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The rural development: one of the most important challenges

for Romania

ANDREEA DRGOI

Senior Researcher in the Institute for World EconomyRomanian Academy050711, Bucharest, Casa Academiei, 13 Septembrie Street no.13, 5 District

[email protected]

NECULAI CRISTINAAssociate Researcher in the Empirical studies and surveys Department of

Institute for Economic ForecastingRomanian Academy

050711, Bucharest, Casa Academiei, 13 Septembrie Street no.13, 5 District

[email protected]

Abstract: Our paper proposes to emphasize the situation of rural development in Romania, highlighting themain opportunities and challenges brought on by the countrys accession into European Union, by taking intoconsideration the results of ten foresight exercises that either focus on or are to some extent interested in ruralareas and regional development. The analysis will underline the key factors of Romanian rural developmentgap comparative with other European countries. In the final section of our paper we will focus on possible

policy options for increasing the sustainability of Romanias rural development (by identifying major SWOTs)in the context of new European vision for rural development that has two objectives: rural socio-economicdevelopment and countryside protection.

Key words: rural development, social sustainability, economic policy, development gap, foresight analysis

This paper is supported by the Sectorial Operational Programme Human Resources Development (SOP HRD), financedfrom the European Social Fund and by the Romanian Government under the contract number SOP HRD/89/1.5/S/62988

1 IntroductionThe concept of rural development encompasses

all activities aimed at improving quality of life inrural areas, to preserve natural landscape andensuring that the rural areas can fulfill the functionsincumbent on society, preserving both aneconomic and ecological balance. According withOECD vision on rural development[1], traditional

policies to subsidize farming have not been able toincrease the economic potential of rural areas, so ithave become necessary for the policies in the fieldto focus on promoting rural development throughco-ordination across sectors, across levels ofgovernment, and between public and private actors.Currently, in the enlarged EU, the new philosophy

of rural development is based on the conceptof local development, which requires botha strong rural component and an

agricultural based economy, preserving the naturalenvironment and assuring the social sustainability.

Sustainable development in rural area haddiffered significantly in the old and new

member states since the last enlargement(2007) until now. The current financial andeconomic crisis helped emphasize these differencesand questioned the consistency of regional ruraldevelopment policies in the European Union.After five years since the last EU enlargement,economic and social cohesion remains one ofthe key issues on the communitarian agenda.

Moreover, economic andfinancial crisis "shocked" the whole structureof European common policies and led to widespread debate on the correct "mix" of policies toaddress economic problems that have a pronouncedsocial component.

Models and Methods in Applied Sciences

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This is the central message of the EuropeanCommission Report on the measurementof economic performance and social progress(Stiglitz Report [2] ), published in 2009, after thefirst year of economic crisis. Under this approach, a

policy of sustainable economic development musttake into account a number of additional criteriasuch as quality of life, social welfare, efficiencyand energy security, environmental protection.

Presently, in the European Union, ruraldevelopment policy for 2007 - 2013 is focused onthree themes (known as "thematic axes"). Theseare: improving the competitiveness of theagricultural and forestry sector: improving theenvironment and the countryside and improving thequality of life in rural areas and encouragingdiversification of the rural economy.

A new feature for 2007 to 2013 is a greateremphasis on coherent strategy for ruraldevelopment across the EU as a whole.

For Romania, this approach should help toidentify the areas where the use of EU support forrural development adds the most value, make thelink with the main EU priorities (for example, thoseset out under the Lisbon and Gteborg agendas)and ensure consistency with other EU policies, in

particular those for economic cohesion and theenvironment.

1.1. The importance and role of Romania for the

rural development of the enlarged European

Union

The agricultural sector of Romania, whichjoined the EU in the most recent enlargementin 2007, is currently regulated by the CommonAgricultural Policy, which governs

both the development processes of agriculturalproduction ("first pillar") and theagricultural territories ("second pillar"). The impactof integration on the Romanian agricultural

sector has two consequences: national authorities inthe field have become less independent and

production structure by industry sectorbecame morestandardized (losing certain specialties andtraditional products that did not meet EU standards)

but agricultural policy has acquired a characterof long-term stability, allowing for more coherentaction for the development of this sector.

Figure 1: The place of rural areas in Romaniacomparative with the EU situation in 2007

61,60%

47,10%

58%

36,50%

56,20%

18,60% 16% 13,10%

0,00%10,00%

20,00%

30,00%

40,00%

50,00%

60,00%

70,00%

Shareof

ruralareain

theterritory

Shareof

rurala

population

Sharein

total

employment

Theshareof

agriculturein

totalGDP

Romania

EU-27

Source: Authors calculation based on nationalstatistics

As shown in the above data, one of themain characteristics of Romanias economy isthe importance of socio-economic development

of rural areas, which is higher than in the EU-27. After accession, Romania has launchedRural Development Program for the period 2007 -2013 which replaced the SAPARD Program, whichoperated in the pre-accession period. The mainobjective of those post-accession developmentstrategies was to implement policies toencourage rural economic and social changesnecessary for sustainable development in ruralareas.

