Macroeconomic Factors and Government Role in Romanian Business

This report provides a comprehensive analysis of business economics in Romania, focusing on macroeconomic factors and the role of the government. It begins with an introduction to Romania's background and macroeconomic overview, covering key economic indicators such as GDP, inflation, a...Read More

Business Economics In
Romania's

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Background of Romania and Macroeconomics:......................................................................3
2. Framework and model for macroeconomics:..........................................................................4
3. Government role in advancing businesses in Romania:..........................................................5
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
This report is about Macroeconomics and Romina economic. Economic has two parts
such as microeconomics and macroeconomics. This report is about macroeconomics which
means aggregate demand and supply of whole country and government spendings and income.
This report covers topics such as Background of Romania and macroeconomic introduction,
framework for macroeconomic (Băcanu, 2020). Apart from this is also covers topics such as
role of government in advancing businesses.
MAIN BODY
1. Background of Romania and Macroeconomics:
Romania is the southeastern country which is known for forested region of transylania
covered by mountains. It is bordered on north and northeast through the Ukrain and the republic
of Moldova, on northwest it covers by Hungary, south and southwest side it covers by
Yugoslavia and Bulgaria and in east covers by the black sea. This countries covers area of
237499 square Km. As per the 2000 data, the population of Romania was 22.5 million, it was
shows as decrease rate of 2.7 %. Its capital and largest city which is known as Bucharest had
population of 2.02 million. Its most population is rural and agriculture, there are six cities which
has 300000 or more population includes Constanta, Iasi, Cluj- Napoca, Timisoara, Galati and
Brosav (orlea, Achim and Mare, 2017). According to religious the population of Romania is
almost Christian. The GDP of the economy has grown by high rates seven percent in the year
1990's. Its areas including agriculture, energy, tourism provides it great economic future. It has
52 ranked in human development index, and it counted as developing country and high income
economy. It shows annual economic growth rate as 3.5% in year 2020. The official language of
Romania is known as Romanian. It is developing country and has large connections with others
such as Ukraine etc. Romania has increasing GDP rate because of its agriculture, power,
commercial department.
Macroeconomic is the part of economics which means large economic. Macroeconomic
is the sum of all micro economic. It deals in performance, behaviour, structure, decision-making
for the economy as whole. It using interest rates, tax rates, income, spendings, subsidies for
regulating economy growth and stability. It covers topics such as unemployment rates, price
indicates, consumption, national income, inflation savings, investment, trade policies, energy,

international finance etc (Claudia and Mihaela, 2020). micro economy is deals with individuals
spendings while macroeconomic is deals with country as whole. It is known for economy as
whole. It focuses on aggregate changes in the economy such as gross domestic product,
unemployment, growth rate, inflation, income level etc. it is the study of total number of goods
and services produced in the economy. Government spendings and income is necessary for any
economy as it provides money to consumers so that they can consume that and money it is rotate
in the economy, income of government generates from consumers spendings by paying tax and
purchasing goods and services. As per the Romania's macroeconomic indicators its including
GDP per capita, it shows 11430 in the year 2019 whereas its GDP ( EUR bn ) it shows 223 for
the year 2019. its economic growth rate shows 4.1% in the year 2019 and consumption shows
6% in the same year. Inflation rate of Romania is 3.8%, exchange rate is 4.24 local currency unit
per dollar, money supply shows in billion currency units 469.28, inflation monthly change is
0.12 % and inflation annual change is 2.14 %.
2. Framework and model for macroeconomics:
For the economic model of macroeconomics it consists PESTEL analysis which is for
external factors. It consists six factors such as political, economic, social, technological,
environmental, legal which are mentioned below:
 Political factors: These factors includes government policies which affects Romania's
business and specific industry. This includes political policy, government stability, trade,
fiscal policy and taxation policies which affects its businesses (Emir and Bekun, 2019).
 Economic factors: These factors affects Romania's economy and its performance which
directly affects organisations and their profitability. Economic factors includes interest
rates, unemployment and employment, material cost, exchange rates etc. These policies
of government directly affects business profitability.
 Social factors: Social factors is related latest trends and social environment. Social factors
includes demographics, education level, cultural trends etc. In context to Romania,
education level and their cultural trends directly affects business. For example, in
Romania Christian religion covers wide range of people that affects others business
(Hadad, 2017).
 Technological factors: These factors involves technical innovation and development
which affects market and industry. As Romania's government supports technical changes

