2017 Index of Economic Freedom

Romania

overall score69.7
world rank39
Rule of Law

Property Rights63.9

Government Integrity45.9

Judicial Effectiveness58.5

Government Size

Government Spending65.3

Tax Burden87.4

Fiscal Health90.9

Regulatory Efficiency

Business Freedom65.9

Labor Freedom62.5

Monetary Freedom83.6

Open Markets

Trade Freedom87.0

Investment Freedom75.0

Financial Freedom50.0

Embed This Data

Create a Comparison Chart

See how Romania compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 19.8 million
  • GDP (PPP):
    • $413.8 billion
    • 3.7% growth
    • 2.4% 5-year compound annual growth
    • $20,787 per capita
  • Unemployment:
    • 6.9%
  • Inflation (CPI):
    • -0.6%
  • FDI Inflow:
    • $3.4 billion
Embed This Data

Romania continues to recover from the recent global economic slowdown and has made fiscal sustainability a priority. Economic growth rates have improved, but the benefits have not been felt by all Romanians. The country continues to have the highest poverty rate in the European Union.

Progress on implementing reforms and improving the business environment has been uneven. The unpredictable and uneven regulatory system discourages foreign investors from doing business in Romania. Efforts to privatize state-owned enterprises have stalled in the past two years. Corruption is endemic at all levels of government and undermines the rule of law.

Close

Background

Former Prime Minister Victor Ponta of the center-left Social Democrat Party resigned in November 2015 following protests against government corruption that were sparked by a fatal nightclub fire. A caretaker government of technocrats managed the country for about a year until President Klaus Iohannis designated Prime Minister Sorin Grindeanu as the head of a new Social Democrat Party–led coalition government at the end of 2016. Romania’s transition to a free-market economy began with the adoption of its new constitution in 1991. In the post–Cold War period, Romania developed closer ties with Western Europe and was accepted into NATO in 2004 and the EU in 2007. In addition to its strategic position on the Black Sea, Romania has extensive natural resources and a productive agriculture sector.

Rule of LawView Methodology

Property Rights 63.9 Create a Graph using this measurement

Government Integrity 45.9 Create a Graph using this measurement

Judicial Effectiveness 58.5 Create a Graph using this measurement

Romania’s constitution guarantees the right to ownership of private property, and procedures for the enforcement of contracts have been streamlined. The inadequately resourced courts suffer from chronic corruption and political influence. Under pressure to meet the European Union’s anticorruption requirements, authorities charged Prime Minister Victor Ponta with fraud, tax evasion, and money laundering. He resigned from office in November 2015.

Government SizeView Methodology

Both the personal income and corporate tax rates are a flat 16 percent. Other taxes include a value-added tax and an environmental tax. The overall tax burden equals 27.4 percent of total domestic income. Government spending has amounted to 34 percent of total output (GDP) over the past three years, and budget deficits have averaged 1.9 percent of GDP. Public debt is equivalent to 39.4 percent of GDP.

Regulatory EfficiencyView Methodology

Enforcement of commercial regulations is not always consistent, and efficient procedures and rules for bankruptcy have not been fully implemented. Labor regulations remain rigid, although several amendments to improve the flexibility of the labor code have been adopted. The IMF has urged the government to reform inefficient and subsidized state-owned enterprises in the transportation and energy sectors.

Open MarketsView Methodology

Trade is important to Romania’s economy; the value of exports and imports taken together equals 83 percent of GDP. The average applied tariff rate is 1.5 percent. The government does not screen or discriminate against foreign investment, but the regulatory and judicial systems may be deterrents. The banking sector is relatively sound and stable, with a high degree of capitalization. Foreign-owned banks account for over 70 percent of total assets.

Country's Score Over Time

View Chart of Scores over Time

Regional Ranking

rank country overall change
1Switzerland81.50.5
2Estonia79.11.9
3Ireland76.7-0.6
4United Kingdom76.40.0
5Georgia763.4
6Luxembourg75.92.0
7The Netherlands75.81.2
8Lithuania75.80.6
9Denmark75.1-0.2
10Sweden74.92.9
11Latvia74.84.4
12Iceland74.41.1
13Finland741.4
14Norway743.2
15Germany73.8-0.6
16Czech Republic73.30.1
17Austria72.30.6
18Macedonia70.73.2
19Armenia70.33.3
20Romania69.74.1
21Poland68.3-1.0
22Kosovo67.96.5
23Bulgaria67.92.0
24Cyprus67.9-0.8
25Belgium67.8-0.6
26Malta67.71.0
27Hungary 65.8-0.2
28Slovakia65.7-0.9
29Turkey65.23.1
30Albania64.4-1.5
31Spain63.6-4.9
32France63.31.0
33Portugal62.6-2.5
34Italy62.51.3
35Montenegro62-2.9
36Bosnia and Herzegovina60.21.6
37Croatia59.40.3
38Slovenia59.2-1.4
39Serbia 58.9-3.2
40Belarus58.69.8
41Moldova580.6
42Russia57.16.5
43Greece551.8
44Ukraine48.11.3
See Entire Region List ›

View all countries ›

Back to Top