Article Type : Research Article
Authors : Gheorghe R
Keywords : Actual Individual Consumption per capita (AIC); GDP per capita; Gini coefficient; Incomes; inequality; Local Human Development Indicator (LHDI); Purchasing Power Standard (PPS); Regional disparities; Risk-of-poverty rates; Risk-of-poverty rates ans social exclusion; R.Square; Well-being
Within
a society, inequality is highly corrosive. The main ideas that fuel the debate
about inequality are not new. What has changed is that the effects it generates
can be much better understood and analysed today. This happens because, in
addition to the ongoing creative adaptation of scientific research methods and
strategies, we now have a wealth of data with the help of which we compare
societies or their different regions. The instrumentation of these data, and
the use of these data, not only brings to our attention the heterogeneous
dimension of societies (observations which are otherwise quite important and
useful for analysis). They bring to light the often hidden, hardly observable
effects of inequality. The vast majority of societies are heterogeneous within
the meaning that they are different in many ways. But what lies behind
heterogeneity shaped by social and economic inequalities? What happens if these
differences are widened? How much is the cohesive fabric of society being
eroded, and how much is it resisting the attack of inequality? Is it affected
in a way that is invisible to the social eye in the absence of scientific
tools? Should the absence of inclusiveness of the economic growth be of
concern, analysed in terms of tolerance of differentiation? Or the huge
disparities present within a society?.
Within a society, revenue is very important. In 2021 Romania's GDP per capita was 73% of the European average, while the individual consumption of Romanians (AIC), expressed in Purchasing Power Standards (PPS), was 82% of the European average [1,2]. In terms of GDP per capita expressed in PPS Romania was in increasing in the European Union (EU-27) in 2021, managing to record higher values than Bulgaria (55%), Greece (65%), Slovakia (68%), Croatia (70%) and Latvia (71%) (Figure 1). Moreover, according to the latest estimates of World Bank representatives, Romania's GDP per capita will soon exceed that of Hungary, and they forecast that at the current pace of economic recovery and growth, it would not be excluded that by 2023 even for Poland to record lower values than Romania [3]. Since 2007 (the year of its integration into the European Union (EU) Romania has experienced strong economic growth, moving closer year by year to the frontier of very high-income countries (Romania has recovered 21% of the European average in the last 12 years, from 52% GDP per capita in 2009 to 73% GDP per capita in 2021 (Figure 2). Seen from the outside, Romania is the fastest growing country in the EU, already integrated into the corporate chains of Europe's richest countries, which has successfully absorbed huge capital and technology investments over the last thirteen years. But seen from the inside, development is uneven. The data show a significant polarisation between urban and rural areas and the growing structure of huge regional and intra-regional disparities, with some of the most serious demographic and social consequences (high external migration rate, decline of fertility rate, high rate of poverty, high infant mortality rate). The recovery of 21% of the European average GDP per capita over the last ten years has not been accompanied by a process of reducing regional and intra-regional disparities, which seem to be widening as the average individual income at national level has risen year by year (the effect of income inequality increase, as the average of well-being of the society is no longer dependent on national income or economic growth). Even if Romania describes itself as a country with huge economic potential, a comprehensive analysis of economic indicators, living conditions or social well-being highlights the distinct, heterogeneous profile of several small countries operating within the same area:
In 2021, Eurostat data place Romania in second place within the EU-27 in terms of the "Income Quintile Share Ratio" - 7.13 [5] (Figure 3).
Moreover, in a ranking conducted by the Social Progress Imperative, with the support of Deloitte, Romania ranked 43th out of 169 countries worldwide in 2022 and last but one in the EU in terms of quality of life and social well-being (social progress index), after countries such as Barbados (40th), Argentina (41th) or Hungary (42th). According to the study, Romania scored best globally indicators on nutrition and basic medical care (93,62%), shelter (90,71%), water and sanitation (87,77%), access to communications and information (87,67%) and access to basic knowledge (85,92%), while very low scores were obtained on indicators of inclusiveness (54,69%), health and wellness (58,78%), access to advanced education (65,62%), environmental quality (66,76%) and personal freedom and choice (71,27%). The above data reflect positions obtained by measuring the national average for each category, but within the regions they are highly differentiated, reminding us of the huge disparities that characterise them (for example, if basic knowledge in 2020 was provided for 49.8%% of the population of the South-Muntenia Region, for 43.5% of the population of the North-East Region or for 42.6% of the population of the South-East Region, for the population of the Bucharest-Ilfov Region was 83.5%, a proportion very close to the EU average) [6]. This heterogeneous construction describes an unequal Romania, with growing regional socio-economic disparities, sustained by a whole network of factors, one of the most important being the unequal distribution of income (IQSR - while very high incomes are obtained only in the areas of the capital and the most developed cities of the country, the rural and peripheral areas of the cities still provide the fuel for the migration process of people seeking better income opportunities outside Romania).
Paving
the Road to Disparities?
Romania has eight development regions [7]:
As an important step we collected regional data on several issues with social variations, comparable at European level (EU-27/2020). Practically it used 27 variables:
“Equal opportunities”
“Fair working conditions”
“Social protection and inclusion”
Others variables
Variations in Social Support (Comparable Social Support in Regions)
As a first step, it was sought to identify the extent
to which that the more unequal the regions are, the worse they deal with all
types of social problems (Figure 4).
Figure 4 confirms some important results of our approach:
Dynamic of gaps – gdp per capita, income quintile share ratio, at risk of poverty rate and at risk of poverty or social exclusion
As a second step, a closer look at Figure 2 suggests that in the period 2009-2021 Romania has recovered in a relatively short period of time a gap of about 21% of the European average in terms of income per capita (from 52% in 2009 to 73% in 2021 compared to the European average). This favourable development, which best describes the huge impact that EU accession has had on the Romanian economy, signals on the one hand a complex process of rapid catching up of Romania's gaps with the EU's strong market democracies. But on the other hand at the same time with the rapid economic growth at the national level, an almost invisible process has been developing which describes the establishment of significant gaps between Romania's regions and micro-regions.
Practically:
Gap (2011) < Gap
(2021)
Where
Gap (2011) = 2011Maximum (reg.m) – Minimum (reg.n) /
GDP per capita, IQSR, AROP, AROPE
Gap (2021) = 2021Maximum (reg.m) – Minimum (reg.n) /
GDP per capita, IQSR, AROP, AROPE
(2011)Max (reg.m) – Min
(reg.n)(N) < (2021)Max (reg.m) – Min(reg.n)(N)
Where N could be GDP per capita, IQSR (income quintile
share ratio index), AROP (at-risk-of-poverty rate), and AROPE
(at-risk-of-poverty and social exclusion rate). Figure 5 exemplifies the dynamics
of the gaps annually constructed within the IQSR, GDP per capita, AROP and
AROPE. All four have decisive implications in explaining the specific social
problems of Romania's eight regions. As can be seen, the gaps have widened
rather than narrowed in the last decade of the 21th century (Figure 5 - Figure
10).
Figure 5 best illustrates as follows: over the last
decade the value of the index describing income inequality (IQSR) has increased
and the regional GDP per capita gap has widened:
Gap IQSR (2021) > Gap IQSR (2011)
(4.3>3)
And in the same time:
GapGDP per capita (2021)>GapGDP per capita (2011)
(118%>94%)
GapAROPE(2021)>GapAROPE (2011)
(33.90%>22%)
GapAROP(2021)>GapAROP(2011)
(32.7%>28.7%)
Table 1 is eloquent for our explanatory approach, highlighting the dynamics of annual regional gaps (differences) measured since 2011 for four of the variables that decisively influence their installation and preservation: