrated History. NY:Hippocrene Books, Inc., 2002, page 230</ref>

Romania's debt was completely paid off during the 1980s by implementing [[Austerity in Romania|severe austerity measures]] which deprived Romanians of basic consumer goods. In 1989, before the [[Romanian Revolution]], Romania had a GDP of about 800 billion lei, or $53.6 billion.<ref name="cp2010-01-02">[http://standard.money.ro/articol_111865/dupa_douazeci_de_ani__economia_romaniei_in_1989.html După douăzeci de ani. Economia României în 1989] {{webarchive|url=https://web.archive.org/web/20091224142319/http://standard.money.ro/articol_111865/dupa_douazeci_de_ani__economia_romaniei_in_1989.html |date=24 December 2009 }}, 21 decembrie 2009, standard.ro, accesat la 2 ianuarie 2010</ref> Around 58% of the country's gross national income came from industry, and another 15% came from agriculture.<ref name="cp2010-01-02" /> The minimum wage was 2,000 lei, or approx. $57.<ref name="cp2010-01-02" />

=== Free market transition ===
The end of the communist period marked the beginning of a sharp economic downturn. Romania's weight in the global economy dropped to 0.3% in 1993, down from 0.8% in 1983.

[[Privatisation]] of industry started with the 1992 transfer of 30% of the shares of some 6,000 state-owned enterprises to five private ownership funds, in which each adult citizen received certificates of ownership. The remaining 70% ownership of the enterprises was transferred to a state ownership fund, with a mandate to sell off its shares at the rate of at least 10% per year. The privatisation law also called for direct sale of some 30 specially selected enterprises and the sale of "assets" (i.e., commercially viable component units) of larger enterprises.

As of 2008, inflation stood at 7.8%, up from 4.8% in 2007<ref name="cia.gov"/> estimated by the [[National Bank of Romania|BNR]] at coming within 6% for the year 2006 (the year-on-year [[consumer price index|CPI]], published in March 2007, is 3.66%). Also, since 2001, the economy has grown steadily at around 6–8%. Therefore, the PPP per capita GDP of Romania in 2008 was estimated to be between $12,200<ref>{{cite web|url=https://www.cia.gov/library/publications/the-world-factbook/fields/2004.html|archive-url=https://web.archive.org/web/20070613003440/https://www.cia.gov/library/publications/the-world-factbook/fields/2004.html|url-status=dead|archive-date=13 June 2007|title=GDP – per capita (PPP)|access-date=16 September 2014}}</ref> and $14,064.<ref>Data refer to the year 2008. [http://siteresources.worldbank.org/DATASTATISTICS/Resources/GDP_PPP.pdf PPP GDP 2008] & [http://siteresources.worldbank.org/DATASTATISTICS/Resources/POP.pdf Population 2008], World Development Indicators database, [[World Bank]], 15 September 2009. Note: Per capita values were obtained by dividing the PPP GDP data by the Population data.</ref>

Romania was the largest U.S. trading partner in Central-Eastern Europe until [[Nicolae Ceaușescu]]'s 1988 renunciation of [[Most Favored Nation]] (non-discriminatory) trading status, which resulted in higher U.S. tariffs on Romanian products. Congress approved restoration of the MFN status effective 8 November 1993, as part of a new bilateral trade agreement. Tariffs on most Romanian products dropped to zero in February 1994 with the inclusion of Romania in the Generalized System of Preferences (GSP). Major Romanian exports to the U.S. include shoes and clothing, steel, and chemicals.

Romania signed an [[Association Agreement]] with the EU in 1992 and a free trade agreement with the [[European Free Trade Association]] (EFTA) in 1993, codifying Romania's access to European markets and creating the basic framework for further economic integration. Romania formally joined the EU in 2007.

During the later part of the Ceaușescu period, Romania had earned significant contracts from several developing countries, notably Iraq, for oil-related projects. In August 2005 Romania agreed to forgive 43% of the US$1.7&nbsp;billion debt owed by an Iraq still largely occupied by the military forces of the U.S.-led "[[Coalition of the Willing]]", making Romania the first country outside of the [[Paris Club]] of wealthy creditor nations to forgive Iraqi debts.<ref>{{cite web|url=https://business24.ro/international/irak/romania-isi-va-recupera-datoriile-din-irak-82882 |title=Romania isi va recupera datoriile din Irak |trans-title=Romania will Forgive Iraqi Debts |lang=ro |website=business24.ro |access-date=24 September 2017 |date=12 September 2006 }}</ref>

Growth in 2000–07 was supported by exports to the EU, primarily to Italy and Germany, and a strong recovery of foreign and domestic investment. Domestic demand is playing an ever more important role in underpinning growth as interest rates drop and the availability of credit cards and mortgages increases. Current account deficits of around 2% of GDP are beginning to decline{{Citation needed|date=December 2009}} as demand for Romanian products in the European Union increases. Accession to the EU gives further impetus and direction to structural reform.

