Territorial Inequalities and Economic Growth in Romania. A Multi-factor Approach

Abstract

Territorial inequalities represent a long-running subject in regional economics and many statistical methods aiming to provide relevant data and information on the magnitude and evolution of disparities have been developed over time. It is a topic of interest in Romania as well, given that the development gaps among counties continuously increased since the transition to market economy, despite many strategies explicitly targeting them. In this context, the paper introduces a new synthetic index of territorial inequalities that includes three variables: GDP/capita, labour productivity and life expectancy in order to capture various aspects of economic and social spatial disparities. This methodological approach offers a better and more complex image on territorial development gaps, compared to the analyses using individual indicators. We further assessed the impact of territorial disparities (as measured by this synthetic index) on the economic development in Romania over 1995-2012, by means of an economic growth model. We found a cointegrating relationship between GDP and the synthetic index of territorial inequalities, suggesting that the regional development in Romania is systematically unbalanced and the disparities have had the tendency to widen with economic growth.