SOME ASPECTS OF DATA WAREHOUSING IN TOURISM INDUSTRY

ISSN 1582-6554 PUBLISHED TWICE A YEAR www.seap.usv.ro/annals

CNCSISclassified journal,

B+ categoryRevistă cotată

CNCSIS,categoria B+

THE ANNALS OF THE"ŞTEFAN CEL MARE"

UNIVERSITY SUCEAVA.FASCICLE OF THE FACULTY OF

ECONOMICS ANDPUBLIC ADMINISTRATION

VOLUME 9, NO. 1(9), 2009

Editura Universităţii Suceava

The Annals of The "Ştefan cel Mare" University Suceava. Fascicle of The Faculty of Economics and Public Administration Volume 9, No.1(9), 2009

EDITORIAL BOARD:

Editor-in-chief: Carmen NĂSTASEGeneral editorial secretary: Adrian Liviu SCUTARIUEditors: Elena HLACIUC, Carmen CHAŞOVSCHI, Mariana LUPAN, Ovidiu Florin HURJUI

SCIENTIFIC COMMITTEE:

Angela ALBU, „Ştefan cel Mare” University of Suceava, RomaniaGeorge P. BABU, University of Southern Mississippi, USAChristian BAUMGARTNER, International Friends of Nature, AustriaGrigore BELOSTECINIC, ASEM, Chi şinău, Republic of MoldovaIonel BOSTAN, „Alexandru Ioan Cuza” University of Iaşi, RomaniaAurel BURCIU, „Ştefan cel Mare” University of Suceava, RomaniaGheorghe CÂRSTEA, Academy of Economic Studies, Bucharest , RomaniaSlobodan CEROVIC, Singidunum University, Belgrade, SerbiaSimion CERTAN, State University of Chişinău, Republic of MoldovaCarmen CHAŞOVSCHI, „Ştefan cel Mare” University of Suceava, RomaniaLiliana ELMAZI, Tirana University, AlbaniaCristian Valentin HAPENCIUC, „Ştefan cel Mare” University of Suceava, RomaniaElena HLACIUC, „Ştefan cel Mare” University of Suceava, RomaniaElena IFTIME, „Ştefan cel Mare” University of Suceava, RomaniaMarian JALENCU, State University of Chişinău, Republic of MoldovaMiika KAJANUS, Savonia University of Applied Sciences, Iisalmi, FinlandStefanos KARAGIANNIS, Institute of Tourism Research, Athens, GreeceMaria MUREŞAN, Academy of Economic Studies, Bucuresti, RomaniaCarmen NĂSTASE, „Ştefan cel Mare” University of Suceava, Roman iaAlexandru NEDELEA, „Ştefan cel Mare” University of Suceava, RomaniaIon PÂRŢACHI, ASEM, Chişinău, Republic of MoldovaRusalim PETRIŞ, „Ştefan cel Mare” University of Suceava, RomaniaAbraham PIZAM, University of Central Florida, Orlando, FloridaIon POHOAŢĂ, „Alexandru Ioan Cuza” University of Iaşi, RomaniaGabriela PRELIPCEAN, „Ştefan cel Mare” University of Suceava, RomaniaGheorghe SANDU, „Ştefan cel Mare” University of Suceava, RomaniaPetru SANDU, Elizabethtown College, Pennsylvania, USAPavlo SHYLEPNYTSYI, Bucovina State Academy of Finance, Chernivtsi, UkraineDoru TILIUŢE, „Ştefan cel Mare” University of Suceava, RomaniaIon TORONCIUC, National University Yuri Fedcovici, Chernivtsi, UkraineViorel ŢURCANU, ASEM, Chişinău, Republic of MoldovaDiego VARELA PEDREIRA, University of A Coruna, SpainRăzvan VIORESCU, „Ştefan cel Mare” University of Suceava, RomaniaValeriy YEVDOKYMENKO, National University Yuri Fedcovici, Chernivtsi, Ukraine

Text review: Ovidiu Florin HURJUI, Adrian Liviu SCUTARIU. Cover design: Adrian Liviu SCUTARIU

Contact:

Faculty of Economics and Public Administration„Ştefan cel Mare” University of SuceavaStr. Universităţii nr. 13, Corp H, Camera H108720229 SUCEAVA, ROMANIAPhone: (+40) 230 216147 int. 294E-mail: cercetare@seap.usv.roJournal web site: www.seap.usv.ro/annalsFaculty web site: www.seap.usv.roUniversity web site: www.usv.ro

CONTENTS

SECTION 1ECONOMY, TRADE, SERVICES ................................ ................................ .............................. 9

PROGNOSTICATION OF PRODUCTION OF GOODS ON THE BASIS OF FUZZYSETS................................ ................................ ................................ ................................ ............ 11

Senior teacher Olesya TOTSKAVolyn National University, UkraineAssociate Professor Ph.D. Alexandru NEDELEA“Stefan cel Mare” University of Suceava, Romania

THE OBJECTIVE AND THE INSTRUMENTS OF EUROPEAN POLITICS IN THECOMPETITION DOMAIN ................................ ................................ ................................ ........ 16

Professor PhD. Maria MUREŞANThe Academy of Economical Studies, Bucharest, Romania

AN ANALYSIS OF THE COMPANIES’ ECONOMIC GROWTH CAPACITY................... 23Associate Professor PhD. Camelia BURJAProfessor PhD. Vasile BURJAUniversity „1 Decembrie 1918”of Alba Iulia, Romania

THE LINK BETWEEN LOCAL AND GLOBAL MANAGEMENT IN THE RURALTOURISM................................ ................................ ................................ ................................ ... 31

Lecturer PhD. Rodica-Manuela GOGONEAProfessor Ph.D. Cristian-Valentin HAPENCIUCAssociate Professor PhD. Irina -Maria DRĂGANAcademy of Economic Studies, Bucharest, Romania

DEVELOPMENT OF LIVESTOCK SEC TOR THROUGH LEADING NGO INBANGLADESH ................................ ................................ ................................ .......................... 36

Assistant Professor Mohammad SHAMSUDDOHADepartment of Marketing, University of Chittagong, Chittagong, Bangladesh

THE LASTING DEVELOPMENT OF THE ROMANIAN AND THE RELATIONSERVICES-ECONOMIC GROWTH-ECONOMIC DEVELOPMENT ................................ . 45

Teaching Assistant, doctoral student Cristina MANIURomanian-American University – Bucharest, RomaniaLecturer PhD. Manuela-Rodica GOGONEAAcademy of Economic Studies - Bucharest, RomaniaProfessor PhD. Marian ZAHARIARomanian- American University – Bucharest, Romania

REGIONAL DEVELOPMENT IN THE CONTEXT OF THE EUROPEAN UNIONINTEGRATION................................ ................................ ................................ .......................... 51

Lecturer PhD. Mihai POPESCUAssociate Professor PhD. Carmen N ĂSTASEAssistant PhD. Student Adrian Liviu SCUTARIU“Ştefan cel Mare” University of Suceava, Romania

GLOBALIZATION VS. ROMANIAN COMPETITIVENESS ................................ ................ 57Associate Professor Ph.D. Mihaela BÎRSANUniversity Lecturer, Ph.D. candidate Ştefăniţă ŞUŞU„Ştefan cel Mare” University of Suceava, Romania

FREE TRADING – THE STRONG DIMENSION OF ECONOMIC LIBERALISM ............ 64Lecturer PhD. Rozalia KICSI“Ştefan cel Mare” University of Suceava, Romania

COMPETITIVENESS OF ROMANIAN TOURISM IN THE AGE OF GLOBAL IZATION 71University Lecturer, Ph.D. candidate Ştefăniţă ŞUŞUAssociate Professor Ph.D. Mihaela BÎRSAN„Ştefan cel Mare” University of Suceava, Romania

STRATEGIC OPTIONS OF THE LOW-COST COMPANIES ................................ .............. 81Assistant PhD. Student Laura DIACONUFaculty of Economics and Business Administration“Al. I. Cuza” University Iaşi, Romania

INTEGRATED MARKETING COMMUNICATION IN POLITICS? ................................ ... 88Assistant PhD. Student Ovidiu-Aurel GHIUŢĂUniversity Ştefan cel Mare Suceava, Romania

COMPETITIVITY AND THE IMPACT OF SERVICE COMMERCE LIBERALIZATIONON THE ACTIVITY OF TOURISM AGENCIES ................................ ................................ .... 94

Associate Professor PhD. Daniela FIROIUEc. PhD. Student Cristina Laura MANIURomanian – American University, Bucharest, Romania

SECTION 2MANAGEMENT AND BUSINESS ADMINISTRATION ................................ ..................... 100

ENTREPRENEURIAL PROGRAM FOR WOMEN: AN EVALUATIVE STUDY ON ASAAND BRAC ................................ ................................ ................................ ............................... 101

Associate Professor Mohammad SHAMSUDDOHADepartment of Marketing, University of Chittagong, BangladeshAssociate Professor Ph.D. Alexandru NEDELEAStefan cel Mare University Suceava, Romania

A STUDY REGARDING THE LEADERSHIP AND ORGANIZATION CULTURE OF ASERVICE PROVIDER ................................ ................................ ................................ ............. 110

Professor Ph.D. Marian ZAHARIARomanian American University, Buchares t, RomaniaProfessor Ph.D. Cristian-Valentin HAPENCIUCUniversity “Ştefan cel Mare”, Suceav a, RomaniaLecturer Ph.D. Nicoleta-Rossela DUMITRURomanian American University, Buchares t, Romania

ASPECTS REGARDING THE EVOLUTION OF THE FOREIGN DIRECTINVESTMENTS IN ROMANIA BETWEEN 1990 -2007................................ ........................ 117

Assistant PhD. Student Adrian Liviu SCUTARIUAssociate Professor PhD. Carmen NĂSTASE“Ştefan cel Mare” University of Suceava, Romania

HUMAN RESOURCES MANAGEMENT STATE OF THE ART IN TERRITORIALPROFILE ................................ ................................ ................................ ................................ .. 124

Associate Professor PhD. Carmen CHAŞOVSCHIAsistant Otilia ALBUMaster Student Codrin COCIERUStefan cel Mare University of Suceava

GLOBALIZATION APPROACHES – IDEAS CONFRONTATIONS ................................ . 132Lecturer PhD. Mariana LUPANProfessor PhD. Gabriela PRELIPCEAN“Stefan cel Mare” University of Suceava, Romania

MICROECONOMIC FUNDAMENTS OF FOREIGN DIRECT INVESTMENTSCONTAGION EFFECTS: ROMANIA AND EUROPEAN UNION CASE ........................... 141

Professor PhD. Ioan TALPOŞProfessor PhD.Bogdan DIMAAssistant Professor PhD. Ioan Mihai MUTAŞCUTeaching Assistant PhD. Candidate Oana Ramona LOBONŢWest University, Timisoara, Faculty of Economics And Business Administration, Romania

THE NATION STATE IN THE CONTEXT OF THE INTERNATIONAL MARKETGLOBALIZATION ................................ ................................ ................................ .................. 151

Lecturer PhD. Student Carmen BOGHEANLecturer PhD. Mihai POPESCULecturer PhD. Mariana LUPANLecturer PhD. Student Florin BOGHEAN“Ştefan cel Mare” University of Suceava, Romania

THE FINANCING POLICY ON THE REAL ESTATE MARKET IN ROMANIA ............. 157Lecturer PhD. Oana Mihaela VĂSIOIUEcological University from Bucharest, Romania

THE IMPACT OF CULTURAL AND MOTIVATIONAL ENVIRONMENT WITHIN ANORGANISATION UPON HUMAN RESOURCES ................................ ................................ 163

Lecturer Ph.D. Alunica MORARIU“Stefan cel Mare” University of Suceava, RomaniaEc. Ph.D. Candidate Răzvan SERGHIUŢĂ”Al. I. Cuza” University of Iasi, RomaniaAssociate Professor Ph.D. Carmen CHA ŞOVSCHI“Stefan cel Mare” University of Suceava, Romania

FOREIGN DIRECT INVESTMENTS – CATALYST FOR ECONOMIC GROWTH INCENTRAL AND EASTERN EUROPE ................................ ................................ ................... 170

Lecturer PhD Roxana HETEŞLecturer PhD student Cosmin ENACHEAssociate Professor PhD Nicoleta MOLDOVANWest University of Timisoara, Faculty of Economics and Business Administration, Romania

MARKETING BUDGET DURING THE ECONOMIC CRISIS PERIOD IN ROMANIA .. 177Assist. Professor PhD. Candidate Monica BÎJAAssociate Professor PhD. Ramona LILEAurel Vlaicu University, Faculty of Economic Sciences, Arad, Romania

SHORT INTROSPECTION IN FORMATION PROGRAMS FROM ROMANIA AS EUSTATE MEMBER ................................ ................................ ................................ .................... 182

Assistant PhD. Student Lucia MOROSAN -DANILAAssisant Otilia Maria ALBU„Stefan cel Mare” University of Suceava, Romania

SECTION 3ACCOUNTING - FINANCES................................ ................................ ................................ .. 191

ASSESSMENT AND RECOGNITION OF STOCKS IN ACCOUNTING ACCORDING TOINTERNATIONAL STANDARD OF FINANCIAL REPORT IAS 2 – STOCKS ................ 192

Professor PhD. Elena HLACIUCStefan cel Mare University of Suceava, RomaniaProfessor PhD. Dorel MATESWest University of Timisoara, RomaniaAssistant PhD. Student Marian SOCOLIUC

Stefan cel Mare University of Suceava, RomaniaTHE REGIME OF INFORMATION DERIVED FROM THE APPLICATIONPROCEDURES FOR STATUTORY AUDIT ................................ ................................ ......... 198

Professor PhD. Ionel BOSTAN“Ştefan cel Mare” University of Suceava, Romania

THE PERTINENCE OF INFORMATION FURNISHED BY FINANCIALSITUATIONS................................ ................................ ................................ ............................ 202

Lecturer PhD. Student Florin BOGHEANProfessor PhD. Elena HLACIUCLecturer PhD. Student Carmen BOGHEAN“Ştefan cel Mare”University of Suceava, Romania

A RESEARCH ON THE FINANCIAL DISCLOSURE CHOICES WITHIN LISTEDCOMPANIES................................ ................................ ................................ ............................ 209

Associate Prof. PhD. Daniela Artemisa CALULecturer PhD. Mădălina DUMITRULecturer PhD. Ileana Cosmina PITULICEAssociate Prof. PhD. Viorel AVRAMAssociate Prof. PhD. Aurelia ŞTEFĂNESCULecturer PhD. Student Andreea PONORÎCĂASE Bucureşti, România

CORRELATIONS CONCERNING THE ASPECTS OF CORPORATE GOVERNANCEAND THE USERS OF FINANCIAL – ACCOUNTING INFORMATION ........................... 219

Lecturer PhD. Camelia Cătălina MIHALCIUC„Ştefan cel Mare” University of Suceava, RomaniaProfessor PhD. Silvia Melania PETRESCU„Al. I. Cuza” University of Iaşi, Romania

THE CONSEQUENCES OF THE CAPITAL REGULATION IN CREDIT INSTITUTIONSACCORDING TO THE BASEL I AGREEMENTS ................................ ............................... 225

Lecturer PhD. Student Mariana VLADAssociate Professor PhD. Mihaela TULVINSCHI“Ştefan cel Mare” University of Suceava, Romania

HARMONIZED STATUTORY AUDIT - LEGAL LIABILITY AND SANCTIONS ........... 231Professor PhD. Ionel BOSTANUniversitatea “Ştefan cel Mare” Suceava, Romania

SUPREME AUDIT INSTITUTIONS. COMPARATIVE STUDY FOR THE CENTRAL ANDEASTERN EUROPEAN COUNTRIES MEMBERS OF THE EUROPEAN UNION .......... 235

PhD. Student Mirela-Oana PINTEAFaculty of Economics and Business Administra tion, Babeş-Bolyai University Cluj-Napoca,RomaniaLecturer PhD. Sorin Adrian ACHIMFaculty of Economics and Business Administration, Babeş -Bolyai University Cluj-Napoca,Romania

COMPARATIVE STUDY REGARDING EVOLUTION OF THE HARMONISATION OFTHE ACCOUNTING PROCESS AT NATIONAL, EUROPEAN AND INTERNATIONALLEVEL ................................ ................................ ................................ ................................ ...... 243

Associate Professor PhD. Felix ARIONUSAMV-Cluj Napoca, RomaniaUniversity Assistant PhD Student Veronica GROSU“Stefan cel Mare” University of Suceava, RomaniaLecturer PhD.Cristian PERESWest University of Timisoara, RomaniaUniversity Assistant PhD. Student Bogdan COTLET

West University of Timisoara, RomaniaTHE LIQUIDITY RATIOS AND THEIR SIGNIFICANCE IN THE FINANCIALEQUILIBRIUM OF THE FIRMS ................................ ................................ ........................... 252

Lecturer PhD. Student Ciprian Dan COSTEAVasile Goldis West University of Arad, Satu Mare branch, RomaniaPhD. Student Florin HOSTIUCAlexandru Ioan Cuza University of Iasi, Romania

OFFSHORE AREAS – THE KEY TO SUCCESS IN THE FISCAL REGIME .................... 262Economist Engineer Florin Ovidiu HURJUIProfessor Doctor Gheorghe SANDU“Ştefan cel Mare” University, Suceava, Romania

SECTION 4STATISTICS, DATA PROCESSING (INFORMATICS) AND MATHEMATICS .............. 267

BACKTRACKING APPLICATIONS DEVELOPED IN C # ................................ ................ 268Assoc.Prof. PhD. Valeriu LUPU„Stefan cel Mare” University, Suceava,RomaniaPhD. Student Engineer Cătălin LUPUMinistry of Administration and Interior, Suceava, RomaniaGrigore VASILACHEFinancial-Banking College, Head of IT Depa rtament, Chisinau, Moldova

THE SYNTHETICAL INDICATORS OF VARIABILITYAN APPROACH IN TOURISM ................................ ................................ .............................. 279

Associate Professor PhD Elisabeta R. ROŞCA„Stefan cel Mare” University of Suceava, Romania

SOME ASPECTS OF DATA WAREHOUSING IN TOURISM INDUSTRY ....................... 290PhD. Mirela DANUBIANUPhD. Candidate Tiberiu SOCACIUPhD. Candidate Adina BARILA“Stefan cel Mare” University of Suceava, Romania

ECONOMETRIC ANALYSIS ON THE INFLUENCE OF DIFFERENT FACTORSOVER THE SHARE OF TURNOVER IN TOURISM ................................ ........................... 297

Lecturer PhD. Student Anamaria G. MACOVEIAssistant PhD. Student Ionuţ BĂLAN“Ştefan cel Mare” University of Suceava, Romania

IMPLEMENTATION METHOD "DIVIDE AND IMPERA" USING OBJECT -ORIENTEDPROGRAMMING IN C # ................................ ................................ ................................ ........ 307

PhD. Student engineer Cătălin LUPUMinistry of Administration and Interior, Suceava, RomaniaAssoc. Prof. PhD.Valeriu LUPU„Stefan cel Mare” University, , Suceava,RomaniaProfessor of Informatics Petru ARCANNational College of Commerce , Chisinau, Moldova

BHP UNIVERSALITY HYPOTHESIS VERIFICATION FOR BET-FI INDEX OFBUCHAREST STOCK EXCHANGE................................ ................................ ...................... 320

PhD. Student, Tiberiu SOCACIUPhD. Mirela DANUBIANU“Ştefan cel Mare”University of Suceava, Romania

SECTION 5LAW AND PUBLIC ADMINISTRATION ................................ ................................ ............. 326

PUBLIC POLICIES FOR FLEXIBILITY CONCERNINGTHE EUROPEAN MARKET OF HUMAN RESOURCES ................................ .................... 327

Lecturer PhD. Alunica MORARIU“Stefan cel Mare” University of Suceava, RomaniaAssociate Professor PhD. Vadim DUMITRAŞCU„Petre Andrei” University of Iasi, RomaniaAssociate Professor PhD.Marian JALENCU„State University from MoldovaLecturer PhD. candidate Cristina BĂLĂNEASA“Stefan cel Mare” University of Suceava, Romania

ECONOMICS’ DIPLOMACY AND ROMANIA’S FOREIGNINTERESTS PROMOTION ................................ ................................ ................................ .... 335

Lecturer Ph.D. Marilena-Oana NEDELEAStefan cel Mare University Suceava, Romania

THE ROLE OF TRADE UNIONS IN REGULATING LABOR RELATIONS .................... 341Lecturer Ph.D. Candidate Cristina BĂLĂNEASA“Stefan cel Mare” University of Suceava, RomaniaProfessor PhD. Aurel MANOLESCUAcademy of Economic Studies Bucharest, Romania

THE JUDICIAL COOPERATION IN CRIMINAL MATTERSWITHIN THE EUROPEAN UNION ................................ ................................ ....................... 348

Professor PhD. Vasile PAVALEANU“Stefan cel Mare” University of Suceava, Romania

DECENTRALIZATION AND DECONCETRATION - NECESSARY CONDITIONS FORTHE EMERGENCE OF LOCAL DEMOCRACY ELEMENTS ................................ ........... 352

Lecturer PhD. Student Irina Adriana BILOUSEAC„Stefan cel Mare” University of Suceava, Romania

THE EUROPEANIZATION OF THE CIVIL SERVICES IN THE COMMUNITYTERRITORY ................................ ................................ ................................ ............................ 358

Lecturer PhD Student Ciprian UNGUREANU"Ştefan cel Mare" University of Suceava, Romania

BOOK REVIEW

THE GOVERNMENT OF THE EUROPEAN UNION , DIEGO VARELA............................. 365Andreea GOVNA Alexandru Ioan Cuza University of Iaşi, Romania

INSTRUCTIUNI UTILE PENTRU AUTORI / AUTHOR GUIDELINES ............................ 369

SECTION 1

ECONOMY, TRADE, SERVICES

PROGNOSTICATION OF PRODUCTION OF GOODS ON THE BASIS OF FUZZY SETS

Senior teacher Olesya TOTSKAVolyn National University, Ukraine

Associate Professor Ph.D. Alexandru NEDELEA“Stefan cel Mare” University of Suceava, Romania

Abstract:In the article the authors forecast the issue of commodities by the enterprises of food retail industry of the

Volyn region of Ukraine by the use of the fuzzy sets theory. The algorithm of such foresight consists in passing of thefollowing stages: construction of dynamic rows of issue of ten basic food stuffs in the last few years; equipping themafter growth; construction fuzzy interval for every commodity; determination optimistic estimation for every index. Onthe basis of obtained information the ge neral issue of food products is calculated also in next years. Determination ofoptimistic estimation is conducted after the original method developed by an author. Basic its idea consists in that aninterval which answers the “golden” mean of dynamic row is most credible.

