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Angela ALBU, „Ştefan cel Mare” University of Suceava, Romania Paolo ANDREI, University of Studies in Parma, Italy Stefano AZZALI, University of Studies in Parma, Italiy George P. BABU, University of Southern Mississippi, USA Christian BAUMGARTNER, International Friends of Nature, Austria Grigore BELOSTECINIC, ASEM, Chi şinău, Republic of Moldova Ionel BOSTAN, „Alexandru Ioan Cuza” University of Iaşi, Romania Aurel BURCIU, „Ştefan cel Mare” University of Suceava, Romania Slobodan CEROVIC, Singidunum University, Belgrade, Serbia Simion CERTAN, State University of Chişinău, Republic of Moldova Carmen CHAŞOVSCHI, „Ştefan cel Mare” University of Suceava, Romania Liliana ELMAZI, Tirana University, Albania Manuela Rodica GOGONEA, Academy of Economic Studies, Bucuresti, Romania Cristian Valentin HAPENCIUC, „Ştefan cel Mare” University of Suceava, Romania Elena HLACIUC, „Ştefan cel Mare” University of Suceava, Romania Elena IFTIME, „Ştefan cel Mare” University of Suceava, Romania Marian JALENCU, State University of Chişinău, Republic of Moldova Miika KAJANUS, Savonia University of Applied Sciences, Iisalmi, Finland Mariana LUPAN, „Ştefan cel Mare” University of Suceava, Romania Alunica MORARIU, „Ştefan cel Mare” University of Suceava, Romania Carmen NĂSTASE, „Ştefan cel Mare” University of Suceava, Roman ia Alexandru NEDELEA, „Ştefan cel Mare” University of Suceava, Romania Abraham PIZAM, University of Central Florida, Orlando, Florida Ion POHOAŢĂ, „Alexandru Ioan Cuza” University of Iaşi, Romania Ionuț POPA, Academy of Economic Studies, Bucharest , Romania Gabriela PRELIPCEAN, „Ştefan cel Mare” University of Suceava, Romania Petru SANDU, Elizabethtown College, Pennsylvania, USA Adrian Liviu SCUTARIU, „Ştefan cel Mare” University of Suceava, Romania Doru TILIUŢE, „Ştefan cel Mare” University of Suceava, Romania Viorel ŢURCANU, ASEM, Chişinău, Republic of Moldova Diego VARELA PEDREIRA, University of A Coruna, Spain Răzvan VIORESCU, „Ştefan cel Mare” University of Suceava, Romania Marian ZAHARIA, Petroleum-Gas University of Ploiești, Romania
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3
RURAL ENTREPRENEURSHIP IN THE NORDIC COUNTRIES ............................................................................................. 7 CARMEN NASTASE ANCUȚA LUCACI
ASF EVOLUTION AND ITS ECONOMIC IMPACT IN EUROPE OVER THE PAST DECADE ......................................... 18
ADRIAN STANCU THE IMPACT OF GREEN TAXES AND OF FISCAL MEASURES ON COMPETITIVE SUSTAINABLE TOURISM IN ROMANIA ......................................................................................................................................................................................... 28
NICOLETA ASALOȘ FOOD INDUSTRY - ECONOMIC CATEGORIES AND PROCESSES SPECIFIC TO THE SECONDARY SECTOR ....... 36
CRISTINA-MIHAELA LAZĂR EVOLUTION OF FOREIGN TOURISTS NUMBER IN THE EUROPEAN UNION MEMBER STATES .......................... 43
ADRIAN-LIVIU SCUTARIU THE PUBLIC PRIVATE PARTNERSHIP MODE IN BEIJING CULTURAL TOURISM .................................................... 53
YUYAN PAN ALEXANDRU-MIRCEA NEDELEA
THE PERCEPTION OF YOUNG CONSUMERS ABOUT THE CIRCULAR ECONOMY ..................................................... 60
MIHAELA STATE DANIELA MIHAELA NEAMȚU
RELIGIOSITY– A MARKETING PERSPECTIVE ...................................................................................................................... 67 HORAŢIU VASILE BORZA SMARANDA ADINA COSMA
LEADERSHIP BASED ON EMOTIONAL INTELLIGENCE IN MODERN ORGANIZATIONS ......................................... 73
CAMELIA BĂEȘU ETHICAL LEADERSHIP PERSPECTIVES IN ORGANIZATIONS ........................................................................................ 79
DANIELA MIHAELA NEAMȚU RUXANDRA BEJINARU
EVALUATING THE IMPACT OF ICT INVESTMENT PROJECTS ........................................................................................ 89
LAURIAN GABRIEL TĂNĂSESCU
RECOGNITION AND ASSESSMENT OF IDENTIFIABLE AND UNIDENTIFIABLE INTANGIBLE ASSETS .............. 99 MIHAELA TULVINSCHI
EVOLUTION ANALYSIS OF CREDITS BY SECTORS ACTIVITY IN ROMANIA ........................................................... 107
ANIŞOARA APETRI CAMELIA MIHALCIUC
BANK ASSETS QUALITY. NON-PERFORMING LOANS IN ROMANIA ........................................................................... 114
GHEORGHE MOROȘAN LAURENTIA ELENA SCURTU
THE FIELD OF MEASURING FINANCIAL PERFORMANCE: AN OVERVIEW ............................................................... 124
VERONICA DEAC COMPARATIVE ANALYSIS OF THE LOWEST SALARY FROM 2017 TO 2018, REGARDING THE CONTRIBUTION RATES TO BE PAID BY THE EMPLOYEE AND THE EMPLOYER. ................................................. 132
IOANA CRISTINA CIRCA (BUZDUGA)
ASPECTS OF STATISTICAL ANALYSIS OF THE COMPETITIVENESS AND PERFORMANCE IN TOURISM ....... 137 ELISABETA R. ROȘCA
SHORT REVIEW OF ELECTRONIC TRADE ........................................................................................................................... 148
EUGENIA IANCU TUDOR COLOMEISCHI
STATISTICAL CHARACTERIZATION OF HUMAN DEVELOPMENT IN ROMANIA AND THE EUROPEAN UNION ........................................................................................................................................................................................................... 155
GRAȚIELA BRÂNZĂ BIG DIGITAL MEDIA DATABASES IMPACTING E-COMMERCE .................................................................................... 161
ȘTEFAN SFICHI
THE GOVERNANCE PROCESS IN THE EUROPEAN UNION - BREXIT AND FUTURE OBJECTIVES...................... 170 PETRONELA SCUTARIU VALENTINA ALINA ADOMNICĂI
5
7
Professor PhD Carmen NASTASE
Ștefan cel Mare University of Suceava, Romania [email protected]
PhD Student Ancuța LUCACI
Ștefan cel Mare University of Suceava, Romania [email protected]
Abstract:
The aim of this paper is to analyze the importance of rural entrepreneurship in the Nordic countries. Over the
years, many countries have implemented different policies and programmes in order to stimulate entrepreneurship in
the rural areas. Currently, entrepreneurs from the Nordic countries are encouraged to identify new business
opportunities in rural areas and to transform them in successful business ideas with the certain purpose of creating new
jobs and increasing the income of this rural areas. This paper provides a view of rural entrepreneurship at the local
level in terms of its socioeconomic contribution. In all four Nordic countries many of the highlighted characteristics of
rural entrepreneurship are similar, with a focus on innovation and the early embrace of new competitive technologies.
The results of the analysis show that in the Nordic countries innovation, entrepreneurship and modern technology
create new opportunities and rural areas are regarded as important for the development of a sustainable society.
Key words: entrepreneurship, rural entrepreneurship, innovation, Nordic countries
JEL classification: H89, L83
1. INTRODUCTION
The Nordic countries are the furthest corner of Europe, with only twenty-five million
inhabitants. The Scandinavian landscape itself, including its wilderness, sparsely populated areas,
and vulnerable natural sites, provides avenues for prospective specialization and innovative rural
tourism products, distinguishing Scandinavian rural tourism from other parts of Europe (Hjalager,
2018). The democratic economic and social model of the Nordic countries, where tax rates are high
and the state offers supportive solutions to its citizens in need, has discouraged the entrepreneurial
initiatives, which are considered risky. However, in the last years, the need of financial success has
gained ground in a society with strong economic security. The sector is based on the Nordic model
of a tax-financed supply of services with a political objective of equal access for all (Olsen, 2016).
Therefore, there are more and more entrepreneurial initiatives, especially in the rural environment,
which is the majority in these countries. In fact, business tax rates in the Nordic regions are
comparable to the rest of Europe and some countries, like Denmark, have a liberal labour market
where it is easy to lay off staff. Anyway, this does not mean that entrepreneurs in this region are not
challenged by the legislative environment that imposes most taxes and capital gains, but perhaps
this is partly offset by the fact that the region is among the least corrupt in the world, with effective
governance structures and digitized public sector. Results point to potential policy actions that
could positively impact rural development as well as individual firm actions that may enhance
performance (Nybakk, 2008).
2. RURAL ENTREPRENEURSHIP IN THE NORDIC COUNTRIES
Nordic cooperation is well established, has a long history and covers a number of political
fields; regional policy being one of them (Nordregio, 2011). Much of the region’s ability to create
(for which the Scandinavians even have a special word, „skaberkraft”, i.e. the power to create)
comes from the high level of education. Education is not only free, residents can also receive a
grant while pursuing higher education. Free education leads to a general education level which is
among the highest in the world, providing entrepreneurs with skilled workforce in most fields.
The entrepreneurial ecosystem, according to Global Entrepreneurship Index of 2018 (Table
no. 1), shows that the Nordic countries are ranked in the top 10 places:
Table no. 1. The entrepreneurial ecosystem of the Nordic countries
Country GEI 2018
lower limit
GEI 2018
upper limit GEI 2018
Rank
2018
GEI
Rank
2017
United States 77,5 89,7 83,6 1 1
Switzerland 72,5 88,4 80,4 2 2
Canada 73,9 84,6 79,2 3 3
United Kingdom 73,6 81,9 77,8 4 8
Australia 69,0 82,0 75,5 5 7
Denmark 64,8 83,8 74,3 6 5
Iceland 63,6 84,7 74,2 7 6
Ireland 66,8 80,6 73,7 8 9
Sweden 67,1 79,1 73,1 9 4
France 59,9 77,1 68,5 10 13
Netherlands - - 68,1 11 -
Finland - - 67,9 12 -
Source: Global Entrepreneurship Index
The entrepreneurial ecosystem means a combination of attitudes, infrastructure and
resources. Global Entrepreneurschip Index measures both the quality of entrepreneurship in a
country and the spread and depth of the entrepreneurial ecosystem.
2.1. RURAL ENTREPRENEURSHIP IN DENMARK
Denmark is a Nordic/Scandinavian country, considered to be one of the most creative and
innovative countries in Europe, being always on top in the field of entrepreneurship. Denmark has
5.7 million inhabitants and since it is a small country, most of the startups and companies seek for
internationalization, wishing to become known worldwide. This is encouraged by the fact that
Danes are the best non-native speakers of English in the world.
Denmark is ranked first regarding opportunity perception, opportunity startup, technology
absorbtion, human capital and risk capital (Figure no. 1). Denmark is a favorable country for
startups and has stimulated over time worldwide successful companies such as: JustEat, Momondo,
Podio, Trustpilot, Vivino.
Figure no. 1. Perception of entrepreneurial development factors
Source: GEI 2017
Rural areas predominate on most of Denmark’s territory, through rural areas understanding
areas that are not built and areas that are not planned for construction. Most of the rural landscape is
used by the population for agriculture and forestry purposes.
Entrepreneurship in rural areas, most often in the industrial and agricultural sectors, has
greatly diminished in recent years. Most of the population from rural areas has opted for jobs in
major cities.
The rural areas of Denmark contribute not only with the production of food for consumption
but also with landscapes, cultural heritage and recreation. In the last years, many urban residents
have come to rural areas, either to settle in the region or only for visiting. However, the rural areas
of Denmark are currently facing a decline in population and emplyment, which means a small
number of businesses.
2.2. RURAL ENTREPRENEURSHIP IN FINLAND
The Finnish entrepreneurial scene is characterized by strong people with clear dreams and
ideas. Companies in Finland face very little bureaucracy, decisions are taken quickly, businesses
acting efficiently after a planning and a careful preparation. The Finnish market is not very large,
with only 5.3 million inhabitants, so entrepreneurs have to move to international markets very early.
Finland is always looking for new startups, especially in the field of technology. As is well
known, Finland is a country well-known for high-tech products (the Nokia mobile phone - which
has fallen). Although it has frequently ranked among the top categories of innovation and
competitiveness, Finish society is quite discouraging for personal ambitions.This fact is also
influenced by the Finish educational system, which focuses on equality rather than excellence.
According to Figure no. 2, among the 14 components of the entrepreneurial ecosystem,
Finland occupies the largest position in the following areas: opportunity startup, startup skills,
opportunity perception, cultural support and technology absorption. The weakest is in the areas of
competition, human capital and risk capital.
Figure no. 2. Perception of entrepreneurial development factors
Source: GEI 2017
Finland’s rural environment is beautiful, dynamic and very clean. It is dominated by busy
villages, forests, lakes, specific and fun events, innovative companies and modern technologies.
In Finland, more than 40% of businesses are active in rural areas. Small companies and
farms are opened in the countryside, among the main areas in which they operate being tourism,
machinery contracting, various services models, wood processing, food industry, electricity.
Entrepreneuriship is promoted in various fields, mainly for job creation. Rural
entrepreneurship is promoted both by the Ministry of Agriculture and Forests and by the Rural
Development Programe for Mainland Finland.
2.3. RURAL ENTREPRENEURSHIP IN NORWAY
Norway is one of the richest countries in the world, its inhabitants being known as digitally
advanced and early adopters of technology, being eager, willing and able to pay for the latest
technology, making from Norway a unique testing market. It can be found in Norway loyal and
advanced expertise in the field of technology of information, finance, life science, design, energy
and music technology. The startup market is prosperous, providing entrepreneurs with industry
expertise, investors and, last but not least, talents.
There are several considerations that make Norway an attractive, safe and easy country,
namely: economic wealth, economic and governmental stability, long-term trade with European
Union, as well as well-developed communication and transport infrastructure. In the top made by
Global Entrepreneurship Index, Norway ranks 21st in 2018, with a score of 56.6. World Bank
claims that it is very easy and safe to do business in Norway, according to „Ease of doing business”
report.
The norvegian capital market is under-sized, including Venture Capital funding and a
fragmented Business Angel comunity, partially offset by public suport and slow financing. In
Norway, the market is restricted, with only 5.2 million inhabitants, thus requiring early
internationalization of companies and startups. Entrepreneurship is largely a new situation for
Norway’s population, therefore its latent evolution.
Norway is one of the Nordic countries that ranks first place in terms of opportunity
perception, opportunity startup, risk capital, cultural support and risk acceptance (Figure no. 3).
Figure no. 3. Perception of entrepreneurial development factors
Source: GEI 2017
Big efforts are made in Norway to implement rural development measures and politics in
order to convince as many people as possible to live in the rural areas. Rural entrepreneurship it is
not very developed here. This is mainly due to the fact that Norwegians do not enjoy a free market
and an intense promotion of entrepreneurship, that’s why it is necessary to work a little more with
people’s mentality. Through the implementation of entrepreneurship education courses there is a
aim to promote entrepreneurship and most often in rural areas.
2.4. RURAL ENTREPRENEURSHIP IN SWEDEN
Sweden, although it is a small country with only 9.9 million inhabitants in 2017, has
produced many entrepreneurs over time. Although it is a country with high taxes and high incomes,
Sweden excels in the promotion and training of new businesses. Stockholm is the second largest
producer of billion dollar tehnology companies per capita after Silicon Valley (The Atlantic).
According to a comparative study of entrepreneurial dynamics, published by the Swedish
Entrepreneurship Forum (based on data provided by the Global Entrepreneurship Monitor), five
percent of swedish adults are involved in setting up a new company and about 6% of Swedish
adults have invested in a business started by someone else. Sweden’s entrepreneurial tradition is
quite limited and there are very few investors (Business angels) to start or develop a business. In
order to be competitive on national and international market, Sweden has learned to make its
existing companies more efficient.
Sweden ranks first place regarding opportunity perception, technology absorption, startup
opportunity and process inovation (Figure no. 4).
Figure no. 4. Perception of entrepreneurial development factors
Source: GEI 2017
The entrepreneurial scene has developed in Sweden in spite of the limited population, due to
the consideration they have created in terms of internationalization. There are Nokia, Ericsson,
Volvo. It is considered to be the most digital economy in the world because, over time, it has
invested heavily in technological infrastructure, has created high-speed internet and offered to its
citizens the posibillity to aquire computers through tax cuts. All the investments supported by the
Swedish state have given citizens physical tools and digital knowledge to encourage
entrepreneurship and consumption. Also, has created a generation of people who grew up with the
internet, being this way more opened to technological innovation.
Rural areas in Sweden, as well as in the rest of Europe, face demographic changes and
challenges. Young people go to big cities for studies and work and after graduation they settle there.
Some studies show that entrepreneurship among women is much more developed in Sweden. Rural
development is supported through the Rural Development Program.
3. SUPPORTIVE POLITICIES FOR RURAL ENTREPRENEURSHIP IN THE
NORDIC COUNTRIES
In the Nordic countries, rural development has traditionally not been approached as a policy
area in its own right, both in Denmark, Norway, Sweden and Finland. After the Second World War,
the policy in the Nordic countries was dominated by a focus on the constitution of state welfare and
regional development. Many similarities are found in terms of rural political objectives within the
four countries. In all the four countries there is the argument for supporting rural areas.
In Finland, rural entrepreneurship policies support prosperity through rational use of
resources. Moreover, this policies focus on: taking rural areas and their inhabitants into account in
all actions in society and in various administrative branches, such as using practical tools by
government and society to develop the rural environment (e.g. financing projects for rural
development). All this policies are coordinated by the Rural Policy Council. Through the Rural
Finland project - National Tourism Coordination Project, the implementation of the best practices
and development measures on entrepreneurship and rural development in the rural areas is being
pursued.
Nowadays, startups and hubs are in full ascension in Finland, among which we list Startup
Sauna, Maria 01, Oulu Game Lab, Turku Boost. Within these programs, participants take part at
real cases that provides them with a solid foundation on leadership and management, self-
development and strategic thinking. Startups, large companies and governments need innovation
clusters to support learning, sharing and developing of products and services. Moreover, it is
necessary to build business networks.
If the entrepreneurs do not have enough resources to fund their businesses, they can opt for
commercial bank loans or for Finnvera, a Finnish financing company. Also, if the business is in the
field of innovation, the entrepreneur can get support from the Finnish Agency for Innovative
Finance (www.tekes.fi). When entrepreneurs want to open a business in developing countries, a
subsidy can be obtained through the Finish Business Partnership Program (www.finnpartnership.fi).
In Finland, startups can receive a grant for business start. This grant is a form of
discretionary support for an entrepreneur by giving a sum of money in the initial stages of the
business. This grant is offered at the begining of the entrepreneur’s business, in order to help him
survive on the market.
The Danish Innovation Center (Silicon Valley) investment manager - Sebastian Lykke
Møller - states that the Danish entrepreneurial environment is unique in the following: „First,
Denmark has simplified the process of setting up a business, with only four procedures at minimum
costs. This fact has as result a flexible, transparent and secure business environment. Secondly, the
startup community enjoys a high level of confidence, making easy the connection and share of
experiences with everyone. Third, due to a well-established educational system, there are a lot of
talented people, as well as a growing scene of international players. Finally, you will have access to
an environment with large accelerators, workspaces and investors that incorporate the coldness of
Scandinavia.”.
Taking into consideration what Sebastian Lykke Møller said above, we can conclude that
four are the reasons for which Danish entrepreneurship is efficient and well-known: a simple
process of setting up a business, a high level of confidence of startup community, a well-regulated
educational system, the existence of investors that seek successful businesses.
Considering that Denmark is known as a country with high taxes and high salaries, many
foreign investors are reluctant in opening a business here. However, the entrepreneurial spirit is
alive in this country and grows among citizens. One of the reasons for which entrepreneurship is
supported and practiced very much in Denmark is the close collaboration between the Danish
government, investors, startup community and companies.
Danish rural development is regulated through legislation - the Danish Planning Act, the
Danish Forest Act, the Danish Environmental Protection Act and the Danish Agriculture Act.
In Norway, according to some studies of Norwegian Statistics Bureau, most entrepreneurs
that enter on the market choose to set up a business in professional, scientific and technical
activities. The second area in which entrepreneurs choose to set up a business is construction and
the last areas chosen by Norwegian entrepreneurs are wholesale and retail and repair of motor
vehicles and motorcycles. Also, more than half of entrepreneurs are aged between 25 and 44, with
upper secondary education. Female entrepreneurs are younger than men, and much better educated
and trained.
In order to set up a company in Norway, the startup process is easy, with low costs.
Residents are very well trained , with high skills and knowledge, employees are loyal to the
workplace and very productive. The cost of setting up R&D activities is very competitive at
international level.
Norway’s Ministry of Local Administration and Administration is pursuing policy
development in rural areas, both in terms of developing new businesses in rural areas and providing
rural individuals with decent living and equal conditions to those in the urban environment.
In Sweden there is Rural Development Policy, whose main purpose is sustainable rural
development from an economic, ecological and social point of view. The Swedish Government
helps entrepreneurs to create and develop businesses in rural areas through the following:
simplifying administrative procedures, reducing company taxes, providing business consultancy
services and improving qualifications services, providing regional business development grants and
financial assistance, improving infrastructure.
Sweden’s Rural Development Program aim is to increase employment in rural areas by
supporting entrepreneurship in rural areas. It also focuses on sustainable development, which means
that future companies will have to operate in an ecological way and preserve the natural heritage
around them.
4. STAKEHOLDERS AND SUPPORT ORGANIZATIONS - INITIATIVES OF THE
COMMUNITIES INVOLVED IN THE DEVELOPMENT OF
ENTREPRENEURSHIP IN RURAL AREAS
The Nordic countries have a long history of cooperation in the field of regional policy and
rural development. This cooperation is based on the fact that joint learning and identified solutions
are key elements for achieving results that contribute to sustainable development as well as regional
development in the Nordic region as a whole.
The development of entrepreneurship in rural areas is supported by several programs and
actions carried out through public funds, either in the whole region or in each of the four countries.
The Nordic Cooperation Program for Regional Policy for 2017-2020 acts in the context of
three thematic groups: the Committee of Senior Officials on Regional Policy; Nordregio -
responsable for the implementation of areas of interest; Nordic public institutions which assist in
the implementation of the program. Nordic cooperation in the field of Regional Policy is composed
of the Nordic Council of Ministers for Business, Energy and Regional (MR-NER), the Nordic
Committee of Senior Officials for Regional Policy (EKR), Secretariat of the Nordic Council of
Ministers, as well as cross-border cooperation through cross-border cooperation committees,
NORA and the Western Nordic Fund.
In the Nordic countries, regions and municipalities play an important role. Regions have a
coordinating role and are responsable for the regional development strategies at regional and local
level. Compared to other European countries, the Nordic regions already have strong municipalities
and a tradition of basic movements, as well as one to achieve and support local development
initiatives. Initiatives and local stakeholders are an important factor in this process. LAG groups
represent the most prominent trained actors that support rural development at local level.
An important initiative is the Nordic Working Group on Rural Development, which aims to
make the Nordic region a world leader in developing a new and efficient regional policy through
close cooperation between different decision levels and different sectors. This strategy is
implemented through a concentrated effort in the three priority areas of action: exchange of
experience and knowledge; globalization and cross-border cooperation; the third generation
regional policy. Members of this working group include nordic officials and representatives from
Norway (Nordic Research Center for Regional Development by the Nordic Council of Ministers).
Denmark, Finland, Norway and Sweden have chosen to have active members. This working group
is tasked with experience exchanging and knowledge developing on the role of rural policy in
regional development in the Nordic countries. Its purpose is to seek to improve future cooperation
conditions among Nordic countries in terms of development and growth in rural areas.
5. CONCLUSIONS
This study contributes to the understanding the growth potential in rural tourism in Nordic
counties, hampered by innovation gaps (Hjalager, 2017). In the previous chapters it was highlighted
that the entrepreneurial ecosystem of the Nordic countries is ranked in the top 10 places in the
world (GEI, 2017). This emphasizes the importance of entrepreneurs and entrepreneurship in the
development of these countries. All four countries - Denmark, Finland, Norway and Sweden,
embrace early new technologies and consider innovation as an important pillon for competitive
entrepreneurship.
Rural areas of these countries faced different challenges over time (migration of population,
small number of businesses) but, notwithstanding, governments still try to encourage and stimulate
entrepreneurship in these rural areas through specific policies and programs. There were quite
enough persons that wished to move to the countryside and initiate and develop a new business, so
we can say that the future of rural entrepreneurship in the Nordic countries is regarded as
encouraging.
Among the reasons for which entrepreneurship and startups are very popular in the Nordic
countries we mention:
Economical and political factors
People in the Nordic countries are not afraid to take the risk of opening a new company
because of the social protection system that makes them feel safe. Governments encourage and
support technological progress within states, so it offers many facilities.
The positive attitude of the Nordic countries population towards innovation and
technological progress
The Nordic countries citizens are very open to technological progress and new inventions,
particularly in the area of IT and communication. In Denmark and Sweden, studies show that over
75% of the population (Eurostat, 2017) uses the internet every day and most of the shopping is done
online. Thereby, e-commerce it is encouraged and the opening of new startups. In Norway, the
percentage of people using the Internet is much higher, more than 90% (Eurostat, 2017). In these
countries, online shopping is not a fear for residents, as it is in Romania. It is simply a region where
IT is the order of the day, something designed to make life easier.
The existence of scientific and technological clusters
In the Nordic countries, the concept of innovative cluster is not new. The existence of
clusters in these countries has led to the opening of new startups, to the internationalization of small
and medium-sized enterprises, to the stimulation of innovation and technological progress, to the
protection of small and medium-sized enterprises by large companies. In Denmark there are clusters
in the following areas: IT & C, bioenergy, food industry, wood industry, furniture industry. There is
also in Denmark a program that supports science and technology clusters: RTC (Regional
Technology Centers) - 10 million (from 2 to 4 years) with 40% co-financing from companies and
public authorities.
Supporting talents and encouraging competitions between talents
In the Nordic countries, universities provide students with business incubators, offers them
access to specific entrepreneurial courses and mentoring programs, all this with the purpose of
encouraging and promoting entrepreneurship. As is well known, entrepreneurship is the engine of
economic development and the opening of new successful startups requires the education and
training of young people in high schools and universities in the field of entrepreneurship education.
Since students in the Nordic countries are very well educated in most areas, current and future
entrepreneurs can find potential employees very well trained in order to help them build successful
businesses.
The internationalization of startups in the Nordic countries in a fast rhythm
Startups in the Nordic countries have been the subject of a fast process of
internationalization, due to entrepreneurial abilities of citizens. Moreover, most of the residents in
Denmark, Norway and Sweden are very good english speakers, a fact that accelerated the process of
internationalization.
The existence of an informal networking that unites new entrepreneurs with experienced
entrepreneurs
The creation of a such community has led to a major exchange of information between
entrepreneurs. In this countries are very well known counseling sites for startup businesses.
Therefore, through networking and communities, people share together knowledge and information
with the purpose of helping each other in their businesses.
The availability of risk capital
The availability of risk capital (Venture capital) on Nordic countries market helps especially
the startups and the businesses with high development potential on long term and also to have a
good start on the market. The value of risk capital comparative with the existing GDP in the Nordic
countries is much more larger than in the others european countries.
Catalyst programs for small and medium-sized enterprises and for newly established
enterprises
This catalyst programs in the Nordic countries are a new and modern model of business
incubators, which attract small teams and provides a number of technological companies with
financing (for mentoring and training).
Many of the challenges highlighted are the same across all four countries and between the
various levels in each. The effects of the underlying trends creating the challenges however bring
about different results at the different geographical and administrative levels.
Acknowledgement
„This work was supported by a grant of the Romanian Ministery of Research and
Innovation, CCCDI-UEFISCDI, project number PN-III-P1-1.2-PCCDI-2017-0884/56
PDDCI/03.04.2018. , within PNCDI III”.
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18
Professor PhD Adrian STANCU Petroleum-Gas University of Ploiești, Romania
Abstract:
African swine fever (ASF) is a virus that has widely spread in the last years. Even if ASF is a non-human
transmission virus, it affects both domestic and wild pigs with significant negative impact on country’s economy.
Firstly, this paper emphasizes the main reasons for which the ASFV is deemed a very powerful virus and it presents the
international and European organizations which fight against ASF. Considering the two major ways of transmission of
ASF, namely sick animals and vectors, the evolution of the number and date of outbreak was analyzed for both domestic
pigs and wild boars in Europe, between 2009 and 2018. The results showed that ASF virus transmission to domestic
pigs was not made by the sick wild boar.
Key words: African swine fever, domestic pigs, wild boar, outbreak, Animal Disease Notification System
JEL classification: D18, L66, P46,
1. INTRODUCTION
African swine fever virus (ASFV) belongs to Asfarviridae Family, it is the only member of
the genus Asfivirus and it represents the swine’s hemorrhagic and endemic disease. It was
discovered in Kenya by R. Eustace Montgomery during his research between 1910 and 1917.
Initially, ASFV affected the sub-Saharan countries and it extended in Europe starting with 1957,
when Portugal recorded the first outbreak (Plowright, 1986; Simulundu et al, 2017).
ASFV is a double-stranded DNA virus and it replicates in the reticuloendothelial system of
the swine (Dixon et al, 2000; Atuhaire et al, 2013). ASF epidemiology is different among countries,
regions and continents due to the type of hosts, environmental conditions, (Gallardo et al, 2015), the
movement of fomites, etc.
According to the World Organization for Animal Health (OIE) there are two types of
ASFV’s hots (OIE, 2013):
Animals such as African wild swine (warthogs), bush pigs, giant forest hogs in Africa
and domestic pigs, European wild boar, and American wild pigs;
Ticks of the genus Ornithodoros.
The transmission of ASFV is by (OIE, 2013):
direct transmission due to the contact between sick and healthy animals mentioned
above;
indirect transmission through infected meat, soft ticks and fomites (e.g. clothes, vehicles,
feed, etc.);
tick vector.
The ASFV is a very powerful virus due to at least 8 reasons mentioned in table no. 1.
The international organizations which fight against ASF are the World Organization for
Animal Health (OIE) and the Global African Swine Fever Research Alliance (GARA). The World
Organization for Animal Health (former Office International des Épizooties) with the headquarters
in Paris has 182-member countries (including Romania) and it is coordinated by the World
Assembly of Delegates which unites the delegates of all 182-member states. OIE’s main objectives
are: (i) to inform about the animal diseases in the member countries based on their reports, (ii) to
update its members with regard to the latest scientific methods used to test and eliminate the animal
disease, (iii) to provide expertise for animal diseases, (iv) to develop health standards for animal
health which are recognized by the World Trade Organization, (v) to improve the veterinary
infrastructure of developing and transition countries, and (vi) to ensure the animal welfare and food
safety through its normative documents which are correlated with the Codex Alimentarius
Commission’s standards (OIE, 2018).
Global African Swine Fever Research Alliance (GARA) is an international organization
which is presided by the 7 members of the Executive Committee. They are elected by the 33
worldwide institutions from veterinary domain (e.g. USDA ARS Foreign Animal Disease Research,
Plum Island Laboratory, National Centre for Foreign Animal Disease, Faculdade de Medicina
Veterinária, The Pirbright Institute, etc.) which are in fact their members. GARA collaborates with
other 7 institutions on research projects. The GARA’s main goal is to conduct and manage a global
research in order to understand, prevent, identify, control and eradicate the ASF (GARA, 2018).
Table no. 1. The main reasons for which the ASFV is a very powerful virus
No. Criterion Description
1. Transmission It is made through both animals and vectors (ticks)
2. The depth of the
transmission
It is very high in the case of ticks because ASFV has a transstadial,
transovarian, and sexual transmission
3. Spread The ASFV is a transboundary disease which easily spread from a country to
another through fomites
4. Activation The virus has a wide pH activation scale which corresponds to most common
human food, i.e. 3.6 – 11.5;
The virus is active for a long period of time in blood (540 days for blood at 4C
and 105 days for putrefied blood), faces (11 days at room temperature), and
tissues (1000 days for frozen meat, 300 days for dried meat, skin and fat, 182
days for salted meat, 110 days for chilled meat, 105 days for offal, 30 days for
smoked and deboned meat, etc.) for uncooked pork and pork products
5. Inactivation The virus becomes inactive at 56C for 70 minutes or 60C for 20 minutes
6. Source The source is very wide starting with blood, tissues, and secretions and
finishing with excretions of both sick and dead pigs
7. Prophylaxis Treatment and vaccination were not developed until now even if there is more
than a century since it was reported in 1910 by R. E. Montgomery
8. Impact It has economic, social, psychological, and medical impact
Source: Made by author based on OIE, 2013; USDA, 2018; Plowright,1986; FAO, 2017; EFSA, 2010
In the European Union, food safety stands as a basic principle related to consumer rights
(Ene, 2012; Ene and Matei, 2012). In this context, the European Food Safety Authority (EFSA)
manages the animal health and welfare, and the ASF respectively. The Animal Disease Notification
System (ADNS) has its roots in IDA (Interchange of Data between Administrations) programme
which started in 1985 (Eur-Lex, 2005; IDABC, 2005).
The ADNS was operational after 2000, and it manages the outbreaks with respect to animal
diseases in 46 countries which provide the necessary information. All UE member states and 12
non-EU member states (Norway, Iceland, Andorra, Faroe Islands, Turkey, Macedonia, Serbia,
Montenegro, Switzerland, Albania, Bosnia and Herzegovina, and Kosovo) are part of ADNS
(European Commission, 2015). In ADNS, the collecting of data and the exchange of information
among countries and the European Union is made through a web platform (figure no. 1). Each
national veterinary authority shares their animal disease outbreaks and keeps the others informed
about their evolution (Animal Disease Notification System, 2018; Directorate-General for Health &
Consumers, 2009).
Figure no. 1. ADNS’s interface of web platform
Source: Quintans, S. (2012), Notifications and exchange of information at national internal and EU level, Better
Training for Safer Food BTSF, https://www.mapama.gob.es/es/ganaderia/temas/sanidad-animal-higiene-
ganadera/emergentes10_tcm30-111758.pdf
2. EVOLUTION OF AFRICAN SWINE FEVER
As it was mentioned above, the ASF affects both the domestic pigs and the wild boars. In
his chapter the number and date of outbreak are analyzed for both domestic pigs and wild boars in
order to find out whether the ASF virus was transmitted to the domestic pigs by the sick wild boar
or not.
2.1. EVOLUTION OF AFRICAN SWINE FEVER FOR DOMESTIC PIGS
Figure no. 2 shows the number of ASF outbreaks in the case of domestic pigs in Europe
between 2009 and 2018. During these last 10 years, only 8 out of 46 countries reported outbreaks.
For a better view, the 2009-2018 period was divided into four subperiods. Thus, between 2009 and
2011, Italy was the only country that reported ASF outbreaks with a peak in 2011, i.e. 31 outbreaks
(figure no. 2a).
In the second subperiod (2012-2014), Italy remained the main country which notified
outbreaks of ASF with a maximum value of 109 in 2013 (251% higher than the value in 2011).
Starting with 2014 year, three more countries, Latvia, Lithuania and Poland reported outbreaks on
their territories (figure no. 2b).
In 2015, Estonia reported the highest number of outbreaks (18) being followed by Italy (16
outbreaks), Lithuania (13 outbreaks), Latvia (10 outbreaks), and Poland (2 outbreaks). The next
year brought important changes, i.e. Italy had the highest number of outbreaks (23) and at close
range there were Poland (20) and Lithuania (19). It can be noticed that Latvia and Estonia reported
fewer outbreaks in 2016 as compared to 2015, whereas Romania, Ukraine, and Bulgaria are still the
countries with no outbreaks to be notified (figure 2c).
In 2017, Ukraine was the country which reported the highest number of outbreaks (124).
Due to its border with Ukraine, Poland had the second number of outbreaks (81). In addition,
Lithuania reported with 76.47% more outbreaks than Italy (figure 2d). In 2018, the number of
outbreaks increases with 296.6% which is mainly due to Romania because it weighs 76.87% of the
total number of outbreaks. Lithuania and Poland reported higher number of outbreaks as compared
to 2017, with 63.33% and 29.62% respectively (figure 2d).
Figure no. 2. The number of ASF outbreaks for domestic pigs in Europe between 2009 and
2018* Source: Made by author based on data in Animal Disease Notification System (ADNS) Report Summary Animal
Disease Notification System: Outbreaks per Disease 2009-2018, https://ec.europa.eu/food/animals/animal-
diseases/not-system_en *Data is updated until 2nd September 2018 based on the Report published in 3rd September 2018.
There is a significant difference in the number of outbreaks among the 8 countries due to
either the absence of ASFV in their territory or to problems in reporting to the European
Commission. Overall, the number of outbreaks notified by the ADNS’s member states had
increased from 43 in 2009 up to 1051 at present. As figure no. 3 shows, the ASF moved from the
Central and Northern Europe countries to Eastern European countries owing to the actions taken in
Italy and Latvia to reduce the spread of ASF.
Another issue that must be analyzed is the date of the last outbreak. Figure no. 4 shows the
month of the last outbreaks of ASF for domestic pigs in Europe between 2009 and 2018. Thus, in
the case of Italy, the number of outbreak (figure no. 2a) is correlated with the month of the last
outbreak (figure no. 4a) because the additional outbreaks identified in 2010 and 2011 caused the
date of the last outbreak to change from May to July and December. Between 2012 and 2014, the
month of the last outbreak was between August and December. August was the last outbreak for
Poland and Lithuania in 2014, September was the last outbreak for Latvia, while December and
October were the last outbreaks for Italy (figure no. 4b).
In 2015, Poland was the only country that recorded the last outbreak in the first semester
(January) of the year. In the other countries, the last outbreak occurred in the second semester of the
year, i.e. September (Estonia and Latvia), October (Lithuania) and November (Italy).
Figure no. 3. Progression of ASF outbreaks in Europe for domestic pigs in 2015 contrasted
with 2018 Source: Made by author based on data in Animal Disease Notification System (ADNS) Report Summary Animal
Disease Notification System: Outbreaks per Disease 2015, 2018, https://ec.europa.eu/food/animals/animal-
diseases/not-system_en
In 2016, firstly, there were slight changes in case of Estonia where the last outbreak was one
month sooner than in the previous year, and for Lithuania where the last outbreak was one month
later than during the previous year. Secondly, in Poland, the last outbreak occurred in September,
while Latvia and Italy reported the same month as in the previous year (figure no. 4c).
Figure no. 4. The month of last ASF outbreaks for domestic pigs in Europe between 2009 and
2018* Source: Made by author based on data in Animal Disease Notification System (ADNS) Report Summary Animal
Disease Notification System: Outbreaks per Disease 2009-2018, https://ec.europa.eu/food/animals/animal-
diseases/not-system_en *Data is updated until September 2nd, 2018 based on the Report published in September 3rd, 2018.
Ja – January, My – May, Jy – July, A – August, S – September, O – October, N – November, D – December.
In 2017, in Estonia and Lithuania the last outbreak was in September, which Latvia and Italy
reported in October, Poland in November, and Ukraine in December (figure no. 4d). The date of
outbreaks in 2018 cannot be analyzed objectively because the last available report comprises data
until September 2nd. However, 5 out of 7 countries recorded the last outbreak in August. In Italy the
last outbreak occurred in May, while in Romania the last outbreak registered in September.
2.2. EVOLUTION OF AFRICAN SWINE FEVER FOR WILD BOAR
Figure no. 5 is illustrative of the ASF outbreaks among wild boar in Europe between 2009
and 2018. The analysis is made by following the same procedure described in the previous sub-
chapter. Between 2009 and 2011, Italy was the only country that recorded ASF outbreaks in the
wild boar. The highest number of outbreaks was in 2011 (figure no. 5a).
In the following 2 years, Italy continued to be the only country which reported ASF
outbreaks, but the number of outbreaks increased over 5 times in 2012 and over 22 times in 2013 as
compared to 2011. Taking into account the number of countries and the number of outbreaks, 2014
represents a milestone for both criteria. Thus, 4 new countries (Estonia, Latvia, Lithuania, and
Poland) recorded ASF outbreaks in the wild boar and Latvia’s number of outbreaks was with
393.3% higher than in Poland, with 260.9% higher than in Estonia, 228.8% higher than in
Lithuania, and 111.42% higher than in Italy (figure no. 5b).
Figure no. 5. The number of ASF outbreaks for wild boar in Europe between 2009 and 2018*
Source: Made by author based on data in Animal Disease Notification System (ADNS) Report Summary Animal
Disease Notification System: Outbreaks per Disease 2009-2018, https://ec.europa.eu/food/animals/animal-
diseases/not-system_en *Data is updated until 2nd September 2018, based on the Report published in 3rd September 2018.
In 2015 the number of outbreaks increased dramatically as compared to 2014 for 4 out of 5
countries that recorded outbreaks. The rate of increase in outbreaks was 17.6 times in Estonia, it
expanded by a factor of 5 in Latvia, becoming 2.4 times larger in Lithuania, while in Poland it
increased 1.7 times. Italy was the only state in which the number of outbreaks decreased by 0.65
times. The year 2016 brought out a new wave of augmented outbreaks for all states. Thus, the
number of outbreaks escalated by 186.9% in Italy, 172.9% in Lithuania, 50.9% in Poland, 45.5% in
Estonia, and by 14.8% in Latvia (figure no. 5c).
Starting with 2017, two new countries started to report ASF outbreaks in wild boar, i.e.
Czech Republic (202 outbreaks) and Ukraine (37 outbreaks). In the case of Estonia and Italy, the
number of outbreaks decreased by 39.4% and 29.5% respectively as compared to 2016. Instead,
Latvia, Lithuania, and Poland recorded higher numbers of outbreaks: 9.4%, 338.2% and 826.2%.
Even if the available data for 2018 ends by September 2nd, it can be noticed that Hungary and
Romania recorded their first outbreaks of ASF in wild boar, whereas Poland already faces 251
times more outbreaks as compared to the previous year (figure no. 5d).
As regards the date of the last outbreak, figure no. 6 shows the month of the last ASF
outbreaks in wild boar in Europe between 2009 and 2018. During the first sub-period, the month of
the last outbreak in Italy fluctuated significantly, starting with November in 2009, continuing with
April in 2010, and ending with December in 2011 (figure no. 6a).
Figure no. 6. The month of last outbreaks of ASF for wild boar in Europe between 2009 and
2018* Source: Made by author based on data in Animal Disease Notification System (ADNS) Report Summary Animal
Disease Notification System: Outbreaks per Disease 2009-2018, https://ec.europa.eu/food/animals/animal-
diseases/not-system_en *Data is updated until September 2nd, 2018 based on the Report published in September 3rd, 2018.
Ja – January, Ap – April, Jy – July, A – August, N – November, D – December.
Between 2012 and 2014, there were no major differences because in 2014 all five reporting
countries (Poland, Lithuania, Latvia, Italy, and Estonia) had December as the month of the last
outbreak. Only in 2012, Italy recorded its last outbreak in November (figure no. 6b). In the third
sub-period, December was the month of the last outbreak for all these five countries (figure no. 6c).
In 2017, December was again the month of the last outbreak in all seven reporting countries
(Ukraine, Poland, Lithuania, Latvia, Italy, Estonia, and Czech Republic). In 2018, it can be noticed
that Ukraine, Italy, as well as the Czech Republic have recorded outbreaks in July, January, and
April (figure no. 6d). For the other countries the month cannot be interpreted because it depends on
the published date of the ADNS’s last report which was September 3rd.
3. ECONOMIC IMPACT OF ASF
As it was shown in table no. 1, ASF has economic, social, psychological, and medical
impact. In the case of economic impact, the livestock industry, agriculture, food industry, trade, and
tourism are most vulnerable.
Firstly, ASF has negative impact on livestock industry because all infected animals must be
slaughtered, and the mortality rate is approximately of 100% in the acute form of the disease (OIE,
2013). There is total loss for both individual breeders and stock farms. For example, in Romania,
ASF recorded in 2018 lead to the slaughtering of 348,691 domestic pigs out of 4,129,293 which is
the total number of domestic pigs (ANSVSA, 2018; INS, 2018). Thus, during approximately 9
months, the number of domestic pigs decreased dramatically with 8.44% due to the ASF.
Secondly, the agriculture is negatively affected through the decline of feed demand as a
result of the decrease of domestic pigs and fact that feed is an indirect transmission vector of ASF
form infected to healthy pigs.
Thirdly, the companies from the food industry have to find new suppliers for pork meat if
the consumers’ demand for pork products remains unchanged. Sometimes the suppliers are form
foreign countries and the price of pork meat is high which involves a higher price of pork products
for consumers. In the case of decreasing of consumers’ demand for pork products, the companies’
sales will fall, and they have to focus on other type of meat according to the consumption patterns
on the market.
Fourthly, the export of pork meat and pork products decreases because any importing
country wants to avoid introducing ASF in their food chain. The importing companies are dealing
with the clients’ psychological pressure knowing that the meat or meat products might have been
contaminated with ASF. Also, the import of pork meat and pork products increases for countries
that recorded ASF to satisfy the domestic demand.
Fifthly, the rural tourism and ecotourism are negatively affected in the areas where ASF is
recorded because the companies that are focus on these forms of tourism offer local foods and
drinks prepared according to the traditional recipes based on local raw products (vegetables, fruits,
eggs, meat, etc.). Thus, the pork meat consumers will no longer be interested in traveling in these
areas.
4. CONCLUSIONS
Italy was the country that reported ASF outbreaks in domestic pigs starting with 2009 which
was the first year of the period that was analyzed and remained the only country that recorded ASF
for 5 consecutive years. Similarly, Latvia, Lithuania, and Poland reported continuous ASF
outbreaks in domestic pigs but for a shorter period, only between 2014 and 2018. On the opposite,
Romania and Bulgaria reported each only in one year.
In the case of ASF in wild boar, Italy was again the only country that faced outbreaks
starting with 2009 until present, while Latvia, Lithuania, and Poland recorded constant outbreaks
between 2014 and 2018. Instead Romania reported the outbreaks only in 2018.
Throughout these past 10 years, there have been 7 countries that faced outbreaks in both
domestic pigs and wild boar, namely Italy, Latvia, Lithuania, Poland, Romania, Ukraine, and
Estonia, two countries which dealt with outbreaks only in wild boar (Czech Republic and Hungary),
and one country that tackled outbreaks only in domestic pigs.
There are significant differences concerning the date of the last outbreak. August,
September, October and sometimes November are the months of last outbreak in domestic pigs,
whereas December was in most of the cases the month of the last outbreak in wild boar. This data
supports the idea that for most countries the transmission of the ASFV to domestic pigs was not
made by the sick wild boar.
The economic impact of ASFV is not insignificant taking into account that it influences at
least five of the branches of economics. Also, the ASFV has a major social, psychological, and
medical effect on humans.
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e_cards/AFRICAN_SWINE_FEVER.pdf
26. World Organization for Animal Health (OIE) (2018), Our missions,
http://www.oie.int/about-us/our-missions/
28
Professor PhD Nicoleta ASALOȘ
Ovidius University of Constanța, Romania [email protected]
Abstract:
Tourism, as a mass phenomenon, has grown over the last decades due to increased population incomes, global
infrastructure development, communication and promotion means, and last but not least, due to increased leisure time.
