This chapter provides an overview of regional development and innovation in Romania’s eight regions. It explores recent economic trends, provides an overview of Romania’s territorial arrangements, and demonstrates the significant differences in demography, productivity, and well-being in evidence among its regions. These include measures of economic and social development, as well as analysis of the policy, institutional and funding structures that are currently in place. The chapter also introduces the role of Romania’s Regional Development Agencies and provides an overview of their strategic planning and innovation support responsibilities.
Enhancing Strategic Planning and Innovation Services
Supporting Romanian Regional Development Agencies
OECD Regional Development Studies
2. Overview of regional development and innovation in Romania
Abstract
Over the last two decades, Romania has converged rapidly towards the OECD average income per capita, reducing the gap by half. Its economy has also proved resilient: after a deep contraction in 2020 triggered by the COVID-19 pandemic, activity has rebounded fast. However, regional disparities in economic opportunities and living standards are large and widening (OECD, 2022[1]). The Bucharest-Ilfov capital region has grown rapidly over the last decade, has a sophisticated service-based economy and remains an attractive destination for migrants. However, many other regions in Romania have suffered from population decline over the last decade and recorded slower economic growth than the capital region. The majority of Romanian regions significantly lag behind the OECD and European Union (EU) averages, with lower gross domestic product (GDP) per capita and weaker labour productivity (OECD, 2023[2]). The high regional disparities come with pockets of poverty in rural areas and the COVID-19 crisis has aggravated poverty risks, especially in marginalised communities (OECD, 2022[1]). Overcoming the regional development disparities confronting Romania will require a well-targeted suite of policies.
Counties and municipalities in Romania play a critical role in tackling regional development disparities but many small municipalities face capacity constraints. County and municipal governments are key investors, accounting for over half of total public investment in Romania and 2.5% of its GDP. They thus play a strong role in implementing regional development policies by investing in a wide range of sectors, from housing, local transport to social welfare, education, and community amenities. Meanwhile, over 90% of municipalities are communes in rural areas, most of which have fewer than 5 000 inhabitants. These small municipal governments have limited administrative and strategic capacity to effectively design and deliver investment. Institutional and systematic support to these municipal governments is necessary to reach their potential in advancing regional development.
To help address regional inequality, the Romanian government established eight Regional Development Agencies (RDAs) in 1999. These agencies are tasked with strategic planning (e.g. regional development plan, smart specialisation strategy) and providing innovation support, in addition to other responsibilities, such as supporting the implementation of national programmes for regional development (European Association of Development Agencies, 2016[3]). The RDAs work closely with regional and local actors in their activities through serving the Regional Development Councils that consist of local government representatives, as well as various committees and working groups related to regional development. In 2021, RDAs were made the Managing Authorities for EU Cohesion Policy Regional Programmes in Romania (European Commission, n.d.[4]). Therefore, the RDAs and the strategies they pursue to accelerate regional development have a unique opportunity to contribute to mitigating territorial disparities and boosting Romania’s long-term well-being, starting from the regional level.
This report focuses on strategic planning and innovation support activities in the RDAs. It aims to explore how building RDAs’ capacities around these two areas could help contribute to regional economic growth, attract investment and provide new employment opportunities for residents in their regions. Romanian RDAs have great potential to leverage planning and innovation support, with their long experience in regional planning, close relationship with regional and local innovation actors, and their role in managing investments under the 2021-27 Regional Programmes. Yet, they need the capacity to do so, including strengthening a more systematic, place-based and outcome-oriented approach to these activities in order to yield better results in regional development.
Romania faces significant and growing regional disparities
Romania has eight NUTS 2 statistical regions1 (Figure 2.1), each of which have vastly different economies, demographics and industrial structures. The Bucharest-Ilfov region, which includes the capital city of Bucharest, 8 smaller towns and 32 communes, has the largest economy, the most highly educated labour force and the smallest geographic area (1 754 km2). It is an almost entirely urban region with good transport connections. Romania’s other seven regions are much larger, containing multiple counties and a mix of urban, rural and remote areas. In terms of population size, the regions, including Bucharest-Ilfov, are broadly comparable, averaging around 2.4 million inhabitants in 2022. The North-East, with 3.2 million residents, is the most populous, while the West, with 1.7 million inhabitants, has the smallest population.
