FROM GOVERNANCE TO GROWTH: INSTITUTIONAL AND MARKET DRIVERS OF GDP PER CAPITA IN ROMANIA (1998–2023)
FROM GOVERNANCE TO GROWTH: INSTITUTIONAL AND MARKET DRIVERS OF GDP PER CAPITA IN ROMANIA (1998–2023)

Summary/Abstract: This study analyses the relationship between the quality of public administration and economic growth in Romania, between 1998 and 2023. The question it seeks to answer is whether state institutions in Romania have reformed under internal or external pressures? The indicator used to measure economic performance is GDP per capita correlated with other indicators that measure real convergence such as governance, quality human development, financial market development, foreign direct investment and fiscal capacity. To capture the structural changes, the period under review is divided into four subintervals, reflecting structural and economic changes and external pressures: 1998- 2006 (pre-EU accession period), 2007-2015 (global financial crisis), 2015-2019 (recovery period) and 2020-2023 (COVID 19). The results confirm that public institutions in Romania improved when only there were external pressures to make administrative reforms: required to join EU (1998-2006), required by International Monetary Fund (2007-2015), required to access EU pandemic recovery funds (2020-2023). In the absence of these pressures, the quality of institutions decreased (2015-2019). These results confirm the Public Choice theory and crisis triggered reform (Rodrik, 2007), reflecting the importance of conditionality and external anchoring in governance transformation.

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