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Indermit Gill (World Bank): Romania obtained tangible short-term economic results
Romania managed to have good and tangible short-term economic results, but it needs a medium and long-term outlook, Chief Economist for Europe and Central Asia with the World Bank (WB) Indermit Gill told a specialist press conference on Monday.
On short term, Romania managed to have some tangible results and ranks among the few countries which had such macroeconomic results. We must be more careful with our growth resources and I am certain we shall have a more direct approach. We want economic growth both on medium and long term, that is why the Government is focusing on several areas: cleaning the sector of enterprises where resources are lost, the energy sector and the infrastructure construction sector (they both show not very good signals), investments (privatizations), the agricultural sector, the reform in the public administration system, Gill showed.
World Bank's Chief Economist for Europe and Central Asia Indermit Gill in Bucharest, at the National Bank of Romania headquarters, on Monday, presents the report 'Golden Growth: Restoring the Lustre of the European Economic Model.'The report approaches the prospect of long-term growth in Europe, with a focus on the developments of the past two decades and tries to identify what needs to be done to ensure prosperity in the next 20 years.
European growth model help developing countries in Europe catch up to their richer neighbours
The European growth model has been a powerful engine for economic convergence, helping developing countries in Europe catch up to their richer neighbours and become high-income economies, concludes a World Bank report called 'Golden Growth: Restoring the lustre of the European economic model,' released on Monday in Bucharest by Chief Economist of the Europe and Central Asia Region of the World Bank Indermit Gill, at a conference hosted by the National Bank of Romania (BNR).
'We could see that the European growth model has been a powerful engine for economic convergence, helping developing countries in Europe catch up to their richer neighbours and become high-income economies, but recent changes in and outside Europe necessitate change,' said Gill.
He added that Romania belonging to the convergence mechanism is an advantage for economic growth. 'Countries in the region, such as Romania, were lucky to be part of the European convergence machine, because it can help them with economic recovery, to a great extent,' said Gill.
The report proposes the adjustments needed to make trade and finance work even better, to encourage enterprise and innovation in parts of Europe which have begun to lag, and address shortcomings in the functioning of labour markets and governments. The changes proposed would restart the European convergence machine, make Europe's enterprises competitive, and help Europeans afford the highest standards of living in the world.
Accounting for the stresses Europe is experiencing and assessing the longer-term challenges that Europe will face, the report evaluates the six principal components of the model: trade, finance, enterprise, innovation, labour, and government.
Business environment of Romania, quite unstable
The quality of the business environment of Romania is quite unstable at present, although the country is lucky to be part of the convergence area, World Bank's (WB) Chief Economist for Europe and Central Asia Indermit Gill told a specialist press conference on Monday.
'Countries such as Romania are lucky to be part of the convergence area and must take advantage of this. The main concern is that some countries of Central Europe have become too dependent on the western countries. In fact, the situation is the exact opposite. The largest capital flows are in Europe. The EU's new member states have benefited from large capital flows, same as the candidate countries. Most of this capital has been correctly used in Romania, but the quality of the business environment is quite unstable at present and it must direct to the outlook of the states of the EU15,' Gill said.
According to the World Bank official, Europe spends very large amounts of money on the social protection system, above the average of other countries in the world. Indermit Gill mentioned, in this context, that Romania had a relatively good pension system, however some adjustments were in place.
'Some countries in Europe have prosperous economies (Sweden, Finland), because they simply adopted the American model. If we were to assess the situation in detail, we would find that these countries' GDP does not cover the value of the GDP of the state of Texas. Europe spends the most, namely 60 percent, on social insurance. Europe does not spend more than the rest of the world on education, for example, but it spends more on social protection. The question is whether these expenditures should be diminished here or other countries of the world should increase these amounts. In Romania, the pension system stands relatively well, but it must be kept under control. Romania must make some adjustments in health and social protection,' the World Bank's Chief Economist underscored.
Indermit Gill on Monday, in Bucharest, at the National Bank of Romania (BNR), presents the report 'Golden Growth: Restoring the Lustre of the European Economic Model.'