Dependent Development and Its Limits: Romanian Capitalism after the Great Recession

While European Union (EU) membership offers more opportunities for convergence and limited economic volatility relative to the 1990s, it did not drastically weaken the causal generators of the developmental divide between Eastern and Western Europe. While most countries in the EU’s eastern part have followed a path of liberalism and hyper-integrationism, frustration with the effects of the enduring East-West social and economic gap is perhaps one of the deepest causes of the crisis of political liberalism in the region today.

But how has the Great Recession weakened the liberal-hyperintegrationist strategy and the resulting dependent market economy model of capitalism and increased tensions?

A working paper by Cornel Ban looks at the case of Romania, a country that converged with the Visegrád countries in terms of export complexity, flexible industrial relations and impoverished innovation regimes, while converging with the Baltics in terms of institutionalizing socially disembedded neoliberalism. Ban claims that three main transformative processes remain understudied by existing literature: the rise of a public-private system for liquidity assistance in times of bond market stress, the dramatic shrinking of the supply of labor and skills by migration and the rise of a state-led enterprise policy aimed at overcoming some of the bottlenecks of independence.

The paper finds that the emergence of ‘deep structures’ of financial dependence bind the state in distinctive and under-appreciated ways. Moreover, multinational corporations have not been as passive with regard to labor training as much of the existing literature claims. The author also explains that, by deploying state aid schemes with the objective of increasing the complexity of the economy, the Romanian state does not fit the role assigned to it by the literature on dependent market economy or on neoliberalism.