The Economy of Cluj. Cluj-Napoca and the Cluj Metropolitan Area: The development of the Local Economy in the 2008-2018 decade

Abstract

Over the last decade, globalization processes have intensified, and as such, global organizations relocated their secondary processes to new spaces specialized in operations (Peck 2018; Oshri, Kotlarsky, and Willcocks 2015). Most of the processes that are being externalized are Business Process Outsourcing (BPO) and Information Technology Outsourcing (ITO) (Oshri, Kotlarsky, and Willcocks 2015). The global outsourcing hotspots are India, China and the Philippines, that concentrate over 80% of outsourced processes. At European level, Central and Eastern Europe has capitalized most of the outsourcing in the West, particularly in regards to German capital (Marin 2018; Dustmann et al. 2014). Almost half (45.4%) of the total foreign investments of German companies is outsourced to Central and Eastern Europe. In Romania 63.7% of the German foreign investments are processes that were outsourced to our country (Marin, Schymik, and Tarasov 2018). As Peck (2018) points out, the logic behind the process is finding the cheapest labor force pools. Initially, outsourcing was focused on industrialized labor, however, now it is mostly skilled and highly skilled workforce that is being outsourced (Pavlínek 2019). Even if it is work performed by white collars, it has a high level of repetitiveness; however, in sectors such as IT there are also R&D operations (Oshri, Kotlarsky, and Willcocks 2015). Cluj is an example of a city whose local economy and workforce composition changed dramatically after the 2008-2010 financial crisis. The city is one of the Central and Eastern European hubs that benefited from the globalization of outsourcing operations. In particular, Cluj-Napoca excels in four transnational fields: Information & Communications Technology, Business Support Services, Engineering, Research & Development and Financial Services. In 2018, Cluj-Napoca was one of the most developed cities in the European Union in the GDP per capita group 19.000 – 27.000 at Purchasing Power Parity, cities that made a credible commitment at European level to promote knowledge, culture and creativity. In particular, participation in global production chains has generated the emergence of two types of internal markets: An internal market for the well-paid labor force employed in internationalized sectors that consumes a series of dedicated products and services: hospitality (restaurants, cafes, bars), food stuffs (meat products, pastries, premium alcoholic products), lifestyle services (hair salons , spas, gyms), cultural services (festivals, theatres, operas), location services (real estate services, interior design services, furniture manufacturing services). A set of markets that serve the global capital in reproducing their location (cleaning services, security, construction of type A office buildings, human resources). Both domestic and internationalized markets are responsible for the impressive development of the city between 2008 and 2018. The GDP of the Cluj Metropolitan Area and the private revenues of companies have doubled in the last decade.