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Welfare Trends in Romania

1990 – 2014

Authors
Șerban Toader, Victor Iancu, Dan Olteanu

KPMG Economics
Welfare Trends in Romania, 1990 – 2014 | 3

1. Introduction
“It is our intention to clarify how welfare in Romania, as expressed by
statistical indicators, has evolved over time, thus contrasting with the
abundance of ungrounded opinions that have emerged recently and
which have only managed to add layers of confusion on the issue.

During almost three decades, since the 1989 other, we see an overly optimistic one that
change of regime, Romania has been through reports economic success all the way (e.g.
some major economic, social and political praising unconditionally every rise in GDP,
transformations. This period has witnessed without discussing the underlying grounds, or
some remarkable moments that have had medium/long term implications). There also
an impact on our economic environment and are moderate, consistent views, usually from
also set new development trajectories for the academics, backed up by more background
country, such as joining NATO in March 2004 information. However these do not “sell”
and the EU accession in January 2007. We very well and do not make the head-lines of
have also seen some dramatic events such business and economic news.
as civil unrest, economic crises and political
instability; everything that a new society The confusion is not necessarily caused by the
usually goes through when struggling to adapt split views that emerge from such a variety
to new, capitalism driven paradigms. of sources, as mentioned above, but rather
due to the largely unsubstantiated opinions
But to what extent have all these events been on the issue. Too often we are provided with
translated into progress, and where exactly are expert opinions backing up a certain view,
we economically, as a nation, after 27 years with no supporting explanations/methodology
of the market economy? What is the level of attached. And many too often incomplete or
wellbeing among Romanians, compared to even flawed analyses remain unchallenged.
inhabitants of other neighbouring countries? Taking information for granted comes at a
Are we experiencing increased wellbeing or, cost, especially if the sources are debatable,
on the contrary, can we not really report much and this cost may gradually translate into a
improvement? Well, if we were to try and find formalization of faulty opinions by members of
an answer to such question by researching the public.
publicly available knowledge on this issue
(ranging from official Governmental positions, Consequently, we believe the questions above
going through media coverage of the subject are still on the table today and they can be
and ending with un-official, average citizens’ summarized as follows: where do we really
perspectives) one would be at best confused. stand in terms of economic wellbeing after all
This is because the majority of opinions are this time? One can imagine that formulating
quite polarized under two main factions: on a relevant answer is no easy task. It is in the
one hand, there is one side that generally above context that we thought it would be a
denies progress is being made (this includes good idea to initiate this discussion, place it in
extreme views according to which the past a more technical context and investigate some
communist era used to provide a better important elements which could shed some
living and economic environment) and on the light on this issue.
4 | Welfare Trends in Romania, 1990 – 2014

It is important to outline that our endeavour We have structured this paper into four main
is also curiosity driven, as we do not aim to sections (apart from this introduction), with
revolutionize or overhaul economic concepts, a fourth one used for drawing conclusions.
but rather to check, using a practical case, As such, in the next chapter we start by
some well-grounded theories with regard to conceptualizing a few key elements essential
measurement of human wellbeing and add for our analysis, such as wellbeing and its main
some substance and consistency to some components, together with the tools used to
important ideas that have been recurrent measure such an exotic concept. Then, as we
in the relevant economic literature lately, are only following on the footsteps of some
as well as in the local media, under various famous predecessors, we thought it would
forms. We will do this by making reference to be useful to see how various researchers see
established economic concepts, going through wellbeing in a country economic context and
relevant past and present research, while also what kind of metrics they have developed in
deploying our own statistical analysis. order to draw specific conclusions (chapter
3). After we gain a reasonable understanding
On a more concrete note, it is our intention to of the main concepts, as well as the relevant
clarify how welfare in Romania, as expressed theoretical and measurement frameworks
by statistical indicators, has evolved over used in this area, it is time to become a bit
time, thus contrasting with the abundance more technical and show off a bit with our
of ungrounded opinions that have emerged own statistical analysis. It is worth bearing with
recently and which have only managed to us as we go through some relevant graphs
add layers of confusion on the issue. We will and indicators, as it will help you gain a better
also take advantage of a relative research understanding of our concluding remarks
gap in this area, by analysing specific data (chapter 4). The last section summarizes the
(concerning Romania) spread over a sufficiently main conclusions of the analyses.
long number of years in order to achieve
relevant results. So, as we hope that we have your attention, it
is time to proceed with our analysis.
Welfare Trends in Romania, 1990 – 2014 | 5

2. Wellbeing
Concept and Measurement

“Objective wellbeing is assessed using quantitative data (usually


indicators obtained from statistical sources) and, essentially, represents
an “external” view.

Wellbeing is a complex concept commonly The second component is the subjective


used in many disciplines ranging from measure of wellbeing. It is also known as
philosophy and psychology to sociology and reported wellbeing and it encompasses
economics. While it has been studied as a broad range of emotional and cognitive
such under various forms since as early as processes. Essentially, it is people’s perception
the 1950s, in the last two decades we have on the quality of life. In economic research
witnessed an increased and sustained interest literature, subjective wellbeing is often used
in this area, both at academic as well as policy interchangeably with the concept of happiness,
making levels, with various theories and although from a psychology point of view the
paradigm shifts emerging. Although there is latter appears to be a much narrower concept.
no generally accepted definition, as it is still Usually, subjective wellbeing is measured
quite difficult to define the notion especially through surveys targeted at capturing in a
due to the various interpretations assigned. direct manner people’s feelings, experiences
One possible approach could refer to wellbeing and emotions. In a specific context, subjective
as a description of the state of people’s life items indicate how a condition is perceived
situation (Conceição and Bandura, 2008). by interviewees, as opposed to objective
wellbeing where items are independently
Measurement of wellbeing is yet another observed and reported. In this paper we shall
activity that increasingly captures specialists’ specifically focus on the objective coordinate
attention and, similarly to finding a proper of wellbeing.
definition, it appears to be quite a difficult task
given the various frameworks currently used.
As a large body of research shows, we should
mention in this respect that the measurement
of wellbeing can be broken down into two
components: objective and subjective (Figure 1
below summarizes this structure).

The first component can be construed as an


indirect mean and uses observable facts as
measurement tools, in the form of economic,
social or environmental statistics. As such,
objective wellbeing is assessed using
quantitative data (usually indicators obtained
from statistical sources) and, essentially,
represents an “external” view.
6 | Welfare Trends in Romania, 1990 – 2014

Figure 1
Two components of wellbeing

Wellbeing
Subjective
Qualitative
People’s perception

Objective
Quantitative
Direct, external observations

Well Being
Source: own compilation

2.1. Gross Domestic Product as a proxy for In addition, GDP puts together under an
objective wellbeing aggregate figure the volume of goods and
services produced by the population within
As discussed, the measurement of the borders of a certain country, in a specific
objective wellbeing is carried out using period of time (year, month, etc.). This figure
statistical indicators, as the latter have the is the monetary expression of a valuation that
unique strength of condensing information. people make in their consumption1, and this
Historically, wellbeing has generally been is directly related to a central economic theory
associated by economists with one directly according to which wellbeing is directly related
measureable indicator, i.e. Gross Domestic to consumption, i.e. it increases together
Product (GDP). The measure actually used is with the latter. This is intrinsically linked to the
Subjective the average per person Real Gross Domestic
Product, which is the inflation adjusted value
economic concept of “utility”, as in this case
the value of the goods and services produced
of the GDP, divided by the total population of a by an economy is the reflection of the marginal
country. utility for consumers.

There are several reasons why the GDP has There are, however, quite a few technical
been used as a yardstick for human welfare. restrictions that limit GDP from being a well-
One reason is that it is a transparent tool, rounded measurement tool for analysing
which is quite difficult (though not impossible) objective wellbeing and the last decade
to manipulate, as it is the result of open market especially has brought an abundance of
processes. The concept was developed in the theories pointing to these shortcomings. The
1930s, and there are internationally recognised grounds for these drawbacks are various and
standards in place for calculating the GDP. This quite complex in nature, and we aim here to
allows for an easy, direct comparison between enumerate just a few.
countries.

1. Weimann, Joachim, Andreas Knabe, and Ronnie Schöb (2015), “Measuring happiness: The
economics of well-being”, MIT Press, p. 14;
Welfare Trends in Romania, 1990 – 2014 | 7

Wellbeing is without doubt a multidimensional Nobel Prize laureates, in order “to identify
concept, as it includes many aspects of the limits of GDP as an indicator of economic
human life, not just those related to income performance and social progress, including the
or consumption. These aspects are health, problems with its measurement; to consider
education, environmental conditions, etc. what additional information might be required
Consequently, GDP seems suddenly too for the production of more relevant indicators
limited in scope to probe such a multiple of social progress; to assess the feasibility of
faced concept. In addition, as we have already alternative measurement tools, and to discuss
mentioned utility, there is still disagreement how to present the statistical information in an
among economists on how/if an increase appropriate way4”.
in consumption always represents an
improvement in wellbeing. Similarly, some of A report was prepared and released in 2009.
the components that make up GDP are difficult The conclusion was clear in the sense that
to calculate while others are not even part growth in GDP does not necessarily translate
of it (some because they are impossible to into improvement in the quality of life of the
calculate). For instance, GDP does not consider society. One of the main causes for this is that
non-market activities such as house-work too often growth is achieved at the expense of
or un-paid work, non-taxed /illegal economic human wellbeing. This conclusion is grounded
activities, etc. The distribution of wealth is in undeniable realities that severely impact our
also something totally silent under the figures day to day lives such as the intense/stressful
of this indicator, as there is a high possibility working conditions, which can lead to health
that a large share of GDP per capita goes to a issues, the burden of debt, the unsustainable
limited percentage of a country’s population. use of natural resources, environmental
Social services are also a good example, i.e., pollution, etc.
given their subsidized price the relevant output
cannot be valued based on market prices. The European Commission also invested time
and resources into researching this subject
Economists’ scepticism over GDP as a useful and in 2009 produced a landmark paper,
tool for measuring wellbeing is not new. As “GDP and beyond: measuring progress in a
early as 1974 the American economist Richard changing world5”. The document ascertained
Easterlin produced his seminal theory stating that GDP does not measure environmental
that there is no positive correlation between sustainability nor social inclusion and called
GDP growth and life satisfaction (the so- for specific actions, including the production
called “Easterlin Paradox”). His conclusion and improvement of data and indicators,
was backed up by numerous empirical and with a view to complementing GDP, as well
statistical studies that followed throughout the as extending national accounts to include
next few years2, and which have reinforced environmental and social issues.
the idea that the level of average income is
not relevant to the average level of life quality, Consequently, starting from the fact
a fact demonstrated especially at the level that wellbeing is multidimensional, as it
of advanced economies such as Japan3, the encompasses various aspects of human
United Kingdom, Germany or the United life, and noting that GDP is not a completely
States. adequate measurement tool, looking for
alternatives that go beyond GDP was a natural
However, the most recent and noteworthy step. As the need to conceptualize welfare
exercise in this area was the impressive in a much more holistic way became evident
academic effort of the Stiglitz-Sen-Fitoussi even before the dates of the above mentioned
Commission in 2009. In February 2008, the reports, various solutions have emerged in
French President Nicholas Sarkozy contracted order to solve these shortcomings.
an international team of economists, including

2. Relevant examples can be found in “Happiness and Economics” (2002) by Frey and Stutzer,
or “Measuring Happiness” (2015) by Weimann, Knabe and Schob;
3. Long-term happiness data is available for Japan starting from the 1950s. At that time the
income per capita was below $3,000. However during 1958 -1991, GDP per capita rose more
than five-fold. Despite this growth, there was no change in reported happiness (Easterlin,
1995);
4. Stiglitz, Joseph E., Amartya Sen, and Jean-Paul Fitoussi (2010), Report by the commission on
the measurement of economic performance and social progress. Paris: Commission on the
Measurement of Economic Performance and Social Progress;
5. EU Commission (2009), GDP and beyond: measuring progress in a changing world, COM
(2009) 433 (2009);
8 | Welfare Trends in Romania, 1990 – 2014

“ It appears that there are no perfect, nor widely accepted, means for
measuring wellbeing, and ultimately, in the GDP case, the question is
not whether the latter is or not an adequate instrument for measuring a
society’s welfare, but rather to what level of depth GDP can be used in
isolation.

