SIMILAR ARTICLES

Three problems in 2018 budget – perseverare diabolicum

The first time it happens, the second time it can be a coincidence but for the third time it is already confirmed the establishment of… Mai mult

Draft / Employers who do not pay employees’ contributions to state budget are at risk of up to 6 years of imprisonment

The intentional non-payment of taxes and contributions due to the budget, subject to the withholding regime, will be considered a tax evasion, according to a… Mai mult

Fiscal Council, on 2018 draft budget: Deficit target depends on exceptional revenues. Overvalued revenues, undervalued expenses

The Fiscal Council published a preliminary opinion on the 2018 draft state budget on Wednesday, stating that this draft remains within the already traditional pro-cyclical… Mai mult

Real convergence – Wage purchasing power: Some comparisons with former communist countries

BNR made a thorough analysis of Romania’s status in terms of real convergence with Western economies. A precondition for adopting the euro, in line with… Mai mult

Eurozone accession in mid-term – single objective that can limit slippages in economy

Keeping the national currency under a controlled float exchange is a way to optimize the sustainable economic growth towards getting closer to the West but… Mai mult

An abnormality that has reached its potential: Depopulation does not help too much GDP/capita growth

de Marin Pana , 20.11.2017

The data published by Eurostat on the evolution of GDP per capita over the period 2005-2015 show that the growth rate of this key indicator for living standards has been boosted, relative to the real economic growth in real terms, by the steady decline of the resident population, which declined (according to the official data) by no less than 1.75 million people in the last 12 years.

The addition in the GDP per capita resulted from the year-by-year diminishing of the Romanian population in relation to which is divided the same economic result that is the nominator in the fraction that succinctly describes the welfare in a country fell from 0.6% in the years 2005 and 2006 toward 0.4% now, with an important peak in 2007-2008 and attenuated in 2009, right after the EU accession (see table).

*

  • Contribution of the population decrease to the GDP growth in real terms (%)
  • Year
  • Population (mn)
  • GDP increase
  • GDP/capita increase
  • Contribution

*

Practically, the EU accession and the gradual liberalization (some states opened the employment immigration to Romanians and Bulgarians right after January 1, 2007, others requested transition periods of up to seven years) of the workforce circulation led to the amplification, strictly by this way, of Romania’s GDP/capital by about two and a half percentage points.

This significant contribution to the value with which we relate to the European average living standard per capita is not the result of the economic growth – otherwise consistent, overall, from 2005 onward – but caused by some of those who found no conditions here to perform a decently paid work and left the country.

Of course, the GDP value has been amplified afterwards each year by the money sent to their relatives remained in the country, which have been considered “foreign” investments, increased consumption and stimulated local production, while sustaining the national currency (under the controlled flotation regime), implicitly the stability of the imported products’ prices for those who remained in the country.

Maybe it would have been much better if we had enough jobs and the contribution of those who left to look for work abroad to Romania’s welfare would have been produced inside the country, but it is not clear if their added value to the internal productivity would have been enough to offset the indirect but substantial effect of transferring a part of the value added abroad to the country of origin, where the remuneration of their activity was much higher.

That, without considering the major social problems, with an increased pressure not so much on the workplaces (paradoxically, the departure of some, often the most competent, created space and generated higher salaries for those who remained in the country, where there is already a certain lack of workforce) but especially on dwellings, schools or hospitals.

Domains where the state was no longer pressured to meet new challenges that would have existed if we had an even higher poverty and social non-inclusion rate, a much higher unemployment and an inherently much higher rate of criminality. So, the rush to some extent for the EU accession (January 1, 2010 was a working variant, and it is easy to guess what would have happened if the world crisis had hit us on the eve of the planned accession) prevented us from a whole series of problems.

Back to the relationship between the population decline and GDP, it should be underlined though that NOT the whole decline in the number of inhabitants can be attributed to the departures from the country. Where data show, at January 1, 2017, 19.63 million residents (a small part are foreigners) but 22.20 million people residing in Romania. That is a difference of about two and a half million people.

Beware, a part of the decrease in population, also significant, came from the difference between birth and mortality levels, which started to increasingly clearly take over on the way from the influence of the departures abroad, now contributing around three quarters of the effect of amplifying the GDP per capita, according to the latest INS data.