Trough her Rural Development Strategies,Romania has directed funds to the followingobjectives: increased competitive ability of ruralhouseholds and forestry by meeting performanceand quality standards in agricultural production,improving land management and environmental

protection and improving quality of life and socialsustainability, expanding development in ruralhabitat trough diversification of economic activity.

1.2. Romanias rural development gap,

comparative with others European countries

According to an analysis recently published bythe European Commission [3], Romania is on thelast places in the implementation of her programsfor rural development from 2007 2013, using only20% of the allocated funds, compared with theadvanced countries in the field (Luxembourg53,8% and Ireland 54,9%). European analystsconsider that the "slow" progress of these programsis due to difficulties related to the approval andimplementation (the excess of bureaucracy),and poor mobilization of local actors.According with the data from a recent DG

Agriculture Report (EU- DG Agriculture and RuralDevelopment Rural Development in the


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funding schemes, could remain involved innoncompetitive businesses, take on a new profileand image, and act as a point of attraction andenhancement of human resources.

In this context, it should be noted that abetter use of funds for the implementation of ruraldevelopment strategies of Romania, with fulladvantage of opportunities offered by the newCommon Agricultural Policy can not omit, in ouropinion, the following priority objectives:

a. reducing the share of population employedin agriculture and providing alternativeemployment and income related to thecreation of economically viable farms, byreducing the fragmentation of the land;

b. development of infrastructure and ruralspecific services that can support economic

growth in detriment of subsistencefarming as currently practiced;c. providing alternative employment and

income for rural population (roadconstruction, communications).

2 Possible solutions for increasing

Romanias rural developmentRecent developments in European funding

through the Common Agricultural Policy (CAP)show predominant orientation to finance ruraldevelopment programs (until about a decade,

priority was given to financing agriculture throughdirect payments to farmers and subsidies).

Significance of this new funding context is that,through the Community budget, rural communitiescan now receive money, including in the formof state aid to support their development strategies,for which purpose specific funding from the ruralenvironment can be related to regional policyfunding programs.

In Romania, there are currently, state aid

schemes to support rural development, suchas: State aid scheme for improving the productquality in organic farming sector, state aid schemefor producers in disadvantaged areas state aidscheme for collecting organic waste in the livestocksector (funded by the national budget).

Also, can be granted state aid for environmentalprotection, compensation for handicaps in certainareas, young farmers in rural areas, farmers' earlyretirement or cessation of agricultural activities,support for producer groups, encourage the

production and marketing of quality agricultural

products, providing technical assistance inagriculture and farm restructuring in difficulty.

In this context it should be noted that unilateralaid measures which are designed simply to improvethe financial situation of farmers, but not in anyway to contribute to the sustainable development ofrural sector, particularly aid based solely on price,quantity, production unit or unit of the means of

production are regarded as operating aid that areincompatible with the common market regulation.

From the perspective of the opportunitiesoffered by State aid policy in Romania, ruraldevelopment must be thought in terms of the future[4], not as a solution to past problems.

For example, are preferred state aid toboost rural development on environmentalgrounds, such as state aid for the additionalcosts and income losses caused by use ofenvironmental technologies and not the state aid

granted to ordinary farmers for agricultureproducts.They may also be beneficial for sustainable

development state aid for training forest ownersand farmers [5], aid for consultancyservices provided by third parties, including thecreation of business plans, management plans inforestry and agriculture and feasibility studies and

participation in international competitions.

2.1. Opportunities brought on by the EU

integration for the development of rural areasEU rural development policy provides the

tools to solve problems that affect rural economicsustainability of the new Member States:

- Give priority to the rebuilding andmodernization of production tools inagriculture and forestry, for this objective areallocated 41.7% (in Bulgaria) and 45% (inRomania) from the loans granted by theEuropean Agricultural Fund for RuralDevelopment;

- Mobilize the available funding under the

second axis of the Rural DevelopmentRegulation, to conserve the naturalenvironment; this objective attracts 27.1%of loans granted by the EuropeanAgricultural Fund for RuralDevelopment in Bulgaria, and 25% inRomania;

- Give a great importance to the "open"economic infrastructure of rural areas anddiversification of activities in order to boosttheir development (in Bulgaria and Romania,

for this purpose are allocated 31.2%and 30% of loans from the EuropeanAgricultural Fund for Rural Development).


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2.2. Positive trends to ensure sustainable rural

development in Romania

Romania has a significant agricultural potential,but untapped at its best [6], both soil and climaticconditions are favorable to agriculture, after herland surface Romania ranks second in Central andEastern European countries and 7th in the EU- 27.Romania's rural areas have multiple opportunitiesrelated to ecotourism including authentic traditions,natural products and beautiful landscape.