One such solution was the construction As such, it appears that there are no perfect,
of other objective measures meant to nor widely accepted, means for measuring
supplement GDP. As the various dimensions of wellbeing, and ultimately, in the GDP case, the
human welfare include aspects such as health, question is not whether the latter is or not an
education, environmental conditions, relevant adequate instrument for measuring a society’s
indicators have been developed and used to welfare, but rather to what level of depth GDP
assess specific progress in these areas. These can be used in isolation. This is why in various
are not absolutely new, however, as such frameworks developed for the measurement
indicators started to emerge as early as the of wellbeing, GDP is still an important
1970s. component, as we shall further develop in this
paper.
Another approach was to replace GDP with
composite indices in order to capture the In the context presented above, we believe it
complex nature of wellbeing. These type of would be an interesting exercise to apply some
measures are constructed by incorporating of the concepts discussed to a more practical
various components (usually indicators) level, and use Romania as a study topic. But
which are weighted in order to become one before emerging into our own analysis, let
single index. The problem with using indices us explore a few dedicated platforms used
however, is that the results depend highly on by several organizations around the world for
the indicators used, their quality (which also measuring wellbeing.
includes the reliability of the source), as well
as the way they are weighted. In other words,
as the methodology behind their construction
is not internationally standardized, arbitrary and
non-transparent inputs may easily distort the
results.
Welfare Trends in Romania, 1990 – 2014 | 9

3. Various frameworks
currently developed for measuring
human wellbeing

“The Human Development Index (HDI) is structured under a tri-


dimensional format focusing on aspects that are considered significant
to human well-being and development.

In the following we shall briefly present some 3.1. The Human Development Index - HDI
of the most visible/well-known ones, with the (United Nations)
main aim of focusing on the indicators chosen/
used to assess/measure wellbeing. Another This is possibly the most popular index these
objective is to investigate Romania’s standing days and it has been developed by the United
as presented by each relevant framework. We Nations Development Programme (UNDP),
will not enter into many technicalities regarding starting in 1990. The HDI is structured under a
the construction of the various indices, but tri-dimensional format focusing on aspects that
merely present the indicators/variables used. A are considered significant to human wellbeing
short section will conclude on the relevance of and development, as follows: health (assessed
the results that are of particular interest to us, using the “life expectancy at birth” indicator),
i.e. Romania’s case. education (measured by the mean of years of
schooling for adults aged 25 years and more
and expected years of schooling for children of
school admission age) and standard of living
(assessed through the gross national income
per capita). For each of these dimensions,
an annual index is calculated using statistical
data collected, and the scores corresponding
to the three HDI dimension indices are then
aggregated into a composite index using a
geometric mean.
10 | Welfare Trends in Romania, 1990 – 2014

Figure 2
HDI Components

Source: UNDP (2015), Human Development Report 2015. Work for Human Development, New York– Technical notes, p.1.

The 2015 HDI, the results of which we shall latest 2014 rankings are Norway, Australia and
briefly present below, classifies countries Switzerland, while at the bottom of the list
under four major categories concerning human are the Central African Republic and Niger.
development: a) very high (HDI value ranging In Figure 3 below we represent graphically
between 0.944 and 0.802), b) high (HDI value Romania’s position as provided by the 2015
b) high (HDI value ranging between 0.798 and 0.702),
ranging between 0.798 and 0.702), c) medium c) medium
HDI scores, (HDI
relative value
to other ranging
Central between 0.6
and East
(HDI value ranging between 0.698 and 0.555) European (CEE) countries and one western
and 0.555) and d) low (HDI value ranging
and d) low (HDI value ranging between 0.548
between 0.548 and 0.348). The top three
society for a more relevant comparison.
countries in t
latest 2014
andrankings
0.348). Theare
topNorway, Australia
three countries in the and Switzerland, while at the bottom of the list are t
Central African Republic and Niger. In Figure 3 below we represent graphically Romania’s position
provided by the 2015 HDI scores, relative to other neighbouring countries and one western society f
a more relevant comparison.
Figure 3
Ranking as per HDI score*
Figure 3
0.95
0.916

0.90
0.87
0.843
0.85 0.828

0.793
0.80 0.782

0.75

0.70
Germany Czech Rep. Poland Hungary Romania Bulgaria

Source: Based on figures produced by UNDP (2015), Human Development Report 2015. Work for Human Development, N
York, p. 208.
Source: Based on figures produced by UNDP (2015), Human Development Report 2015. Work for Human Development, New
*based on 2014 figures
York, p. 208.

Romania *based
rankson52 out of 188 countries analysed and it is positioned in the High Human Developme
2014 figures

category surpassing Bulgaria. However it is behind other CEE countries such as Hungary, Poland a
the Czech Republic. By comparison, the scores obtained by these countries place them in the Very Hi
Human Development category. It is important to notice, however, the dramatic development over tim
in Romania’s case, with an impressive advance recorded between the years 2000 and 2010 and slo
but ascendant, development until 2014.
0.793
0.80 0.782
Welfare Trends in Romania, 1990 – 2014 | 11
0.75

0.70
Germany Czech Rep. Poland Hungary Romania Bulgaria

Source: Based on figures produced by UNDP (2015), Human Development Report 2015. Work for Human Development, New
York, p. 208.
*based on 2014 figuresranks 52 out of 188 countries
Romania Very High Human Development category. It
analysed and it is positioned in the High is important to notice, however, the dramatic
Human52
Romania ranks Development
out of 188 category
countries surpassing
analysed and itdevelopment over
is positioned intime in Romania’s
the High Humancase, with
Development
Bulgaria. However it is behind other CEE an impressive advance recorded between the
category surpassing Bulgaria. However it is behind other CEE countries such as Hungary, Poland and
countries such as Hungary, Poland and the years 2000 and 2010 and slow, but ascendant,
the Czech Czech
Republic. By comparison,
Republic. By comparison, thethe
scores
scoresobtaineddevelopment
by these countries place them in the Very High
until 2014.
Human Development category.
obtained by these It isplace
countries important
them intothe
notice, however, the dramatic development over time
in Romania’s case, with an impressive advance recorded between the years 2000 and 2010 and slow,
but ascendant, development until 2014.
Figure 4
HDI scoreFigure
trend4 for Romania
HDI score trend for Romania
0.84
0.82
0.786 0.788 0.791 0.793
0.80 0.784
0.78
0.76
0.74
0.72 0.703 0.706
0.70
0.68
0.66
0.64
1990 2000 2010 2011 2012 2013 2014
Source: Based on figures produced by UNDP (2015), Human Development Report 2015. Work for Human Development,
New York, p.Source:
212. Based on figures produced by UNDP (2015), Human Development Report 2015. Work for Human Development, New
York, p. 212.

3.2 The World Happiness Report - WHR • GDP per capita;


(Sustainable Development Solutions 6 • Healthy life expectancy at birth;
Network) • Social Support;
• Freedom to make life choices;
The latest version of this report was published • Generosity;
in 2016 (actually an update of the 2015 version). • Perceptions of corruption.
It was first produced in 2012 in the context
of the United Nations High Level Meeting on According to the 2016 Report, Denmark,
“Happiness and Well-Being: Defining a New Switzerland and Iceland are top three
Economic Paradigm.” countries, while Syria and Burundi are at the
bottom of the ladder. Romania ranks 71 out of
The 2016 Report provides a country ranking 157 countries reported. We provide below in
which is constructed on both quantitative Figure 5 a graphic representation of Romania’s
(mainly statistical) and qualitative (mainly standing in the World Happiness Report,
surveys) factors. The qualitative component by comparing the scores of other relevant
is based on survey data gathered under the countries (for consistency purposes we used
Gallup World Poll (GWP). The specific analysis the same country panel as in HDI’s case).
uses six key objective and subjective variables
as follows6: With a score of 5.528 Romania achieves a
better standing compared to Hungary and
Bulgaria, while the Czech Republic’s high score
brings the latter closer to Germany than to its
CEE peers.

6. Helliwell, John F., Richard Layard, and Jeffrey Sachs, eds. (2016), World Happiness Report
2016 Update (Vol.I), New York, Sustainable Development Solutions Network, p. 17;
subjective variables as follows :
 Romania,
12 | Welfare Trends in GDP1990
per– 2014
capita;
 Healthy life expectancy at birth;
 Social Support;
 Freedom to make life choices;
 Generosity;
 Perceptions of corruption.
According to the 2016 Report, Denmark, Switzerland and Iceland are top three countries, while S
and Burundi are at the bottom of the ladder. Romania ranks 71 out of 157 countries reported.
provide below in Figure 5 a graphic representation of Romania’s standing in the World Happi
Report, by comparing the scores of other relevant countries (for consistency purposes we used the s
country panel as in HDI’s case). With a score of 5.528 Romania achieves a better standing comp
Figure 5high score brings the latter closer to Germ
to Hungary and Bulgaria, while the Czech Republic’s
than to its CEE peers. Average 2013-2015 country score,
World Happiness Report
Figure 5

6.994
7 6.596
5.835
6 5.528
5.145
5 4.217
4
3
2
1
0
Germany Czech Rep. Poland Romania Hungary Bulgaria

Source: Based on figures produced by Helliwell, John F., Richard Layard, and Jeffrey Sachs, eds. (2016), World Happ
Source: Based on figures produced by Helliwell, John F., Richard Layard, and Jeffrey Sachs, eds. (2016), World Happiness
Report 2016 Update I), New
(Vol.Update
Report 2016 York,
(Vol. I), Sustainable
New York, SustainableDevelopment Solutions
Development Solutions Network,
Network, pp.20-22. pp.20-22.

3.3 The Legatum Prosperity


3.3 The Index (Legatum
Legatum Prosperity Index - LPIInstitute)
• Personal Freedom;
(Legatum Institute) • Social Capital;
This is one of the most complex indices (if not “the” • most complex)
Natural covering
environment countries’
(introduced in 2016).welfare
a
This is one of the most complex indices (if
based on bothnotincome
“the” most(also takingcovering
complex) into account
countries’the GDP factor)
The above and other
sub-indices wellbeing
are based indicators.
on a total of Fro
methodological standpoint,
welfare and is based it on
is both
a composite index based
income (also on ninewhich
104 variables sub-indices
have been concerning
standardized 7:
taking into account the GDP factor) and other and given weights through regression analysis.
 Economic Quality;
wellbeing indicators. From a methodological Each country analysed is ranked under a total
 The Business Environment;
standpoint, it is a composite index based on
7
score, as well as by scores assigned to each
nine sub-indices concerning : sub-index.

• Economic Quality; In the 2016 Legatum Prosperity Index Romania


6
Helliwell, John •
F., Richard Layard, and
The Business Jeffrey Sachs, eds. (2016), World
Environment; Happiness
ranks Report
50 out of 149 2016 Update
countries (Vol.I), New
analysed. The York, Sustain
Development Solutions Network,
• Governance; p. 17; graphic below shows that its positioning
7
–– • Education; relative to the CEE peers and Germany is not
• Health; a favourable one, being the penultimate, after
• Safety and Security; 7 Bulgaria.