Tourism identifies with nature, movement, culture, health and knowledge. However, these desires have led to the
spectacular development of a new industry, i.e. the tourism industry. Tourism, if not planned and controlled through
institutional policies, can give rise to serious social and environmental imbalances. A particular problem is caused by
the air pollution entailed by the industry; the pollution sources with repercussions on the tourism potential have been
considered, in a decreasing activity rate, as follows: energetic, metallurgical, chemical, petrochemical, building
materials, wood processing, and food industry. Mixed emissions of dust, harmful gases, irritants and smelling
substances produced by the units of these industries can pollute the resources underlying the development of activities
specific to spa, leisure and relaxation tourism, cultural tourism, hunting and sport fishing.By charging environmental
impact activities, states aim to achieve environmental objectives, which is only one of the instruments used for this
purpose.
Therefore, this paper focuses on this issue, i.e. the impact of green taxes and of fiscal and social taxes on
competitive and sustainable tourism.
Key words: green tourism, green taxes, fiscal and social measures, competitiveness,
JEL classification: F64, O44, Q56, M41
1. INTRODUCTION
Tourism is seen as a form of relaxation alongside other leisure means and activities
(Holloway, 1994). It involves the temporary movement of people to destinations located outside
their usual residence and focuses on activities carried out during the time spent at those destinations
(Witt, Brooke, Buckley, 1991).
The multiple connections of tourism and its economic, social, cultural and political
implications argue for the permanent concerns about knowing its content, weaknesses and
incidents, to better understand its functioning mechanisms, hence the magnitude and complexity of
the connections between tourism, the other branches of the economy and the environment. The
natural degradation of the local environment, generated by the over-development of tourism
activities in association with a general lack of specific and integrated management programs for the
preservation of natural resources within tourist areas has resulted in economic decline in many
tourism destinations (Travis, 1980; Lozato-Giotart, 1991; Hall, 1998).
The development of the society as a whole exposed the environment to two types of threats.
One of them is directly triggered by demographic growth and urban expansion, by the rapid growth
of industry, agriculture and other fields of activity, transport and communication systems, intensive
and extensive exploitations of natural resources. The other threat, which is much less aggressive
and predominantly seasonal, derives from tourism and leisure activities.
The success of public and integrated management to safeguard natural resources on a local
scale initially depends on the efficiency of public authorities in obtaining the necessary financial
resources to develop specific environmental planning for its territory. Thus, different measures,
either at local or regional level, are adopted in order to implement a series of tourism tax collection
systems that guarantee long-term tourist economic revenues, when, in turn, these are partially
employed to sustain the local community’s future environmental and economic needs (Pazienza,
2011).
By charging environmental impact activities, states aim to achieve environmental objectives,
which represent only one of the instruments used for this purpose. Depending on the activity type,
taxation can be used in combination with other types of instruments, such as fees, tariffs or tradable
permits.
Thus, the simultaneous achievement of environmental, economic and social policy
objectives has been envisaged, because the hidden production and consumption costs are taken into
account both in terms of human health and of their impact on the environment.
2. THE RADIOGRAPHY OF TODAY’S ROMANIAN TOURISM
Over the last 20 years, Romanian tourism has been characterized by profound unrest.
Although more than 20 years have passed since the 1989 Revolution, which marked the end of the
communist era and Romania’s passage to capitalism, the situation of Romanian tourism does not
please and honor us because Romania has an enormous natural and cultural potential that is
insufficiently capitalized. Moreover, foreign and Romanian tourists encounter great difficulties in
accessing it. In terms of tourism, Romania means seaside, the Danube Delta, the Carpathians, spa
resorts, Bucovina, Maramures, Dracula; all are tourist destinations specific to different tourism
forms: seaside, mountain, spa, religious, and business. However, we are unable to create a
competitive tourism product, tailored to the tourists’ needs, and we failed to capitalize our natural
potential.
The pollution of landscapes, heritage sites and heritage buildings is another extremely
serious problem, accompanied by the local authorities’ disinterest to preserve the cultural and
historical values (such as Constanta Casino, Adamclisi, Histria).
The landscape degradation factors belong to the group of factors whose actions destroy the
environment (vegetation, wildlife, river system, etc.). Other issues add to these factors, such as
uncontrolled deforestation, uncontrolled industrial and domestic waste, unaesthetic or inappropriate
buildings/ constructions; these are only several elements that deteriorate nature, precisely where it is
most sought for its beauty.
The most serious shortcomings are caused by the construction of forest roads, which lead to
deforestation, the excavation of slopes, the defoliation of trees, which occur especially in the
Apuseni Mountains, Bucegi Mountains, in the Bila-Lala Reserve from Rodna Mountains, etc.
The degradation of natural reserves and natural monuments is also detrimental to the tourist
potential, reducing the scientific, cognitive-educational, aesthetic contribution of some unique
landmarks. The degradation of these monuments and natural reserves in our country is a result of
uncontrolled economic activities, entailing incalculable damages both scientifically and
economically, by diminishing the possibilities of their tourist value (the Danube Delta, Retezat
National Park, caves – nature monuments, etc.).
As a consumer of space and tourism resources, tourism participates implicitly in the
degradation and pollution of the environment and of the tourism potential, either through the direct
pressure of tourists on the landscape, flora and fauna, through the partial or total deterioration of
some tourist attractions, or through the wrong capitalization of certain tourist areas, points and
objectives.
Destructive activities can be numerous, especially in areas or objectives where there is an
obvious tourist concentration and where no special facilities are needed to practice different tourist
activities, especially in order to visit them. They are caused by uncontrolled tourist traffic in areas
or tourist sites located outside marked trails, leading to the destruction of vegetation and flora, the
outbreak of fires, preventing the regeneration of plants, terraced soil, poaching, hunting, which
sometimes lead to the destruction of some species.
The Romanian tourism sector has been affected by the absence of general guiding policies,
by the lack of a general policy framework for the development and sustainable management of the
tourism industry in terms of natural and cultural resources. Thus, at governmental level, a
masterplan has been drawn up, which takes into account these aspects, policies and strategies that
target this sector of national priority.
Regarding the impact of tourism on the economy, the 2018 World Travel & Tourism
Council (WTTC) report ranks Romania the 66th in the world in terms of the absolute direct
contribution of tourism to the GDP (i.e. $ 3 billion), at a great distance from the EU average (i.e. $
23.8 billion) or from the global average (i.e. $21,5 billion). In the latest global report of the World
Economic Forum on Tourism Competitiveness, Romania ranked 68th in 2017, with an aggregate
index of 3.78, on a par with Oman and Vietnam. This situation was entailed mainly by the lack of
infrastructure and the insufficient promotion of Romanian tourist destinations.
3. GREEN TAXES – GREEN TOURISM
Over the last years, perhaps from the experience of other states, but also under the
constraints of European directives, Romania has understood that it must promote green tourism,
which is responsible for sustainable development, i.e. a tourism form whereby the tourist is aware
that s/he must consume tourist services by diminishing environmental pollution as much possible
(be it natural travel, accommodation in organic units, consumption of natural products, etc.). Thus,
it contributes to the sustainable development of tourism and, why not, to changing the perception of
what tourism consumption is nowadays and what it will be in the future.
Daedalus Consulting, in partnership with Green Report, has developed the first quantitative
research on environmental issues in Romania (Daedalus Consulting, 2008). The poll appeared in
February 2008 and was conducted on a sample of 1,003 respondents. Among the phenomena with
an impact on the environment, Romanians identified worrying issues related to atmospheric
pollution (84.3%), deforestation (84.1%), genetically modified food (77.3%), industrial pollution,
drought and floods or ozone layer thinning (by over 72%) (Daedalus Consulting, "Green Thinking,
environmental survey among Romanians", February 2008).
According to the Eurostat methodology, environmental taxes can be classified into three
groups: energy taxes, transport taxes and pollution and resource use taxes.
Energy taxes include taxes on energy products used both for transport and for powering stationary
machinery. The most important products used in transport are gasoline and diesel. Natural gas, coal
and electricity are among the products used for powering stationary machinery.
Transport taxes mainly include property and vehicle taxes. Taxes on other transport
equipment (e.g. airplanes) and related transport services (e.g. charter or program fees) are also
included in this category, when they comply with the general definition of environmental taxes.
Pollution and resource use taxes apply to emissions from mobile and immobile sources, the sale of
certain goods (batteries, hazardous chemicals, tires, plastic bags, plastic and cardboard packaging)
and the exploitation of natural resources (wood, aggregates) other than those used as energy sources
(OECD, Taxation Innovation and the Environment, Paris, 2010).
Green taxes – taxes for environmental purposes – arise from the desire to preserve resources
and to offset the possible negative effects of tourism. They create an incentive to protect and restore
the environment and its resources, compensating for the tourist activity in each area.
These taxes help to:
-create funds so that destinations can invest in improvements such as environmental protection or
resource recovery;
-encourage environmental awareness amongst tourists about their use of the destination’s resources;
-promote a positive image of the destination and the companies based there by demonstrating their
environmental concern.
According to the Eurostat 2009 EU Taxation Report, since 1999, there has been a slightly
decreasing trend in the share of green taxes as a percentage of the GDP25 in the EU-1524, while in
the new Member States there is an increasing trend. The report stresses that this trend is unexpected
having in view that environmental issues have become increasingly important in recent years.
However, these developments can be explained by the actions undertaken by national governments
to limit the effects of the steady rise in oil and gas prices in recent years, and by accentuating the
use of other instruments in order to achieve environmental objectives.
Another explanation advanced by the Eurostat26 report focuses on the consequences
entailed by the decrease in the energy intensity of the industry in the EU member states caused by
the increased prices of energy sources in relation to the maintenance of fixed excises. Overall, as a
result of the implementation of minimum excises for all energy sources, the taxation profile of the
new EU Member States, except Romania, has changed after 2004, eliminating some sensitive
differences from the other EU member states in terms of incomes (Table 1, Fg.no.3).
The structure of green tax revenues in 2015 shows the key role played by energy tax
revenues in green tax receipts, which is clear for almost all countries, (accounting for some 77% of
EU-28 green tax revenues) — of which transport fuel taxes represent around 70% of receipts —
followed by non-fuel transport taxes (20%) and pollution/ resources taxes (4%).(Fig.no.2)
Changes in the structure of green tax revenues between 2005 and 2015 can be noticed in
Greece, Slovenia, Italy and Estonia, which display the largest increases in both overall green tax
revenues and in energy tax receipts.
Around 70% of energy tax revenues in the EU are raised on transport fuel. In 6 Member
States, transport fuel represents over 90% of energy tax revenues.:(Fig.no.1) Denmark, Sweden,
Italy, the Netherlands, Finland and Greece have the lowest share of transport fuel tax revenues
(between 40% and 62%). Overall, the energy tax revenue is the highest in Slovenia, Greece and
Italy (3%, 3% and 2.8% of the GDP respectively).
Figure no. 1. Environmental taxes by tax category, 2016 Source:
https://ec.europa.eu/eurostat/statisticsexplained/images/f/f2/Environmental_taxes_by_tax_category%2C_2016_%28%2
5_of_total_environmental_taxes%29.png [accesed on 11.09.2018]
Romania shows a divergent evolution compared to the other 9 post-communist EU member
states, with the largest decline in green tax revenues as a percentage of the GDP between 1999 (i.e.
the start of the EU accession negotiations) and 2007.
Figure no. 2. Total environmental tax revenue by type of tax, EU-28, 2002 -2016 (billion
EUR) Source:
https://ec.europa.eu/eurostat/statisticsexplained/index.php/Environmental_tax_statistics#Environmental_taxes_in_the_E
U [accesed on 11.09.2018]
Table no. 1. Total environmental tax revenue relative to GDP 2004-2016, EU member states
Structure by
type of tax 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Ranking
2016
Revenue
2016
bil.eur
Environmental
taxes 2.3 2.0 1.9 2.0 1.7 1.9 2.1 1.9 2.0 2.0 2.3 2.4 2.4 18 4.0
Energy 2.1 1.8 1.7 1.7 1.4 1.6 1.8 1.7 1.7 1.7 2.1 2.2 2.1 12 3.6 of which transport fuel
taxes
: : 1.5 1.3 1.5 1.5 1.3 1.3 1.4 1.7 1.7 1.7 13
Transport 0.1 0.1 0.1 0.3 0.4 0.3 0.3 0.2 0.3 0.3 0.3 0.3 0.2 21 0.4 Pollution and resources
0.14 0.09 0.08 0.02 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 25 0.0
In 2016, the total environmental tax revenue in the EU-28 represents 2.4 % of the EU-28
Gross Domestic Product (GDP) and the energy taxes (which include taxes on transport fuels)
represented by far the highest share of overall environmental tax revenue.
Figure no. 3 Source: https://ec.europa.eu/eurostat/web/products-eurostat-news/-/DDN-20180131-1?inheritRedirect=true
Environmental taxes have been used more and more to influence the behaviour of economic
operators, whether producers or consumers. These taxes in all countries generate revenue that can
potentially be used by government to increase its expenditure on environmental protection or
efficient management of natural resources. Between 2002–2015, the level of the environmental
taxation in Romania decreased below the EU average level. In 2015, this level is quite similar for
Romania and EU, although Romania ranged among the EU countries with a low share of
environmental tax of GDP.
4. FISCAL MEASURES TO RELAUNCH ROMANIAN TOURISM
The government – through its line ministries – is trying to compensate for the weaknesses of
Romanian tourism by adopting fiscal or social measures aimed at the population and at the
economic agents in this field (i.e. tourism). This paper assesses the impact of these measures, which
although are necessary in the context of prioritizing this sector within the national economy, are not
enough to place Romania at the top of tourist destinations.
Overall, Romanian tourism is on a positive trend. The sector's profitability is estimated to
reach over 200 million RON this year, i.e. double, compared to the one from ten years ago.
A recent fiscal measure adopted by the government resides in the application of the 5%
VAT rate to areas such as accommodation in the hospitality sector or in similar-function sectors
(including the rental of camping grounds), restaurant and catering services (excluding alcoholic
beverages, other than beer) sport, recreational and entertaining activities. Thus, tourism will have
the lowest VAT rate among all economic sectors. In addition, another measure that will stimulate
Romanian tourism and influence positively the population's health will be the unblocking of spa
tourism by zero royalties for geothermal water and natural mineral water, for population
consumption in public buffets. Moreover, local authorities and commercial companies will be able
to access money from the investment fund, specifically dedicated to the development and
modernization of spa resorts.
Romania risked an infringement procedure on the part of the European Commission for
failing to implement the European legislation in the field of tourism and, implicitly, for not
transposing into the national legislation the European Directive guaranteeing packages of tourist
services purchased by individuals. The Ordinance for the implementation of the Package Travel
Guideline 2302/2015 will allow the full reimbursement of the packages paid by tourists and non-
performed by tourism agencies, as well as the urgent repatriation of the tourists remaining outside
the country due to the agency's insolvency.
Starting this year, the employees in the state sector have benefited from holiday vouchers.
The government has been pursuing the revival of Romanian tourism also by limiting the
Romanians’ tendency to access tourism services abroad. The measure should produce a visible
positive impact on the tourist services market and will probably boost the hospitality industry as
well as the leisure industry. This may increase the profit for such units and perhaps even increase
their competitiveness compared to other such options abroad.
Thus, the inappropriate infrastructure and the absence of promotion, in a country whose
touristic potential is enviable, Romanian tourism will register this year the best financial result of
the last decade, boosted by these fiscal and social measures that practically compensate for the great
obstacles to the development of this sector.
5. CONCLUSIONS
The promotion and implementation of competitive and sustainable tourism require the
adoption and implementation of some measures that mainly concern the following aspects: the
preservation of all tourist functions of national parks and of biosphere reserves should be based on
tourism development plans, which should not be limited to these natural areas and which should be
part of a wider regional context. The isolated actions of partial improvements exclude the
development of sustainable tourism. All tourist facilities and equipment should be performed in a
certain style, on a certain scale, in full harmony with the local environment, using traditional local
construction materials;
Cleaner, non-polluting modes of transport should be developed by using alternative energy
sources.
For the future, there are needed new types of holidays requiring low energy expenditures,
minimizing the use of resources, preserving and protecting the environment.
The tourists and the local population should become acquainted with the role and the
implementation means of sustainable tourism; they should also be informed about the gradual
achievement of a way of living compatible with international environmental protection rules, which
is particularly useful for the development needs of future generations.
The compliance with these minimum requirements needs a political and economic
engagement of all stakeholders in the development of tourism, the achievement of real financial
support, the implementation of collaborations between international, national and local bodies.
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df
36
PhD Cristina-Mihaela LAZĂR
Ovidius University of Constanta, Romania [email protected]
Abstract:
This paper explores the approach of the agri-food industry sector, in the context of the manufacturing
industries within the national economy. At present, four categories of agri-food industries can be distinguished: the
industries that transform/process and cure perishable goods, the agri-food industries in the beverage sector (alcohol,
tonic or natural drinks), the grain-processing industries and intermediate products industries. The analysis of this
sector, which is a complex apparatus in terms of processing, distribution, marketing, etc., reveals the special
relationships that structure them, and we can practically observe that the Romanian food industry is characterized by a
relatively low productivity, by manufacturing technologies that are not among the most modern ones (obviously, there
are companies that make an exception), as well as by a certain incompatibility with the market demand. Certainly, the
revival of the food industry is still dependent on the increased competitiveness of products and, on the other hand, by
the establishment of new processing units in rural areas.
Key words: agri-food sector, transformation industries, successive processing, the Romanian food industry,
favoring factors.
JEL classification: Q1,L00, A1
1. INTRODUCTION
The food industry is one of the most dynamic and important industries in Europe, including
over 300 thousand companies. About 4 million people carry on their activities here, and the
turnover reaches approx. 1 billion euros (CE, 2011).
Although at the European level the food industry is a massive exporter of competitive
finished goods marketed on the global market, it is thought that the need for improvement is felt
nowadays. The reasons are related to bureaucratic elements, financing deficit, problematic supply of
raw materials, R & D gaps.
It should be added that, at present, the sector in question faces multiple issues stemming
from: the need to ensure sustainable development/ growth, the current environmental regulations,
health requirements, economic and financial constraints, etc. All of this is meant to influence the
consumer - in the end, the demand, in quantitative, qualitative and structural terms. We also
highlight this issue, pursuant to a series of papers from the literature (Popescu et al., 2009;
Dospinescu, 2018; Todua, 2017; Burciu et al., 2008; Bostan, 2016, 2017; Stanciu et al., 2010;
Spatariu et al., 2011).
The issues that should be solved by the European Commission (as the EU's desire is to play
a more important part on the world market) need legal solutions to promote access to foreign food
industry markets in the EU Member States.
2. INTEGRATING FOOD INDUSTRY AMONG THE PROCESSING INDUSTRY
BRANCHES OF THE NATIONAL ECONOMY
Structuring the national economy in branches, sub-sectors, sectors, etc. (Lămătic, 2001)
allows us to integrate the food industry as part of the processing industries within a country's
economic system, whose social and economic role is to produce food, meeting the population's
feeding needs.
Between the producer and the consumer, excluding direct sale, there are many economic
agents and a variety of operations that transform/ process the agricultural product and make it
available to the consumer (Constantin, 2000). The analysis of this ensemble, which involves the
transformation/ processing, distribution and marketing apparatus, reveals the complexity of the
relationships that structure them: trust, complementarity, solidarity; however, the tensions that can
be explained by competition are not excluded, with the tendency to seize as much of the specific
market as possible.
Processing industries have a relative functionality in relation to agriculture: they supply
from national markets and from other international markets through imports. The features of agri-
food industries result from their connections with agriculture (Gavrilescu & Giurca, 2000):
- agri-food industries process biological products, being thus difficult to automate the
production processes;
- they subscribe to the same qualitative and quantitative variations, but there is also the
import possibility;
- their supply depends on many exploiters, even when they are grouped;
- there is a clear dependence on the type of agricultural policy: subsidizing, supporting
certain products or limiting production, etc.
However, no matter what kind of products the agri-food industries processes, the final
product is food. This is a perishable good, its manufacture and conservation requiring special
attention. The explanation is related to the fact that the occurrence of errors can have serious
implications for the people's health.
3. PROCESSING, DISTRIBUTION AND MARKETING WITHIN AGRI-FOOD
CHAINS
Within agri-food chains, the processing, distribution and marketing chain is a whole, an
ensemble, dominated by well-founded rules and interactions (Dona, 2000).
By processing, we understand all the operations that contribute to the substantial change of
an initial product. The simplest example is represented by turning wheat into flour and then into
various products: bread, biscuits, other pastries, etc.
Once carried out by the farmers themselves, these processing operations have become more
complex, on the one hand, because of their increasing quantities, and on the other hand, due to the
technological advancement that explains the presence of specialists. Although several processing
operations have been known since the beginning of the 20th century, i.e. distillation, drying,
grinding, we can really speak about agri-food industries only after the 1960s.
From now on, the increasing mechanization, automation and continuity of production
processes have required supply regularization, so as not to interrupt the manufacturing process. This
regularization takes first the form of deliveries and then continues through the selection of
agricultural raw materials adapted to large-scale production processes.
At present, four categories of agri-food industries can be distinguished: industries that
process/transform and cure perishable products, beverage agri-food industries, such as alcohol,
tonic or natural beverage industries, grain processing industries and intermediate products
industries.
Classification of agri-food industries (UNIGRAIS, 2011)
● Group 1. Basic food industries: animal and poultry butcheries, dairy industry, animal feed
industry, oil and raw fats. These industries are characterized by the fact that they use a lot of employees and,
at the same time, they add little value.
● Group 2. Highly industrialized basic food industries: malt, semolina, sugar factories. These are
characterized by important investments that have allowed them to purchase highly sophisticated equipment.
They add more value than Group 1 products, but they also produce intermediate products.
● Group 3. Food industries of elaborated products: preserving, freezing, pastry, industrial sweets
etc. They ensure the production of agri-food goods for consumers. Their added value is important, but it
varies in terms of specialties.
● Group 4. Auxiliary food industries: spices and sauces, condiments, fruit and vegetable juices.
They develop because of strong publicity and innovation, with a good profitability level.
Source: http://www.unigrains.fr/
Looking ahead, the evolution of processing operations is strongly related to technology and
biotechnology. It is not difficult to notice that agri-food industries have stretched their activities
along three axes (Dona, 2000):
Diversification of consumption products: foods containing more and more additives: iron,
magnesium, selenium, lysine, intended to enrich the taste or to make it better; others are destined to
reduction, i.e. less sugar and fewer fatty substances.
Market segmentation with the creation of children's food, regimes for diabetics or
athletes.
Developments in industrial processing. Examples: aromatic and medicinal herbs, products
obtained by separating the constituents of the agricultural product: starch, casein, cellulose, glucose,
ethanol.
In economically developed countries, the concentration of agri-food industries has allowed
the practice of scale economies, cost reductions, widening markets and reducing competition. In
this case, at the level of companies, modern managerial and control systems were introduced.
(Figure 1).
a) Food industry – HACCP b) Quality - ISO 9001
Figure 1. Managerial systems customized to support the performance of agri-food
companies Source: http://www.tqs.ro/index.php?module
After Romania's accession to the European Union, these systems have also gained some
scope among the Romanian processors working in the analyzed sector.
4. ECONOMIC FEATURES OF THE ROMANIAN FOOD INDUSTRY
At the national level, the volume of processed agricultural goods has been declining since
1990 (the food industry represents 27% of its value - Nitulescu, 2016), especially in the dairy
sector, which is explained by the decrease in the domestic demand, the decrease in the
competitiveness of Romanian products, as well as by the decrease in the supply of the agricultural
products destined to processing.
Throughout the transition period from the centralized economy to the market economy, we
dealt with the decapitalization of units, the technological deterioration and the misunderstanding of
the importance of privatization, which was carried out with a long delay.
Nowadays, the Romanian food industry is characterized by low productivity, obsolete
manufacturing technologies as well as by incompatibility with the market demand. This has
happened despite the fact that the official statistical data reveal that the food industry represents an
important traditional branch of the Romanian processing industry, covering a significant segment of
the GDP (MADR, 2010, Tudor, 2010), being among the largest manufacturing sectors in Romania
– with a turnover of 9.7 billion euros; it is the most important employer – with 186 thousand
employees (MADR, 2015). There are 50 domineering large companies, accounting for less than 1%
of approx. 8,400 companies that are active in this field. These 50 companies achieve over 40% of
the Romanian food production and get a profit of over 4 billion euros (Nitulescu, 2016).
The sector in question still faces several shortcomings in terms of compliance with the EU
requirements/ standards, regarding food safety and quality throughout chain linking/ agri-food
entities.
We recall that "modern chains of agri-food products have developed rapidly over the past
decade due to the major investments facilitated by pre-accession programs and by NRDP 2007-
2013, but also by foreign investors. In addition, large investments made by foreign retailers in
supermarkets (...) have provided more market opportunities" (MADR, 2015).
In this respect, there is also an unwanted but expected consequence: small-scale processing
entities did not meet the new requirements (the high prices of raw materials, demanding European
standards, high investment requirements, etc.), being forced to terminate their activity.
However, if we only refer to the processing industry for animal products, it has been
functioning for a relatively long period, under its capacity (Table 1).
Table 1. Capacity and degree of using processing units for animal products Type of processing units No Total capacity (t/year) % use
milk and dairy products 253 4244040 50
beef, pig and poultry abattoirs 183 1538842 43,1
processing units for meat and meat
products
731 944327 47
processing units for canned meat and
mixed canned meat and vegetables
16 63373 25,3
Source: http://www.madr.ro/docs/agricultura/strategia-agroalimentara-2020-2030.pdf
The modernization tendency must be maintained in the future, so that in 2030, the entities
will have the modern technologies found in the most advanced European states. The revitalization
of the food industry is dependent on increasing the competitiveness of these products and on the
other hand, on the creation of new processing units in rural areas.
5. FACTORS INFLUENCING THE ROMANIAN FOOD INDUSTRY
To a large extent, the difficulties faced by the food industry come from the competition –
which presents disloyalty aspects – on the Romanian market, with imported products. The latter,
among others, are strongly subsidized by their home states.
The factors acting on the Romanian food industry are divided into two categories: those that
favor development and others that hinder the development of this sector (Constantin, 2000 Dona,
2000 Gavrilescu & Giurcă, 2000). It is well-known that Romania has got good experience in the
export of agri-food products, noticed since the first half of the last century, and which continued
during the socialism years.
As far as the first category of factors that influence the sector are concerned, we mainly take
into consideration the agricultural potential based on soil fertility and climatic conditions; we
should also mention that it is still far from being capitalized. Then, it is necessary to take into
account the industrial transformations and regressions, which – even since the transition period of
the Romanian economy – made a considerable number of people to return to rural areas. Against
this background, the macro-decision factor had to concentrate the resources on the stimulation of
agriculture.
As far as the second category of factors is concerned – which affect the development of the
food industry – we should mention the relatively modest purchasing power of the population. It is
difficult to improve this factor in the short term; its action is particularly evident when it comes to
decreasing food consumption, including meat and meat products. For example, in Romania, the
average monthly consumption of fresh meat per person was 3.4 kg in 2016 and only together with
meat products it amounted to 4.5 kg per month. This results in an average annual consumption of
54 kg per person, but it is well below the standards in developed countries (Andrei et al., 2017).
It is also worth highlighting the subcategory of factors related to financial, tax and credit
issues. Thus, during certain periods, taxation was quite high; some improvement in this respect
occurred after 2015, being connected to the emergence of the New Fiscal Code (PR, 2015). On the
other hand, the lack of credit limits the development and retechnologization possibilities of the
sector in question.
We should also add to all these the constant amendment of the legislation, given that new
regulations emerge frequently, increasing the entrepreneurs’ uncertainty in the Romanian food
industry.
It is noteworthy that when the macro-decision makers have determined that in about 10
years "Romania will have a sustainable and competitive agri-food sector centered on the export of
products with high added value, resistant to global challenges, ensuring well-being and living
conditions in rural areas close to those in the urban area", some strengths of the sector were
considered (MADR, 2015).
These include the following (Agrointel, 2014):
Significantly large agricultural areas with a high share of arable land;
High potential for the diversification of crops;
Extensive areas favorable to agricultural production (favorable climatic conditions and
fertile soil);
Satisfactory water resources;
Available local workforce;
Diversity of natural resources and local products;
A wide range of traditional products, etc.
Concerning the set of opportunities in the field (MADR, 2015), we mention those related to
the increase in the demand for agri-food products, the fact that the bio-organic production has
favorable development prospects and the growing demand for qualitative local and regional
products. In the same context, it is worth highlighting the intensification of agritourism and the
emergence of young agricultural entrepreneurs.
6. CONCLUSION
Included among the processing industries of the national economy and producing goods to
meet the population's feeding needs, the food industry is of particular importance to researchers.
A sector of this type (transformation/ processing industries) has a relative function in
relation to agriculture, supplying itself on national markets and on other international markets
through imports. An analysis of the food industry, which is a huge and complex apparatus for
transformation/ processing, distribution, marketing, etc., reveals its relationships that involve trust,
complementarity, solidarity. At the same time, the sector under discussion implies tensions,
explained by the continuous competition, the entities aiming at the domination of an increasingly
larger part of the market.
Nowadays, the Romanian food industry is still characterized by relatively low productivity,
manufacturing technologies that are not among the most modern ones (obviously, there are also
companies that make an exception), as well as by a certain incompatibility with the market demand.
The explanation implies the knowledge of what happened after the abandonment of the centralized
economic system. Since 1990, the volume of processed agricultural products has been characterized
by a downward trend, especially in the dairy sector, with a fall in domestic demand, diminishing the
competitiveness of Romanian products, and decreasing the supply of agricultural products destined
for processing. Thus, this triggered the decapitalization of units, the technological deterioration and
the misunderstanding of the importance of privatization, which took place with a lot of delay in
some branches.
In our opinion, the revival of the food industry is dependent on increasing the
competitiveness of specific products and, on the other hand, on the creation of new processing units
in rural areas. Among the measures that need to be applied to counteract the observed trend, we can
highlight, in addition to improving the mechanism at the purchase price of the products underlying
the food industry, the use of tools that do not necessarily involve budget allocations, such as
associations, better organization, processors’ integration etc.
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43
Lecturer PhD Adrian-Liviu SCUTARIU
Ştefan cel Mare University of Suceava, Romania Faculty of Economics and Public Administration
Abstract:
Tourism became one of the most important economic fields and it experienced significant increases all over
the world. In the EU it is also a very important economic sector and five of the EU Member States are in the top ten
destinations of the world. In this article we analyze the evolution of arrivals and nights spent of the foreign tourists and
total tourists, as well as the occupancy rates of accommodation capacities in the EU countries. All the indicators
analyzed have increasing trends and there are high differences among the EU Member States in terms of total number
of arrivals, nights spent and occupancy rate. The share of foreign tourists in total arrivals and nights spent number
differs quite much from country to country in the EU. Not all the Eastern and Central European countries managed to
attract foreign tourists in the same degree after the EU accession, but some of them used this opportunity and, as a
result, intensified their tourism activity. However, the most visited areas remain the ones from Southern Europe.
Key words: tourism, European Union, arrivals, nights spent, occupancy rate of accommodation capacity
JEL classification: L83
INTRODUCTION
In the last decades the tourism registered a considerable growth in all the regions of the
world. The number of foreign visitors also increased significantly due to the development of
technology and to the intensification of the possibilities of travelling (lower costs and less travel
time). Some of the EU countries are among the main tourist destinations of the world. From the top
ten destinations in the world, 5 are in the EU: France, Spain, Italy, UK, Germany, and the most
visited areas are those in Southern and Mediterranean Europe.
European Union records 40% of international tourist arrivals worldwide, 31% of
international tourism receipts and EU destinations welcomed half a billion international tourist
arrivals in 2016 (UNWTO, 2018, p.15). Extra-EU source markets account for 137 million nights in
EU accommodation establishments, most of them from the United States, Switzerland, the Russian
Federation and China, and interregional source markets account for 276 million nights in EU
establishments (UNWTO, 2018, p.49). In 2015, one in ten enterprises in the European non-financial
business economy acted in tourism field, counting 2,4 million enterprises and an estimated number
of 12,7 million persons; so, 9,2 % of the persons employed in the whole non-financial business
economy and 21,7 % of persons employed in the services sector were in enterprises in industries
with tourism related activities (Tourism Statistics – Statistics Explained). International arrivals in
the EU are expected to grow 2,3% a year until 2020 and 1,5% a year until 2030, while international
arrivals from markets outside the EU are expected to grow at a faster rate than from EU markets
(UNWTO, 2018, p.63).
In this article we analyze the evolution of arrivals, nights spent and occupancy rates in the
EU countries. We reveal the evolution and share of foreign tourists in the number of arrivals and
nights spent. We use official statistical data from Eurostat and we elaborate appropriate graphs to
highlight the trends of the indicators and the differences among the states. In all the figures showing
several countries, these are ordered by the newest available statistical data, from the highest values
to the smallest ones.
THE EVOLUTION OF TOTAL AND FOREIGN TOURISTS NUMBER OF
ARRIVALS IN THE EUROPEAN UNION MEMBER STATES
The number of arrivals and nights spent depends on the size of the country, as well as on the
touristic attractions of that country. As the EU enlarged, tourism experienced some changes also
due to the freedom of movement of persons which facilitated the travels inside the EU. Together
with the EU membership came the opportunity to attract tourists from older EU member states, of
which not all the EU countries in the Eastern and Central Europe used to the same amount
(Scutariu, 2016). We intend to see if after the first years after EU accession this situation changed or
these differences are kept.
The number of arrivals at tourist accommodation establishments recorded growth in all the
EU countries. We can notice that there are states where tourism arrivals increased significantly,
while in other ones this number slowly increased. By far, the highest number of arrivals is in
Germany, France, Spain, Italy and UK. The lowest number of arrivals corresponds to the smallest
countries of EU: Luxemburg, Malta, Latvia, Cyprus, Lithuania and Estonia (Figure no. 1).
Figure no. 1. Arrivals at tourist accommodation establishments in the E.U. Member States,
2000-2017 Source: Eurostat (http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=tour_occ_arn2&lang=en)
The share of foreign tourist arrivals in total tourist arrivals differs very much from country
to country, from approximately 90% to 21,26%, while the EU average is 39,77%. Also, the values
are fluctuating in time and the general tendency is slow increase. We can see a decrease in the
financial crisis period (2009-2010), followed by an increasing trend (Figure no. 2). So, the countries
where the foreign tourist arrivals have the highest shares are: Malta, Luxembourg, Croatia, Cyprus,
Slovenia, and the lowest shares are found in: Poland, Germany, Romania, Sweden and Finland. In
some cases, like Germany, this low share can be explained by the fact that residents travel very
much in their own country.
Figure no. 2. Arrivals from foreign countries share in total arrivals at tourist accommodation
establishments in the E.U. Member States, 2000-2017 (%) Source: Eurostat (http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=tour_occ_arn2&lang=en)
In the Annex, Table no. 1 we calculated the evolution indexes for arrivals – for total tourists
and, respectively, for foreign ones. The main increases in the period 2000-2017 were registered in:
Lithuania (increase of more than 5 times for total and foreign tourists arrivals), Latvia (increase of
more than 4 times for total and of more than 5 times for foreign tourists arrivals), Bulgaria (increase
of more than 3 times for total and of more than 4 times for foreign tourists arrivals), Croatia,
Estonia, Slovenia, Romania, Poland (increase of more than 2 times for total and for foreign tourists
arrivals). We can see that there are countries, including some of the Eastern and Central European
ones, where the number of foreign tourists’ arrivals increased higher than the total number of tourist
arrivals. This means that the proportion of foreign tourists’ arrivals increased in the total number of
arrivals. Such significant increases are in Latvia, Bulgaria, UK, Romania and Slovenia.
THE EVOLUTION OF TOTAL AND FOREIGN TOURISTS NUMBER OF NIGHTS
SPENT IN THE EUROPEAN UNION MEMBER STATES
Regarding the evolution of the nights spent at tourist accommodation establishments, we
can notice a slowly increasing trend, only few countries experiencing high increases, some of the
ones with the highest values (UK, Spain, France, Italy) (Figure no. 3.a). In this way the difference
between these and the other EU countries increased. Generally, the lowest values are recorded in
the EU smallest countries: Luxemburg, Latvia, Estonia, Lithuania and Malta.
The EU Member States are very different in terms of size and this fact gives some limits in
the information got from the comparison of the values of nights spent. This inconvenient can be
overcome by analyzing the intensity of tourism, highlighted by using the indicator nights spent at
tourist accommodation establishments expressed per thousand inhabitants. This further information
revealed from Figure no. 3.b is that the highest tourism intensity is recorded in Malta, Croatia,
Cyprus, Austria, Spain and Greece, these including areas from the Southern Europe, except Austria
– visited for mountainous tourism. The lowest values are recorded in Romania, Poland, Latvia,
Lithuania and Slovakia. The lowest values can also be the result of the short tourists’ stay that can
be caused by the insufficient diversification of the tourist product.
(a) (b)
Figure no. 3. Nights spent at tourist accommodation establishments in the E.U. Member
States, 2000-2017, (a): (number), (b): (per thousand inhabitants) Source: Eurostat (http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=tour_occ_nin2&lang=en)
The share of foreign tourists nights spent in total nights spent is having a slowly increasing
trend with fluctuations over time. The shares show high differences among the EU Member States,
from 19,57% to 95,86% in 2017, and the EU average was 49,06%. The highest rates are found in
Malta, Cyprus, Croatia, Luxemburg, Greece, and the lowest in Romania, Poland, Germany, Sweden
and Finland (Figure no. 4). Some countries have a high number of residents that travel inside the
country, so the foreigners share can be low, but other countries have difficulties in attracting foreign
tourists.
Figure no. 4. Nights spent at tourist accommodation establishments in the E.U. Member
States: share of foreign countries in total, 2000-2017 (%) Source: Eurostat (http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=tour_occ_nin2&lang=en)
The evolution indexes for 2000-2017 period for nights spent of total tourists and of foreign
ones were calculated in the Annex, Table no. 2. The main increases were recorded in: Lithuania
(increase of more than 5 times for total and for foreign tourists nights spent), Latvia (increase of
more than 3 times for total and of more than 4 times for foreign tourists nights spent), Bulgaria
(increase of more than 3 times for total and for foreign tourists nights spent), Croatia (increase of
more than 2 times for total and of more than 3 times for foreign tourists nights spent), Estonia
(increase of more than 2 times for total and for foreign tourists nights spent). In most of the
countries the number of foreign tourists nights spent increased more than the total number of
tourists nights spent, so the share of foreign tourists nights spent in total increased. The highest such
increases were recorded in: Latvia, Poland, Romania, Slovenia and UK.
The evolution index for total nights spent at tourist accommodation (per thousand
inhabitants) for the period 2000-2017 have a variety series of values. The most important increases
were recorded in Lithuania (of 6 times), Latvia, Bulgaria (of more than 3 times), Croatia and
Estonia (of more than 2 times) (Annex, Table no. 3). The EU growth average is 35%, and we notice
that most of the Eastern and Central European countries of the EU have a growth higher than the
EU average, which is a good thing as the tourism intensity in that zone was not so intense and there
is much potential for development. Some of the main touristic destinations have slow growth of
tourism intensity, which is a normal fact, taking into account the very high values of nights spent
per thousand inhabitants.
THE EVOLUTION OF OCCUPANCY RATE OF ACCOMMODATION CAPACITY
IN THE EUROPEAN UNION MEMBER STATES
The occupancy rate of accommodation capacity is also important, as it shows the efficiency
of using those resources. So, the tendency in the EU Member States is of slow increase and the
differences also tend to increase. The values are from 76,4% to 31,3% in 2017, while the EU
average was 46,21%. The highest rates are recorded in Cyprus, Malta, Spain, Croatia, Ireland, and
the lowest are in Luxemburg, Slovakia, Romania, Latvia, Poland and Hungary (Figure no. 5). This
means that in these latest six countries either the accommodation capacity is oversized, or there are
difficulties in attracting tourists.
Figure no. 5. Net occupancy rate of bed-places and bedrooms in hotels and similar
accommodation (bedplaces) in the E.U. Member States, 2000-2017 Source: Eurostat (http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=tour_occ_anor2&lang=en)
DISCUSSIONS AND CONCLUSIONS
Tourism recorded spectacular increases in the latest decades on all the continents. Europe
has always been a preferred tourism destination. In the EU tourism was and remains one of the most
important economic fields, especially in the Southern and Mediterranean zone.
As a result of our analysis, we noticed that the tourism activity evidenced by the number of
arrivals and nights spent is concentrated in some countries: UK, Spain, France, Germany and Italy.
Reported to the population of the country, the highest tourism intensity (nights spent per thousand
inhabitants) is recorded in: Malta, Croatia, Cyprus, Austria, Spain and Greece. The highest
occupancy rate of accommodation units is higher in the South of Europe: Cyprus, Malta, Spain and
Croatia. The trend of all these indicators is an ascendant one, but the growth rates differ from
country to country. The highest rates for arrivals and nights spent are registered in: Lithuania,
Latvia, Bulgaria, Croatia, Estonia, and in Slovenia, Romania, Poland the number of arrivals also
increased significantly.
The share of foreign tourists number of arrivals and nights spent in total number of arrivals
and nights spent in the EU countries also differ significantly, the highest rates being recorded in:
Malta, Cyprus, Croatia, Luxemburg, Slovenia and Greece. In many Eastern and Central European
countries the share of foreign tourists increased, the most important increases being recorded in:
Bulgaria, Latvia, Romania, Slovenia - for arrivals and in Latvia, Poland, Romania, Slovenia - for
nights spent. The share of foreign tourists also increased significantly in the UK, both for arrivals
and nights spent.
By using appropriate statistical-mathematical instruments, Algieri, Aquino & Succurro
(2016) reveal that the Northern countries have strong comparative disadvantages in tourism, while
Mediterranean countries hold a leading position in tourism, but there are other factors which may
also influence the tourism activity, such as: scale-economies, market integration and social order.
A study made on a very important tourist destination, the Balearic Islands, shows that the
demand is very dependent on the evolution of economic activity in each of the origin countries and
on the relative cost of living of tourists in the destination (Garín-Muñoz & Montero-Martín, 2007).
This facts is valid not only for Balearic Islands, having to be taken into account when creating plans
and strategies for tourism. So, this fact shows the opportunity for Eastern and Central European
countries in attracting tourists from Western Europe. In addition, the marketing tools need to be
used, so the tourist products can be remarked by the tourists. In the present competitive
environment, tourism companies, especially the small ones, must permanently use innovation tools
to differentiate from the competitors from the point of view of the product, services, personal and
image (Cosma, Paun, Bota & Fleșeriu, 2014)
Tourism industry have an ascending path in the EU new Member States, although most of
them cannot be compared with the old Member States, as they still lack infrastructure, have poorer
marketing strategies and a smaller degree of international awareness concerning their touristic
potential (Ana, 2017). The tourism activity is highly concentrated in some areas, especially in some
Western EU countries. An important idea that reveals from this study is that after 10 and more than
10 years after the EU accession not all of the Eastern and Central Europe countries took advantage
in the same degree of the EU membership opportunity to attract tourists from the older EU Member
States. There is still to work on the offers, promotion and infrastructure, because there is still not a
fully exploited potential.
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ANNEX
Table no. 1. Evolution index for arrivals at tourist accommodation establishments in the E.U.
Member States: total and foreign countries, 2000-2017
Country
Evolution index
for arrivals
(total)
Evolution index
for arrivals
(foreign countries)
BE - Belgium 141,8405 115,8595
BG - Bulgaria 322,3229 451,257
CZ - Czechia 169,2677 195,3036
DK - Denmark 146,6599 133,7244
DE - Germany 148,5516 186,9434
EE - Estonia 237,2182* 204,9592*
IE - Ireland 75,96322*** 29,8695***
EL - Greece 169,6703 195,5089
ES - Spain 166,0308 166,2944
FR - France 137,8166 111,6308****
HR - Croatia 260,8341 288,6162
IT - Italy 146,1225 161,687
CY - Cyprus 108,3522 101,353
LV - Latvia 448,5574 586,9943
LT - Lithuania 59 1,8221 549,9203
LU - Luxembourg 130,4984 124,1997
HU - Hungary 173,0298 164,9617
MT - Malta 139,7079** 152,1799
NL - Netherlands 150,2727 158,2632
AT - Austria 163,7612 161,7747
PL - Poland 206,7859 204,6357
PT - Portugal 197,4722 220,4626
RO - Romania 221,8892 285,0456
SI - Slovenia 226,2777 288,358
SK - Slovakia 177,851 190,8746
FI - Finland 131,7515 141,51
SE - Sweden 161,4056 171,0982
UK - United Kingdom 135,82*** 228,7272***
Source: own elaboration by Eurostat data
(http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=tour_occ_arn2&lang=en)
* 2002 instead of 2000; ** 2004 instead of 2000; *** 2016 instead of 2017; **** 2015 instead of 2017
Table no. 2. Evolution index for nights spent at tourist accommodation establishments
(number) in the E.U. Member States: total and foreign countries, 2000-2017
Country
Evolution index
for nights spent -
number
(total)
Evolution index for
nights spent -
number
(foreign countries)
AT - Austria 133,53071 133,46716
BE - Belgium 132,38696 120,16371
BG - Bulgaria 304,57882 330,85621
CY - Cyprus 96,336529 94,832881
CZ - Czechia 120,40692 168,34562
DE - Germany 134,39834 195,92403
DK - Denmark 127,78806 119,07777
EE - Estonia 241,47249* 207,77152*
EL - Greece 178,93364 189,87137
ES - Spain 136,7128 130,78504
EU28 145,65921*** 173,03147**
FI - Finland 136,60401 165,83576
FR - France 154,59506 119,8703****
HR - Croatia 279,00618 301,03605
HU - Hungary 154,71743 133,28446
IE - Ireland 103,9489***** 77,928287*****
IT - Italy 124,12145 150,08785
LT - Lithuania 523,81435 539,81269
LU - Luxembourg 111,39002 108,17849
LV - Latvia 333,65338 488,73431
MT – Malta 123,82292*** 124,25171**
NL - Netherlands 137,45224 170,17546
PL - Poland 171,90888 242,41081
PT - Portugal 171,69459 189,58528
RO - Romania 152,5249 245,09505
SE - Sweden 147,41119 169,15365
SI - Slovenia 191,43031 258,72711
SK - Slovakia 140,17423 143,55122
UK - United
Kingdom 2016 169,06661***** 378,57822*****
Source: own elaboration by Eurostat data
(http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=tour_occ_nin2&lang=en)
* 2002 instead of 2000; ** 2003 instead of 2000; *** 2004 instead of 2000; **** 2015 instead of 2017; ***** 2016
instead of 2017;
Table no. 3. Evolution index for total nights spent at tourist accommodation establishments
(per thousand inhabitants) in the E.U. Member States, 2000-2017
Country
Evolution index for
nights spent – per
thousand inhabitants
(total)
LT - Lithuania 605,205
LV - Latvia 360,05136
BG - Bulgaria 337,22701
HR - Croatia 270,67206
EE - Estonia 239,03131*
EL - Greece 165,61932
PL - Poland 164,00941
SI - Slovenia 163,57069
RO - Romania 162,73028
PT - Portugal 155,12831
UK - United Kingdom 152,00668
HU - Hungary 149,05603
EU28 135,0352**
SK - Slovakia 132,129
FR - France 131,03458
DE - Germany 130,24938
SE - Sweden 129,34038
NL - Netherlands 122,13003
AT - Austria 119,74056
FI - Finland 119,51515
DK - Denmark 118,38
BE - Belgium 114,2068
ES - Spain 113,83512
IT - Italy 111,57988
CZ - Czechia 109,5093
MT - Malta 106,73301**
LU - Luxembourg 85,669283
IE - Ireland 83,105276
CY - Cyprus 71,721925
Source: own elaboration by Eurostat data
(http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=tour_occ_nin2&lang=en)
* 2002 instead of 2000; ** 2004 instead of 2000
53
Yuyan PAN
Stefan cel Mare University of Suceava, Romania [email protected]
Alexandru-Mircea NEDELEA
Stefan cel Mare University of Suceava, Romania [email protected]
Abstract:
The aim of this paper is to analyze the concept of Public Private Partnership in Beijing cultural tourism.
