TEAM FOR THE PREPARATION OF National Human Development Report Romania 2000 Principal Author Gerardo Berthin Contributors: Lucian Liviu Albu, Ionel Chera, Constantin Chirca, Victor Dinculescu, Constantin Ionete, Stefan Mihai, Valeriu Ioan Franc, Catalin Zamfir, Georghe Zaman Copyright © 2001 By the United Nations Development Programme 16, Aurel Vlaicu St. 79362 Bucharest, Romania ISBN 973-0-02354-9 Short extracts from this publication may be reproduced unaltered without authorization, on condition that the source is indicated. Design: Paul Madrio Layout: Victoria Dumitrescu Desktop & production management: VANEMONDE intrade The issue of European Union accession became relevant to Romania's human development immediately after it was officially invited as a candidate country in late 1999. The National Human Development Report (NHDR) 2000, analyzes the implications of the EU accession process for Romania's human development and sets out proposals to contribute to the ongoing discussion and debate. The overarching goal of the Report is not to assess the EU accession process. Rather it is to analyze how the EU accession process can be consistent with human development goals. This is the Sixth NHDR in the series that started in 1995. The analysis of the five previous NHDRs yielded four critical lessons to better understand the transition p rocess in Romania and its implications for human development. First, that macroeconomic stability is an essential precondition for human development. Second, that not economic growth alone matters but the improvement of human development by such economic growth as well. Third, that no policy alone will trigger human development, therefore a comprehensive approach is needed. And fourth, that good governance is an important component for human development. Today growing interdependence among people, countries and institutions is a reality. The NHDR 2000 supports the EU accession process, as it recognizes that economic integration will bring human development to Romania. However, it also cautions policymakers and non-governmental development actors to be more aware of the implications for human development. The complex and lengthy process of EU accession can create ample development opportunities, but unless it is properly managed it could harm human development. In proposing a multi-dimensional strategy to manage and implement the EU accession process, UNDP wishes to highlight the complexity of the process and the important role good governance will play. The NHDR 2000 is also part of a larger ongoing effort to assess and support more effective good governance initiatives in Romania. I hope that the NHDR 2000 will allow key Romanian governmental and non- governmental sectors to find ways to contribute more effectively to governance activities for both EU accession and sustained human development. Winston Temple Resident Representative United Nations Development Programme Country Office, Romania Acknowledgements The preparation of the National Human Development Report Romania 2000 would not have been possible without the support and valuable contributions of many individuals. Many Romanian experts contributed with information, analysis and inputs. The Report benefited greatly from the inputs and contributions provided by Lucian Liviu Albu, Ionel Chera, Constantin Chirca, Victor Dinculescu, Constantin Ionete, Stefan Mihai, Valerie Ioan Franc, Catalin Zamfir and Gheorghe Zaman. At a later stage, International Adviser, Conor Sean Kearney, provided guidance and editing advice to various drafts of the Report. During the final stage UNDP-Romania colleagues provided extremely useful comments, suggestions and inputs. In particular the author wishes to thank Ruxandra Stan, Dan Dionisie and Kyoko Postill. The Report also benefited of comments by Alin Teodorescu, Coordinator for the NHDR Romania 2001 and from Juliette Hage, the Human Development Adviser at the Regional Bureau for Europe and the CIS in Bratislava, Slovak Republic. Sincere appreciation is due to Vasile Puscas, Minister-delegate, Chief-Negotiator with the European Union for his valuable inputs and encouragement. The author is especially grateful to Winston Temple, who as UNDP -Romania Resident Representative, guided and inspired the preparation of the NHDR Romania 2000. Thankful for all the support that the NHDR Team has received, the author assumes full responsibility for the opinions expressed in the Report. Gerardo Berthin Foreword ....................................................................................................................................5 Acknowledgements ....................................................................................................................6 Executive Summary .................................................................................................................11 INTRODUCTION Human Development and the Transition Process in Romania and Central & Eastern Europe ..................................................................................................19 The National Human Development Report (NHDR) in Romania: 1995-1999 ............................................................................................................22 NHDR 2000: Human Development in Romania in the Era of Integration ............................................................................................................23 The Human Development Challenge for Romania and the Need for a Strategy ......................................................................................................26 The NHDR 2000 for Romania: The Implications of the Process of EU Accession for Human Development ..............................................................................27 CHAPTER 1: THE HUMAN DEVELOPMENT PROFILE OF ROMANIA AT THE BEGINNING OF THE EU ACCESSION PROCESS What does the Human Development Index (HDI) Reveal? ......................................................29 The Three Components of the HDI: Life Expectancy, Education and Standard of Living in Romania .........................................................................30 Other Factors in Romania’s Human Development Profile .......................................................44 What does the Human Development Profile of Romania at the Beginning of the EU Accession Process Reveal? ...........................................................50 CHAPTER 2: GOOD GOVERNANCE: THE BACKBONE OF THE PROCESS OF EUROPEAN UNION ACCESSION Building an Enabling State and Good Governance in Romania ...............................................54 How to Promote a Good Governance Strategy in Romania for the EU Accession Process? .................................................................................................57 The Need for Good Governance ..............................................................................................60 New Opportunities for Good Governance in Romania ............................................................66 Moving Human Development to Center Stage of the EU Accession Process Through Good Governance .................................................................68 CHAPTER 3: ECONOMIC RESPONSES TO MAKE THE EU ACCESSION PROCESS WORK FOR HUMAN DEVELOPMENT The Need for a Strategic Economic Response .........................................................................75 What can Romania do to Make the EU Accession Process work for Human Development? ..................................................................................78 Promoting Economic Growth for Human Development...........................................................79 Stabilization and Growth .............................................................................................79 Institutional Factors & Good Governance ....................................................................80 Environmental Protection & Management ...................................................................83 Income & Asset Distribution ........................................................................................85 Job Creation .................................................................................................................86 Pro-Poor Growth ..........................................................................................................88 Public Expenditures for Human Development .............................................................89 Promoting Human Development for More Economic Growth ................................................93 Participation and Decentralization ...............................................................................93 Skills & Knowledge .....................................................................................................94 Promoting Entrepreneurial Initiatives ..........................................................................95 Opportunities Expanded ...............................................................................................96 CHAPTER 4: THE ROAD TO THE EUROPEAN UNION & HUMAN DEVELOPMENT Romania's Strategy for the EU Accession Process and Desired Outcomes ...........................................................................................................100 Good Governance and Human Development for Empowerment ...........................................101 Human Development and Economic Response for Equity.....................................................102 Economic Response and Good Governance