Romania SWOT Analysis - Strengths, Weaknesses, Opportunities, Threats of Romania

Strength 

Romania is an upper-middle-income country located in Southeast Europe, on the Black Sea. Romania has the advantage of being integrated with the European economies, in the sector of transportation equipment, parts and accessories, and subassemblies. The leu becomes stable against the euro because of specialization in the area of average cost and good quality. The large domestic market is an advantage, as well as the large agriculture potential, renewable electricity production, and highly competitive and diversified industries. The situation of the capital market is stabilized through the implementation of European directives. 

Weakness 

Romania is faced with a natural demographic decline (Kirov, 2017). The numbers of births continue to outweigh the number of deaths, with a rise in the number of children dying under the age of one. Romania has experienced more than 20 years of natural population decline, forcing many of the young people to migrate to wealthy countries in the EU. Many youths leave the country at a time they may be having a family, and some never return to impacting the level of population and the labor force (Roberts, 2018) . The steady decline in population leads to economic downturn and loss of urban functions especially in the range of transport, social, and utility infrastructure. 

Romania has critical regional disparities regarding transport and healthcare, training, and education. The disparities were influenced by extent and location of foreign investment in developing regions, loss of competitive capacity of domestic and external enterprises because of increased physical obsolescence of technology, and other factors such as trade and specialized workforce. The disparities negatively influenced employment opportunities, industrial production, income, and household financial resources (Oţil & Părean, 2010) . 

Romania has a shadow economy characterized by a large informal economy, inefficient informal sector, inefficient agricultural sector, and weak policies on public revenues and tax evasion (Zaman & Goschin, 2015). The issue of corruption and tax evasion has degraded Romania from a moral perspective negatively impacting its economy. The issue of corruption is universal at all levels of government in Romania impacting the level of taxation and economic growth and results in high government debt and deficit. 

Opportunities 

The greatest opportunity for Romania is its membership in the EU since 2007 and has benefited financially from EU policy support in two programming periods. Romania as a member state offers a comparatively low-cost foothold and the sizable domestic market for accessing the EU market as a whole. The country is strategically located reducing distance for export sales to Ukraine, Turkey, and Moldova is shortened. The country’s concentration of high-end software services and development is largely driven by exports to serve regional and global markets (Kirov, 2017). 

The huge financial allocation from the European funds decreased the gap between Romania and other developed states of the EU, improving its advantages in attracting direct foreign investors. The country developed the productive sector, infrastructure, energy sector, modernized agriculture, and developed the tourism sector. Development of the business infrastructure created new jobs for Romanians and created the need to increase productivity through management improvement and use of capital in production. The country also developed its natural and cultural heritage and increased the interests of investors to in central and Eastern Europe because of the economic success of Poland, Hungary, and the Czech Republic. 

Threats 

The Romanian economic state is threatened by the global and European financial crisis and slow down, problems of public finances because of social security, and a shortage of qualified labor. The country is facing the growing global competition, nonreformed judicial system, and increased political instability. The rate of business improvement, on the other hand, is slow, and there lacks feedback from labor markets to the training and education (Kirov, 2017). 

Economic Situation 

The country has the largest economic growth in the EU, with a substantial fiscal stimulus boosting economic growth to 3.9% in 2015, 4.8% in 2016, and 5.8% in 2017. The drivers of the high economic growth are domestic consumptions by the public and government. The country has experienced weak fixed for a long time because the government has been sluggish in taking up new projects under the 2014-2020 programming period financed by the EU. The monetary policy is based on inflation targeting officially, but the central bank practically aims at currency stability. The country’s exchange rate is relatively stable at fluctuation rates of 3.7%, and volatility of the renewed exchange rate because of the ongoing vulnerability in the banking sector appearing to be continued unsustainable fiscal stimulus. 

The economic growth in Romania is contributed by major industries such as precision machinery, telecommunication, chemicals, motor vehicles, electric goods, and food processing among others (Adriana & Monica, 2012) . The processing and manufacture of goods are primarily in small and medium family-owned firms and no world-class multinational corporations. The main industries in the country are metal, cloth and shoe manufacturing, heavy machinery, and oil refining among others. Italy is the largest trading partner, with chief exports including jewelry, printing machinery, cut diamonds, and telecommunication equipment. 

Cultural and Social Situation 

Romania has a cultural public policy prioritizing on supporting the national heritage and contemporary creation. The policy is included in the country's strategic plan aiming to improve 9ndependent cultural sector and support cultural and creative industries, and decentralization of administration and decision making. The Romania heritage is related to the customs of the people and cultural development in the whole territory (Adriana & Monica, 2012) . Customs is a special aspect of Romanian lives, and old customs in some areas are revived to improve the area's cultural heritage. The potentials of cultural heritage are presented through sanctuaries and ancient fortification, religious monuments, and cultural-religious patrimony. 