Figure 2.1. Statistic regions and counties in Romania
Notes: Administrative boundaries: © EuroGeographics © UN-FAO © Turkstat; Cartography: Eurostat-GISCO, 10/2020
Source: OECD adapted from European Commission (2022[5]), Statistical regions in the European Union and partner countries NUTS and statistical regions 2021 - re-edition 2022, https://doi.org/10.2785/321792.
Economic disparities between regions are large and growing larger
In addition to variations in urbanisation, geographic size and population density, there are major economic differences between regions. Most strikingly, the GDP per capita in Bucharest-Ilfov is more than double that recorded in all other regions and is almost four times larger than that of the North-East. The region with the second-highest GDP per capita is the West, followed by the North-West and Centre. In comparison with both the EU and OECD average, the economies of all Romanian regions, except for Bucharest-Ilfov, are smaller when measured at the per capita level (Figure 2.2).
Figure 2.2. GDP per capita in Romanian regions, 2012-21
Note: Data for the 8 Romanian regions in 2021 are provisional.
Source: Data for OECD, European Union and Romania are from OECD (2023[6]), Gross domestic product (GDP) (indicator), https://doi.org/10.1787/dc2f7aec-en (accessed on 6 November 2023); data for the 8 Romanian regions are from European Commission (2023[7]), Eurostat: Gross domestic product (GDP) at current market prices by NUTS 2 regions [nama_10r_2gdp], https://ec.europa.eu/eurostat/databrowser/view/NAMA_10R_2GDP__custom_8298461/default/table?lang=en (accessed on 6 November 2023). Purchasing power parities conversion is based on OECD (2023[8]), Purchasing power parities (PPP) (indicator), https://doi.org/10.1787/1290ee5a-en (accessed on 6 November 2023).
Despite the large differences in GDP between Bucharest-Ilfov and the remaining seven regions, there is no strong evidence that the gap is narrowing. Between 2015 and 2021, Bucharest-Ilfov was the fastest-growing regional economy in Romania, averaging 7.6% real GDP growth. In 2020, as the economies of all other regions contracted, Bucharest-Ilfov still managed to grow by 1.3%. The relatively high-income regions of the West and North-West also recorded significantly faster economic growth than the relatively low-income regions. The three regions with the lowest GDP per capita – North-East, South-Muntenia and South-West Oltenia – have achieved near-zero real GDP growth since 2015 (see Figure 2.3). These recent trends suggest that economic inequality across the regions is widening, not only between Bucharest-Ilfov and all other regions, but also between the middle-income and lowest-income regions.
Figure 2.3. Real GDP growth in Romanian regions, 2015-21
Source: European Commission (2023[9]), Eurostat: Gross domestic product (GDP) and Gross value added (GVA) in volume by NUTS 2 regions (nama_10r_2gvagr), https://ec.europa.eu/eurostat/databrowser/product/view/nama_10r_2gvagr
Figure 2.4. Average annual real GDP growth in Romanian regions, 2015-21
Source: European Commission (2023[9]), Eurostat: Gross domestic product (GDP) and Gross value added (GVA) in volume by NUTS 2 regions (nama_10r_2gvagr), https://ec.europa.eu/eurostat/databrowser/product/view/nama_10r_2gvagr
One contributing factor to Bucharest’s exceptional economic growth and high level of GDP per capita is labour productivity. In comparison to other Romanian regions, the average worker in Bucharest is significantly more productive, albeit at levels below the EU average (see Figure 2.5). This high rate of productivity, EUR 52 500 per person in 2021, is partially driven by higher rates of education. Not only is Bucharest-Ilfov the location of many of Romania’s highest-ranking universities and technical colleges, it has also been able to attract skilled migrants from across Romania and overseas. The high density of Bucharest and the agglomeration that it enables is a further contributing factor. Skilled workers have the potential to match with thousands of potential employers, face fewer barriers moving between organisations and can identify potential collaborators and partners much more easily than their counterparts in other regions.
Figure 2.5. Nominal labour productivity of Romanian regions, 2021
Note: Provisional data.
