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Analysts: Economic growth could be saved by rural population if education problem solved

The growth potential of the Romanian economy could increase if labour force from the rural area is activated. The are millions of people who contribute just with 3.5% of GDP, whose education is precarious and who cannot be easily transferred to industries and services, analysts say.

'If we care 19 million people after the census there are many people in the rural area who do not produce enough in Romania to make us hope to converge to EU', said the senior economist of UniCredit, Dan Bucsa.

The UniCredit analyst showed that 'these a few million village people could be moved to more productive branches, like industry and services. We would need some reforms which have been made by other states in the area. We need a permissive fiscal frame for investments in the rural area and in very small towns, investments in infrastructure allowing mobility and we count on the fact that these people would be cheaper. Potential may grow, but until then the growth potential remains 2-3%' Bucsa said.

The senior economist of BNR, Valentin Lazea noticed that despite of a possible source of potential in the rural area, people there have been suffering from acute lack of education and especially quality education. 'I agree with Dan Bucsa that Romania has a great reserve of labour force in the country, that third of the population who produce almost nothing. The quality of the population and of human capital is much to be desired', Lazea said.

The senior economist of BNR mentioned that the teachers' compulsory repartition criterion was 'dismantled' in 1990 but after 20 years the rural population benefits only from crumbs of the education system and of quality health system. Lazea comes with a possible solution: 'Each state university should allocate 10% of its number of students for those who come from the rural area on condition that they should get back and work there. We disregard one of the few resources of increasing potential GDP,' Lazea concluded.

The labour force question, one of the important factors in determining potential GDP was initial mentioned by the senior economist of Raiffeisen Bank, Ionut Dumitru. The latter quoted an eurostat prognosis according to which Romania's demographic structure will be very low in 2060 and that is alarming.

These analysts have converging opinions about GDP which places it between 1 and 3% . Several analysts pointed out in this context the determining importance of European fund absorption when direct foreign investments tend to leave Romania.

However, Adrian Mitroi, the strategic director of MKB Romexterra consider that European funds can have a beneficial effect, considering the slow development of Romanian economy.

He thinks that financing big infrastructure projects , those with feasible projects will not be made from EU funds or bank loans, but by issue of dedicated bonds.

Sursa: http://www.actmedia.eu

Tags: rural potential people education population growth could analysts bnr

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