60 COMPARATIVE ANALYSIS OF THE RECENT EVOLUTIONS OF ROMANIAN AND EUROPEAN UNION’S COMPETITIVENESS Felea Adrian Ioan University of Oradea Faculty of… [616991]

60 COMPARATIVE ANALYSIS OF THE RECENT EVOLUTIONS OF
ROMANIAN AND EUROPEAN UNION’S COMPETITIVENESS
Felea Adrian Ioan
University of Oradea Faculty of Economic Sciences

The main subject of this paper refers to an analysi s of the recent trends and evolution of
Romanian competitiveness compared to the European U nion competitiveness and it is structured
in four main parts. The first section of the paper regards an introduction of the competitiveness
evolution process, recalling the three actual evalu ation models of the competitiveness level. In
the second part of the paper there can be found the competitiveness indexes practiced and
published by the World Economic Forum, indicators t hat are structured on three main levels as
following: the Global Competitiveness Index and its aggregate indicators that are developed on
three categories of factors that are essential for the competitiveness process (Basic requirements,
Efficienty Enhancers, Innovation and sophistication factors) and the indexes associated to the
twelve pillars of competitiveness: Institutions, In frastructure, Macroeconomic stability, Health
and primary education, Higer education and training , Goods market efficiency, Labor market
efficiency, Financial market sophistication Technol ogical readiness, Market size, Business
sophistication, Innovation. Based on the values obt ained after consulting the World Economic
Forum Reports and regarding the competitiveness fro m a global perspective, the third part of the
paper presents a comparative analyisis of the evolu tion of the Romanian competitiveness process
and the one of the EU25. In the last part of the pa per there can be found the conclusions of this
analysis, with respect to the values found

Key word: competitiveness, indicators, analysis, di fferences, evolution

The article’s JEL code: O10, O11, O52, O57

Introduction
At the beginning of the XXI century, the world econ omy is governed by two strong forces:
technology and globalization, both of them having a n important impact on the companies,
economies and countries. Nowadays, when the globali zation process is happening significantly,
the main objective of any country and nation remain s the competitiveness.
After a 235 years long evolution, from Adam Smith [ 1] to present, the concept of
competitiveness is considered by the economists, th e governing law of the capitalist economies.
Economic literature [2,3,4] presents the important personalities, starting with the year 1776, that
have contributed to the development of competitiven ess concept.
In 1990, Michael Porter published his work entitled ,,The Competitive Advantage of
Nations’’[5], paper in which he mainly resumes all competitiveness related ideas developed ever
since. Michael Porter presents them in a universal model, entitled “competitiveness diamante”
basically devoted to the companies competitiveness analysis, that is based on the following
factors:
– Production factors (4)
– Local / National demand (2)
– External environment of the company (2)
– Related and complementary industries (2)
Nowadays, the competitiveness concept has different approaches, both at company level and at
national level, and the recent written economic lit erature shows that concept is also raising a
regional dimension.
The practical importance of competitiveness is desi gned by a large number of international
institutions that manage the research in this field .

61 – International Institute for Management Development, World Competitiveness Yearbook
– World Economic Forum, Global Competitiveness Repor t
– World Bank, Doing Business, KAM
– Organization for Economic Co-operation and Developm ent, New Economy Report
– European Commission, European Competitiveness Repor t
IMD World Competitiveness Centre director, Prof. St ephane Grelli, is the author of certain
competitiveness related theories [6]. In this conte xt, one nation’s competitiveness factors are
distributed by Prof Stephane Garelli in the so call ed “competitiveness cube”, in which every two
of the eight facets are connected to the fundamenta l or essential drivers:
– Economic performance: Attractiveness vs. Aggressive ness
– Governmental efficiency: Proximity vs. Globalizatio n;
– Business efficiency: Stock vs. Processes
– Infrastructure: Cohesion vs Assumed Risk
At the beginning of the XXI century, the world econ omy is governed by two strong forces:
technology and globalization, both of them having a n important impact on the companies,
economies and countries. Nowadays, when the globali zation process is happening significantly,
the main objective of any country and nation remain s the competitiveness.
World Economic Forum (WEF) competitiveness index
World Economic Forum is an independent international organization commit ted to
improving the state of the world by engaging busine ss, political, academic and other
leaders of society to shape global, regional and in dustry agendas. Over the past 30 years
this institutions has published annual reports rega rding the world economy status, has
also analyzed policies and economic indicators.
Starting with the year 2005, the World Economic For um underlies its competitiveness analysis,
defined as being an ensemble of political factors p lus the Global Competitiveness Index (GCI).
This aggregate index has been developed by Prof. Xa vier Sala – i – Martin and it is meant to
quantify the national performances, by including ce rtain complex aspects, appropriate to the
multidimensional phenomenon that this index is mode ling [7]: diversity and the numerous
competitiveness factors, their evolution through ti me, positive impact of some key factors (for
example Education and continuous formation) and the negative impact of some other factors.
The Global Competitiveness Index evaluation starts from quantifying the competitiveness main
factors, that are grouped in 12 pillars [7], presen ted in Figure 1, where there are also resumed the
key directions for competitiveness growth and pilla rs split in certain specific directions:

Fig. 1: The 12 pillars of competitiveness

Source: Global Competitiveness Repot (GCR) 2010 – 2 011

Every year the World Economic Forum publishes the G lobal Competitiveness Report, that
presents the evaluation methodology of the GCI and the obtained values, for the countries that

62 provided the data needed for the index assessment. The Global Competitiveness Repot (GCR)
represents an essential document at international l evel, that is usually consulted by the economic
and political actors, with the purpose of identifyi ng the best solutions for improving the
competitiveness.
Since 2005 the Global Competitiveness Report evolut ion refers to its content and inward and
outward data accuracy [7,11]. The Reports issued st arting with the year 2006 – 2007, are
extremely important for Romania, as they are based on the information provided by the Applied
Economy Group and are also assumed by certain inter national institutions, in the context of
preparing our country’s EU accession.
The main purpose of this paper is to present the Ro manian competitiveness level, based on the
Global Competitiveness Index values registered in t he period 2006 / 2007 until 2010 / 2011.
The following table presents the development stages of different economies, depending on GDP
per capita values.