According to some experts, an important reason why cultural tourism PPP is difficult to land lies in the government's
lack of predictability of its own affordability. For the government, whether it is capital investment or subsidies, it will
be a long-term burden. It may not be obvious for one project, but if there are too many projects, it will cause local
government financial pressure and will greatly increase the risk of exceeding public budget.
Key words: Public Private Partnership, Beijing, cultural tourism
JEL classification: H89, L83
1. INTRODUCTION
China’s tourism industry has long relied mainly on traditional financing models such as
government investment and bank loans. It is difficult to meet the huge financing needs of tourism
project construction and transformation of tourism product structure. In August 2015, the General
Office of the State Council issued a document saying that enterprises should be supported to invest,
build, and operate tourism projects through government and social capital cooperation models. The
so-called government and social capital cooperation mode is named the Public Private
Partnership(PPP). It is a new type of investment and financing mode that the government and
social capital cooperate with each other.
The concept of PPP in the United States and Europe has existed for centuries, but has
become more prominent in recent decades in local economic development (Keating, 1998).
Partnerships come in all sizes and types. The most important PPPs since the 1990s have been in the
sectors of education, health, and transportation. There is considerable range in partnerships from
those dominated by the private sector to those dominated by the public sector (Savitch, 1998).
Public private partnerships (PPPs) are cooperative agreements between governments and the private
sectors for the purpose of providing public infrastructure, community facilities and related services,
typically of a long-term nature.
The development of tourism in emerging economies have been shaped by many factors
among which Public-Private Partnerships (PPP) play a key role as they bring together government
agencies and the public sector with representatives of the whole tourism value chain under the same
goals of promoting socio-economic development, sustainability, job creation and international
competitiveness through tourism (Taleb, 2015). PPPs attract stakeholders who have various kinds
of objectives, skills and resources in a formal or informal voluntary partnership with the
government to improve the attractiveness of a regional destination, its productivity, associated
market efficiency, and the overall management of tourism.
2. THE PUBLIC PRIVATE PARTNERSHIP IN CHINESE TOURISM
The Chinese tourism PPP is accompanied by the growth of the entire PPP industry. The
“National PPP Integrated Information Platform Project Library” of the Ministry of Finance
Government and Social Capital Cooperation Center website, by February 28, 2017, the PPP
projects in tourism reached 720, accounting for the proportion of 6.1% among total library PPP
projects in China. According to Wei Xiang, associate professor of the Institute of Finance and
Economics of the Chinese Academy of Social Sciences, tourism PPP investment focuses on tourism
islands, ecotourism, forest parks, ancient towns, wetland parks, and industrial parks. In tourism PPP
applications, social capital favors tourist towns. Since 2015, a number of tourist towns have been
established. The local government and social capital industry are full of enthusiasm and expectation
for entering the tourism industry through PPP. The Beijing News reporter found that by 2017, the
PPP project for comprehensive development of ethnic cultural tourism in the world has been
successfully implemented in Hunan Province with an investment quota of 18.5 billion Yuan. In
addition, it is reported that Chifeng City, Inner Mongolia, is expected to start construction of 9
tourism PPP projects in 2018. The total investment amounted to 5 billion Yuan.
However, the number of PPP projects in Beijing doesn’t stand out so much. As an important
content of the supply-side reform, the PPP mode has been highly valued by Beijing Municipality.
The development of Beijing PPP has the following characteristics:
(a) The number of PPP projects is not prominent, but the investment is at the top
Considering the number of the PPP projects, there are 55 approved PPP projects in Beijing,
accounting for less than 0.6% among all the 9285 PPP projects all over the country. The number is
not so prominent, ranking 41th in 332 cities in China; but from the investment amount, the total
investment is RMB 190.593 billion, accounting for 1.80% of the total, ranking the 4th, indicating
that although the number of projects in Beijing's PPP projects is not outstanding, the project
investment is relatively large and the overall scale is considerable.
(b) Concentrated in several industries and the municipal construction projects accounts for a
relatively high proportion
The following chart shows that there are only 11 industries in Beijing’s PPP projects. Not
every industry is involved, and the project industry is extremely uneven, in terms of quantity, the
proportion of municipal construction projects is relatively large, as high as 45.45%, from the
amount of investment Look, this difference is even more prominent. The amount of investment in
municipal construction projects is as much as 70.30%, followed by transportation, accounting for
16.60%, indicating that the municipal infrastructure projects are the main force for Beijing’s storage
projects. In the meanwhile, Tourism PPP projects only accounts for 3.64% in quantity and 1.05% in
amount of investment, which is a relatively very small proportion, compared with the PPP projects
in other fields.
Figure 1. Beijing PPP Projects Fields Analysis (by Quantity)
Source: Ministry of Finance People’s Republic of China, National PPP Integrated Information Platform Project
Library Season 6 Quarterly Report
Figure 2. Beijing PPP Projects Fields Analysis (by Investment Amount)
Source: Ministry of Finance People’s Republic of China, National PPP Integrated Information Platform Project
Library Season 6 Quarterly Report
(c) Flexible and diverse operating modes, but mainly BOT
At present, the main operating modes of PPP in China can be divided into three types: First,
the outsourcing type, including O&M (Operation-Maintenance) and MC (Management Contracts).
In Beijing there are 10 PPP projects that use O&M to entrust the inventory PPP projects to
experienced social capital with comparative advantages to operate; second, the franchising type,
especially the BOT (Build-Operate-Transfer), which is most commonly used. 22 PPP projects in
Beijing use this model. In terms of quantity, it accounts for 40% of the total investment. From the
point of view of the investment, it is up to 90.94%, indicating that most of the large-scale projects
with large investment, such as Beijing Metro Lines 14 and 16, Xingyan Expressway take BOT
model; In addition, there is another inventory project that adopted ROT (Rebuild-Operate-Transfer)
model. The third type is the privatization. BOO (Build-Operate-Own) is more commonly used. 4
projects in Beijing are operating in this way and the entire the construction and operation of the
project participated by social capital does not need to be handed over to the government.
Figure 3. Beijing PPP Projects Operation Modes Analysis (by Quantity) Source: Ministry of Finance People’s Republic of China, National PPP Integrated Information Platform Project
Library Season 6 Quarterly Report
Figure 4. Beijing PPP Projects Operation Modes Analysis (by Investment Amount)
Source: Ministry of Finance People’s Republic of China, National PPP Integrated Information Platform Project
Library Season 6 Quarterly Report
(d) The government is mainly initiative and the private supplemented
The initiator of a PPP project can be categorized into two types---public and private, from
the Charts down, we can notice that both in terms of the number of projects and the amount of
investment the government is the absolute body of the PPP project. More than 90% of the projects
are issued by the government. There have been very few private initiators.
Figure 5. Beijing PPP Projects Initiators Analysis (by Quantity)
Source: Ministry of Finance People’s Republic of China, National PPP Integrated Information Platform Project
Library Season 6 Quarterly Report
Figure 6. Beijing PPP Projects Initiators Analysis (by Investment Amount)
Source: Ministry of Finance People’s Republic of China, National PPP Integrated Information Platform Project
Library Season 6 Quarterly Report
(e) The duration of cooperation varies and the differentiation is very serious
It is worth mentioning that although nearly 70% of the Beijing PPP projects periods are
between 10-30 years, but there are still different lengths of cooperation. For example such as the
“Beijing Longxiang Fenghe Cultural Tourism Comprehensive Service Base Construction Project”,
which has been cooperating for 70 years, the only 1 year cooperation Shandong Li Community
Project initiated by Shougang Corporation and the sewage disposal Plant Project in Mentougou
Distrcit, which lasts for only 3 years. The latter obviously contradicts the “cooperation period” in
the application conditions issued by the Ministry of Finance. The limit is not less than 10 years in
principle.
3. THE PUBLIC PRIVATE PARTNERSHIP MODE IN BEIJING CULTURAL
TOURISM
Among all the PPP projects in Beijing, there are only 2 somehow directly with cultural
tourism. Both of the projects are in the rural area. The introduction and details can be seen in the
format down:
Table 1. PPP Projects related to Cultural Tourism in Beijing
PPP Projects related to Cultural Tourism in Beijing
Name Time Place Amount of capital Details
Miaofeng Chuangyi
cultural tourism service
facilities construction
project
2015
Mentougou
District(rural)
25,83million RMB
The project was invested by
Beijing Wanhua Chuangu
Tourism and Vacation Co., Ltd.
in the way of village-enterprise
cooperation. The planned total
land area is 0.36 hectares, and
the planned total construction
area is 1,005 square meters. The
main contents include: Reception
service, cultural and leisure
experience, cultural tourism and
so on.
Shaanxi Garden of
painting construction
project
2016
Mentougou
District(rural)
80million RMB
The project was invested and
constructed by the Beijing
Gudao Lanting Culture and Art
Co., Ltd., in the way of village-
enterprise cooperation. It covers
an area of 0.83 hectares. The
main construction includes:
cultural exhibition area, art
gallery and Supporting projects.
Source: Ministry of Finance People’s Republic of China, National PPP Integrated Information Platform Project Library
Season 6 Quarterly Report
WHY IS IT HARD TO ISSUE A PPP PROJECT IN CULTURAL TOURISM?
As for the difficulties encountered the cultural tourism PPP projects in Beijing as well as the
whole China, the reason may be that cultural tourism PPP projects endowed the characteristics of
continuous operation and sustained return. It is necessary for the government and social capitals to
select the projects very carefully. PPP is a co-rent model for the public and private sectors. For the
government, it needs the project to have a certain social public benefit, while the ultimate purpose
of the private sector is to make profits. The project that simply pursues the nature of public welfare
or is completely commercialized is not suitable for PPP. To projects that are both public in nature
and capable of commercial operation are the first prerequisites for determining whether the
government and the company’s cooperation projects can proceed smoothly.
According to some experts, an important reason why cultural tourism PPP is difficult
to land lies in the government's lack of predictability of its own affordability. For the
government, whether it is capital investment or subsidies, it will be a long-term burden. It may not
be obvious for one project, but if there are too many projects, it will cause local government
financial pressure and will greatly increase the risk of exceeding public budget. Therefore, for the
local government, planning for PPP should not be based solely on the project itself, but should be
planned from the total local PPP project payment to determine whether it will exceed the capacity
to bear.
It is also suggested that since cultural tourism PPP needs long-term operations
compared to the general PPP, the government should choose to have more operational and
capable private partners to cooperate. At the same time, in the cultural tourism PPP project, the role
of experts and consulting agencies should be fully utilized, and the synergy between the tourism
industry experts, financial experts, legal experts, and professional consulting agencies should be
fully utilized to judge the feasibility of the project and the operational capacity of social capital.
In order to better encourage the PPP mode to improve the tourism public services, In April,
2018 the Ministry of Culture and Tourism and the Ministry of Finance People’s Republic of China
have jointly issued the Instructions on PPP Mode in Tourism, which emphasized the importance of
developing PPP mode in China’s tourism through the promotion of government and private
cooperation models in the tourism sector, promote the implementation of the government's
commitment to resources protection, environmental remediation, ecological construction, cultural
heritage, consulting services, public facilities construction, and other tourism public services related
to the neighboring hotels, scenic spots, shops, parking lots, real estate, advertising, refueling
stations, and other operational resources for overall planning, integration and development,
comprehensive improvement, and constantly optimize the tourism public service and public product
supply, promote the protection and rational use of tourism resources, improve Assessment of the
value of tourism resources assets, to better meet the people's needs for public tourism services, and
vigorously promote the tourism industry to improve quality and efficiency and transformation and
upgrading.
4. CONCLUSIONS
For the first time, the development of the tourism PPP mode is proposed. Chen Shaofeng,
deputy dean of the Institute of Cultural Industries of Peking University and deputy director of the
National Cultural Industry Innovation and Development Research Base of the Ministry of Culture,
stated that more and more large-scale projects are both cultural and tourism projects, and many
cultural industry goals must be combined with tourism. In Chen Shaofeng's view, the merger of the
cultural and tourism sectors is conducive to solving the problem of insufficient internal motivation
for cultural undertakings. “Cultural venues built in many places cannot support endogenous growth
and cannot solve the problems of both the business and the industry. Many businesses lose money.
If culture and tourism are combined, they can use tourism to grow cultural industries and strengthen
the cultural experience and industrial properties in tourism” (Ni, 2018).
REFERENCES
1. Keating, M. (1998). Commentary: public-private partnerships in the United States from
a European perspective, in Pirre, J. (ed.): Partnerships in Urban Governance, London:
MacMillan.
2. Ni, Wei (2018). Expert Interpretation “Ministry of Culture and Tourism”: “Cultural +
Tourism” is being merged into an industry. The Beijing News. Retrieved from
http://www.bjnews.com.cn/news/2018/03/13/478825.html.
3. Savitch, H. V. (1998) The ecology of public-private partnerships: Europe, in Pirre,
J.(ed.): Partnerships in Urban Governance, London: MacMillan.
4. Taleb Rifai (2015). Global Report on Public-Private Partnerships: Tourism
Development. World Tourism Organization, Griffith University.
5. Ministry of Finance People’s Republic of China, National PPP Integrated Information
Platform Project Library Season 6 Quarterly Report
60
Lecturer PhD Mihaela STATE University Stefan cel Mare, Suceava, Romania
PhD Daniela Mihaela NEAMȚU University Stefan cel Mare, Suceava, Romania
Abstract:
Knowledge and application of circular economy principles can help move faster to an economy that provides a
high level of environmental protection with major economic benefits, thus contributing to job creation and economic
growth. The study aims to analyze the perception of young consumers regarding the application of the principles of the
circular economy in Romania. The methodology of the research was based on a systematic review of the literature,
complemented by information collected through an online survey among 130 young consumers. The results showed that
the application of the principles of the circular economy must take into account the impact on costs and consumers,
supporting the development of innovative environmental projects.
Key words: circular economy, innovative projects, consumer
JEL classification: A13, F63, O33, O44
1. INTRODUCTION
Moving towards a circular economy is crucial to the resource efficiency agenda set by the
Europe 2020 Strategy.
For a society based on the circular economy, a new type of expertise, cooperation between
decision-makers and a general change of attitudes and mode of action is needed. Education has an
essential role in creating experts.
There are already a few companies that apply the principles of the circular economy, but
multiplying the application requires widespread knowledge of good practice examples and adequate
consumer information. Therefore, this study investigates among young people what factors are
considered important and the main products that should have priority in ensuring the transition to a
circular economy.
2. LITERATURE REVIEW
Most researchers believe the circular economy refers to 3R: reducing materials and waste,
product reuse in product pieces and recycling materials (Kirchherr et al., 2017).
The implementation of the circular economy transforms the waste of some economic agents
into valuable resources for others, realizing the recovery of materials and energy (Yong, 2007).
The recycling component is one of the priorities of the European Union, which generates
annually 483 kg of household waste each person (Eurostat, 2017)
Research shows that there is a positive effect on children in the field of recycling by
teaching sustainable practices. Recycling rate could be improved through current consumer actions
and through the education of future generations (Buil et al., 2017).
The role of the consumers in the transition to a circular economy should be considered
taking into account all phases: buying, consumption and disposal. Research in Italy and Sweden,
considering four sectors of activity: clothing, home appliances, paper and food, shows that
individuals have environmental problems in the disposal phase rather than when they buy or use a
product (Siminelli, 2017)
The consumer attitudes vary greatly depending on consumer patterns and product type. For
example, the attitude is positive when buying second-hand furniture or short-term rental products,
while long-term rental leads to negative attitudes (Gullstrand Edbring et al., 2016).
Most of the consumers tend to reject the refurbished products based on personal, contextual,
or product-related factors that negatively influence the consumer's assessment of the risks and
benefits of the renewed product(van Weelden et al., 2016). Consumers could be involved by
returning organic food waste to retailers in exchange for reductions in the purchase of animal
products, the return of organic food waste entering the production process of animal products
(Borrello et al., 2017).
Public awareness-raising messages from government, businesses, or the media can influence
consumer behavior in order to acquire environmental friendly products, but widespread
implementation of the circular economy requires profound changes in industrial practices and
consumer patterns (Ferdousi et al., 2016). With an improvement in public awareness, it is likely that
consumers will be able to pay recycling charges in the future either through a prepaid deposit or by
purchasing the product with the price charged (Yin et al., 2014).
Cultural barriers are an important factor preventing the circulation of so-called "circular"
business models, especially as a result of lack of acceptance by consumers or users. In this sense,
more efforts could be made in terms of strategies that not only stimulate the acceptance but also the
adoption and diffusion of the circular economy (Camacho-Otero et al., 2018).
The circular economy involves growth corporate responsibility and consumer awareness as
well as the use of renewable technologies and materials, but without ensuring economic return on
investment, can not generate a strong incentive for companies and investors(Ghisellini et al., 2016).
Eco innovations that bring cost reductions can be a positive motivation especially for implementing
cleaner production technologies (Horbach, 2008).
Environmentally friendly products that, in addition to their public benefits, benefit from
private environmental benefits for the customer (eg energy savings) will generate greater consumer
demand and may therefore be the company's motivation to implement these innovations
(Kammerer, 2009). One of the obstacles to the development of the circular economy is the gap
between policy-making and practical action (Xue et al., 2010)
Policies that could help close material loopholes and increase resource efficiency should
address three areas: (1) reuse, repair and reconstruction policies; (2) green public procurement and
innovative procurement; and (3) policies to improve secondary materials markets(Milios, 2018).
3. METHODOLOGY
The methodology of the research was based on a systematic review of the literature,
complemented by information collected through an online survey based on a questionnaire among
130 young consumers. Establishing hypotheses has significant practical value in designing research
by helping to clarify expectations in terms of results and setting the information that will be needed
in the analysis process. The working hypotheses for this study are:
1. Over 50% of respondents consider innovative projects to be the key factor in the transition
to the circular economy
2. More than half of the respondents believe that household appliances should be the priority
product category in the development of circular economy measures
4. RESULTS
The research was based on a sample of 130 young people, out of which 100 women (76.9%)
and 30 men (23.1%). The average age of the respondents was approximately 24 year.
Table no. 1. The structure of the sample
Number %
Female 100 76,9
Male 30 23,1
Total 130 100
The application of the principles of circular economy is to be achieved considering the
impact on production costs, the impact on the consumer and the impact on the way the product
operates. More than 90% of the participants considered these issues important and very important,
as it can be seen in Figure 1.
Figure no. 1. Why should it be considered when applying the principles of circular economy
Among the product categories considered to have priority over the next few years, clothing,
large appliances and cars received most of the responses from interviewees. More than 70% of
respondents believe that priority should be given to general measures, as it can be seen in Figure no.
2.
Figure no. 2. Main product categories that should be prioritized for the transition to the
circular economy
An important share of the participants does not consider as a priority: packaging materials,
motors and pumps, industrial and furniture equipment. An explanation might be that already visible
measures for consumers have already been taken for these products.
Of the factors considered important in promoting the circular economy, more than 65% of the
respondents considered it very important to finance innovative projects or technologies. Supporting
the development of circular economy projects is considered very important by over 55% of
respondents. More than half of the research participants believe that supporting the market
penetration of innovative projects is a very important factor in promoting the circular economy., as
it can be seen in Figure 3.
Figure no.3. Factors considered important in promoting the circular economy
Promoting examples of good practice can help motivate companies to apply circular
economy principles but also to consumers in purchasing products that are environmentally friendly.
The development of relevant skills in the circular economy can ensure widespread dissemination of
innovative environmental projects.
5. CONCLUSIONS
The application of the principles of circular economy must be done in the light of consumer
impact, production costs, and product performance. More than 90% of respondents considered these
issues to be important. The clothing and textiles along with large electrical appliances should be
considered as priorities in the coming years in applying the principles of the circular economy. The
explanation is given by the rapidity of replacing these products with consumers as a result of
attractive offers on the market. Financing and supporting the development of innovative
environmental projects is a key factor for the success of the implementation of circular economy
principles
A circular economy offers huge business opportunities, but an adequate response from
consumers buying eco products is needed. In order to boost the application of the principles of the
circular economy, it is essential to spread best practices, invest in innovation and encourage
consumers to buy appropriate eco-products.
BIBLIOGRAPHY
1. Borrello, M., Caracciolo, F., Lombardi, A., Pascucci, S., Cembalo, L., 2017. Consumers’
Perspective on Circular Economy Strategy for Reducing Food Waste. Sustainability 9, 141.
https://doi.org/10.3390/su9010141
2. Buil, P., Roger-Loppacher, O., Selvam, R., Prieto-Sandoval, V., 2017. The Involvement of
Future Generations in the Circular Economy Paradigm: An Empirical Analysis on
Aluminium Packaging Recycling in Spain. Sustainability 9, 2345.
https://doi.org/10.3390/su9122345
3. Camacho-Otero, J., Boks, C., Pettersen, I., 2018. Consumption in the Circular Economy: A
Literature Review. Sustainability 10, 2758. https://doi.org/10.3390/su10082758
4. Ferdousi, F., Qiang, D., Qiang, D., Qiang, D., 2016. Implementing Circular Economy and
Its Impact on Consumer Ecological Behavior. Journal on Innovation and Sustainability.
RISUS ISSN 2179-3565 7, 3. https://doi.org/10.24212/2179-3565.2016v7i1p3-10
5. Ghisellini, P., Cialani, C., Ulgiati, S., 2016. A review on circular economy: the expected
transition to a balanced interplay of environmental and economic systems. Journal of
Cleaner Production 114, 11–32. https://doi.org/10.1016/j.jclepro.2015.09.007
6. Gullstrand Edbring, E., Lehner, M., Mont, O., 2016. Exploring consumer attitudes to
alternative models of consumption: motivations and barriers. Journal of Cleaner Production
123, 5–15. https://doi.org/10.1016/j.jclepro.2015.10.107
7. Horbach, J., 2008. Determinants of environmental innovation—New evidence from German
panel data sources. Research Policy 37, 163–173.
https://doi.org/10.1016/j.respol.2007.08.006
8. Kammerer, D., 2009. The effects of customer benefit and regulation on environmental
product innovation. Ecological Economics 68, 2285–2295.
https://doi.org/10.1016/j.ecolecon.2009.02.016
9. Kirchherr, J., Reike, D., Hekkert, M., 2017. Conceptualizing the circular economy: An
analysis of 114 definitions. Resources, Conservation and Recycling 127, 221–232.
https://doi.org/10.1016/j.resconrec.2017.09.005
10. Milios, L., 2018. Advancing to a Circular Economy: three essential ingredients for a
comprehensive policy mix. Sustainability Science 13, 861–878.
https://doi.org/10.1007/s11625-017-0502-9
11. Siminelli, C., 2017. Consumer behaviours and attitudes towards a circular economy:
Knowledge and culture as determinants in a four-market analysis. Economics and policy of
energy and the environment 135–169. https://doi.org/10.3280/EFE2017-001008
12. Van Weelden, E., Mugge, R., Bakker, C., 2016. Paving the way towards circular
consumption: exploring consumer acceptance of refurbished mobile phones in the Dutch
market. Journal of Cleaner Production 113, 743–754.
https://doi.org/10.1016/j.jclepro.2015.11.065
13. Xue, B., Chen, X., Geng, Y., Guo, X., Lu, Cheng-peng, Zhang, Z., Lu, Chen-yu, 2010.
Survey of officials’ awareness on circular economy development in China: Based on
municipal and county level. Resources, Conservation and Recycling 54, 1296–1302.
https://doi.org/10.1016/j.resconrec.2010.05.010
14. Yin, J., Gao, Y., Xu, H., 2014. Survey and analysis of consumers’ behaviour of waste
mobile phone recycling in China. Journal of Cleaner Production 65, 517–525.
https://doi.org/10.1016/j.jclepro.2013.10.006
66
67
Master Student Horaţiu Vasile BORZA
Babeș-Bolyai University of Cluj-Napoca, Romania [email protected]
Professor PhD Smaranda Adina COSMA
Babeș-Bolyai University of Cluj-Napoca, Romania [email protected]
Abstract:
Religiosity represents one of the most valorized personal realities of humans. The purpose of this research is to
find the peoples’ perspective on their own Religiosity. The main objective was to identify the most important benefits
and the biggest cost or sacrifice that believers perceive in performing in a religious way. A descriptive, cross-sectional
study was conducted, based on a quantitative questionnaire, with face-to-face directly collected answers, applied on
high-school students. The results were analyzed using Microsoft Excel application. The conclusions reveal that
religiosity is seen as a practice with benefits rather at a personal level, than a social or transcendental level.
Key words: Religiosity, benefits of Religiosity, costs of Religiosity, inter-confessional, believers’ perspective
JEL classification: M31, Z12
1. INTRODUCTION
During the history of humankind, the idea of a superior force was always present in people’s
lives. It was regarded either as a collection of gods with various powers or as a single god in the
center of their beliefs-religions. In the course of religion development, people entitled themselves
with distinct roles which main aim was to connect the common people with the Gods or God, thus
enabling the appearance of psychological, sociological, theological, and lately marketing elements
in the relation of man with his (so called) ‘Creator’.
The importance of Religiosity in people’s lives is highlighted by the fact that well-known
psychologists (such as James Fowler, Pascal Boyler, Allport, Ross, Batson, Schoenrade, Genia) and
sociologists (like Emil Durkheim, Karl Marx, Max Weber) analyzed the dimensions of this
phenomenon [1]. Psychology studies the internal echo of the phenomenon while Sociology
investigates mutual implications and interconnections between Religiosity and society. Thus, a
series of tests and questionnaires were elaborated with the purpose of quantifying the elements
involved in religious experiences, dogmas and beliefs [2]. The nowadays importance of religious
phenomenon is also supported by the involvement of modern sciences like neurology-
neuroimaging, which try to offer a more in-deep picture with a biochemical, imaging and
physiological approach to this matter. Neuroimaging reveals the organic substrate of the religious
experience and all the functional changes that accompany it [3]. On the other hand, theology is
focused on the sacramental-administrative aspects and deals with missionary and pastoral activities
that, at a certain degree, imply elements of modern marketing. On the other hand, deeply
understood and actively adapted to the current global context, Religiosity can be one of the most
available and affordable resources, which allow us to cope with the everyday challenges. That is the
reason for including in the Research and Innovation Framework Program of the European Union,
Horizon 2020, the CULTCOOP- 05-2017 Religious diversity in Europe - past, present and future
[4].
Marketing, unlike all of the above-mentioned disciplines that study Religiosity, has an
original approach from a distinct perspective. Marketing is the discipline entitled to study the
phenomenon itself, as a product or service, meant to satisfy real needs, involving all 7 defining
elements: product, price, placement, promotion, people, physical evidence and process.
There are three directions of analysis in this general field: direct marketing of religions,
faith-based marketing and marketing based on religious techniques. Nowadays, marketing is mostly
present and consistent in the online environment. Apart from the traditional Vatican Radio that is
broadcasting since 1931, a series of modern electronic applications are available in religions’ field:
web pages, applications for iOS, Android or Windows, online blogs, Facebook, Twitter or Pinterest
pages, online Bibles [5]. Likewise, on-line presence is a reality in Romania, many cults having and
managing their own Facebook groups, blogs, etc.
The most consistent faith-based marketing is the religious tourism, which according to
statistical data has more than 300 million consumers worldwide per year and has a turnover of more
than $18 billion, according to official data [6]. Either as an obligation (visiting the city of Mecca for
Muslims) or an optional activity (Jerusalem or Rome for Christians) as spiritual practice, at
secondary level, the religious tourism involves authentic forms of marketing. Religious literature,
religious art (iconography, music, etc.), objects of worship, fundraising activities, charity actions,
etc., all integrating and highlighting the economic aspect of this activity.
The idea of studying Religiosity from the marketing perspective is not a reductive approach.
The marketing analysis of religiosity does not entail a demythisation or desacralisation of the
phenomenon, but does a research with specific means. It tries to draw pertinent conclusions in order
to allow a better understanding of the phenomenon. Eventually, it would help Churches/Cults to
adapt their strategies. Nowadays, in the area of religiosity the market is a highly competitive one.
On one side, the traditional Churches see their position threatened both by newly emerging cults
and by secular trends of society. On the other side, new cults seek to increase their membership
communities, often taking advantage of the stiffness of traditional churches and the new social
context.
Considering the global social context, the main objective of this study was to identify the
perception of the religious people on Religiosity itself, in terms of benefit and sacrifice/cost. To the
authors’ knowledge, up to date this is the first study that addressed this perspective on the topic,
thus adding value to the present research.
2. MATERIALS AND METHODS
In a first phase of the research, over 40 people were asked the following two open questions:
What is the greatest present or potential benefit of being religious, and What is the greatest
sacrifice you do for being religious. Their responses have been systematized and used to create the
final questionnaire, with 21 items. This final form used closed questions and suggested answers. A
number of 12 possible answers were provided for the benefit question and 13 for the sacrifice one.
This questionnaire was applied in all 5 high-schools from Turda, Cluj county. A total number of
383 students answered, from the 9th grade to the 12th grade, with ages between 14 and 25 years.
The questionnaire included multiple demographic variables: confession, relationship with
the Church, thoughts regarding a potential change of their religion or confession, single child or not,
the death or the divorce of the parents, how often do they practice prayer, what do they value most:
faith or rationality, how often do they attend the religious services of the Church, age, gender,
monthly income level.
The answers were collected directly, during a face-to-face interview. A descriptive statistics
was applied on the results, using Microsoft Office Excel application.
Due to the fact that the identity of the respondents remained anonymous, the approval of
Ethics Committee of Babes-Bolyai University was not considered as mandatory.
3. RESULTS AND DISCUSSIONS
3.1. DEMOGRAPHIC CHARACTERISTICS OF THE INCLUDED SUBJECTS
A total number of 383 subjects responded to the questionnaire. Part of the demographical
characteristics are mentioned in the Table no. 1.
Table no. 1. Demographical characteristics of the group
Gender Residence Family (type) Siblings Orphan
Male Female Urban Rural Divorced United Yes No Yes No
155
(40%)
228
(60%)
261
(68%)
122
(32%)
79 (21%) 304
(79%)
129
(34%)
254
(66%)
21
(5.5%)
362
(94.5%)
The answers were collected from all five existing high-schools in Turda. The number of
respondents from each institution is mentioned in Figure no. 1.
Figure no. 1. Distribution of the respondents based on high-school
The age of the respondents was from 14 to 25, with an average age of 16.5 years. The
median was 16, the mode was 16 also, and the range of the group was 11 (Figure no. 2).
Figure no. 2. Distribution of the respondents based on age
3.2. RELIGIOUS CHARACTERISTICS OF THE INCLUDED SUBJECTS
Regarding the confession of the respondents, two main groups were observed. The biggest
one is the Orthodox one, with a 83% from the total. The second one, with 31 subjects (8%) is the
Pentecostal one. All other confessions (Greek Catholic, Baptist, Adventist, Jesus Witness, and
Catholic) summed 30 subjects, representing 7%. An atheist group of 6 (2%) was also present
(Figure no. 3).
Figure no. 3. Confession of the respondents
Regarding the relationship of the respondents with the Church, two distinct groups were
notices: the basic believers and the active members, those involved in associations, foundations,
choirs, orchestras, etc. As a general description of the whole group, just 10% of the respondents
considered themselves as active members. A difference between Orthodox and Pentecostal group
was observed (Figure no. 4).
Figure no. 4. Relationship with the Church
The answers to the question What is the greatest present or potential benefit of being
religious are summarized in Figure no. 5.
Figure no. 5. Biggest Benefit
The most frequent answer was an unreligious one. The idea of personal development
through Religion/Religiosity might be explained by the age of respondents. It is important to notice
the fact that relationship with God is also perceived as a major benefit. Technically, from a
theological point of view, the possibility of soul salvation represents the biggest benefit.
Psychological aspects were also valued, in form of positive emotions and self-reconciliation.
The perceived costs, or the involved sacrifices, are described in Figure no. 6.
Figure no. 6. Biggest Sacrifice
As it can be observed, the price is more divers and with a more uniform distribution. The
moral aspect as fight with sins and the guilt are the main direction (25.5%), followed by rational
aspects: the time involved, the environment that churches provide (23%). The practice of lent / fast
represent for 10% of the respondents the main price, while 9% of them consider that there is no
sacrifice or cost is practicing your Religiosity.
4. CONCLUSIONS
As a result of this study, we may say that Religiosity is a reality in high-school students’
life, with personal and specific echoes. It is perceived mainly as a way of personal development or a
way of achieving personal wellness. The theological dimension (connection to God) or the social
one are not balancing the psychological faces of the phenomena. The inner peace and the positive
emotions are rather felt as benefits, than the chance of coming closer to God and saving the soul, or
being part of a social group.
Taking into consideration these conclusions, it is mandatory that the Churches adapt their
pastoral and missionary strategies to fulfill the expectations of their younger followers.
ENDNOTES
[1] Martikainen, T., Gauthier, F. (2013)
[2] Saroglou, V. (2014)
[3] Lindstrom, M. (2010)
[4] http://ec.europa.eu/research/participants/data/ref/h2020/wp/2016_2017/main/h2020-wp1617-
societies_en.pdf
[5] http://www.thechurchapp.org/apps
[6] Stielstra, G., Hutchins B. (2009)
BIBLIOGRAPHY
1. *** (2004), Culture Matters - Working with Communities and Faith-based
Organizations: Case Studies from Country Programmes, UNFPA, New York
2. Backwith, H. (2010), Marketingul serviciilor / Arta de a vinde invizibilul, Business Tech
International, Bucureşti
3. Einstein, M. (2008), Brands of Faith – Marketing religion in a commercial age,
Routledge, New York
4. Kitiarsa, P. (2008), Religious Commodifications in Asia – Marketing Gods, Routledge,
New York
5. Kaufman, R. (2013), Cultura serviciilor superioare: metoda confirmată prin care să vă
încântaţi clienţii, colegii şi pe toţi cei care vă ies în cale, Publica, Bucureşti
6. Lindstrom, M. (2010), Buyology, Publica, Bucureşti
7. Lindstrom, M. (2016), Small data: indicii mărunte care scot la iveală trenduri în masă,
Publica, Bucureşti
8. Martikainen, T., Gauthier, F. (2013), Religion in Consumer Society, Ashgate, Burlington
9. Roullet, B., Droulers, O. (2010), Neuromarketing, Dunod, Paris
10. Saroglou, V. (2014), Religion, Personality, and Social Behavior, Psychology Press, New
York
11. Stielstra, G., Hutchins B. (2009), Faith-Based Marketing, Wiley, New Jersey
12. Zurawicki, L. (2010), Neuromarketing – Exploring the Brain of the Consumer, Springer,
New York
13. http://students.washington.edu/daianak/MarketingReligion.pdf
14. http://www.aabri.com/manuscripts/08072.pdf
15. http://imgbiblio.vaneduc.edu.ar/fulltext/files/TC068479.pdf
16. https://theologika.files.wordpress.com/2011/01/curs-pastorala-iv.pdf
17. http://www.thechurchapp.org/apps
18. http://www.tourismandmore.com/tidbits/the-importance-of-the-religious-tourism-
market/
73
Associate Professor PhD Camelia BĂEȘU
Ștefan cel Mare University of Suceava, Romania [email protected]
Abstract:
At present emotional intelligence in leadership plays an extremely important rol in modern organizations.
Leaders play first fiddle and should have the capacity of influencing positively the emotions of the organization
members in order to get performance. In order to get competitiveness it is required for organizations to develop more
leaders who have sufficient knowledge and management skills. Organizations need also efficient managers who think in
prospect, are confident in their own forces and possess adequate leadership abilities. The leaders who promote the
leadership based on emotional intelligence are inspired by their own values and are receptive to the emotions of the
group members, creating an optimist energy based on trust and enthusiasm, by helping the group to reach the
objectives. When the leaders do not succeed in empathizing with the group’s emotions they cause dissonance by
conveying messages that discourage the employees from the achievement of organization objectives. Therefore, in
modern organizations the leader’s emotional responsibility is fundamental in the management process. A top leader
promotes sufficient teams and performing groups which contribute to an ascending evolution of the organizations in a
dynamic economic environment.
Key words: leader, managers, performance, emotional intelligence, resonant leadership, dissonant leader
JEL classification: M10, M12
1. INTRODUCTION
In a broader approach even in the sociological one, most authors tend to introduce
leadership in the sphere of power notions. Power is included in the area of social influence, and if it
is used in an intelligent manner may become a really useful tool for life and organization efficiency.
Leadership is the way of expressing and displaying a type of management process
essentially, combined with the personality of the leaders. Different types of behavior that may be
learnt and changed are being taken into consideration, while every individual’s psychological
features are more difficult to be determined and changed. (Goleman et al, 2018)
The investigation into leadership style also derives from the extremely relevant effects that
its practice may bring about on the relational climate existing in social organizations as well as on
the labor productivity; it comes from the fact that it has a special capacity of spread and it is quite
contagious for the whole organization. The leadership style more often interacts with the leading
direction, achieved as sets of phenomena referring to the way in which leaders do their own
coordinating activity, the tasks they are charged with, the way they fulfill them, the right
relationship with equal subalternates as well as with their superiors. Nowadays business needs
excellent leaders and brilliant managers, visionary leadership and high quality management.
Leaders play an absolute emotional role, having the maximum capacity of influencing all
members’ emotions in modern organizations. In performing organizations there must be an
encouraging emotional bond between the leadership representatives and employees. The
performance or downfall in an organization depends significantly on the leader’s capacity of
channeling emotions in a positive or negative direction. (Goleman et al, 2018).
Performing leaders are promoters of change, they have the capacity of foreseeing, they are
creative, original and dynamic, integer, they have the capacity of taking risks, they are confident in
people, they are capable of continuous improvement; they have great personality, they master their
emotions, they empathize with all the employees involved in labor processes, they accept the critics,
they contribute to their employees’ career promotion, they are honest and staunch, they express
themselves directly and efficiently, they trust their own forces. (Arădăvoice, 2004)
To be competitive, the future organizations must train as many leaders as possible, but these
ones must also have good knowledge and skills of management. Organizations also need efficient
managers who possess proper leadership skills for a better solution of problems and overall
functioning within teams. Top leadership provides leading and direction; leaders make certain that
their vision of continuous improvement is transmitted to all in the organization, communicating the
values which are the basis of continuous development.
In order to bring vision into reality, leaders must have a set of specific competences to guide
their actions; these are meant as a sequence of talent, knowledge and abilities which make a person
adequate or highly trained for a position within the organization hierarchy. These competences may
be considered interior tools to motivate the employees, to guide systems and processes as well as to
lead activities towards conjoint targets which will allow the development of organization’s
performances. (Telespan et Merce, 2003).
2. THE ROLE AND IMPORTANCE OF EMOTIONAL INTELLIGENCE
Emotional intelligence includes ” a set of skills which allow us managing in a complex
world – personal, social and surviving aspects of intelligence on its whole, elementary good sense
and sensitivity which are essential to the normal daily evolution” (Stein, 2003)
In a reference study, Goleman shows that “we are not judged accordingly to our
intelligence or professional competence, but by our behavior against us and against the others” and
in this conceptual framework “the labor rules are in full shift” (Goleman, 2004)
In modern organizations emotional responsibility play an essential role in promoting some
leadership styles that provide organizations with high performance; it plays an essential role in the
process of leadership as well at all levels of leadership. (Goleman et al, 2018)
On the whole, a performing leadership is based on the four elements of emotional
intelligence: self-knowledge, self-control, social consciousness and management of relationships.
Self-knowledge refers to the leader’s capacity of knowing himself and mastering his own
emotions. The leaders who know themselves well from the emotional point of view understand the
way in which feelings may influence the performances obtained. They are capable of thinking in
prospect, anticipating a future performing evolution of the organization. They are confident in their
own forces, they bear responsibilities in carrying out difficult projects, and their presence and self-
reliability make them be appreciated by the group members.
Self-control brings into discussion the leader’s capacity of emotional self-control, to keep
calm in conditions of maximum stress. The transparency practiced by these leaders towards the
others; in terms of feelings, opinions and actions they demonstrate their integrity and capacity of
communicating openly with their employees. They are flexible and capable of adapting to all
changes that occur within an organization, anticipating the risks that may affect the achievement of
the objectives aimed at in conditions of maximum efficiency. The capacity of controlling their own
emotions and those of the persons’ they collaborate with helps the successful leaders to turn
obstacles into opportunities.
Social consciousness from the point of view of emotional intelligence refers to the
leaders’ capacity of comprehending group members’ non-experienced emotions and feelings, by
empathizing with these ones. A leader with a strong social consciousness can understand the values
and rules of the group; he brings forward an emotional climate that allows the maintaining of good
relationships between the group members.
The management of relationships brings into discussion issues such as inspiration, favor
for changes and conflict management. Leaders are a source of inspiration by mobilizing the human
resource and by promoting optimist state of mind and enthusiasm among the group members. These
leaders also know how to persuade people to get the performances wanted and have skills in getting
over the barriers that may come across during the change.
3. RESONANT LEADERSHIP
The success or failure of a company is significantly influenced by the leadership style
practiced. Leadership reflects the leaders’ personality who develop themselves their potential of
leaders. (Tracy, 2018).
Resonant leadership is promoted by leaders who are in harmony with the people’s feelings
and channel them to a positive direction. Inspired by his own values, such a leader succeeds in
getting people united in the organization by means of the emotions they feel, by cultivating
optimism. (Goleman et al, 2018)
The efficiency with which the leaders empathize with the group depends on their level of
emotional intelligence. On the whole, the process of resonant leadership is based on subalternates’
capacity of relating efficiently between them, of being in harmony with the leaders’ optimism and
enthusiasm, of sharing the same emotions. In this context, the leaders’ passion is perceived within
the whole group. The leader has the capacity of empathizing with the employees’ emotions and of
managing efficiently all the positive or negative situations the organization may come across. The
emotional bonds established by leaders with the organization members are the basis of a well done
job even in conditions of stress and uncertainty. In this case, the employees relate between them,
learn ones from the others, participate in the decision-making process and collaborate in order to
achieve the organization’s goals with maximum efficiency. (Goleman et al, 2018)
At present, more and more organizations are promoting leader-manager. An efficient
manager fulfills successfully all tasks and responsibilities and obtains the performances aimed at.
But what happens when a crisis occurs? This question arises more frequently in practice. It is the
moment when the manager must demonstrate that he has the qualities of an efficient leader and is
able of managing the organization activity by using empathy in order to collaborate efficiently with
his subalternates.
Over time many studies in the literature have been made in order to identify the abilities of a
successful leader.
The most important quality of a successful leader is vision which turns practically “the
transactional manager” into “an innovating leader” (Tracy, 2018). The leaders who a clear vision on
the actions meant to be carried out in the future know well their own values; they know how to
establish time- well defined targets, provide the group with positive energy and have the capacity of
making the necessary decisions in view of putting objectives into practice.
The courage of taking risks in the process of putting objectives into practice is another
quality of a highly performing leader. In conditions of crisis it is essential for managers to get
turned into leaders who have the ability of keeping the organization at the level of performance
wanted. It is the moment when such a leader must keep his calm, maintain the “resonance” state
within the group, be confident in his own forces and convinced that he can make the required
decisions any moment.
In the process of strategic planning, the absolute quality of top leaders is integrity. Integer
leaders have the capacity of always keeping their promises, are honest and harmonize with the
employees’ feelings, driving them into a positive direction in order to obtain the desired results.
Performing leaders have the ability of thinking far and wide, anticipating the evolution
tendencies of market and implicitly the situations of crisis. Strategic thinking and the capacity of
foreseeing risks must be found in all the evolution stages of modern organizations. Therefore, an
excellent leader has a clear vision on the future evolution of the organization he is running, he
initiates actions to protect the organization from the risks existing on the market and takes
advantages of all possible opportunities. (Tracy, 2018)
The ability of providing the organization members with help by focusing on the most
important contributions brought for the company is another relevant characteristic of successful
leaders. (Tracy, 2018) Thus, a performing leader will have to adapt the leadership style to the
employees’ needs and behavior in order to help them to reach their objectives. (Maxwell, 2009). In
the training process of human resource, leaders must know the employees’ desires and help them
turn them into reality so that their results show the performances aimed at. ( Maxwell, 2009)
Leaders who have superior emotional intelligence create resonance instinctually; they are in
harmony with the group members, by supporting them and cultivating their loyalty to the
organization.
One of the main characteristics of the leadership based on emotional intelligence is that
resonance amplifies and prolongs the leader’s emotional impact. (Fodor, 2009). Resonance is not
based only on the leaders’-managers’ optimism and talent but also on their leadership styles
promoted within organizations.
The democratic style, centered on the communication with the organization human
resources, determines that benefic resonance for achieving performances. The leaders who promote
the democratic style place the human resource in the center of their concerns, by initiating it and
making it responsible, by creating harmony and a resonant team; they earn the employees’ devotion
and encourage them to participate in the projects’ development.
The visionary style works successfully in modern organizations which evolve under the
impact of multiple changes. Visionary leaders establish standards of performance and make
responsible the group members in the achievement of objectives and implementation of long-term
strategies.
Emotional intelligent leaders who promote styles of resonant leadership develop methods
and techniques which lead to open and efficient labor relationships, based on positive collective and
encouraging energy capable of leading to the achievement of performances.
4. STUDY ON MODELS AND PRACTICES OF DISSONANT LEADERSHIP
Dissonant leadership involves that emotional discomfort which may occur within human
relationships and which discourages employees from getting involved in the fulfillment of the
organization objectives. (Goleman et al, 2018)
4.1. DOMINATING LEADERSHIP
Dominating leadership aims at the following components of emotional intelligence: influence,
ambition and initiative. Such a leader makes his mark by a tough behavior, by using a “dominating”
voice in order to draw people’s attention and make them get the desired results. Leaders, who
besides being furious and depreciative, may have a devastating emotional impact on people. If the
leader who has such a style lacks emotional self-control, then he may turn into a despotic leader
who “shouts” orders by ignoring the employees’ reactions. (Goleman et al, 2018)
The dominating leader criticizes implicitly the employees, forces and threatens the
employees and tries to control and monitor any situation in the organization. This leader is
concerned more with his own person, does not empathize with the employees, he considers himself
the “hero” of the company he runs and has a reduced level of flexibility, ignoring people’s
discontents who provide him with success. (Goleman et al, 2018)
This style is focused on the activity itself and its results, the staff being considered rather a mere
factor of production. The problems are solved by the closed circle of the company leadership; all
the employees do their job accordingly to “the orders came from aloft”, often not being
accompanied by any explanation. That is why two risks may occur: (Fodorea, 2004)
The company leadership is so involved in solving the problems in detail that essential
leadership activities, such as long term planning, get shadowed;
The training of highly qualified staff is affected and the employees who are endowed with
special capacities (creativeness, initiative) will get frustrated, being unable of capitalizing
their potential.
This approach may be useful in situations of crisis, when a well-established intervention of
the manager is required (who does not take into consideration the employees’ opinions or feelings
anymore). (Fodorea, 2004)
Authoritarian leaders expect their orders to be obeyed immediately, without offering any
explanation, creating a general hostile environment meant to intimidate the employees. If a leader
lacks self-knowledge which allows him emotional self-control, the dominating style may determine a
destructive emotional impact on the employee. The employees’ state of mind may get altered
significantly when they feel that their leader does not trust them.
4.2. MANIPULATIVE LEADERSHIP
The leader who promotes this leadership style succeeds in persuading by his “shipshape” image,
is a genuine emotional leader but a weak entrepreneur and manager. He uses a slew of manipulating
techniques, does not develop strategies and get actually negative performances. (Bodea, 2018).
