ECONOMY

The transition from a centrally planned to a market economy has not been easy. Romania exports mineral resources, chemical products, industrial machinery, textiles and semi-finished products. The basic principle of Ceausescu's policy was self-sufficiency. From 1980 r. everything was done, to pay off 10 billions of dollars in foreign debt. It was possible in part thanks to the export of food products, at the expense of domestic consumption. As a result, hunger has set in in the country that used to be Europe's granary. Even though the economic system has changed, Romania and Albania are distinguished by the lowest level of living conditions in Europe. From 1989 r. new debt grows, reaching already 7 billions of dollars,- the main lenders are the IMF and the World Bank.

The communists promoted the development of heavy industry and infrastructure projects with the flagship example of the giant hydroelectric power plant Iron Gates at Drobeta-Turnu Severin on the Danube, open from 1972 r. The oil fields north of Bucharest have been exploited since 1860 r., and the steelworks in Gałacz started operating only after World War II. Other sources of energy are natural gas resources in Transylvania, lignite in the Tirgu Jiu basin and the nuclear power plant in Cernavoda, at the mouth of the Danube. Fortunately, it was built on the basis of the Canadian one, not Russian technology, so it probably isn't a catastrophe.

Three-quarters of the electricity comes from the combustion of natural gas in combined heat and power plants. Shrinking oil reserves and the rise in world fuel prices have slowed down, for a year 1973, activities of the chemical and petrochemical industries.

Two car brands were produced in Romania. A popular oltic is a Citroen foldable in Craiova, the slightly more luxurious Dacia is the Renault version 12, assembled in Pitesti. The 4WD aro jeep is built in Cimpulung. Nevertheless, the Romanian motorization is probably not doing well, almost on 1000 there are only eight passenger cars.

Romania is still a developing country. Special hopes, which were associated with the development of heavy industry, resulted directly from the long-term policy of economic independence. However, they led to an insufficient supply of food and consumer goods, and, as a result, left Romania unprofitable, technologically backward industry, which stands no chance in competition on the world market. Between 1989 a 1993 a year, industrial production decreased by 50%.

In the absence of an appropriate bankruptcy law, ineffective enterprises accumulate increasing debts and keep redundant employees. Privatization is hampered by high-ranking bureaucrats and corrupt officials. W 1991 r. the government announced, that 85% of collectivized farms will pass into private hands, but only two years later 10% of them changed owners.

Many people are concerned, that reducing the social security system will cause chaos. As a result, the pace of economic changes has slowed down, to avoid high inflation and unemployment. Many wages are charged according to the rate of inflation (which in 1992 r. was 200%, w 1993 300%, and now according to official sources – 150%), thereby causing it to build up. Half 1993 r. there were general strikes by miners and railroad workers, a w 1996 r. Bucharest was paralyzed by a metro strike. The ruling Social Democratic Party (SDPR) there is no effective economic program. One example of its ineptitude is the precarious position of the Bucharest stock exchange, which is part of a privatization project 4000 Romanian companies. The International Herald Tribune put it this way:

In November 1995 r. Finally, the long-awaited opening of the Bucharest Stock Exchange took place. Its activity so far is not very dynamic. The numbers are completely different from heaven 40 brokers and 12 share packets. The exchange takes place once a week and all shares listed since November are from the south of the country.

But there is good news. National product (GPD) rose in 1995 r. until Fr. 6,9% (per year 1998 less economic growth is projected: 4-5%), while in Hungary it was only 2,9%, and in Russia -4%. Romania owes its industrial production increase in part to foreign capital investment (650 mln $ w 1995 r.). South Korea is one of the most important investors, Germany, United States and Italy. Among the big concerns, which also appeared in Romania, are shell, Coca-cola, Colgate-Palmolive and Daewoo. Not far behind them is McDonald's, which already has five restaurants in the capital and plans to open another six and one in Brasov there, which means, that up to a year 1998 its investment contribution will increase to 150 Million $. Bucharest's first McDonald's beat all Eastern European sales figures, even the Katowice point (!).