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POVERTY IN ROMANIA follows a pattern found in many of the former command economies of the former Soviet Union and other areas of eastern Europe. The Romanian economy continues to undergo a painful transformation from state-owned to primarily privately owned enterprises, which started with the fall of the communist Nicolae Ceausescu regime in late 1989.

Despite significant progress, corruption, lack of transparency in government, and lack of economic opportunity remain major problems. Also, large sectors of the economy, such as the mining sector, have yet to undergo privatization. The impact on poverty is comparable to that in other parts of eastern Europe, such as Ukraine and Bulgaria. Integration into the European Union, slated for 2007, is driving reform efforts in the economy and government, including key social policies such as child welfare.

Poverty levels in Romania are driven by economic growth. Many households were thrown into poverty during the early transformation period, followed by a limited recovery that continued into the mid-1990s. Necessary efforts to rein in inflation led to a decline in Gross Domestic Product (GDP) from 1997 through 1999, causing a marked increase in poverty. Subsequent recovery in the national economy saw a decline in poverty from a peak of 35 percent in 2000 to 29 percent in 2002, and in severe poverty (based on the ability to obtain a minimum daily caloric intake) from 14 percent to 10 percent. Research by the World Bank also indicates that a sustained GDP growth rate of five percent could halve the poverty rate by 2007. However, the same report states that corruption, the slow pace of privatization, and other problems could threaten future economic growth.

Rural Deprivation

Based on a human development index developed for rural areas, a World Bank report determines that poverty follows a strong spatial pattern, concentrated in the eastern provinces and also spread as pockets throughout the rest of the country. Poverty enclaves are typically isolated in outlaying areas away from town or city centers, with limited road networks. On average, central villages had an index 30 percent higher than found for outlying villages, with central villages located close to cities on hillsides showing the highest level of development.

Poverty also shows a very strong ethnic pattern. The Romanian Roma (Gypsy) population is estimated at 2.5 million, the largest in eastern Europe. Poverty rates for the Roma have been estimated to be 10 times greater than those for other groups. Roma poverty also serves to reinforce negative stereotypes and discrimination.

Poverty is daunting because formal social networks, such as private professional organizations, usually exclude the poor and tend to help transfer income to their own, wealthier, members. The dislocation experienced by the poor since 1989 has also tended to disrupt their informal networks; hence the poor have less trust in neighbors and people in general and have little access to problem solvers and means of informal assistance.

In cooperation with the United Nations, the European Union, other international donor organizations, and domestic and international nongovernmental organizations, the Romanian government seeks to reduce poverty by various means. These efforts include the development of business and technology incubators throughout the country and enhanced access to information technology systems for disadvantaged youth.

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