Romania and Bulgaria A Brief Overview Econ 270 – European Economic Integration Dr. Diego Méndez-Carbajo 5/17/05 Presented By: Peter Brown

Location Official Names: Official Names: Romania (România)Romania (România) Capital: Bucharest Capital: Bucharest Republic of BulgariaRepublic of Bulgaria Capital: Sofia Capital: Sofia

Geographical Statistics Area:RomaniaBulgaria Total: 237,500 Km 2 110,910 Km 2 Land: 230,340 Km 2 110,550 Km 2 Water: 7,160 Km Km 2

EMU Membership: Current Challenges and Future Agendas Romania Romania Good background with the IMF and the World Bank build credentialsGood background with the IMF and the World Bank build credentials Despite recent macroeconomic improvements, corruption threatens to stifle economic activityDespite recent macroeconomic improvements, corruption threatens to stifle economic activity Lack of transparency in public spending and lack of competitiveness in the agricultural sector remain problemsLack of transparency in public spending and lack of competitiveness in the agricultural sector remain problems Bulgaria Bulgaria Economy contracted dramatically after 1989 with the loss of the Soviet marketEconomy contracted dramatically after 1989 with the loss of the Soviet market Living standards fell about 40% Living standards fell about 40% Series of unstable banking systemsSeries of unstable banking systems Since 1997, has been on the path to recovery with GDP growing at a 4-5% rate, increasing FDI, and macroeconomic stability; however, still considered very poor economySince 1997, has been on the path to recovery with GDP growing at a 4-5% rate, increasing FDI, and macroeconomic stability; however, still considered very poor economy

DemographicsRomaniaBulgaria EU Average Total Population: (2005 est.) 22,329,9777,450,349 Population Density: (2005 est.) ppl/Km ppl/Km ppl/Km 2 Population Grown Rate: (2005 est.) -0.12%-0.89%0.16% Net Migration Rate: (2005 est.) migrants Per 1000 ppl -4.3 migrants Per 1000 ppl 1.5/1000 Life Expectancy (yrs): (2005 est.) Total Pop. : Male: Male: Female: Total Pop. : Male: Female: Total Pop. : 78.2 Male: 75.1 Female: 81.6 Ethnic Composition: (2002) Romanian 89.5% Hungarian 6.6% Roma 2.5% Ukrainian 0.3% German 0.3% Russian 0.2% Turkish 0.2% Other 0.4% Bulgarian 83.9% Turk 9.4% Roma 4.7% Other 2%

Economic Statistics (GDP) RomaniaBulgaria EU Average Total GDP (PPP): (2004 est.) $171.5 Billion $61.63 Billion $11.65 Trillion GDP per Capita: (2004 est.) $7,700$8,200$26,900 GDP Growth Rate: (2004 est.) 8.14%5.3%2.4% GDP Composition by Sector: (2005) Agriculture: 13.1% Industry: 33.7% Services: 53.2% Agriculture: 11.5% Industry: 30.1% Services: 58.4% Agriculture: 2.2% Industry: 28.3% Services: 69.4% Services: 69.4%

Pre-Accession Aid Romania and Bulgaria receive no subsidies from the EU Romania and Bulgaria receive no subsidies from the EU Instead, they receive “pre-accession aid” Instead, they receive “pre-accession aid” Pre-accession aid is delivered by three main instruments: Pre-accession aid is delivered by three main instruments: Phare Program, providing funding for institution- building and investment in support of EU accession preparationsPhare Program, providing funding for institution- building and investment in support of EU accession preparations ISPA, the pre-accession instrument providing investments in transport and environmental infrastructureISPA, the pre-accession instrument providing investments in transport and environmental infrastructure SAPARD, the financial instrument supporting agriculture and rural developmentSAPARD, the financial instrument supporting agriculture and rural development

Common Agricultural and Fisheries Policies Romania Romania Agricultural Products:Agricultural Products: wheat, corn, barley, sugar beets, sunflower seed, potatoes, grapes; eggs, sheep wheat, corn, barley, sugar beets, sunflower seed, potatoes, grapes; eggs, sheep SAPARD for 2003 is € million. SAPARD for 2003 is € million. Bulgaria Bulgaria Agricultural Products:Agricultural Products: vegetables, fruits, tobacco, livestock, wine, wheat, barley, sunflowers, sugar beets vegetables, fruits, tobacco, livestock, wine, wheat, barley, sunflowers, sugar beets SAPARD allocation for 2004 is €68.0 million. SAPARD allocation for 2004 is €68.0 million.

Fiscal Policy Romania Romania Not currently a member of the EU (expected to join in 2007)Not currently a member of the EU (expected to join in 2007) No contributions No contributions Receives substantial EU support (around €700 million/year)Receives substantial EU support (around €700 million/year) Represents around 1.4% of GDPRepresents around 1.4% of GDP Bulgaria Bulgaria Not currently a member of the EU (expected to join in 2007)Not currently a member of the EU (expected to join in 2007) No contributions No contributions Currently receives around € 400 million per year, reaching 2% of its GDPCurrently receives around € 400 million per year, reaching 2% of its GDP EU will raise financial assistance by 30% in periodEU will raise financial assistance by 30% in period

Inflation and Unemployment Rates RomaniaBulgaria EU Avg. InflationRate:9.6%6.1%2.1% UnemploymentRate:6.3%12.7%9.5%

Social Policies Romania Romania Unemployment is down due to increasing trade demands within EuropeUnemployment is down due to increasing trade demands within Europe Social Security devastated by communist ruleSocial Security devastated by communist rule Immigration policy is open due to need for higher labor inflowsImmigration policy is open due to need for higher labor inflows Bulgaria Bulgaria Unemployment is decreasing rapidly, but still unacceptably highUnemployment is decreasing rapidly, but still unacceptably high Social Security affected by unstable economySocial Security affected by unstable economy Immigration policy is open due to need for higher labor inflowsImmigration policy is open due to need for higher labor inflows

Government Statistics Budget Balance: (2004 est.) RomaniaBulgaria Revenues: $22.1 Billion $9.67 Billion Expenditures: $23.2 Billion $9.619 Billion Balance: -$1.1 Billion $51 Million Outstanding Public Debt (as % of GDP): (2004 est.) 23.6%41.9% Current Account Balance: -$3.63 Billion $682.9 Million

External Relations - Romania Social: Social: First Central and Eastern European country to have official EU relationsFirst Central and Eastern European country to have official EU relations Close historical, cultural, and economic ties leads to a mutually beneficial relationship with RussiaClose historical, cultural, and economic ties leads to a mutually beneficial relationship with Russia Dependent on Russian energy supplies Dependent on Russian energy supplies Economic: Economic: Most important destination countries of Romanian exports (2002)Most important destination countries of Romanian exports (2002) Italy: 36.6% Italy: 36.6% Germany: 22.4% Germany: 22.4% France: 11.5% France: 11.5% Romania imports from EU (2002)Romania imports from EU (2002) Italy: 31.6% Italy: 31.6% Germany: 28.5% Germany: 28.5% France: 10.4% France: 10.4%

External Relations – Bulgaria Social: Social: Current administration has made public intentions of strengthening ties with Eastern European countriesCurrent administration has made public intentions of strengthening ties with Eastern European countries Romanian-Hungarian relations are at an all time highRomanian-Hungarian relations are at an all time high Great peacekeeping efforts worldwide (especially aligned with the US)Great peacekeeping efforts worldwide (especially aligned with the US) Economic: Economic: Strong developing trade relations with all of EUStrong developing trade relations with all of EU