Structural modification în Romanian economy

Abstract

Changes in the economy have been significant and dynamic with the overall result of fostering economic growth but also with imbalances that have accumulated over time at the enterprise level and the entire economy. Several issues have emerged, namely the need to recapitalize businesses. It has been noticed that their funding pattern has changed significantly, raising questions of sustainability. Debt financing has replaced equity financing by generating debt leverage, being the largest in the EU. Then, it is difficult to get in and out of the market easier. It is necessary to stimulate the economy by setting up new companies, increasing their number but also rejuvenating them as most Romanian companies have passed since their first youth. New businesses, but also the old ones, must focus on innovative and knowledge-based development. Another aspect is to improve the work of tax authorities. The high level of taxation is one of the most pressing issues for businesses. The degree of polarization and heterogeneity is required to decrease. The degree of heterogeneity has increased, so there is only one pole of economic power in the country and there is still no evidence of the emergence of a second. In addition, weaker economic firms have failed to improve their economic performance over the past two decades. There are also policies that favor certain categories of companies and need to be reviewed. There is a need for a neutral policy regarding small and medium enterprises towards corporations and for companies with majority foreign capital compared to Romanian capital companies.