Economic analysis of Romania in the context of EU transformations until 2035

The year 2024 marks a crucial point for the European Union (EU) and, implicitly, for Romania, as the European elections and the accountability of politicians will determine the policies and institutions shaping the continent until 2035 and even 2050.

This is a period marked by multiple challenges, from climate change and demographic decline to migration, the global race for technological dominance, geopolitical tensions leading to worldwide conflicts, and the increasing awareness of hostility from other superpowers towards democratic values. To navigate these uncertainties and succeed, the entire European project must undergo a transformation.

In this context, Romania must adapt and contribute to transforming the European project to navigate these uncertainties. The annual EFOR (Expert Forum) report, titled “Risks for Romania: Forecast Report,” highlights the changes and challenges Romania will face in the next decade and beyond, emphasizing the need for immediate actions.

Romania’s progress and EU integration

Over the past 30 years, Romania, along with other former communist states in Eastern Europe, has experienced a remarkable transition. Integration into the EU’s common market, leveraging existing assets in a non-socialist system, and the benefits of EU funds have accelerated the economic development of these states. The 11 countries that are now new members of the Union have eliminated much of the development gap with the West; the Czech Republic and Slovenia now surpass Greece, Portugal, and Spain in terms of GDP per capita.

However, citizens do not always perceive these advances as sufficient. Although Romania has made significant convergence compared to Western countries, the central question is whether this trend can be sustained in the context of new global challenges. Nearshoring and transformative changes in key industrial sectors, such as energy and the automotive industry, necessitate continuous adaptation of the Romanian economy.

Future challenges and growth sustainability

Romania faces two major problems in the context of economic growth sustainability. The first problem is the deprofessionalization of the public sector, which affects the capacity for efficient governance and the implementation of necessary policies to adapt to new economic conditions. Deprofessionalization has reduced administrative competencies and eroded public trust in governmental institutions, potentially jeopardizing the implementation of essential reforms.

The second problem is aligning Romania’s growth model with EU trends, which are moving towards “green” production, sustainability, and well-being, in contrast to growth based on affordable labor. The current growth model needs to be revised to integrate sustainable development goals and respond to the demands of a rapidly changing global economy.

Migration and policy

In recent years, Romania has become increasingly attractive to migrants from outside the EU, including from countries other than Ukraine. The number of foreign citizens legally residing in Romania has significantly increased, from about 57,000 in 2011 to 114,000 in 2022. This increase is also illustrated by the data on residence and work permits, which show an upward trend.

Internal migration from outside the EU mainly consists of low-skilled labor, and this trend can have major implications for Romania’s economy and demography. The growing demand for medical and elderly care services could attract more workers from non-EU countries, emphasizing the need for effective integration and migration management policies.

Demographic challenges and education

Romania faces a pronounced demographic challenge, as the boom generations of the 1960s will leave the workforce after 2030, and smaller population cohorts will be of working age. The population aged 15 to 54 will sharply decline, both due to low birth rates and the migration of working-age individuals. This dynamic will pressure the country’s social and healthcare systems.

At the same time, the demand for highly skilled labor will increase significantly, according to the European Centre for the Development of Vocational Training (CEDEFOP). The sectors with the highest projected growth, such as professional, scientific, and technical activities, as well as financial and insurance activities, will require consistent reforms in the education system to adequately prepare the future workforce.

Strategic technologies and industrial development

In the digital era, Romania has significant potential to become competitive on a continental and global scale, thanks to technological advances and geopolitical changes that impose nearshoring. New technologies increase the productivity of agricultural and manufacturing sectors and allow rapid expansion of services to meet global market demands.

With intelligent political decisions and appropriate incentives, Romania can attract more EU funds for strategic technologies and participate in pan-European initiatives such as the super electricity network. Developing specialized industries requires building a coherent cluster of activities, from resource acquisition to logistics chains and qualified labor in related fields; policy direction can facilitate or hinder this development.

Conclusions and recommendations

To successfully navigate the uncertainties and challenges of the future, Romania must adopt a series of strategic measures. First, the professionalization of the public sector is essential to improve administrative capacity and the quality of political elites, enabling the implementation of efficient and adaptive policies. Furthermore, alignment with EU trends is crucial to adjust the economic growth model and prioritize investments in eco-friendly technologies and innovative industries.

Effective migration management is increasingly important to attract skilled labor and integrate migrants in a way that supports the country’s economy and demography. Reforming the education system is necessary to adequately prepare the future workforce in fields with projected growth, such as IT and professional and technical activities.

Romania’s future in the EU

Romania has the opportunity to become a key player in transforming the European project, contributing to developing a sustainable and competitive global economy. With appropriate policies and a firm commitment to reforms, Romania can leverage its potential and successfully navigate the challenges of the future. In the long term, close collaboration with European partners, adaptation to technological and geopolitical changes, and investments in education and infrastructure are essential to ensure sustainable and prosperous development for Romania and the entire European Union.