Romania is located in southeastern Europe on the coast of the Back Sea and borders Hungary and Serbia to the west, Ukraine, Moldova to the northeast, and Bulgaria to the South. The country’s capital and largest city is Bucharest.
According to the CIA Factbook, Romania covers a total area of 238,391 square kilometers and is the 82nd largest country globally. Estimates put the population at 21.2 million (July 2021 est.) with 83.4% Romanian, Hungarian 6.1%, Roma 3.1%, and the remainder a mix of Ukrainian (0.3%), German (0.2%), other 0.7%, unspecified 6.1% (2011 est.). The official language of Romania is Romanian, with a small proportion of people speaking Hungarian and Romany.
The country has a population density of 90/km2, ranking it 104th versus other countries across the globe.
With the fall of the Iron Curtain and the Revolution in 1989, Romania has undergone several political and economic reforms. Today the country is a semi-presidential republic with its constitution adopted by a national referendum in 1991. It joined the European Union in 2007.
Romania participates in some international organizations, including The EU, United Nations, The World Bank, and the IMF.
The official currency of Romania is the Romanian Leu (RON). The country hopes to adopt the Euro in 2027-2028.
The Romanian Economy
The CIA estimated Romania’s GDP in 2009 at $161.5 billion and a GDP (PPP) of $254.7 billion. Romania’s GDP per capita is estimated at $11,500, ranking it the 97th most prosperous country globally. In 2020, the CIA Factbook estimated Romania’s GDP at $556.1 billion GDP (Purchasing Power Parity), and GDP per capita (Purchasing Power Parity) $28,800.
Having transformed from its days under communist rule and since joining the European Union, Romania today is considered an upper-middle-income economy. The country has a large services sector that generates 53% of the national GDP, and a strong industry sector accounts for around 35% of GDP.
Romania’s primary industries include electric machinery and equipment, textiles and footwear, light machinery, auto assembly, mining, timber, construction materials, chemicals, food processing, and petroleum refining.
Romania was once Europe’s breadbasket and benefits from a small and dynamic agricultural sector that generates around 12.4% of national GDP. Foodstuffs produced include wheat, corn, sugar beets, sunflower seeds, potatoes, grapes, eggs, and meat products.
Trade with other EU countries accounts for over 40% of Romania’s imports and exports. Commodities are exported primarily to Germany 22%, Italy 10%, France 7%, Turkey 5%, and Hungary 4%.
Austria also imports several products, primarily machinery and equipment, fuels and minerals, chemicals, textiles and products, metals and agricultural products with 17% coming from Germany, Italy 12%, Hungary 8%, France 6% and China 5%.
The Romanian Infrastructure
Romania has a fairly extensive infrastructure undergoing significant improvement to support economic exchange in the region. Its location makes it a major transport route between leading business centers in Central Europe.
The country is connected by an extensive road system that stretches 198,817 kilometers. Sixty thousand forty-three kilometers are paved with some 942 kilometers of expressways.
Romania’s railways are run by state-owned CFR and operate a dense network of train stations that links Romania with international cities. The CIA Factbook estimates that the railways throughout the country stretch over 10,788 kilometers, one of the most extended in Europe. Official government statistics estimated that the railways’ transport around 105 million tons of goods and 216 million passengers per year.
Bucharest has its own extensive public transport network consisting primarily of trolleybuses, trams, buses, and the country’s only metro system.
Romania has over 50 airports, several of which are international – with Henri Coandă International Airport being the largest and busiest. Located in the town of Otopeni, some 17 kilometers North West of Bucharest, the airport offers flights to many domestic and European destinations. In 2018 it was estimated that the airport moved over 13.824.830 million passengers.
The Romanian Workforce
According to the World Bank, Romania’s labor force is estimated at almost 9 million in 2020 (from 12.1 million, in 1990). The labor force is predominantly Romanian, with a small proportion of Hungarian, Roma, and German people.
47% of the labor force work in the services sector, which comprises a diverse portfolio of retail, financial services, real estate, communications, and tourism. A significant proportion of the workforce (30%) are employed in agriculture producing grain, vegetables, and meat products. 23% work in the industrial sector dominated by machinery and auto assembly, including mining, petrochemicals, and construction.
Small and Medium-Sized enterprises take the largest share of the manufacturing sector.
Notably, in 2019, Romania produced 490,412 vehicles, making it Europe’s 12th largest producer of automobiles. Dacia brand, produced in Mioveni, Arges, is one of the best selling cars in Europe, in the last years.
The Romanian government spends an estimated 2,28% of GDP (2022) on education, and its focus results in a skilled workforce and a high literacy rate of 97%. School attendance is compulsory for nine years, with students graduating age 16 or 17. Higher education is aligned with European Higher Education Area (EHEA) and is offered by numerous public and private institutions.
Bucharest is home to many known international universities, like the University of Bucharest, Bucharest University of Economic Studies, Carol Davila University of Medicine and Pharmacy, Polytechnic University of Bucharest, and many more. Other known universities from Romania are Babes-Bolyai University, West University of Timisoara, University of Medicine and Pharmacy, Cluj-Napoca, Alexandru Ioan Cuza University, Gheorghe Asachi Technical University of Iasi, and many others. Yes, Romania have a strong and healthy education system.
Business Costs in Romania
Romania’s individual income tax rates work off a flat fixed rate of 10%.
Corporate tax is also fixed at 16%, although certain small businesses are only expected to pay 3% of their turnover. Capital gains are set at 16%, while the tax rate for gains from the sale of real estate is between 1% and 3%.
The standard VAT rate in Romania is 19%, while a reduced VAT of 9% and 5% can be applied to insurance companies, banks, financial services, and buildings supply.
There are two minimum wage levels set in Romania. Unskilled workers are guaranteed RON 1524 per month (working 170 hours), while skilled workers with a higher education certificate earn around 120% more via minimum wage.