According to the EU's strategic guidelines onrural development, various regions ofRomania have the opportunity to develop localstrategies based on measures such as: the trainingof human resources in rural areas, the encouraging

of conserving traditional products and technologies[7].Accelerating social and economic restructuring

of rural areas may also be driven by measuresto promote development of local knowledge

by promoting the recruitment of group leaders andtechnicians and dissemination of information [8],

both extremely important in the context of ruralpopulations low education, and, not least byrestructuring of agricultural jobs.

Other opportunities lie in complementarysectors, such as fisheries, marine-based

aquaculture, inland aquaculture (in rivers andlakes), renewable energy production and forestry.The development of skills in these sectors

would add value to rural businesses related to woodproducts, craft industries, country sports, and ruraltourism, for example. Finally, it is important toemphasize that the political process of enlargementin the European Union has brought social divides

back to the top of the European agenda, thuscreating new funding schemes and opportunities forregional development in rural areas.

2.3. Four major policy optionsFirst, government leadership is vital for rural

development. This leadership may be a response toeconomic or social pressures but aims at solvingspecific problems (e.g. upgrading infrastructures,allowing business clusters to expand into adjacentfarmland, or supporting residential construction)and promoting a sustainable rural economy whereenterprises will be commercially competitivewithout damaging the environment.

Second, the rural economy should promote amore competitive agriculture and food industry,

with increased emphasis on multi-functionality ofagri-rural areas. In so doing, regional and nationalauthorities would need to develop more adequatespatial planning instruments.

Third, in terms of employment policy, regionalgovernments should launch plans to secure andstabilize employment for at least one member ofevery rural household. In addition, employment forrural youth should ideally be available in theirregions.

Fourth, both the public and private sectors needto invest in the development of the so-called socialinfrastructure, that is, the promotion of new skillsand talents leading to the formation of thrivingmulticultural communities and more developedregional institutional capacity. In other words, newcapabilities and competences for managers and

employees in the private and public sectors wouldhelp rural citizens to become (a) moreentrepreneurs, (b) more adaptive to changes, and(c) more capable of anticipating and overcomingrisks.

3 ConclusionsIn the post - accession period, the rural

areas of Romania are confronted withprofound changes and newly created tensions thatchallenge the extremely fragile balance of their

development.In solving these problems is necessary to seize

all the benefits taking into account all aspectsof economic and social environment. In otherwords, along with agricultural issues it is necessaryto be analyzed all other aspects of rural life, inorder to create the appropriate strategies for anintegrated economic environment and a goodquality of life in rural areas. Rural sectordevelopment in Romania should be encouraged bysupporting agricultural communities to provideEuropean citizens with quality food, valuable anddiverse products in a sustainable manner with therespect of environmental compliance and publichealth regulations.Generally, in the literature [9], it is considerate thatthe government and citizens should make togetherthe decisions about public services in the ruralareas. However, our research conclusion is that therole of innovation and public management toolsregarding co-design and co-delivery can improveservice delivery in rural regions. In addition, to co-

production, such approach explores the benefits of

incorporating long-term planning (futures thinking)and rebalancing the rural-urban relationships in


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designing services (vis--vis place based approachto policy design).

Also, the national rural development strategiesof Romania should promote more competitive,efficient use of resources to generate economicgrowth in a sustainable manner, by taking intoconsideration the analyzed SWOTs. The readershould take into consideration that the proposed

policy options result from a review of ten foresightexercises that either focus on or are to some extentinterested in rural areas and regional development.

Many trends could have been further elaboratedto complement the SWOTs. However, for reasonsof space, only the most relevant ones have beenconsidered. In any case, these trends and SWOTsare only some of the many elements contributing tothe complexity of rural systems from Romania,

which are continuously affected by regional,national, European and global trends.

References:

[1] OECD - Agricultural policies and ruraldevelopment, 2011

[2] Joseph E. Stiglitz, Amartya Sen and Jean PaulFitoussi(2009) Report by the Commission onthe Measurement of Economic Performanceand Social Progress (The Stiglitz Report),Paris.

[3]

European Commission Ensuring goodmanagement of rural developmentprogrammes 2007 -2013, Brussels 28.08.2011.

[4] Vincze, Maria (2000), Regional andrural development. Ideas and practices.University Press Publishing House Cluj, Cluj-Napoca.

[5] Ciutacu C., Luminita Chivu - Romania and theEuropean model of agriculture and ruraldevelopment, CIDE, economic issues,no.31/2002, Bucharest.

[6] Chivu, Luminita, Ciutacu C.; Franc V.-

I., Constantine M. - The competitivenessof agriculture and EU integration, ESEN 2,CIDE Tender no. 24/2002, Bucharest.

[7] Puia, I., Sorana, V., (2001), Agroecologyand ecodevelopment, Academic PressPublishing House, Cluj-Napoca.

[8] Bara Simona, Moldovan Minodora - Roleof institutions in development of agricultureand the countryside, IEA, CIDE, EconomicIssues, no. 33/1998.

[9] OECD Strategies to Improve Rural ServiceDelivery, 19 April 2010


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