This information comes from the assessment conducted in country for the Romania report, which was published in January 1999.
Romania’s transition to a market economy has been protracted and painful. The legacy of the communist regime, extreme centralization, a high degree of bureaucracy, and no experience with partial reforms such as those undertaken in other Central European economies during the 1980s left Romania with one of the longest paths toward a market economy.
Since 1990, Romania’s policy has been to encourage foreign direct investment. To this end, a substantial body of legislation has been enacted to create a favorable investment climate. However, foreign investment in Romania has not kept pace with expectation. The new reform-minded government strongly emphasizes the role of foreign capital, and has promised to remove the remaining structural barriers to foreign investment. Romania’s private sector, which now represents 52 percent of the country’s GDP, is growing rapidly and has become the chief engine of economic growth.
Romania’s ability to sustain economic reforms and promote a stable democracy faces some key constraints. The constraints – lack of access to a transparent and credible legal system, restrictions on property ownership, bureaucratic corruption and red tape, to name a few – are similar to the constraints facing other countries in transition.
In terms of legislative development, Romania is the most unusual among the reforming economies of Central and Eastern Europe. The country has the largest body of pre-Communist legislation, which survived the Communist takeover in the late 1940s. This long legal tradition proved to be a mixed blessing in some cases, because it encouraged the decision makers to preserve solutions that were clearly outdated and could not properly serve the needs of a modern economy. On the other hand, the presence of the Commercial Code (adopted in 1887) in the body of applicable legislation provided the opportunity for the post-war generation to be acquainted with legislation completely forgotten in some other countries during the socialist period. No matter what the reason for the preservation of the Commercial Code, it fell into disuse in the years after 1945.
Recent legislative developments in Romania are directed towards the preparation of the country for European Union (EU) membership, and the declared legislative priority is the harmonization of the legal system with that of the EU. This will give Romania the opportunity to restructure the legal system in a more organized and systematic manner and make it a useful instrument in the economic restructuring of the country.