7. Legatum Institute (2016), The Legatum Prosperity Index 2016. Bringing prosperity to life,
London, p. 4;
The above sub-indices are based on a total of 104 variables which have been standardized and giv
weights through regression analysis. Each country analysed Welfare
is ranked under a total score, as well as
The above
scores sub-indices
assigned are based on a total of 104 variables which
to each sub-index. have
Trends in been
Romania, 1990standardized
– 2014 | 13 and
weights through regression analysis. Each country analysed is ranked under a total score, as we
Inscores assigned
the 2016 to each
Legatum sub-index.
Prosperity Index Romania ranks 50 out of 149 countries analysed. The grap
below shows that its positioning relative to the CEE peers and Germany is not a favourable one, be
In penultimate,
the the 2016 Legatum Prosperity Index Romania ranks 50 out of 149 countries analysed. The g
after Bulgaria.
below shows that its positioning relative to theFigure 6 and Germany is not a favourable one
CEE peers
the penultimate, after Bulgaria.
Legatum ProsperityFigure Index
6 score, 2016

Figure 6
76.83
80
68.34 65.96
70 76.83 62.56 61.67
80 60.23
60 68.34
70 65.96
50
62.56 61.67 60.23
60
40
50
30
2040
1030
020
10 Germany Czech rep. Poland Hungary Romania Bulgaria

Source: Based onSource: 0 Based


figures produced
on figuresby Legatum
produced Institute
by Legatum (2016),
Institute (2016),The Legatum
The Legatum Prosperity
Prosperity Index
Index 2016. 2016.
Bringing Bringing
prosperity to prosperit
life, London – Germany
Prosperity rankings:Czech
Full datarep.
set Poland Hungary Romania Bulgaria
life, London – Prosperity rankings: Full data set
.
Source: Based
However, on figures
if we analyseproduced by Legatum Institute
the year-on-year (2016), TheinLegatum
development Romania’s Prosperity
case,Index
one2016.can Bringing
notice pros
visi
life, London – Prosperity
However, ifrankings:
we analyse Full
thedata set
year-on-year 2011, a substantial score improvement started
progress.
.
Afterdevelopment
a drop in in 2010-2011,
Romania’s case, a substantial
one can scorein improvement
2012. started in 2012.
However, if notice
we analyse the year-on-year development in Romania’s case, one can notice
visible progress. After a drop in 2010-

progress. After a drop in 2010-2011, a substantial Figurescore


7 improvement started in 2012.
Legatum Prosperity Index: Romania's score evolution
Figure 7
65 Figure
Legatum Prosperity Index: 7
Romania’s score evolution
64 Legatum Prosperity Index: Romania's score evolution

63
65 61.67 61.67
62
64 60.52
61
63
60 61.67 61.67
62 58.66 58.87 58.83
59 60.52
61 58.96 59.23
58
60 58.07 58.27
57 58.66 58.87 58.83
59
56 58.96 59.23
58
55 58.07 58.27
57 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
56
Source: Based on figures
55 produced by the Legatum Institute (2016), The Legatum Prosperity Index 2016. Bringing prospe
to life, London – Prosperity2007
rankings: Full data
2008 2009set. 2010 2011 2012 2013 2014 2015 2016

Source: Based on figures


Source: Basedproduced by the by
on figures produced Legatum
the Legatum Institute 8 (2016),
Institute (2016), TheThe Legatum
Legatum Prosperity
Prosperity Index 2016.
Index 2016. Bringing Bringing p
prosperity
to life, London –to Prosperity rankings:
life, London – Prosperity Full data
rankings: set.
Full data set.

8
3.4 The Happy Planet Index (New Economics Foundation)
14 | Welfare Trends in Romania, 1990 – 2014

According to its own description, the Happy Planet Index (HPI) combines four elements in
show how efficiently residents of different countries are using environmental resources to le
happy lives.
3.4ItThe
is Happy
a revolutionary
Planet Index tool
- HPI in the senseInthat the HPI
the 2016 rationale behind
Report (the latest) it is the need to d
Romania
welfare measurement
(New Economics mechanism
Foundation) that takes intoranksaccount sustainability
55 out of indicators.
a total of 140 countries. When Similarl
World Happiness Report, the 2016 report includes
According to its own description, 8the Happy
both objective (quantitative) and su
compared to the other group of countries
already used for our analysis, Romania’s
(qualitative) components, as follows :
Planet Index (HPI) combines four elements position is quite surprising (especially if we
 Experienced wellbeing;
in order to show how efficiently residents of
different countries are using environmental
consider the results under the previous indices
we have presented). As such, with a total
 Life expectancy;
resources to lead long, happy lives. It is score of 28.8 we are close to Germany and
a revolutionary tool in the sense that the much better positioned when compared to
 Inequality of outcomes;
rationale behind it is the need to develop a Bulgaria or Hungary.
 Ecological Footprint.
welfare measurement mechanism that takes
into account sustainability indicators. Similarly Under this index, economically developed
to the World Happiness Report, the 2016 countries (such as Germany) score significantly
The HPI isreport
not very
includescomplicated
both objective to calculate, thebelow
(quantitative) first less
three indicators
developed statesare multiplied and the
(for example,
divided by and
thesubjective
ecological footprint
(qualitative) index . as
components, 9 Luxembourg ranks 139 out of 140 countries).
follows8: One of the main explanations for this is
• Experienced wellbeing; that, while having high life expectancy
In the 2016• HPI Report (the latest) Romania ranksand55scoring
Life expectancy; out of a well
very totalwith
of regard
140 countries.
to well- When c
to the other• groupInequality
of countries already used for being,
of outcomes; our analysis,
economicallyRomania’s position
active countries have is quite su
• Ecological Footprint. a correspondingly large ecological footprint
(especiallyThe
if we consider the results under the previous
HPI is not very complicated to calculate,
indices we have presented). As such
which ultimately affects their final scoring.
total score the
of 28.8 we are close to Germany
first three indicators are multiplied and and much better positioned when compared to Bu
Hungary. the result is divided by the ecological footprint
index9.

Under this index, economically developed countries (such as Germany) score significantly be
developed states (for example, Luxembourg ranks 139 out of 140 countries). One of t
explanations for this is that, while having high life expectancy and scoring very well with r
well-being, economically active countries Figure 8
have a correspondingly large ecological footprin
ultimately affects their final scoring.
Country ranking as per HPI 2016 score

Figure 8
29.8 28.8
30 27.5 27.3 26.4
25
20.4
20

15

10

0
Germany Romania Poland Czech Rep. Hungary Bulgaria

Source:BasedSource:
on figures produced
Based on by New
figures produced Economics
by New Foundation
Economics Foundation (2016),
(2016), “The
“The Happy Happy
Planet Planet
Index 2016. Index
A global 2016.
index of A glob
sustainable wellbeing” – Data file.
sustainable wellbeing” – Data file.

3.5 Preliminary conclusions

In the above we have briefly examined quite a wide variety of frameworks, each providing t
vision on how to measure and report human prosperity and welfare. Featuring their own partic
each focusing on a specific coordinate, the reports analysed are naturally separate reflection
various interpretations of wellbeing, as described under Chapter 2 of this paper. So what con
8. New Economics Foundation (2016), The Happy Planet Index 2016. A global index of
8
New Economics Foundation
sustainable(2016), The Happy
wellbeing Planet
– Briefing Index
paper, p. 2016. A globalpaper,
1; Methods indexpp.
of sustainable
2-9; wellbeing – Briefing paper, p.
paper, p. 2-9. 9. New Economics Foundation (2016), The Happy Planet Index 2016. A global index of
9
New Economics Foundation
sustainable(2016), The Happy
wellbeing Planet
– Methods 1.; A global index of sustainable wellbeing – Methods paper, p
Indexp.2016.
paper,

9
Welfare Trends in Romania, 1990 – 2014 | 15

order to
ead long,
eacha focusing on a specific coordinate, the reports analysed are naturally separate reflections of the
develop
as described under Chapter 2 of thisAnpaper.
3.5 Preliminary conclusions
various interpretations of wellbeing, exception however is the HPI, given the
So what conclusions
ly to the methodological reasons already presented.
can we draw after going through In this selection?
ubjective the above we have briefly examined quite
a wide variety of frameworks, each providing
Its results taken at face value may seem
controversial (ranking the US on the 108th
First of all, what all frameworks have
their ownin common
vision on howis to that theyand
measure allreport
use additional measurement
position, next to Bulgaria, factors
is a good example in
human prosperity and welfare. Featuring this respect). But then again we need to turn
besides income. These factors are both quantitative (i.e. statistical indicators such as life expectancy at
their own particularities, each focusing on a to the rationale and methodology used by this
birth or years of schooling) andspecific
qualitative (suchthe
coordinate, asreports
people’s perception
analysed are on Can anyoneThis
corruption).
index. reallyisargue
a clear
with the fact
indicator that the latest trends naturally
in assessing human welfare are focused
separate reflections of the various more and more on including
that a sustainable use of natural resources and
societal aspects into the welfareinterpretations
measurement equation.as described
of wellbeing, a clean and healthy environment are absolute
under Chapter 2 of this paper. So what prerequisites of future human welfare?
conclusions can we draw after going through
As expected, the results in terms of country ranking are not identical. The
this selection? However, one can notice
HPI’s measurement a goes
tool clearly
e result is
recurrent pattern in that the top ten countries is generally composed of thetosame prove“usual
that thesuspects”,
results of anysuch
study on
as Norway, Sweden, Finland, FirstSwitzerland,
of all, whatNetherlands
all frameworksor Australia.
have in The same pattern
wellbeing is consistent
measurement largely depends on
common is that they all use additional the indicators used and, ultimately, on the goal
when we look at those states forming the bottom of the ladder, usually African
measurement factors besides income. These
countries such as Niger,
of each individual piece of research. As such,
compared
Togo, Chad or Central-African factors
Republic.
are both quantitative (i.e. statistical one should not attempt to interpret the results
urprising indicators such as life expectancy at birth of various studies in a comparative manner, but
An
h, with a exception however is the HPI, given
or years of the methodological
schooling) reasons
and qualitative (such already presented.
rather Its results
try to understand the taken
objectives of each
as people’s perception on corruption). This index, as well as the context in/for which they
at face
ulgaria or value may seem controversial (ranking the US on the 108 position,
is a clear indicator that the latest trends in
th
next to Bulgaria, is a good
were developed.
example in this respect). But then again human
assessing we need to turn
welfare to the rationale
are focused more and methodology used by this
index. Can anyone really argueand with theon
more fact that asocietal
including sustainable
aspects useintoofthe
natural
Withresources and a clean
regard to Romania’s and however,
standing
healthy environment are absolute prerequisites
welfare measurement of future
equation.human welfare? across the studies presented, the relative
elow less ranking seems to be constantly close to the
the main As expected, the results in terms of country
The HPI’s measurement tool ranking clearlyaregoes to prove
not identical. that one
However, thecan
first third of the league, as the graph below
results represents.
of any study on we
Although wellbeing
advised against cross
regard to
measurement largely depends notice
on thea recurrent
indicators usedinand,
pattern ultimately,
that the top ten oninterpretation
the goal ofbetween
each individual
various reports with
nt which
piece of research. As such, one should
countries not attempt
is generally to interpret
composed of the same the results
regardof to avarious studies in the
specific country/ies, a empirical
“usual suspects”, such as Norway, Sweden, ascertainment related to Romania’s similar
comparative manner, but ratherFinland,
try to Switzerland,
understandNetherlands
the objectives of each index,
or Australia.
as well as the context
ranking in all four reports quoted is quite
in/for which they were developed.The same pattern is consistent when we look remarkable.
at those states forming the bottom of the
With regard to Romania’s standing however,
ladder, across
usually African the studies
countries such as presented,
Niger, the relative ranking seems to
Togo, Chad or Central-African Republic.
be constantly close to the first third of the league, as the graph below represents. Although we advised
against cross interpretation between various reports with regard to a specific country/ies, the empirical
ascertainment related to Romania’s similar ranking in all four reports quoted is quite remarkable.
Figure 9
Figure
Romania’s 9
rankings according to various welfare reports
Romania's rankings according to various welfare reports

HDI (2014), 188 countries 52

WHR (2013-2015), 157 countries 71

LPI (2016), 149 countries 50


bal index of
HPI (2016), 140 countries 55

Source: Based on figures produced bySource:


the Human
Based onDevelopment
figures producedIndex
by the (HDI) 2015; World
Human Development Happiness
Index (HDI) 2015;Report (WHR) Report
World Happiness 2016;(WHR) 2016;
Legatum Prosperity Index (LPI) 2016;Legatum
HappyProsperity
Planet Index (HPI)
Index (LPI) 2016.
2016; Happy Planet Index (HPI) 2016.

their The
own following chapter of this study will detail the development of some wellbeing indicators for
cularities,
Romania and other CEE countries, in order to emphasize more relevantly the main trends and provide
ns ofsome
the explanations. We will limit
The following chapter of this study will detail and provide some explanations. We will limit
theour investigation
development to the
of some year 2014,
wellbeing whichour
indicators is the last available
investigation for some
to the year 2014, which is the
nclusions
indicators. for Romania and other CEE countries, in order last available for some indicators.
to emphasize more relevantly the main trends
. 1; Methods
4. Welfare Trends in Romania and other CEE countries during 1990-2014
p. 1.

10
16 | Welfare Trends in Romania, 1990 – 2014

4. Welfare Trends
in Romania and other CEE countries
during 1990-2014

“ We chose 1990 as a base year for measuring welfare dynamics because


it is a milestone in the economic development of the CEE countries,
i.e. the turning point from the centralised system to the free market
economy.