Source: European Commission (2023[10]), Nominal Labour productivity by NUTS 2 regions [nama_10r_2nlp], Eurostat, https://ec.europa.eu/eurostat/databrowser/view/nama_10r_2nlp/default/table?lang=en.
Disparities are visible in other regional development areas
Since 2012, Romania’s population has been steadily shrinking. This decline is concentrated in the south and western parts of the country, with South-West Oltenia decreasing the fastest, at an average annual rate of -1%. Only Bucharest-Ilfov, with its fast-growing economy, has managed to avoid population loss in the last decade. In the same period, the EU population has increased by 6.2 million at an annual average rate of 0.1%.
Table 2.1. Regional population and decline, 2012-22
Source: European Commission (2023[11]), Eurostat: Population on 1 January by NUTS 2 region (demo_r_d2jan),
https://ec.europa.eu/eurostat/databrowser/product/view/demo_r_d2jan
The cause of regional population loss is largely structural, with the birth rate falling gradually over the past three decades throughout Romania. Emigration has also played an important role, with many Romanians choosing to live and work in other countries. Between 2017 and 2021, for example, approximately 1.1 million Romanian residents temporarily emigrated (National Institute of Statistics, 2021[12]), the vast majority to other EU economies. In addition to a declining population, several regions in Romania remain at high risk of poverty. The North-East, South-West Oltenia and South-East all recorded at-risk poverty rates of over 30% in 2020, compared to Bucharest-Ilfov, where poverty only affects a small proportion of the population.
Figure 2.6. Risk of poverty in Romanian regions, 2020
Source: European Commission (2023[13]), Eurostat: At-risk-of-poverty rate by NUTS regions (ILC_LI41__custom_2484856), https://ec.europa.eu/eurostat/databrowser/view/ILC_LI41__custom_2484856/default/table?lang=en
A further indicator of regional development is the wide availability of broadband Internet. Broadband Internet allows households to access government services, undertake more diverse employment activities, complete educational courses and communicate more regularly with their communities. Throughout Romania, significant progress has been made since 2017, with all regions demonstrating increases in the number of households with a broadband connection. Bucharest-Ilfov remains the best connected, with 93.8% of households having access to broadband but the gap has narrowed significantly. Although the lowest in Romania, the South-East is rapidly improving, recording 84.3% in 2021 compared to 71.2% in 2017.
Life expectancy is also unevenly distributed across Romania. In Bucharest-Ilfov, residents can expect to live, on average, 73.9 years. The North-East, which has the lowest life expectancy of all regions, is almost 2 years lower at 72.0. These differences suggest that health services and individual well-being are better in some regions of the country, and it is notable that life expectancy is longer in regions with higher average incomes. Compared to the EU average of 80.1 years, all Romanian regions are underperforming, suggesting that there is significant room for improvement in access to and the quality of health services across the country.
Figure 2.7. Household access to broadband in Romanian regions, 2017-21
Source: European Commission (2023[14]), Eurostat: Households with broadband access (isoc_r_broad_h), https://ec.europa.eu/eurostat/databrowser/view/isoc_r_broad_h/default/table?lang=en
Figure 2.8. Life expectancy in Romanian regions, 2021
Source: European Commission (2023[15]), Eurostat: Life expectancy by age, sex and NUTS 2 region (demo_r_mlifexp), https://ec.europa.eu/eurostat/databrowser/view/demo_r_mlifexp/default/table?lang=en
Educational attainment is also highly unequal across the eight Romanian regions. In Bucharest-Ilfov, approximately 42.2% of residents aged 25-64 have attained a tertiary qualification. This level of education is significantly higher than the EU average of 34.3% and is evidence of a highly skilled and diverse workforce. Across Romania, however, the average rate of attainment is only 19.7%. The three regions with the lowest level of tertiary education are the North-East, South-East and South Muntenia. Despite the large disparities, there is little evidence to suggest convergence has occurred over the last five years. The number of adults with a tertiary education has grown in all regions, but only marginally, and at a comparable speed across the entire country. Accelerating this rate of growth and boosting the level of educational attainment would greatly assist Romania’s regions in meeting their regional development objectives.
