Editing Economy of Romania (section)

=== 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>