Keywords: fuzzy intervals, food retail industry, production of goods, optimistic estimation, pessimisticestimation.

JEL Classification: A12, D24

INTRODUCTION

As known, the logistic is the system instrument of management, which allow s to manage allmaterial streams and supplies, and also financial and informative streams which accompany movingof materials and services on an enterprise. And one of functions of management is prognosticationon the basis of which managers carry out plan ning of activity of the enterprises.

For prognostication of issue of commodities in any sphere, in particular in food retailindustry, next to classic (least squares and exponential smoothing), infrequently -accessed(probabilistic) and it is comparative ne w (neurons networks) by methods it is expedient to applyalso fuzzy numbers and to examine them as fuzzy information.

To the use of unclear measures and integrals for the decision of the poorly structured tasksdevoted the scientific publications S. Arapov, I. Arapova, A. Matvijchuk, N. Mytsa, O. Rybytska,M. Siavavko, M. Solyanichenko, L. Zadeh, G. Zaichenko et al [1-7]. In particular, they are appliedfor estimation of internals of public service [1], decision -making close [2-3], previous analysis ofissuer of securities [4, 177-186], prognostication of income of enterprises of playing business [5],prognostication of volume of realization of products by bread -making factories [6] and others likethat. And basic work in the fuzzy sets theory considers the book of the American mathematicianL. Zadeh published in 1965.

The purpose of writing of this article is prognostication of indexes of production of basictypes of food products by the enterprises of the Volyn region of Ukraine with the help of fuzzy sets.For its realization it is needed to untie such tasks:

1) to build the dynamic rows of issue of commodities in the last few years (1990 and 1995 -2005);

2) to put in order them after growth;3) to build for every commodity fuzzy interval of production;4) to define optimistic estimation for every index.

EXPOSITION OF BASIC MATERIAL

The fuzzy set A on the set X is the aggregate of pair of kind (x, µA(x)), where xX, and µA

it is function of x[0, 1], which is named the function of belonging of fuz zy set of A. Value µA(x)for concrete x is considered the measure of belonging of this element to the fuzzy set of A [3, 490].More frequent in all for forming of function of belonging choose trapezoids and triangles methods.

Above the fuzzy sets, as well as above ordinary, it is possible to conduct the variedoperations, in particular addition (logical objection), association (logical copula “or”), crossing(logical copula of “³”), work, presentation to the degree, concentration (presentation to the degree2), tension (presentation to the degree 0,5), protuberant combination [2, 39], difference, Dekartianwork and others like that.

During the decision-making on the basis of fuzzy sets use both fuzzy numbers and fuzzyintervals.

An unclear number is the protuberant normalized fuzzy set A of the set of material numbersX=R, for which one number is only x 0 with µА(х0)=1, and µА(х) it is a lump-continuous function.

An unclear interval is the protuberant normalized fuzzy set A of the set of material numbersX=R, for which exists anymore as one number with µА(х)=1, and µА(х) it is a lump-continuousfunction [7, 84].

As expedience of image of fuzzy sizes in the form of trapezoids consists in the comfort ofmathematical calculations and considerable possibilities fro m presentation of functions [5, 181], wewill give the indexes of production of basic food stuffs exactly in the form similar to the trapezoidfuzzy intervals by such four:

commodity i =(l i; hi; ai; bi),where li is lower value of optimistic (with most mea sure of belonging) estimation of

parameter i;hi - it is high value of optimistic estimation of parameter i;ai - it is difference between the low bounds of optimistic and pessimistic (with the least measure ofbelonging) estimations of parameter i;bi - it is difference between the high bounds of pessimistic and optimistic estimations of parameteri.

Thus there is a question, how on the basis of rows of dynamics of issue of food products tochoose the high values of optimistic and pessimistic estimations l ower and. Pessimistic estimationswe decided to depict as least and most value of production of food stuffs in Volyn region ofUkraine for analyzable period (1990 and 1995 -2005).

And for determination of optimistic interval we developed such method:1) location of elements of sentinel row in the order of growth;2) calculation of amount of elements of sentinel row of n;3) determination of optimistic interval (with most measure of belonging):а) if n is not pair number and size n/2 – also not pair, central n/2 elements will be included

in the sought interval after, thus the first from these elements will be his low bound, and last –overhead. The row of dynamics in this case will consist of such three parts: n/4+n/2+n/4=n.Number of lower element of optimistic interval – (n/4+1), and overhead – (n/4+n/2=3/4*n);

б) if n is not pair number, and size n/2 it is odd, central n/2+1 elements will be included inthe sought interval after, thus the first from these elements will be his low bound, and last –overhead. The row of dynamics in this case will consist of such three parts: (n/4 -1/2)+(n/2+1)+(n/4-1/2)=n. Number of lower element of optimistic interval – ((n/4-1/2)+1=n/4+1/2), and overhead –((n/4-1/2)+(n/2+1)=3/4*n+1/2);

в) if n is odd number, central n/2 -1/2 elements will be included in the sought interval after,thus the first from these elements will be his low bound, and last – overhead. The row of dynamicsin this case will consist of such three parts: (n/4+1/4)+(n/2 -1/2)+(n/4+1/4)=n. Number of lowerelement of optimistic interval – ((n/4+1/4)+1=n/4+5/4), and overhead – ((n/4+1/4)+(n/2-1/2)=3/4*n-1/4).

The basic idea of this method consists in that most credible, to our opinion, there is aninterval which answers the “golden” mean of dynamic row.

We will build the unclear intervals of issue of food products in the Volyn region of Ukraineon the basis of information for 1995 -2005, but will take advantage also of information for 1990year, as exactly then the indexes of production of food stuffs were maximal practically after al lkinds (see table no.1).

Table no. 1 Volumes of output of food stuffs in the Volyn region of Ukraine, thousand of tons

YearCommo-

dity 1Commo-

dity 2Commo-

dity 3Commo-

dity 4Commo-

dity 5Commo-

dity 6Commo-

dity 7Commo-

dity 8Commo-

dity 9Commo-dity 10

1990 61,8 13,5 18,3 106,0 6,0 221,0 271,2 184,2 15,7 6,41995 23,1 4,7 6,3 22,9 2,0 81,5 136,4 59,5 4,3 2,11996 21,8 4,0 5,7 15,8 1,7 103,3 112,9 49,3 4,3 2,81997 20,9 4,7 4,7 9,4 1,5 67,9 84,7 44,5 4,6 1,81998 16,2 3,0 4,0 8,2 1,5 67,8 83,0 39,9 5,4 2,71999 12,5 3,1 4,8 9,7 1,3 76,4 84,1 41,5 7,1 6,22000 13,6 6,7 6,3 12,4 3,2 71,0 90,6 42,7 7,4 7,02001 13,2 12,1 7,1 27,8 5,9 70,5 70,3 45,4 6,0 4,52002 12,3 16,7 4,0 25,2 6,2 77,8 63,5 45,7 3,9 5,22003 16,1 13,8 4,0 32,8 6,4 223,2 74,8 49,2 8,2 10,42004 19,8 17,0 3,7 37,1 8,7 181,2 78,1 48,7 11,0 9,92005 22,2 13,9 4,3 40,9 8,5 198,7 72,3 46,6 8,5 10,2

It is concluded by an author on basis [8, 67; 9, 79; 10, 83; 11, 83]

In this table: commodity 1 is meat and meat wares of 1-st category;commodity 2 are sausages wares;commodity 3 is animal butter;commodity 4 is products from a full -milk (in the count on milk);commodity 5 are fat cheeses, including a brynza;commodity 6 is the granulated sugar;commodity 7 is flour;commodity 8 is bread and bread wares;commodity 9 are pastries wares;commodity 10 are macaronis wares.

Farther we will dispose the elements of sentinels rows in the order of growth (see table 2).

Table no. 2 Production volumes of food stuffs in the order of gr owth, thousand of tons

Commo-dity 1

Commo-dity 2

Commo-dity 3

Commo-dity 4

Commo-dity 5

Commo-dity 6

Commo-dity 7

Commo-dity 8

Commo-dity 9

Commo-dity 10

12,3 3,0 3,7 8,2 1,3 67,8 63,5 39,9 3,9 1,812,5 3,1 4,0 9,4 1,5 67,9 70,3 41,5 4,3 2,113,2 4,0 4,0 9,7 1,5 70,5 72,3 42,7 4,3 2,713,6 4,7 4,0 12,4 1,7 71,0 74,8 44,5 4,6 2,816,1 4,7 4,3 15,8 2,0 76,4 78,1 45,4 5,4 4,516,2 6,7 4,7 22,9 3,2 77,8 83,0 45,7 6,0 5,219,8 12,1 4,8 25,2 5,9 81,5 84,1 46,6 7,1 6,220,9 13,5 5,7 27,8 6,0 103,3 84,7 48,7 7,4 6,421,8 13,8 6,3 32,8 6,2 181,2 90,6 49,2 8,2 7,022,2 13,9 6,3 37,1 6,4 198,7 112,9 49,3 8,5 9,923,1 16,7 7,1 40,9 8,5 221,0 136,4 59,5 11,0 10,261,8 17,0 18,3 106,0 8,7 223,2 271,2 184,2 15,7 10,4

We will represent the fuzzy int ervals of volumes of output of basic food commodities bysuch four:commodity 1=(13,6; 21,8; 13,6 -12,3; 61,8-21,8)=(13,6; 21,8; 1,3; 40);commodity 2=(4,7; 13,8; 4,7-3; 17-13,8)=(4,7; 13,8; 1,7; 3,2);commodity 3=(4; 6,3; 4-3,7; 18,3-6,3)=(4; 6,3; 0,3; 12);commodity 4=(12,4; 32,8; 12,4 -8,2; 106-32,8)=(12,4; 32,8; 4,2; 73,2);

commodity 5=(1,7; 6,2; 1,7-1,3; 8,7-6,2)=(1,7; 6,2; 0,4; 2,5);commodity 6=(71; 181,2; 71-67,8; 223,2-181,2)=(71; 181,2; 3,2; 42);commodity 7=(74,8; 90,6; 74,8 -63,5; 271,2-90,6)=(74,8; 90,6; 11,3; 180,6);commodity 8=(44,5; 49,2; 44,5 -39,9; 184,2-49,2)=(44,5; 49,2; 4,6; 135);commodity 9=(4,6; 8,2; 4,6-3,9; 15,7-8,2)=(4,6; 8,2; 0,7; 7,5);commodity 10=(2,8; 7; 2,8-1,8; 10,4-7)=(2,8; 7; 1; 3,4).

And the sum of common production of food stuffs will be association of previous ten four:S=(13,6; 21,8; 1,3; 40) (4,7; 13,8; 1,7; 3,2) (4; 6,3; 0,3; 12) (12,4; 32,8; 4,2; 73,2) (1,7; 6,2; 0,4; 2,5) (71; 181,2; 3,2; 42) (74,8; 90,6; 11,3; 180,6) (44,5; 49,2; 4,6;

135) (4,6; 8,2; 0,7; 7,5) (2,8; 7; 1; 3,4)=(13,6+4,7+4+12,4+1,7+71+74,8+44,5+4,6+2,8;

21,8+13,8+6,3+32,8+6,2+181,2++90,6+49,2+8,2+7; 1,3+1,7+0,3+4,2+0,4+3,2+11,3+4,6+0,7+1;

40+3,2+12+73,2+2,5+42+180,6+135+7,5+3,4)==(234,1; 417,1; 28,7; 499,4).

We will represent the graphically got unclear interval on fig. 1.

0 200 400 600 800 1000thousand of tons

Figure no. 1. Fuzzy interval of common production

From him evidently, that in next years the general issue of food products is most credible inscopes from 234,1 to 417,1 thousand of to ns. In any case he can not go down below 205,4thousands of tons (234,1-28,7) or to rise higher 916,5 thousands of tons (417,1+499,4).

For acceleration of calculations to our opinion it is expedient to project in any algorithmiclanguage program which will automatize construction of similar to the trapezoid fuzzy intervals fordynamic rows.

CONCLUSIONS

As a result of the conducted analysis it is possible to draw such conclusions:1) in next years production is most credible from 13,6 to 21,8 thousand of tons meat; from

4,7 to 13,8 thousand of tons sausages wares; from 4 to 6,3 thousand of tons animal butter; from 12,4to 32,8 thousand of tons products from a full -milk (in the count on milk); from 1,7 to 6,2 thousandof tons fat cheeses, including a brynza; fr om 71 to 181,2 thousand of tons sand of sugar; from 74,8to 90,6 thousand of tons flour; from 44,5 to 49,2 thousand of tons bread and bread wares; from 4,6to 8,2 thousand of tons pastries wares; from 2,8 to 7,1 thousand of tons macaronis wares;

2) the general issue of basic food stuffs in next years will be in scopes from 234,1 to 417,1thousand of tons;

3) developed by an author the method of determination of optimistic estimations of unclearintervals can be used in the different spheres of production, as at t he level of one enterprise soindustries on the whole.

BIBLIOGRAPHY

1. Arapova I., Arapov S., Solyanichenko M. Public service quality evaluation by methods offuzzy logic. Conception // Modern state and problems of innovative development of thestate: Materials of international conference. Theses of lectures. (October, 6 -7, 2006).–Lutsk: Vezha, 2006.– p. 316-318.

2. Matvijchuk A. Analyze and management by the economic risk. – Kyiv: Center ofeducational literature, 2005.– 224 p.

3. Mytsa N. Prognostication of inco me of enterprises of playing business on the basis offuzzy logic // Sciences. messages of Ostrogian academy. Series “Economy”. – Ostrog:Ostrogian academy.– 2003.– № 5.– p. 179-184.

4. Siavavko M. Use of fuzzy sets and integrals for the decision of the poorly structured tasksof economy // Announcer of the Lviv university. Series economic. – Lviv.– 2007.– № 37(2).– p. 46-58.

5. Siavavko M., Rybytska O. Design on conditions of vagueness. – Lviv: Ukrainiantechnologies, 2000.– 320 p.

6. Statistical annual Volyn-2003.– Lutsk: Main administration of statistics in Volyn region,2004.– 560 p.

7. Statistical annual Volyn-2004.– Lutsk: Main administration of statistics in Volyn region,2005.– 558 p.

8. Statistical annual Volyn-2005.– Lutsk: Main administration of statistics in Voly n region,2006.– 584 p.

9. Volyn for years independence: Statistical collection. Anniversary edition. – Lutsk:Nadstyr’ja, 2001.– 408 p.

10. Zadeh L. Concept linguistic variable and his application to the decision -making close:Transl. from English.– Moscow: World, 1976.– 168 p.

11. Zaichenko G. Operations analysis. – 3-th publ.– Kyiv: Vyshcha shkola, 1988.– 552 p.

THE OBJECTIVE AND THE INSTRUMENTS OF EUROPEAN POLITICS IN THECOMPETITION DOMAIN

Professor PhD. Maria MUREŞANThe Academy of Economical Studies, Bucharest, Romania

mar_muresan50@yahoo.com

Abstract:One of the base conditions for the existence of an economic functional market, beside the freedom movement of

the goods, persons, services, and of the capital, is r epresented by a competitive undistorted environment. In this way,the dealers, either at national or communitary level, must interact as much as possible in a free mode, without negativeinfluence from the strong agents found in privileged positions, the a ssociations of economic agents or the state. In aneconomic functional market, the respecting of the norms about the competition assures the economical progress, thedefense of the consumer interest and the competitively of the products and services among the respective economyconfronted by the products from other markets.

One of the elements specific to the ordinary market is the affirmation of market economy. That is why, bothtraining Treaty of European Community (TCE) (1), and derived law proposed to remove effective all the threatening atthe competitivety address, both of the part of the private actors, especially against competition agreements and theabuse of the dominant position, as well as public actors, especially public help and public markets.

Keywords: European Union, European politics, competition, against competition agreements, EuropeanCommittee.

JEL Classification: F59

INTRODUCTION

One of the base conditions for the existence of an economic functional market, beside thefreedom of movement of the goods, persons, services, and of the capital, is represented by ancompetitional undistorted environment. In this way, the dealers, either at national or communitarylevel, must interact as possible in free mode, without negative influence fr om the strong agentsfound in privileged positions, the associations of economic agents or the state. In a economicfunctional market, the respecting of the norms about the competition assures the economicalprogress, the defense of the consumer interest a nd the competitivity of the products and servicesamong the respective economy confronted by the products from other markets.

The competitor environment can be negative affected by against competition activitieswhich represent the object or the result of agreements or practices concretized between economicagents, the abuse of dominant position of some strong agents. Also, the competition can be distortedby subventions adjusted for the state to some economic agents, which creates an advantageousposition confronted by the others competing on the respective market.

THE COMPETITION AND RIVALRY POLITICS

The “competition” term designates the “relations between all that take action on the samemarket for the realization of their own interests in economical fr eedom conditions”. In the sametime the competition reflects “the rivalry, dispute, between the respective economic entity whichfollow the same purpose and that is why their interests become contradictory”.

The competition is a fundamental condition of t he market economy being considered themost important cause of the economic and technically scientific progress.

In an enough comprehensive sense, the competition is a rivalry, a fight with economicmeans (the reduction of the costs, launching new products , buying actions) and extra economics(industrial espionage, sabotage actions) between producing or dealer, monopoles, countries forproducing and detachment of some goods, buying some markets and obtaining big profits.

The competition politics has as purp ose putting in practice and presenting a system thatallows a competition undistorted inside an economic area. As part of economic liberal theory, the

competition politics follows to realize markets with a perfect competition and to prevent theforming of the monopoly and oligopoly which impose to themselves their prices in consumerdetriment. There were state monopoles in European Union in transports, postal services andtelecommunications.

It must be underlined the fact that in reality, the perfect compet ition does not exist being anideal situation to which it tends to, and the concrete form to manifest the competition is theimperfect one, in which the participants that differentiate between them after a series of criterion,dispose of a different economical force, of more limited or more ample information and with adifferent importance.

The perfect competition presumes an organization form of the economy with very strictrules which have as a purpose setting up a certain equality kind of the conditions for all theeconomic agents.

The competition politics follows the ensuring of the necessary frame for manifesting a loyalcompetition in other words of a competition that has place in the conditions of respecting by theeconomic agents of the norms and way s considered correct and recognized as such thought theregulation in vigor from each state.

If the competition is not loyal (has place with means and actions contrary to the usage andlegal regulation) than it gets to a distort and a defalcation of the co mpetition from his purposethought the favor of one or many economic agents and not in the favor of others.

In European Union, one of the success keys of the economic integration was constitute bythe existence, even from the beginning of the communitary b uilding of a common politics in thecompetition domain. After 40 years of function, this politics continues to be a necessary conditionfor the existence of the Internal Unique Market that assures free circulation of the goods services,capitals and persons.

In last, the main beneficiary of a free competition politics is the citizen in his triple quality: consumer (free competition gets to a diversification of the offer and to a reducing of the

selling price); participator on the working force market (free competition obliges to a continuous

process innovation for the realized product, and for the production process as well); stockholder (free competition gets to the efficiency rise and of the realize of rised

profits).Free competition between firms favors the innovation, reduces the production costs, raises

the economic efficiency and as a consequence, raises the competition level of the Europeaneconomy. Stimulated by the competitional environment, the firms offers competitive products andservices regarding the quality and price.

The politics competition in UE, as well as in the other big word economic powers, bases onthe conception that the markets of a pure and perfect competition are the most suitable, assuring thewellbeing of the population. In con sequence, the competition politics vises the restriction,supervising, even forbidding the behaviors of the enterprises which bring the touching of the perfectcompetition.

Still many economists admit that can exist in certain conditions so named “market failure”which justify than the inobservance of the free competition rules between enterprises, or the directintervention of the state for correcting these effects. These failures can, for example keep of theexistence of the market external effects consi dered (the researching development activity realized ofa big enterprise can crate an environment or can generate a series of useful knowledge for otherenterprises too without these to support their cost) or the outputs rising scale. In this case theenterprises efficiency increases depending on their size and can not be wished, in some conditions,for the society aggregate, for the markets not to be “atomistic”, constitute from a big number ofsmall enterprises, like in the reference model of the pure and perfect competition.

The monopoles or enterprises having monopoly behavior (for example, those whichunderstand to each other about the price or they divide their market) are the first visited through thecompetition politics.

The term of “competition po litics” is general enough, referring in big lines to certain lawsand actions taken by the government, or in this case, of the European Community in it’s ownaggregate (which acts through the instrumentality of European Committee), meant to remove or atleast to discourage the commercial restrictive practices as the cartels, monopoles or other obstacleswith no tariff which could have as effect, in the terms of Treaty “preventing, restriction or distortingof the competition”.

The politics in competition domain forbids practices as: giving public help which creates distorts in the competition relations between economic

agents; establishing the prices through previous agreements between producing and purveyor; creating cartels which to share their market, to not compete with each other; the abuse of dominant position on the market; realizing fusions which distorts free competition;The competition politics in UE have the following essential characteristics: the big principles of the competition politics are f ixed by treaties; in the Rome Treaty it shows that in the competition domain (the community must

establish an regime which to assure that in the common Market the competition is notdenatured):

there area lot of regulations which specifies putting in appl ication of the competitionpolitics principles;

European Committee is charged with the correct application of the law and of thecommunitary dispositions;

Law Courts arbitrates the litigations and fixes the jurisprudence.The objective of the European co mpetition politics consists in warranting the unit of the

common Market. The market monopolization can have a place through accord or fusion. Besides, itsupervises the actions of the Member States Governments which could distort „the playing rules”by the application of discriminating measures for some enterprises, favoring public enterprises orby giving assistance to the enterprises from the private sector.