As presented in the theoretical section, the our paper is focused on the long-term dynamics of
concept of welfare includes quite a variety of living standards, for each country considered.
life quality aspects, corresponding to different First, we study, comparatively, how different
theories in the literature. In this study our aim is indicators of well-being have varied in five Central
to follow a pragmatic and hedonic approach to and Eastern European countries (CEE), i.e.
the mentioned concept, in the sense that we are Romania, Bulgaria, the Czech Republic, Hungary
interested in measuring the satisfaction of basic and Poland, and one Western European developed
needs, corresponding mainly to the first two levels country (as a benchmark for comparison) –
of the well-known pyramid of human needs, as Germany - during two and a half decades, i.e.
outlined by Abraham Maslow. We will not analyze from 1990 to 2014. We chose 1990 as a base
those aspects of welfare related to social, cultural, year for measuring welfare dynamics because it
or spiritual needs, as we believe that these are is a milestone in the economic development of
difficult to quantify and very different from one the CEE countries, i.e. the turning point from the
person to another, or even absent in some people. centralised system to the free market economy.
On the other hand, we intend to carry out a
welfare analysis in the objective sense, measured Second, we provide an overview of their dynamics
by quantitative data. The subjective analysis of during the period 1990-2014. Because the relevant
wellbeing, consisting of perceptions of each time variations have different ranges, a composite
individual on the satisfaction provided by various index summing up the dynamics for each country
sides of life, is not the subject of our survey. would be inappropriate. This is why we will use a
radar-type chart instead, providing the 1990-2014
We deal in this chapter with the following indicator normalized changes corresponding to
three pillars of welfare: health, income and the 5+1 countries. We end this chapter with the
consumption, as well as education. Unlike development of welfare gaps between Romania
other frameworks on this topic (HDI10, MPI11, and the other countries considered, during the
HPI12, WHR13, etc.) which built classifications of mentioned period.
countries on various criteria, at some point in time,

10. Human Development Index;


11. Multidimensional Poverty Index;
12. Happy Planet Index;
13. World Happiness Report;
Welfare Trends in Romania, 1990 – 2014 | 17

The following sections of this chapter include: We will start to estimate income progress
the methodology and data used (section 4.1), by examining historical GDP for Romania, as
the statistical analysis of the proposed welfare calculated by Victor Axenciuc (2012)16. This
indicators (section 4.2), and the big picture data series ends in the year 2000, but we
of welfare dynamics and welfare gaps during have extended it to year 2015 using a volume
1990-2014 (section 4.3). index provided by Eurostat. Further, for all six
countries analyzed, we have chosen GDP per
4.1. Methodology and data used capita provided by the WB, expressed in 2011
USD constant prices at purchasing power
Because of the rather long period for which we parity (PPP).
intend to study the development of welfare,
the range of available and relevant statistical We will later compare the GDP with the
indicators, corresponding to all countries gross national income (GNI). National income
analysed, is quite limited. Out of the open is obtained by extracting from the GDP
access statistical databases providing 1990- the difference between primary incomes
2014 data, the only complete data series were (employees’ compensation and property
found with the World Bank (WB)14 and Penn income: dividends, interest, rent, and retained
World Table (PWT)15. We added to these series profit) achieved by foreign entities in the
other indicators that we deemed as being country and the incomes achieved by residents
significant for the description of the analyzed on the territory of other countries17. The
aspects, although they are available for shorter two components may balance each other
time periods. Annex 1 combines the indicators out, so that GNI and GDP levels are very
used in this study, their measure units and close. However, this is not the case for the
sources of statistical data used for their CEE countries, where the first component -
accession. incomes of foreigners operating within the
country’s borders - is substantial, while the
4.1.1. Health latter is usually small. Consequently, their
national income is noticeably lower than
We start with the population’s health status, domestic product, as we will see by calculating
which we consider to be a core component of the ratio of GNI to GDP. Thus, although foreign
a nation’s welfare. Health is our most valuable companies may boost economic growth (GDP),
asset since a good physical and mental state their contribution to national income (GNI) is
is crucial for being able to work, study and usually smaller. To calculate the mentioned
enjoy life. Assessing health status, however, ratio, we used GDP and GNI in current national
is a difficult task because of the multitude currency, also available on the WB database.
of aspects involved. Limited long-term data
available constrained us to limit our analysis to Revenue data represent national average
certain indicators. The ones we have chosen, values, which say nothing about their
available for the period 1990 – 2014, are: life distribution to individuals. For this purpose we
expectancy at birth, expressed in number of used WB estimates of the Gini index based
years (calculated by WB) and infant survival on household surveys, which quantifies “the
rate, per thousand live births (obtained through extent to which the distribution of income
the difference to 1,000 of infant mortality, also (or, in some cases, consumption expenditure)
calculated by WB). among individuals or households within an
economy deviates from a perfectly equal
4.1.2. Income distribution.(...) a Gini index of 0 represents
perfect equality, while an index of 100 implies
Although the use of GDP in welfare evaluation perfect inequality”18.
is increasingly controversial, revenues of
companies active within a country in exchange
for products and services provided can be
considered a proxy for the population’s income.

14. http://data.worldbank.org/indicator;
15. Feenstra, Robert C., Robert Inklaar and Marcel P. Timmer (2015), The Next Generation of the
Penn World Table American Economic Review, 105(10), 3150-3182, available for download at
www.ggdc.net/pwt;
16. Axenciuc, V. (2012), Produsul intern brut al României 1862-2000. Serii statistice seculare și
argumente metodologice, volumul I: Produsul intern brut 1862-2000. Sinteza seriilor de timp
a indicatorilor globali, pe secțiuni temporale, Editura Economică, București, 2012, pp. 38-41;
17. For more details see the OECD definition: https://data.oecd.org/natincome/gross-national-
income.htm;
18. http://data.worldbank.org/indicator/SI.POV.GINI;
18 | Welfare Trends in Romania, 1990 – 2014

4.1.3. Consumption the labour market. We will analyze the level of


education using the human capital index (HCI)21
Consumption is another widely-used measure conducted by PWT alongside with tertiary
for standard of living, reflecting the hedonic side enrolment ratio provided by the WB. HCI per
of welfare, namely the satisfaction obtained by person is calculated based on the number of
spending revenue and other financial resources years of schooling and its marginal rate of return.
(e.g. loans). Obviously, consumption largely The latter is given by a coefficient calculated as
depends on the temperament and life philosophy a Mincer-type function of incomes, where the
of each person which, alongside with rational income of an individual is correlated with the
well as the facilitation of higher earnings
factors19 generate the distribution
in the labour
of financial
market. We will analyze the level of edu
degree of education. The coefficient is different
21
using the human
resources capital
towardsindexconsumption(HCI) conducted on
and saving. byvarious
PWT alongside
segments with tertiary
of the educational route. enrolmen
provided by Athe WB.higher
relatively HCIconsumption
per person levelisdoes
calculated
not based on the number
Tertiary enrolment ratio (WB) isof years as
calculated oftheschooling
necessarily mean a higher level of wellbeing, percentage of people enrolled in tertiary education
marginal ratebutofrather
return. The latter is given by a coefficient
an excessive propensity to capitalize
(quite relatively) calculated as a Mince
within the total number of persons in the age
function of incomes, where
on present and/or theearnings
future income of an
in order to individual
groupis correlated
(within with the degree
5 years) corresponding of educatio
to the period
coefficient is different on various segments of the educational route. Tertiary enrolment ratio (W
maximize present satisfaction. subsequent to the graduation of secondary
school.
calculated asWe thewillpercentage
consider the finalof people
consumption enrolled
of in tertiary education within the total number of p
in the age group (within
households 5 years) corresponding to the
20, per capita, expressed in 2011 4.2.period subsequent to the graduation of sec
Main findings
school. USD PPP , which was calculated based on the
same indicator expressed in constant 2010 USD. 4.2.1. Health
This series was first converted to constant 2011
4.2. Main findings
national currency, using the 2010 exchange rate In order to analyse the health status of a
(national currency / USD) and national consumer population, we considered two indicators: life
price index for 2011 (2010=100). Second, it was expectancy at birth (years) and infant survival
4.2.1.converted
Healthto 2011 USD PPP, using the 2011 PPP rate (‰) - calculated by the difference to 1,000
conversion factor. All the above indicators were of WB infant mortality (‰). In Figures 10a-10b,
available in the WB data base. we showed the development of these indicators
In order to analyse the health status of a population,over wetheconsidered
1990-2014 period,twoforindicators:
5 CEE emerging life expecta
birth (years) 4.1.4.
and infant
Education survival rate (‰) - calculated economies (Romania, Poland, Hungary, Bulgaria infant mo
by the difference to 1,000 of WB
(‰). In Figures 10a-10b, we showed the development ofCzech
and the theseRepublic)
indicators over
to which the 1990-2014
we added a p
The role of education in improving welfare resides West-European developed country (Germany).
for 5 CEE emerging
in both its economies (Romania,
contribution to personal Poland, Hungary, Bulgaria and the Czech Republic) to
development
we added a West-European developed country
as well as the facilitation of higher earnings in (Germany), as a benchmark for comparisons.

Figure 10a
Figure 10a
Life expectancy at birth (years)
Life expectancy at birth (years)
82
Romania Bulgaria
80 Czech Rep. Hungary
Poland Germany
78

76

74

72

70

68
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014

Source: World Bank


Source:Indicators.
World Bank Indicators.

Figure 10a shows that the ‘90s brought a significant overall increase in life expectancy in a
countries considered,
19. See thewhich lasts until
intertemporal the end
consumption of theandperiod.
theories life-cycleThis
modelmay be interpreted in the sen
of consumption;
the economic20.
changes thatconsumption
Household occurred after
include1990 have had
expenditures a positive
of nonprofit effect serving
institutions on the health system and
on the population’s healthascondition.
households, mentioned byThe absolute
the WB rise in life expectancy in Romania was 5.3
(http://data.worldbank.org/indicator/NE.CON.PRVT.
PC.KD?view=chart);
during 1990-2014. Noteworthy is that the 5+1 country trends are parallel as of 1990, although Ro
21. http://www.rug.nl/ggdc/docs/human_capital_in_pwt_90.pdf;
and Bulgaria have a late start (1998).
Welfare Trends in Romania, 1990 – 2014 | 19

Figure 10a shows that the ‘90s brought a Figure 10b shows that the number of children
significant overall increase in life expectancy in who survive to the age of 1 year, per thousand
all CEE countries considered, which lasts until live births in the respective year (infant
the end of the period. This may be interpreted survival rate) has also increased considerably.
in the sense that the economic changes Romania’s values marginally decreased during
that occurred after 1990 have had a positive the late 2000s, along with the other countries.
effect on the health system and hence on the Its 1990-2014 rise (20.9 ‰) was the highest
population’s health condition. The absolute rise within the CEE group. Germany recorded only
in life expectancy in Romania was 5.3 years, a modest rise, but only because its absolute
during 1990-2014. Noteworthy is that the 5+1 values were superior to the CEE countries, so
country trends are almost parallel, although the growth potential was inferior.
Romania and Bulgaria have a late start (1998).

Figure 10b
Survival rate, infant (per
Figure 10b1,000 live births)
Survival rate, infant (per 1,000 live births)
1000

995

990

985

980 Romania
Bulgaria
975 Czech Rep.
Hungary
970 Poland
Germany
965
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014

Source: World Bank Indicators.


Source: Own calculation, based on World Bank Indicators.

4.2.2. Income

In this sub-section we will first review the GDP historical series for Romania (1950-2000), expr
in constant USD PPP, as calculated by Axenciuc (2012). We extended this series up to 2015, u
chained linked volume index provided by Eurostat.