Table 1: Income values for development stages

Source: Global Competitiveness Report 2010 – 2011

Comparative analysis of Romanian competitiveness ev olution
The Global Competitiveness Report provides the valu es for the following indexes:
– Global Competitiveness Index; (GCI)
– The Aggregate Indexes organized in three factor cat egories that influence the
competitiveness (Figure 1 IAC)
– Indexes associated to the 12 pillars of competitive ness (IPC)
The research methodology used in this paper implies following the next steps:

Step 1 – The evaluation of the following measures taken f or every type of indexes

The medium value for EU25:
I= ∑/g2893/g2920/g2919/g3289
/g3258/g3128/g3117
/g2924 , (1)

where I={GCI,IAC,IPC}; i=1,25 for UE 25 j=1, for GC I ; j= 1,3 for IAC; j=1,12 for IPC

Romanian competitiveness indexes values deviation, compared to the EU25 average

Ij=Ij-Irj (2),

where Irj is the type i and j category Index for Romania

Step 2 – The graphic representation of the time evolution in the period of deviation analysis:

Ij=f(t)
Step 3 – Identifying the Romanian competitiveness strengt hs and weaknesses, based on the
previous characteristics; outlining the possible so lutions for increasing the competitiveness.
Besides the evaluations and graphic representations , the next figure, Figure 2 presents the

63 evolution of our country’s position, considering th e value registered by the Global
Competitiveness Index compared with the countries l isted in the Global Competitiveness Report

Figure 2: The evolution of our country’s position, considering the value registered by the
Global Competitiveness Index

Source: Author’s calculations

It is very important to mention that under the deve lopment stage (in Table 1), during the analyzed
period of time, Romania is listed in “Group 2”, exc ept 2009 / 2010 when our country is listed in
transition from stage 2 to stage 3 countries group

In the following table, Table 2 there are presented the average values of competitiveness index at
the EU 25 level and at our country’s level, during the period of time analyzed.

Table 2: Average values of EU (Ij) and Romanian (Ir j) competitiveness indexes

Source: Author’s calculations

The following figures, Figures 3, 4 ,5 and 6 presen t the evolution of GCI, IAC and the 12 pillars
of competitiveness deviations.

68 74 68 64 67 125 131 134 133 139
020 40 60 80 100 120 140
2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 evoluția Ro în funcție de GCI
pozitia RO numar total tari

64 Figure 3: Deviations associated to GCI and IAC

Figure 3: Deviations associated to pillars 1, 2, 3 and 4

Source: Author’s calculations

Figure 4: Deviations associated to pillars 5, 6, 7, 8, 9 and 10

Source: Author’s calculations

Figure 5: Deviations associated to pillars 11 and 1 2

Source: Author’s calculations
00.5 11.5
GCI IAC 1 IAC 2 IAC 3 2006/2007 2007/2008 2008/2009
2009/2010 2010/2011
00.5 11.5 22.5 3
pilonul 1 pilonul 2 pilonul 3 pilonul 4 2006/2007 2007/2008 2008/2009
2009/2010 2010/2011
-0.5 00.5 11.5
pilonul
5pilonul
6pilonul
7pilonul
8pilonul
9pilonul
10 2006/2007
2007/2008
2008/2009
2009/2010
2010/2011
00.2 0.4 0.6 0.8 11.2 1.4
pilonul 11 2006/2007
2007/2008
2008/2009
2009/2010
2010/2011

65 Conclusions
The Global Competitiveness Report issued by the Wor ld Economic Forum is actually a reference
document at international level, due to its method of outlining each nation’s competitiveness
stage.
According to the Global Competitiveness Report for the period of time analyzed 2006 / 2007
until 2010 / 2011:
– Romania tends to occupy the 68 th position in the total of 132 (average) countries
analyzed;
– Romania is placed under the second group “stage 2 – Efficiency driven” with an average
GDP per capita of 3000 and 9000 USD
The evaluations made with reference to the evolutio n of deviation values of indexes for Romania
compared with the EU 25 are the following:
– The obvious tendency of recovering the gap between Romania and EU 25, under the
aspect of Global Competitiveness Index
– Recovering the gap between Romania and EU 25 is mad e with the aggregate index IAC1
and IAC 2
– The aggregate index IAC 3 follows a contradictory e volution in the period analyzed and
that leads to a decrease in the competitiveness gap recovery between Romania and EU25.
– Throughout the 12 pillars of competitiveness associ ated indexes we can note that IPC10
values are over the value of EU25, this being the m ost powerful gap recovery instrument
for the period analyzed. For IPC1, IPC3, IPC5, IPC6 , IPC7 and IPC8 the main tendency
is to reduce the gap. The indexes IPC11 and IPC12 n eed to be carefully monitored
because they contribute to the increase of the gap between EU25 and Romanian
competitiveness, and the indexes IPC2, IPC4 and IPC 9 tend to have the same effect,
during the period of time analyzed.

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