In early 2004 the government passed increases in the [[value-added tax]] (VAT) and tightened eligibility for social benefits with the intention to bring the public finance gap down to 4% of GDP by 2006, but more difficult pension and healthcare reforms will have to wait until after the next elections. Privatisation of the state-owned bank [[Banca Comercială Română]] took place in 2005. Intensified restructuring among large enterprises, improvements in the financial sector, and effective use of available EU funds is expected to accelerate economic growth. However, the Romanian economy was affected by the [[2008 financial crisis]] and contracted in 2009.<ref>{{cite web|url=http://www.seeurope.net/?q=node/16430|title=Index of /|access-date=3 March 2015}}</ref>

After communism, Romania needed [[Capital (economics)|capital]] infusion, [[Entrepreneurship|entrepreneurial]] and managerial skills, the fastest way to obtain that was through foreign direct investment (FDI).<ref>{{Cite web|url=https://mises.org/quarterly-journal-austrian-economics/better-red-transition-communism-coca-cola-romania |access-date=12 July 2024 |title=A Better Red: The Transition from Communism to Coca-Cola in Romania|date=13 April 2019|website=[[Mises Institute]]}}</ref> As of 2018, total FDI in Romania was 81&nbsp;billion EUR, 63% of total (51&nbsp;billion) are [[Greenfield project|greenfield investments]]. Top ten FDI stock by country of origin in 2018 were: Netherlands (23.9%), Germany (12.7%), Austria (12.2%), Italy (9.5%), Cyprus (6.2%), France (6%), Switzerland (4.5%), Luxembourg (4.2%), Belgium (2.2%) and United Kingdom (2.1%).<ref>{{Cite web|url=https://www.bnr.ro/PublicationDocuments.aspx?icid=14364|title=Foreign Direct Investment|website=[[National Bank of Romania]]|url-status=dead|archive-url=https://web.archive.org/web/20200728114650/https://www.bnr.ro/PublicationDocuments.aspx?icid=14364|archive-date=28 July 2020}}</ref>

===Investments in Romania===
The level of investment remains above EU average. Investment accounts for almost 25% of GDP in Romania as opposed to 19% of GDP in the EU, in 2016.<ref>{{cite web|url=http://ec.europa.eu/europe2020/pdf/csr2015/cr2015_romania_en.pdf|title=The European Semester|website=European Commission – European Commission|access-date=24 September 2017}}</ref>

Locally, UniCredit, one of the region's leading banking firms, announced in October 2023 that it will merge its Romanian affiliate with the recently purchased Alpha bank in Romania (for €300 million), creating Romania's third-largest lender.<ref>{{Cite book |last=Bank |first=European Investment |url=https://www.eib.org/en/publications/20230288-cesee-bls-2023-h2 |title=Central, Eastern and South-Eastern Europe (CESEE) Bank Lending Survey: Second half of 2023 |date=2023-12-06 |publisher=European Investment Bank |isbn=978-92-861-5622-9 |language=EN}}</ref>

Romania's Recovery and Resilience Plan dedicates over €6 billion to digitalisation efforts, encompassing public administration, connectivity, cybersecurity, digital skills, and the development of an integrated e-health and telemedicine system.<ref name=":208">{{Cite book |last=Bank |first=European Investment |url=https://www.eib.org/en/publications/20240079-eib-group-activity-in-eu-cohesion-regions-2023 |title=EIB Group activities in EU cohesion regions 2023 |date=2024-07-15 |publisher=European Investment Bank |isbn=978-92-861-5761-5 |language=EN}}</ref> The European Investment Bank Project Advisory Support programme aids Romania in advancing digitalisation through collaborations with the National Agency for Public Procurement and the Ministry of Research, Innovation, and Digitalisation<ref name=":2083">{{Cite book |last=Bank |first=European Investment |url=https://www.eib.org/en/publications/20240079-eib-group-activity-in-eu-cohesion-regions-2023 |title=EIB Group activities in EU cohesion regions 2023 |date=2024-07-15 |publisher=European Investment Bank |isbn=978-92-861-5761-5 |language=EN}}</ref><ref>{{Cite web |last=Bank |first=European Investment |date=2023-04-19 |title=Evaluation of EIB Project Advisory Support in Bulgaria and Romania |url=https://www.eib.org/en/publications/20220205-eib-project-advisory-support-in-bulgaria-and-romania |language=EN}}</ref>

This assistance includes evaluating ICT projects and supporting the rollout of a €600 million government cloud initiative, aimed at enhancing interoperability, reducing bureaucracy, and bolstering cybersecurity.<ref name=":2083" />

===EU membership (2007)===
{{Main|Romania and the euro}}
{{Euro accession map}}
On 1 January 2007 Romania and Bulgaria entered the EU, giving the Union access to the [[Black Sea]]. This led to some immediate international trade liberalisation. Romania is part of the European single market which represents more than 447 million consumers. Several domestic commercial policies are determined by agreements among European Union members and by EU legislation. This is to be contrasted with enormous [[List of countries by current account balance|current account deficits]]. Low [[interest rate]]s guarantee availability of funds for investment and consumption. For example, a boom in the [[real estate market]] started around 2000 and has not subsided yet. At the same time annual inflation in the economy is variable and during the mid-2000s (2003–2008) has seen a low of 2.3% and high of 7.8%.

Romania adopted 1 January 2005 a [[flat tax]] of 16% to improve tax collection rates. Romania subsequently enjoyed the lowest fiscal burden in the European Union, until Bulgaria also switched to a flat tax of 10% in 2007. Since 2018 the flat rate was lowered to 10%.

Romania posted 6% economic growth in 2016, the highest among European Union member states. According to Bloomberg, the country's economic growth advanced at the fastest pace since 2008.<ref>{{cite web|url=http://www.business-review.eu/news/eurostat-romania-posts-biggest-economic-growth-in-eu-in-2016-q2-115455|title=Eurostat: Romania posts biggest economic growth in EU in 2016 Q2|date=12 August 2016|website=Business-Review.eu|access-date=24 September 2017}}</ref> It is now considered the next tech-startup hub country in EU. Nowadays, that Romania's digital infrastructure ranks higher than other eastern and central European countries makes it an attractive place to start a tech business.<ref name="qz.com">{{cite web|url=https://qz.com/763630/one-of-the-poorest-countries-in-the-eu-could-be-its-next-tech-startup-hub/|title=One of the poorest countries in the EU could be its next tech-startup hub|website=QZ.com|date=23 August 2016 |access-date=24 September 2017}}</ref>