The Impact of EU Accession in Romania: An Analysis of Regional Development Policy Effects by a Multiregional I-O Model

THE IMPACT OF EU ACCESSION IN ROMANIA. AN ANALYSIS OF
REGIONAL DEVELOPMENT POLICY EFFECTS BY A
MULTIREGIONAL I-O MODEL

Abstract

The objective of this article is to assess labour income and employment effects in Romania
coming from rural development and structural policies defined in the proposed 2007-09 EU accession
financial package. The methodology used is based on a multiregional I-O model derived by a three-
stage estimation procedure. Main results show that EU accession will lead to large positive effects in
Romania, which vary according to the region considered. In this connection, the South and the North-
East regions are those on which benefits tend to concentrate. Finally, policy would seem to reduce
regional and sectoral income disparities, leading to more balanced development. On the contrary, in
terms of employment, policy would increase divergences, albeit, from an analysis of single region
economy, a general tendency to a reduction of sector disparities is noticed.

Keywords: EU accession, rural development, structural actions, policy impact, multiregional I-O
model; C82, R15, R58

1 Introduction

Romania submitted application for EU membership on June 22, 1995. In October 1999, the
Commission recommended starting accession negotiations with Romania, provided that Romania
engaged to improve the situation of children in institutional care and drafted a medium-term economic
strategy. Following the Helsinki European Council's decision in December 1999, accession
negotiations started with Romania on February 15, 2000.

Romania’s objective is to gain EU membership in 2007. This aim is likely to be reached since, in
June 2004, of the 31 chapters under negotiation, 24 have been provisionally closed (European
Commission, 2004a, 2004b).

In order to prepare the ground for the completion of the negotiations, in 2004, the EU
Commission drew up a proposal defining a financial package for the accession negotiations with
Bulgaria and Romania (European Commission, 2004c). This proposal is based largely on the existing
acquis and on the principles and methodology underlying the financial package developed for the
negotiations with the ten countries entered EU in 2004. In view of possible future modifications of the
financial package due to policy reforms or other fundamental changes, the time period covered has
been expressly limited to three years and goes from 2007 to 2009.

The proposal establishes 5 expenditure chapters: (a) agriculture; (b) structural actions; (c) internal
policies (nuclear safety and transition facility for institution building); (d) budgetary compensation; (e)
administration. With reference to chapter (a), appropriations relate to market measures, direct
payments and rural development. Chapter (b) involves structural and cohesion funds.

Although the EU commission gives an estimate of funds allocated to Romania, no evaluation of
possible impact coming from application of the financial package is carried out. The objective of this
paper is just to attempt to estimate employment and labour income impact in Romania deriving from
application of development policies included in the proposed financial package for the period 2007-
09¹. Development policies considered are rural development policies and structural actions (cohesion

¹ An attempt to estimate impact coming from accession of Romania to EU for the period 2007-09 is contained in
Vincze (2004). This work, which is a synthesis of results produced within the REAPBALK European project, is aimed at

<<   1   2   3   4   5   >>

More intriguing information