In some cases, the incidents in the competition domain are solved through the competitionpolitics modification of the states or of the companies involved. In other cases, Committee pleadsfor the application of a penalty, that can rise above the sum of 75 million Euro.

Succinct dotted, the objectives vised by the politics in the competition domain are wellbeingrising and consumers protection, incomes redistribution, protecting little and middle enterprises,markets integrations, but having regional social or sectorial considerations.

JURIDICAL BASES OF THE POLITICS IN THE COMPETITION DOMAIN

Even if communitary politics in the competition domain is more and more determined ofeconomical reasons, the compulsions it is submissive of are in essence juridical.

The legal base of the politics in the competition domain is offered, by the foresight includedin UE Treaty, respective:

Article 81, about restrictive practices; Article 82, about the dominant position on the market; Article 86, about public enterprises; Article 87-89, about state help.In the second row, references found in the secondary legislati on, adopted of UE Council and

of European Committee, under the form of Regulations and Norms. In this way, we find referencesin the secondary legislation, adopted of UE Council and European Committee, under the form ofRegulations and Norms. Like this, in this category are included:

Council Regulation 17/1962 about the application of the foresight Art.85 and 86 fromRome Treaty;

Council Regulation 4064/1989 , about the economic concentration control;

Regulation nr.3385/1994 about the form, content and other details about notificationmode to UE Committee;

Articles 28 and 86 from Amsterdam Treaty (2) about the monopoles and exclusiverights, in connection with Art.30, 34 and 59 from Rome Treaty;

The Regulations and Norms about the expectation in the block, gi ven in the case ofsome accords about precise determined situations, as: technologic transfer, research anddevelopment, motor vehicle distribution, etc.

In the third row, one instruction rising number, which are not in formal mode obligatory,offer essential information destined to show how the obligatory rules could be interpreted or inwhich mode it will take action the Committee in this domain. Thought those, the Committee wantsto raise predictability rank of its own acts. To these law sources adds the decisions of EuropeanJustice Courts and of First Instance Tribunal.

Not in the last row, we mention the international accords as well were there is expressreferring at specific situations about competition.

THE MAIN ACTORS INVOLVED IN POLITICS IN THE C OMPETITIONDOMAIN

The responsible institution at communitary level of politics implementation in competitiondomain is European Committee, which European Commission (3) for competition is, from 22November 2004, Neelie Kroes.

European’s Committee roll is the promotion of competing politics in the authorizationsbase, examining the denunciation putted by one of the Member States, by a producing or byparticulars. This administrates the Common Market for ensuring the European consumer protection.It keeps vast authorizations in the application of the competitional legislation and, beginning with1989, was authorized to examine and to block big proportion fusions. Supervising the Committeeacts is made by European Justice Court (4) and The First Instance Court (Kroes,N., 2008)

The Committee disposes of General Directory for Competition DG COMP (previouslyknown as DG IV), which concerns of competition politics promotion.

The base mission of General Directory for Competition (DG COMP) is to establish andimplement a competitional coherent politics inside European Union. Of DG COMP competence isthe control execution of the communitary legislation implementing in competition domain. As well,DG COMP concerns of the international politics of UE in the competitio n domain in quality ofpartner of industry developed states (ex. SUA, Japan, Canada etc.) or in quality of consultant of thestates during development (ex. Central Europe States and East Europe States).

The decisions are prepared by General Directory for Competition which reports to thecommissary responsible with the politics in competition domain, Neelie Kroes, the approval ismade by simple majority.

As a procedure, any agreement which Rome Treaty don’t agree follows to be led toEuropean Committee knowledge. According the Articles 81 and 82 foresights, the companies canhope to a „negative settle” of the incident, which means that, after examine of the case, theCommittee will not undertake acts contrary to involved companies, giving immunities. TheCommittee disposes of vast investigations possibilities. It can make the control of enterprisesdocuments without preventive announcement. Before taking the final decision, the Committee canapply a penalty of 10% from the annual income.

The last arbitrator in the domain of these so different rules and who can decide if theCommittee action was in the limits of the powers established in legal mode is European JusticeCourt (CEJ). CEJ is entitled to take act in the case of some solicitations made by national i nstances,as well as in the case of some actions initiated against Committee in the front of the First InstanceTribunal (TPI). Remarkable for the juridical instance, CEJ requests to the Committee, in somecircumstances, rather arguments of economic order, than formal order (juridical).

The companies can contest the decision of the Committee at European Justice Court, whichfrequently reduces the penalty sum. The European legislation in the competition domain offerspriority to the national legislation and is direct applicable in the Member States. ( Cosmovici, M.P.,Munteanu, R., 2001)

European Congress estimates the Committee activity as well as the evolution of this domainby publishing an annual report.

Ministers Council (5) authorizes the excepting in block and makes modifications in the legalbase of the politics.

In the same frame acts the national authorities too invested with competences in this domain(in Romania the authority in domain Concurence Council).

THE MAJOR EUROPEAN POLITICS OBJECTIVES IN THE COMPETITIONDOMAIN

The applicable rules in European Union vise generally the following aspects:1. The agreement against competition - “The forbidding of any kind of agreements/accords

between enterprises, association decisions and concerted practice s, which are susceptible to affectthe market between member states and which have as object or as effect the prevention, restrictingor the falsification of the competit ion inside the common market”.( Rome Treaty)

The treaty offers examples of this kind of agreements that are “nulls of law”: Fixing direct or indirect the buying or selling prices of other deals conditions; Limiting or controlling the production, technique developments or investments; Sharing the markets or provision sources; The application of commercial partners, of some unequal conditions or equivalent labor

conscriptions, making them support disadvantage in competition fight; Subordination of contracts settlements of accepting by the partners of some

supplementary labor conscriptions which through their nature or according thecommercial usages have no connection with the object of the respective contracts.

The forbidding of these practices depends of some conditions: Firstly, intra-communitary exchanges must be review according to the juri sprudence of

the European Community’s Justice Court even if the partners are in the same state; Secondly, the agreements must been have as object or like effect the restriction or

swindle competition inside the communitary market, what excludes the agreeme ntsbetween UE enterprises which vise third countries;

The last imposed condition has in consideration that the touch brought to thecompetition to be important: in this way the minor importance agreements get in thederogation sphere, for example, for SME s, an agreement does not affect significant themarket’s conditions when the market quote own by the respective enterprises does notpass to 5%, and the annual business number does not pass to 300 mil Euro;

The Treaty foresee a derogation series for the ag reements that: contributes “to the productsmelioration or to the deliver of the products” and at “the technique or economic progresspromotion” and which in the same time allow to the user to get an equitable part of the profit thatresults”. This kind of situations is tolerated just if the producing maintains their capacity of offeringcompetitional goods or services. The exception is of individual nature and practices when theCommittee authorizes an agreement previous verified.

Another kind of derogations has collective charactere and applies to an entire series ofagreements, being necessary one regulation conceived by the Council and which specifies certaindemands.

2. The dominant position abuses: This article does not regulates the concerning, but l imits tothe forbidding of exploiting abusive a dominant position, being more corrective that preventive. Inthis case not the occupied place in one activity sector is putted in discussion, but just the fact ofobtaining one excessive advantage out of this position is criticized: “it’s incompatible with the

common market and forbidden, in the measure in which the commerce between member states isaffected, the fact that, for one or more enterprises, exploiting abusive a dominant position in thecommon market or on a substantial part of this.

To determine if one enterprise is or is not in a dominant position, unimportant if it belongsto the Community or to a third country, it judges first the market quote owned (which should bebigger than 50%, and the enterprise must have the capacity of maintaining it). When the enterprisetakes possession 70-80% the qualification is made automatic, and if it is not the case, than interveneother complementary elements as: the reputation, the product’s brand, commercial net workefficiency, the technologic advance, economic power of the completive, the existence of a hiddencompetition, the access of resources and technologies.

The next level is the establishment of the abuse, if this exists, considering only the effects ofthe firm’s behavior and excluding any accusation fraud intention.

There are presented in many situations: Imposing in unperformed conditions (too large or too small prices for the elimination of

some rival producing); Limiting the production or technique development in the consumer’s detriment; The application of a discriminatory treatment for commercial partners.There is no derogation stipulated in agreements case, and the penalty is pronounced by the

Committee which, by decision, orders to the enterpris e to finish the constant situation and can applya penalty.

3. The concentration – wasn’t provided in Rome Treaty, but the Committee alwaysconsidered that this can get to one abusive exploitation of the dominant position. The regulationsfrom December 1989 and from September 1990 covered this gap, imposing a obligatorynotification of fusions and acquisition projects at European Committee. In this way, it institutes onepreventing control of the Committee, which can forbidden the concentration operations w hichpresent a European dimension, if it risks to get to a dominant susceptible position and toobstruction significant the competition.

In this way it allows to the competition politics to intervene, at a precocious stage of aconcentration process, approving or forbidding the alliances had in consideration. The preventivecontrol apply the following types of operations: fusing, taking over control, common entitiescreating starting from a minimal threshold. This minimal threshold was modified through theregulations of the Council from 30 June 1997. The respective enterprises, from which at least onebelongs to a UE member state, must accomplish certain criterions:

The world turnover (CA) number cumulated which should be bigger than 5 milliardsECU (6) from the beginning was brought to 2.5 milliards;

CA realized inside communitary space which previous had to be bigger than 250millions ecu for at least two of the unities was brought 100 millions;

Each enterprise does not have to realize more than 2/3 from total CA from theCommunity inside one and the same member state.

In this case, the agreement protocol must be ratified in obligatory mode by the Committee,this having the possibility to suspend it too. Practical the Committee estimated if there is or the re isnot a dominant position which constitutes a significant obstacle for the competition and decides theapproval or the forbidden of the agreement.

CONCLUSIONS:

The comunitary politics of the competition complete reflects the individual liberalism’sprinciples which were at the Rome Treaty’s base, both private domain, and public domain.

Public domain must conform to the free market ideology of the Community. In the most ofthe cases, the intervention of the state in economy produced when the free compe tition market wasnot capable to satisfy the interests and needs of some economic branch or region. (Cairns, W.,2001)

Amsterdam Treaty consolidated the place of the competition inside the base elements of thecommunitary economic constitution, adding anot her dimension to the enterprises economicperformances.

With all these, the competition does not have to be understood in absolute sense, but as away that must be interpreted thought comparison with the other fundamental interest of theCommunity (Cairns, W., 2001).

As follow from the European Constitution project contain, the Committee role in Europeanlegislation application of the competition will diminish. Concomitant, the member states and thecommunitary justice role in domain will increase.

ENDNOTES:

(1) The treaty of institution of the European Community (The Rome Treaty) established the EconomicalEuropean Community (EEC), was sighed to Rome on 25 March 1957 and come into effect starting with 1 January1958. The treaty of institution of the Eu ropean Community of atomically energy (EURATOM) was signed on the samedate, both of them being known as the Rome Treats. The consolidated variant published in the Official Journal C 325,24 December 2002 is available on the website http://eur -lex.europa.eu/en/treaties/dat/12002E/htm/12002E.html

(2) Amsterdam Treaty, signed in 2 October 1997, entered in vigor at 1 May 1999, amended and renumberedEuropean Union’s and European Committee’s Treaties. The consolidated versions of the UE and EC treaties wereattached at it. Amsterdam Treaty modified European Union’s Treaty articles, identified thought letters from A to S,numerical.

(3) The European Commission represents the interest of Europe as a whole. It is independent against thenational governments. The European Commission propose new European lows, which are presented to the EuropeanParliament and to the Board observe the breaches, treaties and European Laws

(4) The European Justice Court assures that the European law is interpreted and unitary applied i n all countriesof the EU

(5) The Council of European Union (Minister Council) shares with the European Parliament the responsibilityof the approval laws and application of the decisional politics. The main responsibility is to decide the UE actions indomains as external business, security politics, some justice actions.

(6) ECU – (European currency unit) it was an artificial currency which it was used by the member states of theUE, as intern account unity. ECU is was introduced on 13 March 1979 by the Economical European Community, thepredecessor of the EU, as accounting unity of the currencies from the area named Monetary System (EMS). ECI wasthe predecessor of the European unique currency, EURO, which it was introduced on 1 January 1999.

BIBLIOGRAPHY:

1. Cairns, W., Introducere în legislaţia Uniunii Europene , Ed. Universal Dalsi, 2001;2. Cosmovici, M.P., Munteanu, R., Înţelegerile între întreprinderi , Ed. Academiei Române,

2001;3. Kroes,N., Comisarul european pentru politici concurenţiale - Comisia lansează o anchetă

sectorială în domeniul farmaceutic. Remarci introductive la conferinţa de presă , Bruxelles,16 ianuarie 2008;

4. Manolache,O., Regimul juridic al concurenţei în dreptul comunitar , Ed. All, 1997.

AN ANALYSIS OF THE COMPANIES’ ECONOMICGROWTH CAPACITY

Associate Professor PhD. Camelia BURJAUniversity „1 Decembrie 1918” of Alba Iulia, Romania

cameliaburja@yahoo.comProfessor PhD. Vasile BURJA

University of „1 Decembrie 1918” Alba Iulia, Romaniavasileburja@yahoo.com

Abstract: The sustainable economic growth of companies constitutes a strategic management objective as it is of

general interest. The companies’ accrued net worth and their capacity to generate profit result in increasedcompetitiveness. This paper presents a general model to analyze the companies’ economic growth grounded on theinvested capital profitability that is illustrated in an adequate case study. The described model highlights the majorfactors influencing economic growth at a microeconomic level as well as the direction they act, providing thepossibility to better substantiate decisions that serve this purpose.

Key words: economic growth, net worth, financial profitability, invested capital, factor analysis

JEL code: O47, O12, D92, D61

1. INTRODUCTION

In the market economy, the success of a business requires well -founded managementdecisions, based on the analysis of the information received from inside and outside the company.On these lines, the company’s economic performance analys is and the assessment of its economicgrowth capacity implies a continuous process, which is a part of the basic responsibilities of themanagement. This is the necessary instrument able to supply information to the variousstakeholders [9].

Because the main objective of the management’s actions targets the increase in efficiencyand profitability, the financial analysis techniques must underline the quality of the leaders’decisions [16]. The coherence of their actions determines the optimum capital budge ting, theefficient use of all resources, aspects that can lead to the growth of the business’ value if integratedinto the right financial strategies and policies.

The information resulted from the analysis are also important for other beneficiaries. F or theinvestors (shareholders), the economic viability of the firm is important. The company must firstshow the business continuity through its activity and its resource management. At the same time,the capital owners are interested in the possibility o f the company to improve the financialprofitability on the long term, and based on this, to increase the value of the owned shares and ofthe collected dividends.

Regarding the creditors, who finance the business for a certain period of time, they trac e theeconomic and financial performance of the firm, especially from the point of view of its existenceand from the perspective of the positive cash flows proving the company’s liquidity and a warrantyfor the recovery of the loan.

The firm’s growth capacity also satisfies the employees’ interests, because this ensures theirjob’s safety. The salary packages often include clauses regarding remuneration from the company’sprofit or participation to its social capital. At the same time, the local communities and the nationaleconomy in its whole benefit from the growth of the companies’ potential because the favoringelements for the economic environment of the enterprise become factors of the economic growth ata macroeconomic level [12], and the paid ta xes and duties will contribute to achieving the local andgeneral objectives.

Under these circumstances, all the stakeholders interested in the success or the failure of thebusiness follow the assessment and the prediction of the economic performance, w hich synthesizesits capacity for economic growth. To reach this objective, the analysis of the indicators is of realinterest. It defines the net assets of the company, the profitability, the cash -flow, the economic valueadded, the growth of the owners’ equity, the market performance, the stability and financialautonomy, etc.

The analysis of the businesses’ performances constitutes a necessary step to identify thecompany’s growth reserves.

2. AN ANALYSIS MODEL FOR THE COMPANIES’ ECONOMIC GROWTHCAPACITY BASED ON THE NET WORTH INDICATOR

A starting point in the analysis of the company’s economic growth capacity is the Net Worthindicator (NW), studied in its dynamic.

The net worth is an element with great information value for the investors, cred itors, etc. Itrepresents the net assets of a company and is calculated as a difference between the amount of thetotal monetary assets and of the non -monetary assets which the company holds ( At) and themonetary and non-monetary debts (Dat) [14]:

DatAtNW (1)

The Net Worth usually has positive values and, if in time it shows a growing trend, thisindicates a good management of the company’s total assets, a growth of the equity and thus, anincrease of the shareholders’ wealth, reflectin g a sustainable economic growth. The growth of theNet Worth is determined by the reinvestment of some of the net profit and other accrual elements:regulated provisions, subsidies, reserves, etc.

In the cases where negative values are recorded for th e net worth, there is a bankruptcy riskbecause the real assets exceed the level of contracted debts, which signifies insolvency. Adecreasing dynamic of this indicator reflects a reduction of the owners’ equity and thus, depletionfor the shareholders. Obviously, the prospect of the company’s economic growth is not possibleunless we record an increase of the shareholder’s equity and the financial policy of the firm isadequate, realistic and can ensure this trend in the future [ 2].

Stated in absolute units, the companies’ economic growth capacity for a time period is givenby extend of the net assets’ growth:

01 NWNWNW (2)

Yet, it is not enough to diagnose that a company has the capacity for economic developmentbased solely on an indicator that includes all the influences of the various variable factors, but it isnecessary to identify those elements that impact its change.

The factorial analysis of the economic growth capacity needs to find a complex model thatpresents the factors leading through their action to the growth of the net assets and of theshareholders’ equity.

Because increasing the capitals is only possible in the case of an efficient activity of thecompany, the economic growth capacity is closely tied to the ana lysis of the profitability trend. If intime the company is defined by profitability, and thus has an income from the operational,investment or financial activities, a capital increase and the reinvestment of a profit’s part can takeplace, which contribute to the growth of the business’ economic value.

Among the profitability indicators is considered that the financial profitability rate (Returnon equity) reflects the best the idea of performance and economic growth, which results from themanagement of the invested own capitals [15]:

PnRf (3)

where:Rf is the financial profitability rate;Pn - net profit;Kpr - invested own capitals;If the entire obtained net profit is reinvested (no dividends are paid) and the compan y works

without loans, the financial profitability rate reflects the economic growth capacity of the companyand the analysis model is [8]:

Rfg ;Kpr

Png (4)

in which g represents the growth rate of the own capitals (net worth) in relative sizes.But, if we take into consideration the most frequent case, which is the existence of a certain

degree of indebtedness and of the payment of dividends, then, the general analysis model of theeconomic growth is the following [8]:

GpRdKpr

DatGpg ReRe (5)

where:Gp is the proportion of the non-allotted profits in the net profit;Dat - debts;Re - return on invested capital (ROIC);Rd - the interest rate.

In its turn, the financial profitability and, implicitly, the economic growth of the company, isinfluenced by the rotation speed of the invested own capitals (expressed by the number of rotationsdone through the turnover - VRKinv) and by the commercial profitability rate (the ne t profitcorrespondent to a certain level of the turnover - Rcom). On these lines, the previous model (5)becomes:

Gp)Rd(ReKpr

CAg (6)

where:Kinv represents the invested capital (Kinv= Kpr + Dat), or:

Gp)Rd(ReKpr

DatGpRcomVRKinvg (7)

The obtained model suggests that the good management of the invested capitals positivelyaffects the rate of the economic growth, by a high commercial profitability, as well as the amount ofthe reinvested profits (non-allotted profits as dividends). At the same ti me, the degree ofindebtedness can also contribute to the development of the business, only if the structure of thecapitals preferred by the managers is advantageous and generates profitability above the cost of thedebt (the leverage effect).

Next, in order to show the influence of the mentioned factors over the rate of economicgrowth, the development of the model is presented:

- The influence of the invested capitals’ rotation speed:

00)( GpVRKinvRcomVRKinvg (8)

- The influence of the net commercial p rofitability rate:

01)( GpVRKinvRcomRcomg (9)

- The influence of the non-allotted profits’ weight for dividends (reinvested profits):

Gp)]Rd(ReKpr

DatVRKinvRcom[)Gp(g 00

011 (10)

- The influence of the financial structure (degree of indebtedness ):

100 Gp)Rd(ReKpr

- The influence of the difference between the return on invested capital and the interestrate:

1 )(Re)(Re GpRdKpr

DatRdg (12)

The analysis of the influence factors over the company’s economic growth potential shows that afirm on the rise needs investments in fixed and circulating assets financed from equities anddebts, which will contribute to an adequate turnover and a high profit.

3. APPLICABILITY OF THE ECONOMIC GROWTH CAPACITY MODEL. ACASE STUDY

The case of an industrial company is shown to substantiate the general model of economicgrowth capacity and to highlight its essential aspects. The indicators necessary for the analysiswere extracted from the financial statements, for two consecutive years (table 1).

Table 1. Economic- financial indicators (thousand RON)

DeviationIndicators Basicperiod

Current period ± %

Total equities18089 19599 1510 8.3

Debts 2483 3299 816 32.8Invested Capital 20572 22898 2326 11.3Net profit 3800 4357 557 14.6Turnover 27461 31197 3736 13.6

Interests payable 425 525 100 23.5Allotted dividends 570 436 -134 -23.5Source: company’s financial statements

The dynamic of the main factors that contribute to the economic development of the company ispresented in table 2.