Figure 2.9. Proportion of adults aged 25-64 in Romanian regions with a tertiary education
Source: European Commission (2023[16]), Eurostat: Population by educational attainment level, sex and NUTS 2 regions (%) (edat_lfse_04), https://ec.europa.eu/eurostat/databrowser/view/EDAT_LFSE_04/default/table?lang=en
Innovation is concentrated in Bucharest-Ilfov
All of Romania’s eight NUTS 2 regions were deemed “emerging innovators” in 2023 by the European Commission Regional Innovation Scoreboard (European Commission, 2023[17]). The scoreboard, which uses 21 indicators, provides a composite innovation score and a comparative assessment of the performance of innovation systems across 239 regions of 22 EU countries. At the national level, according to the European Innovation Scoreboard which assess a broader set of 32 indicators, Romania was also considered an emerging innovator, alongside Bulgaria, Croatia, Latvia, Poland, and the Slovak Republic, and was the lowest-ranked country in the European Union (European Commission, 2023[18]).
Box 2.1. Benchmarking innovation in Romania, the European Union and internationally
The depth and frequency of innovation activity in Romania are much lower than both the EU average and several other large, advanced economies. The European Innovation Scoreboard, which was last updated in 2023, demonstrates a significant gap between Romania and its immediate neighbours, ranking it last out of the 27 EU member countries. The highest-ranking member countries, deemed “innovation leaders”, included Belgium, Denmark, Finland, the Netherlands, and Sweden, and all scored over 125% above the EU average. A selection of non-EU advanced economies was also included in the study. Australia, Canada, Korea, and the United States, for example, scored above the EU average and comfortably outperformed Romania. These countries generally scored higher than the EU on tertiary education, research and development expenditure and intellectual property indicators.
Source: European Commission (2023[17]), European Innovation Scoreboard 2023, Directorate-General for Research and Innovation, https://data.europa.eu/doi/10.2777/119961
The level and sophistication of innovation could also be further improved upon at the regional level. Among Romanian regions, Bucharest-Ilfov achieved the highest score, with 59.5 (Figure 2.10). Indicators it scored well on, compared to the other seven regions, include trademark applications, innovative small and medium-sized enterprises (SMEs) collaborating with others, innovation expenditures per person employed, and SMEs introducing product innovations. The North-East, North-West, and West were the next best-performing regions but their scores were only fractionally higher than those of Romania. The poorest performing regions were South-West Oltenia and South-East. Nonetheless, the innovation performance in most Romanian regions has improved since 2016, most strongly North-West and South-West Oltenia region (4.0 and 3.5 increase of the Regional Innovation Index, respectively) (European Commission, 2023[19]).
Figure 2.10. Regional Innovation Index 2023 of Romanian regions
Source: European Commission (2023[20]), Regional Innovation Scoreboard 2023 – Regional profiles Romania, https://ec.europa.eu/assets/rtd/ris/2023/ec_rtd_ris-regional-profiles-romania.pdf
Romania’s overall low innovation performance cannot be attributed to a single factor. However, Romania scored the lowest on several of the 32 innovation indicators, which could shed light on areas requiring priority attention. These include measures of intellectual assets, international scientific co-publications, research and development expenditure in the public sector and the use of information technologies (European Commission, 2023[19]).
The relative strengths of Romania from an innovation perspective include high rates of broadband penetration, exports of knowledge-intensive services, high numbers of publication citations and the export of medium- and high-technology goods. However, areas that have decreased significantly since 2016 include the number of doctorate graduates and non-research and development innovation spending (European Commission, 2023[19]). Innovation support, therefore, has a wide range of potential areas to focus on but several relative strengths and careful prioritisation will be necessary if Romania is to improve its overall innovation performance.