Manipulative style lays the stress on elements such as pride, vanity and overestimation of
personal value. (Bodea, 2018). The manipulative leader is extremely confident in his own person,
he exerts excessively his power and authority, he promotes a culture of superiority where his
hallmark is everywhere, he needs the admiration of people surrounding him, and he likes being
overpraised. This type of leader succeeds in building a mediocre organization, with negative
performances by his leading style, but he considers himself being in the hierarchy top. (Bodea,
2018). There are situations when some leaders use their charisma to manipulate and promote
values they do not really believe in, being devoid of empathy. The messages of these leaders cause
negative emotions which suppress hopes, optimism as well the employees’ capacity of innovation
and creativeness. (Goleman et al, 2018).
Therefore, dissonant leadership discourages the employees who feel emotional discomfort based
on fury and discontent in their relationship with dissonant leaders.
Therefore, the dissonant leadership discourages the employees; dissonant leaders cannot
empathize with the group members and have a negative impact on the organization’s performances
creating a state of imbalance and discontent among the employees.
5. CONCLUSIONS
A top leadership promotes an efficient team and a performing group, which results in the
increase of welfare of those involved, in turn, an inefficient leadership downgrades the life quality
of any team member. (Rîlea, 2006)
Leadership involves a collective action meant to bring about significant changes, by increasing
competence and motivation of all those involved in. The true leadership occurs when his adepts
choose to follow their leaders – due to their belief and vision.
Leaders should adapt their behavior to the employees’ needs, abilities and personality. The
efficiency of leaders’ behavior depends on the working environment as well. (Maxwell, 2003)
A performing leader adopts an efficient behavior style which mobilizes individuals to
achieve the organization objectives by favoring equally a better productivity as well as the
employees’ satisfaction. Many specialists consider that such a behavior may be learnt and
interiorized, thus ensuring some people’s success even if they do not have special psychological
skills. The literature emphasizes two types of leaders: those task -oriented and those employees-
oriented. Thus, the leader’s behavior varies with these dimensions: structural dimension and
relation dimension. (Gavrilovici et al, 2003)
The structural dimension has in view the leader who lays the stress on task-establishing and
doing, setting a level of formal communication in the group and defining of activity guidelines of
the group, the main goal being that of objective achievement or task fulfillment. Sometimes these
leaders tend to be autocrat fact which will lead to task fulfillment but with emotional and energy
expenditure from the employees’ part.
The relational dimension promotes the leader who lays the stress on the behaviors which
create such a labor environment where trust, mutual respect, friendship and support hold an
important place. It is based on group’s interactions and every group member’s needs, he
understands the individual needs of the staff, and he recognizes the differences between the group
members and their capacities, by avoiding judging them.
It is considered that the best leaders are those who equilibrate the concern for people with that
for tasks depending on the situation they are in. An essential aspect regarding the leaders’ behavior
and performances is social intelligence. If in the past the leaders were perceived as having only a
role in leading, controlling and planning the gear of the organization, at present their role is to
motivate and inspire the others, to stimulate positive attitudes at workplace and give a sense to the
employees’ contribution.
Resonant leadership is being promoted by the leaders who succeed in empathizing with the
group’s emotions, who lay the stress on behaviors and create a favorable working climate where
trust, mutual respect, friendship and support hold the first place. It is focused on group’s
interactions and on each member’s needs taken individually, it understands the individual needs of
the subordinates. The leader’s behavior is influenced by his own personality, experience and
knowledge, these internal forces include: the system of values, trust of employees, preference for a
certain leadership style and the feeling of safety regarding an uncertain situation.
Dissonant leadership discourages and exhausts the employees. As previously mentioned in
the study above, the types of dissonant leaders may vary from dominating leaders to manipulative
ones. Dissonant leaders practice among their employees a state of demotivation, fury and hard
feelings which lead to low performance.
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79
Daniela Mihaela NEAMȚU
Ștefan cel Mare University of Suceava, Romania [email protected]
Ruxandra BEJINARU
Ștefan cel Mare University of Suceava, Romania [email protected]
Abstract:
Throughout this paper we conduct an argument about ethical behavior and managerial communication in
business organizations, whether it is an effective or rather inefficient communication. The debate shall present
information about what makes a manager or an employee develop the ethical or non-ethical behavior, as well as the
barriers that often stand in the way of an organization's success. Issues of ethics in organizations as well as managerial
communication are topical and searching for continuous improvement. Both specialized literature in psychology and
sociology emphasize the idea of simple and clear communication, but also the ways we behave, we dress or express
ourselves send messages to the people. The arguments of addressing these issues are the controversy that arises, the
important link they have in business organizations and the fact that these seemingly insignificant details can make an
organization succeed or, on the contrary, fail. We will also focus on positive aspects such as analyzing the skills of
successful managers and what has led to such a great success in their career. This section will discuss ethical issues, as
well as how effectively everyone communicates throughout his career, and last but not least, the relationship with
employees and the way they have been motivated over time. Therefore, through this paper we will highlight the issue of
managerial ethics and communication in the manager-employee relationship but also the psychological impact that can
be triggered if some basic principles of management are not respected in this context.
Key words: ethics, leadership, communication process, strategic management, organizational culture, skills.
JEL classification: M10, M12, M13
1. INTRODUCTION
As far as the managerial ethics dimension is concerned, we will discuss how employees who
have ethical behavior at work can get rewards, appreciations, and an appropriate remuneration by
simply providing them. As each organization is confronted with its difficulties, we will follow
through this work to find out what leadership lessons we can draw from the mistakes made in ethics
and managerial communication, as well as the good principles which organizations apply in order to
succeed (Aubrey, 2007; Basran, 2012; Băeşu & Bejinaru, 2015).
The main purpose is to understand what has led to the success of this organization, the
difficulties faced by managers, and what aspects they would like to improve. Regarding the ethical
behavioral perspective of the relationship with employees, we will find out if this is a centralizing
aspect in the company's business. In other respects, managerial communication issues are an
important part of the analysis because it is a multilingual organization, which is why the task of
managers to communicate effectively is much more difficult than in a monolingual organization
(Bass & Steidlmeier, 1998; Yannopoulos, 2011).
The basic purpose is to highlight the issue of ethics and managerial communication in the
manager-employee relationship as well as the importance of these things in contemporary society,
but also the psychological impact that can be triggered if some basic principles of management are
not respected in this context (Bejinaru & Baesu, 2013).
2. THE SIGNIFICANCE AND ROLE OF ETHICS IN BUSINESS
Regarding the genesis of ethics in the literature we find innumerable definitions of the term,
but we know that, in order to correctly define this notion, we must start from the fundamental
meaning of the term. In order to use the terminology correctly, we need to understand the difference
between ethics and ethology, this being the essential starting point in the debate (Sandu, 2015).
Although they have the same roots, the two terms are "morals" or "habits" and the first use was
given by Aristotle (Zamfirescu, 1982).
Biologists Fr. Jacob and J. Ruffe remind us of the conception that some attitudes or habits of
individuals or some living things are innate, which would mean that the tendency to do good or to
be moral is a behavior that sometimes does not depend on us, but as J. Ruffe even states: "Complex
behaviors that could be assimilated to acquired behaviors are purely genetic. Written in the genome,
they are the fruit of natural selection just like any hereditary character” (Zamfirescu, 1982, pp. 37-
38). If we refer to the age of ethics, we can say that it dates back about 3,000 years. For example, in
the 13th century BC, Moses received the "Ten Commandments," this being the first approach to
ethics. Buda (563-483 BC) said that we would be happier if we avoid fraud, we will not lie and we
will have a life based on fairness. Plato (427-347 BC) considered rational knowledge to be our most
valuable asset and, last but not least, Aristotle (384-322 BC) put at the center of his work that man
must tend towards fairness, honesty and morality (Iamandi & Filip, 2008, pp.24-25). All these
examples, as well as many others, attest to the fact that, over time, man has been and is inclined
towards a fair lifestyle, wants to be respected and live in safety. That is why, regardless of how long
people lived, they have taken into account laws and a set of principles based on ethics in inter-
human relationships.
In order to properly diagnose the role of ethics, we will refer to Plato's words (427-347 BC).
"As the secrets of ethics are deciphered, it is increasingly used and becomes increasingly useful to
society" (Iamandi & Filip, 2008, pp.18). Starting from the premise of the utility of ethics, we
understand that ethics has not always occupied a primordial place in the concerns of mankind in
general, but it has gradually become more important, as it is nowadays the object of conduct. In
other words, when we refer to the role ethics plays in a society, we mean that it is the starting point
for the actions taken by an entity and will also be the foundation from which it departs in terms of
the moral obligations it has. Ethics is therefore closely linked to a moral obligation.
What is the moral obligation? This can be considered a code of ethics? The ethics codes of
the 1950s have been discussed when, due to the wrong actions of some organizations, this concept
has begun to spread because of people's mistrust. Therefore, codes of ethics are intended to guide
morality, fairness and good faith of an organization. The specialized literature tells us about certain
rules of this kind that we should respect. For example, Sandu (2015) explains in simple steps what
ethical codes are supposed to be. Among the most important, we recall: implementing employee
ethics and managers at the company level, supporting professional standards as a benchmark for
identifying ethical employees or unethical behavior, good reputation for clients, and methodologies
used to address such issues.
Ethics from a business perspective considers that each organization wants to gain an
appropriate reputation, be known as fair and have a morally clean history (Tigu, 2005). However, in
order for these things to happen, the ethics or supremacy of the law must be respected or committed
to fair practices. But on what scale can we classify ethics in business? Fundamentally, ethics has the
role of meeting the basic needs of man. Any manager would like to have subordinates with moral
high behavior around him. However, lately, business morality has become increasingly
controversial and requiring some regulation. For example, in Max Weber's conception, while
medieval Catholicism considered money to be immoral, he claimed that the Protestant ethics itself
made possible the implementation of capitalism. In the past decades, the concept of "ethical
companies" has begun to revolve around large companies, especially in countries like the US,
Britain, Germany or France, because economic and informational progress has put its mark on what
we define today as a successful organization (Lupan & Prelipcean, 2009). When we talk about
business ethics, we can refer to 3 perspectives as shown below, in figure 1.
In order to emphasize a stand point upon these ideas, we refer to the fact that in business, the
goal of each player is to win in front of others, no matter what the price they have to pay. In other
news, the main objective of any organization is to increase profits and mitigate losses. That is why,
taking into account the fact that a profitable business is an ethical business, the manager will use
any leverage he would have to gain ground in the face of competition (Bratianu et al, 2012). Last
but not least, any organization will be led in favor of the stakeholders, according to the third theory
that we find in Figure 1.
Figure 1. Theories of the relationship between ethics and business Source: adaptation after (Iamandi, 2008, pp.51-52)
3. ETHICS IN DECISION-MAKING
According to Adam Smith's words, "How selfish is supposed to be a man following his
principles, a man that interests others' assets, which makes happiness for others, though he knows
he will not get anything out of it except for the pleasure of seeing it" (Pastin, 2013, p.5).
Ethics can be considered an intrinsic element in decision-making by the consistency of
actions, by being rational and having the necessary experience and responsibility, being a moral
person having an effect on the organization's climate. Being a moral person can be considered to be
the key to the concept of ethics, which is the basis for a luggage of experience (Neely & Mosley,
2018).
Ethics is, perhaps, the best marketing strategy that an organization can approach. Business
ethics can have more perceptions: ethics in general, at work, at company management level, at the
level of adopted strategies, market ethics, ethics towards suppliers and customers, and collaborators
and employees. In order to be able to talk about the application of moral principles, at each of these
levels there are certain rules of behavior, certain values, which must be respected. An economic
system can not last, can not bring prosperity to people if it is not based on ethics. Growing interest
in business ethics around the world is not just a fleeting fashion. In the European context, there is a
growing consensus on the importance of business ethics, be they students, professors, government
officials or consumers, but especially business firms. In most universities across Europe business
ethics have been introduced in recent years and since then the number of articles published in the
press on business ethics has grown enormously. Modern corporations already have ethics officers
and as a global trend, has increased the number of independent business ethics consultants
(Kheirandish et al., 2017).
Ethics must accompany the entire decision-making process at all stages. In general, human
resource management activities (such as recruitment and staff selection, formal assessment, position
analysis, remuneration, disciplinary action, etc.) are most often confronted with ethical dilemmas.
However, to encourage ethics in the field of human resource management, managers can support
some actions. The analysis carried out in this area reflects the complexity of the issues and the need
to be approached and treated appropriately by communication and negotiation management with
implications for communication with collaborators, specialists, employees, suppliers, clients,
coordinating and control institutions. Improving business leadership in this direction aims to
achieve business success at desired, established levels. Ethics in leadership has become a fashion
bringing positive effects. Businesses that emphasize and communicate strategically their ethics have
much to earn in terms of customer trust and loyalty (Neely & Mosley, 2018).
We can accept the idea that most people, in most of the time, will take or wish to make their
own decisions and respond to them. The decision of the manager is taken into account, before all
the decisions of the whole company, as a leader, and he must reflect on new situations and be aware
of the possible consequences of his actions (Bejinaru, 2017; Mele, 2012). In contrast to legal
responsibilities, moral responsibilities are not just about mistakes, but also about the good deeds
one wants to do. In the last decades, management, both theoretically and practically, has begun to
emphasize the importance of an informal organization. The informal organization will include the
financial status of the human resource, including motivation.
How does ethics contribute to good management? Ethical behavior is related to
management, mainly due to managerial decision. Managerial practice attests that ethical ideas and
values will define a manager who has ethical behavior or does not (Bratianu et al., 2011). But how
can these two elements contribute to efficient leadership? First, the trust that exists in a company
will affect its smooth running. From a subjective perspective, trust, above all, refers to people
whose thoughts inspire confidentiality and can be felt throughout the organization. Secondly, it is
good to know that promoting loyalty is important to achieve growth within the company and to
maintain long-lasting relationships with customers. In this respect, the company will make some
steps to take care of its customers and use some tactics to spur customer appreciation. An
organization that has loyal employees is generally a highly appreciated organization. A loyal
employee is generally willing to stay in that organization, make sacrifices for the company's good,
and work after-hours when it is needed. Therefore, loyalty that exists in an organization can be
regarded as the hidden weapon of that company that influences its progress, profit and values.
Employee loyalty may be motivated by emotional incentives, or, if we refer directly to employee
behavior, it is demonstrated that unfair behavior with the employee will entail repulsion for work
(Bejinaru & Prelipcean, 2017).
The third element is to strengthen the manager's moral habits. It is known that the habits and
norms that a manager has are reflected in the company's leadership. If the managers have accepted
an incorrect business on a particular occasion, it is likely that they will continue to show similar
behavior in the future. The third aspect concerns the fact of encouraging responsibility and being a
creative person. Efficiency usually depends on having technical skills and the concern to improve
them, but without alienating from ethical behavior. A truly moral manager is one that focuses not
only on efficiency and profitability, but also on people who come into contact with him and his
moral responsibilities. Thus, a moral manager will not see maximizing profits before ethical
behavior. The fourth and last characteristic is to invest in an ethical organizational culture. In other
words, an ethical organizational culture is deeply rooted in the values and practices of the
organization (Baesu & Bejinaru, 2014). The organizational culture will be directed by the people
involved in that company, and all those who interact with the company will form the ensemble. It is
unanimously accepted that a quality organizational culture will positively influence the company
and will have some advantages (Mele, 2012, pp.5-22).
4. MANAGERIAL COMMUNICATION WITH EMPLOYEES
Communication involves the transfer of information from the transmitter to the receiver,
ensuring the flow of information to some people working towards a common goal. Effective
managerial communication allows successful communication of information by managers or team
leaders through written messages, gestures or other means, with great clarity in the message. Most
of the activities undertaken by managers are done through communication. Thus, we can say that
they must, in most cases, be well understood, so that the task can be carried out with
scrupulousness. Usually there are two ways of communicating between the manager and the team.
The first refers to verbal communication that is word-of-speech. In verbal communication,
managers need to be mindful of their speech. Also, the tone of voice, clothing, gestures are features
that make it easier for the manager to communicate. Managers must choose the right words to be
understood by all team members, in other words, be clear and convinced in speech without leaving
room for interpretation (Bratianu et al., 2011; Hapenciuc et al., 2014).
Managers use interpersonal communication in their speech, and therefore we need to know
how it is done. First of all, as mentioned above, we need a source or a transmitter, which is often the
person who sends the information. Secondly, we need a message. The message is the information
the broadcaster wishes to forward. Last but not least, the receiver is the person to whom the
message is addressed, the latter being the source decoder. Do not neglect the disturbing factors, or
how they are called in the "micro-bacteria" specialty literature. They have the role of distorting the
initial message for a variety of reasons, such as: the transmitter's conception of information, the
point of view of the receiver over the information, the ambiguity of the message, or the multi-sense
words. All of these can be considered as harmful factors that will affect both the transmission of the
message and its reception (see figure 2).
Figure 2. Communication barriers
Source: adaptation after (Husain, 2013)
Human capital is everything that is related to people (knowledge, education and
relationships), individual abilities capable of achieving goals and objectives at national level.
Education is the foundation on which capital is built. Human capital is the whole mass of skills,
knowledge, social attributes and personality, including creativity, resulting in the ability to perform
works to produce economic value. It is an aggregate economic outlook in the economy human
action, trying to explain the interaction of social, biological, cultural and psychological aspects of
human culture. Human capital is an important component of the intellectual capital of
organizations. As a component of intellectual capital, human capital is analyzed through the
following dimensions and variables: improving skills, improving staff, stability, improving the
capacity of population and groups. Human capital has the following three dimensions: knowledge -
formal education, specific training, staff development and experience; skills - individual learning,
collaborative teamwork, sharing individual knowledge through communication, know-how and
leadership and behaviors - models, paradigms, sense of belonging, self-motivation, job satisfaction,
flexibility and creativity. Both attracting and retaining talent, leadership, corporate reputation, and
organizational benevolence all reflect the quality of human capital (Neamțu & Bejinaru, 2017).
As far as the managerial team and the manager are concerned, we can say that the results
obtained by a manager will reflect in the efficiency of the collaboration with his team. We can
define the managerial team as a group with which a manager will collaborate during the execution
of one or more projects and result in certain outcomes. As a rule, the managerial team collaborates
with the manager to achieve joint results, but managerial practice attests to some situations where
the management team has worked to meet their own goals. That is why the manager has no
obligation to approve and take on the views of the group in order to solve organizational issues. On
the other hand, the position and behavior of each member of the team will condition the good
course of the business organization, which is why, when choosing his team, the manager will have
some standards for each member to work with. The manager will respect some aspects such as:
maximum number of candidates, good collaboration skills, adaptability, professionalism, high
emotional intelligence, punctuality, adaptability, good communication skills, ability to integrate in a
collective, willingness to know, and show confidence (Vance, 2015).
For some managers, building the management team can be a real challenge as team
members will have different personalities, they do not know each other well, which may lead to
divergences, given that the manager does not know very well the potential of each employee. Once
a managerial team is built, a well-designed motivational strategy will lead the team to focus on the
results. The manager will have to understand each employee and help him develop the skills he /
she has within and for the benefit of the corporation. If the strengths of each member of the team
are properly channeled by the manager, while also resorting to motivational factors, the
effectiveness of work will certainly be followed by satisfaction (Vance, 2017). When we refer to the
position of a manager in relation to the team, we can say that the good thing will happen if there is a
sense of equality among the employees, the management will be trust based, and each member will
find himself in that organization. It is necessary for the manager to impose on some organizational
issues, but the manager does not have to intimidate the team members by imposing their own point
of view in front of the others, nor to try to convince them about a particular situation if the others do
not agree (Drucker, 1999; Koestenbaum, 2006).
Communicating with the managerial team must be based on collaboration, understanding,
and, most of the time, team communication helps develop new ideas and streamline the way the
organization operates. In most cases, the act of communication defines the degree of collaboration
that exists between the employer and the employees. The climate of communication is equally
important because, through climate, we can establish the degree of employee satisfaction that
relates to solving situations within the organization. To set the right climate requires teamwork,
communication and openness to listen to new proposals. When the manager wishes to inform the
team about a situation, the most effective method is to meet with all crew members. In this way, the
information will not be diluted and the sense of understanding will not be lost.
Figure 3. Effective Leadership Communication
Source: adaptation after (Luthra & Dahiya, 2015)
The ethics of leadership rests upon three pillars: (1) the moral character of the leader, (2) the ethical
values embedded in the leader’s vision, articulation, and program which followers either embrace or
reject, and (3) the morality of the processes of social ethical choice and action that leaders and
followers engage in and collectively pursue. These characteristics of ethical leadership have been
accepted globally (Wren, 1996; Kouzes & Posner, 1993; Greenleaf, 1977). Transformational
leaders transmit examples of conduct to be assimilated by their followers. Burns (1978) and
Dukerich, Nichols, et al (1990) argued that the more leaders demonstrate a more mature moral
reasoning, the more their followers will behave morally. On one hand, it has been noticed that the
majority of ethicists are searching, exclusevely, for the self-interest (Gini, 1995, 1996; Rosenthal &
Buchholz, 1995). On the other hand the authentic transformational leadership proposes a flexible
approach of the self concept – a self that is linked to family, friends and community whose
welbeing could be more important than oneself. At this point, moral obligations are connected to a
wider perspective upon individuals, community and connected to social norms and cultural beliefs.
5. CONCLUDING PERSPECIVES OF ETHICS IN LEADERSHIP
In order to give concluding perspectives of ethics in leadership we shall briefly point out a
series of ideas. The analyzed literature and surveys, led to the formulation of the following
concluding perspectives. At the core of an efficient and lasting leadership stand the principles of
integrity and ethics. In the first place, personal integrity is the foundation for the ethics of the entire
organization. Considering these assertions, we conclude that the two notions have strong
convergence and synergy effect. In fact, we cannot discuss about leadership in the absence of
ethics. At organizational level, the leader’s personal values as honesty, fairness, transparency and
responsibility, become at the organization level the following four cornerstones of the code of
ethics: responsibility, respect, objectivity and integrity.
In leadership, the value of responsibility is represented by the duty of assuming the taken
decisions, the taken actions and the assuming of consequences. Responsibility must be perceived in
several positive ways: -to take decisions and act on the basis of the society’s benefits, public safety
and the environment protection; -to accept and lead only projects that are in line with our
qualifications, experience and qualities and the team we work with; -to do what we say we will do; -
to react and correct mistakes immediately; -to keep any confidential or personal information that
has been entrusted to us.
Another important value in leadership is respect. Respect is the duty to show consideration
for ourselves, for others, and for the resources that have been entrusted to us. These include: people,
money, reputation - their safety and natural or environmental resources. An environment that
cultivates respect generates trust, security and performance through the development of co-
operation. It is highly appreciated that a leader who has mastered respect as a core value, shows the
following behavior: - informs about the norms and traditions of all members and avoids engaging in
behaviors that may be considered unreasonable; - listens to the opinions of all, trying to understand
them; - directly addresses the people with whom it has a misunderstanding that can degenerate into
a conflict and clarifies the situation; - behaves in a professional manner, even when there is no
reciprocity; - negotiates for win-win outcomes; - does not use his/her power of expertise and
hierarchical position in order to influence the decisions or actions of others for his personal benefit;
- does not have abusive behavior towards others; - totally respects the ownership of others.
The feature of objectivity is the duty to make decisions and act impartially and objectively.
Behavior of leaders must not compete with their own interests, prejudice and favoritism, be
impartial and lacking in preconceived ideas. A leader aligned with the objectivity mark must show
the following profile: - proves transparency in the decision-making process; - constantly reviewing
its impartiality and objectivity, taking the necessary and appropriate corrective measures; - gives
equal access to information to all those who are authorized to hold that information; - offers equal
opportunities to all qualified candidates; - avoids situations of conflict of interest; - avoids situations
of favoritism and discrimination.
In leadership, integrity is understood as the duty to understand the truth and to act correctly,
both in the way we communicate and in behavior. The behavior of an integruous leader will be
characterized by: - seriously and honestly tries to understand the truth; - correct in communication
and in its behavior; - provides accurate, timely information; - to make commitments and make
promises, implied or explicit, in good faith; - creates an environment in which others feel safe to tell
the truth; - do not tolerate or engage in unsound behavior by: - making false or misleading claims,
telling the half-truth, to provide information outside the context or to retain information that, if
known, would make our information misleading or incomplete; - does not engage in dishonest
behavior with the intention of making personal gains based on the work of others.
The essentials of a leader lie in its values, beliefs and sales of attitudes, features that help
make clear and effective decisions in a very short time. According to Stephen R. Covey, principles-
based leadership is the way to success. Covey (2001) states that "true leadership power derives from
an honorable character and from the exercise of certain principles and tools of power." Thus, in
effective management, it is both ethical behavior (values, traits) and leadership (leadership style).
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PhD Student Laurian Gabriel TĂNĂSESCU
Stefan cel Mare University, Suceava Romania [email protected]
Abstract:
There are many theories and many schools of thought regarding project management and the approach one should
consider for a successful project implementation and an efficient spending of the resources. An analysis of the ICT
investment projects reveals that most of them, by nature, are project-based. The coordination and implementation of
such a project requires a Scope of Work – SoW, more or less formally defined. General multiannual projects, with
multiple and diverse sources of funding had to be split into separate projects.
There are several types of ICT-specific investment assessment models. However, their applicability is rather limited.
Depending on the purpose of the analysis, we must choose the appropriate model.
Huge differences among assessment approaches are determined by the purpose of the analysis, the type of the
organization implementing the project, the project aim, its beneficiaries, technology to be used,
influence/dependence/synchronism determined by interactions with other organizations, etc. Given all that, it is
impossible to have a model designed to answer all such needs.
As for the quantitative (numerical) methods of project analysis, the legal framework in Romania requires that a public
funding-based project use a certain pattern to assess and present the results. Such pattern is not appropriate for ICT
investments as it is based on classic models of assessing the cost-efficiency of an investment.
Key words: Evaluation projects; Impact indicators; Results / Outcome indicators; European Structural and
Cohesion Funds
JEL Classification: C13, C81, E22, E61, H25, H27, H50, H70, H72, O11, O21
1. INTRODUCTION
There are many theories and many schools of thought regarding project management and the
approach one should consider for a successful project implementation and an efficient spending of
the resources. The methodology developed by Project Management Institute, USA, and described in
A Guide to the Project Management Body of Knowledge ( PMBOK® Guide )—Fifth Edition
(Project Management Institute, 2013) is probably the most widespread.
In Romania the project-based approach has been supported especially in case of international
financing or resources, coming mostly from the main international donors such as the European
Union/European Commission, World Bank, UK Government, US Government through USAID
(United States Agency for International Development) or USTDA (United States Trade and
Development Agency), etc
Concepts like project / project management existed in Romania before the international
financing emerged. Such concepts were mainly used in the academic environment, as well as in the
research-development field. Foreign financing relies exclusively on the concept of project, therefore
they contributed significantly to promoting the concept, to raising awareness of the decision makers
with regard to the importance of splitting the activity into interconnected projects. A relatively
strong campaign has been trying to convince the Romanian Government to elaborate the state
budget based on public policies and projects, and not broken down by institutions which use or
manage public money.
An analysis of the ICT investment projects reveals that most of them, by nature, are project-
based. The coordination and implementation of such a project requires a Scope of Work – SoW,
more or less formally defined. General multiannual projects, with multiple and diverse sources of
funding had to be split into separate projects. The computerization of the public administration, of
the National Health Insurance House, etc. are significant examples in this respect. All these projects
lacked an overall strategy (at least sometimes), as well as medium and long-term vision. When their
components were implemented, they were divided into projects with well-defined limits. For
example, in the field of education, there have been projects aimed at the reform of the financial
management of the high-school education system, the implementation of AeL (Advanced
eLearning) or to provide Internet access to the schools in rural areas. The health system benefited
from projects such as: e-health systems implemented in hospitals, the implementation of the
electronic prescription, of the electronic health card, etc. All these projects should have been part of
a projects’ multiannual strategy, interconnected and correlated with individual actions. Each project
should have had clear, measurable objectives, whose degree of achievement should have been
assessed at the end of the implementation.
We should mention that there is no clear, measurable, quantifiable dependence between the
external and internal factors and the success of a project. In the past 20 years there have been many
international research and studies, conducted my multidisciplinary teams (sociologists, experts in
economics or ICT). In most of the cases, the results have shown that the internal factors have a
stronger influence on the success or failure of a project than the external factors. An analysis of
over 6000 projects, conducted by the World Bank from 1983 to 2011, has revealed that:
„However, a striking feature of the data is that the success of individual development
projects varies much more within countries than it does between countries”. (Denizera,
Kaufmann, & Kraay, 2013)
The lack of coherence among the approaches of various organizations, the actors on the
market and the results of some projects illustrates the lack of ICT models and methods of
investment projects analysis. It comes as a shock to see that the degree of dissatisfaction of the
implementation of a CRM – Customer relationship management ranges between 52% and 75%
(Steela, Dubelaarb, & Ewingc,, 2013)
2. ICT AREA IN STRUCTURAL AND COHESION FUNDS AVAILABLE FOR
ROMANIA
2.1. The allocation and functioning of structural and cohesion funds
The 2007-2014 budget had three major objectives at a European level:
Convergence
Regional Competitiveness and Employment
European Territorial Cooperation
During 2007-2014 the Convergence Objective included:
Regions of convergence: with a GDP per capita lower than 75% of the EU-25 average
GDP
Regions outside convergence: with a GDP per capita over 75% of the EU-25 average
GDP, but less than 75% of the EU-15 average GDP
During 2007-2013 the Objective Regional Competitiveness and Employment included :
Regions of convergence: with a GDP per capita lower than 75% of the average EU-15
(in 2000-2006), but over 75% of the average EU-15
Regions of competitiveness and employment: it applies to all other EU regions.
To reach the three objectives the European Commission:
The Cohesion Fund
the European Regional Development Fund
the Social European Fund
Each fund had its own regulations, eligibility criteria, monitoring and evaluation
mechanisms. At a European level, a certain amount from each fund was allocated to each member-
state. Such allocations are not based on any formulas or analytical mechanisms. The allocation is
based the member-state needs, its self-established priorities and regional level of development, the
predictions regarding its capacity to absorb funds, as well as on negotiations determined by public
policies and priorities in the member-states, especially in the donor-state, (which give more to the
EU budget than they receive).
In 2007-2013 the European Commission supported the member-state so that they could
ensure the complementarity of financed actions. The European Commission considered such
complementarity on approving the Operational Programmes, proposed by each member state,
though such complementarity was no longer a priority (as in 2000-2006 budget or as it is expected
for 2014-2020 budget). The refers to actions partially financed from different funds or programmes,
without overlapping among the priorities of each programme. Thus, a project cannot be eligible for
EU financing from two programmes for the same activities/actions.
For 2014 – 2020 the Strategy Europe 2020 is the main EU strategic tool. EU has established
2020 objectives in five priority areas :
Employment
o - 75% of people aged 20–64 to be in work
Research and development (R&D)
o - 3% of the EU's GDP to be invested in R&D
Climate change and energy
o - greenhouse gas emissions 20% lower than 1990 levels
o - 20% of energy coming from renewables
o - 20% increase in energy efficiency
Education
o - rates of early school leavers below 10%
o - at least 40% of people aged 30–34 having completed higher education
Poverty and social exclusion
o - at least 20 million fewer people in – or at risk of – poverty/social exclusion
In terms of eligibility, for the 2014-2020 budget, the EU regions are divided into three
categories, based on the regional GDP per capita compared to EU-27 average GDP
Less developed regions: whose per capita GDP is less than 75% of the EU average
Transition regions: whose per capita GDP is between 75% and 90% of the EU-27 average
media
More developed regions : whose per capita GDP is over 90% of the EU-27 average
Figure 1. The allocation of funds based on the type of region for 2014-2010 budget (billions of
Euro)
2.2. Structural and Cohesion Funds available for Romania
The Romanian Government and the European Commission agreed on apart from the 2007-
2013 National Development Programme to be funded from structural and cohesion funds; this part
was extracted from the 2007-2013 National Strategic Reference Framework (NSRF), which details
certain actions from NDP 2007-2013, with very clear monitoring and evaluation indicators
(Romanian Government, 2006).
The 2007-2013 NSRG implementation mechanisms were based on seven Operational
Programmes. Beside the Operational Programmes, there were other EU funds allocation
mechanisms: The Fisheries Operational Programme (FOP) and the National Programme for Rural
Development (NPRD)
2.3. ICT EURIOEAN funds available in other EU countries
As shown previously, ICT represented a horizontal objective for the projects implemented
as part of the 2007-2013 budget, which means that it was recommended that all projects address the
ICT issues and have a component dedicated to ICT use. That is why, without access to all project’s
documents (especially to the Application) it is impossible to see exactly to which extent the
structural and cohesion funds supported the ICT use. Such a detailed analysis is impossible first of
all due to the lack of access to relevant documents (the applications are not documents of public
interest, so the authorities would not make them public; moreover the information would only be
available in print, which means it would be a huge effort on the part of the authorities to deliver
such information). Secondly such a detailed analysis implies the study of all projects-related
documents. According to the information published by the Ministry of European Funds ( (Ministry
of Public Finance, 2014)) on 31 January 2015, 45075 applications had been submitted for all
programmes and 15242 had been approved and were in the process of implementation (the
contracts had been signed).
Many finance programmes allow for the implementation of projects with ICT components
of various size, which is another challenge in identifying and analyzing the ICT components. Some
calls have a major ICT component (for example, the Sectoral Operational Programme IEC 2007-
2013 Call, Priority Axis III dedicated to the ICT support and use); other calls have a major but not
compulsory ICT component (for example 2007-2013 Regional Operational Programme, Priority
Axis 4, Major Intervention Area 4.3. Support for the development of micro-enterprises.
We should also make a difference between the projects whose aim is to implement an
information system and the projects which aim to reach their objectives by using ICT (for example
enhancing the efficiency of the city hall activity by implementing an ICT system that includes
modules related to the management of documents, secure electronic communication, resource
management, financial resources included, as well as a module for the electronic communication
with the citizens)
Informatic systems as such should not represent an objective. They should be only a tool
one can use to reach objectives like: enhancing the efficiency of resource spending, decreasing the
response time, increasing the number of customers, etc. Yet more often than not the ICT use
becomes an objective in itself. That is the case of extremely complex systems whose
implementation requires a huge and specific effort, when the donor prefers short- and medium- term
objectives like an informatic system which allows the online payment of local taxes, instead of
general and difficult to measure objectives.
However, for a coherent analysis of the structural funds impact on ICT projects and to be
able to make comparisons, we will narrow down our scope as follows:
we will analyze only the financial sources dedicated to the implementation of ICT solutions
we will consider only the financing sources that cover all the (hardware and software)
resources that an ICT project requires
we will identify the sources of financing with ICT related achievement /outcome indicators
The correlation between the European development objectives and the structural tools, for 2007-2014
budget the structural instruments are financed by the European Social Fund (ESF), the European
Fund for Regional Development (ERDF) and the Cohesion Fund (CF). Here are the characteristics
of each fund:
European Social Fund finances non-investment projects: courses, workshops, exchanges,
information or promotion campaigns, analyses, reports, working groups, grants, stipends,
etc.
Tangible assets, fixes assets or tangible investments are not eligible.
European Regional Development Fund finances investment projects. Eligible expenses
include purchase of equipment, constructions, etc.
Cohesion Fund finances projects of big infrastructure, transport, environment, energy
production and transport.
Considering the specificity of each fund, as a first selection criterion in the attempt to
identify the ICT finance sources, we excluded the programmes financed by European Social Fund
(ESF). No hardware infrastructure compulsory to any ICT project can be purchased under such
projects.
The following analysis did not consider the cross-border cooperation programmes, which
have different characteristics and rarely include important ICT components. We have also excluded
technical assistance programmes, dedicated to the public authorities that manage or are involved in
the management of structural instruments. Such programmes generally cover the organizational
expenses of the eligible institutions. As the ICT component represents – unfortunately – a very
small part of an operational programme, we believe that such operational programmes are not
relevant to the current analysis. Unfortunately, no Management Authority has implemented an
integrated and coherent information system yet.
The next figure illustrates the percentage of the ERDF funded projects out of the total
structural instruments available in our country, as illustrated by the information released by the
European Commission, General Directorate for Regional Development (European Commission,
2015)
Figure 2. The percentage of Operational Programmes financed through ERDF out of the total
of Structural Instruments by country
If we do not take into consideration the extremes (the Czech Republic which has allocated
66,75% of all structural instruments to ERDF projects, Greece which has allocated 78,73% and
Hungary, at the other extreme with 94,38% allocate to such projects) the other countries allocated
between 80% and 86% to such projects. The European Commission does not have a significant
contribution to this allocation, in compliance with the negotiation and approval mechanisms of the
Operational Programs. Hence the result shows the priorities of the respective member-state. For
Hungary, the infrastructure investment was a priority, while the Czech Republic considered that
solving social issues and reforming the administration represented the priorities.
The analysis reveals an extreme, Poland, with the average value of a programme of 11.1
billion euros, i.e. over 70% of all such type of programmes developed by Romania (15.5 billion
euros).
It is also worth noting the case of Hungary, where, despite a total budget 50% higher than
the budget allocated to Romania (23.6 billion euros compared to 15.5 billion euros), the average
value of an Operational Programme is roughly the same, which shows Hungary's option to set
targets similar to those of Romania (though the country is about a half of Romania when it comes to
population and surface).
As far as maximum and minimum values of an Operational Programme are concerned, we
can see that there is a huge diversity among the countries under scrutiny. There are Operational
Programmes with budgets of even under 1 billion euros, but there is also the case of Poland which
allocated over 27 billion euros for large infrastructure (transport and environment).
Under these circumstances, the analysis of the absolute values of Operational Programmes
has major limitations, with a different approach among countries (e.g. Poland and some small
countries - Estonia, Latvia, Lithuania and Slovenia – decided to run a single Operational
Programme for Transport and Environment, areas with major financial allocations, while the
remaining countries decided to run several Operational Programmes for these areas). And the
analysis of each Operational Programme values does not take into account the total amount
available for that country
As for the average value of the Operational Programmes, contrasts are less relevant with a
minimum level registered by Slovakia, with 12%, followed by Hungary with 14%, and a maximum
reached by Bulgaria and Romania, with 20%. This shows that Member States have preserved the
same balance between the total budget they got and the size of an Operational Programme. Or, from
another point of view, Member States have set targets of a similar size according to the budget
available.
Analyzing Operational Programmes available in all Members States shows that 4 countries
have chosen to run only two Operational Programmes (Estonia, Lithuania, Latvia and Slovenia). All
of these countries are small-sized in terms of both population and surface. They also have historical,
cultural and economic experiences quite different from Romania's (that all four came out of federal
states existing before 1989, the Baltic States from the USSR and Slovenia from Yugoslavia). Under
these circumstances, a detailed analysis of the information available concerning structural
instruments in the four countries is not relevant.
The list of Operational Programmes carried out by Member States under scrutiny reveals the
following types of programmes:
Technical Assistance Programmes. As we already mentioned, such programmes also
included projects with major ICT components; however, the details of the respective
projects are not public interest information, hence it is impossible to assess their
performance indicators (that is to identify these indicators and verify the extent to which the
projects have succeeded to achieve them).
Programmes addressing large infrastructure (transport, environment). In this type of project,
at least in terms of the share in the total budget, ICT components are insignificant or non-
existent.
Programmes addressing regional priorities. Such programmes are expected to address in
particular the infrastructure development of local or regional interest. This type of
infrastructure has little or no connection with ICT as in most cases it refers to road
infrastructure, buildings, social infrastructure, etc.
Programmes aimed at supporting economic environment, competitiveness, certain sectors
(health, information society, etc.), research and innovation. In such Operational Programmes
we expect the programme also include performance indicators for the use of ICT.
Starting from issues previously mentioned, from the list of Operational Programmes
implemented by the Member States we will analyze only those programmes focused on business
environment and we will only refer to countries with more than two Operational Programmes
financed by ERDF in 2007-2013 budget, other than technical assistance project or cross-border
programmes (supporting territorial co-operation).
Figure 3. Operational Programmes Budget aimed to support competitiveness in the relevant
Member States
First of all, compared to Romania, Poland allocated over three times more money to
competitiveness. However, we should also take into account that Poland’s budget was almost three
times bigger than Romania’s, which makes the proportion of the budget allocated in support of
competitiveness similar in the two countries, if we consider the total funds available.
Similar, though totally opposite, is the case of Bulgaria, which – of all member states under
analysis - allocated the smallest budget to support competitiveness. Yet, if we consider Bulgaria’s
total budget – which represents 38% of Romania’s budget – the amount allocated to
competitiveness accounts for 35% of sum allocated by Romania.
We should note the cases of the Czech Republic and Slovakia, countries much smaller than
Romania, whose total budget available for structural instruments is similar to Romania’s (on case of
the Czech Republic) or lower (64% of Romania's budget in case of Slovakia). Both countries
allocating budgets higher than Romania’s in support of competitiveness, even double in the case of
the Czech Republic.
As I have already shown, strictly analyzing the amounts allocated (overall, for programmes
financed by the ERDF or, in our case, for those programmes aimed at supporting economic
competitiveness) has the great disadvantage that it does not take into account particularities of the
country concerned. For each member State, such a comparative analysis should consider:
Population
Surface
Stage of economic development
Stage of infrastructure development
Needs of vulnerable/deprived social groups
The interest of the Member States in supporting the use of ICT is also reflected by the
importance of ICT-related objectives as part of the national strategies, in general, and Operational
Programmes, in particular. Thus, we can identify three types of situations:
Member States that considered the use of ICT as a "first level" objective, dedicating an
entire Operational Programme to this priority
Member States that considered the use of ICT as a "second level" objective, dedicating a
Priority Axis of an Operational Programme to this priority
Member States that considered the use of ICT as a "third level" objective, devoting a Major
Intervention Area of an Operational Programme to this priority
3. Current status and trends in ICT performance evaluation
The ICT (Information and Communication Technologies) field has been growing fast in
the last decades; it is probably the field with the largest and most radical changes, which greatly
affect our life and activity.
In terms of external factors, one should first of all consider the environment (political,
economic, and social) of the project involved. As major external factors in this category we
mention:
The country’s level of economic development (GDP). No matter if we examine a project
developed by a company or a public institution, economic dynamics, the level and diversity
of economic transactions, and the economic performance of the market players, are factors
with major impact on the performance of the resources spent in the project.
Development level of ICT infrastructure in that country. Any ICT investment project
involves interaction with other existing IT systems, the use of hardware (e.g.
communications infrastructure, data center, etc.) and information infrastructure (databases,
structured information available in electronic format)
Users’ degree of technological "literacy". If the project is to be implemented in an
environment where users have neither knowledge, nor access to technology, training
sessions and presentations, plans of introducing future changes in the organization, an
information campaign, etc. should be taken into account, prior to launching the project.
Human resources able to manage the new system. Any system, irrespective of the opening
and support received from the supplier or third parties, must be taken over by the
organization/company. Such take over also involves the existence of human resources at
least able to understand, use and run the system.
The factors above can be largely assessed and are relevant at a country and national
economy levels. Their wide influence on the project resides in the choice of substantive actions to
be implemented in order to insure the project’s success and reach the objectives. There is another
set of external factors, this time closer to the project, which must be taken into account both when
we define a project and when we implement, monitor and evaluate it. These factors are (Steela,
Dubelaarb, & Ewingc,, 2013)
"Industry context”
"Organizational context”
"Customer context”
According the project management theory, as presented by the Project Management
Institute, the “project sponsor“ plays a key-role in running a project (Project Management Institute,
2013). That may be the head of the company or institution, another decision-maker or a person with
influence on company’s policies, etc. The study issued by a group of experts - after the assessment
of over 6,000 World Bank-funded projects around the world between 1983 and 2011 – reveals the
key-role of such a person. One of the results of this research shows that:
“Our main finding here is that task team leader fixed effects are of comparable importance
to country fixed effects in accounting for the variation in project outcomes, suggesting a
strong role for task team leader-specific characteristics in driving project outcomes. We
also document that task team leader quality (as proxied by the average outcome rating on
all the other projects managed by the same staff member) is a highly significant predictor of
project outcomes.” (Denizera, Kaufmann, & Kraay, 2013)
4. Conclusions and results
There are several types of ICT-specific investment assessment models. However, their
applicability is rather limited. Depending on the purpose of the analysis, we must choose the
appropriate model.
Huge differences among assessment approaches are determined by the purpose of the
analysis, the type of the organization implementing the project, the project aim, its beneficiaries,
technology to be used, influence/dependence/synchronism determined by interactions with other
organizations, etc. Given all that, it is impossible to have a model designed to answer all such
needs.
As for the quantitative (numerical) methods of project analysis, the legal framework in
Romania requires that a public funding-based project use a certain pattern to assess and present the
results. Such pattern is not appropriate for ICT investments as it is based on classic models of
assessing the cost-efficiency of an investment.
Both Romania’s legal framework and the European recommendations use the method of
Cost-Benefit Analysis for the financial-economic assessment. This is a good method; the only
problem may reside in measuring the impact of the project. As shown by the examples in this
research, quantifying the money proves most difficult especially in case of public institutions. It is
even more difficult when the project’s main impact targets social benefits (health, education).
The examples above reveal that assessing the investment of a public institution and that of a
private company implies totally different approaches. In the first case, financial indicators are not
relevant (the impact may even be negative), only the economic impact has to be positive (the
overall benefits generated by the project must be higher than the costs). However, in case of an
investment made by a private company, the financial impact is critical, as no company would invest
without a positive result.
BIBLIOGRAPHY
1. Wang, J. (2012, 08). Survival factors for Free Open Source Software projects: A multi-stage
perspective . European Management Journal , 30(4) (0263-2373 ).
2. Project Management Institute. (2013). A Guide to the Project Management Body of
Knowledge (PMBOK® Guide)—Fifth Edition. Project Management Institute.
3. European Commission. (2015, 03 08). DG Regio - Directoratul General pentru Dezvoltare
Regională. Retrieved 03 08, 2015, from Europa:
http://ec.europa.eu/regional_policy/index.cfm/en/atlas/programmes/
4. Steela, M., Dubelaarb, C., & Ewingc,, M. T. (2013, 11). Developing customised CRM
projects: The role of industry norms, organisational context and customer expectations on
CRM implementation. IndustrialMarketingManagement.
5. Denizera, C., Kaufmann, D., & Kraay, A. (2013, 11). Good countries or good projects?
Macro and micro correlates of World Bank project performance. Journal of Development
Economics, 105:288-302(0304-3878).
6. Romanian Government. (2006, decembrie 01). Planul Național de Dezvoltare 2007 - 2013.
Retrieved iulie 01, 2014, from Ministerul Fondurilor Europene: http://www.fonduri-
ue.ro/posdru/images/downdocs/pnd_ro.pdf
7. Ministry of Public Finance. (2014, 01 02). Norme Anuale de Venit: Anul 2014. Retrieved 07
01, 2014, from Ministerul Finantelor Publice - Agenția Națională de Administrație Fiscală:
http://www.anaf.ro/
8. Ministry of European Funds. (2015, 01 31). Stadiul Absorbției. Retrieved 03 08, 2015, from
Ministerul Fondurilor Europene: http://www.fonduri-ue.ro
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Associate Professor PhD Mihaela TULVINSCHI Ștefan cel Mare University of Suceava, Romania
Abstract:
Intangible assets are often characterized by high initial costs, low or declining costs, scale economies,
collective consumption and imperfect substitution. In an economic entity, the more it comes out of a certain element, the
unit costs are reduced. Most licensed products can be consumed by more people at a time. The imperfect substitution
refers in particular to the human capital analyzed as a component of intangible assets. Goodwill and human capital, as
unidentifiable assets, spark numerous controversy over the recognition and assessment accounting methodology.
Among the identifiable assets, the article presents the issue of trademarks as they have the ability to provide income for
the economic entity.
Key words: identifiable and unidentifiable intangible assets, assessement, depreciation, goodwill, fair value.
