Romania and the EMU Enlargement - The Illusions of Real Convergence

Abstract

As an effect of the “no opt-out” clause, Romania is facing, rather soon, the Euro adoption challenge along with all its implications, an aim that has become rather challenging given the recent evolutions in Greece, Ireland or Portugal. Apart from foreseeing the future of the Euro-Zone, serious questions are being raised around the real convergence process and its contribution to the actual crises. The lack of convergence from the OCA criteria point of view is more and more envisaged as the missing puzzle piece in a functional monetary union system. This paper wishes to accomplish a brief evaluation of Romania’s real convergence to the Euro-Zone. But this is not the only issue raised here. Apart from that, in accurately quantifying real convergence we must focus on the most expressive and suitable set of indicators for the real convergence, as literature has not yet imposed a single set as universal or at least as generally agreed upon. In assessing real convergence as a certain aim for Romania on a medium term perspective, this paper envisages the Optimal Currency Area theory.Convergent evolution may be influenced by several factors which show the evolution of main disparities in compared economies. Taking this into account we shall also compute the variation coefficient of the GDP per capita or the σ-convergence as an expression of the dispersion of this indicator.