for its business for creating innovation and brand value which helps them development.
Factors including digital, mobile changes, automation, research and development etc.
 Environmental factors: These factors related to environment, climate which affects
businesses. With the help of corporate social responsibility it helps business for managing
its brand value. Environmental factors including climate, waste disposal, carbon
footprint, recycling procedures and sustainability (Jugănaru, 2020).
 Legal factors: These factors helps in understanding legal and regulations in which
business operates. Change in Romania's government will affects the business activities.
Legal factors includes employment legislation, consumers law, health and safety etc.
Illustration 1: Macroeconomic factors, 2020
(Source: Macroeconomic factors, 2020)
3. Government role in advancing businesses in Romania:
Government role and regulations has major impacts on business operated in Romania. In
order to manage business activities in society and changing social needs, government at all levels
created various regulatory acts (Matei and Gaita, 2016). The government plays vital role for

business in order to protect customers. When the seller fails in protect customers, customers has
right go for law as consumers law. Government plays important role as it provides subsidies and
its spendings towards consumers so that they can spend it on economy and fulfill their needs.
Change in government policies can affects the businesses (Macroeconomic factors, 2020). Some
government rules provides the support to the businesses by providing lower interest rates on their
loans, agriculture policies, tax rates support etc. the government supports enterprises in number
of ways which are mentioned below:
 Increasing scope for finance: The government of Romania has various financial schemes
for businesses those who want to expand their business and innovative business by
providing subsidies, business laws, mortgage free loans. Government of Romania
supports entrepreneurs which are belongs from MSMEs because these organisations are
supporting to its GDP.
 Reducing the regulatory burden from entrepreneurs: In context to Romania's government
it helps it in order to reducing laws from businesses such as it allows trade relations with
another countries (Steliac, 2016). The business of the country can trade with other
countries as it globalised its businesses which supports country to develop it. The
government has taken steps to reduce burden of entrepreneurs. This support as greater use
of digital technology.
 Developing IT tools for businesses: government provides government services on online
platform which reduces regulatory burden for businesses. It also provides opportunities to
businesses for innovating and increasing new products with more efficiency as it provides
digital.
 Helping business for access networking: government provides networking for growing
businesses. In this context, the government of Romania using various tools in order to
helps entrepreneurs to build networking. This is of conducting trade mission in abroad,
Ukraine and Netherlands can access foreign markets.
 MSMEs support: Government provides supports to MSMEs sector by providing
mortgage free loans, lower tax rates so that it can increase their profitability. It provides
supporting to them because this sector helps government for economy growth.
 Facilitate customers and market research: Government helps businesses for facilitate
business information and market research as it provides consumers data and information

about class diversification of population. This provides free seminars for business advices
to entrepreneurs and information about the vendors.
 Build public profile: Government of Romania helps entrepreneurs for solving business
problems as it provides support to the businesses, it helps them create brand image
(Zaman and Meunier, 2017). By providing digital technology and marketing support free
trade relations it give opportunities to businesses for expanding their business as
worldwide.
CONCLUSION
From the above report it has been concluded that macroeconomic is the aggregate of
consumers demand and supply for whole country. It includes factors such as government
spendings, tax rates, growth rates, gross domestic products, income level, inflation etc. In context
to Romania it is well known developing country which has huge support of agriculture and
energy. The government plays vital role in order to support businesses by providing them loans,
subsidies, regulations, trade policies, brand image etc.

REFERENCES
Books and journals:
Băcanu, B., 2020. Differentiation vs. Low Cost in Romania: The Covid Shock on Generic
Strategies Theory. Ovidius University Annals, Economic Sciences Series. 20(1). pp.129-
135.
Borlea, S. N., Achim, M. V. and Mare, C., 2017. Board characteristics and firm performances in
emerging economies. Lessons from Romania. Economic research-Ekonomska
istraživanja. 30(1). pp.55-75.
Claudia, O. and Mihaela, H., 2020. Digital Transformation of Centru Region–Romania. Needs
Assessment. Studies in Business and Economics. 15(2). pp.270-281.
Emir, F. and Bekun, F. V., 2019. Energy intensity, carbon emissions, renewable energy, and
economic growth nexus: new insights from Romania. Energy & Environment. 30(3).
pp.427-443.
Hadad, S., 2017. Strategies for developing knowledge economy in Romania. Management &
Marketing. Challenges for the Knowledge Society. 12(3). pp.416-430.
Jugănaru, M., 2020. Effects of the New Coronavirus Pandemic in Romania: Changes in
Buying and Consumer Behavior. Ovidius University Annals, Economic Sciences Series.
20(1). pp.682-687.
Matei, A.I. and Gaita, C., 2016. Characteristics of Process Management in the Public Institutions
in Romania: Comparative Analysis. Procedia Economics and Finance. 39. pp.94-101.
Steliac, N., 2016. The labor market in Romania and interregional disparities. International
Journal of Management Science and Business Administration. 2(6). pp.7-25.
Zaman, C. and Meunier, B., 2017. A decade of EU membership: evolution of competitiveness in
Romania.
Online
Macroeconomic factors. 2020. [Online]. Available through: < http://journals.univ-danubius.ro/ >