JEL classification: M40, M41
1. INTRODUCTION
For managers, the discovery and quantification of a firm's intangible assets is of particular
importance because these assets can generate future economic benefits. Although intangible assets
are difficult to identify and difficult to assess, managers can not abandon the efforts that need to be
made to analyze costs and benefits to make decisions about the recognition and measurement of
intangible assets. The assessment of intangible assets is equally important for the managerial
decision, whether it is for a transaction, legal dispute or strategic improvement of a firm's
operations.
To demonstrate the importance of intangible assets for the company's value, in general, and
patents, in particular, the authors of the article "Are scientific indicators of patent quality useful to
investors?" state that "patent citation information may indeed help investors judge the future profit
– earning potential of a firm’s scientific discoveries."(Hirschey and Richardson, 2004)
While large international corporations attach great importance to intangible assets,
"Romanian firms are characterized by a low degree of dissemination of information on intangible
assets, and the differences between the market value and the accounting one can be explained not
on account of the intangible assets in accounting, but based on extra-financial factors related to
investor confidence." (Fădur et al., 2011)
There are many controversies about the assessment of intangible assets and the presentation
of information in the business environment. In this respect, in the paper "Intangible Assets:
Management, Evaluation and Reporting", Baruch LEV states: "The difficulties encountered in the
assessment of intangible assets should not prevent the disclosure in the financial statements notes or
by other means of important factual information such as investment technology, employee training,
customer acquisition costs and Internet activities."(Lev, 2011)
The need for an assessment of intangible assets " is determined by a number of causes, of
which the most common are: total purchase price allocation of a business undertaken by a business
combination for impairment testing of the asset under IAS 36 Impairment of Assets, the increase
capital by contribution in kind, the separate sale of an intangible asset liquidation of a company.”
(Holt, 2015)
In the paper entitled "Intangible Assets: Evaluation and Economic Benefits," Jeffrey A.
COHEN (Cohen, 2008) proposes three approaches for assessing intangible assets: revenue-based
assessment, market-based approach and cost-benefit assessment.
The approach of intangible assets assessment from the income perspective is a direct
application of the updated cash flow methodology. This method implies a quantitative and
qualitative analysis of cash flows, but also an analysis of associated risks. Potential investors will
pay more for investments that quickly generate more cash flows if they are at minimum risk. The
quality criterion is as important as the quantity one. It is very important to generate cash flows more
quickly because the value of money in time can diminish. Risk analysis is a critical appreciation of
managers' predictions about future economic benefits.
Assessing intangible assets from a market perspective involves the use of other assets as a
reference point to indicate the value. The likelihood of future economic advantages can be
demonstrated by the existence of an outlet for the production generated by the intangible asset or
for the intangible asset itself.
The authors of the paper "Measuring Intangible Capital: A Review of Current Practice”
“propose that the way to a standardized, more comparable approach to measuring intangible capital
is to employ a back – to – basics “costs” approach which classifies investments in intangible capital
as assets based on management intent at the time.”(Hunter, Webster and Wyatt, 2008)
Under an increasingly dynamic global market, the assessment of intangible assets in terms
of costs can not be based only on initial costs because the value of intangible assets changes over
time. The accounting cost, from an economic point of view, is based on a sensitive practice of
depreciation. Thus, the assessment will take into account the fair value, a concept derived from the
assessment approaches from the income and market perspective.
There are off-balance sheet intangible assets associated with a company's product that the
firm can not control clearly. These assets do not qualify for recognition in the balance sheet.
Examples of such assets are: online communities, clubs of those who are passionate about a certain
domain, and distributor networks.
Specialized literature (Cohen, 2008) presents a theory of temporary assets, such as charisma
and beauty. These are considered the most intangible assets. Addressing temporary assets in an
accounting framework involves the notion of status. It can be defined as a stock of accumulated
consideration, meaning a securitization of personality traits. Status is an asset itself, but it results
from combinations of other assets, such as beauty, power, charisma or sports exhortation. Although
not as liquid as money, the status can be transferred separately from the underlying assets that
created it.
Intangible assets require high initial investment and subsequent lower or declining costs.
Initial costs are high because the launch of a new project or service on the market requires huge
amounts of research invested, hundreds of hours of testing, a highly skilled workforce, costly, and
sometimes unsuccessful experiments.
2. DETERMINED OR UNDETERMINED LIFETIME FOR INTANGIBLE ASSETS
Knowing the useful life of intangible assets is important for determining depreciation as an
expression of irreversible economic depreciation. An intangible asset with an indefinite useful life
is not depreciable. An intangible asset with a defined useful life is depreciable and the amortization
expense is tax deductible. International Standard IAS 38 "Intangible Assets" distinguishes between
intangible fixed assets with a defined useful life and those with an indefinite useful life. An
intangible asset should be considered by the entity as having an indefinite useful life if, based on the
analysis of all relevant factors, there is no foreseeable limit to the period it is expected to generate
net inflows for the entity.
Given the rapid pace of technological change, we can say that intangible assets subjected to
moral wear have a short and determined useful life. However, in determining the useful life of an
intangible asset, account must be taken of economic and legal factors. Economic factors determine
the period during which the entity will receive future economic benefits, and legal factors may limit
the time at which it controls access to those benefits. The useful life is the shortest of the periods
determined by these factors.
Determined useful life may be influenced by legal, regulatory or contractual provisions.
Other factors of influence can be the planned use of the asset, moral wear, demand change,
competition, and technology advancement. If none of these factors limits the useful life of the
intangible asset to the reporting entity, the useful life of that asset will be considered indefinite.
Estimates of life expectancy consist of an approach dominated by the uncertainty that the
intangible asset is expected to contribute directly or indirectly to the future cash flows of the entity.
Annually and when there is evidence of impairment, an entity has the obligation to test
intangible assets with an indefinite useful life for impairment. Testing is carried out by comparing
their recoverable value with the book value. These tests examine from an economic perspective
whether there has been a decrease in the fair value of the intangible asset.
The useful life of an intangible asset that is not depreciable should be reviewed in every
period to determine whether events and circumstances continue to support the assessment of the
indefinite useful life for that asset. The transition from indefinite useful life to the determinate one
should be interpreted from the accounting point of view as a change in the accounting estimate.
Unlike assessment, when we discuss accounting estimates, there is a significant margin of
discretion in choosing methods. The existence of several alternatives could create problems in
interpreting the financial statements. Accounting estimates are influenced by professional
reasoning, which is sometimes subjected to inherent subjectivity, but this subjectivism must not be
transformed into a form of manipulation of results.
Goodwill, trademarks and trade secrets are the most representative intangible assets with
indefinite life. By resorting to the professional accounting estimation mechanism, it can be seen that
these intangible assets may also be affected by impairment losses. For example, changing the way
the asset is used and significant market price depreciation are uncertain events that can generate
impairment losses.
3. CONTROVERSIES ON THE RECOGNITION AND MEASUREMENT OF
UNIDENTIFIABLE INTANGIBLE ASSETS
Companies are gaining more and more economic benefits through the use of unidentifiable
assets that remain hidden until a transaction occurs. Goodwill and human capital are the
unidentifiable assets that spark most controversy in the specialized literature and in the business
world. Human capital helps increase the value of a firm, but can not be separated from its own.
Human capital generates hidden assets and property valuation difficulties.
Goodwill is "a residual value created when a firm buys another firm for an amount greater
than the fair value of the identifiable net assets, whether tangible or intangible." (Cohen, 2008) An
entity would pay more than the fair value if it misidentified or misrepresented. In addition, under
uncertainty, the buyer makes uncertain estimates.
The development and widespread application of marketing techniques generates
unidentifiable intangible assets that are difficult to reliably assess. Customer loyalty, customer-to-
supplier relationships, market share, and copyright are factors that help increase fair, market-to-
market value. The exact value of these elements can not be accurately predicted. We can not find an
unanimously accepted answer by economists and investors to the question: Does the increase of fair
market value contribute more to the existence of a large number of loyal customers or the offer of
products and services of a desirable quality?
By using software, businesses can organize customer information, generating customer lists.
These customer lists are identifiable, which allows them to be recognized as a goodwill. Based on
customer lists, revenue generated by existing and potential customers can be predicted. In order to
achieve the forecasted earnings and to support market value as much as possible, recognition of
goodwill as an asset is not sufficient. This must be done in parallel with offering superior quality
products and services.
Not all elements that generate goodwill meet the criteria for recognizing an intangible asset.
The two identification criteria refer to severability and contractual rights. An intangible asset is
separable, meaning it may be segregated or divided by the entity and sold, transferred, authorized,
leased or exchanged, either individually or together with a contract, asset or liability. An intangible
asset derives from contractual or other legal rights, whether those rights are transferable or
severable by the entity or other rights and obligations.
Economic entities engage in significant spending on advertising, improving existing
products and launching new products, recruiting and training staff, loyalty to customers, and
attracting new customers. These expenditures develop internally generated goodwill but can not be
measured reliably, which is why it is not recognized in accounting as an intangible asset. Purchased
goodwill is much easier to define and identify in comparison with internally generated goodwill. It
is recorded "whenever an entity acquires another entity and to reward the surplus over what is
justified by the fair value of the identifiable assets and liabilities purchased." (Bloom, 2010)
Goodwill initially recorded as an asset should not be subsequently amortized but must be
subject to the impairment test both before the end of the year in which the acquisition took place
and annually whenever there is evidence of impairment. Being the most relevant and reliable
solution, the IASB adopted this accounting treatment. This reduced the controversy over the
impairment of goodwill and the way it was recorded. Proponents of depreciation brought two
arguments based on components of goodwill. First, goodwill may contain depreciable identifiable
assets that are not separately accounted for because of their unreliable fair value. The second
argument relates to the fact that goodwill may contain items that do not have an infinite lifetime,
and its non-repayment results in damage to the fair image presented in the financial statements.
However, the use of amortization of goodwill was considered to be fairly subjective, affecting the
results published according to the objectives of the economic entity.
In order to obtain better information for users, international accounting references have
opted to perform depreciation tests. Thus, economic entities can not use impairment of goodwill to
influence performance and image towards third parties. There is no testing of a component of
goodwill, but testing of the goodwill of a reporting unit. Managers should pay particular attention to
the establishment of reporting units and the methodology for awarding goodwill to them.
A reporting unit is "an operating segment of an enterprise or a component of an operating
segment that is an activity for which distinct financial information is available, and the segment
management periodically analyzes the operating results of that component." (Cohen, 2008)
The goodwill allocation methodology of a reporting unit requires assessors to determine
what portion of the fair value of the entity's purchase price should be attributed to its various
business units. Once the purchased individual assets and liabilities have been identified at the
reporting unit level, the difference between their carrying amount and the entity's fair value
contribution is the goodwill of the reporting unit.
The depreciation test is carried out in two stages. The first step compares the fair value of a
reporting unit with its accounting value, including goodwill. If the fair value of a reporting unit is
greater than its carrying amount, it is considered that the goodwill of the reporting unit is not
impaired, so that the second step of the impairment test is not required. If the fair value of a
reporting unit is less than the carrying amount, the second step of the goodwill impairment test will
be applied to measure the amount of the impairment loss.
In the specialized literature, we find different approaches to goodwill. These approaches
focus on measuring goodwill, goodwill components and anticipated payments for future economic
benefits. Measurement of goodwill is a "top to bottom" approach, and a component-fund analysis is
a "bottom-up" approach. (Johson and |Petrone, 1998)
Goodwill can be measured as a residual value as it is perceived as a component of the
investment that is based on the buyer's expectations of the future economic benefits of the group of
enterprises. The investment is regarded as a component divided by component. The investment,
seen as an asset, can be a whole company that is valued at a global value (its real value as a whole).
Once the various items purchased are accounted for as assets, what is left is goodwill. In this "top to
bottom" approach, the aggregate value of the entire asset is greater than the sum of the fair values of
the identifiable components acquired and recognized in the accounting.
The following question may be asked: Why does the buyer accept to pay more than the sum
of the fair values of the identifiable components?
The buyer may consider that some acquisition costs are an investment rather than an
expense. Thus, he acquires unidentifiable intangible assets together with identifiable tangible and
intangible assets. In any transaction, non-identifiable intangible assets (eg. goodwill) can not be
purchased individually. Another reason why the buyer agrees to pay a higher value is to make an
erroneous evaluation. Such an assessment occurs when we can not find intangible assets on the
market comparable to the asset underlying the transaction and when there are no prior sales of a
similar asset.
The third reason the buyer will pay more than the fair value of the identifiable components
is the existence of a certain degree of uncertainty. The buyer may have information about the firm's
ability to obtain economic benefits as a result of the internal development of unidentifiable
intangible assets. When acquiring the firm, the buyer will turn these unidentifiable assets into
goodwill, but estimates of their value and the economic benefits they generate are dominated by
uncertainty.
The "bottom-up" goodwill approach refers to the fact that if the cost of acquisition exceeds
the fair value of the entity’s net assets purchased, it is probable that some of the resources have been
acquired by the buyer. This variation is based on the components of the goodwill more than its
measurement.
Goodwill is treated by the International Financial Reporting Standard IFRS 3 Group of
Companies because it represents the unidentified part of the buyer's payment in the case of a
grouping of enterprises. Under the terms of business combinations, the fair value of the investment
of a parent-company in a subsidiary is compared to the fair value of the identifiable net assets of the
subsidiary at the acquisition date. Goodwill gained within a group of undertakings is determined as
the difference between the cost of acquiring the securities and the buyer's share in the fair value of
the acquiree's identifiable assets, liabilities and contingent liabilities. Goodwill is a prepayment
made by the buyer to the future economic benefits that may result from the synergy between the
identifiable assets acquired or the assets that, individually analyzed, do not meet the criteria for
recognition in individual situations but for which the buyer is willing to carry out a payment within
the purchase ". (13Feleagă and Malciu, 2004)
Through the following example, goodwill generated by business groups will be highlighted:
Two economic entities are considered: LALA S.A. and NACU S.A. On July 1st N, LALA
S.A. acquired 75% of the shares of NACU S.A., at the price of 8 lei / share, paid in cash. The share
capital of the NACU entity S.A. consists of 14,000 shares with a face value of 5 lei / share. At the
acquisition date, the balance sheets for the two entities are those presented sin table no. 1.
Table no. 1. Balance sheet situation at June 30, N BALANCE SHEET ELEMENTS LALA S.A. NACU S.A.
Tangible fixed assets 300 000 80 000
Stocks 80 000 20 000
Commercial receivables 120 000 30 000
Availability 200 000 20 000
TOTAL ACTIVE 700 000 150 000
Social Capital 310 000 70 000
Reserves 90 000 17 000
Provisions 30 000 3 000
Commercial debt 270 000 60 000
TOTAL OWN CAPITAL AND LIABILITIES 700 000 150 000
The acquisition of the NACU entity generates assessments of its elements, the established
fair values being the following:
Tangible assets 74,000 lei;
Stocks of 23,000 lei;
Provisions 3 200 lei;
For other elements, fair values are consistent with accounting values;
For calculating the deferred tax, a 16% quota will be considered.
To determine the amount of internally generated goodwill, firstly, the net asset value at fair
value is determined.
tangible assets 74 000 lei;
stock of 23,000 lei;
commercial debt of 30,000 lei;
availabilities 20 000 lei,
deferred tax asset related to tangible assets: 6,000 lei x 16% = 960 lei;
deferred tax asset related to provisions: 200 x 16% = 32 lei;
provision (3,200 lei);
commercial debt (60,000 lei);
deferred tax liability for inventories: (3,000 x 16%) = (480 lei)
Net assets at fair value = 74,312 lei
Combined goodwill generated by combination = Cost of acquisition of securities - part of
NACU S.A. in the net asset value at fair value of NACU S.A.
Goodwill generated by the combination = (14,000 lei x 8 lei / share x 75%) - (74,312 lei x
75%) = 28,266 lei
Goodwill of 28,266 lei shall be recognized as a non-depreciable asset but shall be tested for
impairment at least annually in accordance with IAS 36 Impairment of Assets.
4. RECOGNITION, ASSESSMENT AND DEPRECIATION OF TRADE MARKS
Patents, copyrights, trademarks and trade secrets are certainly identifiable intangible assets
because they have legal status. Production trademarks may be considered intangible assets as they
may be the subject to sale or exchange.
Commercial trademark is the owner's right to use a logo or registered name to identify a
good or service. Production trademarks are more than just a name or a legal concept, such as a
commercial trademark.
"To make itself known, the manufacturer must address the consumer directly. Under these
circumstances, the brand plays the role of a trustworthy contract between producers and consumers,
enabling it to identify the source of the product and guaranteeing a consistent quality
level."(Wallisser,2001, quoted by Feleagă L., 2006)
Recognition and assessment of the brands according to the obtaining process: separately
acquired brands, trademarks purchased within a group of companies and brands created by the
company.
According to the accounting references, separately acquired brands are recognized in
accounting at the paid price even if they do not always reflect the fair value of the brand.
Trademarks acquired within a group of companies are recognized in accouting at the fair value
because they are identifiable intangible assets that are separable from the goodwill.
In the paper "Conceptual difficulties regarding the recognition, assessment and depreciation
of brands", Professor Liliana Feleagă (Feleagă, 2006) presents the main controversy over the
recognition of the brands created by the company. In 1992, the French National Accounting
Council proposed the recognition of the brands created by the enterprise at production cost because
they resulted from a multi-phase project. Thus, it would be possible to determine the cost of
production of the brand by adding to the costs incurred in different phases and which can be
attributed to the creation of the brand.
The concept of project allows the identification of the entire branding process. However, the
principle of prudence and the principle of periodicity lead to the capitalization of a small part of the
costs incurred. For example, expenditure incurred in the conception phase and the costs of
registering the trade mark are excluded from the cost of production. Similarly, the costs of branding
and product preloading are excluded, since at this stage the company can not demonstrate the
technical success and commercial profitability of the project. Failure to capitalize a larger
proportion of the costs incurred has the effect of increasing inequalities in treatment between the
brands created and the brands acquired.
Most specialists oppose the capitalization of trademarks created by the enterprise. The main
arguments concern the application of the principle of prudence and the existence of uncertainties
about the methods of evaluation. Trademarks created by the enterprise are not the subject of a
transaction between a seller and a manufacturer. In the absence of a fair value, there is a risk that
the manufacturer overestimates the value of its brands. Each brand created by an economic entity is
unique. It is difficult to estimate the value of the mark at the time it is created and at the time of
each inventory.
In the paper "Intangible Assets: Assessment and Economic Benefits", Jeffrey A. COHEN
(Cohen, 2008) proposes a four-step methodology to study the economic benefits generated by a
brand. The four steps involve four types of analysis on the basis of which an extra - brand value of a
brand can be assessed. Seeking a segment analysis, financial analysis, property size analysis, and
strength analysis of the manufacturing brand.
The segment analysis brings together the manufacturing brand according to how it manifests
itself to the customer. The financial analysis identifies the profit of the economic entity, establishing
the size of the economic benefits. Determining property size requires an analysis to determine what
proportion of profit can be attributed to the manufacturing make. The analysis of the force of the
manufacturing brand is expressed in the form of a brand strength score that generates a discount
rate to be applied to the profits of the manufacturing trade mark.
Controversies on brand accountancy are not limited to their recognition and assessment,
they are also related to the depreciation of the brands. To record depreciation in the form of
damping, a lifetime has to be set. So the following question arises: Do all brands have a definite
lifetime? In general, brands have an indefinite lifespan, but the advocates of trademark damping
bring arguments for establishing a determined lifespan. A first argument is the disappearance of
some brands from the market.
A comparative analysis of the economic approach and the legal approach of the mark is a
second argument for the irreversible brand depreciation. The value of a trade mark depends on the
goods and services sold under the trade mark. The quality of products and services, the technologies
and customer preferences are constantly changing. If the mark is not supported by management to
anticipate these changes, its value diminishes rapidly. From an economic point of view, the brand is
an identification tool that provides a non-exclusive and time-limited advantage. From the legal
point of view, the brand generates an exclusive and unlimited property right. The economic
approach influences the accounting treatment of the brand, and the legal approach influences the
fiscal treatment of the brand.
The third argument for trademark depreciation refers to the dependence between the value of
a brand and the relations with customers. In the meantime, through advertising, commercial
relationships with new customers are established, and some of the old customers reduce the amount
of purchased products. In this situation, in order to motivate customers, the economic entity gives
up the old trademark and replaces it with a newly created mark, but the latter can not be recognized
on the balance sheet. It is thus demonstrated that the existence of maintenance costs is not an
argument for an indefinite lifetime.
Advocates of the unlimited lifetime of brands and the impossibility of their depreciation are
based on legislation in some countries and on the examples of brands that have existed on the global
market for a very long time. In France, Germany, US, trademarks are granted legal protection for an
indefinite period of time. The owner has no temporary limits on the use of the mark. The value of a
mark is increased or maintained by advertising costs. Recognizing irreversible trademark
depreciation would lower the result twice because it would account for depreciation and
maintenance expenses. If a brand is in decline, its value is significantly reduced, it is necessary to
account for a reversible depreciation in the form of a value adjustment, but not a write-down of the
depreciation.
CONCLUSIONS
Intangible assets involve several steps to be understood, assessed and appreciated. In the
assessment of intangible assets, the context plays an important role. It acquires dynamic
characteristics because the boundaries of what is an intangible asset are not always very clear and
rarely remain static. It is necessary to decide whether intangible assets have a fixed or indefinite
lifetime as this determines how their depreciation is established.
Part of the paper addressed the distinction to be made between identifiable intangible assets
and unidentifiable intangible assets. The separation between the two categories of intangible assets
starts from the way they are acquired. Both categories can be developed internally. Identifiable
assets can be purchased individually, but unidentifiable assets can not be purchased individually.
In the paper, the issue of goodwill was presented because it represents the most often non-
identifiable intangible asset. Goodwill is treated from the accounting point of view as the economic
benefits for which investors are willing to pay but can not identify them exactly. Wrong
identification, mistaken assessment, and uncertainty are the reasons why investors are willing to pay
more than the fair value of a firm.
Trademarks constitute some of the most identifiable intangible assets. The benefit of the
trademark owner is that cash flow forecasting becomes easier, and so he can coordinate the
development of the business in certainty.
REFERENCES
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107
Associate Professor PhD Anişoara APETRI
University Stefan cel Mare Suceava, Romania [email protected]
Associate Professor PhD Camelia MIHALCIUC
University Stefan cel Mare Suceava, Romania [email protected]
Abstract:
The role of credit in the economy is concretized by the results obtained through the manifestation of credit
relations or by the contribution of credit to the achievement of certain economic policy objectives, the credit having a
particular importance in the modern economic system. If business financing is concerned, credit plays a vital role. The
overall objective of this paper is given by the analysis of the evolution of credits in Romania during the period 2010-
2017, this analysis being carried out by sectors of activity.
Key words: naturalistic theory of credit, expansionist theory credit, the theory of regulated credit, bank credit
JEL Classification: G20, G21
1. INTRODUCTION
One of the main causes of stagnation of the economy from Romania is representing by poor
lending. It is well-known that any economy, no matter how advanced, it can not grow without
credit.
The term of credit comes from the latin word "credito", which translates into trusting. Trust is
needed in the loan relations, as without it the sale of goods with deferred payment would not take
place. In order for the credit relationship to manifest itself, the creditor must have confidence in the
debtor's moral qualities, be convinced of his creditworthiness, his financial ability to make payment
at term, his solvency. [Sandu, G., 2001, p.35].
The notion of "credit" is characterized by the chronological gap that separates a benefit from
its contraption. This definition covers two big assumptions in practice: that of the money loan and
that of the synallagmatic contract in which the borrowing part benefits from a term. In both cases,
the creditor provides an immediate benefit, and he will receive his contraption at a later date. [Albu-
Cîrnu, I., 2002, p. 36].
Loan in general is "… the exchange of a present monetary value against a future monetary
value." [Dedu, V., 1996, p. 24] So a defining feature of credit is the obligation to pay, usually on a
certain date, and usually at a certain interest rate.
Another definition presents credit emphasizing its role in the redistribution, creation and
amplification of the monetary mass, as follows: "..the credit is the expression of the relations of
redistribution of the latent cash availability in the economy to both the non-financial and the
financial agents, by replacing the passive currency with active currency,, as well as strengthening
and amplifying money capital and increasing monetary mass (money) in circulation."[Turlic, V. et
al., 2005, p. 124].
The theoretical literature on credit market friction highlighted the importance of credit in
shaping the links between the financial market and the real economy. The expansion of the open
economy has shown that credit market friction can play an important role in transmitting shocks
between countries, through balance sheets links between investors and financial institutions.
From an empirical perspective, many have studied the relationship between finance and
development and have found that better functioning of financial intermediaries accelerates
economic growth. Several authors examined the link between credit and business cycles, for
example, based on empirical evidence of the monetary policy credit channel (Braun and Larrain,
2005 and Jacobiello and Minetti, 2008) and the role of global banks in transmitting liquidity shocks
Cetorelli and Goldberg, 2008, 2010). However, little empirical effort has been made to quantify the
importance of credit in shaping and forecasting the dynamics of the economic cycle and analyzing
the international transmission of credit shocks within a global framework that incorporates both
emerging economies and advanced economies. [TengTeng Xu, 2012].
2. THE CHARACTERISTICS OF CREDIT
Theories on credit characteristics are different, noting the following theories known in the
literature:
- naturalistic theory of credit, according to which credit is only a means of transferring money
from one holder to another, identifying the capital of the loan with the productive capital;
- expansionist theory credit, which attributes to the credit the role of capital creator and, at the
same time, a leading factor in the development of the market economy, this theory being
abandoned in the last decades because it has been noticed that unlimited money creation is not
beneficial but has negative effects for economy such as inflation or bankruptcy of banks.
- the theory of regulated credit, starts from the idea that in the market economy the cyclical
crises and chronic unemployment could be limited by regulating credit in the sense that it
generates an increase in demand for goods in the economy.
3. CHARACTERISTIC RISKS TO BANKS
Lending can be profitable, but it also involves risks. Profits come from the collection of
interest income and commissions from loans. As far as possible, banks and other lenders are trying
to charge borrowers with higher risk, interest rates higher than borrowers with low-risk. Therefore,
creditors have an incentive to take greater risks while waiting for higher earnings.
When we talk about risks, we have to make a difference between the risks in general and the
risks to banks. Among the typical risks banks are [Trenca, I. I., Bolocan, M.-D., 2011, p. 50]:
- financial risks (interest rate risk, liquidity risk, risk on variable income securities);
- signature or counterparty risks (inter-bank risk, country risk, customer risk).
As Caouette et al. (1998) mentioned, the oldest form of risk on financial markets is credit risk.
It would have existed at least since 1800 b.C. because this type of risk is as old as the lending
activity itself. Since then, the concept has evolved a lot and credit risk management has become the
main concern of traditional banks. However, lately they have been forced to turn to banking
relationships, being more focused on customer relationship than on loan returns. This has led to
poor results in terms of credit risk management, and if we look at the history of financial
institutions, it can be observed that credit risk was the cause of the biggest bank failures. [Pichereau
L., 2016, p.3].
Credit risk is represented by the risk of recording losses or the risk of not realizing the
estimated profits, as a result of the counterparty's non-performance of contractual obligations. This
type of risk refers to all market players, whether they are banks or random people who borrowed
and/or lent. In other words, credit risk occurs whenever a person wants to get a product or service
without paying for it immediately. Therefore, the danger is the failure to make any promised
interest and / or principal payments.
In addition to credit risk, country risk is associated with the economic, social and political
conditions of the debtor's country of origin. Aa a component of country risk, the transfer risk arises
if the debtor's obligation is not expressed in its local currency. [Mihai I., Velicu I.C., 2008, pp. 14-15]
Market risk is the result of changes in market variables such as exchange rates or interest
rates. In the specialized literature is defined [Gangreddiwar Aboli, 2015] the market risk as the risk
of losses of the bank's trading portfolio due to changes in stock prices, interest rates, credit rates,
foreign exchange rates, raw materials prices, and other indicators whose values are established in a
public market. Market risk is predominant among banks from banking sector, as they are active in
capital markets.
Systemic risk and moral hazard are two types of risks faced by banks, but they do not cause
losses quite often. But if its cause losses, these can cause the decline of the entire financial system
from a country or globally. We can note that the global crisis from 2008 is the best example of loss
for all financial institutions that occurred due to systemic risk. Systemic risk is the risk that does not
affect a single bank or financial institution but affects the entire industry. Systemic risks are
associated with cascade failures where the failure of a large entity can cause the failure of everyone
else in the industry. The moral hazard is a risk that occurs when a large bank or large financial
institution takes risks, knowing that someone else will have to deal with these risks.
In the paper Risks in the Banking Industry Faced by Every Bank in 2015, Gangreddiwar
presented the moral hazard from the perspective of economist Paul Krugman, who described it as
"any situation where a person makes a decision as to how much to risk in while someone else
supports the cost if things go wrong. "
The decision-making process on the possibility of granting credits is based on knowledge and
customer information. Credit score means the customer's solvency analysis. It is the result of a
statistical model that, based on the information on the borrower, allows to distinguish between
"good" and "bad" credits and to provide an estimate of the probability of default [Deloitte, 2016,
p.5] This is an instrument commonly used in the decision-making process of accepting or rejecting
a loan.
Classification of good and bad credits it is of fundamental importance and is, indeed, the
objective of a credit model. The need for an appropriate classification technique is thus obvious.
But what determines the classification of a new applicant? From literature analysis [Hussein A.
Abdou, John Pointon, 2011, p. 10], characteristics such as age, marital status, dependents,
educational level or occupation are widely used in building scoring models. The time at the current
job, the amount of the loan, the duration of the loan, the owner of the house, the monthly income,
the bank accounts, the possession of a car, the mortgage, the purpose of the loan, guarantees and
others have also been used in building scoring models. In some cases, the list of variables has been
extended to include the spouse's personal information, such as age, salary, bank account, and others.
In terms of lending to legal entities, the credit score can be achieved by identifying other
variables such as the main business activity, business age, business location, credit value and
different financial rates, for example, profitability, bank credits and leverage effect.
The credit decision is based on an assessment of the borrower's financial position and future
prospects, in a process known as credit risk analysis. More from a technical point of view, credit
risk analysis consists of estimating the probability that a borrower will not return the loan according
to the agreed terms (probability of default).
4. THE EVOLUTION OF CREDITS IN ROMANIA BY ACTIVITY DOMAINS
The evolution of lending in Romania is the consequence of intensifying business relations
with the European single market and access to a market with a lower interest rate after joining the
European Union in 2007. The global financial and economic crisis has negatively influenced the
Romanian economy and the banking system by deteriorating both of the offer and of the loan
application, by reducing the lending activity with major concessions on the debtor-creditor
relationship. In this context, after the crisis, credit offer and demand for credit (credit application)
was influenced by the following factors and brief situations presented in Table no. 1.:
Table no. 1. Situations that influenced supply and demand for credit Credit Offer Credit Application
asymmetric competition between government and
companies regarding the access to funding sources as a
result of accelerated public debt growth;
reducing corporate debt due to financial blockage;
a high level of non-performing credits that led to an
increase in banks' provisions;
the deterioration in the creditworthiness of
companies as a result of restrictions on both
domestic and export markets;
a relaxation of the monetary policy of the NBR through
the reduction of the minimum required reserves and the
reduction of the monetary policy rate;
a decrease of the companies profitability and
incomes of the population;
a tightening of credit standards for both household and
non-financial companies;
a volatility of the exchange rate of the national
currency against the major international currencies.
an increase in banks' prudential measures, driven by
worsening economic and financial conditions, increasing
the risk of adverse selection and reassessing the risk
profile of clients.
As regards the activity of the companies that contracted loans in 2017, the highest share is
occupied by the services sector (45%), followed by the industry by 31% and the constructions by
11% over time the lowest share held by agriculture by 8% and the activities of financial
intermediation and insurance (5%) (Figure no 1).
Figure no. 1. Share of the loans granted to commercial companies, by sectors of activity, 2017
Source: processing by authors after www.bnro.ro
Regarding the evolution of credits granted to companies on different types of activities,
during the period 2010-2017, it can be noticed that the most pronounced increase is recorded in the
services sector. However, in 2017 loans for financial intermediation and insurance activities
increased by 21.17% compared to 2016, while loans (credits) for services rose by only 4.8%. A
decrease compared to 2016 is registered in the construction sector by -2.93% (Figure no. 2)
Figure no. 2. Evolution of credits to granted to companies in different sectors of activity, 2010-
2017 Source: processing by authors after www.bnro.ro
In the period 2012-2017, companies have contracted credits for various activities, including
treasury loans (credits), with the most significant increase of 6.1% in 2017 compared to 2016,
equipment credits, which in 2017 increased by 4 6%. On the other hand, in 2017, loans (credits) for
stock financing fell by 6.94% compared to the previous year (Figure no. 3).
Figure no. 3. The evolution of credits granted to commercial companies by destination, 2012-
2017 Source: processing by authors after www.bnro.ro
In 2017 commercial companies borrowed loans in particular to cover their liquidity needs for
operating activities, treasury credits having a weight of 32.95% in total loans to enterprises.
Companies also invested in the acquisition of equipment (18.20%) and in real estate (17.45%). At
the opposite end, there are credits for financing foreign trade operations, with a share of only 0,02%
(Figure no. 4).
Figure no. 4. Share of credits granted to enterprises by destination, in 2017
Sourse: processing by authors after www.bnro.ro
5. CONCLUSIONS
Lending has both advantages and disadvantages. The credit can be good when used wisely. It
can improve the standard of living of a family or help develop your business. But it is important to
remember that this loan is not free of charge. Buying "on time" means paying interest and taxes in
the future.
Banks face a multitude of risks that can be caused by various factors. We have to look at
banking risks as a set of risks, often interdependent, having common determinants or producing a
risk generating other risks, in the form of domino effect. Thus, relationships of interdependence or
dependence may arise between the types of risks.
As regards the activity of the companies that contracted loans (credits) in 2017, the highest
share is occupied by the services sector (45%), followed by the industry by 31% and the
constructions by 11%, while the lowest share is held by agriculture by 8% and the activities of
financial intermediation and insurance (5%).
Regarding the evolution of the credits granted to the companies on different types of
activities, during 2010-2017, it can be noticed that the most pronounced increase is registered in the
services sector. However, in 2017 loans for financial intermediation and insurance activities
increased by 21.17% compared to 2016, while loans for services rose by only 4.8%. A decrease
compared to 2016 is recorded in the construction sector by -2.93%.
The last years were characterized by the growth of credit in the private sector, especially for
households, and the fact that lei loans are the main driver of credit growth in Romania.
REFERENCES
1. Albu-Cîrnu Iulia, 2002, Asigurarea creditului, Editura Rosetti, Bucureşti;
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Structural and Qualitative Analysis of the Romanian Banking System, Annals of
“Dunarea de Jos” University of Galati Fascicle I, Economics and Applied Informatics.
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of the Monetary Policy of Romanian National Bank (BNR), ERSJ European Research
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And Prudential Banking Indicators In The Romanian Banking Sector During The Crisis
And Postcrisis, Annals of the „Cons tantin Brâncuşi” Univers ity of Târgu Jiu, Economy
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5. Dedu Vasile, 1996, Management bancar, Editura Sildan, Bucureşti;
6. Iordachi Dimitriu, 1994, Monedă şi credit, Editura Graphix, Iaşi;
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Instituţiilor Financiare Nebancare (IFN), Editura Economică, Bucureşti;
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Cărţii de Ştiinţă, Cluj-Napoca;
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evaluation criteria: a review of the literature, Intelligent Systems in Accounting, Finance
& Management, 18 (2-3),
https://pdfs.semanticscholar.org/791c/f0b410e2dcd8d9be88452959c52b3b066580.pdf,
[accesat la 12.03.2018];
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characteristics of companies have an impact on the occurrence of split ratings?
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114
Lecturer PhD Gheorghe MOROȘAN
Ștefan cel Mare University of Suceava, Romania [email protected]
PhD Laurentia Elena SCURTU
Ștefan cel Mare University of Suceava, Romania [email protected]
Abstract:
The importance of having as a volume of non-performing loans as low as possible derives from the role and
functions that banks have in the economic life of a country. That is why bank management is based on the analysis of
the following indicators: Capital, Assets, Management, Earnings and Liquidity. Banking risk indicators, according to
EBA: capital risks, liquidity and financing risks and environmental risks are calculated and monitored more than ever.
This paper reviews the evolution of non-performing loans in the Romanian banking sector during the period 2010-
2017. Empirically we identify the causes of the occurrence of non-performing loans and the concrete data to help us
demonstrate the above.
Key words: assets quality, non-performing loans, credit risk, bank management
JEL classification: G21, G32
1. THEORETICAL CONSIDERATIONS
Often, the term bank is mistake for credit institution, even if, as it is known, banks are only a
part, though significant, of the structure of credit institutions.
According to the legislation on credit institutions and capital adequacy, in force since 1
January 2007, GEO no. 99/2006 defines the banking activity as „attraction of deposits or other
repayable funds from the public and granting loans on own account”, the credit institution being
defined as follows:
„An undertaking whose activity consists in the attraction of deposits or other repayable funds from
the public and granting credits on its own account.” [1]
Credit institutions can be organized and can operate in one of the following categories:
banks, credit co-operative organizations, savings and loan banks for the housing stock, mortgage
banks.
The Romanian banking system has witnessed a spectacular quantitative development over
recent decades, through the transition from an excessively centralized banking system, with most
banking functions concentrated in the NBR operations and some specialized banks, towards a
banking system adapted to market economy requirements, and, implicitly, financial globalization.
Fundamentally, the banking system, although classified according to a set of criteria, is structured
on two levels. Thus, in the current banking landscape, alongside the central bank, there are banks of
second rank, also called commercial or deposit banks and specialized banks.
In the sense, banks are clearly a category of entities essential / fundamental for the
functioning and prosperity of national economies and of the contemporary global economy, an
important „link” in the „chain” of socio-economic development, as they have a „specific share” in
the total financial assets of the economy.
One of the main tasks of banks is to grant credits that allow companies to invest and create
jobs. Credits also allow individuals to purchase durable goods produced in the real sector.
Bank management is based on the analysis of the following indicators: Capital (Capital
adequacy); Assets (assets quality); Management; Earnings (Profitability) and Liquidity.
Asset management starts from the premise that the bank’s main asset, represented by loans,
does not always easily turn into liquidity, especially when the economy is in recession. The bank
earns interest income from these loans.
Therefore, it is assumed that granting of loans is not risk-free, because the bank can never be
sure that borrowers will repay the loan and pay interest at the agreed term. If the borrower
terminates the loan repayment or the interest payment, the bank has to classify the loan after a
certain period into the „non-performing loans” category.
The balance sheet, a clear expression of balance at the level of bank entities, shows, in its
structure and dynamics, that asset and liabilities management is, after a certain period of time, an
integral part of the bank management process.
Thus, the key objectives in the bank asset and liability management (MAP) are
interdependent, reducing, if one can say so, to: „increasing the bank’s investment income
corroborated with lowering costs of attracted sources, maintaining an acceptable risk and
complying with regulations in force on capital adequacy and bank liquidity.” [2]
In the existing relationship between bank administration and banking management, it is
argued that, although theoretically we tend to relate equally to the two concepts, it seems that
practice shows us that the difference between the two is, however, a fundamental one, since bank
administration (through the three specific hypotheses: risk management, asset and liability
management and transparency of public information) is an integral part of bank management (a
concept that requires a certain policy of behaviour and orientation of human actions for optimal and
legal development of banking business, in a climate of stability and growth in its own value,
reflected by asset growth and public confidence in the bank. [3]
In the above-mentioned sense, it is inferred that the importance of the risks (hence their
implicit management and the reduction of the negative results as a result of the exposure to risk)
inherently influences the bank performance, so its dynamics and development.
The risk, according to DEX 2009, is defined as a possible danger or the possibility of getting
into trouble, of having to face a difficulty or to bear a loss. [4]
Banking risk is the element of uncertainty that may affect the activity of the banking
corporation or the conduct of its economic and financial operation. [5]
Although the literature in the field shows that there are different banking risk classification
modes / criteria defined as losses associated with adverse outcomes, they are not stable / fixed but
have a wide variety, being structurally related to changes in the environment and the banking
universe, its size and dynamics. Banking risk is structured on the following components:
„uncertainty” about the occurrence of a future event and „exposure to loss”, as shown in the figure
below:
Figure no. 1. Components of banking risk
If both components are not present, we cannot talk about risk. For example, a lending bank
faces the uncertainty of repayment at maturity, despite the guarantee, due to the possibility of
reducing its value over time and / or the size of its execution costs. The bank takes the risk because
it is exposed to uncertainty.[6]
Next, we present bank risk analysis indicators, or the so-called „banking risk indicators”, in
the EBA’s sense, a reality structured on three components: capital risks, liquidity and funding risks
and environmental risks:
Table no. 1. Components of risk, types of risk and risk factors in EBA optics
CA
PIT
AL
Types of risk Risk factors/vulnerabilities
Credit risk
non-performing loans remain numerous
there are impediments for the reduction of
NPL
the risk of high levels of indebtedness
Market risk
the risk of increasing volatility
market liquidity
the revaluation potential
Operational risk
cyber attacks
cost pressure as an obstacle to building
sound ICT systems
outsourcing
Concentration risk
environment with low interest rate
accumulation of concentrations in certain
classes of assets
Reputational and legal risk unsafe risks due to deviations
Profitability risk
the sustainability trend has to be confirmed
income is determined by unsustainable
components
LIQ
UID
ITY
AN
D
FU
ND
ING
Access to funding and maturity
distribution
vulnerability due to volatility
Funding structure potential challenges to achieving MREL
EN
VIR
ON
ME
NT
Regulatory and legal environment implementation of MREL, Brexit;
Fragmentation
asset quality;
return;
fair regulatory conditions;
Sovereign risk political risk
excess of debts
Source: European Banking Authority, Risk Dashboard Q4, 2017; valid online on: https:// www. eba. europa. eu/
documents/10180/2175405/EBA+Dashboard+-+Q4+2017.pdf
A performing loan will provide the bank with the interest income it needs to earn profits and
grant new loans, which is not generally the case for a non-performing one.
In general, European supervisory authorities consider that a credit is non-performing if there
are indications as to the likelihood that the borrower will not reimburse the loan due to financial
difficulties or when more than 90 days have passed without the borrower having paid the agreed
rates.
This can happen, for example, when a person loses his/her job and therefore cannot repay a
mortgage under the agreed conditions or when a company is facing financial difficulties.
In the worst case scenario, the borrower is totally unable to repay the loan and the bank has
to adjust the amount of credit on its balance sheet - sometimes even up to zero. This operation is
often referred to as „removing from a book” of a credit.
Unfortunately, non-performing loans are a daily reality for banks. In order to be prosperous
in the long term, a bank must keep non-performing loans at a minimum. If the amount of non-
performing loans exceeds a certain level, the bank’s profitability is impaired, as the earnings from
the lending activity are lower. Banks need to save money, or make a provision as a safety measure
for situations where they need to reduce or cancel the amount of the loan at a given time.
Both the reduction of revenue and the saving of funds, for the worst case scenario, result in a
reduction of funds available for new loans, which further reduces the bank’s profits.
A bank with an excessive amount of non-performing loans cannot properly provide
businesses with the loans they need to invest and create jobs. A situation where a large number of
banks are confronted with this problem which on a large scale affects the economy as a whole and,
implicitly, the members of society. Reducing the companies’ investments and reducing the number
of new jobs leads to a downturn in economic growth.
Banks should avoid from the outset granting excessively risky loans by properly assessing
the creditworthiness of borrowers. It is also important to introduce a proper monitoring system to
enable the bank to detect at an early stage when the borrower is facing financial difficulties and to
be able to solve this problem. In some cases, simply advising the client on his / her financial
situation may be sufficient to avoid credit becoming non-performing.
Banks have a range of options available to reduce the level of non-performing loans in their
accounting records. One possibility is the renegotiation with the borrowers of the terms of the loan
agreements. This could mean, for example, giving a longer time to borrowers to repay the loan.
Such a measure could allow a person who has lost his/her job or a company facing
temporary financial problems to survive financially and ultimately to repay his loan.
A bank may also decide to sell non-performing loans to investors, which usually request an
update of their value. The bank may experience a loss as a result of such a transaction, but
removing it completely from the accounting records would generally lead to even greater losses.
If none of the attempts to find a solution is successful, for example because the borrower is
insolvent, banks can resort to legal ways to try to recover at least some of the funds.
Addressing the problem of non-performing loans in the European banking system is one of
the key priorities of the ECB’s supervisory activity.
2. CREDIT RISK AND BANK ASSETS IN THE LIGHT OF THE ANALYSIS
INDICATORS
Risk through credit activity means the possibility of future events occurring in clients’
activities with negative effects in terms of loan recovery or interest collection. [8]
Asset quality indicators are used to highlight the performance of a bank’s assets as well as
the capacity of its revenue-generating activity. In international practice, for example, these
indicators are used to identify asset quality issues across the portfolio and are calculated using the
level of non-performing loans (NPL).
Non-performing loans are payment commitments that the client, whether natural person or
legal entity, does not comply with, thus generating overdue loans and unpaid interest that will have
negative effects on the bank asset, solvency and expenses. That is why a non-performing loan is
an ordinary loan that can or is already recorded by banks as a loss-making loan, which is why these
types of loans are considered to be one of the main causes that lead to the stagnation of the national
economy.
There are various definitions of this term depending on the type of loans and the policy of
the lender. When the payment of the rate and interest rate of a credit is overdue for 90 days or more,
the loan is considered to be non-performing and the borrower in default.
Non-performing loans can be defined as those loans to clients whose financial and economic
situation, damaged in various causes at various stages of the lending process, no longer provides
conditions for full or partial repayment of the credit or for the payment of interest and related
commissions.
However, the level of these loans should be as low as possible, due to the impact on the
bank’s profitability. This goal can only be achieved through a prudent lending policy, based on the
economic conjuncture and the financial environment, as well as a proper risk rating and
appreciation.
A loan may become non-performing at any stage of the lending process, including the
analysis phase, due to causes dependent or independent of the banking practice, but at this stage it
does not manifest itself in practice, it must be passed into the non-performing category when it
becomes a certainty, so when its recovery becomes a problem for the bank or when the credit
clients no longer provide repayment or interest repayment terms, or both.
The existence of non-performing loans, as a separate category of credits, as well as their
negative effects, required separate management of these types of loans and the classification into a
portfolio of non-performing loans. When these credits arise, there are also a series of adverse effects
felt by the bank, by the client and also at macroeconomic level. Simply listing these negative effects
of non-performing loans shows us why banks need to conduct a performing lending activity.
Since there is no standard definition of NPL, in order to improve comparability of the data
used, the IMF Compilation Guide [10] recommends that loans (and other assets) be classified as
NPLs when: principal and interest payment ratios are overdue for three months (90 days) or more,
or interest for three months (90 days) or moreover when they have been capitalized (reinvested in
the principal amount), refinanced or redeemed (i.e. payment has been postponed by agreement).
The 90 days criterion is the most common practice in different countries for determining non-
performing loans.
In addition, non-performing loans will also include those loans with a debt service of less
than 90 days but which, under national law, are recognized as non-performing - in the sense that
there is reason to classify a loan as non-performing even without incurring arrears for over 90 days,
for example in bankruptcy.
The calculation of the following two indicators is considered relevant for asset quality
analysis:
1. The share of non-performing loans in total assets: highlights assets that do not compete with the
performance of the bank, a large volume of which leads to losses with major effects on the bank’s
capital:
The share of NPL n total assets =assets total
loans performing-non x 100
2. The share of non-performing loans in total loans: is calculated as the ratio between the amount of
non-performing loans and the total amount of loans (including non-performing loans before
deducting specific provisions for loan losses):
The share of NPL in the total loan portfolio =assets total
loans performing-nonx 100
The indicator shows the quality of the loan portfolio in the banking sector. A large share or a
rising trend indicates a deterioration in the quality of the loan portfolio and hence an increased risk
of insolvency. In the calculation of the report, loans are used at gross (accounting) value.