Figure 11a
GDP per capita in Romania, 1950 - 2015, 2000 USD PPP
18,000
990
20 | Welfare Trends in Romania, 1990 – 2014
985

980 Romania
Bulgaria
975 Czech Rep.
Hungary
970 Poland
Germany
965

1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: World Bank Indicators.
4.2.2. Income expressed in constant USD PPP, as calculated
4.2.2. Income by Axenciuc (2012). We extended this series
In this sub-section we will first review the up to 2015, using a chained linked volume
GDP historical series for Romania (1950-2000), index provided by Eurostat.
In this sub-section we will first review the GDP historical series for Romania (1950-2000), expressed
in constant USD PPP, as calculated by Axenciuc (2012). We extended this series up to 2015, using a
Figure 11a
chained linked volume index provided by Eurostat.
GDP per capita in Romania, 1950 - 2015, 2000 USD PPP
Figure 11a
GDP per capita in Romania, 1950 - 2015, 2000 USD PPP
18,000
16,000 Axenciuc (2012) original GDP series
14,000
12,000 2001 - 2015 extended series, based on
Eurostat chained linked volume index
10,000
8,000
6,000
4,000
2,000
0
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Source: Figures provided by Axenciuc (2012, p. 38-41), and own calculations based on Axenciuc (2012) and Eurostat.
Source: Figures provided by Axenciuc (2012, pp. 38-41), and own calculations based on Axenciuc (2012) and Eurostat.
Data reveal that the post Second World War period brought a substantial real GDP upswing, with a
peak in 1987, meaning that the GDP decline occurred before the economic transformations which
Data reveal that the post Second World extended based on the Axenciuc (2012) and
started in 1989. This inflexion can be seen as partEurostat
War period brought a substantial real GDP
of the data
business cycle, or as a signal that the
series, the 2015 real GDP value
performance of thea Romanian
upswing, with centralized
peak in 1987, meaning economy
that might
was have comehigher
1.5 times to a critical
than themoment (an argument
1987 peak, and
may be that a turning point had already happened in 1984).
the GDP decline occurred before the economic 11.5 times higher than the 1950 value.
transformations which started in 1989. This In order to analyse all the CEE countries
Further, the can
inflexion graph
be shows
seen asthat
partthe
of transition to the market
the business economy
considered had WB
we use a strong
data, impact
i.e. GDP onper
economic
growth.
cycle,Nevertheless,
or as a signal after a second
that the downward
performance of trendcapita
in theexpressed
1997–1999 period,
in USD Romania’s
at PPP, real GDP
2011 constant
growth has enjoyed
the Romanian the steepest
centralized upturnmight
economy sincehave
1950, interrupted only by
prices. In figures 11bthe
andshock
11c we of the global crisis
combined
(2009-2010). According
come to a critical momentto our
(anfigures,
argument extended
may basedthe on
GDP theabsolute
Axenciucand(2012) data
relative series,
(1991 basethe 2015
realbeGDP
that value waspoint
a turning 1.5 times higher happened
had already than the 1987 peak,
year) and 11.5 times
dynamics. higher than
In absolute terms, theRomania’s
1950 value.
in 1984). GDP has been the second lowest among the
group since 1992. After two declines recorded
Further, the graph shows that the transition 14 in 1992 and 1997-1999, its GDP did not
to the market economy had a strong impact reach the 1990 level until 2002. The increase
on economic growth. Nevertheless, after a became more robust from 2000, but it gained
second downward trend in the 1997–1999 momentum particularly within the 2005 –
period, Romania’s real GDP growth has 2008 period, supported by both domestic and
enjoyed the steepest upturn since 1950, external demand. However, the impact of the
interrupted only by the shock of the global global crisis drastically adjusted the GDP path.
crisis (2009-2010). According to our figures,
USD at PPP, 2011 constant prices. In figures 11b and 11c we combined the GDP absolute and relativ
(1991 base
In order to year)
analysedynamics, for countries
all the CEE the same considered
group of countries.
we use WBIn absolute
Welfare data, ini.e.
Trends terms, Romania’s
GDP 1990
Romania, per capita GDP ha
expressed
– 2014 | 21
been
USDthe second
at PPP, lowest
2011 among
constant the group
prices. since11b
In figures 1992.
andIts11c
GDP, after two declines
we combined the GDPrecorded
absoluteinand 1992 an
relati
1999, did not reach the 1990 level until 2002. The increase became more robust from
(1991 base year) dynamics, for the same group of countries. In absolute terms, Romania’s GDP h 2000, but it gaine
momentum particularly
been the second within the
lowest among thegroup
2005 since
– 2008 period,
1992. supported
Its GDP, after two by declines
both domestic
recordeddemand
in 1992an an
exports.
1999, didHowever,
not reachthe
theimpact of theuntil
1990 level global crisis
2002. Thedrastically
increase
Figure 11b adjusted
became the
more GDP
robust path.
from 2000, but it gain
momentum particularly within the 2005
GDP per capita,– 2008 period,
2011 supported
USD PPPby both domestic demand an
exports. However, the impact of the global crisis Figure 11b
drastically adjusted the GDP path.
GDP per capita, 2011 USD PPP
50,000 Figure 11b
45,000 GDP per capita, 2011 USD PPP
50,000
40,000
45,000
35,000
40,000
30,000
35,000
25,000
30,000
20,000
25,000
15,000
20,000
10,000
15,000
5,000 Romania Bulgaria Czech Rep.
10,000 Hungary Poland Germany
0
5,000 Romania Bulgaria Czech Rep.
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Hungary Poland Germany
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: World Bank Indicators.
Source: World Bank Indicators

Relative Relative dynamics


dynamics is moreis meaningful
more meaningful when when analysinggrowth,
GDPfollowed by Romania
development as and Bulgaria. its absolut
it compares
Source: World Bank Indicators.
analysing GDP development as it compares Poland’s GDP has increased to an extent far
changes toitsthe initialchanges
absolute level, i.e.,
to the the sizevalue,
initial of the economy. Figure
greater 11cofbelow
than that reveals
the other states,that throughout th
recording
period 1990
Relative dynamics- 2014
i.e., the sizeisPoland
of more leads
meaningful
the economy. the group
Also fromwhen as regards
theanalysing relative
GDP
a level in 2014 growth,
development followed by
as it compares
which was approximately Romania an
its absolu
Bulgaria.
changes to Poland’s
income GDP
the initial
point of hasi.e.,
level,
view, increased
its the sizetoofanthe
marginal utility extent
is far greater
economy.
2.5 Figure
times than
11cthat
higher than of the
below
in other that
reveals
1991. states,
Moreover, recordingt
throughout
level in dependant
2014 which onwasthe initial level. Figure 2.5
approximately 11c below
times Polandthan
higher is theinonly country
1991. where thePoland
Moreover, effect is the onl
period 1990 - 2014 Poland leads the group as regards
reveals that throughout the period 1991 -
relative growth, followed by Romania an
of global crisis was almost absent. On the
country
Bulgaria.where the
Poland’s effect
GDP of
has global crisis
increased
2014 (Hungary’s 1990 GDP value is missing, towasan almost
extent absent.
far greater
other hand, On the that
than
Romania otherofhand,
was Romania
the other
visibly states,
affected, was
and visibl
recording
affected, and
level in 2014 consequently
which was
consequently real1991
we chose GDPasin
approximately the2014
2.5 was
base year) only
times 1.9 times
higher than in
consequently higher
GDPthan
1991.
real in 1991.
Moreover,
in 2014 Poland
was only 1.9 is the on
country where
Poland the
leadseffect of global
the group crisis
as regards was almosttimes
relative absent.
higher Onthantheinother
1991. hand, Romania was visib
affected, and consequently real GDP in 2014Figure was only 11c1.9 times higher than in 1991.
Figure 11c
GDP
GDP percapita,
per capita, 1991=1
2.6 Figure 11c1991=1
2.4 Romania GDP per capita, 1991=1
2.6 Bulgaria
2.2
2.4 Romania
Czech Rep.
2.0
2.2 Bulgaria
Hungary
1.8
Czech Rep.
Poland
2.0
1.6 Hungary
Germany
1.8
1.4 Poland
1.6 Germany
1.2
1.4
1.0
1.2
0.8
1.0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014

0.8
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014

Source: own calculations, based on World Bank Indicators.

Source: own calculations, based on World Bank Indicators. 15


Source: own calculations, based on World Bank Indicators.

15
22 | Welfare Trends in Romania, 1990 – 2014

Because a significant part of the revenues second half of the analyzed period, we may
Because
realised abysignificant part of theresident
foreign companies, revenuesinrealised
the by
sayforeign
that thecompanies,
ratio tendency resident in thesimilar
is rather CEE countries,
leave the national
CEE countries, leaveeconomies,
the national a economies,
more suitable a indicator
from onefor CEE assessing
country to people’s
another,welfare
except is fornational
Because
income a significant
more suitable
(WB), indicator
because partforofassessing
this the revenues
removes from realised
people’s
GDP by
theforeign
primary Czech companies,
incomesRepublic
achievedand resident
some
by in the CEE for
oscillations
foreign companies countries,
across
welfare
leave
the theis national
country, national
which income
economies,
is (WB),a because
a significant more suitable
component Bulgaria.
this in the
indicator Theassessing
for
CEE countries rise(please
in foreign
people’s
referdirect investment
to welfare
section is national
4.1.2 above
removes
income
for from
(WB),
a review GDP
ofbecause primary incomesfrom
this removes
this indicator). achieved
GDP primaryled toincomes
a decrease in thisby
achieved ratio from companies
foreign 2000. across
by foreign
the country,entities
which across the country,
is a significant and adds
component in theHowever, after 2007
CEE countries (earlier
(please referintoRomania,
section 4.1.2 above
theaincomes
for review received
of this from abroad (please
indicator). later in the Czech Republic), an upward trend
In figure 11d we can observe that the GNI-GDP ratio in the CEE countries is below 100% for most of
refer to section 4.1.2 above for a review of this occurred, which may signal a decline in the
the countries, and it goes down to 92.4% (Czech Republic,
indicator).
2011). Except for the Czech Republic and
activity of foreign companies. Germany has an
In figure
some 11d we can
oscillations for observe
Bulgaria,that wethe
mayGNI-GDP ratio
say that the in
ratio the
is CEE countries
similar
opposite trend, from
i.e. it hasone is belowcountry
CEE
benefited
100% for most of
to another,
from above
the
both countries,
in terms and
of it
level goes
and down
tendency.
In figure 11d we can observe that the GNI- to 92.4%
The (Czech
rise in Republic,
foreign 2011). Except for the Czech
100% values after 2004, meaning that incomes ratio
direct investment led to a decrease Republic
in this and
some
from oscillations
2000. However, for Bulgaria,
after 2007
GDP ratio in the CEE countries is below 100% we may
(earliersayin that the
Romania, ratio is
later similar
in the from
Czech one CEE
Republic),
received from abroad have been higher than country
an to
upward another,
trend
both in terms
occurred,
for most which
of of countries,
the level
may andsignaltendency.
and it goesThe
a decline in rise
down in foreign
the activity of direct
foreign
foreigners’ investment
companies.
incomes ledGermany
in the to a decrease
country. in this
has an ratio
opposite
from
trend, 2000.
to 92.4% it However,
i.e. (Czech
has benefited afterfrom
Republic, 2007above
2011). (earlier
During 100%in Romania,
the values afterlater2004,
in the Czech Republic),
meaning that incomes an received
upward trend
from
occurred,
abroad have which
beenmay highersignal
thana foreigners’
decline in the activity
incomes of foreign
in the country.companies. Germany has an opposite
trend, i.e. it has benefited from above 100% Figure values11dafter 2004, meaning that incomes received from
abroad have been higher than foreigners’ incomes Figurein 11d
the country.
GNI, % of GDP
GNI, % of11d
Figure GDP
105
GNI, % of GDP
105 Romania

Bulgaria
Romania
100
Czech Rep.
Bulgaria
100
Hungary
Czech Rep.
95
Poland
Hungary
95
Germany
Poland
90 Germany
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
90
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: own calculation, based on World Bank Indicators.
Source: own calculation, based on World Bank Indicators.

