Twenty-eight years ago the combination of genuine popular
anger, regional historical evolution and unacknowledged support from western
and eastern intelligence agencies have delivered the most chaotic and violent
regime change in Eastern Europe. Over 1,000 people died in the events but Ceausescu,
Romania's Stalinist dictator was deposed of power and summary executed (on
Christmas Day) and the country entered a long, tortuous and sometimes painful
period of transition to a political democracy and a capitalist liberal economy.
All this years later, what many people know about Romania
went from "small place behind the Berlin Wall", Ceausescu, Nadia
Comaneci and Dracula to "small place in Europe", Ceausescu, Nadia
Comaneci, Dracula, Hagi, maybe Simaon Halep (WTA #1 currently), poverty,
corruption and not much else. This, a recent read and references to a World
Bank report prompted this little posting, a first for me on Facebook.
In spite of disastrous birth rates and devastating
emigration (second only to the civil-war torn Siria), Romania is by a margin the
seventh largest country in the EU by population, behind the big four (Germany,
France, UK and Italy), Spain and Poland. Think Ohio in the US on a relative
basis and New York in absolute terms 19 to 20m).
In 1992, GDP per head was $1,100. This year will be in
excess of $10,000, a more than respectable increase, up there in top 10 with
China, Vietnam, etc., but Romania is significantly more prosperous that any of
these (e.g. China is at $8,000 per capita). This 800% increase came in spite of
often incompetent and sometimes corrupt leadership, in spite of sometimes
challenging regional and international circumstances, in spite of often
shattering social evolution. By comparison, there was just few tens of percents
expansion in wealthy EU economies (Germany 59% and Italy 32%) and a global
weighted average of around 120%. For optimists believing that economic and
political transition and reform is an irreversible, ultimately successful
process, just look at neighbouring Ukraine (just 54% for this whole quarter of
a century, to just $2,200).
Sure, there are meaningful regional differences within
Romania. Bucharest and the wealthier regions have grown faster than China and
are now around six times wealthier that the poorest region, a regional
discrepancy akin to Spain's. The poorest regions have grown even below the
global average and have registered incredible losses of population - they all
went to pick strawberries in Italy and Spain, paint houses in the UK and write
software all over the place. Bucharest is now on a GDP per capita basis similar
with Western Europe in the '90ies, while the wealthier parts of the country are
at the '80ies level.
Hyper inflation in the '90ies, the recent economic crisis,
numerous examples of questionable economic management have all eaten away at
the even higher growth potential, but have not altered the fundamentally solid
economic foundation. Public debt, in spite of tripling in the last decade or
so, is still a fraction of what most other EU countries have.
EU and NATO membership certainly helped, although not always
as much as once hoped and certainly sometimes in the wrong direction. Healthcare
and education are still below par, infrastructure is often lacking or
problematic, yet Romania decided (or was asked to decide) to spend $3.9 billion
buying Patriot missiles. Although there are examples showing that rule of law
and human rights sometimes seem an afterthought (Romania has a disastrous
record at the European Court of Human Rights), the country is unmistakeably
European in foundation, but still displaying emerging markets growth and
development prospects and potential. Fairly well educated, cosmopolitan urban
population, high industrial and consumer potential sustained by productivity
and an interesting social and cultural mix make this potential still more
attractive.
So, tick the "successful transition" box next to
Romania's name and think about spicing up your
diversified investment portfolio. Or even better, go and visit.