Subnational governments are key players in delivering regional development policy
Reducing regional imbalances is one of the key objectives of regional development policy in Romania. Other policy objectives include linking sectoral policies at the regional level and stimulating inter-regional, national, cross-border and international co‑operation (Government of Romania, 2004[21]). While regional development policy is administered by the Ministry for Development, Public Works and Administration at the national level, its design and effective delivery relies on all levels of government – national, county and municipal. In Romania, there are 41 counties and the city of Bucharest, which has both status as a city and a county. At the municipal level, there are 102 cities, 216 towns and 2 862 communes. All counties and municipalities have their own elected councils (OECD-UCLG, 2022[22]). For each of the eight NUTS 2 development regions, there is no regional government but a Regional Development Council, which consists of representatives of counties and municipalities in the respective region2. The RDA in each region, which is an NGO with a legal personality and of public interest, serves as the secretariat of the Regional Development Council, among other responsibilities.
Counties and municipalities are key investors in Romania. They are generally responsible for the provision of public services, including housing, community amenities, local transport, social welfare, preschool, primary and secondary education, as well as healthcare and local police. Increasingly, county councils are also in charge of the overall co‑ordination of the efforts and actions of local councils. In 2020, county- and municipal-level investment represented over half of total public investment in Romania and 2.5% of its GDP. Investment is a key function of subnational governments in Romania, representing 26.0% of their expenditure (vs. 11.3% in OECD countries and 9.9% in the EU27 in 2020). Municipal and county investment is primarily dedicated to transport and road infrastructure (45.6% of subnational government investment in 2020), followed by housing and community amenities (18.0%) and education (9.7%) (OECD-UCLG, 2022[22]).
Nevertheless, Romanian municipalities are relatively small, which may affect their capacity to design and deliver investment projects and provide public service. Among the municipalities, the majority are communes established in rural areas and comprise one or more villages. The average municipal size is fewer than 7 000 inhabitants. This is above the EU average (5 960) but below the OECD average (10 250). Around 75% of municipalities have fewer than 5 000 inhabitants and 25% have fewer than 2 000 inhabitants (OECD-UCLG, 2022[22]). These small municipal governments have limited administrative and strategic capacity to effectively design and deliver investment. Institutional and systematic support to these municipalities is necessary to materialise their potential in advancing regional development.
Setting the scene: The important role of Romanian RDAs in regional development
Place-based regional development policy can help support economic growth, resident well-being and environmental sustainability, as well as help to reduce territorial income disparities, but often requires joint efforts among all levels of government. The OECD has developed recommendations around ten pillars for regional development policy, from defining strategy and territorial scales to ensuring integrity and performance measurement, which is highly relevant for Romania in its quest to address regional disparities through well-designed and implemented regional development policy (Box 2.2). While there is no regional tier of government in Romania, the Regional Development Councils and RDAs play a critical role in supporting the design and implementation of regional development policy, including mobilising regional and local actors to develop and implement regional development strategies.
At the same time, innovation is a known contributor to regional development and a place-based regional development policy could help regions leverage their unique innovation assets to support growth (OECD, 2020[23]). The 2022 OECD Economic Survey for Romania highlights that the country needs to find new growth drivers, including supporting the transition to a knowledge-based economy and the expansion of high-value-added goods and services production (OECD, 2022[1]). To achieve this aim and unlock growth potential across the country, all regions and localities need to identify and invest in their inherent innovation assets.
Box 2.2. OECD Recommendation on Regional Development Policy
The Recommendation on Regional Development Policy (OECD, 2023[24]), adopted on 8 June 2023 by the OECD Council at the ministerial level, provides countries with a comprehensive policy framework to support the design and implementation of effective regional development policies. It considers that regional development policy is long-term, cross-sectoral and multi-level, with the aim of improving the contribution of all regions to national performance and reducing inequalities between places and between people.
The recommendation includes ten pillars, from defining strategy and territorial scales to ensuring integrity and performance measurement. For example, it recommends that governments:
Design and implement an integrated and balanced regional development strategy tailored to different places.
Actively engage with regional and local communities and stakeholders throughout the policy-making cycle to gather and co-produce the knowledge needed to identify a region’s needs and leverage its specific assets.
Strengthen administrative, strategic and technical capacities for regional development policy design and implementation at the national and subnational levels of government.
Source: OECD (2023[24]), Recommendation of the Council on Regional Development Policy, https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0492.
