Escaping Periphery through Trade. A Tale about Romanias Convergence to the EU

The “ever closer” ties with EU led to Romania’s de facto integration in

the EU as far as trade flows are concerned (about two thirds of the

Romanian foreign trade takes place with EU). EU is also the largest

investor in the Romanian economy (63% of FDI stock) and is becoming

its largest donor, through the various pre-accession programs that it

finances.

Nevertheless, convergence towards similar structures of production

between Romania and EU shows little improvement. Moreover, the fact

that Romania is one of the largest net exporters of workforce from the

region (Langewiesche, Lubyova, 2000) indicates that wage differentials

are large enough to stimulate temporary and/or permanent emigration,

meaning that income convergence is still far ahead. Of course, these

situations may end up with short and medium term positive results, as the

differences in the production structures encourage specialization, and the

money earned abroad return as foreign remittances in the domestic

economy. These positive implications may, in turn, create further

incentives for resources’ allocation outside the economic convergence

paradigm.