Further,
Source: incalculation,
own order to assess
based onthe extent
World BanktoIndicators.
which incomeinequality has developed over time we present
Further,
the in order to
development of assess the
the Gini extent
index, astoestimated
which bysurveys
the WB (please
basedrefer to sectionsurveys
on household 4.1.2 above for refer
(please
income
Further, inequality
in order has
to developed
assess the over
extent time
to we
which a concept
income refresh).
inequality has Because
developedthe data
over for
time
to section 4.1.2 above for a concept refresh). Because the data for 1990 was missing, we selected 1990
we present
1989
present
the the development of the Gini index,
development was missing, we selected 1989 as the start
as the start year. of the Gini index, as estimated by the WB based on household surveys (please refer
as estimated by the WB based on household year.
to section 4.1.2 above for a concept refresh). Because the data for 1990 was missing, we selected 1989
as the start year. Figure 11e
Figure
Gini
11e%
index,
Figure 11e
Gini index, %
1989 * 2004**
Gini index, % 2008 2012
40

30 1989 * 2004** 2008 2012


40

20
30

10
20

0
10
Bulgaria Czech Rep. Hungary Poland Romania
0
* 1988 for the Czech Republic; **2003 for Bulgaria. Note: data not available for Germany.
Bulgaria
Source: World Bank Indicators. Czech Rep. Hungary Poland Romania
* 1988 for the Czech Republic; **2003 for Bulgaria. Note: data not available for Germany.
Despite
Source: different
World developments for the
Bank Indicators. of income inequality (12.6 p.p. and 11.6 p.p.,
16
countries selected, the tendency towards respectively). In the Czech Republic and
growth of income inequality is obvious. If we Hungary we notice a decreasing trend after
16
compare 1989 and 2012 values, Bulgaria and 2004; also in Romania, after a maximum in
Romania register the most sizable growth 2008 (36.9%), the 2012 value is 2.1 p.p. lower.

* 1988 for the Czech Republic; **2003 for Bulgaria. Note: Germany was excepted because complete data was not available.
Source: World Bank Indicators.
Hungary we notice a decreasing trend after 2004; also in Romania, after a maximum in 2008 (36.9%),
the 2012 value is 2.1 p.p. lower. Welfare Trends in Romania, 1990 – 2014 | 23

4.2.3. Consumption

Figures 12a and 12b show the absolute and relative (1991=122) development of the real final
4.2.3.of
consumption Consumption
households, per capita. Although in absolute the Czech Republic
values suffers aisslight
Romania again contraction,
in one of the last
and Poland continues its growth. Germany’s
places (Fig. 12a) along with Bulgaria, its
Figures 12a and 12b show the absolute and
relative growth is the highest in the group, as
development is also notable, without visible
we can observe
in Fig. 12b. As in the case
22 of GDP, household
relative (1991=1 ) development of the real final consumption
oscillations in private consumption, duringgrowth
dynamics reveal sustained the last up to
2008, followed by the recessionary phase prompted
consumption of households, per capita. Although by the global crisis,
global recession. when private consumption was
strongly affected
in absoluteon 3 coordinates:
values income,
Romania is again in onecredit
of and propensity for consumption (uncertainty about
economicthedevelopments
last places (Fig. determined
12a) along withthe population
Bulgaria, its toHousehold
becomeconsumption
more reserved grew in inRomania
their consumption
by 2.9
relative growth is the highest in the group, as times between 1991 and
expenditure). The 2008 consumption shock is obvious for Romania, Bulgaria and Hungary, while the 2014, and is followed
we can observe in Fig. 12b. As in the case of by Poland (2.4 times). Poland is the country
Czech Republic suffers a slight contraction, and Polandwhose
GDP, household consumption dynamics reveal
continues its growth. Germany’s development
consumption most quickly recovered
is notable, without visible oscillations in total
sustained growth up to 2008, followed by the or private consumption, during
after the shock of 1989 the but
– 1990, lastRomania’s
global recession.
recessionary phase prompted by the global crisis, sluggish recovery was compensated with a steep
Household whenconsumption grew inwas
private consumption Romania by 2.9 times
strongly affected between
ascension 1991 2000
between and and2014,
2008,and is followed by
supported
Poland (2.4 times). Poland is the country whose consumption most quickly recovered after
on 3 coordinates: income, credit and propensity both by earnings and by massive loans, whichthe shock
for consumption (uncertainty about economic considerably reduced
of 1989 – 1990, but Romania’s sluggish recovery was compensated with a steep ascension the gap in absolute values.
between
developments determined the population to From 2009 onwards, though, the gap between
2000 andbecome
2008, supported both by earnings
more reserved in their consumptionand by massive
the two has recurred because of the different the gap
loans, which considerably reduced
in absolute values. From 2009 onwards, though,
expenditure). The 2009 consumption shock is the gap between
impact the
levels of thetwo has recurred because of the
crisis.
different obvious
effects for
of Romania,
the crisis.
Bulgaria and Hungary, while

Figure12a12a
Figure
Household Household
final consumption per capita,
final consumption 2011 USD PPP
per capita,
2011 USD PPP
25,000

20,000
Romania Bulgaria
Czech Rep. Hungary
15,000 Poland Germany

10,000

5,000

0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014

Figure
Source: own calculation, based on World Bank Indicators.
Figure12b
12b
Household final consumption per capita, 1991=1
Household final consumption per capita, 1991=1
3.0
Romania
2.5
Bulgaria
22
Hungary's1990 GDP value is missing, consequently we chose 1991as the base year.

2.0 Czech
Rep. 17
Hungary
1.5

1.0

0.5
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014

Source: own calculation, based on World Bank Indicators.


Source: own calculation, based on World Bank Indicators.
22. Hungary’s1990 consumption value is missing, consequently we chose 1991 as the base year;
4.2.4. Education
24 | Welfare Trends in Romania, 1990 – 2014
0.5

1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: own calculation, based on World Bank Indicators.

4.2.4. Education
4.2.4. Education 1990 was ranked in last place, with a ratio of
only 8.4%, subsequently benefited from the
Here weHere will
weexamine howhow
will examine thethelevel ofofthe
level thepopulation’s education
strongest rise andevolved, using
reached first twoinindicators:
place 2009, the
gross tertiary
population’s enrolment
educationratio (%) provided
evolved, using two by the WB with(Fig. 13a), and
an enrolment theofhuman
rate 71.3% (an capital index (HCI)
increase
indicators:
calculated by PWT the (Fig.
gross 13b).
tertiary enrolment ratio of 8.5 times). As a ratio, this indicator is
(%) provided by the WB (Fig. 13a), and the influenced both by the numerator (number of
human capital index (HCI) calculated by PWT students) and by the denominator (population
The rate
(Fig. of13b).
enrolment in tertiary education measures fromthethe
percentage
specific age ofgroup).
studentsIt is in the five
possible thatyear age
group subsequent to secondary school graduation. After 1990, the emergence of private
the reduction in the numbers within this age universities
generated
The arate steep rise in theinnumber
of enrolment of students. Romania,
tertiary education group, which
driven byin various
1990 was ranked
reasons, mayinhave
last place, with
a ratiomeasures
of only 8.4%, subsequently
the percentage benefited
of students in thefrom the strongest
additionally rise and toreached
contributed this rise.first place in 2009,
Hungary
with anfive year age group
enrolment rate ofsubsequent
71.3% (antoincrease
secondary also8recorded
of almost times). As a significant increase;
a ratio, this the 2007
indicator is influenced
both byschool graduation. After 1990, the emergence
the numerator (number of students) and by the level was almost fivefold that of 1990.
denominator (population from the specific age
of private universities generated a steep rise
group).in Ittheisnumber
possible that the reduction
of students. Romania, whichin the
in numbers within this age group, driven by the aging
population, may have additionally contributed to this rise. Hungary also recorded a significant increase;
the 2007 level was almost fivefold that of 1990.
Figure 13a
Gross enrolment
Figureratio,
13a tertiary (%)
Gross enrolment ratio, tertiary (%)
80

70

60

50

40 Romania
Bulgaria
30
Czech Rep.
20 Hungary
10 Poland
Germany
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Note: data not available for Germany between 1998 and 2012.Source: World Bank Indicators.
Note: data not available for Germany between 1998 and 2012. Source: World Bank Indicators.

18
The second half of the 2000s brought a limit financial crisis. As a result, more young people
in the expansion of tertiary enrolment for might have either turned to a less qualified job,
most of the CEE countries. The potential or decided to emigrate - to study or to achieve
causes are multiple and country-specific. In a decent income. For these reasons, between
Romania, for example, the country with the 2007 and 2013, the number of students in
steepest contraction in the rate of university Romania has halved, as a report of the Court of
enrolment, the increasing difficulty of the Accounts found23.
baccalaureate significantly reduced the number
of candidates for admission to universities. Romania’s exceptional development until 2009
Also, interest in the qualifications offered should be viewed with reservations, because it
by universities declined, primarily because says nothing about the quality of education and
of a mismatch between the latter and the hence about its usefulness both for personal
demands of the labour market, which led to development, and for contributing to increasing
difficulties in graduates finding appropriate revenues. The latter is taken into account by
jobs. Another reason is the low salaries offered the human capital index (HCI), conducted
by employers, which were disproportionate by PWT. The HCI estimation is based on the
with the level of training. Salaries were also number of years of schooling and its marginal
affected by the recession subsequent to the rate of return.

23. Curtea de Conturi a României (2015) – Analiza fundamentării şi evoluţiei situaţiei obiectivului
privind creşterea procentului absolvenţilor de învăţământ superior, în conformitate cu
prevederile Strategiei Europa 2020, pp. 36 – 37, http://www.curteadeconturi.ro/Publicatii/
SINTEZAAPInvsup.pdf.
The second half of the 2000s brought a glut of tertiary students for most of the CEE countries. The
potential causes are multiple and country-specific. In Romania, forinexample,
Welfare Trends the –country
Romania, 1990 2014 | 25 with the
steepest contraction in the rate of university enrolment, the increasing difficulty of the baccalaureate
significantly reduced the number of candidates for admission to universities. But above all, interest in
the qualifications offered by universities declined, primarily because of a mismatch between the latter
and the demands of the labour market, which led to difficulties in graduates finding appropriate jobs.
Another reason is the low salaries offered by employers, which were disproportionate with the level of
training. Salaries were also affected by the recession subsequent to the financial crisis. As a result, more
young people either turned to a less qualified job, or decided to emigrate - to study or to achieve a
decent income. For these reasons, between 2007 and 2013, the number of students in Romania has
halved, as a report of the Court of Accounts23found.

Romania's exceptional development until 2009 should be viewed with reservations, because it says
nothing about the quality of education and hence about its usefulness both for personal development,
and for contributing
Figure 13b showstothat
increasing
Romania revenues. The latter
and Bulgaria and is taken far
growing intomore
account bythan
quickly the the
human
rest capital
of index
(HCI), conducted
achieved by PWT.
a modest Thein HCI
increase estimation
the HCI, as isits
based on theHowever,
CEE peers. number the
of years of schooling
HCI increase in and its
marginal rate oftoreturn.
compared Hungary and Poland. The Czech the Czech Republic is capped in the late 90s,
Republic showed a particularly steep rise in the and its growth between 2000 and 2014 is
Figure 13b
HCI up shows
to 2000,that Romania
closing its gapand
withBulgaria
Germany,achieved
lower. a modest increase in the HCI, as compared to
Hungary and Poland. The Czech Republic showed a particularly steep rise in the HCI up to 2000,
closing its gap with Germany, and growing far more quickly than the rest of its CEE peers, in absolute
values. In relative terms, though, because Figure 13b in the Czech Republic is capped in the late
the HCI increase
90s, its growth between
Index 2000 and 2014
of human is lower.
capital per person, based on years of
schooling and returns
Figure 13bto education

3.8

3.6

3.4

3.2

3.0
Romania Bulgaria
2.8 Czech Rep. Hungary
Poland Germany
2.6
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014

Source: Penn World Table 9.0.


Source: Feenstra, R. C., Inklaar, R., M. P. Timmer (2015), ”The Next Generation of the Penn World Table”, American
4.3. The big Review
Economic picture
2015, 105(10): 3150-3182, available for download at www.ggdc.net/pwt.https://www.rug.nl/research/ggdc/
data/pwt/v81/the_next_generation_of_the_penn_world_table.pdf.

4.3.1. Welfare development relative scores

After going through a significant amount of statistical analysis and explanations it is time to synthesize

Curtea de Conturi a României (2015) – Analiza fundamentării şi evoluţiei situaţiei obiectivului privind creşterea procentului absolvenţilor
23

de învăţământ superior, în conformitate cu prevederile Strategiei Europa 2020, pp. 36 – 37,


http://www.curteadeconturi.ro/Publicatii/SINTEZAAPInvsup.pdf.