*

  • Evolution of natural growth of population
  • Year    new-borns       deceased        natural growth

*

We come this way to the most important long-term effect of departures abroad, beyond the mixed effect resulted from the jobs and relatively low earnings as share in GDP, another issue that should concern decision-makers. That is the QUALITATIVE effect, not the quantitative effect, given that people who left also were to have children, just to provide them with a better future elsewhere.

This way, we can already raise the alarm, given the very rapid decline in births, about twice as fast as the decrease in the number of deaths between 2015 and 2016.

If for the moment, the overall effect is an increase in GDP per capita, it will come very quickly the moment, on the historical scale, when reaching the living standard of the West will practically become impossible. Because there will be no one left to do that, at least from internal sources.

Mergeți în homepage ›

Publicat la data de 20.11.2017

Lăsați un comentariu


NEWS

Brussels offers Romania four months to take measures to correct significant deviation of structural deficit

The European Council issued on Tuesday a new recommendation, at the request of the European Commission, based on the significant deviation procedure, with Romania being… Mai mult

Eurostat: Romania had second lowest tax to GDP ratio within EU, in 2016

In Romania, the ratio between the revenues that must be collected from taxes (including social contributions - tax/GDP ratio) and GDP was 26% in 2016,… Mai mult

9 ambassadors repeat: Venice Commission's opinion is needed to amend laws on judiciary

The nine ambassadors who met on Wednesday with Minister Tudorel Toader shared their "concern over the draft laws on the reform of the judiciary discussed… Mai mult

British Vitruvian Partners bought 30% of Bitdefender

Vitruvian Partners investment fund acquired about 30% of Bitdefender from Axxess Capital and becomes the second largest shareholder in the company, valued at over USD… Mai mult

Split VAT at the Chamber of Deputies: Dilemmas of all kinds. Thresholds for outstanding payments have increased 10 times, Budget Committee to resume debates on Monday

The Budget Committee of the Chamber of Deputies has increased ten times the threshold of the outstanding VAT obligations from which companies will automatically be… Mai mult

Competition Council: Food price increase could be caused by demand excess from budget deficit

The Competition Council started an analysis, following the request of the Ministry of Agriculture, to establish the causes of the accelerated food price increase this… Mai mult

Seizure of all Liviu Dragnea's assets to recover EUR 28 million in Tel Drum case

Liviu Dragnea at the exit of the DNA headquarters where he was expected by a group of supporters and another of protesters. DNA prosecutors have… Mai mult

Rompetrol saga, chapter about money: Government asks KazMunaiGaz to pay the historical debt and demand settlement of case in court

The extension of the memorandum between the Romanian state and KazMunaiGaz, the owner of the Rompetrol Group, will be discussed only after the company's historical… Mai mult

"Not only we have not died, we rank third in the world" - Government approved second budget amendment, deficit of 2.96% of GDP

The second budget amendment this year has been adopted at the government meeting on Wednesday. As the Finance Minister assures, this amendment is "positive", the… Mai mult

Mayors: Government to offset by state budget money municipalities’ losses following tax measures

Mayors accepted on Tuesday in the negotiations with Prime Minister Mihai Tudose and several cabinet members, the promises made by the government officials to partially… Mai mult

Competition Council, "worried" that municipalities are establishing their own companies

The establishment of own companies by local administration to manage the services at the local level is worrying for the competition authority, Bogdan Chiritoiu, President… Mai mult

Draft legislation on judicial system in Parliament – to be debated as a matter of emergency

The ruling coalition registered with the Chamber of Deputies on Tuesday the draft amendments to the three important laws for the judicial system: Law 303/2004… Mai mult

Negative opinion and analysis of Fiscal Council on tax changes. "Tax package" costs 5.2 billion, not planned at all

The Fiscal Council issued a negative opinion on the proposal to amend the Fiscal Code, according to the opinion published Friday on the institution’s website.… Mai mult

Negative opinion from CES for Tax Code changes, Government meeting postponed

The Economic and Social Council, a consultative body of the Parliament and the Romanian Government, issued a negative opinion on Tudose cabinet's draft amendment to… Mai mult

Doing Business 2018: It is easier to do business in Republic of Moldova than in Romania

Romania ranks 45th in the Doing Business 2018 ranking by the World Bank (WB), with a total score of 72.87 points, right under the Republic… Mai mult