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Romania’s path to OECD accession and its development are examined in this article, which also presents the stages followed and conformity with the organization’s standards. Romania encountered difficulties throughout the accession process, its enacted reforms and fulfilling the technical requirements for membership. Key stages are highlighted: submission of the initial memorandum, the 2024 economic study, roadmap acquisition, and obtaining the first formal notice. Additionally, the article discusses the benefits of Romania’s OECD accession, reflecting on the ongoing efforts required for successful integration. It focuses on the broader context of the 2022 enlargement wave and emphasizes the significant role of democratic institutions in meeting OECD standards. It underscores the need for improving the educational system and internal challenges within the investment environment. The conclusion highlights how crucial it is to keep an eye on political and economic trends throughout the world in order to adjust plans accordingly, guarantee Romania’s preparation for OECD membership, and integrate Romania into international governance frameworks.

Romania’s road to OECD

Romania’s path to joining the OECD represents a long-term strategic objective that has evolved over multiple governments, underscoring the country’s ambition to integrate into the international economic system. Romania’s interest in the OECD originated in the early 1990s, a crucial period in the state’s history marked by the transition from a centrally planned economy to a market economy. Joining international organizations became a strategic goal necessary for this transformation.

In April 2004, Romania officially expressed its desire to join, with a formal application initiated by the Adrian Năstase government. Romania’s journey toward the OECD became a foreign policy objective but lacked concrete implementation steps, focusing instead on aligning interests and policies with economic and Western standards. This objective was maintained and reiterated by successive governments, but attention during these periods was primarily on EU membership (Bratu, 2017).

On January 25, 2022, the OECD officially opened accession talks with Romania, along with five other candidates: Argentina, Brazil, Bulgaria, Croatia, and Peru. This crucial step signifies progress in implementing reforms and adhering to the organization’s values, vision, and priorities. The decision is based on a commitment to democracy, the rule of law, respect for human rights, and maintaining an open and competitive market economy (OECD, 2022).

The accession roadmap was developed by the OECD Secretariat with support from member states, outlining the sectoral negotiation chapters and criteria Romania must meet in the coming years. This essential document structures, guides, and directs the efforts toward accession. The formal adoption of the roadmap took place at the OECD ministerial meeting in Paris on June 9-10, attended by Romanian Foreign Minister Bogdan Aurescu. This represents the first OECD ministerial meeting in which Romania participated as a candidate country, emphasizing the commitment to successfully completing the accession objective. The OECD Council’s resolution on the accession process and the adoption of the roadmap marks a political-diplomatic success, opening new opportunities for Romania’s long-term development and prosperity (Diaconu, 2022).

During the accession process, Romania will be reviewed by OECD core committees, enabling the Council to make an informed decision on this path. These committees will provide an official opinion to the Council upon completing the technical review, outlining a detailed and comprehensive assessment of Romania’s readiness and capabilities to become a member. The Council’s resolution on January 25, 2022, along with the letter from the Secretary-General, highlighted multiple essential policy areas for evaluation (OECD, 2022, pp. 3-4):

- Structural Reform: Romania needs a comprehensive structural reform agenda as a foundation for economic growth. Enhancing competitiveness, modernization, sustainability, stability, and economic predictability are fundamental goals of these structural reforms, aimed at transforming the economy into a more robust and adaptable one in the face of global challenges.

- Open Trade and Investment: OECD member states and key partners account for 70% of global trade and 90% of worldwide foreign direct investment. Emphasizing the consolidation of Romania’s open trade and investment regime is essential. International trade must be rule-based and support the values of open, competitive, sustainable, and transparent market economies. Additionally, opposing economic constraints and deeper integration of SMEs into global value chains are necessary for promoting economic growth, innovation, and competitiveness.

- Inclusive Growth: Implementing policies capable of reducing inequalities and promoting equal opportunities, with tangible outcomes for all citizens.

- Governance: Improving public governance, strengthening inclusive and transparent institutions, integrity, ethics, and anti-corruption efforts are necessary measures to build public trust and ensure responsible administration.

- Environment, Biodiversity, and Climate: The OECD supports measures to combat climate change, aiming to meet the objectives set by the Paris Agreement (Gregor & Scalamandrè, 2023, pp. 1-2). Romania must develop policies focused on environmental protection, deforestation, biodiversity, greenhouse gas emission reductions, and green entrepreneurship, ensuring these goals have a real and sustainable impact.

- Digitalization: Romania needs to promote a digital economy adapted to contemporary societal needs, requiring international cooperation to encourage innovation, adopt new technologies, and boost competitiveness.

- Infrastructure: Investments in modernizing infrastructure are necessary to support economic growth and improve citizens’ quality of life.