Table 2. Influence factors of the economic growth (%)

Indicators Symbol Basicperiod

Currentperiod

Absolutedeviation (±)

The rate of the reinvested profitsGp 85 90 5

Degree of indebtedness Dat/Kpr 13.72 16.83 3.11Interest rate Rd 17.1 15.9 -1.2Return on invested capital Re 18.47 19.03 0.56Commercial profitability Rcom 13.83 14.02 0.19The rotation speed of the investedcapitals (number of rotations)

VRKinv 1.33 1.36 0.03

The difference Return on investedcapital – Interest rate

Re-Rd 1.37 3.13 1.76

The economic growth rate g 15.79 17.63 1.84

We can see in table 2 that for both time periods, the economic growth rate has higher values(over 10%), which places the enterprise in the category of companies with a fast economic growth[7]. The economic growth rate of the analyzed firm, calculated on the basis of the model suggested,has increased by 1.84%, which indicates a high quality management. The growth was determinedby the influence of the mentioned factors, as follows:

- The change in the invested capitals’ speed rotation, expressed through the number ofrotations indicator based on the turnover:

%35.085.003.01383.0)( 00 GpVRKinvRcomVRKinvg

- The change of the commercial profitability:

%22.085.036.10019.0)( 01 GpVRKinvRcomRcomg

- The change of the reinvested profits weight:

%96.005.0)0137.01372.036.11402.0(

)](Re[)( 000

GpRdKpr

DatVRKinvRcomGpg

- The change of the company’s financial structure:

%04.09.00137.00311.0)(Re 100

- The change of the difference between the financial profitability rate and the interest rate onthe capital market:

%27.09.00176.01683,0)(Re)(Re 11

1 GpRdKpr

DatRdg

The results of our analysis show that the company had, for each of the two time periods, agood statement regarding the economic growth potential.

In the analyzed period, the wealth of the sharehold ers was consolidated; the equitiesincreased by 1510 thousand RON, which represents 8.3%. The net profit increased by 557 thousandRON (14.6%) and the turnover increased by 3736 thousand RON (37%). The company’s degree ofindebtedness increased as well, bu t the returned on invested capital was on a rise (by 0.56%) andwas superior to the interest rate, which shows an efficient use of the loaned capital (the leverageeffect). The figures also show that company had a growth potential for its activities each y ear,illustrated by the economic growth rate, which was 15.79% in the first year and 17.63% in thesecond year.

All the factors that influenced the economic growth rate actively contributed to theimprovement of the firms’ development capacity. Foremost, the favorable action of the reinvestedprofits’ weight was of importance, by 0.96%.

The rotation speed of the invested capitals has also positively influenced (0.35%) theeconomic growth rate. This is actually a representative element of the profitabil ity, which showsthat besides the size of the profit allotted for development actions and re -equipment, the efficientmanagement of the capitals invested in assets is just as important for the qualitative growth, whichmust be materialized in a higher turn over and, implicitly, a higher net profit.

With a 0.22% contribution, another important influence factor was noticed and namelycommercial profitability. Through advantageous marketing strategies, the company succeeded inincreasing its sales and their profitability in time.

Another important factor, which had a significant influence over the improvement of thecapacity to increase equities, was the difference between the financial profitability of the companyand the amount of the interest rate prac ticed in the inter-banking system (its influence was of0.27%). If the company’s management succeeds to efficiently capitalize the bank credits, the goodmanagement of the invested capitals will lead to a higher Return on Invested Capital in comparisonto the loan cost (leverage effect), which will favorably contribute to the development of thebusiness.

A smaller contribution to the improvement of the economic growth capacity is owed to thedegree of indebtedness (0.04%). It must be mentioned that in t he period studied at the company, thefinancial structure of the capitals changed. The degree of indebtedness increased by 3.11% thatshows, that more loans were used for financing the activity. This is an option of financial policy forthe cases when the profitability is higher than the cost of the loaned capital.

CONCLUSIONS

The factors that stimulate the fast economic development of the companies are tied toexternal variables (the economic -social conjuncture, the legislation, the features of theentrepreneurial environment, the specific economic -financial instruments, the economic policies)and internal variables, such as the strategy and the particularities of the company, the sales increase,creating new products and services, taking risks and the technological endowment.

Moreover, studies show that one of the essential elements for the economic growth of thefirms is the quality of the human capital [ 3] - [12], reflected by the knowledge and competences ofthose who work to improve profitability [ 4] - [10].

The particular case that was analyzed during the study has availed the knowledge ofessential aspects tied to the economic growth potential of the companies, and the used model

highlights the analysis possibilities of the factors that influence the growth. The resultedconclusions can be generalized and adopted by companies in order to increase competition andsatisfy the interests of those involved in their activity:

The economic growth is a major objective of the company’s functioning, being at the sametime a condition to maintain the company in the competition system of the market, because it is tiedto the profound value creating mechanisms and, especially, to the efficient functioning.

For a firm to have an economic growth capacity, it m ust apply an efficient management thatensures an optimum administration of all its economic resources. The operational, investment andfinancial activities will be able to generate positive cash flows and to favorably contribute toforming profits only with rational and well-substantiated managerial decisions.

The net worth indicator offers information about the owners’ equity of a company, whichare largely constituted as a result of the obtained and reinvested profits. In other words, the level ofthe net assets widely reflects the quality of the previous earnings’ management [ 5]. The growingdynamic of the net worth shows a company in economic expansion, which generates profits and isstrengthening its financial position. Maintaining such a trend is a warranty of the company’sgrowing economic value and of the financial advantages that are given to the shareholders,creditors, managers, employees and other interest groups.

The annual economic growth potential of a company is given by the growing rate of theequities, whose essential element is the amount of the obtained net profit.

The firm has an economic growth potential only to the extent to which it rationally allottedthe financial resources, so that the invested capitals for financing the asse ts are efficiently managedand generate net profit.

The financing structure of the company’s activity is a financial policy option and has a wideextent of variation between the two extremes – development on its own with the help of equity ordevelopment through financial loans. Choosing a rational proportion between owners’ equities andloaned capitals can help reach objectives such as: financial security and autonomy, lowering thefinancial risk, increasing the possibilities to develop the investment and production activities [11].Inside the companies, the preferences of the capital owners are conformed to the pecking ordertheory (the internal financing resources are used first, before any debts) and the main motivation arethe aims of independence and control [6]. The main requirement of good management for thecapitals’ structure is to use the degree of indebtedness as a financial leverage, which means havingin view the resources’ efficient use in order to obtain a higher profitability than the costs of theloaned capitals. Otherwise, the degree of indebtedness can cause negative effects for the company,even leading to a decrease in the economic growth potential.

The profitability of the assets managed by the company increases significantly with the helpof the efficient sale of its products. Sales connect the company to the external environment [ 13].The adequacy of marketing mix elements will find its effect in the turnover’s size and in theearnings obtained with its help. Thus, the commercial prof itability indicator becomes an importantinfluence factor of the economic growth capacity.

The company’s capacity to record profit can also increase significantly as a result of betterusing the invested capitals (equities and loans) [1]. When economic a ctions that accelerate the fasterretrieval of invested money are stimulated, the conditions to obtain higher earnings are also createdthrough several cycles of the economic circuit. An improvement of the profitability can be obtainedby accelerating the rotation speed of the used capitals and thus, create resources for financing theeconomic growth of the company.

An important decision that affects the development possibilities of the company is theoption regarding the allotment of profits. A rewardi ng policy for the shareholders, based on payinghigher dividends, limits the financing possibilities, which, in the end, will lead to a lower economicgrowth capacity.

The multiple implications caused by the influence of the factors that act in the busi nessenvironment enforce the careful analysis of their implications for the firms’ economic growthpotential. Only if the decisions adopted by the managers are substantiated by economic rationality

criteria, if they meet the prudence, coherence and economi c efficiency requirements, only then willthe business be more reliable.

BIBLIOGRAPHY:

[1] Accounting harmonization with EU , Meteor Press, Bucharest, 2003[2] Aidis R., Mickiewicz T., Sauka A., Why are Optimistic Entrepreneurs Successful? An

Application of the Regulatory Focus Theory , William Davidson Institute Working Paper No.914, 2008, http://ssrn.com/1147771

[3] Almus M, What Characterizes a Fast Growing Firm? , Discussion Papers, Centre forEuropean Economic Research (ZEW), Mannheim, no. 64, 2000, pp.3- 20

[4] Baker D., DeLong J.B., Krugman P., Asset Returns and Economic Growth, 2005, www.j-bradford-delong.net/movable_type/pdf/BDK-BPEA_20050629.pdf

[5] Barton J., Simpko P. J., The Balance Sheet as an Earnings Management Constraint, 2002,http://ssrn.com/abstract=320641

[6] Brian M. L., Mac an Bhaird, Ciaran J., Capital Structure and the Financing of Smes:Empirical Evidence From an Irish Survey , 2006, http://ssrn.com/abstract=905845

[7] Buergel, O., A. Fier, G. Licht and G. Murray (2000) ‘Internationalisation of High-TechStart-Ups and Fast-Growth Evidence for UK and Germany’ , Discussion Paper 00-35,Centre for European Economic Research (ZEW), Mannheim

[8] Helfert E.A., Techniques of Financial analysis a guide to value creation , BMT PublishingHouse, Bucharest, 2006, pp.207 -238

[9] Jared H. D. Financial Misrepresentation: Antecedents and Performance Effects , Business &Society, Vol. 47, Issue 3, 2007, http://ssrn.com/1254654

[10] Leiponen A., Dynamic Competences and Firm Performance , International Institute forApplied Systems Analysis, Luxemburg, 2006, 25 pphttp://www.iiasa.ac.at/Admin/PUB/Documents/IR -97-006.pdf

[11] Mironiuc M., Analiză economico-financiară, Sedcom Libris Publishing, Iaşi, 2006,pp.236-278

[12] Silva S.T., Castro Teixeira A.A, Silva M.R, Economics of the Firm and EconomicGrowth. An hybrid theoretical framework of analysis , CEMPRE, CEDRES, no.158, 2004,38 pp.

[13] Vâlceanu Ghe et al., Analiză economico-financiară, Economică Publishing, Bucharest,2004, pp.235-306

[14] Yang D. C., Vasarhelyi M. A., Caix ing L., Kim S., An Empirical Study of Net AssetsDisclosure: Inflation Accounting Revisited. International Journal of Business , Vol. 10, No.4, 2005, http://ssrn.com/abstract=830084

[15] www.investorswords.com/4249/return -on-invested-capital, accessed in August 2008[16] www.financialmodelingguide.com/analitical -tools, accessed in August 2008

THE LINK BETWEEN LOCAL AN D GLOBAL MANAGEMENT IN THE RURALTOURISM

Lecturer PhD. Rodica-Manuela GOGONEAAcademy of Economic Studies, Bucharest, Romania

e-mail: manuela.gogonea@gmail.comProfessor Ph.D. Cristian-Valentin HAPENCIUCUniversity “Ştefan cel Mare”, Suceava, Romania

e-mail: expresedinte@gmail.comAssociate Professor PhD. Irina-Maria DRĂGAN

Academy of Economic Studies, Bucharest, Romaniae-mail: irina.dragan@csie.ase.ro

Abstract:The process of globalization and of lasting tourism’s development aims at the touristy activities placed under

the influence of ecology and of reasonable use of resources. At a nation-wide level it is necessary to apply a rural development p olicy, capable of stimulating the effortsundertaken to bring Romanian villages out of their isolation, to establish regulations allowing for their use, as well asto create institutions functioning for the same purpose, and last but not least, to secure t he existence of fundsappropriated for the desired goal. The role of global management is to gather all individual initiatives in order to channel them towards nationaland international networks, to ensure their accomplishment at easily accessib le standards, both as to how they can berun and for the rural tourist offer.

Keywords: rural tourist product, the rural tourist offer, development principles, European Tourist Market,global management.

JEL Classification: L83, R11

1. RURAL TOURISM IN THE VIEW OF LASTING DEVELOPMENT

The social-economic national development strategy on medium term regards tourism as apriority sector, being considered that it is capable of contributing with an important weight inRomania’s launching and economic straigh tening.

Together with the urban crowding, another step in the process of durable development of thetourism includes the growth of the leisure time, the increase of the individual’s incomes and theincrease of the knowledge and education level. The reform of the educational system, of thetechnical-informational process and last but not least, the media “explosion” are the factors thathave lifted up the level of education and knowledge of the population, which tend to spend more oftheir leisure time in another way.

In this context, the ecological tourism has deeper capacities, its contribution to a long -termdevelopment being unquestionable. This kind of tourism goes along with the rural one, consideredto be a new form of tourism, which, nowadays, develo ps in the same framework, viewing thedevelopment of the touristy activities in accordance with the protection and the preservation of theenvironment, of the social-economic, historical-cultural traditions.

The tourism has reached a contour through the p racticing of rural tourism, this new type,being adequate to the current modern age, and implicitly to the process of globalization. The ruraltourism takes place in an environment that is relatively unpolluted, undisturbed and inhabited bytraditional communities, satisfying multiple needs:

the need of “escape” for the diminishing of the tension estate, this being accompanied by theactive or passive participation at different touristy activities.

the need to maintain and rebuild the health the need of belonging and love the need of knowing/learning and education

the need connected to the desire to visit relatives and friends the need of beautiful and new, etc.

Schematically, the fundamental elements that form the premises of the appearance anddevelopment of rural tourism may be presented as follows (figure 1).

Figure no. 1 - The fundamental elements making up the premises underlying the emergenceand development of rural tourism

The structural and functional relatio nships that are manifesting currently in Romania aretaken into consideration in the durable development and globalization, established at a national andinternational level.

Regarding this aspect, the development of the tourism in the Romanian rural area wasapproached by three specialists from the following points of view:

1. – from the perspective of the agricultural exploitation system – family;2. – under the aspect of the search for the professional identity in the rural environment;3. – from the point of view of the economical-social relationships in the rural environmentThese are considered to be motivational trends for learning more about the rural tourism

activity, based on the premises of some remarkable possibilities, in Romania, to put into action t histype of tourism, argued through the presence of the natural and anthropic resources in a rural

INCREASEDLEISURE TIME

INCREASED LEVELOF KNOWLEDGEAND EDUCATION

INCREASEDINDIVIDUAL

INCOME

1st agepopulation

2nd agepopulation

Livingstandard

improvement

Healthcare

Lowbudget

Uniqueexperiences

Decreasingworkingdays per

weekIncreasingleave days

Self-employed

Developingalternative,home-based

workingconditions

Undertakingseveral paid

activities

Multimedia“explosion”

Educationalsystem reform

New workingconditionsoffered

CROWDING

New workingconditionsoffered

Romanian area with multiple ethno folkloric traditions, cultural -historical monuments, museumsetc.

2. THE ASPECTS REGARDING THE INTERMINGLING OF LOCAL ANDGLOBAL MANAGEMENT

Traditional Romanian hospitality, a specific brand of the Romanian farmer, becomes theoffer of rural tourism, in conditions of channelling it towards upgrading farmers’ households inorder to reach the stage in which they beco me carriers of commercial offers. It has to allow for services rendered both for obtaining income, which partially is beingreinvested for development purposes, and for augmenting offered services. Each household owner should be given assistance and help to get license for his home to becapable of rendering tourist services, thus conveying him the right to be placed on the data bank andimplicitly on the rural tourist network, in this way becoming known. From the economic and social point of view, the managerial structure and technique shouldbe created to supervise the preparations of the commercial offer of the households. It is necessary tosecure relations between the rural tourist offer and tourists –as consumers of the rural touristprogrammes. The detailed activities for preparing rural tourist products at all levels, for preparing thehouseholds and business agents, can not be carried into practice unless the existence of a functional,both local and global management. The intermingling of local and global management is presented in detail through theircomponents, as a management of rural tourism in diagram no.2:

Figure no. 2 - Basic Components of Rural Tourism Mana gement

The way of identifying the rural tourist potential under all its aspects should be taken intoaccount, and this potential should harmoniously gather and blend natural, material and culturalfactors, both from the point of view of the host and from that of the tourist. To harmonize these

Global assessmentof area potential

Acknowledgementof the area

Training of operators& nomination of local

Identification &acknowledgment of

households

Cataloguing ofhouseholds

Achievement of the ruraltourism program

Identification ofoperators

Working out ofselection procedures

Training & acknowledge-of operators &

Business agents

Working out ofclassification criteria

Setting up of regionalarea networks

Marketing programPromotion

LocalManagement

GlobalManagement

Management of rural tourism

Preparation of the offer

Setting up of thenational networks

resources, to begin with, it is necessary to identify and test the person who has a minimum ofqualities and necessary knowledge, which implicitly will be trained, becoming that factor to takeaction and prepare the local rural tourist potential. Assessment of the rural tourism potential is being done through “agreeing” with the area fromthe point of view of a minimum infrastructure, of a built framework that is harmoniously matchingwith the landscape, of the possibilities to identify and achieve leisure and pleasure programmes,which should enliven trades and crafts that will become elements of attraction for the tourists. The local agent, trained and acknowledged, has thus turned to ca rrying out activities as partof agencies or organizations in the purpose of connecting the area to the national and internationalnetwork. In order to facilitate correspondence with the domestic and foreign partners, at all levels,horizontally and vertically, it is necessary to adopt certain standards as to the assessment criteria,the way of advertising, the signs used etc. Rural tourism is one of the development solutions for the entire countryside. Its appearanceand layout within the village environment offers new income sources to the population, particularlywhen the area has a special potential, human resources of real quality, as well as an adequateinfrastructure. The expected success can be achieved by an over -all development of the rural environment,against a moderate increase in time and to the benefit of the rural area, since a rapid or disorderlydevelopment of rural tourism can spoil the environment, and may lead to the background of thelocal population being affected. Moreover the local population should be socially and professionallyprepared for tourist activities, and through market feasibility studies, the food output should beorganized by complying with request, as well as through tourist motivation. Thus, rural tourism canbe associated to the over-all tourist activities of the area, as well as within the integrated regionalpolicy.

3. CONCLUSIONS

Satisfying the society’s needs, the population’s material and spiritual needs, are constituentelements of the political-economical-social objective that must be kept in mind in the current phase.

The need of coordinating the efforts, both on a regional and on a national level for theaccomplishment of great projects in the infrastructure area, especially tran sportation andcommunication, is being correlated with the process of arranging the territory, which supposes thecoordination of all the projects with special implications, and solving possible conflicts appeared inthis context by profound changes. The o verall layout targeted to establish a pattern of evaluationand of hierarchy in order to identify the most suitable and efficient ways of valuing the touristypatrimony by using a multi -criteria analysis of delimiting the tourist regions accompanied by theshaping of the priority actions for every case in particular.

The application of the projects for a long -term development of tourism starts from the earlystages which deal with the projection and the construction of the technical -material base, with thepurpose of harmonizing with the environment, the local community or other sectors of theeconomy, and continues during the development of the touristy activities.

The stages of the project development can and must be supervised and stimulated by theauthorized departments, which have also the capacity to establish strategies concerning solutions forthe deficiencies occurring during the development.

The application of these criteria for a long -term touristy development is inevitablyaccompanied by the appearance of certain concepts which are specific for the creation of theprograms which approach explicitly the space problems of the economies and the localcommunities. Thus, it is mentioned the development of a process of gradual application of themeasures which are imperative in the direction of protecting the touristy potential and preventing itsdegradation, exploiting scientifically and rationally the touristy resources in such a way, that thelevel of exploitation would not exceed the level of their re cycling and regeneration, and the

intensity of their direct and indirect relations between tourism and the environmental factors wouldnot exceed the limits of the touristy reception capacity.

Contributing directly and indirectly to the growth and assuring of the life quality, the ruraltourism with adequate tourist services determines parts of the economical -social and political life.

The premises of the globalization process realization in rural touristy services have requiredmechanisms that include pr ivatization, the de-regulation of the tertiary sector, and also theliberalization of prices and international services trading.

The centre of the globalization process in services is constituted by the cooperationagreements in the field of information a nd promotion, commercialization and distribution.

The globalization of the rural tourism, generated by the utilization of the moderntechnologies, determined a quantity growth as well as a quality jump in the evolution of the ruraltouristy services.

BIBLIOGRAPHY:

1. Gogonea R.-M. – Statistical research on rural tourism. Study upon the rural tourism inBran-Moeciu area, (Cercetarea statistică în turismul rural. Studiul turismului rural dinzona Bran-Moeciu), Publishing House -Universitară, Bucharest, 2006

2. Gogonea R.M – Statistical methods applied for the analysis of rural tourism, -doctoralthesis (Metode statistice aplicate în analiza turismului rural - teză de doctorat), Bucharest,2005

3. Hapenciuc C.V. - Elements of analysis and prognosis in tourism, Junimea PublishingHouse, Iaşi, 2004

4. Hapenciuc C.V. - Statistical research in tourism - A study of the touristy phenomenon in thedistrict of Suceava, Zoloti Litavry Publishing House, Chernavitsi, Ukraine, 2003

5. C. Huidumac - Macro-economy – Didactical and Pedagogical Publishing House, Bucharest2002

6. Iordache M.C. – Romanian tourism perspectives versus the dynamics of world tour ism –doctoral thesis (Perspectivele turismului românesc în dinamica turismului mondial – teză dedoctorat), Bucharest, 2004

7. Economic impact of tourism (L`impact economique du tourisme –Un compte satellite dutourisme pour savoir l`essentiel) , OMT, Madrid, 2001

8. Nistoreanu P. – Ecotourism and rural tourism, (Ecoturism şi turismul rural), PublishingHouse ASE, Bucharest, 2003

9. Ţiţan E. - Statistics, theory and practice in the tertiary sector, (Statistică, teorie şi aplicaţiiîn sectorul terţiar), Publishing House Press, Bucharest 2002

10. www.world-tourism.org

DEVELOPMENT OF LIVESTOCK SECTOR THROUGH LEADING NGO INBANGLADESH

Assistant Professor Mohammad SHAMSUDDOHADepartment of Marketing, University of Chittagong, Chittagong, Bangladesh

Abstract:In Bangladesh, more than half of the total popula tion is based on agricultural product and livestock.

Recognizing this fact, Government has changed its development policy. Government has recognized the fact that equalparticipation of public and private organization can solve the problem by doing various activities. Apart from thisGovernment encouraged NGOs and private sectors to undertake steps for the development of livestock by liberalizingits policy. Therefore, the study has tried to unearth the present condition and activities of NGOs (especially B RAC) forthe development of Livestock in Bangladesh. Bangladesh Rural Advancement Committee (BRAC) implements LivestockDevelopment program towards rural and urban poor family. Here, the paper explore about the livestock businessdevelopment through various program designed by BRAC.