At present, the best known asset quality indicators and prudence intervals are set by EBA,
and they are as follows:
Table no. 2. Credit risk analysis indicators and EBA safety intervals
CR
ED
IT
RIS
K
AN
D
AS
SE
T
QU
AL
ITY
Analysis indicators Explanations Safety intervals
Rates of non-
performing loans and
advances
Non-performing loans and advances /
Total exposures from loans and
advances
<3%
[3%-8%]
>8%
Provision coverage of
non-performing loans
Impairment adjustments for non-
performing loans / Non-performing
loans and advances
>55%
[40%-55%]
<40%
Rate of credits and
advances with
restructuring measures
Exposures from loans and advances with
restructuring measures / Total exposures
from loans and advances
<1.5%
[1.5%-4%]
>4%
Source: European Banking Authority, Risk Dashboard Q4, 2017
According to EBA, a level of non-performing loans of over 8% of total credits falls into the
red band; a level of non-performing loans of 3-8% falls into the yellow band; a level of non-
performing loans of less than 3% of total credits falls into the green band.
Taking into account the methodological indications of the EBA and the evaluation intervals
set by this one, the NBR performs similar analyses of the national banking system on the basis of
the information reported by individual banks. These analyses finally highlight the quality of the
assets of the national banking system.
Before granting the loan, creditors have to verify that borrowers can cope with unfavourable
developments in interest rates, exchange rates and available income, and the maximum degree of
indebtedness in the event that those risks arise must not exceed the explicitly mentioned thresholds.
In conclusion, the bank assets quality is of great importance for the good course of banking
activity. The management of a whole portfolio of a bank can be referred to as the management of
assets and liabilities.
3. CAUSES OF NON-PERFORMING LOANS IN ROMANIA
The occurrence of non-performing loans, their dynamics are related to the existing economic
situation, which may be different from one sector of activity to another, and the tightening of
monetary conditions can accentuate the occurrence of this type of loan.
The economic areas underlying such a process are those for which the banking system
finances both a significant part of their working capital and the demand for the products / services
they provide. The most eloquent example is given by the construction sector, where bank loans
provide both real estate developer financing and most of the resources needed to buy the apartments
and commercial spaces so created by economic agents.
One of the major problems of the Romanian banks after 2010 was the recording of non-
performing loans. The non-performing loans reached 31.5% of total loans in 2013, registering high
values in 2011, 2012, 2014 and even 2015. Over the last years (2016, 2017), non-performing loans
have declined, reaching 6.4% of total loans at the end of December 2017.
Deepening the factors that can determine the level of non-performing loans can lead to
separate credit assessments of the companies and the population. From the existing studies [11], the
macroeconomic determinants of default rates are generally the same for the two categories of
participants in the lending process, the inflation rate and the short-term interest rate influencing in
similar proportions both the repayment capacity of the companies, as well as that of the population.
Other factors such as the annual growth rate of GDP, the degree of financial indebtedness,
the unemployment rate, the real interest rate or the disposable income, influence the default rate of
the loans granted. [12]
In Romania, the results of some econometric studies [13] suggest that real economy
dynamics is the main factor in the influence of the existence of arrears at the level of the credit
portfolio granted to economic agents.
Foreign direct investment or export volume negatively influences the dynamics of non-
performing loans as well as the exchange rate, the dynamics of which is reflected in the evolution of
loan repayment capacity in the trade, service and construction sectors. There is also a strong link
between the evolution of mortgage loan and the dynamics of non-performing loans in the
construction sector.
Synthetically, we present the main causes of non-performing credit recordings in the
Romanian banking sector since 2010. Here is a summary of these causes:
- the state of the economy, the economic situation highlighted by the GDP indicator, here we can
hint that some economic branches are more sensitive to the evolution of the economy and are
therefore more risky for banks,
- the degree of financial indebtedness of economic agents, here we can see the existence of negative
capital (in the case of companies) and the situation of the net wealth of the population (absolute and
relative poverty of households)
- erroneous lending policies promoted by banks (granting loans in exotic currencies, exposing
certain risky areas, wanting to win by granting loans with excessively high interest rates); in 2017
five credit institutions accounted for 70% of the volume of out-of-balance-sheet loans [14]
- deficiencies in the preparation of banking staff,
- poor financial education of the population.
Based on this, in the table below we identified the evolution of non-performing loans in the
period 2010-2017 as well as some macroeconomic indicators.
Analysing the evolution of these indicators, we can demonstrate whether the causes of non-
performing credit recordings have been correctly identified.
The Romanian banking system recorded periods of positive net financial results (2013,
2015-2017), interrupted by years with losses, mainly due to the size of the expenses on provisions,
amplified by the reduction of the operational profitability (or attenuated in the years with favourable
evolutions of this one).
Table no. 3. Evolution of Banking Indicators and GDP in the Period 2010-2017
Years Non-performing
loans (%)
Profit
(millions
lei)
Evolution of
the loan
granted to
the private
sector (%
compared to
the previous year)
Loans in
currenc
y (% in
the total loans for
the
private sector)
Long term loans
granted for the
private sector
(% in the total
loans for the
private sector)
Share of
total
indebtness
in GDP (%)
Evolution
of GDP
(%)
Difference
ROBOR-
EURIBOR
2010 15,0 -516 n/a 63,0 57,70 60,97 -1,1 n/a
2011 19,9 -777 6,6 63,4 56,46 56.80 2,3 n/a
2012 27,6 -2.300 1,3 46,3 54,98 56.51 0,6 n/a
2013 31,5 49 -3,2 62,5 54,95 49.96 3,5 5,241
2014 20,7 -4.700 -3,3 60,9 54,58 50.29 3,0 1.38
2015 13,5 4.878 2,9 49,3 54,52 46.45 3,8 1,00
2016 9,6 4.259 1,2 42,8 54,45 42.87 4,8 1,40
2017 6,4 5.335 5,5 37,2 54,19 39.28 6,9 2,90
Source: Processing according to NBR, interactive database 1) 31 march 2013
The economic situation highlighted by the GDP indicator shows that banks recorded non-
performing loans on the background of GDP falling or rising at low rates. Thus, in 2009, GDP fell
by -6.6% [15], falling also in 2010, in which the rate of non-performing loans reached 15.0%,
culminating in 2013 when it recorded the highest value (31.5%), amid a modest increase of only
3.5% of GDP.
This was amplified by the unceasing rhythm of credit growth in previous years. For
example, the annual growth rate of RON-denominated loans granted to households and non-
financial corporations was 24% in January 2008, the annual growth rate of loans in foreign currency
granted to households was 124.1% and the annual growth rate of loans in foreign currency granted
to companies was 20.4% [15].
From the analysis of the data in the above table it can be concluded that the degree of
financial indebtedness of the economic agents influenced the level of non-performing loans. In the
years 2010, 2011 and 2012, the share of total indebtedness recorded the highest levels (60.97%, 56,
80% and 56.51%). Thus, there can be a direct link with the high level of non-performing credit
recorded during this period and in following years.
Another cause of non-performing loan recording is the granting of foreign currency loans to
households and companies that do not earn income in the currency of the loan. In the period 2000-
2011, foreign currency credit was predominant in total loans (in 2011, for example, it accounted for
63.4% of total loans). This trend culminated in lending in Swiss francs or Japanese yen.
According to a study carried out by the National Bank of Romania, the share of loans in
Swiss francs „amounts to about 10 percent of the total volume of loans granted to the population,
and the number of individuals who contracted CHF loans represents 2.1 percent of the total
number of borrowers of this category (i.e. 75 412 persons).”[16]
Basically, the decision by the Swiss National Bank to waive the 1.2 CHF threshold for one
EUR led to CHF appreciation against RON and generated the increase in debt service for all Swiss
francs borrowers.
As a result of the above, „Credit risk is relatively higher for CHF loans than for other
currencies (the default rate is 12 percent for CHF loans compared to 9.4 percent for all foreign
currency loans, November 2014).”[17]
The analysis of ROBOR-EURIBOR 3M interest rate gap reveals that in March 2013 it was
of 5.24, which proves that banks, in the chase after profit, demand high interest rates with an impact
over time on borrowers’ ability to repay, with effect on the rise in the level of non-performing
loans. And in the years to come, as shown in the table, there is maintained a large gap between
ROBOR and EURIBOR.
To keep up with the high pace of change in banking, staff must be continually prepared.
Banks do not have coherent and consistent personnel training policies in their desire to make
savings. The average annual expenditure of Romanian banks for the professional training of an
employee is relatively small and increased from 490 lei in 2007 to around 900 lei in 2016.
Employees involved in lending activity attract about 31% of the amounts allocated for training
(June 2016). Banks that have allocated a higher share of money for staff training in the period prior
to 2007 have lower rates of non-performing loans over the next period [18].
Financial education of the population is of great importance when people and companies
plan to access a loan, when they negotiate with the bank, when they plan reimbursement terms,
when they know how to work with the bank. Unfortunately, „A study conducted by Standard &
Poor’s rating agency pointed out that Romania was ranked 124th out of the 143 countries surveyed,
on the same place as Honduras, Sudan or Uzbekistan, in terms of financial education of the
population. Only 21% of Romanians have financial knowledge and only 15% save or invest to
secure a supplementary pension.”[19]
CONCLUSIONS
More than a decade after the onset of the global financial crisis, many banks worldwide and
in Romania experienced its effect, registering large losses due to the occurrence of non-performing
loans.
Even the less efficient business model of some banks, with risky or inadequate credit
policies, leads to this type of credit. The dependence of the Romanian financial system on credit
institutions increases credit risk and it makes the number and volume of non-performing loans
increase.
In recent years, the largest banks in Romania, BCR and BRD Groupe Société Générale have
suffered huge losses due to non-performing loans. There were also smaller banks with the same
problems, namely Alpha Bank and Bancpost as well as Volksbank.
However, the banks in Romania registered a net profit of 5.335 millions lei at the end of
2017 and the market share of credit institutions with losses reached a historical minimum, amid the
continuation of reducing the expenditures with the depreciation adjustments in a framework
favourable domestic macroeconomic conditions, the extension of the low interest rate and the
sustained pace of lending in national currency.
The bank assets quality continued to improve, as confirmed by the declining trend in non-
performing loans.
The paper synthesized the main causes of non-performing loan recordings in the Romanian
banking sector starting with 2010.
It has been shown that these have been the causes of a non-performing loan outlook with a
series of macro and microeconomic indicators in a table. The state of the economy, the economic
situation is the main cause, but one should not neglect the banks’ erroneous policies, their lack of
vision and the financial education of the economic agents.
In order to prevent similar situations from occurring, the ECB and the EBA have put in
place new rules that banks will be obliged to follow regarding non-performing loans, rules on how
to set up provisions for new non-performing loans, strong regulatory and oversight of EU banks,
capital requirements have increased, new liquidity rules have been introduced with an impact on the
maturity of the asset structure, and credit risk assessment is much more rigorous.
ENDNOTES
[1] Regulamentul (UE) nr. 575/2013, art. 4 alin. (1)
[2] Kock, T., W., Bank Management, The Dryden Press , Part II: Managing Interest Rate Risk, 1995
[3] Toma, S.B. (teză de doctorat), Performanţe Bancare în Economia României, 2004
[4] https://dexonline.ro/definitie/risc accesat la data de 13.05.18
[5] Iuga I, Dimensiunile proecesului de analiză a creditului și riscul de credit, valabil online la http:
//www.oeconomica.uab.ro/upload/lucrari/820063/8.pdf
[6] Costică, I., Lazărescu S.A., Politici și tehnici bancare, Editura ASE, București, 2004
[7] European Banking Authority, Risk Dashboard Q4, 2017; valabil online pe: https:// www. eba. europa. eu/
documents/10180/2175405/EBA+Dashboard+-+Q4+2017.pdf
[8] Iuga, I, Dimensiunile proecesului de analiză a creditului și riscul de credit, valabil online la
http://www.oeconomica.uab.ro/upload/lucrari/820063/8.pdf
[9] Moroșan, Gh., Condratov, I., Sofian, A. T.., The Credit Influence On The Economic Growth In Romania,
The USV Annals of Economics and Public Adiministration, Vol. 17 (1(25)), pp. 118-128, 2017
[10] FMI, Indicatorii de Soliditate Financiară:Ghid de compilare
[11] Boss Michael, A Macroeconomic Credit Risk Model for Stress Testing the Austrian Credit Portfolio,
Financial Stability Report 4, OeNB. 2002, pp. 64-82
[12] Jakubik, P., Schmieder, C., Stress Testing Credit Risk: Comparison of the Czech Republic and Germany,
Financial Stability Institute, Bank for International Settlements, FSI Award 2008 Winning Paper
[13] Moinescu, B., Codirlaşu, A., Dinamica sectorială a ratei creditelor neperformante: repere economice şi
monetare Economie teoretică şi aplicată, Volumul XIX (2012), No. 2(567), pp. 40-52
[14] BNR, Raport asupra stabilității financiare nr. 4, decembrie 2017
[15] BNR, Raport asupra stabilității financiare nr. 5, iunie 2018
[16] BNR, Analiza creditelor în franci elveţieni,2015,p.8
[17] BNR, Analiza creditelor în franci elveţieni,2015,p.15
[18]BNR, Raport asupra stabilității financiare nr. 3, mai 2017
[19]Moroșan Gheorghe, Produse și servicii bancare,ed. a II a, Editura Pim, Iași, 2018, p.9
BIBLIOGRAPHY
1. Baranga, D., C., Baranga, C., Managementul resurselor financiar-bancare, National
Defense University „Carol I” Publishing House, Bucharest, 2007
2. Blanaru. A., Rolul băncilor în activitatea de intermediere financiară, EIRP Proceedings,
Vol. 1, pp. 443-448, 2006
3. BNR, Raport asupra stabilității financiare nr. 4, decembrie 2017
4. BNR, Raport asupra stabilității financiare nr. 5, iunie 2018
5. BNR, Analiza creditelor în franci elveţieni, 2015
6. BNR, Raport asupra stabilității financiare nr. 3, mai 2017
7. Boss Michael, A Macroeconomic Credit Risk Model for Stress Testing the Austrian
Credit Portfolio, Financial Stability Report 4, OeNB. 2002
8. Costică, I., Lazărescu S.A., Politici și tehnici bancare, Editura ASE, București, 2004.
9. Dardac, N., Vaşcu, T., Monedă și Credit, - Module 2, valabil online la
http://www.biblioteca-digitala.ase.ro/biblioteca/carte2.asp?id=99&idb
10. European Banking Authority, Risk Dashboard Q4, 2017; valabil online pe
https://www.eba.europa.eu/documents/10180/2175405/EBA+Dashboard+-+Q4+2017.pdf
11. FMI, Indicatorii de Soliditate Financiară: Ghid de compilare
12. Isaic-Maniu, I., Măsurarea și analiza statistică a riscului în Romania, Editura ASE
București, 2003
13. Iuga I, Dimensiunile proecesului de analiză a creditului și riscul de credit, valabil online
la http://www.oeconomica.uab.ro/upload/lucrari/820063/8.pdf
14. Jakubik, P., Schmieder, C., Stress Testing Credit Risk: Comparison of the Czech
Republic and Germany, Financial Stability Institute, Bank for International Settlements,
FSI Award 2008 Winning Paper
15. Kock, T., W., Bank Management, The Dryden Press , Part II: Managing Interest Rate
Risk, 1995
16. Moinescu, B., Codirlaşu, A., Dinamica sectorială a ratei creditelor neperformante: repere
economice şi monetare Economie teoretică şi aplicată, Volumul XIX (2012), No. 2(567),
pp. 40-52
17. Moroșan, Gh., Condratov, I., Sofian, A. T., The Credit Influence On The Economic
Growth In Romania, The USV Annals of Economics and Public Adiministration, Vol. 17
(1(25)), pp. 118-128, 2017
18. Moroșan, Gh., Produse și servicii bancare, ediția a II, Editura Pim, Iași, 2018
19. Stoica, M., Management bancar, Ed. Economică, București, 1999
20. Toma, S.B. (teză de doctorat), Performanţe Bancare în Economia României
21. UE, Regulamentul nr. 575/2013 privind cerințele prudențiale pentru instituțiile de credit
și societățile de investiții și de modificare a Regulamentului (UE) nr. 648/2012
Resurse web:
22. https://www.eba.europa.eu/documents/10180/2175405/EBA+Dashboard+-+Q4+2017.pdf
accesat la data de 12.05.18
23. http://www.bnr.ro/apage.aspx?pid=404&actid=2 accesat la data de 13.05.18
24. https://dexonline.ro/definitie/risc accesat la data de 13.05.18
25. http://www.biblioteca-digitala.ase.ro/biblioteca/carte2.asp?id=99&idb accesat la data de
10.05.18
26. http://www.oeconomica.uab.ro/upload/lucrari/820063/8.pdf accesat la data de 10.05.18
124
Assistant PhD Veronica DEAC University of Medicine, Pharmacy, Sciences and Technology of Târgu Mureș, Romania
Faculty of Economics and Law Financial-Accounting Department [email protected]
Abstract:
The present research aims to present and describe the possibilities of measuring financial performance. It is
known from the literature that measurement of performance involves applying and using a wide range of indicators,
precisely its existence requires us to delimit an area of measuring the financil performance of the enterprise, starting
from the generalization of this area, and then framing the different measurement methods performance in a
performance measurement system. The current study contributes to the accountancy related literature, through
presenting and describing of financial measurement possibilities, aspect to be treated in the first part of the work,
respectively, through proposing of a performance measurement system, in the second part of the study.
Key words: financial performance, enterprise performance, measurement method of performance, indicators.
JEL classification: M40
1. INTRODUCTION
The financial performance represents the study objective for many researchers in the
international academic field (as displayed in figure no 1, the number of the published articles on
financial performance from 1994 up to present time, according to the Web of Science data base, is
7419 in the Business field, respectively 7293 in Economics and 6235 articles in Business Finance),
but in the same time, it represents the interest of all practitioners, business owners, potential
investors, credit institutions and others.
Figure No. 1. Evolution of the international published articles on „financial performance”
from 1994 up to 2018
Source: Web of Science database
As per the national economic-financial literature (Colasse, 2009; Vâlceanu et all, 2009;
Bătrâncea et all, 2012; Petcu, 2009; Petrescu, 2004; Siminică, 2008 and others), one may observe
that the most recognized, accepted and used measurement method of performance is the
determinists, causality models, but the academic environment deals throughout the last two decades
with enterprise performance measurement study through using the stochastic models, which have
been thoroughly presented in a previous study (Deac and Hlaciuc, 2014).
We, therefore, firmly align with the opinion according to which the selection of the
particular measurement methods „is a complex task and it is not going to turn easy at all, as the
numberand types of the available measurement methods is continuously increasing” (Tangen,
2003).
As long as there is no clear general manner for performance measurement or an accepted
system correlated with the entity strategy, which is recognized in various disciplinary backgrounds,
not only in accountancy, we propose to find the answer for the following questions:
which are the representative models for measurement and estimation of financial
performance ?
can a financial performance measurement area be defined ?
how does a financial measurement system looks like ?
The current study contributes to the accountancy related literature, through presenting and
describing of financial measurement possibilities, aspect to be treated in the first part of the work,
respectively, through proposing of a performance measurement system, in the second part of the
study.
2. RESEARCH METHODOLOGY
The present research is fundamental type, the research methodology is deductive. The
applied research methods are: analysis of documents consisting of assessment of the information
sources used for the completion of this study, comparison method and typological method. Also a
search in the Web of Science database was performed in order to identify any published scientific
articles on the subject of “performance measurement systems”.
3. APPROACH
It is known from the literature that measurement of performance involves applying and
using a wide range of indicators, precisely its existence requires us to delimit an area of measuring
the financial performance of the enterprise, starting from the generalization of this area, and then
framing the different measurement methods performance in a performance measurement system.
Therefore, following the literature, we have observed and considered it is necessary to treat
three essential possibilities in measuring the performance of the enterprise, namely:
classic financial indicators;
modern financial indicators;
non-financial indicators.
Along with these performance measurement capabilities, the academic environment aims to
discover as many models as possible to measure performance by using stochastic models.
4. RESEARCH RESULTS
In the following, we will present the three possibilities for performance measurement and
will motivate our approach to delimit a performance measurement area, finally presenting a
personal idea of constructing a performance measurement system.
Classic financial indicators
Measuring enterprise performance is traditionally done through financial indicators that
remain the most often used. They are recognized as classic indicators and modern indicators for
performance measurement.
From the accounting literature, we find that selecting an appropriate measure to assess
performance is a challenge for the company's partners (Bătrâncea, 2013; Bunea, 2006). Moreover,
Anghel, shows that from the literature, more than 150 financial rates can be identified, used in the
financial diagnosis: "while the analysis of financial statements can be done through the use of one
or more instruments (techniques), most often analysts call for rate-based analysis. Financial ratios
can be used to develop a set of statistics to highlight the key financial characteristics of the
undertaking concerned"(Anghel, 2002). A vision that complements this challenge, of financial
indicators selection for measuring performance, is that of Colasse B., according to which "... the
analyst can appreciate, according to his needs, the relevance of the accounting indicators applied to
study the performance of the enterprise" (Colasse, 2009).
Nowadays, many business partners are concerned about company’s performance, depending
on its own interests, sometimes contradictory, as we have already mentioned. Naturally, economic
and social actors are diverse, from investors - current or potential shareholders, to managers,
financial creditors, clients, employees, the state, the public, financial analysts, etc. Each with
different interests and trying to "decipher the performance of the economic and financial enterprise
and the risks they take by working with it"(Colasse, 2009). In this respect, we present a grouping of
the company partners concerns about its performance, in figure no. 2.
Figure no.1. The main users of financial information and their interests related to the
performance of the enterprise.
Source: own processing after (Bătrâncea, 2013; Bunea, 2006)
We therefore learn that the diversity of business partner concerns generates a variety of
analysis criteria. Each of these criteria gets a name that depends on the actor who uses it. Thus, we
can talk about a parameter that is very common in the literature, but also the most pragmatic
performance criterion used in practice, the rentability. The measurement of rentability is possible by
absolute values, reflected by the results of the enterprise, and by relative sizes, reflected by the rates
of return.The traditional rates used to express relative profitability are:the rate of return on trade, the
rate of return on consumed resources, the rate of economic profitability and the rate of financial
return. Other forms of “results used to measure cost-effectiveness are: result of turnover, operating
result, financial result, current result, gross result of the year, net result of the year, overall result"
(Robu et all, 2014).
Other indicators that provide information of interest to both business managers and
shareholders and creditors are Interim Management Balances, that complete the results of the Profit
and Loss Account and show how the result of a financial exercise is forming, at the exploitation
activity level, respectively the use of material, financial and human resources in the enterprise's
activity.
Interim Management Balances that are additionally calculated against the results that appear
in the income statement are: trade margin, output of the exercise, value added and gross operating
surplus.
Modern financial indicators
Modern performance measurement indicators are indicators that reflect value creation for
shareholders. The concept of value creation is widely presented in the literature. A very succinct
and clear perception of this concept is that of Robu, Anghel and Serban, who explains:
"shareholders add value to the investments they make as long as they invest capital at a rate of
return that exceeds its cost"(Robu et all, 2014). The same authors present and describe the system of
indicators used in the value-added analysis by the firm as being composed of:
added economic value;
added market value;
liquid added value;
liquidity return on investments;
total return of shareholders.
An interesting remark on one of the above mentioned indicators is that of Bostan, which
states that "the added economic value method was not born as an entity evaluation method, but as a
performance indicator ... therefore, the added economic value is an economic indicator that can
complement the guidance obtained, given the dynamics of value" (Bostan, 2010).
Non-financial indicators
The literature also discusses about another form of indicators, namely their non-financial
side. In this respect, some authors point out that "the lack of traditional measures based only on
financial indicators has led to the emergence of performance measurement systems that include
both financial and non-financial indicators.These performance measurement systems have a number
of advantages compared to traditional ones" (Brătian, 2010), which is why more and more analysts
are turning to this new type of indicators.
The purpose of non-financial indicators is to build a performance measurement system that
allows the enterprise to identify the long-term financial performance generators. The interest in
these indicators "flows from the awareness that financial indicators measuring performance are by
their nature: simplistic measures of results, far from being familiar and intuitive for the people
generating operations" (Diaconu, 2003), instead, the non-financial indicators complement the
financial ones, characterizing "better the performance of the enterprise, because it directly touches
the organization's sensitive points (such as the quality of management and intellectual capital in
general)", (Robu, Sandu, 2006).
The concept of non-financial indicators for performance measurement is associated with a
balanced scorecard, which was designed by Kaplan R.S. and Norton D.P. in 1992, built on four
axes: investors satisfaction, customer satisfaction, the quality of internal processes, enterprise
development and innovation capability, with the aim of improving decision-making by managers -
providing a synthesis view through this scorecard of the main financial and non-financial indicators.
The definition and construction of a system for measuring the performance of the enterprise
is widely debated in the literature. This concept is not a new one; various author shave studied and
proposed systems for measuring the performance of the enterprise over the years, among which the
most cited studies nowadays are (see table no. 1):
Table no. 1. The most cited articles on the subject of “performance measurement systems” in
2018
Authors Publication
Year Title
Times
Cited
Chenhall, RH 2003 Management control systems design within its organizational
context: findings from contingency-based research and
directions for the future, Accounting Organizations And
Society, Feb-Apr 2003, Vol. 28, Issue 2-3
811
Chenhall, RH 2005 Integrative strategic performance measurement systems,
strategic alignment of manufacturing, learning and strategic
outcomes: an exploratory study, Accounting Organizations And
Society, Jul. 2005, vol. 30, issue 5
298
Hornsby, JS; Kuratko,
DF; Zahra, SA
2002 Middle managers' perception of the internal environment for
corporate entrepreneurship: assessing a measurement scale,
Journal Of Business Venturing, May 2002
290
Mohammed, Susan;
Ferzandi, Lori;
Hamilton, Katherine
2010 Metaphor No More: A 15-Year Review of the Team Mental
Model Construct, Journal Of Management, Jul 2010, vol. 36,
issue 4
260
Chiesa, V; Coughlan, P;
Voss, CA
1996 Development of a technical innovation audit, Journal Of
Product Innovation Management, Mar 1996, Vol. 13, Issue 2 253
Garengo, P; Biazzo, S;
Bititci, US
2005 Performance measurement systems in SMEs: A review for a
research agenda, International Journal Of Management
Reviews, mar 2005, vol. 7, issue 1
205
DiRomualdo, A;
Gurbaxani, V
1998 Strategic intent for IT outsourcing, SUM 1998, vol. 39, issue 4 184
Fawcett, Stanley E.;
Magnan, Gregory M.;
McCarter, Matthew W.
2008 Benefits, barriers, and bridges to effective supply chain
management, Supply Chain Management-An International
Journa
183
Henri, JF 2006 Organizational culture and performance measurement systems,
Accounting Organizations And Society, Jan 2006, vol. 31, issue
1
182
Abernethy, Ma; Lillis,
Am
1995 The Impact Of Manufacturing Flexibility On Management
Control-System Design, Accounting Organizations And
Society, May 1995, Vol. 20, Issue 4
181
Source: own processing using Web of Science database
Andy Neely presents the evolution of the performance measurement system in a study
conducted in 2005, which presents the most relevant and quoted research studies during the years
1981-2005. These are summarized in table no. 2.
Table no. 2. The most cited articles on the subject of performance measurement systems
Authors Publication
Year Title
Times
Cited
Kaplan, R.S.,Norton,
D.P.
1992 The balanced scorecard: measures that drive performance,
Harvard Business Review, January-February, pag. 71-79
119
Kaplan, R.S.,Norton,
D.P.
1996 The balanced scorecard: Translating Strategy Into Action,
Harvard Business School Press, Boston, MA
63
Charnes A.; Cooper,
W.W. and Rhodes, E.
1978 Measuring efficiency of decision-making units, European
Journal of Operations Research, 2, 6, pag. 429-444
56
Dixon J.; Nanni, A.,
and Vollmann, T.
1990 The New Performance Challenge, Business One, Irwin, Burr
Ridge, IL
49
Neely, A.D., Gregory,
M. and Platts, K.
1995 Performance Measurement system design: a literature review
and research agenda, International Journal of Operations &
Production Management, 15, 4, pag.80-116
42
Eccles, R.G. 1991 The performance measurement manifesto, Harvard Business
Review, January-February, pag. 131-137
41
Lynch R.L. and Cross
K.F.
1991 Measure Up!, Blackwell Publishers, Cambridge, MA 40
Kaplan, R.S. and
Norton, D.P.
1993 Putting the balanced scorecard to work , Harvard Business
Review, September- October, pag. 134-147
36
Banker, R.D.; Charnes,
A. and Cooper , W.W.
1984 Some models for estimating technical and scale inneficiencies in
data development analysis, Management Science, 30, 9, pag.
1078-1092
34
Kaplan, R.S. 1996 Using the balanced scorecard as a strategic management system,
Harvard Business Review, 74, 1, pag. 75-85
34
Source: personal interpretation after Neely, 2005
More recently, we can see that the international interest in this topic is steadily increasing.
Figure no. 3. presents the evolution of the number of scientific publications and their interest in the
topic of "performance measurement system design" in the past 20 years in the area of "Business
Finance", "Business" or "Economics." A total of 522 articles were indexed in the database Web of
Science. These articles were quoted - without auto- citations - 9505 times, with an average citation
per article of 18.21.
Figure no. 3. The evolution of the number of scientific publications and their interest in the
topic "performance measurement system design" in the past 20 years in the area of "Business
Finance", "Business" or "Economics". Source: own processing using Web of Science database
As a result of the analysis performed based on the literature, we propose to put a brick on
the research entitled performance measurement systems, without claiming exhaustiveness, which
consists in proposing an idea, namely: building a measurement system of performance indicators
that include classical financial indicators, modern financial indicators, non-financial indicators,
performance measurement models using stochastic models but also the removal of the limit
presented in a previous study (Deac, Hlaciuc, 2014) by modeling the uncertainty, represented by the
impact of random variables on performance, specific to each enterprise's needs.
5. CONCLUSIONS
On the background of national economies opening towards exterior, in an increasingly
competitive environment, managers were forced to find new solutions to reduce vulnerabilities, new
solutions to measure enterprise performance, financial performance. Also, the needs of different
categories of users of financial statements are increasingly "aspiring", they want to be able to
anticipate future business developments based on financial information. Therefore, the specialists
focused their attention on "the analysis of the financial health", which the various economic and
social partners of the economic entity are interested of for managing the relations they establish
with it. In adopting their specific decisions, they must study the financial situation and performance
of the enterprise.
Following this purpose, the academic environment in various fields is concerned with the
theme of "performance measurement". In this paper, the following questionswere addressed:
which are the representative models for measurement and estimation of financial
performance ?
can a financial performance measurement area be defined ?
how does a financial measurement system looks like ?
For the first question, based on the literature analysis, we considered that the most used
models of performance measurement are deterministic models that include the three types of
indicators: classical financial indicators, modern financial indicators and non-financial indicators.
We deem that these indicators can be grouped in a performance measurement area, even if their
number is large enough, and this would be the answer to the second question.
The answer to the third question is more ambiguous, following research conducted on
articles published in the Web of Science database. In this scope, we have discovered that a
performance measurement system is designed from different domains, created differently
depending on the sides of the research performance, but the international interest in this topic is
steadily increasing.
As a result of the analysis performed based on the literature, we propose to put a brick on
the research entitled performance measurement systems. Of course, our idea will have to be taken
over and developed further, this issue being a long-lasting one, but with a great impact on the
economic environment.
BIBLIOGRAPHY
1. Anghel I., (2002), Falimentul. Radiografie şi predicţie, Editura Economică, Bucureşti, p.29.
2. Bătrâncea I., et all, (2013), Standing & Rating în business, Editura Risoprint, Cluj-Napoca,
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132
Ph.D. Ioana Cristina CIRCA (BUZDUGA)
1 Decembrie 1918 University Alba Iulia, Romania [email protected]
Abstract:
In this article the central element is the comparative analysis between the contribution rates what needs to be
paid by the employer and employee for the year 2017 and the same contribution for 2018. This analysis is realized on
the staff salaries paid from public fonds, published in monitorul oficial nr. 492/ 2.06.2017 and on OUG nr. 90/
06.12.2017 in relation with fiscal measures – budgetary, the changing of some piece of legislațion and giving on time
these terms. The role of this analysis is to compare the lowest salary in 2017 with the lowest salary in 2018, to evidence
the weak and strong points. The aim/goal of the article is to underline the changes in the payings of the staff from 2017
to 2018 and it can influence the employer as well as the employee.
Key words: contribution, salary, analysis, employee, employer.
JEL classification: M41
1. INTRODUCTION
This article contains a comparative analysis of the 2017 minimum wage economy and the
minimum wage in 2018.
This analysis is carried out on the salary of the staff paid out of public funds, published in
Official Monitor no. 492 / 28.06.2017 and on Government Emergency Ordinance no. 90 /
06.12.2017 on the fiscal - budgetary measures, the modification of some normative acts and the
programming of some deadlines. It should be recalled that as of August 2016, staff paid from public
funds benefit from a basic salary / salary allowance lower than the one set at the maximum for each
function within the institution or public authority. (Florin Dobre, 2016)
The comparative analysis is based on the documentation and analysis of the literature, as
well as the increase of the minimum wage on the economy which is accompanied by a drastic
change in the calculation and application of the social contributions. (Simona Voiculescu, 2018)
Comparative analysis is achieved with both wage increases and salary increases. This
analysis takes into account the contribution rates to be paid by the employee and the employer for
2017 and the same contributions for the year 2018. Although the highest salary increase of 31.03%,
the increase in the employee's flyer is only 9% net. (Claudia Strănilă, 2017)
The increase in the gross minimum wage in the next 4 years to the value of 2400 lei leads to
a 40% reduction of the labor force from the total production compared to other countries where it is
50%. (Mihai Nicut, 2017)
The purpose of this article is to highlight the changes in staff salaries that may affect both
the employer and the employee, the impact on economic units of wage changes, the impact on
employees of salary changes.
2. PAPER BODY
Salary
According to the draft Law no. 153/2017 regarding the salaries of the staff paid from public
funds "the basic salary is the sum of money to which the staff paid from the public funds is entitled
per month, corresponding to the function, the degree / professional step, the gradation, the level of
the institution in which the activity is performed: , local, as set out in the Annexes to this Law. "(4)
The minimum wage is the lowest wage that employers have to pay to the employee, taking into
account the working time (hours) and the working period (daily, monthly), according to the
legislation in force.
3. THE SALARY FOR 2017
According to H.G. Nr. 1/2017 of 6 January 2017 the minimum gross national salary
guaranteed in payment represents a "fixed amount in money not including bonuses and other
bonuses, set at 1450 lei per month for a full working program of 166.00 hours, on average, per
month in 2017, representing 8,735 lei / hour ".
In 2017, the minimum wage in economy is 1450 lei, of which the employee has to pay the
compulsory social contributions to the state, namely: Social Insurance (CAS) with 10.5%, Health
Insurance (CASS) with a percentage 5.5%, Unemployment Fund with a percentage (CFS) of 0.5%,
Personal Deductions (DP), Income Tax (IV) 16%. From the gross salary, all the contributions that
the employee has to pay, and the net salary in the amount of 1065 lei, are deducted.
Net wage is the amount of money the employee remains in the hand.
Also, the employer has to pay the same minimum wage after employing certain
contributions, namely: Social Insurance (CAS) 15.8%, Health Insurance (CASS) 5.2%,
Unemployment Fund (CFS) 0, 5%, 0,85% leave allowances (CCI), 0,25% salary claims (FGPCS),
0,15% risk fund and accidents (AMBP) 0,15%.
From the above, the employee pays the state the sum of 385 and the employer pays the state the
sum of 329, which means that all the state's sums are 714 lei.
At the minimum wage in 2017 an employer pays an employee with the sum of 1065 lei, and the
employer pays to the state for the employee the sum of 1779 lei.
4. THE SALARY OF THE 2018 WITH THE INCREASE OF THE SALARY
According to H.G. Nr. 846/2017 of 29 November 2017, the minimum gross national salary
guaranteed in payment represents a "fixed amount of money not including bonuses and other
bonuses, set at 1,900 lei per month, for a full work program of 166,666 hours, on average , per
month, in 2018, representing 11.40 lei / hour ".
In 2018, the minimum wage for the economy is 1900 lei, from which the employee has to
pay the compulsory social contributions to the state, namely: Social Insurance (CAS) with 25%,
Health Insurance (CASS) with a percentage of 10 %, Personal Deductions (DP), Income Tax (IV)
10%. From the gross salary, all the contributions that the employee has to pay are deducted and we
reach the net salary of 1162 lei.
Net wage is the amount of money the employee remains in the hand.
Also, the same minimum salary must also be paid by the employer to the state after the
employee's 2.25% employment insurance contribution (CAM).
Of the above, the employee pays to the state the sum of 738 and the employer pays the state
the sum of 43, which means that all the sums received by the state are 781 lei.
At the minimum wage in an economy, an employer pays an employee with the sum of 1162
lei, and the employer pays the state after the employee 1943 lei.
If in 2018 the employer does not modify the minimum wage of 1450 lei from which the
employee has to pay the compulsory social contributions to the state, namely: Social Insurance
(CAS) with 25%, Health Insurance (CASS ) with 10%, Personal Deductions (DP), Income Tax (IV)
10%. From the gross salary, all the contributions that the employee has to pay, and the net salary in
the amount of 899 lei, are deducted.
For the same salary the employer has to pay to the state after the employee the contribution
Labor Insurances (CAM) 2,25%, and the Social Insurance Social Insurance (CAS) 7,72% and the
Social Insurance for Health (CASS) 3,1%.
From the above mentioned, the employee pays the state the sum of 551 and the employer
pays the state the sum of 190, which means that all the sums received by the state are 741 lei.
At the unchanged salary, from 2018 an employer pays an employee with the amount of 899
lei and the employer pays to the state for the employee the sum of 1640 lei.
Table no. 1
2017
2018
2018
EMPLOYEE
EMPLOYEE
Gross salary 1450 Gross salary 1900 1450
Social Security (CAS) 10.5% 152 Social Security (CAS) 25% 475 363
Social Health Insurance (CASS) 5.5% 80 Social Health Insurance (CASS)
10%
190 145
Unemployment Fund (CFS) 0.5% 7
Personal deduction (DP) 300 Personal deduction (DP) 510 510
Income tax (IV) 16% 146 Income tax (IV) 10% 73 43
Net salary 1065 Net salary 1162 899
EMPLOYER
EMPLOYER
Social Security (CAS) 15.8% 229
Labor Insurers Contribution (CAM)
2.25%
43
33
Difference
of CAS
7,72% ,
val. 112
CASS
3,1%,
val.45
Social Health Insurance (CASS) 5.2% 75
Unemployment Fund (CFS) 0.5% 7
Holidays and Indemnities (CCI) 0.85% 12
Salary Claims (FGPCS) 0.25% 4
Risk and Accident Fund (AMBP) 0.15% 2
Complete Salary 1779 Complete Salary 1943 1640
TOTAL TAXES
TOTAL TAXES
The employee pays to the state 385 The employee pays to the state 738 551
The employer pays the state 329 The employer pays the state 43 190
Total taxes collected by the state 714 Total taxes collected by the state 781 741
In order to pay a net salary of 1065 lei,
the employer spends 1779 lei
Employee 59.87% State 40.13%
In order to pay a net salary of
1162 lei, the employer spends 1943
lei
Employee 59.8%, State 40.2%
employee
54,82%
State
45,18%
According to the Emergency Ordinance no. 90/2017, published in the Official Gazette, no. 973 of 7 December 2017,
the institutions and public authorities which finance the number of public funds positions shall be set up in such a way
as to ensure the full payment of salary rights, subject to expenditure approved by the budget.
5. CONCLUSIONS
- From 1 January 2018, the employer's contributions are transferred to the employee;
- The minimum wage in 2018 is 31.03% higher than the minimum wage in 2017; [6]
- As a result of the salary increases, the employee and the employer are almost equal (59.87%
employed, 40.13% for the year 2017, 59.8% employed, 40.2% for 2018)
- The net salary the employee receives in his hand is higher in 2018 by 97 lei compared to 2017
(1162-1065 = 97);
- The proposed increase in salary for 2018 will have positive effects on the economy by reducing
the black work and additional state revenues;
- Companies that have not increased their wages since December 1, 2018 suffer both the employer
and the employee because he receives less salary money.
- Transferring contributions from the employee to the employer has an insignificant impact on the
macroeconomic level
- Income tax fell from 16% to 10%
- According to the survey conducted by DCNews, of the 100% of respondents, it was found that
40.63% of people dropped their salaries, 28.85% wage increases and 30.52% said they remained as.
The survey shows that after January 1, 2018, a fairly high percentage of people received low wages,
which means that many of the employers in the country have not increased wages. [5]
- If the employer does not increase the minimum wage in 2017, 1450 lei, the employer has to pay
CAS and CASS in addition.
BIBLIOGRAPHY
1. www.calculator-salarii.ro
2. www.avocatnet.ro - Deputy Editor-in-Chief SiminaVoiculescu, 2018;
3. www.monitoruljuridic.ro;
4. https://legea5.ro/ framework law no. 153/2017 on the remuneration of staff paid from
public funds;
5. www.dcnews.ro - Survey Payroll Law after the first flyers, 2018;
6. Claudia Strătilă, "YourBraşovul" Magazine, 2017;
7. Mihai Nicut, "Economica.net", 2017
8. Unique lecturer. Florin Dobre, PhD, "CECCAR BUSINES MAGAZINE,
CurierLegislativ, no. 18-19, 2016,
136
137
Associate Professor PhD Elisabeta R. ROȘCA University „Ștefan cel Mare” of Suceava, România
Abstract:
The paper is composed of an introduction, in which the chosen theme is located in the context of statistical
literature, a presentation of the ideas detached from the study of specialized literature related to the competitiveness
and performance in the tourism activity, a succinct presentation of the calculation methodology of the Travel &
Tourism Competitiveness Index (T&TCI), an analysis of the Romanian tourism competitiveness, as revealed by The
Travel & Tourism Competitiveness Report 2007 and 2017, documents elaborated by the World Economic Forum
(WEF) and a presentation of the conclusions and some future research directions that the paper can open.
As a component of the Statistical Informational System (SIS) in tourism, the system of statistical indicators
must respond to multiple requirements, including the description of the economical results of the tourism agent and the
characterization of the economical results at the branch level. For this reason, within the system of indicators of the
tourist activity are included groups of indicators such as: indicators of the efficient use of the workforce (indicators of
labor productivity and quality of workforce in tourism), as well the indicators of economic efficiency in tourism, which
characterize the resources (efforts) used and the obtained economic and social results (effects). The study of the
specialized literature highlighted the concern for defining and measuring the competitiveness and performance of
tourist activity, statistical analysis of these economic categories being complex, requiring the calculation and
interpretation of the resources and results indicators subsystems.
Competitiveness was defined by The Organization for Economic Co-operation and Development (OECD) as
being the measure in which a country can, under conditions of free trade and efficient market, to produce goods and
services that resist on the international market, in the conditions of maintaining and even increasing real incomes of the
population, in the long term. Competitiveness can be statistically measured by a single synthetic indicator or by a
system of indicators. Thus, in order to measure competitiveness, the WEF 1994 recommended the use of the level and
the increase of GDP per capita indicator. In the year 2007, the economic foundation located in Switzerland published
the first Travel & Tourism Competitiveness Report, in which was calculated the first T&TCI for 124 economies,
including Romania.
Also, the paper presents the indicators for the tourism competitiveness measuring proposed by the OECD in
2013.
In the paper is analysed the Romanian tourism competitiveness in the world context in 2007 compared with
2017, as results from the reports of 2007 and 2017 on travel and tourism competitiveness, elaborated by WEF.
Keywords: statistical indicators of competitiveness and performance, T&TCI, OECD, WEF, Romania.
JEL Classification: C43, L83, Z32.
INTRODUCTION
Need of information for the macro and microeconomic management is satisfied by the
organizing and functioning of the statistical information system (SIS). This is organized at the
economical unit level, as a subsystem of the economical information system (EIS). Tourism
economic agents, to obtain the necessary information for the management of the economic activity,
organize their own EIS and within it exists and functions SIS. It has some defining characteristics,
which highlights the specific statistical content of its functionality and which refer to: the methods
and procedures of observing, modeling and analysis mass data, which are specific for statistics; is
organized and functions for the pursuit of economic activity; participates at the realization of
specially organized statistical researches. Economic agents, included those from tourism, at present
operate with an assembly of data on the internal and external environment of the enterprise, which
in order to be operational, requires the use of computing technique, which makes the EIS to acquire
an informatics system character. This justifies the appearance of statistical databanks, in the SIS
structure, which enable operatively, by interrogation, to respond at the need for data appeared at
various levels and profiles, with a higher or lower degree of processing. A databank has in its
structure, among other components, the database, consisting of the indicators system of domain;
methods, definitions and procedures of the indicators calculation; general and specific
classifications and nomenclatures; the description of enters, outputs and information stored in the
databank. This component of the SIS allows to identify the location of the statistical system of
tourism competitiveness and performance indicators, within the SIS in tourism (Baron et al., 1996;
Biji et al., 2010).
Indicators of competitiveness and performance in tourism can be primary indicators,
resulted from the evidence of each tourism economic entity (commercial society, family
association, physical person) or derived indicators, resulted from the databank interrogation.
In the specialised literature, the system of indicators is considered to be the main part of the
SIS in domain of tourism and subsystem of the national economy system of indicators (Roșca,
2001). Knowledge and quantification function of the tourism indicators system is a complex one,
being realized if the system of indicators provides information on: touristic supply or economic
potential, regarding material base and personnel; value results of the tourism activity, in terms of
expenditures, income and economic efficiency, including the competitiveness and performance of
the tourism economic agent, at regional or county levels; quality of tourism activity, expressed by
the social, cultural, artistic and political effects.
Indicators of competitiveness and performance of the tourism economic agent fall within the
group of economic efficiency indicators of tourism, the two economic categories being influenced
by factors such as the attenuation of seasonality and extension of the tourism season, the
diversification of supplemental services, the changes in the structure of tourist flows, the
stimulation of the international flows a.s.o. (Baron et al., 1996; Biji et al., 2010).
Statistical characterization of the competitiveness and performance in tourism can be done
at the level of tourism economic agent, at the destination level, region level or tourism branch level
and at the level of country. Analysis of the tourism economic agent performance interests both on
the whole firm and on the categories of prestations (accommodation, food, transport, agreement).
Also, the characterization of the tourism competitiveness can be done through a system of
indicators, as it was proposed by OECD in the year 2013 or using a synthetic index which
encompass proportional with their significance, different sides of competitiveness, as it was
proposed by the WEF Geneva 2007 (Dupeyras and MacCallum, 2013; *** WEF, 2007). This
article aims to approach aspects regarding tourism competitiveness at the country level, based on
the Travel & Tourism Competitiveness Index (T&TCI) in the year 2017 compared to 2007 (***
WEF, 2007; *** WEF, 2017).
STUDY OF THE SPECIALIZED LITERATURE
Important theoreticians of competitiveness, M. E. Porter and C. van der Linde emphasized
in their work that, in the last 20-30 years of the 20th century, the concept of competitiveness known
a static approach. The new paradigm regarding the international competitiveness is a dynamic one,
based on innovation. They address the competitiveness in industry, but having in view the fact that
international tourism is an industry, it isn’t wrong to consider that also in tourism the
competitiveness results from a high level of productivity, which provide lower costs than the
competitors or the ability to offer high value products that justify premium prices. Authors consider
that, at the firm level, the notion of competitiveness is clear, but at the state or nation level, thinks
are not the same, because no state or nation can be competitive in all. The best expression of the
competitiveness at aggregate level is the average productivity in industry or the value created per
unit of labor or per one invested dollar (generally, per a monetary unit). Aiming to argue the
important role of innovation (especially of technological innovation) in the assuring of the firms or
products competitiveness, authors reveal that innovation in technology had the power, over time, to
change all theories about the limited character of the availabilities and use of resources (Porter, and
van der Linde, 1995).