During this process, Romania will be evaluated by 26 committees responsible for accession reviews, which will issue official opinions to the Council. These technical analyses compare national policies and practices with the best within the OECD, identifying areas needing improvement and assessing Romania’s alignment with international rules and standards followed by OECD members. The timeline for these technical evaluations depends on the country’s commitment and responsiveness, with the pace of providing necessary information to the committees influencing the review process duration (OECD, 2022, pp. 6-7).

The Initial Memorandum marks the first formal step in the technical assessment process for OECD accession. This self-assessment document outlines Romania’s alignment of its legislation, policies, and practices with OECD legal instruments. On December 15, 2022, Romania submitted the Initial Memorandum in Paris, analyzing 26 areas and 234 legal instruments. The OECD Interministerial Committee was reorganized for this purpose, leading to the establishment of the National Committee for Romania’s OECD Accession on September 23, 2022 (Ministry of Foreign Affairs, 2022). The government approved the memorandum to establish this committee on September 14, 2022, representing a crucial step in this complex, multidimensional process.

On December 19, 2023, the Senior Budget Officials Committee (SBO) evaluated Romania’s efforts and progress in aligning its policies and practices with OECD norms in budgetary governance, focusing primarily on the Ministry of Finance. By the end of February 2024, Romania achieved a significant milestone with the OECD’s approval of its first Formal Opinion in a sectoral committee, a notable step in the accession journey (Diaconu, 2024). The SBO evaluation highlighted four key principles guiding the assessment process (Ministry of Finance, 2024):

- Spending Efficiency: Romania was commended for its efforts in managing expenditures, emphasizing the importance of efficient public resource allocation.

- Budgetary Challenge Resilience: Romania demonstrated a proactive approach to current and future budgetary challenges, aligning its policies and strategies with global standards.

- Public Spending Transparency and Accountability: Romania implemented clear mechanisms for transparency and accountability to facilitate public access to information on expenditures, thereby enhancing citizen trust and ensuring transparent governance.

- Effective Budgetary Process Oversight: Romania made significant progress in developing mechanisms for citizen involvement in the budgetary process, essential for ensuring democratic and representative governance.

OECD Anti-Bribery Convention and Romania’s ratification

The pernicious practice of bribing foreign public officials has been used in international trade and investment to secure substantial government contracts and profitable concessions, involving a vast network of multinational corporations and financial institutions. These entities can divert public resources and undermine public institutions in targeted states, severely impacting sustainable development, democratic principles, the rule of law, and human rights (Dell, 2024). On October 6, 2022, Romania requested to join the OECD Anti-Bribery Convention, formalized by the Romanian Minister of Justice through a letter to the OECD Secretary-General. Following evaluations by the Working Group on Bribery (WGB) in December 2022 and March 2023, Romania was invited to join the Working Group and ratify the Convention. The ratification law was adopted on June 19, 2023, promulgated on July 5, 2023, and the instrument of accession was deposited with the OECD Secretary-General three weeks later, with the Convention entering into force on September 22, 2023 (Government of Romania, 2023).

The Phase 1 evaluation aims to analyze the national legislative framework in accordance with this Convention, based on responses from Romanian authorities to the Phase 1 questionnaire and subsequent comments on the draft report. Unlike subsequent phases, Phase 1 does not include on-site consultations with stakeholders. The evaluation team comprises lead examiners from Israel and the Netherlands and members of the OECD Anti-Corruption Division. Following the completion of Phase 1, the Working Group will conduct a Phase 2 evaluation, analyzing the practical implementation of the legal framework and a thorough review of compliance with domestic legislation in combating the bribery of foreign public officials (OECD, 2024, p. 4).

The evaluation identified specific issues, aspects requiring further examination, and potential legislative adjustments. Romania’s offensive against foreign bribery is nearly compliant with Article 1 of the Convention, though concerns remain regarding the definition of “foreign public official” and the requirement for the bribe to relate to the official’s duties. Domestic penalties for foreign bribery meet minimum standards for mutual assistance and extradition, but maximum fines are relatively low. To ensure the effectiveness of these sanctions, Romania may need to increase fines or adopt alternative provisions (OECD, 2024, pp. 33-36).

OECD Economic Survey of Romania

On March 12, 2024, the OECD released the latest Economic Survey of Romania, attended by the Romanian Prime Minister and OECD Secretary-General Mathias Cormann. These biennial economic surveys provide a comprehensive and detailed assessment of member and non-member economies, evaluating current economic conditions, major challenges, and offering public policy recommendations to support economic growth and social well-being (Government of Romania, 2024).

Following the 2022 war in Ukraine and the resulting energy crisis, Romania demonstrated resilience to severe external shocks with international implications. The challenge for macroeconomic policy lies in addressing high inflation, necessitating a multifaceted approach. The National Bank of Romania maintained high interest rates to combat inflation, but the fiscal deficit remains significant, necessitating ongoing fiscal consolidation to ensure the alignment of fiscal and monetary policies and long-term fiscal sustainability. Although Romania faced an economic growth slowdown in the past two years, the national economy showed resilience and managed to reduce living standard disparities compared to higher-income countries. Recovery efforts post-pandemic were initially destabilized due to disruptions from the Ukraine conflict, and managing high energy prices posed a major challenge, requiring persistent strict monetary policies to effectively manage inflation (OECD, 2024).