Key words: Livestock, BRAC, Bangladesh

JEL Classification: E65

INTRODUCTION

BRAC (formally the Bangladesh Rural Advancement Committee) was established in 1972to work with the rural poor in Bangladesh. It is now one of th e world’s largest NGOs withapproximately 3.3 million members, 23,000 full time and 57,000 part time employees. Portfoliogrowth has averaged 46% per annum since 1989. Total expenditure in the year ended 31 December1998 was $77 million. Income from intere st on loans, service charges, and commercial activitieswas $49 million during the same period, 64% of total expenditure. The remaining 36% ofexpenditure was funded by grants. BRAC is involved in a wide range of activities. Its developmentprogram divides into three areas; rural development, health, and primary education. In addition tothese development activities BRAC has established a number of commercial enterprises including aprinting press, training center for development management, production cent ers and a chain of retailoutlets, cold storage facilities, diaries, poultry farms and has recently incorporated the BRAC bank.It also has a number of joint ventures including a housing project. Annual income from commercialactivities in 1998 was $16 mil lion generating a net surplus of $310,000. BRAC’s rural developmentactivities are administered through the Rural Development program (RDP). This is a ‘credit plus’program with savings and credit supported by a range of BDS in the poultry, livestock, fish eries,agriculture, forestry and sericulture sectors (named the Employment and Income Generating (EIG)program but known as the sector programs). There are also components covering socialdevelopment, human rights and legal education, environment, and popu lar theatre. The RDP is runthrough a branch network of 330 area offices and 300 sub -area offices.

RATIONALE OF THE STUDY

Livestock is very important sector which can remove poverty instantly. Bangladesh has 140million skilled and unskilled people. Out of 140 million, more than 70% are as unskilled but theyrely on livestock and agribased business. It is very difficult that Government will accommodate allthe people to livestock sector. That is why NGOs were welcoming by government to act conjointlyin livestock sector. The paper based on how BRAC is so successful in their livestock developmentactivities in Bangladesh.

OBJECTIVES OF THE STUDY

The principal objectives are as follows: -

1. To examine the different programs of selected NGO for Livestock de velopment.2. To spot the problems facing selected samples who are working with the BRAC.

SCOPE AND METHODOLOGIES OF THE STUDY

The study will cover largest NGO (BRAC) whose activities constitute about 50%+ of totalactivities. The proposed studies were both theoretical and empirical ones. Both primary andsecondary data have been used in this regard. The primary data have been collected with the help ofpre-designed interview schedule from 50 respondents of the sample NGO official and interviewed200 Livestock small-medium who are currently enjoying facilities from the sample BRAC. Thesecondary data has been collected from their own web site, annual reports, Journal, other reportsand books. Here the researcher used sophisticated statistical techniques like average, table, Likertscale, etc. for analyze the data.

LIMITATIONS OF THE STUDY

The study was confined on prominent NGO out of 18,000 NGOs in Bangladesh due to timeand resource constraints at the researcher’s disposal, because it was a self -financed research.Therefore, the small coverage may nevertheless be incomplete on the whole depiction of livestockdevelopment. The study covered very limited number of sample small and medium farmer andofficials as well those who is relatively illiterate. Sometim es respondents were not interested toexpress their honest opinion. To overcome these limitations, an intensive study of existing literaturein this field, foreign journal, annual reports, relevant publication by Government and other privateagencies were studied.

AN OVERVIEW OF LIVESTOCK INDUSTRIES IN BANGLADESH

Traditionally, the livestock sector in Bangladesh has been, as in most of South -Asia,complementary to the subsistence economy, with Dairy, and Fisheries being raised for villageconsumption, and poultry mainly being used for draught purposes. Livestock industries areimportant in Bangladesh and make a significant contribution to food production. Thus, livestockproduction on a small farm usually plays a complementary, yet significant role to cro p production.Livestock utilize byproducts from crop production, generate income and diversify employmentopportunities for the family. In particular, the importance of the poultry and cattle industries inBangladesh seems to have increased in recent years , whereas fisheries play a relatively minor role.

THE NATURE AND DEVELOPMENT OF LIVESTOCK INDUSTRIES INBANGLADESH

Under existing farming systems in Bangladesh, 65 per cent of farmers are still small farmersliving in rural areas, of whom almost 80+ per cent are self-employed (BBS, 2000). These smallfarm households, whose living standard is mostly at the subsistence level, frequently operate anintegrated farming system, consisting of field crops, horticulture, fishery and livestock. Livestock,however, including buffalo, cattle, and poultry in Bangladesh where Islam is important – goats andsheep, are most important to these farmers. The varying importance of these animals is explained bytheir differing income to the farmers, with dairy cows supplying o ne of the highest returns, andfisheries yielding the lowest annual income.

ROLE OF NGOS

NGOs in Bangladesh like Bangladesh Rural Advancement Committee (BRAC), Proshika,Swanirvar Bangladesh and Grameen is working hard to develop livestock business sinc e their birth

with the motivation of Ministry of Livestock. More than 18000 NGOs are working in Bangladeshand more than 50% are engaging with livestock development and rests of them are involving withother various program. So many projects from DANIDA, U SAID, ATDP, AUSAID is also workingsignificantly in this sector in Bangladesh. Projects objectives are increased per capita income andincreased animal protein consumption among rural poor in Bangladesh as well as increasedLivestock productivity for the L ivestock rearers involved. It is estimated that about more than 90+per cent of rural households’ rear poultry and 50+ percent rear dairy. All the rearing depends onmostly in the hands of Livestock .

DIFFERENT LIVESTOCK DEVELOPMENT PROGRAM OF BRAC

Microfinance ProgramThe microfinance program of BRAC is a tool for poverty alleviation and empowering the

poor. Lack of access to the formal banking system deprives them of the facilities to borrow, saveand invest in productive activities, and this is a majo r reason why poor people remain poor. Theformal banking sector also requires collateral. Making credit available to the rural poor enablesthem to become involved in different income generating activities which, in turn, allows them tobecome economically self-reliant. Through this process BRAC’s microfinance program works tocreate a self-sustaining and reliable financial service program for the poor. Credit is provided to itsVO members to initiate different income generating activities. While loans for individual and jointactivities do not require collateral, members must have some savings with BRAC before they areeligible for loans. Credit operations are carried out through a Revolving Loan Fund (RLF). ThisRLF consists of donors’ fund, members’ savin gs, Polli Karmo Shohayok Foundation (PKSF) loanand other loans. Loans realized from VO members are credited to and form part of the RLF forextending further credit. A 2% loan loss reserve is kept to cover the risk of bad debts and death.Regular borrowing and payments allow the borrower to take larger loans.

Key Features of Loan• Loan range: US$ 17 (Tk.1, 000) to US$ 345 (Tk. 20,000)• Service Charge: 15%• Repayment mechanism: Equal weekly installments• Loan products: General loan, sector program loan , housing loan and emergency loans

given at the time of disaster in 2002, US$ 294 million (Tk. 1,707 crore) has been disbursed to 2.9million borrowers with repayment rate of over 98%.

Micro Enterprise Lending and Assistance (MELA)Micro Enterprise Lending and Assistance (MELA) program was launched in December

1996 to provide loan to small enterprises with growth potential. The objective of this program is toprovide credit facilities and technical assistance to new and existing small businesses. Thecharacteristics of MELA loans are:

• Loan range: US$ 345 (Tk. 20,000) – US$ 3,448 (Tk. 200,000)• Service Charge: 15%• Repayment modality: Equal monthly installments• Loan duration: 12 months, 18 months and 24 months• Twenty different business sectors are su pported by MELA loanBy the end of 2002, a total amount of US$ 48 million (Tk. 260 crore) was disbursed to

45,503 borrowers in 64 districts of Bangladesh with an average loan size of US$ 1,077 (Tk.62,484).

Employment and Income Generation (EIG) ProgramBRAC has learned that besides lack of access to finance, the two major constraints that have

prevented the poor from improving their lives are the absence of self -employment opportunities and

lack of skills to sustain those activities. BRAC realized that if different employment opportunitieswere created, along with sufficient training and refreshers for capacity development, the poor couldbe linked to the mainstream economy which would ultimately bring them out of poverty. Activitiesapproved for BRAC Sectoral lending and other support enterprises can be classified under thefollowing broad categories.

Poultry & Livestock ProgramApproximately 70% of the rural landless women are directly or indirectly involved in

traditional poultry rearing activities. The Poultry and Livestock Program is composed of severalcomponents: poultry and livestock extends ion program, poultry farms and hatcheries, feed millsand feed analysis laboratories, bull station and the disease diagnosis laboratories. Till to date, 1.96million people have been involved in this program. The key persons under poultry and livestockextension program are i) Poultry and Livestock Extension Worker ii) Chick Rearers iii) KeyRearers iv) Cage Rearers v) Broiler Rearers vi) Egg Collector vii) Model Cow Rearers viii) ModelGoat Rearers and ix) Artificial Inseminator.

FisheriesThe Fisheries Program, started in 1976, is now developed into one of the most promising

and profitable EIG activities for rural women. The key components of the program are po ndaquaculture, open water fisheries management, and fish and prawn hatchery. BRAC aims topromote pond aquaculture by rural women to provide them with an additional source of income andimprove their nutrition level thereby improving socioeconomic conditi on of the participants. BRACprovides training, undertakes production and distribution of quality fish spawn and prawn postlarvae, extends credit assistance, and technical and marketing support. Till to date 47,421 acres ofwater-body have been brought under fish culture and 234,412 farmers are involved in fisheriesprogram.

AgricultureThe agricultural extension activities can be broadly categorized into vegetable cultivation

and crop diversification (rice, maize, wheat, cotton, and sunflower). This prog ram has beenundertaken to increase the nutrition and income levels of the households by increasing agriculturalproduction of VO members through technology transfer. Under these program VO members, whohave less than 0.5 acres of land in each area, receiv e training, technical support, inputs like HYVand hybrid seeds, fertilizers, and have access to BRAC’s microfinance to obtain the resources forinvesting in farming. Interested small farmers, who have land between 0.5 and 3 acres, also receivetraining and technical support. Crop diversification contributes to increased agriculturalproductivity. Besides maize and wheat, which are used for poultry feed, rice, cotton, onion, mustardand sunflower cultivation are also being undertaken. By December 2002, ther e were 157,280vegetable growers brining 67,114 acres of land under vegetable cultivation and 1,169.37 MT ofseeds have been distributed.

SericultureSericulture is a labor intensive agro -industry. Sericulture Program links the rural producers

with urban markets. The main components of the program are: a) mulberry cultivation (roadside,homestead and bush), b) silkworm rearing, c) reeling and weaving, and d) marketing. Besides, thereare other components of the sericulture program, which include silk Seed Production Centre andSericulture Resource Centre (SRC). At present, BRAC is operating 8 Silk Seed Production Centers,6 Sericulture Resource Centers, and 3 Reeling Centers. The Sericulture Resource Centre providespractical training to the rearers on mulb erry cultivation and silkworm rearing. In 2002, there were7,407 silkworm rearers and 1.4 million Disease Free Laying (DFL) have been distributed.

Program Support Enterprises (PSE)Essential inputs such as poultry feed, day old chicks, silkworm eggs, po st larvae and

vegetable seeds must be supplied to group members if they are to continue expanding the program.As the inputs from the government and the local industry are not enough to meet the demandBRAC established a number of Program Support Enterpris es to supply these inputs which includegrain ages for silkworm egg production, reeling centers for yarn production, prawn hatcheries forpost larvae production, feed mills producing poultry and livestock feed, poultry farms for theproduction of day old chicks, nursery for seedlings and seed production centers for quality seed.Under this program, there are 6 poultry farms, 3 poultry feed mills, 2 seed processing plants, 15grain ages and reeling centers, 12 fish and prawn hatcheries, and 1 bull station fo r artificialinsemination.

Dairy & Livestock ProgramApproximately 65% of the country landless people are directly or indirectly involved in

traditional Dairy rearing activities. The Dairy and Livestock Program is composed of severalcomponents: Dairy and livestock extension program, Dairy farms, feed mills and feed analysislaboratories, bull station and the disease diagnosis laboratories. Till to date, 2.50 million peoplehave been involved in this program. The key persons under Dairy and livestock exte nsion programare i) Dairy and Livestock Extension Worker ii) Cow Rearers iii) Bull Rearers iv) Buffalos Rearersv) Milk Marketer vi) Milk Collector vii) Model Cow Rearers viii) Model Goat Rearers and ix)Artificial Inseminator x) Sweet, Butter and milk ba sed product producer

Problems facing by FarmersThe livestock rearers face lot of problems while they exchange or deal with BRAC. More

than fifteen problem identified by researcher but out of fifteen five is very important and have needemphasize by the BRAC. These are as follows:-

1. Higher rate of Interest2. Difficulty in getting Loan3. Lack of Coordination4. Premature recovery loan5. Lack of technical/marketing knowledge

RECOMMENDATION

In the shed light of total problem faced by the farmer, BRAC need to give so me effort to developtheir huge services towards poor people. These are as follows: -1. Cut off their high interest rate 2. Remove their cumulative interest counting, 3.Ease to get loan 4.Giving door to door service regarding loan 5. Reduce initial hassl e regarding loan 6. Developing abusiness planning cell 7. Loan management counseling cell 8. Spread out their loan to real poorpeople, 9. Give training on marketing and production, 10. Coordinate with farmers’ community, etc.

CONCLUSION

In the new millennium, Livestock has become major role to play to eliminate poor people.Livestock development policies must be supported by appropriate organizations or dynamicorganizational, socio-economical changes for sustainable growth and development. In recent y ears,many NGOs have adopted an increasing focus on Livestock development programs provision forthe rural and urban poor people. Some of these programs have been extremely successful and haveexpanded to become major undertakings. In several instances, th e NGO has become sufficientlyeffective to cover all of its operating costs from service charges on the credit provided. Thisrepresents a substantial development in the growth of self -reliance among Bangladeshi NGOs andpoor people as well.

RESULTSTable no. 1: BRAC’s Livestock development activities at a glance: -

Program Coverage Programme Support EnterprisesDistricts 64 (100%) Poultry Farms 14 million chicksThanas (Sub-districts) 480 Feed Mills 35,000 MTVillages 62,404 Prawn Hatcheries 15 million post larvaeUrban Slums 2,297 Fish Hatcheries 4,500 kg fish spawnPopulation Covered 70 millionWater-body under Fisheries 48,976 AcresLand under Agriculture 408,820 Acres

Development program Job CreationVillage Organizations 115,840Membership - TotalMembership - FemaleMembership - Male

3,939,4393,929,128

10,311

PoultryLivestockAgriculture

1,665,688 371,068 778,670

Loan Disbursement (Jan-Jun 2003) Tk. 9616.06 million US$ 164.38 million

FisheriesSericultureHorticultureAgro-Forestry

236,010 18,288

168,101 44,597

Loan Disbursement - Cumulative Tk. 96,226.26 million (US$ 1,963.19 million)Annual Expenditure Commercial Projects

2001 Tk. 8,135 millionUS$ 153 million

Dairy & Food Project 1

2002 Tk. 9,259 million ; US$ 161 million2003 Tk. 10,090 million; US$ 174 million

Source: BRAC Annual Report, 2002

Table no. 2 – Services Provided to Poultry SectorRef Facilitator Provider Recipient

Services provided free of charge1. BRAC donor

consortiumBRAC - provides 3 days training in husbandry techniques forHYV poultry (different course for different recipient groups)

Key, cage, model, broilerand pullet rearers

2. BRAC donorconsortium

BRAC - provides 5 day training course on basic vet erinarytreatment and vaccinations, and a free ‘starter pack’

Poultry workers

BRAC - provides 5 to 7 days training on rearing chick fromday old to 8 weeks

Chick rearers

BRAC - provides 15 days training on egg hatching Mini hatcheries

BRAC - provides 3 day training course on feed Feed sellers

BRAC - provides 1day orientation on egg marketing Egg collectors

Services charged at the market rate7. BRAC donor

consortiumBRAC - provides supplies of vaccines and medicines Poultry workers

BRAC - provides day old chicks from BRAC’s own largescale hatcheries as well as private sector and Governmenthatcheries

Chick and broiler rearers

BRAC - provides bulk quantities of high quality feed fromBRAC’s own feed mills as well as private sector feed mills

Feed sellers

10. BRAC Poultry workers - provide inoculations and medicines forchicks and adult birds

Key, cage, model, broiler,pullet and chick rearers

11. BRAC Chick rearers - provide 8 week birds Key, cage, model andpullet rearers

12. BRAC Mini hatcheries - provide day old chicks Chick rearers13. BRAC Feed sellers - provide high quality feed Key, cage, model, broiler,

pullet and chick rearers14. BRAC Egg collectors - provide marketing services Key and cage rearers

Source: Jack Newnham, 2000

Table no. 3: Expanding the Market for Business Development Services

Number of MSMEspurchasing services

1997 1998 1999(to Sept)

Cumulative/ % change

Units Units Units Units / %Poultry workers BRAC 41,228 41,853 42,000 50,499

Market 60,000 65,000 70,000 8%Key rearers BRAC 1,190,490 1,271,717 1,362,243 1,461,420

Market 1,490,490 1,671,717 1,862,243 11%Cage rearers BRAC 5,000 5,315 6,295 9,000

Market 7,000 8,500 10,000 18%Model rearers BRAC 11,195 11,142 11,175 13,124

Market 11,500 11,500 11,500 0%Chick rearers BRAC 14,723 14,723 14,730 20,339

Market 21,000 21,000 22,000 5%Broiler rearers BRAC 1,081 1,357 1,512 2,423

Market 2,500 3,500 4,000 14%Pullet rearers BRAC 2,260 2,652 2,632 3,643

Market 2,260 2,652 2,632 -1%Mini hatcheries BRAC 1,349 1,364 1,395 1,626

Market 1,700 1,750 1,800 3%Feed sellers BRAC 2,450 2,492 2,563 2,888

Market 2,700 2,700 3,000 11%Egg collector BRAC 2,798 3,128 3,142 4,110

Market 3,500 4,000 4,500 13%Total BRAC 1,272,574 1,355,743 1,447,687 1,569,072

Market 1,602,650 1,792,319 1,982,675 11%BRAC's market share 79% 76% 73%

a - % change in estimated market size between 31 December 1998 and 30 September 1999Source: Jack Newnham, 2000

Table no. 4 Major sectors in which NGOs are currently operating are as follows:

Livestock Development relatedPrograms

Programs for all

Integrated rural Livestockdevelopment

Livestock’s development

Agriculture

Fisheries

Legal aid Human and civil rights Rehabilitation of blind and/or disabled Environment and forestry Public health. Savings and credit Income generation and training Health Education Adult education

[Source: Annual reports and Field survey]

Table 4 shows that selected NGO organization are emphasize the program on Livestockdevelopment because Livestock are widespread than other business. That is why NGOs are givingimportance on Livestock education and training specifically. Here is also some programcomprising with all the people generally. This general program includes all community and societyrespectively.

Table no. 5: Problems identified by the sample respondents towards NGO s activities forLivestock developmentVariables Average Scores

Higher rate of Interest Difficulty in getting Loan Lack of Coordination Premature recovery loan Lack of technical/marketing knowledge

2.02.51.01.51.01.6

[Source: Field Survey]

Table- 5 shows that the aggregate overall score as per opinion of the respondents based onfive problematic sub variables is 1.6 indicating nearer to modest efficiency of the system. In fact,the program of NGOs practiced over the L ivestock which are not quite efficient and it does notfulfill them very much. There has short of desired requirement. In this stage, information wascollected as to the adequacy and efficiency of the programs taken by NGOs. Table -5 shows theresponses of the sample respondents evaluated through seven -point bi-polar scale system wherein+3 would indicate quite satisfactory position, +2 moderate states and +1 would indicate low degreeof satisfaction. The minus scores would indicate the reverse position i.e. Unsatisfactory conditionin the same degree as plus sign would reveal. This survey represented of five major faults donethrough various programs which is the obstacles of the Livestock development.

Table no. 6. Factors influencing regarding the activit ies of selected NGOs which perceiv ed bysample respondents for selected NGOs and their programs respectively

Limitations perceived by sampleRespondents for selected NGO

percentage Limitations perceived bysample respondents forselected NGO program

percentage

Small size, scope and impact Slack structure, often with limited

accountability to beneficiaries Inadequate attention to the ‘very poor’ Unduly influenced by donors’ interests,

which may not reflect the priorities of thepoor;

Insufficient attention to monitoring andevaluation

Weak planning and management capacity Inadequate technical, professional, and

managerial skills.

Inadequate and un-integrated supply of fund

Difficulty in getting Loan Higher rate of Interest Premature recovery loan Lack of education among

the Livestock entrepreneur Inadequate training facilities Lack of marketing

knowledge Lack of Government

activities Lack of freedom

10010070

60100+ 100+

[Source: Field Survey][Note: Percentage exceeds 100 because the respondents mentioned more than one factors]

Table 6 comprises the factors, which are directly involving with the NGOs itselfdevelopments and others are influencing factors to the respondents those who are tak ing andcontinuing the programs under the selected sample NGOs. Here the respondents answered morethan one choice at a time, which is why total is exceeding 100+. That means limitation of NGOsand its program has to improve more than one factor at a time.