Competitiveness is a complex economic category, that was defined by OECD as being the
measure in which a country can, in conditions of free trade and efficient market, to produce goods
and services that resist on the international market, in the conditions of maintaining even increasing
of the population real income, on the long term (Pirău, 2011). Competitiveness can be expressed
through one syntetic indicator and, in this case, WEF 1994 recommanded, as a measure of
competitiveness, the level and increase of the GDP/capita or more complex, through a system of
indicators (Chilian and Iordan, 2007). In order to enroll on a performance trajectory of the
economic entity, an analysis of the internal and external environment, in territorial profil and the
analysis of the resources and competencies of the entity, compared to the competition, must be
carried out. Such an analysis allows the establishment of the market position of the entity and
especially the identification of the weaknesses, in the conditions of capitalizing the opportunities
offered by the external environment and avoiding the threats and also the establishing of a strategy
oriented towards the areas of performance that it can capitalize. Achieving of this stage requires the
measuring of current performance. As techniques of measuring the tourism firm competitiveness,
the specialized literature proposes the balance scorecard (BSC) technique, the performance
measurement matrix, that integrates financial and non-financial indicators of internal and external
environmental analysis of the firm.
M. Palatkova and G. Hrubcova, in their study, analyzed the possibility of applying the BSC
method to national tourism in the Czech Republic, the ultimate goal being to propose a model that
allows the practical use and the monitoring of the regional and national competitiveness in the
Czech Republic. Authors used as theoretical and practical bases The Travel & Tourism
Competitiveness Report from 2013 of WEF and the system of indicators for measuring the
competitiveness in tourism, elaborated by the OECD in 2013. Authors proposed a model of
competitiveness that contains the study groups of indicators, the data sources and the main methods
of their collection, the evaluation model and the current availability of data. The model, as it was
conceive, could serve as base in the managerial national process or at level of region. Critical points
of the two models are the financial costs and the need for other resources such as: a series of other
indicators, long term data, some political aspects (Palatkova and Hrubcova, 2014).
European Foundation for Quality Management (EFQM) proposes for the competitiveness
evaluation the model of excellence in business, which supposes the following of two categories of
performance factors, namely: enablers (leadership-10%; people-9%; strategy and politics-8%;
partnership-9%; processes-14%) and results (people-9%; customers-20%; society-6%; key
performance results-15%). The result of the assessment of performance is concretized in learning
and innovation at the level at the organization for which the model was applied [1].
At present, to the traditional touristic resources (relief, climate, landscape, cultural
objectives a.s.o.) are added and acquired importance in tourism competitiveness resources such as
information (and the strategic management of information), intelligence (and the innovation
capacity of the teams in an enterprise) and the knowledge (the know-how or a combination of
technological abilities and organizational culture). Some previsions show that, in future, the most
visited destinations on the world will not be famous beaches or traditional cultural capitals, but
products created by people, based on massive use of information and communication technologies,
including travel and virtual experiences (Iordache et al., 2010). In this context, Iordache et al., in
their work, present the role of clusters in the increase of the tourism competitiveness, presenting the
statistical criteria which can be taken into consideration in the tourism clusters development such
as: the turnover realized in the tourism from zone compared with the turnover realized in the
tourism at regional/national level; the rate of employment in tourism in the considered area; the
highlighting by statistical methods of an economic growth in tourism bigger than the average in the
tourism sector; the identifying of a larger number of new established SMEs in the tourism sector;
the concentration of an important group of organisms/institutions with competence in the
development of the economic infrastructure and/or which providing services/training to the tourism
companies from area. From the statistics point of view, no less important is the fact that the
implementation of a cluster in tourism requires the elaboration of a unified system of indicators by
the creation and functioning of clusters.
A.A. Cristea highlights in her study the fact that, in the conditions of intensification the
competitiveness among the hotel services providers, mainly, the competitiveness issue must be put
in other terms and in the context of other influence factors, among which the quality of services has
an important role. Author highlights the way in which the issue of ensuring the quality of tourism
services in countries with a tourist vocation such as Switzerland, France is approached and what are
the possibilities for increasing the quality standards and achieving a modern and efficient system of
certification of the hotel services quality in Romania. For our country, the author presents two
possibilities of approach the process of improving the quality of services in the hospitality industry,
namely: by completing the criteria included in the methodological norms regarding the
classification of the tourist accommodation structures [2] and the second, which assumes the
creation of a system of evaluation for the quality of hotel and catering services. Growth of the hotel
services quality in Romania is a continuous and dynamic process, similar to that of ensuring the
competitiveness in the tourism sector (Cristea, 2009).
Duțescu et al., in their study, presented the main indicators of performance used in the
hospitality industry, namely: the rate of occupancy, the rates of income (income per available room,
per total rooms, average rate of room), indicators of profitability, financial indicators and indicators
of efficiency (cost of service on room). Although the aim of the authors was to highlight the
importance of the indicators of financial and economic performance in assessing the sustainability
in tourism, some of these indicators are equally useful also for assessing the competitiveness of
tourism firms (Duțescu et al., 2014).
Specialized literature also highlights the concern for the inclusion in the analysis of the
development of tourism sector from our country, compared to that from other countries, the index
of the competitiveness in tourism (Mitruț and Constantin, 2009; Croitoru, 2011). T&TCI proposed
by WEF in 2007 places Romania on the 76th place among 124 countries, with a score of 3.91 on a
scale from 1 to 7. T&TCI assesses the elements that ensure the development of the tourism sector
through three categories of variables that influence the competitiveness of tourism at global level,
namely: (1) regulatory framework; (2) business environment and infrastructure; (3) human, cultural
and natural resources. In the case of Romania, T&TCI highlighted the relative good results related
to the legislation and regulations in domain, the human resources (education and training,
workforce welfare), the natural and cultural resources and the weaker results related to the
environmental regulations, air transport infrastructure, infrastructure of information and
communication technologies, availability of skilled labor. As it results from the study elaborated by
M. Croitoru, Romania occupied in 2011 the 63rd position in 139 countries, increasing compared to
2009. Author highlights also the position of Romania within the European tourism namely the 34th
place in 42 countries, compared with its direct competitor, Bulgaria, situated on 27th place. The fact
that, in the period 2009 - 2011, Romania raised three positions in the T&TCI classification is
appreciated by the author as an evidence of the economic competitiveness growth due to increase
the communication in tourism.
Competitiveness in tourism, being a complex notion, with multiple sides, can be
characterized through a system of indicators. OECD proposed in this scope a set of indicators
structured in four categories namely [3]:
- indicators that measure the performance and impact of tourism activity. Increasing of the
economic value of tourism is an important concern for advanced tourism economies to remain
competitive on the global tourism market and to other industries. The objective of increasing the
tourism value requires an increasing cooperation in the value chain of tourism, which could help the
tourism sector generally to reduce its high fragmentation, to provide a full tourist experience and to
support a better use of the infrastructure, of the personnel and of the existed resources. An indirect
measure of these aspects is offered by the traditional tourist indicators, which assesse the change
and tendencies about employment and income in tourism.
- indicators that monitor the capacity of a destination to offer qualitative and competitive
tourism services, these indicators referring to the supply side of the tourism industry. Measuring the
tourism competitiveness of the destination can begin with the tourism production and with the
business environment, especially that a direct source of the destination competitiveness is a
dynamic and fair business environment.
- indicators that monitor the attractiveness of destination. Concept of attractiveness of the
destination is closely linked to the notion of competitiveness and to the quality of tourist
experience. To be competitive on the global tourism market, a destination must maintain and
develop its attractiveness and distinctiveness. Tourist experience characterizes the people and
visitors connection to what it represents the identity of a destination, especially its natural and
cultural resources and its way of live. Indicators which refer to the attractiveness of a destination,
ensure its competitiveness monitoring.
- indicators that describe the political responses and the economic opportunities.
Destinations incentives to become more competitive and more attractive are provided by a dynamic
institutional framework, able to promote well-designed support policies in areas that affect the
competitive and sustainable tourism environment. Many policies play an instrumental role in the
tourism development. In the advanced economies, new forces are needed to support the increasing
and to create new value by designing innovative touristic services and for their measuring new
indicators are needed.
M.M. Coroș and L.A. Negrușa in their comparative study on the evolution and the
performances of the touristic supply from Romania and Transilvenia used a system of specific
indicators of accommodation supply. Beyond the conclusions detached by the authors, it is
remarked the fact that the highlighting of the tourism performance was made on the basis of some
statistical indicators such as: distribution of the accommodation units by the classification level,
indices of using of the accommodation capacity a.s.o., indicators that are part from the system of
statistics indicators of tourism, as part of SIS in tourism for which exist large databases (Coroș and
Negrușa, 2014).
C.R. Rusu elaborated a study regarding the influence of non-financial factors on the
performance of tourist units. The non-financial variables considered were: customer satisfaction,
competition in tourism, innovation-diversification, strategy and responsibility face to the
environment and they have been tested five statistical hypothesis on the correlation between the
presented non-financial variables and their economic performance. Author has in view the fact that
an improvement of each factor leading to a superior non-financial performance, which finally will
improve the financial results. The study was realized on a sample of tourist units managers
Constanța and Tulcea districts (Rusu, 2017).
Conclusion detached from the study of specialized literature is that the current system of
tourism indicators satisfies the need for information in this domain, including in term of the analysis
of tourism competitiveness and performance (at the level of accommodation unit, tourist
destination, region or country), but during the touristic sector development new requests towards
tourism SIS appear, that can’t be always satisfied to the best level.
ANALYSIS OF THE ROMANIAN TOURISM COMPETITIVENESS ON THE BASE
OF CURRENT INDICATORS, USED AT THE WORLD LEVEL
The Travel & Tourism Competitiveness Report 2017, elaborated by WEF Geneva, analyses
the T&TCI as principal indicator, calculated for 136 economies including Romania, on the base of
90 indicators. Hierarchy of the economies based on the T&TCI highlights the fact that among the
first 10 developed countries in the tourism domain on the world, most of them are in Europe,
namely Spain, France, Germany, United Kingdom, Italy and Switzerland. Report highlights the fact
that the Region Europe and Eurasia is the best ranked in terms of competitiveness and performance
in tourism due to its cultural heritage, an excellent infrastructure of the tourism service,
international openness and tourist safety, especially in the Western and Southern Europe. Through,
they are remarked significate differences among sub-regions, regarding to the tourism sector
polarization, the environment sustainability polities and the enable character of the business
environment.
T&TCI is the result of the quantitative and qualitative analysis of four categories of
determinations, which refers to: (1) enabling environment; (2) policy in the travel and tourism
domain and enabling conditions; (3) infrastructure; (4) cultural and natural resources. This as
opposed to T&TCI calculated and analyzed in the year 2007, which as we presented above, had
three components. In the year 2007, Romania obtained for the component “regulatory framework” a
score of 3.9, with which it occupied the position 76/124, for the component “business environment
and infrastructure” a score of 3.2, with which occupied the position 74/124 and for the component
“human, cultural and natural resources” a score of 4.7, with which it occupied the position 71/124.
As it results from the Figure No. 1, on subcomponents, Romania had scores over the general value
of 3.9 at “human resources”, “natural and cultural resources”, “policy rules and regulations”,
“national tourism perception”, “safety and security”, “price competitiveness in T&T industry”.
The Travel & Tourism Competitiveness Report 2017 presents some general conclusions
regarding the competitiveness of the tourism domain, namely:
- as long as the industry will continue to growth, an increasing quote of international
visitors come in and go out towards the development economies;
- in the context of the growing protectionism that characterizes global commerce, the
countries with travel and tourism development industry build bridges and not walls among people,
concretized by a growing number of people that crosses borders and an increase of the global
tendency towards the adopting of some less restrictive visa policies;
- in the context of the fourth Industrial Revolution, the connectivity becomes necessary
for countries and so they develop their digital strategy;
- despite the increasing awareness of the environment importance, the travel and tourism
sector faces to the difficulties of sustainable development, such as those generated by natural
degradation processes.
From the Report results the fact that Romania has situated on the position 68 from 136
countries taken in study, with a score of 3.78, descending with two positions face to the hierarchy
achieved in the year 2015. By comparison, the European countries situated in top 10 registered the
following values of T&TCI: Spain - 5.43, position 1/136; France - 5.32, position 2/136; Germany:
5.28, position: 3/136; United Kingdom - 5.20, position 5/136; Italy - 4.99, position 8/136, these
countries occupying the same position also in the year 2015, Switzerland - 4.94, position 10/136,
descending with four positions in the WEF 2017 classification. In this classification, Romania is
part of the Balkans and Eastern Europe countries group, sub-region characterized by a strong price
competitiveness, by the insufficient investment in the air connectivity and in the cultural resources
and by a reduced international openness. The sub-region Balkans and Eastern Europe consists of 12
states, Romania being ranked after Slovenia, Bulgaria, Poland, Hungary, Slovak Republic and
before Montenegro, Macedonia, Serbia, Albania, Bosnia and Hertzegovina and Moldova.
In the Figure No. 2 is represented graphically the distribution of Balkans and Eastern Europe
countries by the ranks obtained for the five elements of the component “enabling environment”. It
is observed the fact that the five subcomponents are situated in the same zone of chart, all states
from the sub-region having scores greater than 3 and less than 7. At the subcomponent “business
environment” all states form the sub-region achieved scopes between 3 and 5 and Romania has a
score of 4.4, being less evaluated at criteria such as: efficiency of legal framework in settling
disputes: 3.2, effect of taxation on incentives to work: 3.1, effect of taxation on incentives to invest:
2.7. At the subcomponent “safety and security” all states from the sub-region obtained scores over
5, Romania being the second country, with a score of 5.8, obtaining the first place with a score of
7.0 at the criterion “index of terrorism incidence”. At the subcomponent “health and hygiene” all
states have scores over 5, Romania obtained 6.1 and the position 1 at three criteria taken into
consideration at this subcomponent. At the subcomponent “human resources and labor market” all
states obtained scores between 4 and 5 and Romania was evaluated with a score of 4.4, being
disadvantaged in the evaluation according to the criteria: primary education enrollment rate
(114/136), extent of staff training (101/136), ease of finding skilled employees (130/136). At the
sub-component "ICT readiness", all countries from sub-region obtained scores between 4 and 5 and
Romania obtained the score of 4.7, being well-rated at criteria related with Internet use, number of
users, use of mobile telephony, mobile network coverage.
0
2
4
6
8
sco
res
countries
Figure No. 2. Distribution of the countries
from Balkans and Eastern Europe by the
scores of elements of the component
„enabling environment” of T&TCI, in 2017
business environmentsafety and security
health and hygienehuman resources and labor market
0
1
2
3
4
5
6
sco
res
countries
Figure No. 3. Distribution of the
countries from Balkans and Eastern
Europe by scores of elements of the
component "T&T Policy and Enabling
Conditions” of T&TCI, in the year 2017
prioritizationof Travel
&Tourism
internationalopenness
pricecompetitivenes
s
In the Figure No. 3 is presented the distribution of Balkans and Eastern Europe countries by
the score obtained for the component “T&T Policy and Enabling Conditions”, in the year 2017. It is
observed that, by subcomponents, all scores fall between 2 and 6, the distribution by countries
being more homogeneous in the case of subcomponents “prioritization of Travel and Tourism”,
“price competitiveness”, “environmental sustainability”. At the subcomponent “prioritization of
Travel and Tourism” the scores are situated between 3 and 5, Romania registered the score of 3.8,
being less evaluated at criteria related with effectiveness of marketing and branding to attract
tourists. Criterion “price competitiveness” has the scores situated over 4, for Romania being
estimated the score of 4.7, being less evaluated at the criteria related to the ticket taxes and airport
charges and fuel prices levels. At the subcomponent “environment sustainability” the T&TCI
variation interval is situated between 3.9 and 5.1, Romania registering a score of 4.4, being
disadvantaged by criteria such as sustainability of travel and tourism industry development,
particulate matter concentration. Regarding the “international openness” of the economy of tourism
from Balkans and Eastern Europe, the index variation has an amplitude of 2.1 and allows a division
of these sub-region in two groups of countries, as it results from the chart, up to Romania, whose
score is 3.9 and above Romania. Our country is well-ranked regarding the number of regional trade
agreements in force, but les evaluated regarding the openness of bilateral Air Service Agreements.
In Figure No. 4 is presented the component “infrastructure”, on its elements and the mode in
which this distributes the countries from sub-region Balkans and Eastern Europe. As it results from
the chart, at the subcomponent “air transport infrastructure” the amplitude of variation is restricted,
not exceeding value 3, and Romania has a score of 2.4, being disadvantaged by the quality of air
transport infrastructure. At the subcomponent “ground and port infrastructure” the scope variation is
between 2.5 and 4.8 and Romania obtained a score of 2.8, being disadvantaged by the quality of
roads, quality of port infrastructure, ground transport efficiency. It is observed the fact that by
subcomponents of the access infrastructure, Romania has small scores, thus they are considered in
the tourism development strategy from our country. At the subcomponent “tourist service
infrastructure”, the index number variation is situated between 2.8 and 5.8, Romania being
evaluated at a score of 4.4, being advantaged at the criterion of the presence of important companies
in the car rental sector, but disadvantaged by the quality of tourist infrastructure.
01234567
sco
res
countries
Figure No. 4. Distribution of the contries
from Balkans and Eastern Europe by the
scores of elements of the component
„infrastructure” of T&TCI,
in the year 2017
air transportinfrastructure
ground andport
infrastructuretourist serviceinfrastructure
In Figure No. 5 is presented the component “natural and cultural resources”. At the
subcomponent “natural resources”, the score variation is between 1.6 and 3.8 and Romania obtained
a score of 3.0, being better rated for the total known species, for the natural tourism digital demand.
At the subcomponent “cultural resources and business travel” the score variation is between 1.1 and
2.8 and Romania was evaluated at a score of 2.3, being better rated regarding the cultural and
entertainment tourism digital demand.
The Travel & Tourism Competitiveness Report 2017 highlights the touristic profile of
Romania also through other indicators. So, the Report reveals that the weight of GDP created in
T&T industry was of 1.3% from the total GDP of Romania and the weight of tourism labor in the
total labor of Romania was of 2.2%. Compared with the year 2015, the Romanian industry of
tourism obtains the same indices of 3.8, but it was ranked two places up, in the classification of 141
economies.
CONCLUSIONS
The work highlighted the importance of quantitative and qualitative quantification of
tourism, at global, national, regional levels or at the level of economic entity in tourism,
quantification that included the statistical knowledge of the touristic sector within the SIS of
tourism and through the system of the tourism indicators. Specialized literature highlighted the
system structure, as the fact that it is constantly improving, by including new indicators, among
which are also the statistical indicators of competitiveness and performance in tourism. The work
presented the two possibilities of quantification of the tourism competitiveness, namely: through a
synthetic index, T&TCI, proposed and calculated by WEF, beginning the year 2007 and through a
system of indicators proposed by OECD, in the year 2013. Analysis of the T&TCI highlighted
some characteristics of Romanian tourism which made from this a competitive economic sector at
the global level and especially in the sub-region Balkans and Eastern Europe, but also
characteristics that requires Governmental interventions and from local authorities to ensure the
sector competitiveness. Both the study of the specialized literature and the structure of the OECD
2013 system of indicators highlight the utility of SIS of national tourism in the obtaining of the
statistical indicators in tourism, some of them can be used in the currect form for the analysis of
tourism competitiveness and performance, namely: accommodation units by the level of
classification, the indices of use of the accommodation capacity, but also the need for continuous
development of new tourism indicators, which highlight new profiles and levels.
As openings for new research directions in this domain, it must be mentioned those resulting
from the existence of the NIS tourist database, including tourism indicators of supply, demand and
relation demand - supply, structured by quality criteria such as: types and categories, monitoring
0
0.5
1
1.5
2
2.5
3
3.5
4
sco
res
countries
Figure No. 5. Distribution of the countries
from Balkans and Eastern Europe by the
scores of elements of the component "natural
and cultural resources" of T&TCI, in the year
2017
natural resources
cultural resources
and business
travel
indicators of the National Strategy of Sustainable Development, including tourism indicators and
indicators which can give a dimension to the tourism competitiveness from Romania, by macro-
regions, by regions of development and by districts, the tourism indicators of the Eurostat database,
which introduce new indicators and structuring criteria such as: travel motivation, age group,
average tourism expenditures and others.
ENDNOTES
[1] http://www.managementulperformantei.ro
[2] *** Methodological norms regarding the issuance of certificates for the classification of the tourist
accommodation establishments with functions of accommodation and public catering, of licenses and of
tourism patents, in the Order of Minister no. 65/10 March 2013, published in M. Of. no. 353/2013,
http://www.legislatie.just.ro
[3] *** Dupeyras, A., and N. MacCallum (2013), ”Indicators for Measuring Competitiveness in Tourism: A
Guidance Document”, OECD Tourism Papers, 2013/02, OECD Publishing.
http://dx.doi.org/10.1787/5k47t9q2t923-en
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148
Associate Professor PhD Eugenia IANCU
Stefan cel Mare University of Suceava, Romania [email protected]
Lecturer PhD Tudor COLOMEISCHI
Stefan cel Mare University, Suceava, Romania [email protected]
Abstract:
For most e-commerce it is online shopping, but scientists are a modern business technology. E-commerce is a
very diverse field, involving a range of activities, different organizations and technologies. There are also a number of
e-commerce applications. The process of globalization has also penetrated e-commerce, becoming a particular and
spectacular component. Apps have been created and created, and their use involves appropriate information,
infrastructure, and support. In the paper are presented the main aspects regarding the electronic commerce
infrastructure and its insecurity.
Key words: e-commerce, infrastructure, insecurity, business process, communication
JEL classification: M1, M15
1. INTRODUCTION
For most, the term "ecommerce" means making online purchases on the World Wide Web.
However, electronic commerce - Electronic Commerce or E-Commerce, is more than the process of
buying / selling products and services. It may include many other activities, such as: exchanges and
bargaining between companies, internal processes of companies that they carry out as support for
buying / supplying, selling, hiring, planning. Also, electronic commerce involves the transfer of
documents - from contracts or orders to images or voice recordings (Fingar, 2000).
From a scientific point of view (Plesa, 2000), e-commerce is defined as "a modern business
technology that addresses the needs of organizations, traders and consumers to reduce transaction
costs while improving the quality of goods and services and increasing delivery speed. can also be
used when using computer networks to search for and retrieve information to support human or
institutional decision-making. "
From a pragmatic point of view, other concepts and ways of defining are also important.
Among these, a particular interest is as follows (Timofte, 2002):
all on-line activities in order to excite consumer interest before selling and to ensure
consumer support after sales;
trading transactions taking place within open networks;
Form the vast network of small companies, government agencies, large corporations and
individual entrepreneurs in a single community that offers the possibility of communicating
with each other via computers;
doing business online. This includes purchasing products, online and Internet services, and
exchanging electronic data, where an organization's computer informs and transmits
purchase orders to the computer of another company;
Commercial transactions using automatic processing procedures combined with automatic
information exchange procedures;
e-commerce technologies include all forms of electronic trading, electronic message
transmission, electronic data exchange (SDE), electronic money transfer (EFT), electronic
mail, electronic catalogs, electronic databases, electronic news and information services,
electronic payment systems, other forms of electronic communication (FEC), on-line access
to services via the Internet and other forms of electronic data transmission for commercial
purposes;
e-commerce generally refers to all forms of business-related, business-to-business or
purchaser-based transactions that rely on the processing and transmission of digital
information, including text, sound and images (Organization for Economic Cooperation and
Development - OECD -, 1997), (OECD, 1997);
e-commerce is the electronic realization of commercial activities. It includes various
activities, including electronic commerce of goods and services, network delivery of goods,
electronic capital transfer, e-commerce with shares, e-mail dispatching, direct marketing,
and warranty and post-warranty service; involves both products (household, medical) as
well as services (informative, financial, legal); such as health, education and virtual mall-
type activities, given by the European Commission, 1997 (1);
e-commerce is the realization of commercial activities, which involve exchanges of values
through telecommunication networks. (European Information Technology Observatory -
EITO, 1997) (2);
trade supports a whole range of activities - product design, realization, advertising, trade
transactions, account management - made through computer networks, given by the
Electronic Commerce Promotion Council in Japan – 1996 (3);
internet-based business activity that will also revolutionize retail and direct marketing.
Consumers view products through TVs or computers, access data about them, view how
they combine, order, and pay, all at home, the US President's Executive Office, 1997 (4);
a broad term describing the commercial activities and the electronic data transfer associated
with them. E-commerce brings together the small-business network in a community,
providing the opportunity to communicate via dedicated platforms provided by the
Electronic Commerce Resources Center;
in the broadest sense, e-commerce can mean any form of use of electronic technology in any
aspect of commercial activity, given by the NTIA of the U.S. It uses a broader definition
than the previous one, it also includes the final consumer whose participation is materialized
in the electronic shopping that it carries out.
2. E-COMMERCE INFRASTRUCTURE
The term e-commerce is also used to describe the use of the information infrastructure to
achieve the following functions (fig. no.1), (5):
1. bringing products onto the market (eg cybermarketing);
2. Buyers' meeting with vendors (e.g., electronic shopping vans, virtual stores, electronic
money transfer);
3. payment of obligations towards the state (electronic collection of taxes and duties);
4. delivery of electronic goods (eg information).
E-commerce can be defined from the following perspectives (Timofte, 2002):
- Communications - e-commerce is the delivery or payment through computer networks or
other electronic means.
- Trade, exchange - e-commerce is done through the Internet and through other online
services.
- Business Processes - business processes taking place over electronic networks, thus
replacing physical business processes with information.
- Service - e-commerce is a means of reducing service costs, while improving the quality of
the customer relationship and the speed of delivery of the service.
- Learning process - e-commerce provides online education and training in schools,
universities and other organizations, including businesses.
- Collaboration - e-commerce is the basis of inter-and inter-organizational collaboration.
- Community - From a community perspective, e-commerce offers a place where members of
various communities can learn, trade, and collaborates.
Figure no.1. The information infrastructure functions
E-commerce is a very diverse field, involving a range of activities, different organizations
and technologies. There are also a number of e-commerce applications. E-commerce applications
are feasible through its infrastructure and with the help of five categories of factors (e-commerce
pillars) (fig. no. 2).
Figure no. 2 Categories of electronic commerce factors
These are (Timofte, 2002):
- People - Vendors, buyers, intermediaries, IT specialists, employees of all kinds and other
participants covering an important area of support for e-commerce;
The
information
infrastructure
functions
Product market
Buyers-Sellers Assessment-
Taxes
Delivery of
electronic
goods
People
Public policy
Marketing -
promotion
Support
services
Business
Partnerships
Pillars of
electronic
commerce
- Public policy - Laws and regulations, data privacy protection, the issue of technical
standards that are set by the government or those in the industry mandated to legislate on these
standards;
- Marketing and promotion - Like any other activity, e-commerce needs advertising,
especially in B2C online transactions where buyers and sellers are unaware;
- Support services - A range of services are needed to support e-commerce. These range from
creating a site's content to making payments and delivery orders;
- Business partnerships - are very common in e-commerce. They often appear on the
distribution channel, consisting of interactions between the company and its suppliers, customers
and other partners.
The rapid expansion of e-commerce (Ravi & Andrew, 1996) is the source of companies to
international competitions actively participating in the global information economy.
3. ELECTRONIC COMMERCE INSECURITY
A major factor behind the current development of e-commerce is insecurity. The original
Internet was designed for research and not for commercial transactions. More specific security
issues can be identified, which can be considered as real obstacles to the development of Internet
commerce (fig. no.3)
In the context of e-commerce, attacks on security are predominantly manifested through the
following keys (Patriciu, 2001):
• Listening to communications - leads to the theft of customer information such as credit
card number, bank account number, payment notes or financial balances. Such attacks also lead to
the theft of some services, normally accessible only to those who pay, such as information or
software distribution. These things can, for example, inform a company about the business dealings
of other competing firms, or can generate the disclosure of personal data of buyers, data transmitted
only to the firms they are doing business with.
• Theft of passwords. Attacks of this type allow access to systems where important
information or services exist. The use of increasingly powerful cryptographic algorithms to protect
this data has moved the target of attacks from attempts to "break" the protocol into attempts to
obtain clear information from less protected nodes.
Figure no. 3. Specific security issues
• Changing data. These attacks are used to change the content of transactions.
• Register. This type allows a communicating party to act as another. The attacker places a
computer on the Internet to collect hundreds of thousands of credit card numbers, account numbers
or other information, attackers can make important payments on behalf of people who do not even
suspect or collect fees from various merchants.
• Refusal to know. Repudiation or refusal of knowledge of network transactions creates
serious damages to the parties involved. For example, the receipt of a bankcards check, refused not
because it does not have coverage in the account, but simply because the bank does not have the
means to authenticate it.
4. ANALYSIS OF THE ELECTRONIC COMMERCE MARKET
The unprecedented development of information technology has revolutionized global trade,
delivery or retail trade, redefining classical marketing principles. It is noted that today, for more and
more businesses in different countries, electronic commerce has become synonymous with profit
growth (Iancu, 2017). This is because e-commerce consists of running a business as a value-
generating activity, supporting the Internet and using specific software packages. Worldwide, e-
commerce has become a core component of the economic development policies of the governments
of the developed countries, Japan, the US, the EU Member States, etc., and government-led
measures by these countries to regulate unique in making e-commerce transactions, e-commerce
has become a fundamental component of world trade.
Table no. 1 shows that in Europe there are six countries with the highest B2C index, three
countries in Asia, and in America only one country.
Table no. 1. B2C Electronic Commerce Index of UNCTAD
Nr.crt. Countries People who use
the Internet
B2C Electronic
Commerce
Index Value of
UNCTAD
1 Luxembourg 95 89,7
2 Iceland 98 89
3 Norway 96 87,1
4 Canada 87 86,3
5 Japan 91 86,1
6 Finland 92 84,3
7 Republic of Korea 84 84,3
8 UK 92 83,7
9 Switzerland 87 83,3
10 New Zealand 86 82,9 Source: Elaborated by author after http://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx
The best placed is Luxembourg with the highest index. This is also due to the fact that it has a large number of secure servers, being the European headquarters for global e-commerce companies.
Figure no 4. Electronic Commerce Index of UNCTAD
Iceland ranks second because it is a leader in the spread of the Internet, the holding of credit
cards and the diffusion of secure servers. Norway and Finland represent other Nordic countries in the top ten with virtually the same features: broadly spreading the Internet, credit cards and secure servers. Like Luxembourg, Switzerland has a good financial sector, good logistics networks and high-level postal coverage. Britain has a relatively high degree of Internet spread. Its ranking in the B2C Index is due to the fact that its e-commerce market is well developed (it has the largest proportion of wholesale and retail businesses selling on the Internet in Europe), which is attractive to buyers abroad.
The pace of development of e-commerce is now more significant than that of world trade
development as a whole, reflected in the work of the World Trade Organization. Reduced costs
compared to traditional stores contribute to the opening of new companies. One of the main trends
of this year were the changes that have occurred in the work of the great giants of the Internet. For
the sake of possible growth, the largest companies are expanding towards 'real markets', for
example, Amazon in the US and Singapore, Zalora. At the same time, a number of providers are
expanding their online offers, such as Walmart, Nordstorm.
5. CONCLUSIONS
Concluding, e-commerce is changing the business world, threatening the existence of not only
businesses but entire industries. Some industries have been forced into strong restructuring while
other new businesses and other ways to drive older businesses are developing. This new business
environment is both frightening and offering new opportunities.
At present, e-commerce is a modern business form that is geared towards meeting the needs of
end-users, consisting in both the realization of trade and commercial logistics operations, and the
realization of marketing actions meant to ensure the rationality of the flow of real-time consumer-
friendly goods.
END NOTES
(1) A European Initiative in Electronic Commerce, http://www.ispo.cec.be/ecommerce
(2) European Information Technology Observatory, Frankfurt, 1997, http://www.eito.org
(3) Electronic Commerce in Japan, http://www.ecom.or.jp/p/eng/ecjapan/ohp3.html
(4) US Executive Office of the President, 1997, A Framework for Global Electronic Commerce,
http://www.whitehouse.gov/WH/New/Commerce/read.html
(5) NTIA Office of Assistant Secretary, Electronic Commerce, 1997,
http://www.ntia.doc.gov/opadhome/ecom3.html
REFERENCES
1. Timofte C, (2002) Comerţul Electronic, p. 64-73
2. Fingar P., (2000) Enterprise E- commerce, Ed. Meghan- Kiffer Press, Montreal, p. 21-25
3. Patriciu V.V., (2001) Securitatea comertului electronic, Editura ATM, Bucuresti, p. 43-49
4. Pleşea, Doru, (2000) Domotica, Editura A.S.E., Bucureşti, 2000, p.38-40
5. Ravi Kalakota, Andrew B. (1996) Whinston, Frontiers of electronic commerce, Editura
Macmillan Computer Publishing, New York, p. 98-99
6. Iancu Eugenia (2017) - The Future of Traditional Commerce, University Annals,
Economic Sciences Series, Volume XVII, Issue 2, ISSN 2393-3127, pp. 19-22
7. OECD, Electronic Commerce:Opportunities and Challenges for Government, Paris,
1997, p. 23-24
8. http://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx
155
Lecturer PhD Grațiela BRÂNZĂ
Constanta Maritime University, Romania [email protected]
Abstract:
The quality of life depends on the nation's power of development, social policy that ensures the income of the
population for consumption and social-cultural expenses. Knowing the well-being of the population requires the
computation of some synthesis indicators that quantify the level, structure and quality of life. The Human Development
Index is the most important indicator that measures longevity, level of education and living standards in a country.
This paper presents the concept of quality of life in general and a comparison of Romania's Human
Development Index with other European Union Member States. It is also highlighted the long-term unemployment
effects on the quality of life in the European Union and some solutions that can be taken to diminish this disequilibrium.
Key words: quality of life, Human Development Index, life expectancy index, training level index, GDP per
capita index
JEL classification: C430, I131.
INTRODUCTION
Analysis of the quality of life requires highlighting the resources and opportunities existing
in society, as well as the conditions of access them. A complex analysis needs the selection and
study of a large number of indicators from different social and economic domains, such as:
inhabitants, natural environment, human settlements, social environment, family, person,
occupation, quality of active life, macroeconomic resources of the living standard, income,
consumption a.s.o. Statistical methods used in the analysis of quality of life are: comparison,
analysis of structural modifications, dynamics analysis, factorial analysis a.s.o. (Brânză, 2013;
Roșca, 2009). In ensuring a high standard of quality of life we highlight the fact that Romania
integrates successfully into the priorities and values of the European Union related to quality of life,
especially related to some subjective indicators of quality of life compared with objective
indicators. For example, most people from the Member States are committed to providing the
necessary lives, having a good health, creating a family. A decreasing tendency recorded the
fertility and migration is growing. In these conditions, the EU recommendations for government
employment policies and creating quality jobs (good labor conditions, corresponding wage a.s.o.),
combating poverty, support for families find their full necessity in Romania.
GENERAL ASPECTS REGARDING QUALITY OF LIFE
Quality of life is a multifactorial concept that represents the overall assessment of the
individual, taking into account the well-being associated with the events or conditions influenced by
one intervention (preventive, therapeutic and other).
The synthesis of the life quality of a country's population is based on the calculation and
analysis of the synthetic indicators of life quality, according to the methodology recommended by
the National Report of Human Development (UNDP, 1998):
- Human development index (HDI): longevity, level of education, standard of living;
- Index of the disappearance of gender discrimination in human development;
- Index of women's participation in political, economic decision making;
- Poverty index, obtained as the average of four indices: the economic poverty index, the
privation in human capital index, the infrastructure privation index and the lack of local resources
index (Moret et al., 1993).
Quality of life is a phenomenon that can not be statistically rigorous measured, as the
objective data must be supplemented with socio-psychological information to capture the
complexity of the individual's behavior, but also that of the society as a whole. The entire society
must work to improve the living conditions of all its members (Begu, 1999).
In order to study the quality of life, the O.N.U. handbook (ONU, 1989) specifies the list of
areas and issues to be considered, which can be summarized in the table below:
Table no 1. Areas and issues of interest regarding life quality Area Issues
Population Natural Movement, International Migration,
Demographic Structure, National and Ethnic Groups.
Settlements and housing Geographical distribution of population, urban and rural
areas, new housing construction, water and sanitation,
rents and housing expenses, household energy
consumption, transport.
Household and Family Size of household, consumption, marriage, divorce,
fertility.
Health and Health Services Mortality and morbidity, diseases, health services,
resources, nutrition, alcohol and tobacco consumption.
Education The level of training and illiteracy, school enrollment,
adult education, vocational training.
Economic activity Labor force participation, inactive population,
employment, unemployment, work benefits, conditions
and qualification level.
Socio economic groups and social mobility Occupational structure, intra and intergenerational
mobility.
Income, consumption, wealth The level, growth and structure of household income;
the level, growth and structure of consumption;
distribution of income and consumption; level and
distribution of wealth.
Social security and services Protection against loss of income, use and importance of
protection.
Free time, culture and communication Use of leisure time, leisure and cultural activities,
facilities, expenses, mass media.
Public order and individual safety Frequency and severity of offenses, victimization,
characteristics and treatment of offenders, justice
institutions, staff.
Source: ONU, 1989
Compared with this first version, there have been improvements in the indicator system,
with special population groups (women, young, old, disabled), new elements (international
migration, school abandonment, economic protection, unemployment) and even new indicators
(average of life, adult education, accessibility to goods and services, and others).
Measuring the progress of a country is done with the help of the human development
indicator, which takes into account social and economic sustainability indices and provides input
for analyzing opportunities and obstacles for human development policies. At the level of a
country's population, the United Nations Development Program considers human development to
be based on three pillars: a longer and healthier life, the accumulation of as much knowledge as it’s
possible and a decent standard of living. In this context, the indicator composition contains three
key indices: the life expectancy index, the training level index and the GDP per capita index.
(UNDP, 2004)
The last Human Development Report (HDR) created by UNDP in 2016, has a major
objective - how human development can be ensured for everyone nowadays and in the future. There
are important disparities between regions and countries regarding socioeconomic conditions, ethnic
and racial discriminations, the gap between women and men or the differencies between rural and
urban areas. So, the HDR also identifies the national policies and key strategies on this theme, in
order to give an equal chance to every human being to live a better life according to the various
dimensions of human development.
STATISTICAL OVERVIEW OF HUMAN DEVELOPMENT INDEX IN ROMANIA
AND THE OTHER MEMBER STATES OF THE EUROPEAN UNION
The United Nations Development Program has promoted since 1990 the Human
Development Index (HDI) as one of the main tools for comparing countries across the globe. Gross
Domestic Product per capita and life expectancy at birth are two important indicators included in
the HDI calculation. In 2007 Romania holded the 61 position in the world from 182 countries, in
terms of GDP/capita (7703 USD) and 85 position in the life expectancy at birth (72.5 years), and in
terms of HDI - position 63. (Marginean, I., 2010)
The Statistical Annex of the 2016 HDR presents the 2015 HDI values and ranks for 188
countries and UN-recognized territories. Romania’s HDI value for 2015 is 0.802, placing the
country in the very high human development category. According to UNDP, human development
groups are: the very high human development group (with a Human Development Index of 0,892 in
2015), the high human development group (HDI=0,746), the medium human development group
(HDI=0,631) and the low human development group (HDI=0,497).
Table 2. Human Development Index in the EU-28 in 2014 and 2015 Country 2015 Human Development Index
(HDI value)
2015 HDI rank 2014 HDI rank
Austria 0,893 24 24
Belgium 0,896 22 21
Bulgaria 0,794 56 57
Croatia 0,827 45 46
Czech Republic 0,878 28 28
Cyprus 0,856 33 34
Denmark 0,925 5 6
Germany 0,926 4 4
Greece 0,866 29 29
Estonia 0,865 30 31
Finland 0,895 23 23
France 0,897 21 22
Hungary 0,836 43 43
Ireland 0,923 8 8
Italy 0,887 26 27
Latvia 0,830 44 44
Lithuania 0,848 37 37
Luxembourg 0,898 20 20
Malta 0,856 33 35
The Netherlands 0,924 7 6
Poland 0,855 36 36
Portugal 0,843 41 41
Romania 0,802 50 51
Slovakia 0,845 40 40
Slovenia 0,890 25 25
Spain 0,884 27 26
Sweden 0,913 14 15
United Kingdom 0,909 16 16
Source:UNDP, 2016
Among European Union countries, Romania places on the 27th position, before Bulgaria.
The best HDI ranks are held by Germany, Denmark,the Netherlands and Ireland. Despite this
position in the overall hierarchy of European Union member states, Romania has recorded
progresses in the period 1990-2015, starting with an HDI of 0.700 and obtaining 0.802 at the end of
the studied period. Also, all the component indices of Human Development Index have constantly
evolved, as we can observe in the table below:
- life expectancy at birth have increased by 7,62% in 2015 compared to 1990;
- expected years of school have grown up with 2,8 years in 2015 compared to the
reference year;
- mean years of schooling have increased by 1,8 years in the period 1990-2015;
- GNI (Gross National Income) per capita grew up on average with 0,918 $ per capita
yearly.
Table 3. Evolution of Romania’s HDI component indices in the period 1990-2015 Year Life expectancy
at birth
Expected years
of schooling
Mean years of
schooling
GNI per capita
(2011 PPP$)
HDI value
1990 69.5 11.9 9.0 11,164 0.700
1995 69.5 10.4 9.5 10,229 0.686
2000 70.5 11.7 9.9 10,201 0.708
2005 72.3 13.7 10.1 13,887 0.755
2010 73.8 15.7 10.6 17,100 0.798
2011 74.1 15.3 10.7 17,333 0.797
2012 74.3 14.7 10.8 17,511 0.794
2013 74.5 14.7 10.8 18,103 0.797
2014 74.7 14.7 10.6 18,895 0.798
2015 74.8 14.7 10.8 19,428 0.802
Source: UNDP, 2016
LONG-TERM UNEMPLOYMENT AT EUROPEAN UNION LEVEL - EFFECTS
AND SOLUTIONS OF DIMINUATION
At European Union level, there are special institutions that focuse on the increasing of life
quality for the entire society. Eurofound is a good example in this context and its research on this
issue concludes that good public services improve citizens’s quality of life and enable their active
participation in society. Otherwise, Eurofound’s programming document for 2017-2020 focuses on
six strategic areas of intervention:
- „working conditions and sustainable work;
- industrial relations;
- labour market change;
- quality of life and public services;
- the digital age: opportunities and challenges for work and employment;
- monitoring convergence in the European Union” (Eurofound, 2017).
According to Eurofound studies, among the most important issue that affect the quality of
life in every society is “young people not in employment, education or training” (NEET). The
NEET category includes 6.6 million young people, from which some 4.6.million aged 15-24 were
unemployed in 2015. Individuals from NEET category have many disadvantages regarding the level
of education, poverty, family problems. They are vulnerable because they can’t accumulate human
capital.
Eurofound identifies seven groups within the category of NEET aged 15-24. The biggest
share (29.8%) is for short-term unemployed, which have been unemployed for less than a year. The
second group is for long-term unemployed (22%), which have been unemployed for more than a
year and have an increased risk of social exclusion. With a share of 15.4%, the group of those who
have family responsabilities can’t work because they are caring for children or incapacitated adults.
The majority components (88%) in this group are women. The last four groups are the re-entrants
(7.8%), those who suffer from illness or disability (6.8%), those who are discouraged (5,8%) and
other NEETs (12.5%), that includes the most vulnerable, the most privileged people (Eurofound,
2017).
This classification presents the composition of NEETs at European level. Each member
states has different size and composition of NEET population. Eurofound gives two examples:
Sweden, where 10% of NEETs are long-term unemployed and discouraged workers and Italy with
42% in this category.
Long-term unemployment is the first cause of inequality, poverty and social exclusion, thus
affecting the individuals, their psychological and health status. This generates high costs for the
health care system and welfare services. All these problems have a significant negative effect on the
quality of life. Long-term unemployment leads to the deterioration of human capital, which is the
most significant resource for modern European economies, with huge implications on the efficiency
of labor market and on the future economic growth and development (European Commission,
2015g).
On European Union average, the value of long-term unemployment fell by 11% in 2015.
Among member states, the value of long-term unemployment decreases by more than 20% in
Estonia, Bulgaria, Ireland, Poland, United Kingdom; increases by 2% - 13% in France, the
Netherlands, Sweden, Croatia, Austria, Latvia, Romania and records almost 25% in Finland and
Luxembourg. With moderate or low long-term unemployment rates (2%-5%) and high long-term
unemployment shares within the total unemployment population (40%-54%) are in the following
countries: Lithuania, Latvia, France, Belgium, Poland, Hungary, Romania, the Netherlands, Malta,
Czech Republic, Finland, Germany.
The experiences in different European countries reveal that the activation measures of
unemployment can reduce considerably the long-term unemployment. Only the Nordic countries
were able to promote and develop the activation policy. The Baltic states confronted with many
variations in GDP, Southeast European countries have to cope with the economic crisis, neglecting
the welfare and activation policies and East-Central European states present a combination of all
these issues. The authors Duell, Thurau and Vetter proposed in their study measures to combat
long-term unemployment and its negative effects on the whole society and economy through “a
broad approach involving different policies, ranging from activate labor market policies, social
inclusion policies and awareness of discrimination to macroeconomic, structural, regional and
educational policies” (Duell et al., 2016).
Also, they suggested southern European countries “to modernize their production models,
invest in skills, research and development and the promotion of high value-added industries in order
to create additional employment opportunities”.
CONCLUSIONS
As a result of United Nations Development Programme’s evolution, sectoral statistical
research is carried out in areas of high social and economic relevance, such as the status of women,
children, the elderly, access to work, working conditions, environmental degradation, access to
information, civil, ethnic or labor conflicts. As some of these are impossible to quantify, the
emphasis is on the theoretical aspects, the construction of indicator systems and the elaboration of
the calculation methodology.
On the basis of the limited set of indicators, synthetic indicators were constructed to
measure the qualitative aspects of human development. The Human Development Index is
calculated annually since 1990 by United Nations Development Programme, providing a more
pertinent measure of progress made by the world's states on human development than traditional
economic indicators. Knowledge of Human Development Index and other indicators in its
component is very important for each state to substantiate human development strategies.
REFERENCES
1. Begu, L.S. (1999). Statistică Internațională. București: Editura ALL Beck
2. Brânză, G. (2013) Measurement tools of life quality development by OECD and the
European Union, Business and Economics series, Volume 5, pp. 88-92
3. Duell, N., Thurau, L. and Vetter, T. (2016). Long-term Unemployment in the EU:
Trends and Policies. Economix Research and Consulting. Available at:
www.bertelsmann-stiftung.de
4. Eurofound (2017). Living and working in Europe. Yearbook 2016. Luxembourg:
Publications Office of the European Union. Available at: www.eurofound.europa.eu
5. European Commission (2015g). Labor market and Wage developments in Europe.
Social. Europe. Directorate General for Employment, Social Affairs and Inclusion.