Romanian RDAs are key actors in advancing regional development
Romanian RDAs, despite having the legal status of an NGO, are responsible for a wide range of activities related to delivering regional development policy, encouraging territorial development and boosting regional attractiveness. They are charged with drafting and implementing their region’s development strategies, plans and programmes. These regional strategic documents are reviewed and approved by their Regional Development Councils. RDAs also support the implementation of regional development projects financed by the EU, as well as contribute to attracting foreign investment, offer business support services and promote innovation.
In fact, having separate legal status and a certain degree of independence from the government is not unique to Romanian RDAs. The core idea behind the “agency model” is to have a certain degree of separateness from the central or regional government, i.e. separate certain functions from a given public ministry or department by transferring them to a different legal entity at the regional level (OECD, 2022[25]). Overall, RDAs and similar entities are common in OECD and EU countries (Box 2.3). One advantage of RDAs is their ability to co‑ordinate greater understanding and stronger working relationships between national and subnational actors and across policy sectors. RDAs are also sometimes better able to engage with the private sector, for example, as a development partner or co-investor.
Box 2.3. RDAs in OECD countries
Among OECD countries, RDAs are complementary to government departments responsible for regional policy and, in many cases, contribute to the design and implementation of national development programmes. The legal status of RDAs varies across OECD countries. For instance, RDAs in Switzerland are organised either as public sector corporations (e.g. “regions” in the canton of Grisons or “regional conferences” in the canton of Bern), as stock corporations (e.g. Region Oberwallis AG), and others. They may have an “exclusive” membership, consisting entirely of public entities (usually municipalities) or an “inclusive” membership, bringing together public and private entities (e.g. interest groups, local businesses, local inhabitants).
In countries with distinct statistical or planning regions, it is common for RDAs to play the role of administrative, professional, and technical agencies supporting the work of the regional development councils or other regional bodies, such as county councils or state/provincial governments. The European Union’s creation of RDAs – or structures of a similar purpose – has been driven by the EU accession process, notably for countries in Eastern Europe without elected regional governments.
Source: OECD (2022[25]), Regional Governance in OECD Countries: Trends, Typology and Tools, https://doi.org/10.1787/4d7c6483-en.
RDAs can leverage strategic planning and innovation to advance regional development
Two key functions of Romania’s RDAs are to provide strategic planning and innovation support services. High-quality strategic planning is particularly important to forming and attaining long-term development goals and priorities. These priorities can, in turn, help guide future investment in government services, infrastructure and targeted development programmes, such as innovation, considering also RDAs’ role as Managing Authorities of the Regional Programmes.
Innovation has the potential to advance regional development ambitions and contribute to regional well‑being. Innovation support provided by the RDAs can focus on the nurturing of new approaches from businesses, universities and other non-government actors but should also align with innovations pursued within governments that can improve the way that government services are provided. The benefits of innovation are primarily economic, leading to higher productivity, lower costs and new employment opportunities. But the benefits can also be social. Improved products, greater accessibility, new infrastructure and better-targeted support services can all result from innovation.
Strategic planning and innovation are also complementary if carefully co‑ordinated. In particular, strategic planning can help RDAs to identify objectives and establish practical steps to achieve them. Innovation and innovation support, meanwhile, is a policy intervention that can help realise the development objectives set out in a strategic regional development plan. It is, therefore, critical for RDAs to consider how and what form of innovation can help them achieve their specific development goals – for example economic growth, social inclusion or reduced income inequality.
Innovation policy can incorporate different types of innovation, including those that depart from current technologies and practices. These can include:
Technological innovation refers to the development of technologically new or substantially changed goods or services or the use of a technologically new or substantially changed process.
Social innovation refers to the design and implementation of new solutions that imply conceptual, process, product or organisational change and which aim to improve the welfare and well-being of individuals and communities.
Business model innovation seeks to change an organisation’s value proposition and its underlying operating model by changing the rationale of how an organisation creates, delivers and captures value in economic, social, cultural or other contexts.
Policy innovation aims to find novel processes, tools and practices used for policy design, development and implementation, resulting in better problem-solving of complex issues.
Public-sector innovation refers to the design and implementation by a public-sector organisation of new or significantly improved processes, methods or services – from data analytics to prototyping and design thinking – aimed at improving its operations or outcomes.