REFERENCES

1. A A Rahman, Role of NGOs. 2002, p. 17.2. ADB, 1992. An Assessment of the Role and Impact of NGOs in Bangladesh .3. Alam, I (1996). Socio-economic Impact of the Smallholder Livestock Development

program. MFL (GOB) and Danida, Dhaka.4. Asia Development Bank Report, 20015. BBS, 2002,2000 Economic Statistical Report, 2002.6. BRAC Bangladesh Annual Report 2002 & 2001.7. BRAC, 1995. RDP, Half-Yearly Report.8. BRAC. RDP Phase II Report.9. CCDB, 1995. An Impact Study on CCDB Savings Credit Program .10. DGIS, 1994. NGOs and Sustainable Land Use in Bangladesh .11. Dr. A Atiq Rahman, Policy Livelihood Relationship in South Asia Role of NGOs In

Advocacy: Lessons Learnt12. Evaluation of Netherlands-funded NGOs in Bangladesh, Netherlands Ministry of Foreign

Affairs, Policy and13. From Bangladesh and South Asian Countries, January 2002, p. 6.14. http://www.brac.net , BRAC’s official website.15. http://www.govfinance.org , Ministry of Finance, Government of Bangladesh.16. Human Development Report, 1993.17. Jack Newnham, 2000, Developing Markets and Measuring Performance, The BRAC

Poultry Programme in Bangladesh, International Conference, Hanoi, Vietnam - April 3-6,2000

18. Martinussen, J (1996). Introduction to the C oncept of Human Development. Theseproceedings.

19. Ministry of Foreign Affairs, Netherlands, 1989 –92. Country policy papers for Bangladesh,1989–92.

20. Operations Evaluation Department (IOB), 2002, p.7021. Rutherford, S., 1994. ASA in Transition.22. Saleque, Md. A. and Mustafa, S (1996). Landless Livestock and Poultry: The BRAC

Model in Bangladesh. These proceedings.23. Sarah Michael , The role of NGOs in Human Security, May 2002.24. Seminar on Micro-Finance Model of ASA & BRAC, Bangladesh”, Organized by

Bandhan, Supported by25. Todd, H. (not dated). Livestock at the Centre, Grameen Bank Livestock Ten Years On. A

Cashpor Pre-Publication, Malaysia. (Undated).

THE LASTING DEVELOPMENT OF THE ROMANIAN AND THE RELATIONSERVICES-ECONOMIC GROWTH-ECONOMIC DEVELOPMENT

Teaching Assistant, doctoral student Cristina MANIURomanian-American University – Bucharest, Romania

laura.maniu@gmail.comLecturer PhD. Manuela-Rodica GOGONEA

Academy of Economic Studies- Bucharest, Romaniamanuela.gogonea@gmail.com

Professor PhD. Marian ZAHARIARomanian- American University – Bucharest, Romania

marianzaharia53@gmail.com

Abstract:Within the lasting economic development, the essential role of verifying and promoting the general objectives

of society is enforced by the sector of services which se ttles the balance between the activities specific to these servicesand those specific to this type of development.

The growth of services from their recognized values to those corresponding to the international standards,deals with the beginning and prom otion of certain activities that should include on the one hand the participation in theeducation process and thus reaching an outlook in accordance with this type of development and, on the other hand theimprovement of the lasting development. This kind of improvement needs time and space in order to maintain therelation environment-economy which involves the achievement of a balance between the positive and negative effectsresulting from services.

The economic growth, as a characteristic of our era, i s considered not only a dynamic process but alsostructural one being deeply influenced by the basic components of the national economy.

A national strategy of lasting economic -social development should consider the services as a priority sector,able to develop and redress the Romanian economy in the context of its integration in the European Union.

Key words: service, economic growth, economic development

JEL Classification: L80, O49

1. THE SERVICES AND ECONOMIC GROWTH

The economic growth is always acco mpanied by a modernization process of the structures.Describing this complex process of combining growth with the change of the structure has to startfrom the regulations the state policy has.

Simultaneously, the economic structure modernization repre sents a modification of thequantity aspects like group proportions, branches and sectors, dimensional modifications, dynamic,and quality movements that stand from the passing from the production diversity step to thespecialization one, the creation of a n own national economy profile, to the acquiring of a dynamicbalance in the developing of different branches and sectors of activity and, as well as passingtowards an efficient economic structure at a certain moment.

The interactions and interdependencie s between the branches of the national economy,between different activities and sectors, along with the economic growth, are increasing. Also, theircomplexity deepens, changing from the simple exchange of materials to cooperation links inproduction, to measures of development and extension of the technical progress.

In this context the factors that influence the process of economic growth can be outlined andthe major types can be seen in figure 1:

Figure no. 1 - Economic growth types and factors

The interest for studying complex relations that are established in the economic dimensionsof the economic growth process, considering the rapid technical progress determined by the strongtechnical-scientific revolution of our days, has increased during the years.

The increase of services role in economic and social on a global scale, especially fordeveloped countries, was interpreted by sociologists as a replacement of the „primary andsecondary civilization” with „the third civilization”, the society in which the services prevail taking,step by step, the position in which the industry and agriculture prevail.

The work of the XVII-th century classic economists include the conceptual handling of theservices, while, only in the XIX-th century the first attempts of analyzing the role of the serviceswithin the economy are noticed.

The global structural movements from one year to another, concerning the services sectorhave outlined deep changes in the theories and models of economic growth and development, thecurrent relation established is presented as follows:

- raw materials stock, energy- production equipment stock

- population number- employed population number- work volume

- proportion for the research anddevelopment investments

QUANTITYDimension

EXTENSIVE

ECONOMICGROWTH

resources

NATURALRESOURCES,PRODUCTION

EQUIPMENT

INFORMATIONAL-

TEHNOLOGICFactor

DIRECT Factors:- investment rate;- research anddevelopement expenses- financial, monetary,fiscal and ecologicpolicy;- absorbtion capacity ofthe domestic market;- international trades

INTENSIVE

QUANTITY Dimension

- quality of raw materials, materials- the technical level of machines

- technologic innovationcapacity indicators

- qualification and motivation ofwork level- labor productivity

Figure no. 2 - Services -economic growth –development theoriesThe specialists’ opinions concerning the role of services in the economic development were

based on the thesis and theories described in time, some of them giving the third sector a primordialrole, of a “nucleus” for economic growth, others considering it as a buffer in its way.

2. THE INTERMINGLING SERVICES -ECONOMIC GROWTH-ECONOMICDEVELOPMENT

Being a complex concept, multidimensional, lasting development comes in with theglobalization processes, economic growth and development, they interact conditioning themselves.

Their interviewing is considered nowadays a success route in placing services on a higherstep that can underline their important role in the economic processes that run on a internationalscale.

It can be considered that this lasting development aspect presumes a satisf action of thepresent needs without compromising the future generation’s possibility to satisfy their own needs.The purpose of the lasting development can be settled with minimum demands, like:

reevaluation the economic growth considering a more equi table distribution ofresources and the focus on the quality aspect of production and services;

abolish poverty and the conditions for meeting basic needs for work, food, water,energy, health, dwelling;

insuring the growth of the population at an accepta ble level by reducing theuncontrolled demographic growth;

preservation and increase of natural reserves, by maintaining the ecosystem’sdiversity, supervision of the economic development within the environment;

orientation of technique and technology and controlling their resources; decentralization of government forms by increasing the degree of participation in the

decisions and joining the decisions concerning environment and economy.

ECONOMICSERVICES – GROWTH - DEVELOPMENT

Theories

InformationalSociety Theory

AutoservEconomyTheory

ComplementaryTheory

TRISECTORIALConventional

“Preindustrial”stage

“Industrial”stage

“Postindustrial”stage

Figure no. 3 - The optimum of system interac tion as objective to the lasting

development

The environmental issues cannot be divided from those of the lasting economic growth anddevelopment, of the living development and the quality of life.

The quality of life is an essential coordination of servi ces, practical directions in which itacts being presented under the shape of:

life conditions which are desired to be maintained or improved by assuring a minimumsalary and an adequate legislation;

working conditions for which it is followed the assuranc e of a work place for eachindividual based on the professional training and the possibilities of the society;

supporting health, educational and spiritual needs through the existence of personalizedmeans of heath care, education, culture and spending fre e time;

achieving consumer goods and spiritual needs through import;

protecting detrimental social groups, especially children coming from disorganizedfamilies, handicapped children, old people with very small pensions, youngsters at the beginning oflife, marriage, students, unemployed, etc.

Through sustained, continuous and simultaneous augmentation of the quality of allspheres that compose life: healthy moods of the individual, the natural environment, work, familylife, participating in the social li fe, etc; a sustained growth of the quality of life occurs.

In the lasting development, the essential role to observe and promote general goals of thesociety belongs the service sector, which can fundament the balance between the specific activitiesand those to the specific development type.

The growth of services from their beginning values to those corresponding to theinternational standards, deals with the beginning and promotion of certain activities that shouldinclude on the one hand the participa tion in the education process and thus reaching a mentality inaccordance with this type of development and, on the other hand the improvement of the lastingdevelopment. This kind of improvement needs time and space in order to maintain the relation

THE OBJECTIVE oflasting development

SYSTEMSOPTIMUM

INTERACTIONS

ECONOMIC

SYSTEM

HUMANSYSTEM

AMBIENTAL

SYSTEM

TEHNOLOGIC

SYSTEM

environment- economy which involves the achievement of a balance between the positive andnegative effects resulting from services.

The necessity for effort coordination at a regional as well as national level for theachievement of grand projects in the servic e area is correlated with the process of liberalization oftransparent commerce, which presumes the coordination of all the projects with spatial implicationand the solutions of possible conflicts that appear in the context of profound transformation.

By applying lasting development of the services launchings ever since the projection stageswith the purpose of harmonizing the environment, local community, or other branches of theeconomy, continuing in the development stage of service based activities.

Project development stages can and must be followed through and stimulated by theauthorized organizations. They have the quality to set strategies concerning the solving ofdeficiencies which appear through the unrolling of the projects.

Applying the service development criteria in the context of lasting development isaccompanied by the appearance of specific aspects of program conceiving which approaches in anexplicit way the space problems of the local community. In this way it is mentioned, the unroll ingof a gradual measures appliance which impose on the line of potential protection and the preventionof its degradation, the scientific and rational exploration of the resources involved in theirunrolling.

3. CONCLUSIONS

The tertiary sector of services in Romania became decisive in the posthbelic period, theservice market having a more important role, incorporating extremely different, heterogeneousactivities under the content aspect, with distinctive effective forms, which widened and diversifiedthe means of creating the social product, this way becoming an important component of thereproduction mechanism.

Like each sector of activities, the Romanian service sector has developed from incipientforms of achieving the basic activities, until the cu rrent structures, which characterize through amaximum use for individuals and society.

The services have increased in the modern Romanian economy, along with the technologicalboom of the society, the environment protection or the enhanced spread of the u rbanization: selfmanagement, water and energy distribution, transportation, communication, those concerning thegrowth of individual free time (cleaners, modern means of commerce, maintenance of house holditems), as well as services concerning the spendi ng of free time (tourism, culture, sport).

The strategies for modernization of the economic structure and the economic growth policyare linked through interdependent relations. As a consequence of enhancing these relations, theeconomic structure modernization is a main factor for the economic growth. At the same time, thisprocess of growth triggers important structural movements.

Choosing an economic growth model involves an attentive analysis of the modernizationpossibilities of the economic structur e. This analysis is followed by choosing some variables thatmeet the conditions and restrictions resulted from the chosen model, considered appropriateaccording to the existing conditions.

BIBLIOGRAPHY

1. Ghibuţiu A. - Serviciile şi dezvoltarea , Editura Expert, Bucureşti, 20002. Gogonea R-M. - Metode statistice aplicate în turismul rural , Teza de doctorat, Bucureşti,

20053. Ioncică M., Stănciulescu G. - Economia turismului şi serviciilor , Editura Uranus, Bucureşti,

4. Mitruţ C., Gogonea R. -M., Cristache S.-E. – Evoluţii şi mutaţii structurale privind activitateade comerţ intern şi servicii din România (1) , Revista de Statistică nr. 11/2006, editată deInstitutul Naţional de Statistică, Bucureşti

5. Mitruţ C., Gogonea R. -M., Cristache S.-E. – Evoluţii şi mutaţii structurale privind activitateade comerţ intern şi servicii din România (2) , Revista de Statistică nr. 12/2006, editată deInstitutul Naţional de Statistică, Bucureşti

6. Zaharia M., Stan R., Vădineanu C., Busuioc M. – Economia Serviciilor. Aplicaţii şi studii decaz, Editura Universitară, Bucureşti, 2004

REGIONAL DEVELOPMENT IN THE CONTEXT OF THE EUROPEAN UNIONINTEGRATION

Lecturer PhD. Mihai POPESCU“Ştefan cel Mare” University of Suceava, Romania

mihaip@seap.usv.roAssociate Professor PhD. Carmen N ĂSTASE

“Ştefan cel Mare” University of Suceava, Romaniacarmenn@seap.usv.ro

Assistant PhD. Student Adrian Liviu SCUTARIU“Ştefan cel Mare” University of Suceava, Romania

livius@seap.usv.ro

Abstract:The integration of the Central and East European countries into the European Union creates a radically and

qualitatively new geopolitical situation on the European continent that, in i ts turn, requires some thorough going andstructural changes from the EU part as to development of international relations in their new form in the countries ofthe European Union and non-member states. In order to apply the regional development strategy, eight developmentregions were set up, spreading throughout the whole territory of Romania. With the process of EU integration at hand,cross-border cooperation has become a top priority in East -Central Europe.

Key words: European Union integration, regional development, regional policy

JEL Classification:R 58

I. INTRODUCTION

The development regions of Romania refer to the eight regional divisions created inRomania in 1998 in order to better co -ordinate regional development as Romania progressedtowards accession to the European Union. The development regions correspond to NUTS II -leveldivisions in European Union member states. Despite becoming increasingly significant in regionaldevelopment projects, Romania's development regions do not actually hav e an administrative statusand do not have a legislative or executive council or government. Rather, they serve a function forallocating European Union PHARE funds for regional development, as well as for collection ofregional statistics. They also co -ordinate a range of regional development projects and becamemembers of the Committee of the Regions when Romania joined the EU on January 1st, 2007.

Regional development policy is an ensemble of measures planned and promoted by the localand central public administration authorities, having as partners different actors (private, public,volunteers) in order to ensure a dynamic and lasting economic growth, through the effective use ofthe local and regional potential, in order to improve living conditions.Wit h the process of EUintegration at hand, cross-border cooperation has become a top priority in East -Central Europe. Infact, there is no viable alternative to integrated regional development.

The main areas regarded by the regional policies are: developme nt of enterprises, the labormarket, attracting investments, development of the SMEs sector, improvement of infrastructure, thequality of the environment, rural development, health, education, culture.

The overview of the situation in Romania related to r egional development revealed severalaspects, which can lead to the conclusion that in the field of regional policy, there have been a lot ofprogress achieved during the last years, but there are still many things to be done in order tocomply with the legal and institutional requests of the European Union cohesion policy.

II. THE PROCESS OF EUROPEAN UNION INTEGRATION

In economic, trade and monetary terms, the European Union has become a major worldpower. It has considerable influence within internatio nal organisations such as the World Trade

Organisation (WTO), the specialist branches of the United Nations (UN) and at world summits onthe environment and development.

The EU as a unit has much more economic, social, technological, commercial and politic al“clout” than the individual efforts of its Member States, even when taken together. There is addedvalue in acting as one and speaking with a single voice as the European Union.

One of the basic objectives of the European Union is to promote economic an d socialprogress which is balanced and sustainable, in particular through the creation of an area withoutinternal frontiers, through the strengthening of economic and social cohesion and through theestablishment of economic and monetary union, including a single currency.

To achieve this objective, it is necessary to promote throughout the Community aharmonious and balanced development of economic activities, leading to a sustainable and non -inflationary growth which respects the environment. The Member States are to regard theireconomic policies as a matter of common concern and to conduct their economic policies with aview to the objectives of the Community. Therefore, Member States coordinate their economicpolicies within the Council.

The cohesion policy of EU is a very specific instrument that has as an objective the decreaseof the economic and social discrepancies existent between different regions of Europe, by means ofits special instruments - the structural funds-, and working upon some signi ficant domains ofdevelopment, as the economic growth and the SME sector, transportations, agriculture, urbanedevelopment, environment protection, employment and professional training, education, genderequality etc. conceived as a policy of solidarity a t European level, the cohesion policy is mainlybased on financial solidarity, i.e. the redistribution of a part of the communitarian budget gatheredby through the contribution of the Member States to in favour of less prosperous regions and socialgroups (for the period 2000-2006 the corresponding sum represents approximately a third of the EUbudget).

The cohesion policy of EU, a policy more than thirty years old, has suffered continuoustransformation, both at the level of the specific objectives, of th e instruments of applying these, andat that of allocating implied finances. The bigger the number of member states and the clearer thediscrepancies, the greater the total amount of Structural Funds, from about 43.8 billion ECUbetween 1988-1993 to over 141 billion ECU for 1994-1999 (values calculated in prices 1992), to286 billion ECU between 2000-2006 and 308.2 billion ECU in 2007 -2013.

The internal market has allowed larger businesses to benefit from enormous economies ofscale. Meanwhile, new export markets have been opened up to small and medium -sized businesseswhich previously would have been prevented from exporting by the cost and hassle.

The EU external trade is based on a common EU policy. In other words, where trade,including WTO matters, are concerned, the EU acts as one single actor, where the EuropeanCommission negotiates trade agreements and represents the European interests on behalf of theUnion’s Member States.

The integration of the Central and East European countries (CEE) into the E uropean Unioncreates a radically and qualitatively new geopolitical situation on the European continent that, in itsturn, requires some thoroughgoing and structural changes from the EU part as to development ofinternational relations in their new form i n the countries of the European Union and non -memberstates.

III. REGIONAL DEVELOPMENT IN EUROPEAN UNION AND ROMANIA

Regional development is a new concept that aims at stimulating and diversifying economicactivities, stimulating investments in the priva te sector, contributing to decreasing unemploymentand, last but not least, a concept that would lead to an improvement in the living standards.

In order to apply the regional development strategy, eight development regions were set up,spreading throughout the whole territory of Romania. Each development region comprises several

counties. Development regions are not territorial -administrative entities, do not have legalpersonality, being the result of an agreement between the county and the local boards.

Rural development has a very distinct place within regional policies, and deals with thefollowing aspects: removal/reduction of poverty in the rural areas; balancing of economicopportunities and social conditions between the urban and rural areas; stimul ating local initiatives;safeguarding of the spiritual and cultural patrimony.

The principles at the basis of the implementation of the regional development fund are:planning, partnership, addition and concentration.

- The planning principle is one of the essential elements of the SF implementation and itrefers to the preparation of the multiyear plans of development, which are fulfilled on thebasis of decisions taken together with the member states and through a series of successivephases, ending with undertaking duties by the public and private organisms (which willalso accomplish these duties). The member states are also required to elaborate two typesof programmatic documents of strategic nature (the Reference Strategic National Frame)and operational (Operational Plans). Unlike the old National plan of development, in whatthe strategic contents is regarded, RSNF does not involve the aspects connected to ruraldevelopment and fishing. Moreover, in what financing is concerned, RSNF is exclusivelysustained by the structural and cohesion funds and by the corresponding nationalfinancing, while the National plan for development included other finances (Europeanfunds of rural development etc.). On the basis of these planning documents, a negotiationprocess takes place between the European Commission and the Member States, processthat end in allocation of structural funds for each state.

- The partnership principle supposes a tight collaboration between the Commission andthe national, regional and local authorities, economic and social partners and othercompetent organisms, especially their implication in all the stages of regional developmentfund – from elaboration and approving development plans to implementation andmonitoring these. This principle u nderlines the degree of decentralization thatcharacterises the entire regional policy and implementation of subsidiarity.

- The addition principle deals with completion of the communitarian assistance throughnational financing, so that the communitarian f unds shall not replace the national fundsallocated for the development of a certain sector but to complete these.

- The concentration principle implies the allocation of the fund for regional developmentto the regions late in their development, whose GDP/ citizen is inferior to thecommunitarian average.

The development region, constituted as a freewill association of neighbor countiesrepresents the implementation and assessment framework of the regional development policy. Thedevelopment region is not a territorial–administrative entity and does not have legal personality.

The main objectives of the regional development policies are as follows:- to reduce the existing regional disparities, especially by stimulating the well -balanced

development and the revitalization of the disadvantaged areas (lagging behind indevelopment) and by preventing the emergence of new imbalances;

- to prepare the institutional framework in order to comply with the integration criteriainto the EU structures and to ensure access to the financial assistance instruments (theStructural Funds and the Cohesion Fund of the EU);

- to correlate the governmental sector development policies and activities at the level ofregions by stimulating the inter -regional, internal and international, cross-bordercooperation which contributes to the economic development and is in accordance withthe legal provisions and with the international agreements to which Romania is a party;

The principles that the elaboration and the application of the develo pment policies are basedon are:

- Decentralization of the decision making process, from the central/governmental level tothe level of regional communities;

- Partnership among all those involved in the area of regional development;- Planning – utilization process of resources (through programs and projects) in view of

attaining the established objectives;- Co-financing – the financial contribution of the different actors involved in the

accomplishment of the regional development programs and projects.The overview of the situation in Romania related to regional development revealed several

aspects, which can lead to the conclusion that in the field of regional policy, there have been a lot ofprogress achieved during the last years, but there are still man y things to be done in order tocomply with the legal and institutional requests of the European Union cohesion policy.

Firstly, it can be said, that in Romania there in place a functional system for implementingregional policy, both at central and region al level. The system has been developed since 1997 -1998and is based on a special legal act, on the existence of central and regional bodies with attributionsand responsabilities set up by normative acts and on corps of central and regional experts. Howev er,although functional, the system is not fully prepared to take over and efficiently implementstructural instruments. The analyses have revealed a number of weaknesses and gaps, which need tobe corrected or filled in:

- The legal framework must be comple ted, in order to provide more precise attribution andresposabilities of the regional policy institutions:

- More correlation is necessary between various laws regulating administrative aspects,financing and procedures about using the public funds in order to get a coherent cohesionpolicy framework;

- The regional bodies are not yet strong enough in order to face all the attributions providedby law now, but especially in the future; they seem to need more support and expertisefrom central bodies;

- The resources of the present system have not been fully used and no complete evaluation ofit has done by now; in spite of that, there have been several changes and attempt ofchanging the system during the last 3 years.

The analyses achieved, as well as the numerou s meetings with responsible persons at centraland regional level showed a weak development of the conceptual base related to regional policy andsocial and economic cohesion. In fact, there in no national concept for how cohesion should beapproached and achieved in Romania and what the role of regional policy would be. No debate atacademic or political level is carried on this matter now although various options seem to be takenin the implementation stage.