19
26 | Welfare Trends in Romania, 1990 – 2014

4.3. The big picture leads to very small values and overlapped
lines for indicators with lower variation, so
4.3.1. Welfare development relative scores that reading the graphs becomes difficult. For
this reason and also for calculating change
After going through a significant amount of averages across indicators,, we normalized
of the variables examined above (except for the Gini index).
statistical analysis and explanations it is time
We used relative changes for GDP and
their 1990-2014 growth within the range of 0-1,
consumption (because the marginal utility
to synthesize and compare in this section the of income / consumption
using the formula:is dependent on the initial level),
and absolute changes for the others 24
welfare developments of the 5+1countries,.
i.e., the 1990-2014 changes of the variables Xnij = (Xij – Xim) / (XiM – Xim), where:
For cumulating
examined indicator changes
above (except forinthea single framework, we will use a radar chart (Fig. 15), where the
Gini index).
axes are indicators,
We used relative and the coloured
changes for GDPlinesand
represent the Xnij
six countries. We canvalue
= the normalized thusofunderstand welfare
the i indicator
consumption (because the marginal utility of change, for country
through the surface described by the line corresponding to each country, joining the index values. j;
Because income
welfare/indicators
consumption is dependent on the
have multiple areas of variation Xij = absolute (relative for GDP and
(different dispersions) in the period studied,
initial level), and absolute changes for the consumption) change of the i indicator, for
their presentation
others . 24 on a single scale leads to very small values
countryand
j; overlapped lines for indicators with
lower variation, so that reading the graphs becomes difficult. For
XiM = max thisj (Xij),
reason,
thatwe normalized
is the maximumtheir 1990-
value
2014growth within the range
For cumulating 0-1 (Fig.in14),
of changes
indicator using the formula:
a single (among the j countries considered) of the i
framework, we will use a radar chart (Fig. indicator change;
Xnij = (Xij the
14), where – Xim)
axes /are
(XiM – Xim),and
indicators, where:
the Xim = min j (Xij), the minimum value (among
coloured lines represent the six countries. the j countries considered) of the i indicator
Xnij = the normalized value of the i indicator change, forchange.
We can thus understand welfare through the country j;
surface described by the line corresponding
Xij = absolute (relative for GDP and consumption) change of the i indicator, for country j;
to each country, joining the index values. This normalized data will generate scores
XiM = max j (Xij),
Because that indicators
welfare is the maximum valueareas
have multiple (amongbetween
the j countries
0 (for theconsidered)
country withofthetheminimum
i indicator
change; of variation (different dispersions) in the period change of the indicator), and 1 (corresponding
Xim = min j (Xij),
studied, thepresentation
their minimum value (among
on a single the j countries
scale to the considered)
country with of thethe i indicator
maximum change.
change).

This normalized data will generate scores between 0 (for the country with the minimum change of the
Figure 14
indicator), and 1 (corresponding to the country with the maximum change).
Welfare development (1990-2014), relative scores
Figure 14
Welfare development (1990-2014), relative scores
Life expectancy at birth
1.0

0.50
0.5
1.00
Index of human capital Infant surviving rate
0.53
0.0

-0.5

0.69 0.51
Gross enrolment ratio,
GDP per capita*
tertiary**

1.00
Household consumption
per capita*

Romania Bulgaria Czech Rep. Hungary Poland Germany

* 1991-2014; **1991-2013. Notes: red values correspond to Romania. Source: own calculation, based on World Bank and
Penn World* Table 9.0 data.
1991-2014; **1991-2013. Notes: values correspond to Romania. Source: own calculation, based on World Bank and
Feenstra, R. C., Inklaar, R., M. P. Timmer (2015), ”The Next Generation of the Penn World Table”, American Economic
Review 2015, 105(10): 3150-3182, available for download at www.ggdc.net/pwt.https://www.rug.nl/research/ggdc/data/pwt/
24
By “relative change” of variable I between 1990 and 2014 we mean the ratio I2014 / I1990; “absolute changes” were calculated as simple
v81/the_next_generation_of_the_penn_world_table.pdf.
differences I2014 - I1990.

24. By “relative change” of variable I between 1990 and 2014 we mean the ratio I2014 / I1990;
“absolute changes” were calculated as20 simple differences I2014 - I1990;
Welfare Trends in Romania, 1990 – 2014 | 27

Figure 14 reveals that, although Romania In Annex 2 we presented the total average
Figure has
14 benefitted
reveals that, from although
consistentRomania
welfare has benefitted
relativefrom consistent
scores of welfarewelfare development,
development for it ran
development, it ranks first for only two of each country, calculated as arithmetic means
first for only two of the six indicators: infant survival rate and household consumption. The GDP chang
the six indicators: infant survival rate and of the average scores corresponding to each
is second after Poland,
household consumption.whose Thenet
GDP growth
changeperformanceof the is higher
three than
welfare all the
pillars: other
health, countries. For th
income
tertiaryisenrolment ratio, Romania
second after Poland, whose growth is only in third position because the initial steep growth
and consumption, and education. In their turn, in 2000-200
was offset by the subsequent
performance is higher than dramatic decrease in the
all the other thesenumber of students
were calculated as (Figure
arithmetic13a).
means Less favourab
countries.
positions resulted Forfor
thelife
tertiary enrolment
expectancy and HCI (fifthofand
ratio, thefourth
two indicator
place, changes includedFor
respectively). in each
life expectanc
Romania is only in third position because pillar. Poland’s development ranks first for
Romania’s and Bulgaria’s initial downward
the initial steep growth in 2000-2009 was
trend (1990-1997) is the main reason for
two pillar averages (income and consumption,
their late start an
low overall changes.
offset by the subsequent dramatic decrease and education) and also as regards overall
in the number of students (Figure 13a). Even welfare growth between 1990 and 2014 (with
In Annex
less 2favourable
we presented
positions theresulted
total average
for life relative scores
a total of welfare
average score ofdevelopment
0.82). Romania’s for each countr
expectancy and HCI (fifth and fourth place, development
calculated as arithmetic means of the average scores corresponding to each ranks first in health,
of thesecond
three welfare pillar
respectively). For life expectancy, Romania’s in income and consumption, and fourth in
health,and
income and consumption,
Bulgaria’s initial downwardand trendeducation.
(1990- In education,
their turn,while
theseitswere
totalcalculated
average score as arithmetic
is 0.70. mea
of the two
1997)indicators
is the mainincluded
reason forin each
their latepillar. Poland’s
start and development
A representation ranksform
in graph firstoffor
thetwo
totalpillar averag
(incomelowand consumption,
overall changes. and education) and also average as regards overall
score for eachwelfare
countrygrowth
presentsbetween
a 1990 an
2014 (with a total average score of 0.82). Romania’ssuggestive development ranksoffirst
summary in health,
the above second in incom
analysis:
and consumption, and fourth in education, while its total average score is 0.70. A representation
graph form of the total average score for Figure each country
15 presents a suggestive summary of the abov
analysis:
Welfare development (1990-2014*), total relative scores
Figure 15
0.900 0.822
0.800
0.704
0.700 0.629
0.600 0.529
0.500
0.400 0.318
0.300
0.200
0.101
0.100
0.000
Germany Bulgaria Hungary Czech Rep. Romania Poland

* 1991-2014 for GDP per capita and household consumption per capita, 1991-2013 for tertiary enrolment rate.
Source: own calculation,
* 1991-2014 for GDPbased on and
per capita World Bank consumption
household and Penn World Table
per capita, 9.0. for tertiary enrolment rate.
1991-2013
Source: own calculation, based on World Bank and Feenstra, R. C., Inklaar, R., M. P. Timmer (2015), ”The Next Generation of
the Penn World Table”, American Economic Review 2015, 105(10): 3150-3182, available for download at www.ggdc.net/pwt.
Germany’s last place might be evidence of the welfare convergence between Eastern and Weste
https://www.rug.nl/research/ggdc/data/pwt/v81/the_next_generation_of_the_penn_world_table.pdf.
Europe. However, this is not necessarily true in the case of GDP and private consumption, becau
lower Germany’s
relative changes
last placefor Germany
might could
be evidence of meansufficiently
higher absolute changes,
higher. This when
issue is also the base level
relevant
sufficiently higher.
the welfare This issuebetween
convergence is also relevant
Eastern when when
questioning the closing
questioning of the
the closing gapgap
of the between Roman
and theand Western
other Europe.asHowever,
countries, regards this
GDP is not between Romania
and consumption. and the
This is why theother countries,
following as will de
section
necessarily true in the case of GDP and regards GDP and consumption. This is why the
precisely withconsumption,
private the absolutebecause
gaps. lower relative following section will deal precisely with the
changes for Germany could mean higher absolute gaps.
4.3.1. Welfare
absolute changes, absolute
when the gaps developments
base level is

To clarify in-depth the development of disparities between Romania and the other countries, in Figu
16 we have presented these gaps, for each indicator, in absolute figures25, corresponding to the start an
the end year of the period under survey (1990 and 201426). We notice that for GDP and consumptio
the results are not entirely predicted by Figure 14. For instance, although the GDP relative change
Romania is higher than that in Germany and the Czech Republic, the respective absolute gaps increase

25
Absolute gaps (monetary units) for indicator I were calculated as simple differences I Romania – I j, where j represents the other five
countries considered.
26
1991 and 2014 for GDP per capita and consumption per capita, 1991 and 2013 for tertiary enrolment rate.

21
28 | Welfare Trends in Romania, 1990 – 2014

4.3.2 Welfare absolute gaps developments higher than that in Germany and the Czech
Republic, the respective absolute gaps
To clarify in-depth the development of increased. The same applies when considering
disparities between Romania and the other the gap between Romania and Poland in
countries, in Figure 16 we have presented terms of household consumption. These
these gaps, for each indicator, in absolute findings confirm that relative changes can be
figures25, corresponding to the start and the misleading when estimating gap trends. For
end year of the period under survey (1990 the rest of the indicators, as expected, the
26). We notice that for GDP and
the
andend year
2014 of the period under survey (1990 and 2014 ). We
findings
26
notice 16
in Figure thatcorrespond
for GDP and consumption,
to those in
consumption, the results are not entirely Figure
the results are not entirely predicted by Figure 14. For instance, 14, i.e., higher absolute
although the GDP changes for
relative change in
predicted
Romania is by Figure
higher than14. Forininstance,
that Germanyalthough
and the CzechRomania
Republic, ledthe
torespective
a narrowing of the gaps
absolute gaps,increased.
and
the same
The GDP relative
applies change in Romania the
when considering is gap between the reverse.
Romania and Poland in terms of household
consumption. These findings confirm that relative changes can be misleading when estimating gap
Figure
trends. For the rest of the indicators, as expected, 16 in Figure 16 correspond to those in Figure
the findings
14, i.e., higher absolute changes for Romania led to a narrowing of the gaps, and the reverse.
Welfare absolute gaps between Romania and the other
considered
Figurecountries
16
Welfare absolute gaps between Romania and the other considered countries

Life expectancy at birth, years Infant survival rate, ‰

-6 -4 -2 0 2 -25 -20 -15 -10 -5 0


Gap between Romania and:

Gap between Romani and:


Bulgaria 2014 Bulgaria 2014
1990 1990
Czech Rep. Czech Rep.
Hungary Hungary

Poland Poland

Germany Germany

Household consumption per capita,


GDP per capita, 2011 USD PPP
2011 USD PPP
-25,000 -15,000 -5,000 5,000 -15,000 -10,000 -5,000 0 5,000
Gap between Romania and:

Gap between Romania and:

Bulgaria 2014 Bulgaria 2014


1991 1991
Czech Rep. Czech Rep.
Hungary Hungary
Poland Poland

Germany Germany

Gross enrolment ratio, tertiary, p.p. Human capital per person, index

-30 -20 -10 0 -0.8 -0.6 -0.4 -0.2 0.0 0.2


Gap between Romania and:
Gap between Romania and:

Bulgaria 2013 Bulgaria 2014


1991 1990
Czech Rep. Czech Rep.

