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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 carmenn@seap.usv.ro

PhD Student Ancuța LUCACI

Ștefan cel Mare University of Suceava, Romania ancutalucaci28@yahoo.com

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

astancu@upg-ploiesi.ro

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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25. World Organization for Animal Health (OIE) (2013), Technical disease cards, African

Swine Fever,

http://www.oie.int/fileadmin/Home/eng/Animal_Health_in_the_World/docs/pdf/Diseas

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 nasalos20@gmail.com

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.

BIBLIOGRAPHY

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Sustainable Tourism Perspective. Wallingford, Oxon: CABI Publishing.

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df

36

PhD Cristina-Mihaela LAZĂR

Ovidius University of Constanta, Romania lazarcristinam@yahoo.com

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

livius@seap.usv.ro

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.

BIBLIOGRAPHY

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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 panyuyan423@163.com

Alexandru-Mircea NEDELEA

Stefan cel Mare University of Suceava, Romania alexandrun@seap.usv.ro

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

mihastate79@gmail.com

PhD Daniela Mihaela NEAMȚU University Stefan cel Mare, Suceava, Romania

dananeamtu999@gmail.com

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 horatiu_borza@yahoo.co.uk

Professor PhD Smaranda Adina COSMA

Babeș-Bolyai University of Cluj-Napoca, Romania smaranda.cosma@tbs.ubbcluj.ro

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 cameliab@seap.usv.ro

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.

BIBLIOGRAPHY

1. Arădăvoice ,G. (2004), Stilul de conducere al liderului, Ed. Antet, Prahova

2. Bodea, D (2008), Adevărul incomod de la vârful organizațiilor: de ce doi din trei executive

eșuează și doar unul reușește_, Ed. Result, București;

3. Fodorea, P. (2004), Managementul Resurselor Umane, Ed. Sedcom Libris, Iaşi;

4. Fodor, I.D.(2009), Inteligența emoțională și stilurile de conducere, Ed. Lumen Iași

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79

Daniela Mihaela NEAMȚU

Ștefan cel Mare University of Suceava, Romania dananeamtu999@gmail.com

Ruxandra BEJINARU

Ștefan cel Mare University of Suceava, Romania ruxandrab@seap.usv.ro

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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89

PhD Student Laurian Gabriel TĂNĂSESCU

Stefan cel Mare University, Suceava Romania laur@euromg.ro

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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99

Associate Professor PhD Mihaela TULVINSCHI Ștefan cel Mare University of Suceava, Romania

mihaelat@seap.usv.ro

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

1. Bloom, M.H., (2006), Double Accounting for Goodwill – A problem Redefined, University

of Sydney, Sydney digital Theses, Business and Economics

2. Cohen, A. J., (2008), Imobilizările necorporale: evaluare şi beneficii economice, Editura

Irecson, Bucureşti

3. Fădur, C.I., Ciotină, D, Mironiuc, M, (2011), Studiu empiric privind raportarea financiară

a activelor necorporale de către firmele româneşti, Revista Economie teoretică şi aplicată,

vol XVIII, no 8 (561), pp. 3-14, www.store.ectap.ro/articole/621_ro.pdf (accesat la

15.09.2018)

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deprecierea mărcilor, articol publicat în volumul Congresului al XVI-lea al profesiei

contabile din România „Profesia contabilă şi Globalizarea”, Editura CECCAR, Bucureşti

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milenii – modele de evaluare şi investiţii imateriale, Editura Economică, Bucureşti

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107

Associate Professor PhD Anişoara APETRI

University Stefan cel Mare Suceava, Romania anisoarad@seap.usv.ro

Associate Professor PhD Camelia MIHALCIUC

University Stefan cel Mare Suceava, Romania cameliam@seap.usv.ro

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;

2. Anişoara Niculina APETRI, Iuliana Oana Mihai, Camelia Catalina Mihalciuc, 2010,

Structural and Qualitative Analysis of the Romanian Banking System, Annals of

“Dunarea de Jos” University of Galati Fascicle I, Economics and Applied Informatics.

Years XVI – no 2 .

3. Anişoara Apetri, Mihalciuc Camelia, 2008, Inflation Targeting-Fundamental Objective

of the Monetary Policy of Romanian National Bank (BNR), ERSJ European Research

Studies Journal, Volume XII, Issue (4) 2009, pages 79-86,

4. Anisoara Apetri, Camelia Mihalciuc, Veronica Grosu, 2015, The Analysis Of Financial

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

Series , Issue 2/2015, „ACADEMICA BRÂNCUŞI” PUBLISHER, ISSN 2344 –

3685/ISSN-L 1844 - 7007, pp. 108 - 117

5. Dedu Vasile, 1996, Management bancar, Editura Sildan, Bucureşti;

6. Iordachi Dimitriu, 1994, Monedă şi credit, Editura Graphix, Iaşi;

7. Mihai Ilie, Velicu Ileana-Cosînzeana, 2008, Managementul riscurilor în cadrul

Instituţiilor Financiare Nebancare (IFN), Editura Economică, Bucureşti;

8. Sandu Gheorghe, 2001, Monedă – credit, Editura Universităţii din Suceava, Suceava;

9. Trenca I. Ioan, Bolocan Mihail-Dragoş, 2011, Performanţă şi risc în bănci, Editura Casa

Cărţii de Ştiinţă, Cluj-Napoca;

10. Turliuc Vasile et al., 2005, Monedă şi credit, Editura Economică, Bucureşti;

Web resources:

11. Hussein A. Abdou, John Pointon, 2011, Credit scoring, statistical techniques and

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];

12. Pichereau Laurence, 2016, Empirical study of credit rating agencies: do the financial

characteristics of companies have an impact on the occurrence of split ratings?