In order to set up a consistent regional policy and to achieve social and economic cohesion,one major request is to get very detailed and scientifically assessments about the social andeconomic disparities of the territory. The research proved that:

- There has been no profound analysis of regional dis parities in Romania and yet is agrowing official opinion that disparities are low and insignificant (at least compared tothose existent within EU countries);

- There is no sufficient attention given to the extremely high disparities between rural andurban areas and within urban areas, proved by numerous studies, which can be aspecific feature for Romania among the other EU and CEE countries;

- No sufficient attention is paid to rural poverty, although this has been also proved bynumerous studies and is currently praised as being of national importance;

- There is not a significant group of aggregated indicators used by an official body atcentral and/ or regional level, to assess regional and intraregional disparities, for themoment.

In fact, the research has brought into evidence, according to most of the opinions expressedby the participants at the meetings and interviews that there is almost no communication, among theadministrative and political bodies and the professional associations, experts, academi cenvironment and media in order to better understand the present situation and to find the best

solution for the future. There is also very little information about the progresses and the policiesundertaken by other candidate countries.

Thirdly, during the elaboration of the report, it appeared clearly that a major issue related tocohesion and an effective regional policy is the role of the regional structures. The debates withinthe interest group and not only went around the issues of regionalisation, de-concentration, anddescentralisation and as the status of regions nd regional bodies. Although the matter of theadministrative regions and their institutions was not entirely the subject of the present report, it isobviously of high relevance for the topic of the report. For such reasons, examples are given aboutFrance, Portugal and Greece and their deconcentration processes.

Fourthly, the researches focused on programing process, provided besides obviousachievements, certain weaknesses. A number of practical aspects have been also identified duringthe research as important weaknesses related to the implementation process of regional policy.Among the most important are:

Reduced training activities of staff of both central and regional institutions a s well asof the elected people;

Lack of any correlation and integration of spatial and regional planning instruments; Low correlation and integration of specially assisted zones (de -favoured areas,

economic free trade zones, industrial parks etc.) with th e regional developmentpolicy and its specific instruments;

Reduced communication among national bodies and among national andlocal/regional institutions involved; reduced information and awareness at the levelof the media and public about regional poli cy and its instruments.

With the process of EU integration at hand, cross -border cooperation has become a toppriority in East-Central Europe. In fact, there is no viable alternative to integrated regionaldevelopment. From the perspective of advancing Eur opean integration process, the existence of theappropriate legislative framework, economic and social policies aimed at ensuring the threemovement of persons, labor, material and spiritual goods across the borders is of an utmostimportance.

Another important argument for the elaboration and implementation of integrated regionalcross border development policies is concerning the necessity to overcome the existing gap betweenthe economic levels and life standards in its constitutive micro -regions. The integration of lessdeveloped territorial-economical units in the economic activities system of the larger regions canprovide them important incentives and stimula for catching up. In the same time, integrated regionaleconomic, social, labor market and mi gration policies would allow for the implementation ofspecial development strategies designed for the needs of the less developed areas. In this way allterritorial micro-units belonging to the region can be supported to find and fulfill the economicfunctions best suited to them, in accordance with the principle of subsidiarity.

In the Ukrainian border region – and to less extent also in the areas belonging to Romania -the collapse of industrial enterprises and the resulting huge unemployment forced man y people tosearch for sources of income in Hungary.

Today has become a political urgency to identify the resources and possibilities of regionalcross border cooperation in the field of labor migration. In order to prepare the ground for this, thereis a need for specifically designed institutional system, regulations and programs. This requires thejoint effort of local, regional and national governments. While the most important work has to bedone by the political and civil elite of the concerned regio n, the strong involvement of the centralgovernments in the process is also necessary, the more so as the political and administrativesystems, at least of Romania and Ukraine, still have strong centralist features.

A document issued by the European Union on July 1, 2003 suggests a mechanism forharmonization of the projects INTERREG, PHARE -CBC, TACIS-CBC, CARDS, MEDA aimed atstirring up cross-border co-operation offering the budget for financing of the programmes (newneighbourliness programmes) in the am ount of 955 million Euro, out of which 95 million Euro

allocated for TACIS (the programme that directly applies to Ukraine as well) for the period 2004 -2006 years.

Regional policy puts into practice the solidarity between the peoples of Europe mentioned inthe preamble to the Treaty on European Union. It helps to achieve one of the fundamentalobjectives laid down in the Treaty: the strengthening of the EU’s economic and social cohesion byreducing developmental disparities betwee its regions. It has a significant impact on thecompetitiveness of the regions and on the living conditions of their inhabitants, mainly by co-financing multi-annual development programmes.

These programmes are supported by four Structural Funds: the European RegionalDevelopment Fund (ERDF) for infrastructures and investments, generating jobs and SMEs; theEuropean Social Fund (ESF) for training, social integration and employment; the EuropeanAgricultural Guidance and Guarantee Fund (EAGGF, Guidance Section) for rural development andaid to farms; and the Financial Instrument for Fisheries Guidance (FIFG) for the adaptation of the fisheries sector. The Cohesion Fund supports environmental and transport projects in the leastprosperous Member States.

IV. CONCLUSIONS

While the share of services in the economy is growing, industry makes an essentialcontribution to Europe’sprosperity. Industry is, moreover, increasingly enmeshed with services andcontributes to their development. European industry is clearly making encouraging achi evementsand its progress in the environmental field and in some technological sectors is widelyacknowledged. Nevertheless, it is now facing major challenges, some of which come from within(increasingly rapid technological development, skills gaps), whil e others are external (society’sexpectations regarding consumer, environmental and health protection) and yet others international(the emergence of new global competitors).

Beyond policies aimed at enhancing innovation and entrepreneurship, which are two majordrivers of competitiveness, many other EU policies also have an impact on the businessenvironment and enterprise performance. All horizontal policies — i.e. regional policy,competition, trade, taxation, etc. - should make the best possible contribution to competitiveness inaddition to pursuing their own, specific objectives.

BIBLIOGRAPHY

1. Costariol, M., 2003, The Development of the SME Sector in Romania , CNA Veneto&Euro-In-Library, Venice

2. Frateschi, C., 2003, The SME Factor in the Romanian Tran sition, in The Small andMedium-Sized Enterprises in the Transition Process.the Case of Romania , CNAVeneto&Euro-In-Library,Venice

3. Goldenberg Vaida, V., 2004, Funding of Capital Investments in Romania , OpenSociety Institute, Budapest,

4. Nedelea, Al., 2005, Regionalization, Regional Development and Cooperation in EasternEurope, Economy and Transition, Albanian Center of Economic Research, no. 3, Tirana

5. Szilagyi, G., Harmonization of regional economic and social policies within the romanian -hungarian-ukrainian border area, www.policy.hu

6. Lecat, J., 2002, Public Utilities Liberalization and Romanian Accession to the EU , Pre-accessionImpact Studies, Institutul European din România,

7. Stucki, E., 2002, Le developpement équilibré du monde rurale en Europe , Sauvegarde de lanature, nr. 58

8. www.europa.eu

GLOBALIZATION VS. ROMANIAN COMPETITIVENESS

Associate Professor Ph.D. Mihaela BÎRSAN„Ştefan cel Mare” University of Suceava, ROMANIA

mihaelab@seap.usv.roUniversity Lecturer, Ph.D. candidate Ştefăniţă ŞUŞU„Ştefan cel Mare” University of Suceava, ROMANIA

stefanitas@seap.usv.ro

AbstractThe spread of economic globalization is bound up with a series of far -reaching to the structures and

practices of the world economy, therefore arising serious issues for the governance of economic life, which in turnposes particular kinds of dilemmas for the territorial nation -state and the way in which public authorities can interveneand regulate market actors. The European integration model is specific. The comparative analysis between threefundamentals processes of integration – European, American and Asian – shows this conclusion. In this paper, weexamine the characteristics of this integration models. What are fundamental pillars of futu re EU construction? WhyEuropean model is considered like an advanced approximation of globalization?

Key words: competitiveness, globalization, structural agreements, lasting development, integration,regionalization.

JEL Clasification: O11

INTRODUCTION

Globalization represents a very used term, to which we can attribute many significations.By this term, we may understand the development of global financial markets, the growth oftransnational corporations and their increasing domination over the nat ional economies. Most ofproblems that people associate to globalization, including the penetration on market for the valueson those area of which they do not belong traditionally, can be attributed to these phenomena.Simultaneously, we might take into c onsideration the globalization of information and culture,about television dispersion, of the Internet and of other forms of communication, as well as aboutincreased mobility of ideas trading.

The globalization can be defined as a set of economic, social , technological, political andcultural structures and processes, which result from the changing character of production,consumption and commerce of goods. Many changing within world economy carried out, otherwisewe can consider globalization as a result of creating world market. But globalization cannot besynonym with internationalism and trans -nationalism. These two processes have their “roots” onthe mercantile manner of directing the commerce, especially after The Great War, within amultinational model of development.

There are four main characteristics that can explain the origins of globalization: integrationwithin world markets of the national economies, the transition from “high volume” to “high value”economy, which result from better acknowled ge of products and services used on the world’smarket of national economies, the end of bipolarity between capitalism and socialism as concernsthe production costs and not lastly, configuring the new economic blocks.

As defined, the globalization represe nts a relatively recent phenomenon, whichdistinguishes the present from what happened 50 or even years ago.

Globalization is whished from many points of view. Private enterprise is able on producingmore richness than the state. More, the states have the tendency of abusing of own power. Theglobalization offers an individual liberty level, which no state can assure. The free concurrency onglobal scale issued the entrepreneurial and creative talents and accelerated the technologicalinnovations.

But globalization has its negative part. Within countries less developed, many sufferedbecause globalization, but without receiving support as concerns the social security system.

Globalization produced a defective allocation of resources between private and publi c goods. Themarkets are able of responding to other social necessities. The financial markets can determinecrises. It becomes possible that habitants of developed countries of not being fully aware ofdevastating results for financial crisis, because the se have the tendency of affect more the countrieson progress of developing.

THE TRANSITION OF ROMANIAN ECONOMY: BETWEEN POLITIC ANDECONOMIC

It can be mentioned that politics had the decisional part on delaying the Romanianeconomy transition, affirmation confirmed by:

1. Disarticulating and destroying the Romanian economy of socialist type that producedrapidly, where time and wish weren’t necessary for re -conversion and building the institutionsspecific to market economy. Romania, by fast passing and without precise plan of transition,assumed to be free, passed immediately to a stage of general unbalance. As result, the only practicalsolution that would have had success wasn’t other than A program of integral reform based uponconditions of steady general balance, which would have lead to the economic miracle in Romaniancountry or any other place from today contemporaneous world. It is about a steady balance inproduction, consumption, currency, banks, stock, budget and state’s finances, agricultural reform,industrial reform, exchange rate, commercial and financial relationships with foreignness,privatization of entire national economy. In other past socialist countries (as the revolution ofvelvet, by which Czech Republic lost the monopole of power and returned to democracy), theprocess being of lasting time, 2 -4 years, by step by step run of the state from leading position, ofcontrol, but only by the measure of creating the institutions specific to the new economical -socialsystem (aspect comparable to physiological processes by which destroyed cells, or those thatsuffered, are moved away once the new vigorous cells appear).

2. The disparity between real economy (underappreciated) and the nominal economy(much appreciated), the decrease of Roman ian economy performance, due to the strong devaluationof the Romanian currency (ROL) towards the American dollar (of few hundreds times), thingfavored by the fact that currency economy replaced the goods economy, that creating of utilitygoods.

3. The incoherence and discontinuity in government (the first decade registered not lessthan five governments), as well as the legislative instability. Each part and all together havecontributed, decisively, on exceeding the economic by the politic. Each of the p revious politicalmoments iterated the necessity on accomplishing the reforms, thing remained only to theory, thepractice proving that very late it passed from restructuring and abolition of industrial “giants” of thestate, generators of great loss in ec onomy and lacks within state budget, that un - industrializationwas partly made chaotically and without having at base a precise thought of what has to be made inthe view of reaching the aims on transition period. Therefore, we may say that the reform wasminimized; no concrete element existed during the entire decade 1989 -1999 as concerns thestructural politics, which had to attract around it the national interests’ community.

Within the same context, the adopting has to be also mentioned, same tardily, of theConcurrency Law, as near as 1997 and entered into force a year later, although in countries asCzech country or Hungary, this fundamental legislative deed for reform was adopted even in thefirst years after the moment of difficulty, 1990.

As concerns the legislative unsteadiness, not only the delay of adopting certain normativedeeds of great importance for delineation of legal frame of developing the mechanism and specificprocesses of a market economy, but even the adopting of certain basic laws w as difficult andneeded many variants and ulterior modifications (see the case of Privatization Law, which waschanged structurally of 12 times, or the entire system of taxation, intended to economic agents andwhich, in only 10 years, suffered 132 modific ations). All these lead towards manifesting themistrust and holding back of foreign investors as concerns the health and normality of business

environment in Romania. In the view of not remembering of the not performance management oftrade companies rema ined on state’s ownership, the financial and contractual indiscipline, butespecially of financial blocking that transformed into serious economic blocking, phenomenon that“affects” the economy from many years.

4. Toleration and as result, strengthening a nd generalization of corruption, scourge thatremained one of the main deficit of recovering the economic -social and political life of our country.

5. The weaknesses and the inconsistency of politics that aim towards the human capital(education, health, science and research), although we dispose of human potential that proved manytimes the value and power of comparing and succeeding toward people form developed countries ofhe world.

These were few of the essential problems, wherewith the Romanian society haveconfronted with, and to which the politics has to face and exceed the situation, accomplishable thingforemost by the existence of political wish of acting towards interest of all and removing theapprehension towards consequences of implementing all radical-structural reforms and whosepostponement doesn’t lead only towards the increase of social costs.

This isn’t the moment in the paper for presenting extensible the solutions for exceeding thepresent state of things. Adhesion of Romania to European Union beginning with 1 st January 2007,with benefits and especially with its costs (having a large estimative area between 14,5 and even 40milliards of Euro) represented for our country the including within a space over 500 millionshabitants and unique market, strongly competitive, where Romanian companies will be able ofenjoy of the four economic liberties: work force, of the capital, of goods and of services. It isobviously observed that to economic field an especial priority has to be given, so that truly, theentire social-economical and political training can function within mixed economy conditions,which does not represent something else than real model of the economy on actual market.Moreover, on the entire process of globalization and simultan eously with our country adhesionwithin European Union, involves from Romania’s part an own significant effort on finding andamplifying those areas (which are especial within services sphere), which have to be competitivewith those similar within Europea n Union and which can assure a favorable position, benefic withinre-setting on economic-social level.

GLOBALIZATION, A WISHFUL ILLUSION?

An extremely striking feature for the current globalization process is constituted byintensifying the information f lows to all fields. Presently, moreover, the power is owned by thosehaving great financial capitals, but those that own strategic information. The information can createcompetitive advantages; their lack can determine bankruptcies to event important comp anies.Suggestive in this way is the motto of Mitsui Japanese Company: “Information is the boat of savingcompany”. The process of globalization extends and strengthens permanently, and the governmentsand leading of companies are obliged to take the most adequate decisions, taking into account themain effects, meaning:

1. Internationalization of products flows, services and capital has as effect theconsolidation of the most powerful companies and corporations by fusions or acquisitions, with avalue more and more increased.

2. Internationalization of markets, beyond the protection barriers, reaching towards theincrease of competitive pressure. Form this reason, by the Treaty of Maastricht (signed on 7 th

February and entered into force on 1 st November 1993), the applicant countries to European Unionare solicited to have a functional market economy , but also companies able to resist toconcurrencies pressure and of market forces within Union.

3. An increased concurrency signifies a continuous pressure over the prod ucers in theview of reducing the costs, improving the qualitative level, the growth of productivity andincreasing the professional level and of employment for the employees. Searching new markets,with low cost and qualified work force, the phenomenon of migration on activities of USA and

Canada towards South part, then from West Europe towards East, towards economies being intransition. Nowadays, the meaning of migration is directed towards China and India. Two processesare in fact carried out: outsourcing – externalization of certain entire sectors of activity towardsother companies strictly specialized and respectively, off shoring – moving some units ofproduction into new areas, potential markets of sale, with low cost and qualified work force.

It is estimated that over 28% of world companies used this last process, the percentageaiming towards growing to 40% at the end of the year 2008. The benefits are obvious; if we referonly to Europe, the yearly cost of a job position (including all taxes) is of 46.600 Euro in Germany,43.990 Euro in France, 41.875 Euro in England, 6.490 Euro in Slovakia, 7.211 Euro in Poland,7.423 Euro in Estonia. It is also estimated that new -created units will have at the end of year 2008 aturnover of over 50 millions dol lars. China signifies also low cost work force, but also a market incontinuous ascension. The off shoring will determine massive loss of work positions in countrieswith low cost work, and also a series of central -European companies started to move toward s East.This phenomenon is visible in Slovenia, where more companies moved already the lines ofproduction in countries as Romania and Bulgaria. The explanation is simple.

The minimal wage in Romania is sixth -seventh times less than that of Slovenia, and t hewage of Bulgaria is even nine times less. This tendency concerns the authorities from Ljubljana,taking into account that closing some autochthon units leads towards increasing the unemployment,almost nothing in the view on stopping the migration towar ds East. Therefore, Alpina Companydecided to move the production to Romania and China, movement by which company estimates tosave 250 millions dollars per year. Same, the Labond Company works presently with thesubcontractors of Romania, Hungary and Pola nd. Recently, the highest manufacturer mobiletelephony of the world, Nokia, closed the factory of Germany, from Bochum, following thatproduction to be moved to other three plants, among which that of Jucu (Romania, Cluj County). Itis expected, that together with the development of our economy, the standard living and wages willincrease, so that companies which in present activate on our market to move towards East, inMoldova, Ukraine or Russia, where the level of wages will be lower.

The National Plan of Development (NPD) represents a concept specific to Europeanpolicy of economic and social cohesion (Cohesion Policy) and represents the strategic planningdocument and multiyear financial programming, issued within a large partnership, which willorientate and stimulate the social -economic development of Romania in accordance to Policy ofCohesion of European Union.

The National Plan of Development (NPD) represents the fundamental instrument by whichRomania will try to recover more rapidly the dispariti es of socio-economic development towardsEuropean Union, by methods of promoting to European level, and which will beneficiate of asubstantial financial support of its part, the global objective supporting on three specific objectives:

The growth of competitiveness on long term to Romanian economy; The development on European standards to basic infrastructure; The improvement and using more efficient of autochthonous human capital.As regards the Strategy of NPD, considering the global objective or reducin g more rapidly

the disparities of social economical development between Romania and Member States of EuropeanUnion and beginning from a comprehensive analysis of the current social economical situation, sixnational priorities of development were established, which group interiorly many priority areasand sub-areas:

The growth of economic competitiveness and development of economy based uponacknowledgement;

Developing and modernizing the transport infrastructure; Protecting and improving the quality of en vironment; Developing the human resources, promoting the occupying and social inclusion, as

well as strengthening the administrative capacity; Developing rural economy and the growth of productivity on agricultural sector; Decreasing the disparities of development within countries regions.

In these conditions, the main question consists on asking of the level of competitiveness ofRomanian companies is enough high so that the economy to face these pressures of globalization.Since 25 years ago, The World Ec onomic Forum publishes yearly a Global Report ofCompetitiveness, report where Romania is included since year 2001.

This analyses statistic data at macroeconomic level and determines three indices: an indexof macroeconomic competitiveness, an index of mic roeconomic competitiveness, which measure infact the business environment competitiveness, and an index of global competitiveness, with theaim of presenting cumulative both indexes.

The conclusion of report published at the end of last year is that Roman ia progressed in thelast years, but we are yet at level of countries of South America and behind the East -Europeancountries, recently entered in European Union. As instance, in 2006, the gross national income(GNI) on each habitant of Romania, computed a t the parity of buying power, represents almost 30%of that of EU with 25 members, different of those 25,2% in 2000. Comparing to Hungary, the GNIon each habitant in Romania was almost twice lower. In these conditions, Romania needs fast andlasting economic growth, of minimum 7% per year, time of 20 or 25 years, so that its benefits tobecome significantly visible on time horizon of a generation, respectively so that GNI/habitant toreach at almost 70-75% of EU average, toward almost 30%, as is today (tak ing into considerationan yearly average rhythm of growing for EU of almost 2%).

The main obstacles identified by report for the growth of competitiveness of autochthonousenterprises are corruption, excessive taxation and cost of credit. The problems exis t as consideringthe point of view of Romanian companies’ competitiveness, as providers for strategic externalpartners. At the level of local providers, there are difficulties both from implementing the modernstandards of quality, and also form providing competitive products towards external partners. Anycompany that develops its activity into an external environment being into continuous dynamics:competitors appear or disappear, new technologies are developed, new markets are created, laws aremodified, social behavior, etc. All these modifications need form the management the capacity offoresee the favorable and unfavorable influences and of adapting the organizational strategy andculture of new realities. As much the competition pressures become mor e powerful, as result ofglobalization, more the rhythm of changes into organization becomes faster. From this point ofview, a permanent adapting to new conditions of market becomes necessary, for continuousimproving of organizational performance. A comp etitive company controls better the operationalcosts, the non-quality costs and has a higher productive than the competitive companies. But thissuperior competitiveness can be maintained only by a continuous improving of processes abilitiesthat manages. And as this generates resistance at changing, it becomes compulsory thatorganizational changing process to be accompanied by a parallel process of adapting theorganizational culture to new realities. The main component is represented by the process ofcontinuous learning, at level of organization, in the view of reaching new acknowledges, newabilities and of better understanding the senses and benefits of these changes.

At Romania’s level, the desiderate of growing the standard living essentially depe nds uponthe capacity of governments on planning and implementing all necessary measures on creating alegislative and competition frame, optimal on increasing the competitiveness. From this point ofview, we consider excellent the idea of promoting a new national strategy of competitiveness.