Luxembourg: Publications Office of the European Union
6. Marginean, I. (2010). Calitatea vieții în România: prezent și perspective. Calitatea
Vieții. XXI.nr. 3-4. pp.231-237
7. Moret, L., Chwalow, J., Baudoin-Balleur, C. (1993). Evaluer la qualite de la vie:
construction d’une echelle. Rev. Epidem. Et Sante Publ.41. pp. 65-67
8. Roșca, R.E. (2009) Analiza indicatorilor calității vieții în România, Analele
Universității Creștine „Dimitrie Cantemir” București, Seria Științe Economice, pp.77-
82
9. United Nations Development Programme. (1998). National Report of Human
Development
10. United Nations Organization. (1989). Handbook on Social Indicators. New York
11. United Nations Development Programme. (2004). Human Development Report. pp. 258
12. United Nations Development Programme. (2016). Human Development Report.
Statistical Annex of the 2016 HDR. Available at: http://hdr.undp.org/en/data
161
Ștefan SFICHI
Ștefan cel Mare University of Suceava, Romania [email protected]
Abstract: Big data is the combined collection of digital data and old - traditional data inside or outside an entity. Media
is being encapsulated in this big data offering powerful insights for e-commerce businesses. This article intends to
review the good and maybe the bad part inside this evolution and to overview the crypto part inside future e-commerce
businesses.
Key words: Big data, big digital media databases, media, media databases, e-commerce
JEL classification: A12, A19
I. INTRODUCTION
This paper intends to review the importance of big digital media databases in nowadays e-
commerce all over the world. Databases evolved from the simple text information contained in
many different forms that include much more info then the old ones.
This market has a lot of money involved. It has great advantages for both the sellers and the
buyers. This is why it is very possible that it should evolve to getting a greater piece of the market.
We shall explain what big data is and we shall speak about increased shopper analysis. As we’ve
mentioned, understanding big digital media databases is good for the sellers, but also for the buyers.
This is why we shall overview improved customer service, on-line payments, the advances in
mobile commerce [1]. At the end, virtual reality should be taken in the spotlight for it is already
helping sellers and buyers get closer.
II. WHY BIG DATA
Big data is everywhere. Data is coming in from different sources in different forms. Facts
are now integral to our future. This information can improve your workforce. It can transform both
the lives of businesses and costumers. It doesn’t do that all by itself. Big data needs context and
connection. Innovation depends and that context, on that connection [2]. There are three important
things when we we think of big data. There is volume, velocity and variety.
Big data has high volume of information that needs to be processed. Being also low-density,
unstructured data, this is also quite hard to take into consideration when processing. For some
organizations, it may get to almost a thousand petabytes.
Velocity speaks about the rate data is received and accessed. There are some companies that
need real time evaluation and action upon. In that case, the speed is very important and most of
them get to work with this data in the memory. After that it get written to disk, maybe.
Figure 1. Big data servers are different than the regular hosting centers [3]
Big data is the combined collection of traditional and digital data from inside and outside an
entity. Its purpose is to be a source of analysis and continued discovery [4]. Figure 1 presents us
the way big data servers look like. This is how businesses got to the point where they can access
huge amounts of data, all ready to get analyzed.
Big data almost always wins [3]. Why is that? Because regular hosting can be viewed as
unscalable but with simple operations, big data servers are the best choice for expanding the years
to come. So if someone should want to evolve and get bigger, this is the way to go. We can view
the big data servers as scalable. They can have modules added, to be short.
III. BIG DATA SERVERS: KEY COMPONENTS
Let’s try and build out a sample of a big data servers. It’s critical that we put the right type
of components on the data analytic environment. The server has processors. That means at least 2,
but usually more. The processors are multiple cores. We also have memory channels. There must be
at least 3 channels dedicated to each processor socket.
For this, we need task manager, data node, MapReduce and hadoop bluster (Hbase).
For the configuration, we are taking into considerations multiple core processors, at least 3
times memory channels (per processor) [5].
Figure 2. Big Data Servers: Key Components [5]
It is important that all worker servers should scale together. What we presented until now is
a worker server. The manager (node servers) are a little bit different. The key components of a big
data server may be seen in Figure 2.
What is the difference between server computers and desktop computers? Understanding
this could get us a step closer to the future that big data computers prepared for us. Fundamentally
they are not that different. They all have the same basic components: processor, working memory,
storage, power source, etc. They all have the same assembly line. If we think that we have a I7 that
is working at 3.8 GHz and we also may think of a Xeon running the same 3.8GHz. At base, they are
all the same, but the Xeon (witch is a server processor) costs way more. Why is that? The server
components have inter compatibility with other server components. The last and more expensive
ones (that run on servers) have ECC Memory Supported. It’s a specification that usually is not
taken into consideration. This means that servers use memory that is slightly more resistant to
errors. For a typical desktop user, this is not critical, but for a server it could result in a lost of a
patient medical record.
The server clients will spend money on: fancy networking capability, remote management
interfaces and hardware redundancy.
The server grade hardware is optimized for different workloads. A server needs maximum
performance, minimum space and minimum power use. All of these make the servers needed by the
big data cost more, but still less when thinking overall.
IV. E commerce and databases
It is not very easy to find the largest e-commerce companies in the world. But because one
thing a person should know best is to search, I came up with a top 8 largest e-commerce companies
since February 2018 [6]. For now, it should work. That companies are:
1. Amazon, Inc., founded in 1994 in Seattle
2. Jingdong, founded in 1998 with a well over quarter of a billion registered users (2018)
3. Alibaba Group Holding Ltd., founded in 1999 and is the world’s largest retailer (over
200 countries)
4. eBay Inc., the first successful dot-com bubble, a symbol of the 90’s, founded in California
in 1995,
5. Rakuten, Inc., Japan’s largest online bank operator, founded in 1997
6. B2W Companhia Digital, founded in 2006, the bigest of its kind in Latin America –
market share of over 50%
7. Zalando, the first European company in this list
8. Groupon, american e-commerce marketplace launched in Chicago in 2008.
Figure 3. Top ecommerce databases driven platforms in the world
These companies are evenly distributed geographically, covering each corner of the globe.
Regardless where you live, if you decide to purchase something on-line, you will come into contact
with one of them [6].
Because Amazon, Inc. is no 1, we shall analyze a fraction of its interest in databases. One
thing is sure: Amazon may never stop investing for growth. Its razor-thin profit margin and roller-
coaster earnings results are a result of the continually going through new investments strategy. The
major thing is the e-commerce business, but it also has the largest public cloud computing service
in the world. Someone might ask himself why!!! Because the two of them go together. Amazon
needs this cloud computing service and has bought itself at the best price. And because the bigger
you are, the better price you may obtain, Amazon has the largest public cloud computing service in
the world. At least for now.
IV.1. The biggest one for now
At the moment of this article being written, Amazon, Inc., has the bestB infrastructure when
thinking of big media databases. Because of its needs, it invested in cloud and now is a big seller on
this market. They give away 1 year free membership – enough time to figure out the needs of each
company.
Where your working in retail or realestate, financial data or photos, your business relies on
applications that run reliable and securely at the cost and scales of your needs. AWS (Amazon Web
Services) provide a complete set of cloud computing service, accessed by the internet, to help you
build and run this applications [7].
Cloud computing offers all that nowadays businesses need:
- compute services
- storage services
- database services.
The great thing is that depending on the needs, anyone may access these services. This is why
a big firm like this, that can be accessed by clients all over the world (hundreds of thousands of
clients), can offer powerful resources at a low operational cost. One thing is for sure, these services
are imperious and far more simple to use for e commerce firms. It’s all about scaling. Their
customers can scale up and scale down anytime. This is very important for growth and for profit
margins, helping removing firms from margin calls. It is clear that cloud computing has emerged as
an extremely popular implementation option for a wide range of computing services [8]. To
understand more, let us review in short figure 4 – an example of a global network architecture.
Figure 4. Example of a global network architecture [8]
In Figure 4 you can view an example of a global network architecture. This architecture
implies a data center that stores data coming from the network. The data center consist in VMs and
VFs. VM comes from Virtual Machine and VF from Virtual Function. The Data Center connects to
the Networks. We have Requester-s from all over the world that also connect through the network
so they could get to the HCA (Hybrid Cloud Architect) that has address 112 in this figure. It
encapsulates Metadata, Equivalency / Type to Type, Placement Engine, Dynamic Placement and
Provisioning Architecture.
V. E commerce and big data
The In-Store Experience can be safely, very well personalized with the information that this
kind of databases may offer. In the past, merchandising was evaluated as a form of true art. It
couldn’t be really measured at the end. We are on the verge of a real change. Now, shoppers search
in stores, preview in stores and tend to buy on-line. The on-line solution helps shoppers find the
best prices.
A data engineering platform can help retailers make sense of their data to optimize
merchandising tactics, personalize the in-store experience [9].
Retailers have a big competitive advantage because of data engineering. The data sources
help sellers increase the market reach. The big data may be retained from: websites, mobile apps,
cameras, selling systems, supply chain systems. It is now very simple to test and quantify the
advertising techniques used (somebody can view and calibrate the return out of each tactic). They
can now really easily personalize in-store services like never before.
It is now easy and efficient to use databases for the increase of conversion rates. The price
for this is better and more point-driven.
Nowadays, customers expect the firms to provide information they need to be more driven
to buy the right product. This makes marketers understand and connect with customers. This is why
big data engineering technologies can bring in one place information and then analyze it for a
greater interest.
The retailers may now find out what’s happening across every step in the customer journey,
who are their best customers and the info on reaching them.
This is why IBM’s Institute for Business Value reported that 62% of retailers report that the use of
information (including big data) and analytic is creating a competitive advantage for their
organizations [10].
Smart mobile devices and smartphone have made mobile commerce spread very quickly,
creating a revolution for the e-business. The search costs in e-commerce puts business under
increased price competition raising the profits [11].
Smart phones are now important big data sources, helping customer relationship
management improve. Retailers can use data to make better decisions improving their performance
[12]. The way to do that is better data exploitation.
VI. Privacy preservation and GDPR in data analytics
There are various organizations (hospitals, banks, e-commerce, retail and supply chain) that
generate huge amounts of data [13]. Social media and smart mobile devices generate that also every
day, every hour, every minute, every second. This data may be analyzed to help better support
decision making. This is where GDPR (General Data Protection Regulaton) comes in. It is a
regulation approved by the European Parliament in April 2016. This European Regulation is
already enforced and being applied in the whole European Union.
Companies process in a way or another personal data. It doesn’t really matter if they do that for
their own interest or for other companies. Any entity works on this kind of data. You may have info
on your employees, on your clients (for marketing), on sensible matters (for your clients: health,
fiscal or juridic data). Although the EU made this law, it implies non-EU firms also, firms that sell
in the EU and have EU customers.
GDPR comes up and enforces:
- DPO (Data Protection Officer) – a new and important function.
- new rules for consent
- new rights for the data subject, portability of personal data
- transparency extended
- non-compliance may come with very high fines.
The privacy threats when thinking at data analytics weights on the shoulder of the data
holder. Data holder is the entity that holds the data and can be: mobile apps, e commerce web
pages, banks, hospitals, social networking applications, and many more. The data holder is
responsible for the privacy of the data [13].
The GDPR may be easily understood if one should overview Figure 5 that presents the 6 big
GDPR myths.
Figure 5. GDPR False affirmations (myths) [14]
Because of big digital media databases, the EU came up with GDPR. Many businesses that
found the honey of this kind of databases grew. This kind of evolution clearly came up with many
good things for the firms and also to their costumers. Still, the buyers can encounter difficulties if
the seller does not have the best interest for their clients. So, although GDPR is redundant, it is very
much needed.
CONCLUSIONS
Data engineering can bring together and explore massive sets of structured and unstructured
data, data that may uncover hidden patterns. It can make new correlations, predict trends and help
businesses grow as never before. All of this may happen if big media databases are used the right
way. If the right way is convenient for only one part of the business deal, it can not be right. This is
why ethics are so important and this is why only a combination of good services or products and the
good will for the costumers may become a success story on the long run. In this direction GDPR
helps and businesses may find the best way to accomplish the plan.
BIBLIOGRAPHY
[1] https://dataconomy.com/2018/02/5-ways-big-data-analytics-will-impact-e-commerce-
2018/
[2] https://www.oracle.com/big-data/guide/what-is-big-data.html
[3] https://channels.theinnovationenterprise.com/articles/why-big-data-servers-are-
different-from-regular-hosting
[4] https://dataconomy.com/2018/02/5-ways-big-data-analytics-will-impact-e-commerce-
2018/
[5] JeffreyLush.net
[6] https://axiomq.com/blog/8-largest-e-commerce-companies-in-the-world/
[7] What is cloud computing? AWS - https://www.youtube.com/watch?v=jOhbTAU4OPI
[8] U.S. Patent, Jul. 24, 2018, US 10,033,597 B2
[9] Five Big Erin Hitchcock, Data Use Cases for Retail, 2018,
https://www.datameer.com/five-big-data-use-cases-retail/
[10] Analytics: The real-world use of big data in retail, How innovative retailers extract
value from uncertain data – ibm.com
[11] Big Data in Mobile Commerce: Customers Relationship Management, Muhammad
Anshari and Syamimi Ariff Lim, Exploring the Convergence of Big Data and the
Internet of Things, DOI: 10.4018/978-1-5225-2947-7.ch006
[12] Using Data and Big Data in Retailing, Marshall Fisher, Ananth Raman,
https://doi.org/10.1111/poms.12846
[13] Privacy preservation techniques in big data analytics: a survey, P. Ram Mohan
RaoEmail, S. Murali KrishnaA. P. Siva Kumar, https://doi.org/10.1186/s40537-018-
0141-8
[14] www.gdprcoalition.ie
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170
Lecturer PhD Petronela SCUTARIU
Ștefan cel Mare University of Suceava, Faculty of Law and Administration Sciences, Suceava, Romania [email protected]
Master Student Valentina Alina ADOMNICĂI
Ștefan cel Mare University of Suceava, Faculty of Law and Administration Sciences, Suceava, Romania [email protected]
Abstract:
Considering the present interest of the Romanian Presidency of the Council of the European Union in the first
six months of 2019, this article aims to analyze the advantages and disadvantages of the membership of the Union in
order to outline some development objectives and to highlight further evolutions of the European bloc. The need of
solidarity and unity of the states imposed many years ago a construction that responds to these aspirations, this being
the main reason why the Union was founded and it evolved in time, counting at present a number of 28 Member States.
This construction has been, is and will certainly remain emblematic in the European history as a form of state
partnership that seeks to identify and respond effectively to the common problems that arise on this European scene.
This study attempted to highlight, on the one hand, the strengths, but also the least-favored aspects of the EU
membership, to emphasize the objectives that support the development and sustainability of the European partnership,
to provide information and last-minute data concerning the Brexit process, so that, in its final part to offer an insight
into how the EU will evolve in the years to come.
Key-words: European Union, advantages, disadvantages, member state, governance process, development
goals, Brexit, evolution
JEL classification: H10
1. INTRODUCTION. THE ADVANTAGES AND DISADVANTAGES OF THE
MEMBERSHIP OF THE EUROPEAN UNION
The European Union represents an incomparable economic and political union in the entire
world, bringing together 28 countries from Europe and covering almost the entire European
continent. The creation of this Union has brought a number of advantages and disadvantages, which
we will present in the following lines.
- Healing the divisions of the past
Considering the purpose for which the European Union was built, it can be said that it
helped heal the divisions of the past. The founding fathers of the Union [1], a group of people with
the same ideals, have created the European Union with the aim of ending the many bloody wars
carried by neighboring countries and living in a united, stable, peaceful and prosperous Europe.
Therefore, the presence of the European Union has helped to achieve a level of harmony on the
continent, which has been rare in the past. In 2012, the Nobel Peace Prize was awarded to the
European Union as a reward for supporting major causes such as peace, reconciliation, democracy
and human rights. The money received with the Nobel Prize was donated to children who did not
have the chance to live in peace. [2]
- The European Single Market
When we think of the advantages of the European Union, the first thing that comes to mind
is the Single Market of the European Union. In the Single Market or the internal market of EU
people, goods, services and money can freely circulate, without the obstacles which in the past
stood in the way of the free trade and the free movement between Member States. This principle
was consecrated in Rome, along with the Treaty [3] establishing the EEC (European Economic
Community), signed on the 25 of March, 1957.
The free movement of the citizens of the European Union is one of the most significant
benefits brought by the creation of the European Union, but also one of the fundamental freedoms
of the internal market. At first, in 1957, the right to free movement and establishment was intended
for employees and service providers, but the original meaning of the concept has undergone
changes over time. [4] With the entry into force of the Maastricht Treaty (1993), 25 years ago, the
concept of European Union citizenship was introduced and the free movement of all citizens of the
Member States was allowed, even if they were involved or not in an economic activity. Therefore,
the possibility of studying, working, living or traveling in any of the Union's Member States has
been and still is the most appreciated right by the citizens, and nowadays many Europeans cross the
borders of their country every day in the interest of business or as tourists, without controls in the
Schengen area, or with just a quick border control. Every citizen of the European Union has the
right to move and reside freely within the territory of the Member States, subject to the limitations
and conditions laid down in the Treaties of the European Union [5] and by the measures adopted to
give them effect.
According to Directive 2004/38/EC [6], all citizens of the European Union and their family
members, irrespective of their nationality, are granted the right to move and reside freely within the
territory of the Member States. Those crossing the border of the country of origin have the right to
stay in the host Member State for a maximum of three months without having fulfilled any
formalities, being required only a valid identity card or a valid passport. Moreover, if they want to
work or study in a Member State of the Union, they only need to register with the competent
authorities of that Member State and after five years of continuous legal residence, they can obtain
the right of permanent residence. Both Union citizens who choose to reside in another Member
State and their family members enjoy equal treatment in relation to the nationals of that State, in
accordance with Article 24 of the Directive mentioned above. Some of the benefits they receive
include: transport subsidies, access to education (e.g. study grants such as scholarships or loans),
social assistance, free access to the labor market, and professional training. Moreover, insured
persons from the member countries can apply for and benefit from the European Social Insurance
Health Card (EHIC), which entitles them to health care during their temporary stay in the 28 EU
Member States as well as in Switzerland, Norway, Iceland or Liechtenstein, under the same
conditions and at the same prices as the nationals of that country, medical services being free of
charge in some Member States. [7]
In view of the above, it can be stated that free movement facilitates cultural, scientific,
economic exchanges and contributes to achieving “unity in diversity” [8] in the European Union.
Reducing prices for goods and services, improving quality and diversifying supply are
another important advantages of the Single Market of the European Union. Telecommunications is
a representative example. Currently, in the European Union, telephone calls cost less than 10 years
ago. Moreover, the huge opportunity for businesses selling their products and services in the Union
consists in unrestricted access to about 500 million consumers, offering great opportunities for
European companies to remain competitive. The EU's Single Market is also attractive for foreign
investors. They are willing to invest in business within the European Union, because Member States
create trade advantages that would not otherwise exist [9]. Working together in the format of the
European Union, each Member State can negotiate with the rest of the world under equivalent, if
not even superior, conditions.
- The development of underdeveloped Member States
The development of underdeveloped Member States is another advantage of the European
Union. In an attempt to reduce the discrepancies between developed and underdeveloped regions in
the Member States, the EU has developed two types of structural funds. One of these is the
European Regional Development Fund, designed to create infrastructure and support investment in
job creation and the other, the European Social Fund investing in training measures to help
unemployed and disadvantaged members of the population benefit from a professional life [10].
- National sovereignty
National sovereignty can be interpreted both as an advantage and as a disadvantage. For
example, the Constitution of Romania enshrines the “transfer of tasks to the Community
institutions”, but also “the joint exercise with the other Member States of the powers provided for
in these treaties” [11]. In other words, the Member States of the Union retain their status as
subjects of law on the scene of international law, exercising all their attributes, with the exception
of those delegated to the Union or incompatible with their position within the Union. Also, the
national identity, the governing institutions of each Member State, as well as its constitutional
structures, both at regional and local level, are respected. Moreover, the basic concept of the
European Union shows that it is a union of states that remain sovereign, and they are the ones that,
together with the Union's own structural elements, form the pillars of the institutional building. The
Union cannot be conceived without the Member States, and the Member States are the constituent
elements of the Union, which is attested in Article1 of the Treaty on European Union, in the
following words: “... on which the Member States confer competences to attain objectives they have
in common”. Therefore, accession to the European Union can be interpreted both as a limitation and
as a benefit in terms of economic, political or social development.
- The high cost of membership
In terms of disadvantages, the high cost of membership in the European Union could be
mentioned. For example, information that Britain sends to the European Union about 350 million
pounds a week appeared in the press in the second half of 2017. However, 2018 began in Brussels
with a simple, but bold statement: “Membership of the European Union is valuable because it costs
citizens less than a cup of coffee a day” [12].
Figure no. 1. Total daily contribution to the EU per person
Source: available on the page https://www.politico.eu/article/the-eu-membership-value-post-brexit-budget-coffee-
index/ [accessed on October 30, 2018]
- Policy issues
Policy issues can also be raised for discussion. Functioning as a single market and following
common policies, many discrepancies have emerged. Regulations designed to protect smaller
Member States can affect larger countries because the European Commission is dealing with the
interests of the entire EU and not the ones of an individual country. Rich countries are also forced to
share their wealth with other Member States, a representative example being the rescue of Greece
by Germany [13].
As a conclusion, the advantages and disadvantages of the European Union indicate that such
a system can be a better plus. However, disadvantages must be recognized and then proactively
eliminated from the equation to prevent any type of problem.
2. DEVELOPMENT GOALS FOR STREAMLINING THE GOVERNANCE
PROCESS
Over the past years, the crises that the European Union has undergone, have underlined its
limited capacity to develop responses and find appropriate solutions to the challenges facing the
European integration project, and there is an urgent need to rebuild its credibility. The fragility of
the foundation of the entire Union construction is outlined by the lack of solidarity between the
Member States and their inability to identify common solutions [14].
Thus, on 25 March 2017, the leaders of 27 European Union countries met in Rome (Italy) to
celebrate the 60th anniversary of the signature of the Treaties of Rome (1957) [15] and, on this
occasion, to reflect on the state of the Union and to analyze its future. In the same context, the
Rome Declaration was signed, establishing a common vision for the coming years. The leaders of
the 27 states and the European Council, the European Parliament and the European Commission
have signed for a stronger, more resilient Union, for greater unity and solidarity, considering those a
necessity. It is stated in the Declaration: “We have united for the better. Europe is our common
future”[16].
Those present in Rome committed themselves to acting to achieve the following goals:
Safety and security for citizens of the Member States, an Union with secure external
borders and an effective migration policy;
Prosperity and sustainability offered by a solid and growing single market that supports
and promotes growth, cohesion, innovation, trade, competitiveness and investment;
A Social European Union promoting equal opportunities, combating discrimination,
social exclusion, unemployment and poverty, a Social Union where young people can
have the best education, can study and find jobs, a Union that emphasizes on cultural
diversity;
A stronger global Union, that builds new partnerships, but also develops the existing
ones, a Union that strengthens security and common defense, protecting its citizens and
supporting free and fair trade [17].
Therefore, the European Union has to make very important decisions in order to achieve the
above-mentioned objectives. Several influential personalities at the Union level have expressed
their views on the future of the Union [18].
Guy Verhogstadt, a former Belgian prime minister and current Member of the European
Parliament, says “we will have to create a strong European federation that will replace the current
weak and impotent confederation of states”, believing that the European Union will never be
effective, if it is governed by the principle of unanimity. Former Belgian prime minister proposes a
Union with a directly supported European budget, a government with a reduced size, but powerful,
a construction with its own defense force and a common foreign policy, using the model of the
political union project of the founding fathers.
Germany’s President Frank-Walter Steinmaier and former French Prime Minister Jean-Marc
Ayrault believe that the European Union will need to focus on common issues, which can be more
thoroughly solved at European level and to communicate more effectively on issues that are
included in its agenda, leaving the national and regional authorities to decide on the other problems.
Greek Prime Minister Alexis Tsipras believes in an Europe of solidarity without
differentiations. On the other hand, Viktor Orban, the prime minister of Hungary, advocates
limiting the role of the European institutions, considering the decision to “limit national sovereignty
in favor of European powers”.
Over the last 25 years, the Treaties of Maastricht, Amsterdam and Nice have effectively
managed to radically transform a Union that has doubled its size. The Treaty of Lisbon has opened
a new chapter on European integration, which, in our opinion, still has an untapped potential.
3. BREXIT. FROM IDEA TO REALITY
The term Brexit is a combination of two words: Britain and Exit, meaning “British exit from
the European Union”. On June 23, 2016, a referendum took place, where citizens with the right to
vote could participate in deciding whether Britain should leave or not the European Union. 71.8%
(over 30 million people) of the population participated in the referendum, 51.9% voting for the UK
to leave the EU (England - 53.4%, Wales - 52.5% Scotland - 38%, Northern Ireland - 44.2%),
according to the BBC [19].
For the UK to leave the European Union, it had to invoke Article 50 of the Treaty on
European Union (TEU). Until the ratification of the Treaty of Lisbon, which entered into force in
2009, voluntary withdrawal was not a provision included in any EU Treaty, nor in the Treaties of
Accession of the Member States. Currently, the Treaty of Lisbon confers on the Member States the
right to voluntarily and unilaterally retire. Thus, according to Article 50, paragraph 1(TEU), “Any
Member State may decide to withdraw from the Union in accordance with its own constitutional
requirements”. From the moment when Article 50 is invoked and implemented, there is no way for
Britain to return. It may be accepted back into the Union only if all 27 Member States give their
consent.
The Council met on 15 December, 2017, in EU27 format, to adopt further negotiating
directives for the Brexit negotiations. In this context, the Commission has a negotiating role with a
mandate to start dialogue on this subject with the UK. The transitional arrangements have to be
clearly defined and limited in time, the date proposed in the negotiating directives for the end of the
transition period being 31 December 2020 [20].
During the transition period…:
the entire acquis of the European Union will continue to be applied to the United
Kingdom;
the UK will no longer participate in the functioning of the institutions and in the decision-
making process within the European Union;
the United Kingdom will preserve the advantages and benefits of the Single market,
Customs Union and European policies;
the United Kingdom can start negotiating various trade agreements, the main options
being the Norwegian Model (following the terms and conditions of the European
Economic Area Agreement), Switzerland Model (member of the European Free Trade
Association, having over 120 bilateral treaties concluded with the EU) or the Turkish
Model (following the terms and conditions of the Customs Union and the European
Union);
British and European citizens will enjoy the same rights as those who arrived here before
Brexit.
On November 25, 2018, a meeting of EU leaders is taking place in order to sign the
agreement on the UK withdrawal terms of the EU Bloc. European Council President Donald Tusk
believes Brexit is a “loss-loss” situation and the main goal of the negotiations is just to control the
damage. The European Commission, pending the conclusion of the agreement, will work to
establish a framework for future UK-EU relations, to be signed by the remaining 27 Member States.
The President of the European Council concluded by sending a message to the United Kingdom:
“As much as I am sad to see you leave I will do everything I can to make this farewell the least
painful as possible”[21].In the next year’s spring, on March 29, 2019, Britain will leave the
European Union.
4. THE EUROPEAN UNION OVER THE YEARS. EVOLUTIONS
The European Union currently covers a Europe that extends from Lisbon to Helsinki, from
Dublin to Sofia, from the Atlantic Ocean to the Black Sea, from the North Sea and the Baltic Sea to
the Mediterranean, and where over 70 years of peace has reigned, being a model of democratic
change and transformation throughout the world. However, the European Union's position may be
at risk in the coming decades.
First of all, demographic change can be discussed. Currently, the European Union has over
500 million inhabitants, representing 8% of the world's population (more than the US and Japan
together), but it is expected that by 2050 it will lower to a 5% by 2050[22]. “The situation is
simple: the world is growing, and we are shrinking.”, says European Commission President Jean-
Claude Juncker [23].
Figure no. 2. Europe’s share of the world’s population is decreasing
Source: available on the European Commission website,
https://ec.europa.eu/romania/sites/romania/files/brosura_romania_64_pag_juncker.pdf [accessed on October 30, 2018]
In other words, the Union's population is in the process of ageing, which leads to a shortage
regarding the labor force needed for the economy. At the same time, Europe's global importance,
both from an economic and social point of view, and from a military point of view, is diminishing.
It is expected that by 2050 there will be no EU country among the seven leading economies of the
world, but if we consider the EU acting together, the European construction would still be at the top
of the rankings. In September 2016 in Strasbourg, Juncker stated in his speech, The State of the
Union 2016: Towards a Better Europe – A Europe that Protects, Empowers and Defends the fact
that: “Europe can only work if we all work for unity and commonality, and forget the rivalry
between competences and institutions. Only then will Europe be more than the sum of its parts”. In
short, we believe that in a world in a continuous globalization, no state of the European Union will
be strong enough to affirm and promote its values itself.
Secondly, the European Union is a group of European states, which is based on the principle
of freedom. Therefore, each Member State is free and can decide at any moment to leave the
European Union [24]. In the case of Great Britain, the people decided in June 2016, following a
referendum, to withdraw from the Union. Britain is the second net contributor, the third national
economy and an influential diplomatic actor in the UN Security Council, and if everything goes
according to the plans, the European Union will lose a strong member. As a consequence, the
European Union will become smaller and more vulnerable, being taken in consideration an
existential crisis of the European Union. In our opinion, the European Union will not fall apart in
the near future. In the current context, it is not to be expected that other states will follow the
example of the British, given the advantages of the Single Market, free movement and political
influence exercised by a union of 27 states.
Jean-Claude Juncker, President of the European Commission, stated in the plenary session
of the European Parliament in Strasbourg on September 13, 2017 that the European Union will have
more than 27 members in the future and that is still open to all democratic countries in Europe that
want to join [25].With a functioning market economy and a stable democracy, the Union has
attracted more and more states over the years. Even if the Union will have a lesser membership
since the spring of 2019, it increases the hopes of other candidate countries for accession. These
include, in particular, the countries of the Western Balkans: Albania, the former Yugoslav Republic
of Macedonia, Montenegro and Serbia. As far as Turkey's accession is concerned, it will still be
negotiated, but due to the current democratic deficit, it proves to be a far furtherance.
As far as the Presidency of the EU Council is concerned, it is taken over by rotation between
Member States every six months, working together in “trios”/groups of three for a period of 18
months. This system has been implemented since 2009, with the entry into force of the Treaty of
Lisbon. The current Presidency is held by Austria (1 July - 31 December 2018)[26].
On 1 January 2019, Romania will take over the Presidency of the Council of the European
Union for the first time and will exercise this function for a period six months. During this period,
Romania will hold the presidency of one of the main European institutions in Brussels, playing an
important role in the decision-making process, the development and consolidation of the European
project, the negotiation of the development of the acquis communautaire and, last but not least, the
strengthening of the cooperation EU Member States. This position represents a huge opportunity for
our country. Romania has the chance to reaffirm its European commitment and to contribute
directly to the evolution of the Union, but also to promote itself from an economic, commercial,
tourist or cultural point of view. Also, contacts at the highest level, the visibility offered to the
country in terms of the organization of the meetings and the participation of the European political
and technical elite, have long-term effects on the host country. There are three major tasks assigned
to the Presidency of the Council of the European Union: planning and conducting meetings,
representing the Council in relation to various Union institutions, and ensuring dialogue with
external partners. The Presidency shall cooperate closely with the President of the European
Council and the High Representative of the Union for Foreign Affairs and Security Policy [27].
Therefore, Romania will have to show a strong political vision regarding the strengthening
of the Union, but also of administrative capacity to identify the best solutions for the European
construction, especially in a period characterized by numerous challenges, by pressure caused by
the events that will take place, for example, in the first half of 2019, the new European Parliament
will be elected, as well as the new composition of the European Commission. Also, during the
Presidency of the EU Council, a large number of meetings, seminars and conferences will be held
in our country, bringing a large number of visitors (between 20,000 and 30,000), requiring a
thorough planning of all events.
In short, the European Union is and will remain an example for many other regions in the
world. No other continent has developed such forms of cooperation, being the largest economic
area in the world and China's and USA’s most important trading partner.
5. CONCLUSIONS
Taking into account those mentioned in this paper, some important conclusions can be
highlighted. In the first part, we have identified more advantages than the disadvantages from which
the citizens of the European Union benefit, including peace and harmony on the European
continent, a common market that ensures the free movement of people, goods, services and capital
or the possibility for disadvantaged countries to develop and thrive.
Moreover, in the second part, we found out what causes the fragility of the Union: the lack
of solidarity between the Member States and their inability to identify common solutions. In this
regard, the leaders of the 27 states gathered together to establish a common vision, signing for a
stronger, more resilient Union for greater unity and solidarity among states. Safety, prosperity,
sustainability and a stronger global union are some of the development goals that were outlined in
2017.
In the third part of the article, the concept of Brexit was emphasized, presenting the major
events that have taken place but will also take place in the near future: the 2016 referendum, the
negotiating directives adopted in 2017, signing the agreement on the withdrawal terms of Great
Britain in 2018 and leaving the European Union in 2019.
In the final part, the image of the future of the European Union was sketched, a construction
with open doors to all democratic states that want to join, which offers more advantages than
disadvantages, where Member States operate in an efficient way and have opportunities for
development, and which is stronger and more resilient as a whole.
The European Union has been, is and will remain an example for many other regions of the
world.
END NOTES:
[1] Konrad Adenauer, Joseph Bech, Johan Willem Beyen, Winston Churchill, Alcide de Gasperi, Walter
Hallstein, Sicco Mansholt, Jean Monnet, Robert Schuman, Paul-Henri Spaak and Altiero Spinelli
[2] Information available on the official website of the European Union, About EU Section, Uniunea
Europeană, laureată a Premiului Nobel pentru Pace în 2012
[3] Currently named Treaty on the Functioning of the European Union
[4] Information available on the website of the Fact Sheets on the European Union – European Parliament,
Chapter Citizens, Fișe tehnice privind Uniunea Europeană – Libera circulație a persoanelor
[5] Article 3 (2) of the TEU and Article 21 of the TFEU
[6] Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of
citizens of the Union and their family members to move and reside freely within the territory of the
Member States amending Regulation (EEC) No 1612/68 and repealing Directives 64/221/EEC,
68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and
93/96/EEC OJ L 158 30.4.2004, pp. 77-123
[7] Information available on the European Commission website, Cardul european de asigurări sociale de
sănătate
[8] The European Union's motto, first used in 2000
[9] Information available on the official website of the European Union, EU by topic Section, O piață fără
frontiere
[10] Information available on the study 9 Foremost Advantages and Disadvantages of the European Union
[11] Article 148 (1) of the Romania Constitution
[12] Information available in the news The Cappuccino Index
[13] Information available on the study 9 Foremost Advantages and Disadvantages of the European Union
[14] Naumescu, V., coord., Criza Uniunii Europene și ordinea globală în era Trump, Trei Publishing House,
Bucharest, 2017, p. 145
[15] Treaty establishing the European Economic Community and the Treaty establishing the European Coal
and Steel Community
[16] Information available in the content of the Rome Declaration, Declarația de la Roma - 25 martie 2017
[17] Information available on the website of European Council and Council of the European Union, Policies
Section, Procesul de reflecție politică privind viitorul Uniunii Europene
[18] Naumescu, V., coord., Criza Uniunii Europene și ordinea globală în era Trump, Trei Publishing House,
Bucharest, 2017, pp. 148-156
[19] Hunt Alex, Wheeler Brian, Brexit: All you need to know about the UK leaving the EU, BBC News,
November 2018
[20] Information available on the website of European Council and Council of the European Union, Press
Section, Brexit: Consiliul (articolul 50) adoptă directive de negociere privind perioada de tranziție
[21] Information available on the Euronews website, EU and UK set to sign Brexit deal on Nov 25, November
2018
[22] Information available in the Brochure published by The European Commission, Representation in
Romania, 60 de motive bune pentru Uniunea Europeană
[23] Information available in the Speech of the European Commission, September 14, Strasbourg 2016,
Discurs – Starea Națiunii 2016, Către o Europă mai bună – O Europă care protejează, capacitează și
apără
[24] Article 50 of TEU
[25] Information available in the Press release of the European Commission, Septembrie 13, 2017,Bruxelles,
Starea Uniunii 2017: Să prindem vântul în pânze
[26] Information available on the website of European Council and Council of the European Union, The
presidency of the Council of the EU Section, Președinția Consiliului UE
[27] Information available in the content of the Romanian Government Memorandum of the theme Planul de
acțiune pentru pregătirea Președinției României la Consiliul UE în primul semestrul 2019
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180
RO
Revista primeste articole, din
toate domeniile economice, pe cele 5 sectiuni: Economie, comert, servicii Management si administrarea afacerilor Contabilitate-finante Statistica, informatica si matematica economica Administratie publica
Este recomandabil ca lucrarile sa fie bine structurate astfel încât sa asigure claritatea continutului precum si esenta temei tratate. Toate articolele trebuie sa prezinte cercetari originale care nu au mai fost publicate sau trimise spre publicare în alta parte. Lucrarile prezentate la conferinte sunt acceptate cu conditia ca ele sa nu fi fost publicate în întregime in volumul conferintei. Lucrarile vor fi redactate în întregime în limba engleza. Lucrarile vor fi recenzate in sistem blind review. Titlul lucrarii Se va scrie cu Times New Roman, caracter 14, bold, centrat în partea de sus a paginii cu majuscule. Autorii lucrarii Numele lor se va scrie la un rând după titlul lucrării, centrat, precizându-se: titlul stiintific, universitatea/instituţia, localitatea, ţara si e-mailul. Se va folosi Times New Roman, caracter 10, cu litere mici. Numele si prenumele autorului/autorilor va fi scris cu litere bold, iar numele de familie va fi scris cu litere mari (caps). Rezumatul lucrarii Rezumatul se va scrie după autori, lăsând un rând liber înainte; trebuie sa cuprinda informatii suficiente pentru ca cititorii sa poata aprecia natura si semnificatia subiectului, caracterul adecvat al metodei de cercetare, rezultatele si concluziile lucrarii. Rezumatul nu este o introducere, acesta prezinta în sinteza rezultatele esentiale ale cercetarii. Rezumatul se va scrie cu Times New Roman, caracter 10, italic, justify. Este necesar ca el sa aiba un numar de 200-250 de cuvinte, spatiate la un rând. Cuvinte cheie Selectati 5-6 cuvinte cheie (cuvinte sau expresii) care surprind esenta lucrarii. Enumerati acesti termeni în ordinea descrescatoare a importantei lor. Acestia se vor scrie cu Times New Roman, caracter 10, la un rând liber după rezumat. Clasificare JEL Se va trece unul sau mai multe coduri JEL, in care lucrarea poate fi inclusa din perspectiva subiectului abordat. Lista cu coduri o gasiti la adresa: http://www.aeaweb.org/journal/jel_class_system.html Introducerea Pentru introducere, formulati scopul lucrarii, motivatia temei alese si explicati pe scurt modul de abordare si argumentele necesare. Înainte de introducere se lasă 2 rânduri libere. Continutul lucrarii Organizati corpul lucrarii utilizând titluri si subtitluri pentru a accentua atât continutul cât si claritatea acesteia. Titlurile şi subtitlurile se vor scrie cu litere mari, 12, bold, aliniate la stânga. Se va lăsa un rând liber înainte şi unul după. Trebuie avute în vedere urmatoarele:
terminologia recunoscuta a domeniului pentru a descrie orice subiecte sau proceduri experimentale folosite pentru colectarea si analiza datelor;
includerea metodelor detaliate, astfel încât cititorii sa poata urmari prezentarea materialului;
formularea rezultatelor în mod clar si succint;
evidentierea rezultatelor cercetarii si impactul acestora, atât global cât si specific. Textul lucrarii se va scrie cu Times New Roman, caracter 12, spatiat la un rând. Tabelele si figurile sa fie dimensionate si plasate în corpul lucrarii asa cum doresc autorii sa apara în revista. Trebuie avut grija ca acestea sa se încadreze pe o singura pagina. Continutul lor se va scrie cu Times New Roman, caracter 10, iar titlul coloanelor tabelelor se va scrie cu Times New Roman, caracter 10, bold. Titlul si numarul tabelelor vor fi pozitionate deasupra acestora, iar titlul si numarul figurilor, sub acestea. Atunci când este cazul se va mentiona si sursa. Numarul tabelelor si figurilor va fi amplasat în corpul textului, într-o paranteza, acolo unde se fac referiri la ele, de exemplu: (figure no. 1); (table no. 1) Graficele trebuie sa fie clar executate astfel încât sa ofere copii alb-negru cât mai lizibile. Numerotati toate ecuatiile si formulele folosite plasând numerele lor în paranteze, în dreapta acestora. Explicati abrevierile si acronimele prima data când apar în corpul textului, chiar daca au fost definite în rezumat.
Nu se vor folosi note de subsol, dar se poate opta pentru unul din urmatoarele moduri de citare: - sunt permise note la finalul lucrarii (endnotes), situate înaintea bibliografiei si introduse manual. Ele se vor scrie cu Times New Roman, caracter 10, italic. Trimiterile bibliografice din textul lucrarii se pot numerota cu cifre arabe [1], [2] etc. - trimiteri in text intr-o paranteza specificand numele autorului si anul aparitiei lucrarii: (Johnson, 2000), (Johnson and Jackson, 2001) - lucrare cu 2 autori, (Johnson et al., 2002) - acolo unde sunt mai multi autori, (Johnson, 2000; Peterson, 2001) - daca ideea se regaseste la mai multi autori, sau (Johnson, 2000a) si (Johnson, 2000b) - in cazul in care exista doua lucrari diferite ale aceluiasi autor aparute in acelasi an (a si b indicand ordinea in care apar la bibliografie). Se poate specifica si pagina in paranteza (Johnson, 2000, 250). Este obligatoriu ca autorii citati in text sa se regaseasca la bibliografie.
Concluzii Concluziile pot recapitula punctele principale ale lucrarii, dar nu trebuie sa reproduca rezumatul. Ele pot cuprinde aspecte legate de importanta lucrarii sau pot oferi sugestii referitoare la aplicatii ale acesteia sau directii de extindere a cercetarilor. Bibliografie Lista bibliografica, de la sfârsitul lucrarii, se va scrie în ordine alfabetica, dupa numele autorului, numerotându-se. Când anumite studii, lucrari, articole sunt publicate în volum, atunci se va mentiona numarul acestuia si paginile. Titlul lucrarii va fi scris cu font italic. Precizari importante
Articolele trebuie sa aiba 6-10 pagini, pe formatul A4, marginile stanga, dreapta, sus, jos: 2 cm.
Lucrarile trimise trebuie sa fie formatate în Word cu extensia doc.
Articolele care nu respecta aceste instructiuni vor fi respinse inainte de a fi date la peer review. Vă rugăm manifestaţi foarte mare grijă pentru corectitudinea traducerii în limba engleză. Vă rugăm să trimiteţi şi varianta în limba română a art icolului, necesară pentru controlul ştiinţific (intr-un document separat, incarcat ca fisier suplimentar). Veţi primi un răspuns în urma procesului de recenzare. Lucrarile se vor incarca on-line, astfel: pana pe 31 martie pt nr.1 si pana pe 30 septembrie pentru nr.2. In cazul in care se primesc foarte multe lucrari, ordinea publicarii este cea cronologica a datei in care au fost trimise. Pentru alte detalii sau noutăţi vă rugam urmăriţi site-ul revistei: www.annals.seap.usv.ro .
EN
T welcomes theoretical and
empirical articles, from all economic fields, according to the 5 sections: Economy, trade, services Management and business administration Accounting-finance Statisitics, economic informatics and mathematics Public administration
It is expected that manuscripts will be organized in such a manner that maximize both the substance and clarity of the document. All articles should report original research that has not been published or submitted for publication elsewhere. Papers presented at conferences are accepted, provided that they have not been published in full in Conference Proceedings. The papers will be all written in English. The papers will be checked in blind review system. Paper Title Must be in 14-point bold type, Times New Roman, centered across the top of the page and will be writen in uppercase. Paper Authors Author’s names will be written under the paper title after a blank line, centered across the page, single spaced specifing: title, university/institution affiliation, country and e-mail address. It must be written in 10 point type, Times New Roman in lowercase. First name will be in caps and the whole author(s) names will be in bold. Paper Abstract It will be written after authors leaving a blank line before. The abstract must include sufficient information for readers to judge the nature and significance of the topic, the adequacy of the investigative strategy, the nature of the results and the conclusions. An abstract is not an introduction, it summarizes the substantive results of the work. The abstract will be written in 10 point type italic, Times New Roman, justify. It must have 200 to 250 words, single spaced type. Key words Select 5 to 6 keywords (words or expresions) that capture the essence of your paper. List the words in decreasing order of importance.All the key terms must be translated in English and attached to your abstract.
It will be written in 10 point type, Times New Roman, after abstract leaving a blank line before. JEL Classification Please put one or several JEL codes, according to the subject of your paper. The codes can be found here: http://www.aeaweb.org/journal/jel_class_system.html Introduction For introduction, state the purpose of the work, the motivation of the chosen theme and, briefly explain your approach and the necessary arguments.Before introduction please let 2 blank lines. Paper Content Organize the body of the paper using titles and subtitles to emphasize both content and clarity. The titles and subtitles will be written in caps, 12, bold, left aligned. Please let a blank line before and one after. Consider the following:
the accepted terminology of the field to describe any subjects or experimental procedures used to gather and analyze data;
include detailed methods, so readers could be able to follow the investigation;
state the results clearly and succinctly;
the implications of the findings and minutely discuss the impact of the results, both globally and specifically.
Typeface must be 12-point Times New Roman type single spaced. Tables and figures should be sized and placed in the body of the paper just as the authors want them printed in the journal. Care should be taken so that tables and figures could be on one page. The tables contents will be written in 10 point type, Times New Roman and the heading of the tables will be in 10 point type bold, Times New Roman. The titles and numbers will be positioned above the table and the title and number of the figures bellow. When it is needed, the source will be mentioned. The number of the tables and figures are to be positioned in the body of the text, in a paranthesis, wherever they are mentioned, for example: (figure no.1), (table no.1). The graphs must be executed clearly so as to give clear black and white copies. Number all the equations and formulas used positioning the numbers in paranthesis on their right side. Define abbreviations and acronyms the first time they are used in the text, even after they had already been defined in the abstract. Footnotes are not allowed, but you can choose one of the following citation ways: - endnotes at the end of the paper, situated before bibliography and introduced manually. They will be written in Times New Roman, size 10, italic. The bibliographic references in the text of the work will be numbered with [1], [2] etc. - citations in text in a parenthesis specifying the author name and the year of the work apparition: (Johnson, 2000), (Johnson and Jackson, 2001) – work with 2 authors, (Johnson et al., 2002) - work with several authors, (Johnson, 2000; Peterson, 2001) – if the idea is found at many authors, or (Johnson, 2000a) and (Johnson, 2000b) - in the case where there are 2 different works of the same author appeared in the same year (a and b indicating the order in which they appear at bibliography). It can be also specified the page in the parenthesis (Johnson, 2000, 250). Authors cited in the text must be found in the bibliography. Conclusions Conclusions may review the main points of the paper, do not replicate the abstract as the conclusion. A conclusion might elaborate on the importance of the work or suggest applications and extensions and extensions of the research. References Sources should be in alphabetical order by author’s last name, the list being numbered. When certain studies, research, articles are published in a volume, the volume numbers and pages will be specified. The title of the work will be written in italic. Important Specifications
The articles must be at least 6 to 10 pages long in the style A4 sheet, margins left, right, top, bottom: 2 cm.
Submitted documents must be in PC-formatted Word (.doc) file.
The articles that don't respect specified guidelines will be rejected before they are sent to peer review. The Romanian authors will also send the article in Romanian language (in another document, uploaded as a supplementary file), necessary for the scientific control. The journal appears twice a year (June and December). For the first number of the review (June), the manuscripts should be submitted on-line until 31 March and for the second issue until 30 September. In the case that a lot of articles are received, the publication order is settled chronologically by the date when they were submissed to us. For other details or news, please check our site: www.annals.seap.usv.ro .
Pentru comenzi va rugam sa ne contactati pe adresa de e-mail a revistei: [email protected] . For commands, please contact us by e-mail at the address: [email protected] .