All of Romania’s RDAs have drafted regional development plans for 2021-27, which are funded through a combination of national, regional and local resources. The regional development plans include an analysis of regional demographic, economic and social trends, as well as in-depth consideration of the region’s natural resources, industrial structure and transport infrastructure. In addition to long-term policy objectives, several of the regional development plans drafted by RDAs also include potential projects that could be funded to accelerate regional development.
The regional development plans also include a series of indicators that will provide valuable benchmarks for future evaluations. Indicators in the regional development plans primarily consist of outcome indicators, such as the employment rate, the number of households connected to the water supply network and life expectancy, that can be used to measure actual improvements in the quality of life for residents. The regional development plans also included a sample of output indicators, for example, the length of the regional road network, the number of technological transfers amongst innovation entities and the number of medical consultations completed within the regional area, which are useful measures of whether government actions and investments are having the desired impact.
Despite the drafting of regional development plans and the commencement of innovation support services, the impact of RDAs could be enhanced by addressing a series of barriers. These include limited access to funding, poor stakeholder engagement, skills gaps among RDA staff and the inconsistent use of evaluation. These issues and how they affect strategic planning and innovation support services will be explored more comprehensively in Chapters 3 and 4.
New opportunities and challenges: Becoming Managing Authorities in the 2021-27 programming period
In 2021, the RDAs became regional Managing Authorities. As such, the eight agencies are entrusted with the task of designing and implementing the EU-funded Regional Programme 2021-27. In practical terms, this shifts the responsibility for managing EU funds from the Ministry for Development, Public Works and Administration to the eight RDAs. Concretely, this means the RDAs are responsible for the administration and investment of EU funds of over EUR 1 billion per development region (Figure 2.11). The shift also provides the RDAs with the opportunity to distribute funds and support investments that are tailored to their regional development needs, as well as leveraging on their proximity with regional and local actors to facilitate effective investment implementation. In addition, RDAs are also intermediate bodies for the national health programme 2021-27; and five RDAs (South-East, Centre, South-Muntenia, South-West Oltenia, and West) also act as the intermediate bodies for the Just Transition Fund.
Figure 2.11. Planned investment of Romanian Regional Programmes 2021-27
Source: European Commission (2023[26]), Cohesion Open Data Platform, https://cohesiondata.ec.europa.eu/countries/RO/21-27
Like other EU countries, Romania has adopted the Recovery and Resilience Plan, which consists of 107 investment measures and 64 reforms. The Romanian Recovery and Resilience Plan will be supported by an estimated EUR 14 billion in grants and EUR 15 billion in loans. Around 41% of the Plan will support the green transition and 20% will support the digital transition. The role of the RDAs in supporting the implementation of this Plan is still under discussion. Nevertheless, many priorities in the Plan have a strong territorial dimension, including green and digital transition (European Commission, 2022[27]).
Conclusion
With the exception of Bucharest-Ilfov, Romania’s regions are underperforming economically compared to the EU average and will require a suite of well-targeted regional development policies in order to catch up. Among Romania’s regions, there is also significant variation in productivity, educational attainment and broadband access, which will also require substantial time and investment to correct. The approaches required for each region, however, with their unique geography, demographics, industrial structure and infrastructure, will differ significantly. Due to their strong understanding of local conditions, and roles as Managing Authorities, RDAs have a critical role to play in the development of effective regional development policies. However, existing approaches and capabilities within RDAs are limited and a renewed focus on long-term strategic planning, alongside a more rigorous and targeted approach to innovation support services, is urgently required.
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Notes
← 1. The NUTS classification (Nomenclature of territorial units for statistics) is a hierarchical system for dividing up the economic territory of the EU and the United Kingdom. NUTS 2 statistical regions are basic regions for the application of regional policies.
← 2. According to the Law for regional development 315/2004 Art. 7 al. 6 (6), the Regional Development Council is made up of the presidents of the county councils and one representative of each category of local municipal, city and communal councils from each county of the region; in the case of the Bucharest-Ilfov region, the Regional Development Council is made up of the president of the Ilfov County Council, the general mayor of Bucharest, one representative of each local sector council and representatives of the local councils of Ilfov county, on par with representatives of the sectors of the city of Bucharest.