Achieving rapid income growth in the coming years is unpredictable. Recent developments have highlighted the limitations of the national growth model, which primarily relies on cheap labor and low taxes. Recent measures targeting consumption and income tax partially address the revenue shortfall, but comprehensive reforms are imperative to prevent exacerbating fiscal imbalances, considering the additional pressure on future budgets caused by an aging population (OECD, 2024, p. 11).

Improving productivity is a fundamental pillar for advancing living standards. Maintaining this requires a favorable investment framework characterized by robust competition, policy predictability, financial inclusion, and rigorous anti-corruption measures. Romania’s Recovery and Resilience Plan serves as a significant catalyst for reforms. Accelerating the decarbonization of the economy by 2050 is imperative, necessitating an increased use of renewable energy sources to reduce dependence on fossil fuels. Romania can advance towards a green economy, but it will need to build energy-efficiently and develop policies to stimulate the use of renewable energy (OECD, 2024, p. 94).

Institutional reform is crucial for implementing sustainable structural reforms. Despite progress in recent years, bureaucracy continues to burden the economic activities of companies. Poorly performing state-owned enterprises disrupt competitive balance, and business expansion and efficient resource allocation are hindered by limited access to finance. While previous institutional reforms have brought benefits, it is essential to develop a transparent and predictable policy framework to strengthen the entrepreneurial environment (OECD, 2024, p. 16).

Persistent socio-economic disparities in Romania remain substantial, with a high risk of poverty, especially in rural areas and among ethnic communities. Over the past two years, pressures generated by the rising cost of living have become a challenge, necessitating more efficient social protection systems and policies focusing on stimulating formal labor sector employment, particularly for women and older individuals. Improving health and education systems is vital to expanding opportunities and providing compelling reasons for young people to remain in the country, thus avoiding external migration (OECD, 2024, p. 13).

Benefits of OECD membership

OECD membership will offer multiple benefits and opportunities for Romania. Membership status will enhance international credibility and create a favorable investment climate, fostering economic growth. Romania shares the OECD’s core values: democracy, rule of law, human rights, open market economy, and free trade, which underpin its social and economic policies. OECD membership reinforces Romania’s commitment to these principles, providing a platform to promote them internationally and strengthen democracy and the market economy domestically. Access to high-level reports and expertise will boost and guide public policies, improving citizens’ quality of life.

Romania has made significant strides towards OECD membership, demonstrating a strong commitment to the organization’s standards and principles. Romania has adopted 84 essential legal instruments, reflecting significant alignment with the OECD normative framework. Romania is actively involved in OECD partnerships, holding four vice-chair or equivalent positions, and has 113 members engaged in various committees and working groups. Additionally, Romania has seven observers participating in various discussions and debates, contributing to the formation and implementation of OECD policies. Romania has adhered to most of the essential standards for membership, including the Declaration on Investments, Corporate Governance Principles, Internet Policy Principles, Recommendation on Good Statistical Practices, Inclusive Framework for BEPS, Global Forum on Transparency and Information Exchange, and the Anti-Bribery Convention. However, Romania and other candidate countries have not yet adhered to the Codes of Liberalization.

Conclusion

The analysis of candidate countries from the 2022 expansion wave highlighted their progress and challenges regarding democratic institutions. Strengthening institutional arrangements to demonstrate commitment to the organization’s values and expediting the ratification and implementation of legal instruments are necessary. The analysis of the education system through the PISA test provided an overview of national educational performance, with all countries scoring below the OECD average. Attracting investments and developing systemic reforms are essential to developing skills adapted to contemporary society. Candidate countries must address internal investment environment challenges to attract foreign investors and realize their economic potential by tackling excessive bureaucracy, political instability, corruption, and lack of regulatory transparency and predictability.

Romania has shown a positive trajectory toward OECD membership in recent years, indicating its aspiration to become a member. It will be vital to support initiatives to fortify institutions and advance economic development in order to carry out the reforms required for accession. Romania wants to join the OECD in 2026, but the results of this election year’s elections will decide the political stability that would affect the country’s entrance process. Sustaining this objective and preserving the speed and consistency of reforms will be crucial for the political agendas of the upcoming year. Moreover, monitoring international economic and political developments is crucial, as this election year’s outcomes can influence global governance trajectories. Understanding international changes and adapting strategies for OECD accession are important.

Photo sources:

[1. https://pxhere.com/en/photo/507732],

[2. https://pxhere.com/en/photo/1239524].

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