https://matheo.uliege.be/bitstream/2268.2/1897/1/Thesis_LaurencePichereau_s111186.pd

f, [accesat la 21.03.2018];

13. TengTeng Xu, 2012, The Role of Credit in International Business Cycles, Bank of

Canada, https://www.bankofcanada.ca/wp-content/uploads/2012/11/wp2012-36.pdf,

[accesat la 21.03.2018];

14. Deloitte, 2016, Credit scoring - Case study in data analytics,

https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Financial-

Services/gx-be-aers-fsi-credit-scoring.pdf, [accesat la 23.03.2018];

114

Lecturer PhD Gheorghe MOROȘAN

Ștefan cel Mare University of Suceava, Romania morosang59@gmail.com

PhD Laurentia Elena SCURTU

Ștefan cel Mare University of Suceava, Romania scurtu.laurentia@gmail.com

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

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11. FMI, Indicatorii de Soliditate Financiară: Ghid de compilare

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București, 2003

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Risk, 1995

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economice şi monetare Economie teoretică şi aplicată, Volumul XIX (2012), No. 2(567),

pp. 40-52

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Growth In Romania, The USV Annals of Economics and Public Adiministration, Vol. 17

(1(25)), pp. 118-128, 2017

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124

Assistant PhD Veronica DEAC University of Medicine, Pharmacy, Sciences and Technology of Târgu Mureș, Romania

Faculty of Economics and Law Financial-Accounting Department deac.veronica@yahoo.com

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,

p. 119.

3. Bătrâncea L., et all, (2012) Analiză financiară a întreprinderilor româneşti, Editura

Risoprint, Cluj-Napoca.

4. Bostan, I., et all, (2010)., Implications Of The Eva Model Use In The Firm Resources'

Performant Allocation Plan, Accounting and Management Information Systems Journal,

vol. 9, no. 1, pp. 120 –145.

5. Brătian (Gavrea) C., (2010), Rolul diagnosticului organizaţional în îmbunǎtǎţirea

performanţelor firmei, Teză de doctorat, Rezumat, Universitatea Babes-Bolyay, p. 25.

6. Bunea Ş., (2006), Monocromie şi policromie în proiectarea politicilor contabile ale

întreprinderilor, Editura Economică, Bucureşti, p. 194.

7. Colasse B., (2009), Analiza financiară a întreprinderii, Editura Tipo Moldova, Iași, 2009,

p. 58.

8. Deac V., Hlaciuc E., (2014), Current tendencies in enterprise performance measurement

and their limitations, The European Journal of Accounting, Finance & Business, vol. II,

issue (3), ISSN 2344-102X, pp. 53-63.

9. Diaconu P., et all., (2003), Contabilitate managerială aprofundată, Editura Economică,

București, p. 228.

10. Feleagă N., Feleagă L., (2007), Contabilitate Financiară, O abordare europeană şi

internaţională, ediţia a doua, Editura Economică, București, p. 20

11. Neely A., (2005), The evolution of performance measurement research, Developments in

the last decade and a research agenda for the next, International Journal of Operations &

Production Management, vol. 25, no.12.

12. Petcu M., (2009), Analiza economico-financiară a întreprinderii. Probleme, abordări,

metode, aplicaţii. Ediţia a doua, Editura Economică.

13. Petrescu S., (2004), Diagnostic economic-financiar. Metodologie, studii de caz, Editura

Sedcom.

14. Robu V., Sandu R., (2006), Problematica analizei performanţelor - o abordare critică în

contextul teoriilor informaţiei şi guvernanţei corporative, Revista Economie Teoreticǎ şi

Aplicatǎ, nr. 8, p. 25.

15. Robu V., Anghel I., Șerban E-C., (2014), Analiza economico-financiară a firmei, Editura

Economică, București, p. 301, pp. 305-306, p.334.

16. Siminică M., (2008), Diagnosticul financiar al firmei, Editura Universitaria, Craiova.

17. Vâlceanu G. et all., (2009), Analiza economico-financiară, Ediţia a doua, Editura

Economică, Bucureşti.

18. Tangen S, (2003), An overview of frequentlyused performance measures, Workstudy,

volume 52, number 7, pp. 347-354.

132

Ph.D. Ioana Cristina CIRCA (BUZDUGA)

1 Decembrie 1918 University Alba Iulia, Romania ioanacb74@yahoo.com

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

roscare@seap.usv.ro

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 eiancu@seap.usv.ro

Lecturer PhD Tudor COLOMEISCHI

Stefan cel Mare University, Suceava, Romania tudorc@seap.usv.ro

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 gratielabranza@gmail.com

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 stefans@usm.ro

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

169

170

Lecturer PhD Petronela SCUTARIU

Ștefan cel Mare University of Suceava, Faculty of Law and Administration Sciences, Suceava, Romania petronela.scutariu@fdsa.usv.ro

Master Student Valentina Alina ADOMNICĂI

Ștefan cel Mare University of Suceava, Faculty of Law and Administration Sciences, Suceava, Romania adomnicai.alina@gmail.com

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

BIBLIOGRAPHY

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tranziție, available at the address https://www.consilium.europa.eu/ro/press/press-

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semestrul 2019, available at the address http://gov.ro/ro/guvernul/sedinte-

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October 2014, Bucharest, Romania, (Edited by Stefan Daniel), Elsevier, pp. 542-549

14. Stancu Adrian, Food and Feed Safety in Romania in the European Union Context:

Current Issues, Economic Insights – Trends and Challenges, Vol. I(LXIV), No.3/2012,

pp. 87-95

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european-union [accessed on October 29, 2018]

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[accessed on October 30, 2018]

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: cercetare@seap.usv.ro . For commands, please contact us by e-mail at the address: cercetare@seap.usv.ro .