Bachelor thesis preview
May 12, 2010 Leave a comment
Since I’ve started writing my bachelor thesis on the impact of the economic crisis on SMEs I had to analyze the financial implications that affect their economic activity. Here are some of the conclusions I’ve drawn while writing my thesis.
For instance did you know that the most important green field investments in Romania are made in commerce, constructions and IT?
Or that the top foreign investor in Romania is Holland (17.8%), followed by Austria (13,3%), Germany (7,9%), France (5,5%), Greece (5.2%), Cyprus, Italy, USA, Switzerland and Spain.
Foreign investments have influenced both the economic development and work productivity. The capacity of absorption of foreign investments is superior to the countries from this region, but the disadvantage is that these investments were started late and their effect can be easily seen.
After 2007 when Romania became part of the EU it started feeling the consequences of being part of a global market. Between 2007 and 2008 the number of enterprises had decreased, but the sum invested in them had increased. We could notice many mergers and acquisitions from the part of big companies that started incorporating small businesses. Furthermore Romanian firms became more competitive and took more risks, because they were trying to remain as competitive as other European companies.
Since the economic crisis started to impact the Romanian economy in the 3rd Quarter of 2008, the number of enterprises has decreased dramatically. And after a booming economy between 2002-2007, the recession was a wake up call, that economic growth does not last forever and we need to be prepared with a plan B.
The crisis built itself on a bubble favored by the real estate market. Romania was not directly affected by the economic crisis in the USA, but because of its indirect effects. We had no toxic actives, and our banks are quite protectionist- considered by others as a lack of sophistication.
At the beginning of this year we could notice the biggest decrease in the number of SMEs, because the fiscal policy of Romania does not provide any help for this sector. Furthermore adopting the flat tax and increasing taxes (VAT and profit tax) is not a happy choice, because it will deepen the poor economic situation as it is. Increasing VAT will lead to decreasing the buying power and as a direct consequence will increase inflation.
We cannot go on in this rhythm, because we need to build a solid infrastructure, invest in health and education and we need to look for the future. Our economy is not based on innovation, is not green and our government does not seem to think for the future. They are acting on CARPE DIEM, but when you rule a country, you should think a bit of the future.
The effects of the crisis were both negative and positive. The economic downturn has increased work productivity if we consider its correlation with wages in the private sector.
Since the economic crisis has started imports have decreased and consume has registered a downward trend. Unfortunately Romania exports goods that had a small economic value- especially in industry- textiles and furniture, and in commerce. 75% of the exterior commerce of Romania is related to the European Union where my country’s market share is of around 1%, a small figure taking into account that is 7th country in EU if we take into account the population. Moreover Romania is dependent on imports, because the country does not have a mechanism of industrial cluster.
I hope that by the time I finish my Bachelor Thesis I will see some realistic measures taken by our government. For the time being I am extremely disappointed.