Legal and Geopolitical Issues 

Romania has legal issues in fighting corruption. Despite the statistics indicating the impressive efficiency of anti-corruption fights, the public domain is concerned with the high rate of corruption that challenges the separation and balance of power. Corruption raises risks of doing business in Romania, and foreign investors complain of complicated procedures, the request of bribes to resolve administrative business-related tasks, and arbitrary application of rules. 

The geopolitical issues facing the country are political tensions after the social democrat prime minister resigned after he was implicated in corruption dealing. The social democrats won, but the cabinet was replaced just after six months in office following street protests in conflict related to the fight against corruption in early 2017. Mihai Tudose was made the new cabinet’s prime minister, but Liviu Dragnea still holds the real powers; the party leader barred from participating in the government by a two years-suspension sentence for rigging ballots. The new government has a limited political mandate, and its image as a transition government will have limited capacity to enact substantial reforms. 

Government Atmosphere 

The Romanian government structure is governed by a constitution developed in 1991, with three branches such as the executive, judicial, and legislative. The executive is headed by the president who is in charge of safeguarding the constitution (Insights, 2018). Other members of the government are chosen by the prime minister. The president serves for a term of 5 years after being elected by absolute majority vote. The president also appoints the prime minister with parliamentary approval. 

The judicial arm of government heads the high court of justice. Justices are appointed by the president on a superior council of magistrate’s recommendation under an election cycle of 9 years. The main power of the legislative arm is senate as the higher house of the parliament. The Senate members are elected on a four-year election cycle through a modified mixed member proportional system (Insights, 2018) . 

Romania has a public/private partnership. The partnership develops the emerging markets and finalizes large-scale infrastructure projects. The public/private partnerships are a concession or institutional with the aim to attract money and complete projects of national interest. 

From a biblical perspective, the issue of corruption in Romania is not a modern challenge. The bible has multiple references to corruption in Israel and its neighbors and requires immediate action as Christians to deal with the issues of injustices and inequality. The Romanians protesting for actions to be taken against the corrupt government officials is a good indicator of always choosing what is good and right. 

Action Plan 

The government should continue with its efforts to retain the populations demographic by encouraging people to have more children. The child-rearing allowance was increased to entitle parents to 85% allowance of the average monthly pay before giving birth, and a two years maternity leave on full allowance (Roberts, 2018) . Strategies for population decline can be linked to finding solutions to induce economic development, encourage the country to become more attractive residentially and also from the point of leisure activities and job opportunities. 

Long-term regional strategies should be put in place by authorities to address the available differences and regional disparities (Oţil & Părean, 2010) . The regional disparities can be mitigated by establishing a policy of training and development of a national and regional economic system agrarian-industrial structure. The policy should be coupled with other policies boosting birth rates, reducing labor migration, and change the training structure as well as retaining people and developing managerial skills. 

The shadow economy in Romania is a major problem to the society because of corruption and tax evasion, causing severe economic and financial crisis. The government should treat the issue of corruption and tax evasion with priority, and implement careful monitoring strategies to support legislative and administrative reforms towards the reduction of the phenomena. The public financial balance of Romania should be achieved through limiting tax evasion and eradicating fiscal corruption. 

References 

Adriana, G., & Monica, D. (2012). Romanian capital market–pest and SWOT analyses. Annals of The University of Oradea, Economic Science Series , 17 (2). 

Braşoveanu, I. V. (2010). Underground Economy and Corruption: the Major Problems of the Romanian Economy. Theoretical & Applied Economics , 17 (11). 

Insights, G. (2018). Romania: Government. Retrieved from https://globaledge.msu.edu/countries/romania/government 

Kirov, V. (2017). Industry in Romania: state of the play. SWOT analysis. Journal of Business Strategy , 23-46. 

Oţil, M., & Părean, M. (2010). Macro-regional disparities in Romania. Annals of the University of Petroşani, Economics , 10 (2), 255-266. 

Roberts, M. (2018). MercatorNet: Romania: 25 years of natural population decline. Retrieved from https://www.mercatornet.com/demography/view/romania-twenty-five-years-of-natural-population-decline/18421 

Zaman, G., & Goschin, Z. (2015). Shadow economy and economic growth in Romania. Cons and pros. Procedia Economics and Finance , 22 , 80-87.