Descompunerea cresterii economice in Romania. Sustenabilitatea procesului de convergenta economica

The economic growth of the Romania is explain by improvements in total factor productivity. Between 1991 and 2004 the contribution from labor was negative as a result of labor shedding. Due to periods of contracting investment followed by weak capital accumulation, on average there was no contribution from capital. Growth was entirely due to more efficient use of labor and capital, and likely the result of the limited privatization and restructuring that has been achieved. In the long-run, efficiency can only increase from the adoption of new technologies, including managerial techniques and advanced capital goods. Hence the conclusion is once more that the incentive structure of the economy needs to be changed to encourage greater domestic and foreign investment.