Hungary Hungary

Poland Poland

Germany Germany

Special attention
Note: Negative gapsismean
required whenforconsidering
lower values the to
Romania, relative change incountries
the other the economic disparity
considered; between
positive gaps mean Romania
higher
values.
and Germany,
Source: becausebased
own calculations, it can be considered
on World anand
Bank Indicators illustration
Feenstra, R.of
C.,the convergence
Inklaar, trend
R., M. P. Timmer with
(2015), theNext
”The highly
developed
Generation ofcountries from
the Penn World Western
Table”, AmericanEurope
Economic(Germany
Review 2015, is considered
105(10): 3150-3182,“the engine
available of Europe”
for download at www. ).
27

Consequently, Figure 17 details how gaps in GDP and consumption have evolved over time, both in
ggdc.net/pwt.https://www.rug.nl/research/ggdc/data/pwt/v81/the_next_generation_of_the_penn_world_table.pdf.

26
1991 and 2014 for GDP per capita and consumption per capita, 1991 and 2013 for tertiary enrolment rate.
2725. Absolute gaps for indicator I were calculated as simple differences I Romania
http://www.economist.com/node/15663362. – I j, where j
represents the other five countries considered.
22
26. 1991 and 2014 for GDP per capita and consumption per capita, 1991 and 2013 for tertiary
enrolment rate.
Welfare Trends in Romania, 1990 – 2014 | 29

Special attention is required when considering performance, and gap widening. The second
the change in the economic disparity between step (2000-2008) involved sustained economic
Romania and Germany, because it can be growth in CEE, hence a tendency towards a
considered an illustration of the convergence narrowing of the gap compared to Western
trend with the
Consequently, highly17
Figure developed
details howcountries
gaps in GDP Europe.
from In the GDPhave
and consumption case,evolved
the absolute
over gap
time, both in
Western
absolute andEurope
relative(Germany
terms is considered
(percentage) 28 “the
. also continued to decrease in 2009, due to
engine of Europe”27). Germany’s large GDP contraction in that year.
During the last stage (2008-2014), we witness
One may distinguish three principal sub-periods. The early one (1990-2000) corresponds to the first
Consequently, Figure 17 details how gaps in again a slight widening of gaps. This tendency
decade
GDPof transition
and to the markethave
private consumption economy
evolved in the CEEwascountries, associated
initially driven by thewith
quicka GDP
decline in economic
recovery
performance, and gap widening. The second
over time, both in absolute and relative terms step (2000-2008)
in Germany after the 2008-2009 instability,growth in
involved sustained economic
CEE, hence a tendency
(percentage) 28. towards a narrowing of the gap compared
while in Romania to Western
the periodEurope. In the GDP case,
of convalescence
the absolute gap also continued to decrease in 2009,lasted due to Germany’s
longer. large GDP
Nevertheless, duringcontraction
the last twoin that
year.
OneDuring the last stage
may distinguish three(2008-2014),
principal we witness years again Romania
a slight widening of gaps.
has struggled This up,
to catch tendency
and was
initially driven The
sub-periods. by early
the quick GDP recovery in Germany
one (1990-2000) there mightafter
bethe 2008-2009forinstability,
prerequisites resuming the while in
Romania the period
corresponds to theoffirst
convalescence lasted longer.tendency
decade of transition Nevertheless,
towards during thethe
closing last twoinyears
gaps Romania
the next
hastostruggled
the marketto economy
catch up, in andthethere
CEE might
countries, few years.
be prerequisites for resuming the tendency towards closing
associated with a decline in economic
the gaps in the next few years. In 2014, the relative gap for both GDP and private consumption was
around 56%, which means that the levels of these indicators in Romania represented around 44% of the
respective indicators in Germany. Figure 17
GDP and household consumption,
Figure 17
gap between
Romania and Germany
GDP and household consumption,
gap between Romania and Germany
0 0
GDP per capita, absolute gap (left scale)
Household consumption per capita, absolute gap (left scale) -10
-5,000
GDP per capita, relative gap (right scale) -20
Household consumption per capita, relative gap (right scale)
-10,000 -30
2011 USD PPP

percentage
-40
-15,000
-50
-20,000 -60
-70
-25,000
-80
-30,000 -90
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014

Note: A negative gap (either absolute or relative) means a lower value for Romania, relative to Germany (see footnotes 25 and
27 for details).
Note: A negative gap (either absolute or relative) means a lower value for Romania, relative to Germany (see footnotes 25
Source: own
and 28 forcalculations,
details). based on World Bank Indicators.
Source: own calculations, based on World Bank Indicators.

5. Final remarks

Summarizing the above results, we can conclude that 1990-2014 welfare development in Romania,
determined using the indicators and methodology already presented, appears to have been consistent
and robust. If we look at the overall welfare development relative scores, Romania ranks 2nd among
the six countries under survey, after Poland. Accordingly, even though Romania used to be below other
CEE countries in absolute figures, the positive developments we have observed for some indicators
have the potential to lead to convergence with countries better positioned so far, as confirmed by
reducing gaps for these indicators.

However, this 2nd rank comprises mixed performances among the analysed indicators. For instance,
Romania’s wellbeing development lags behind some other CEE countries for life expectancy, tertiary
enrolment and human capital. As a result, absolute gaps have expanded. Moreover, in the case of GDP,
although its relative growth was lower only than that of Poland, the absolute gap between Romania and
other two countries (Czech Republic and Germany) widened in 2014, as compared with 1991.

28
Relative gap (%) for indicator I is the ratio (It Romania – It Germany) / It Germany, where It is the value of indicator I in year t.
27. http://www.economist.com/node/15663362.
28. Relative gap (%) for indicator I is the ratio (It Romania – It Germany) / It Germany, where It is
the value of indicator I in year t. 23
30 | Welfare Trends in Romania, 1990 – 2014

5. Final remarks

“ Even though Romania used to be below other CEE countries in


absolute figures, the positive developments we have observed for
some indicators indicate a convergence tendency with countries better
positioned so far, as confirmed by reducing gaps for these indicators.

Summarizing the above results, we can conclude We have seen that the wellbeing progress of
that 1990-2014 welfare development in Romania, Romania and other CEE countries is higher
determined using the indicators and methodology than Germany’s, for most of the indicators
already presented, appears to have been (except for life expectancy). This could suggest a
consistent and robust. If we look at the overall convergence trend between Eastern and Western
welfare development relative scores, Romania Europe, as far as Germany’s development is
ranks 2nd among the six countries under survey, representative for the dynamics in Western
after Poland. Accordingly, even though Romania European countries. However, this may not be
used to be below other CEE countries in absolute true for GDP and consumption (for which we
figures, the positive developments we have calculated relative changes), as exemplified above
observed for some indicators show a convergence with the case of Romania.
tendency with countries better positioned so
far, as confirmed by reducing gaps for these The above clearly points at a few development
indicators. directions which should be followed by economic
and social policy makers in Romania. As such,
However, this 2nd rank comprises mixed important sectors such as healthcare and
performances among the analysed indicators. education require significant attention both in
For instance, Romania’s wellbeing development terms of financial investment and operational
lags behind some other CEE countries for life efficiency.
expectancy, tertiary enrolment and human
capital. As a result, absolute gaps have expanded.
Moreover, in the case of GDP, although its relative
growth was lower only than that of Poland, the
absolute gap between Romania and other two
countries (Czech Republic and Germany) widened
in 2014, as compared with 1991.
Welfare Trends in Romania, 1990 – 2014 | 31

Limitations of our research polarisation. Another relevant aspect of welfare


is the wealth of the population - financial and
We need to stress at this point that the statistical non-financial assets - and also the balance
indicators available for the entire period proposed sheet situation, i.e., the relationship between
in this research are limited, especially for CEE assets, liabilities and disposable income. All
countries, and this shortcoming may have these measures have only recently begun to be
not allowed us to choose the most significant quantified and included in statistical databases
variables for each aspect of welfare. As we and hence they were not included in our long-
consider our present endeavour a starting point term analysis. The compromise between timing
for a possible future series of research papers, and depth of research cannot be avoided, both
we consider that income, consumption and for welfare and many other economic and social
wealth are the main issues that should be further issues. As a result, future short-term in-depth
analysed in relation to the objective wellbeing investigations to deepen our understanding of
topic. Their study at household level and not at various aspects of welfare may contribute to
national level is preferable when studying welfare. completing the big picture.
In terms of household income, the analysis of
disposable income, which excludes taxes paid, is Given the results obtained in this paper, it could
the most appropriate. In the case of consumption, prove useful to research the subjective coordinate
an important methodological step would be its of wellbeing in Romania. This would involve a
segmentation into different categories of goods totally different approach and methodology, as
and services. already presented in the introductory section.
Beside the implicit added value of such an
On the other hand, further research on household analysis, it would also be interesting to benchmark
income (and other aspects of wellbeing) the relevant results against those obtained by
inequality, using various methodologies, is deploying statistical indicators, i.e. the objective
strongly recommended. Assessing distribution analysis. We leave this chapter open for the
of individuals / households by income level is future.
also advisable, to detect possible tendencies of
32 | Welfare Trends in Romania, 1990 – 2014

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pdf;
Welfare Trends in Romania, 1990 – 2014 | 33

Appendix 1
Indicators, measurement units, periods
under survey, and data sources
Indicator Unit Period Data sources

Health

• Life expectancy at birth, total years 1990 - 2014 • World Bank Indicators (updated 17.11.16)
• Infant survival rate, per 1,000 live ‰ 1990 - 2014 • Based on World Bank Indicators: Mortality
births rate, infant per 1,000 live births (updated
17.11.16)

Income

• Gross domestic product, per capita, 2000 USD PPP 1950 - 2015 • Axenciuc (2012), and authors’ calculations
in Romania based on Axenciuc (2012) and Eurostat: Gross
domestic product chained linked volumes,
Index 2010=100, per capita (updated 03.11.16)
• Gross domestic product, per capita 2011 USD PPP 1990 – 2014 • World Bank Indicators (updated 17.11.16)
• Gross national income, % of GDP % 1990– 2014 • Based on World Bank Indicators: GDP, current
LCU; GNI, current LCU (updated 17.11.16)
• Gini index, World Bank estimate % 1989 - 2012 • World Bank Indicators (updated 17.11.16)

Consumption

• Household final consumption ex- 2011 USD PPP 1990 - 2014 • Based on World Bank Indicators:
penditure per capita Household final consumption expenditure
per capita, constant 2010 US$; Official
exchange rate, LCU per US$, period
average; Consumer price index,
2010=100; PPP conversion factor, private
consumption, LCU per international $
(updated 17.11.16)

Education

• Gross enrolment ratio, tertiary, both % 1990 - 2014 • World Bank Indicators (updated 17.11.16)
sexes
• Index of human capital per person, index 1990 - 2014 • Feenstra, R. C., Inklaar, R., M. P. Timmer
based on years of schooling and (2015), ”The Next Generation of the Penn
returns to education World Table”, American Economic Review
2015, 105(10): 3150-3182, available for
download at www.ggdc.net/pwt.https://
www.rug.nl/research/ggdc/data/pwt/v81/
the_next_generation_of_the_penn_world_
table.pdf.(extracted 20.11.16)

Source: own compilation.


34 | Welfare Trends in Romania, 1990 – 2014

Appendix 2
Welfare development (1990-2014)
relative scores
Indicator 1. Health 2. Income & Consumption 3. Education Total
average
\

Country

Life Infant Health GDP Household Income & Gross Index of Education
expectancy survival average per consumption Consumption enrolment human average
at birth rate capita per capita * average ratio, capital
* tertiary **
Romania 0.498 1.000 0.749 0.508 1.000 0.754 0.687 0.531 0.609 0.704
Bulgaria 0.000 0.287 0.143 0.474 0.367 0.420 0.366 0.414 0.390 0.318
Czech Rep. 1.000 0.351 0.675 0.249 0.335 0.292 0.996 0.845 0.920 0.629
Hungary 0.893 0.456 0.675 0.211 0.100 0.156 0.685 0.830 0.758 0.529
Poland 0.831 0.398 0.614 1.000 0.701 0.850 1.000 1.000 1.000 0.822
Germany 0.608 0.000 0.304 0.000 0.000 0.000 0.000 0.000 0.000 0.101

* 1991-2014; **1991 – 2013. Source: own calculations, based on World Bank Indicators and Feenstra, R. C., Inklaar, R., M.
P. Timmer (2015), ”The Next Generation of the Penn World Table”, American Economic Review 2015, 105(10): 3150-3182,
available for download at www.ggdc.net/pwt.https://www.rug.nl/research/ggdc/data/pwt/v81/the_next_generation_of_the_
penn_world_table.pdf.
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