EU Accession and the Impact on Romania’s Industrial Production and Foreign Trade

Abstract:

Romania’s accession in the EU has represented the main objective of all the governments after the 1989 Romanian Revolution , regardless the costs. All the conditions imposed by the European authorities were complied with by Romania in 2004 when all the negotiating chapters were closed. Until that year, Romania had to converge its commercial policy with the EU based on the Common Commercial Policy of the EU block, reducing all its customs duties and embracing all the negotiated agreements of the EU with third countries.

Based on the analysis made by Burnete (1999), Sută (2000), Giurgiu (2008), combined with the data provided by the National Institute of Statistics and the National Commission of Prognosis, the industrial production percentage in the formation of the GDP between 1989 - 2016, and the evolution of the industrial production index between 1990 - 2011 will show the mutations suffered by this sector, with a direct impact on the Romanian economy and trade flows. After analysing the evolution of the industrial production, the paper addresses its impact on the evolution of exports between 1989 – 2011, classified in eight sectors, presenting a cyclical evolution that changes the landscape of Romania’s trade with the EU and the rest of the world.

Furthermore, the paper addresses the concept of comparative advantage based on the Lafay indicator of Romania’s foreign trade between 1991 - 2012. The indicator is calculated based on the statistical data offered by the National Institute of Statistics of the combined nomenclature with its XXII sections. Based on the computations, an overall image is presented, showing the evolution of the comparative advantages and disadvantages of the Romanian economic sectors regarding its trade competitiveness with EU countries and the rest of the world. This period has been chosen in order to portray a better image of the impact of accession on foreign trade.

The conclusions based on the prior results argue whether the accession to the EU has had a beneficial or harmful effect on the Romanian economy, its international trade flows, and its external competitiveness.