Romania’s economic convergence in the European context: theoretical considerations and empirical evidence

Opinion by Leonardo Badea, First Deputy Governor BNR (National Bank of Romania)

Romania’s economic convergence remains, beyond the scope of other economic, social, and geopolitical developments, one of the most important transformation processes experienced in recent decades. Rising incomes, expanding infrastructure, and strengthening economic institutions have contributed to improving the quality of life and creating wider opportunities. However, for this path to be sustainable and irreversible, it is essential to understand not only the opportunities but also the vulnerabilities inherent in emerging economies.

The economic cycles of emerging economies have significantly different characteristics from those of mature economies (Aguiar and Gopinath, 2004). The presence of large and persistent external deficits in their case reflects a strong dependence on external financing, which makes them much more vulnerable to possible international shock...