Competitive Cities: Reshaping the Economic Geography of Romania

Challenge

Romania’s economic, social, and environmental progress has been significant over the past decade, with GDP per capita growing from 26 to 47 percent of the EU average between 2000 and 2010. Much of this growth has been driven by several dynamic urban areas.

However, Romanian cities continue to face a number of critical challenges: they have significant pockets of poverty, with poor and marginalized groups working below productive potential; they are poorly connected to large markets in Western Europe; they are inadequately connected to suburban and peri-urban communities; and they suffer with respect to basic service provision and overall quality of life.

EU Structural Funds can provide vital investment financing for addressing the aforementioned challenges, but capacity building is necessary to improve the country’s ability to leverage this key source of funding

Solution

Since September 2012, the Romania Regional Development RAS has focused on improving the effectiveness of the EU-funded ROP, within the World Bank’s broader effort to support Romania’s absorption of EU funds.

Several World Bank tools have been deployed as part of this work. First, the Competitive Cities study is an application of the World Development Report 2009: Reshaping Economic Geography, which provided a framework for how institutions, infrastructure, and policy interventions can shape development. Second, the Integration Strategies for Marginalized Communities report produced a diagnosis of urban marginalization, including its spatial distribution, and spelled out how the EU’s new Community-Led Local Development approach can tackle issues faced by urban marginalized groups in Romania.

Client ownership—a key concern in an RAS engagement—was ensured through a variety of tools: consultation workshops, interviews with over 300 stakeholders on the ground, summary briefs for policy makers, videos, and other targeted communication materials.

Results

These two activities directly contribute to the Romanian Government’s enhanced capacity to absorb billions in EU funding and get the most value for money by focusing interventions on the most critical areas:

• Connective infrastructure between and around dynamic cities, enabling them to increase their urban mass and continue to fuel sustainable economic growth;
• Improved services in lagging areas to cover people’s basic needs;
• Targeted measures for marginalized communities to ensure that they share the benefits of prosperity and become truly integrated;
• Better quality of life in cities to boost their capacity to compete for talent and maintain a diverse, competitive labor pool.

The reports’ insights and recommendations directly shape how Romania will deploy US$55 billion in EU Structural Funds as a key source of investment funding for the next seven years. In fact, the EU-Romania Partnership Agreement relies heavily on the proposals in the Competitive Cities report for designing interventions at the national, regional, and local levels, and several other strategic documents draw from this work: the Territorial Development Strategy, Regional Development Plans, Growth Poles Integrated Development Plans, and subnational (city- and county-level) development strategies.

The results have also been disseminated directly to over 600 national and local stakeholders through workshops, publications, and local consultations, and summaries and video clips have reached a larger audience.

Bank Group Contribution

These two RASes are part of the Romania Regional Development RAS, which includes three other RAS activities. There is no financial contribution from the Bank under this instrument. The total value of the Romania Regional Development RAS is roughly US$3.3 million, funded by EU Structural Funds for technical assistance and by a contribution from the Romanian Government.

Partners

The team has forged a number of key partnerships at the country level, working very closely with the main client, the Romanian Ministry of Regional Development and Public Administration (MRDPA). The European Commission (EC) was a strategic partner throughout, providing feedback on the team’s deliverables and using these assessments and recommendations in the ongoing dialogue with the Romanian Government. The team also organized consultations and workshops with over 600 stakeholders on the ground (local and regional authorities, local communities, non-profit organizations, private firms, etc.) during the drafting and refinement of recommendations, and reached out again to these partners as part of the knowledge dissemination effort.

Moving Forward

The successful completion of the collaboration with the MRDPA has led to discussions about a follow-up RAS program and to a stronger dialogue on topics that are of importance to the ministry (e.g., the decentralization and regionalization processes). Stronger ties have also been developed with the EC, which frequently draws on the World Bank’s technical advice on a host of development issues. Insights and best practices from this work apply not only to Romania but also to other EU and pre-accession countries seeking to develop their capacity to absorb Structural Funds in the effort to achieve sustainable and inclusive growth.

Beneficiaries

The ultimate beneficiaries of this work are the people of Romania, with a specific focus on marginalized communities (including the estimated 2–3 million Roma in the country). The direct client of this RAS is the Romanian MRDPA. Other beneficiaries include: stakeholders at the local level in Romania (e.g., local and county authorities, beneficiaries of EU funds, private companies, nongovernmental organizations [NGOs]); other ministries at the central level; EU experts; and other EU member states, which could replicate and adopt some of recommendations.