Économie et Statistique n° 383-384-385 - 2005Approaches to Poverty: the Test of International Comparisons
Romania: subsistence farming after imposed industrialisation
Following a sustained policy of industrialisation and infrastructure development, the urban population tripled during the Communist regime and its proportion of the total population rose from 24.7% in 1950 to 54.3% in 1990. The migratory trend started to turn around in 1996. This return to the countryside was triggered by the downturn in employment in the secondary and tertiary sectors and land restitution. During the transition to the market economy, real earnings fell sharply due to inflation. General economic disorder and a drop in production also contributed to this slump in real earnings, which affected all social groups. The existence of an underground economy generally deemed to have grown at a worryingly fast rate has had a strong effect on the (rising) level and distribution of income (increase in inequalities). The Communist regime's extensive housing estate building programme, mainly in the urban areas, gave virtually all Romanian citizens housing. These State-owned dwellings were sold to their tenants at highly advantageous prices after 1989, such that 95% of households now own their own housing. However, the downturn in construction in the 1990s prompted a housing crisis. Demand for housing is now much higher than supply, especially in the public housing domain. Housing conditions remain poor particularly in the rural areas due to a lack of public facilities. The sharp rise in the cost of charges in urban areas has gone hand in hand with a drop in households' financial capacities. Given these circumstances, an increasing number of dwellings are no longer connected to the public networks. The frequency of poverty is particularly high in rural areas where a large proportion of households have low earnings, poor endowments and sub-standard dwellings. A high percentage of urban households also have to deal with the pressure of growing financial difficulties due to unemployment and low pension payments.