This can create to Romanian companies adequate conditions for increasing thecompetitiveness. Hence forward, the difficult work has to be stared for the management onimproving continuously the organizational performan ce of the company (human resources, costs,quality, productivity, innovation).

Taking into consideration the strong and weak points, applying persistently the modernprinciples of continuous improving, the management and stockholding of Romanian companies candetermine the growth of their competitiveness and consequently, the maintenance on markets,influenced within a higher level on globalization process.

For the Romanian companies, the success or failure chances are the same as for theexternal competitors. Everything depends on adequate management, efficient on human, material

and financial resources, taking into consideration the growth of competition pressures, as well as bythe capacity of implementing and maintaining the process of continuous learnin g (lifelonglearning).

The competitiveness of an economic agent and therefore for the Romanian firms(companies) is determined mainly by three high features, meaning:

- services offered;- afferent costs;- registered quality.From here, the need of supporting these areas that can assure the wishes mentioned above

and which, in conditions of Romania, are those of third sector: transports and tourism (with accentput on rural tourism).

Starting from these aims, two main questions can be identified, meaning :1. How can Romania beat the economic disparities?2. What should be made so that more people should beneficiate of results on economic

growth (and not only limitary groups)?The battle for competitiveness becomes difficult, because as shown already, it carries out

under the impact of three simultaneous processes: transition to democracy and market economy;globalization; European integration.

The answer at first question is given by the example of countries that succeeded – few atnumber. The economic analysis revealed that fast, lasting and on long term economical growth ispossible when driving forces that determines it are put into motion by stimulants that a political,economical and social system has to offer efficiently and efficacy. These forces are:

- accumulating of physical and human capital;- efficient allotment of resources;- continuous improving of technologies.And the best system, known until present, which puts into motion these forces is that based

upon private property, free initiative, competition and law state.The answer at the second question is given by a series of conditions that have to be

satisfied simultaneously within the process of economical growth:- the economical growth has to generate new work positions;- the people have to have success to educational systems, that have to assure achieving the

acknowledge and abilities required by new job positions;- corruption has to be retained and reduced;- those that from different reasons do not find their place within an economical

competitive system to be comprised within social protection area of the state and of socialcommunities.

Because the concept of convergence signifies an economical growth and which on its turnis included on the economic development , we can say that it becomes an importan t problem forRomania, but also for the other countries of EU, meaning the assuring of lasting development, aglobal objective, which neither European Union nor other country can assure (achieve) by itself.And than, the attention is directed towards regional development, where putting the accent onchanges and adjustments on structural nature. The analysis of changes on structural naturedetermined by the economic integration over the regional specialty and by training, over thecompetitiveness, different branches and sectors from national economy is especially important inthe view of making a pertinent analysis over what has to be done for stooping or even eliminatingthe negative points that can appear on aimed regions.

The confrontation of ideas from d ifferent social-economic environments: research,education, agents of economical development, political class, representatives of civil society, haveto have a benefic impact over finding the best solutions for detecting and reducing the regionaldisparities, for assuring a harmonious regional development, lasting, which has to assure fullcapitalization, meaning the increase of competitiveness of different economic areas, of localresources.

CONCLUSIONS

If, ever, within the managed history of the World, i t was spoken more insistently andlaboriously over something – facts, wars, cultures, civilizations, personalities, phenomena, etc, well,it was never spoken over it more than now about globalization. Practically, this process directed andcontinues to direct, to attract the attention, the preoccupations and energies to a spectrum more andlarger of institutions, but also of citizens which, no matter their social and professional aim, reporttheir existence to global coordinates of the development. It is sp oken so preoccupied, on all verticalof human training and education, so that this process, globalization, seems to be the last discoveringof anxiety and inquire of humanity, a discovering of all revelations, social phenomenon that givesultimate mark overt planetary saving. But things are different. Globalization, in fact centers ofglobalization, which without them globalization wouldn’t have been possible, as socialphenomenon, not necessarily aware, can be identified and taken into consideration yet fr om thebeginning times of group development on human conditions. Awareness of propriety, and ofinstinctual need on its continuous extension, the permanent diversification of general object ofownership, and implicitly, of its value, perfecting continuousl y of forms and methods of exertionthe domination by means of force and of war, the impossibility of maintaining in ownership ofdefining revelations on human society development, together to generosity of their spread fencelessare few elements that can be taken into consideration, when speaking about globalizations centerparts; the globalization, as social and historical process and phenomenon, but even as practiceunavoidable and irreversible process, a process that reflects the institutionalized human wish, thisbeing able on quickens, decelerations or directions in certain way the process, with specificcorresponding consequences.

BIBLIOGRAPHY

1. Brülhart, M., Torstensson, J. Regional integration, scale economies and industrylocation, Discussion Paper no. 1435, Centre for Economic Policy Research, 1996

2. Naisbitt, J., Aburdene, Patricia, Anul 2000. Megatendinţe , Editura Humanitas,Bucureşti, 1993

3. Popescu T., Antonescu, Daniela, Similarităţi şi diferenţe între conceptele dedezvoltare durabilă şi de dezvoltare regională în dezvoltarea regională durabilă. Întreactualitate şi necesitate , Probleme economice vol. 156-157, Academia Română,Bucureşti, 2005

4. Rugină, A., Memoriale 1. De ce nu s -au rezolvat cum trebuia problemele destabilizare social-economică şi financiară, cu realizarea unui „miracol românesc” dela 1990 încoace? Editura Performantica, Iaşi, 2007

5. Soros, G., Despre globalizare, Editura Polirom, Iaşi, 20026. Stoica, Maricica, Noi abordări ale conceptului de dezvoltare durabilă , Economistul nr.

1759, 29 noiembrie 20047. Torado, M. P., Economic Dvelopment, Sixth Edition, Longman, London & New York,

19978. Tsoukalis, L., Noua economie europeană revizuită , Editura ARC, Bucureşti, 20009. *** www.nord-vest.ro/Document_Files/PND_2007_2013_78nm8c.pdf10. *** www.wikipedia.org.

FREE TRADING – THE STRONG DIMENSION OF ECONOMIC LIBERALISM

Lecturer PhD. Rozalia KICSI“Ştefan cel Mare” University of S uceava, Romania

e-mail: rozaliak@seap.usv.ro

Abstract:Economic theory, taking history on its side, states that free trading brings great benefits to consumers, to

society in general and, consequently, it would be the best policy for any country; all tog ether, protectionism has alwaysbeen present on the international economy stage. For the past two centuries, commercial restrictions (financial andunfinancial) have been one of the intense features of the world’s economy. A great paradox of international commerceis that, even if nations want to enjoy the advantages of commercial flows liberalization, they often tend to limit theaccess to their own markets throughout measures that by their nature vary more and more from the traditionalobstructive policies.

Key words: liberalism, free-trading, protectionism, commerce, comparative advantage

JEL Classification: F 130

1. INTRODUCTION

Trade has been the bind that “linked up” the two separate worlds, becoming one of thevectors of society progress. The history of trade is ancient, but it always “renews” throughout moreand more issues that turn up, and this concept became my motivation for choosing a theme from thevast problematic that is associated to the international trading relations. The aim of th is paperworkis to present briefly the main theoretical arguments throughout which the advocates of liberaltrading policies argue their option and, to “outline” the place that free trading shares with economicliberalism.

2. FREE TRADE AND ECONOMIC LI BERALISM

For the first centuries A.D. some theologians and philosophers considered the tradebetween the nations as being a gift from God; Douglas Irwin describes this early vision regardingtrade that earned the title of ”universal economy doctrine”. A ccording to this doctrine, God hasunequally spread resources and goods all over Earth in order to generate the trading betweenvarious nations and regions. In the IVth century, writer Libanius, was trying to justify the apparitionof trade from this perspective. “God has not spread all the goods in every side of the world, but leftHis gifts in various regions so that, finally, people would be able to develop social relations … Andso He created trading in order for all the humans to enjoy the earth’s fruc tifications, no matter theplace these were produced”(1).

No exaggeration is being made when stating that commercial exchanges represent theultimate key to modern civilization. Ludwig von Mises appreciates that trade is “the fundamentalsocial relation” that “… holds together the people in a society”; “the human serves in order to beserved” within any commercial relation on a free market.(2)

In a brave wave, Ron Paul, remarks that “politicians love to talk about free trade; but thereal free trade doesn’t imply either complex treaties nor allocations in order to facilitate the nativeproducers, but the simple elimination of the tax for internal consumers that wish to buy foreigngoods”. (3)

In reality, there has never existed that kind of trade not to be restricted one way or another.(Hong Kong could though be considered an example of modern much opened economy). Historyshows, as well, that those countries, which have now a high developing level had not, practicedneither the free trade nor the industrial policies of laissez-faire. On the contrary, states as GreatBritain and USA, often were passionate advocates of the interference policy, in the first stages oftheir development.

As part of a state’s economic policy, the commercial poli cy is influenced, among others, bythe economic doctrine that predominates in a certain historic period of that respective state; so, theanalysis of the foreign economic relations development of a state can be regarded from twoperspectives, as a liberal perspective and a nationalist perspective . Strictly, from the historical pointof view, the nationalist perspective has priority, but from the impact point of view, economicliberalism is the dominant doctrine for the last two centuries.

Liberal trading concept, as well as the entire liberal rhetoric, has as main axis the idea offreedom. Free trade respects the individual freedom of the human being; when governmentinterferes to dictate citizens the way to spend their money is like telling the people what they areallowed to do and what they are not allowed to do. In a free society, the individuals that earn theirmoney must be allowed to spend it as they wish. Free trade means that taxes are not so high in orderto restrain an individual from choosing fre ely between the aboriginal and similar foreign products.Free trade means that everyone can sell and buy anything and anytime, without any interferencefrom outside. At the same time, free trade creates favorable conditions for the manifestation of loyalcompetition that generates extremely benefic effects upon the economical activity; competitionencourages producers to realize cheaper products, and this finally favors the consumers.

Free trade bases upon the comparative advantage and international speci alization of nationaleconomies constitute an optimal estate for the world economy. The world we live in is far awayfrom the ideal one (as first best) where “the invisible hand” of the market governs the economicactivity, where private stimulants match p erfectly with the benefits/costs of society; in the realworld (as second-best) there are distortions and disequilibrium that contradict sometimes thetheoretical arguments.

Th. Pugel demonstrates that in the ideal world as the first best the private stimulants matchperfectly with the benefits/costs of society - as a whole; in this world, the free trade is efficient,economically speaking. It allows the invisible hand of competition to act globally.(4) Individualproducers, react the market’s price signal , develop their production in every state on levels that areas good as they can be for the whole world. Individual consumers, also reacting to the price signals,increase their consume (purchased products quantities) to levels that ensure the best possibl ewelfare for the entire world.

The world we live in is far away from the ideal one; distortions do exist and they do notautomatically reduce one another. We are living in a second -best world, in which exists andmanifests disequilibrium between the social costs and benefits and the private ones of an activity.As long as there exists disequilibrium between the way that individuals fundament their decisionsand the complete effect of these decisions on society, the private actions will not lead towar ds thebest possible results for society. (For example: in the absence of any distortion, a tax may create adistortion by artificially raising the price. At the opposite pole, in the absence of any distortion, agovernmental allocation creates a distortio n throughout the artificial raise of price.)(5)

Michel Rainelli presents a simple model throughout which is being demonstrated the impactthat introducing custom taxation has on national economy level. The analyzed case is that of a statewhich contribution to the world consume is low enough in order for the variation not to have anyimpact on the price of imported goods. The custom tax affects differently the two categories ofeconomic agents inside a national economy: the producers’ situation improves w hile theconsumers’ aggravates. The overall impact may be evaluated in the terms of national welfare,representing the sum of the economic agents’ welfare.

For a given price of a certain good, the consumer’s surplus, corresponds with a virtual earnrealized by the consumers which were available to buy that product for a higher price.Symmetrically, for each price higher then the initial price, the producers earn an additional profitfor those units that they were willing to sell for a smaller price. The i ntroducing of custom tax leadsto a raise of the good’s price. Consequently, the consumers’ surplus diminishes, and the producers’increases, but these two effects do not compensate each other. There is being generated thedistortion of production (introdu cing of custom tax influences the national producers to output moreunits of the respective good), and on the other hand a distortion of consume (introducing of custom

tax influences the national consumers to buy insufficient quantities of the respective g ood). Theglobal impact over the national economy materializes in a net welfare lost.(6 )

Many economists believe that besides the elimination of these productions and consumedistortions; the free trading has also a series of additional benefic effe cts, especially for the smallstates in general and for the developing states in particular. Paul Krugman mentions among these,the scale economies and increased opportunities for learning and innovating.

The key argument on which is being built the plea ding of free traders are the following(7): Free trade favors the efficient allocation of production factors , the states improving their

specialization on producing and exporting those goods that bring the greatest advantages; Free trading determines the growth of national prosperity , being a factor of economical

development and growing; Free trade facilitates the improvement for the activity efficiency of firms throughout

obtaining the scale economies; the protected markets determine the production fragmen tation andallow too many firms to enter the protected industrial branch and this way the production scalebecomes inefficient for every firm.

Free trading accentuates the competition pressures , instigating entrepreneurs to searchnew ways for increasing their products’ competitiveness; this way, free trading ensures many morereasons for learning and innovating then a „protected” commercial system, where the governestablishes the pattern of imports/exports.

3. THEORETICAL POINTS

For more then two centuries, economists have outlined the benefits of free tradingcounterpart the costs for applying the commercial restrictions; the traditional case of free trading isbuilt upon the earnings from specialization and trade.

In his famous work, Wealth of Nations. An Inquiry into the Nature and Causes (1776) AdamSmith, set the basis for the free trading concept with a persuasion force that maintained its intensityacross the ages. In the spirit of the liberal school that he founded, Smith pleads for the naturalliberty system where the individual is free to follow up its own interest, while the state has only therole to ensure the legal frame for the development of the economic activity. Promoting his personalinterest, the individual promotes at the same time the community interest, being unconsciously leadup by “an invisible hand” to accomplish this process of promoting a goal that he does notconsciously acknowledge. Free trade is an essential component of the free economic system, since“regularly trading between two countries, without barriers, is always advantageous, even if notequally for the both sides.”(8) In Smith’s opinion, commerce is not a draw game, as mercantilistsused to claim; commerce liberty and regularity brings advantages, it is true thoug h that not alwaysin equal shares for the both partners.

He argues that the state intervention over the commercial flows ensures an unjustifiedmonopoly of the local market. In these conditions, part of the capital and work of a society areartificially oriented towards activities that otherwise they would not seek for, this meaning adeviation from the market’s forces free confrontation. In other words, Adam Smith, demonstratesthat financial and non-financial barriers restrain free individual action and competition, a freedomthat constitutes the engine of economical development.

David Ricardo, aligns himself too in the direction opened up by his predecessor,demonstrating that perfect trade liberty propagates the general advantage (by increasing the o utputsquantities also increases their satisfaction) and reinforces the universal society of nations . Heproposes a step by step recursion to “the solid principles of an universally free commerce”(9) sincethis commerce allows each country to obtain the ad vantages throughout the efficient allocation ofproduction factors. “Inside a perfectly free trading system, each country naturally dedicates capitaland labor to those kinds of activities that are the most advantageous. This persuasion of theindividual advantage is admirably linked to everybody’s universal wellbeing.”(10)

The comparative advantage principle states that is adequate for a country to specialize onthe output and exportation of those goods that ensure the best efficiency; according to Rica rdo, theinternational trade pattern is not shaped up by the absolute production costs, as considers Smith, butby the opportunity costs. For example, a country is efficient to output the products A and B, andregarding the output for product B is much mor e efficient then other countries; in this case it ismore advantageous to export the good B and to import the good A (though it could be producedlocally). The comparative advantage principle remains the cornerstone on which has beenconsolidated the entire international commerce theory.

John Stuart Mill analyzes in more detail the earnings associated to foreign commerce,mentioning the existence of some direct economic advantages, of some indirect advantages and ofsome moral and intellectual advantag es.

The direct economic advantages derive from the specialization and the countries’opportunity to obtain goods they cannot output; “if each should produce those goods they have thebest facilitation” then the world output would be greater.(11) The conse quence would be a moreefficient use of world’s production forces and even of the world’s growth possibilities. Asconsequence of specialization, a country may produce exportable goods in a bigger quantity thenthe necessary one for satisfying the local ne ed, so not as a necessity, but as a cheap way to supplywith other imported products. This way trading becomes a “method to cheapen the output”, in orderthat finally the consumers to be the beneficiaries.(12)

Besides the direct economic advantages, Mill points out the existence of indirectadvantages, which result from market’s dimensions amplification and products’ rangediversification. Mill considers that the commodity market extension beyond the national bordersleads to a more extended division of la bor, to an intensive use of equipments and, continuing, toinventions and improving of the output process. “A country that outputs for a larger market then thelocal one may introduce a more extended division of labor, may use a greater part of the product ioncapacity and is more interested to innovate and to improve the output processes.”(13) In otherwords, trade has impact on the labor productivity growth and offers the possibility for exploiting theadvantages that refer from the scale economies.

Another indirect advantage is given by the fact that openness towards the extraneousthroughout commerce sometimes acts like some kind of industrial revolution. Trade facilitates for acountry’s inhabitants the access to new wares that previously did not knew a bout or could notafford to buy. This way, people are motivated to work more in order to satisfy their new wishes andthey even are more tempted to save their money and to gather capital so they can ensure themselvesmore satisfactions in the future.

J.S. Mill outlines that the moral and intellectual ones surpass the economic advantages ofthe free trading. Centuries ago, besides all the negative sides and effects, the war had thoughsomething a little less malignant; it created the contact between people belonging to differentworlds. Today, this role attributes to commerce, which is a purpose for the greatest part of thecommunications that take place between civilized nations.(14) Therefore, commerce is one of themain progress sources; J.S. Mill attribu tes an educational role also, since it teaches the nations how“to look positively” at other nations’ welfare and prosperity. And this because a wealthy nationrepresents a potential commercial partner that is solvent for other nations. Rapid extension andamplification of international trade becomes, as the same author opines, a guarantee not only for theworld’s peace, but also for continuous progress of ideas, institutions and human rase character.

The hypotheses on which the three liberal classics buil t their pleading are (15):- the proportions in which products change between them are determined by the

quantity of labor necessary for their output;- the international exchanges are not a goal by themselves, they are subordinated to

the economical growth;- free international trade is an extension on foreign level of the liberal values.

As we can see, Smith, Ricardo, and Mill are convinced of the free commerce virtues. Freetrading means an efficient distribution of the output factors, a free competition, and the individuals’

freedom of action that is for the benefit of consumers and leads only for a permanent flourishing.The comparative advantage principle and the international specialization ensure to a country aneconomic efficiency and a greater welfare t hroughout the participation to international commercethen throughout introducing the commercial protectionism.

Heckscher-Ohlin-Samuelson model continues the ricardian paradigm about the internationalcommerce and tries to find some answers to issues rega rding, among others, the immediate resultsof foreign commerce, the long-term consequences that foreign commerce has upon the economicalgrowth and development, as well as the optimal foreign economic policy. Undertaking anddeveloping the concepts of abso lute cost/advantage and relative advantage from the classic theory,the model’s authors conclude to the followings (16):

on short-term, there do not exist losses for the partners in the international exchanges, butonly earnings;

on long-term, the international commerce is more benefic because contributes to eachcountry’s economical growth, to equitable repartition both of output factors and final waresbetween the partners, to generalization of the progressive experience; throughout itsstimulation/propagation effect, the less developed countries get closer to the developedones;

the necessary condition for efficient realization of commercial exchanges is the absence offinancial barriers and of other commercial restrictions; in other words, the optimal fo reigncommercial policy is that of free -trading, the protectionism being accepted only as anexception, for protecting the industries which are at the begging of their development andfor national security reasons.P. Samuelson appreciates that “the ele gant theory of the comparative advantage” represents

the unshaken basis of international commerce; free commerce is a compulsory condition in orderfor the countries to orient their output towards domains that they benefit of the comparativeadvantage. Each country’s specialization in the domain that they have the competitive advantage isbenefic for everyone; the exchange terms improve, that means, that finally, workers in each regioncan produce a bigger quantity of consume wares with the same volume of l abor effort. Theeconomy openness generates an increase of the national income, while custom taxation is a sourceof economic insufficiency; the economic loss endured by the consumers as consequence ofintroducing the custom taxation for imported wares is bigger then the incomes obtained by the statetogether with the producers’ earnings. But “after the efficient specialization the world movestowards the efficiency’s limits”. In Samuelson’s view, the levy of a custom tax stimulates the localinefficient output, determines the consumers to reduce the acquisition of wares taxed under theefficiency levels and contribute to state’s income growth. Out of these effects, the first two onesinevitably imply costs regarding the economic efficiency. (17)

Samuelson also emphasizes the existence of some limits; when the economy confronts withdysfunctions, it is hard to establish if the countries will benefit from the trading process. History hasproven that this theory has fewer advocates in those periods when the eco nomic activity isunorganized; for example, while the ’30 crisis, nations have built veritable “taxation pill boxes”attempting to recover themselves. The relative advantage theory has regained its attraction forceafter the Second World War when the indus trialized countries met an unprecedented economicgrowth. But, despite its possible limits, Samuelson attributes the relative advantage theory the statusof “one of the biggest truths of political economy” and consider that those nations which do not takeit into account “pay a heavy price, quantified in their living standard and economic growth.” (18)

Protectionist measures, more or less visible, have become though a reality of thecontemporary world; the grotesque situation, as L. Von Mises characterize s, is that all countrieswish to limit their importation and, at the same time, to amplify their exportation. These kinds ofcommercial policies interfere with the world’s labor division resulting in a decrease of generallabor’s productivity. The only one “great achievement’ of protectionist taxation is to stop thedeveloping of output where the natural and social conditions are the most favorable. (19)

Milton Friedman is also convinced that “a free commerce not only contributes to world’swelfare … but, could also favor peace and harmony between nations…” (20) which differ throughhistorical evolution, language, culture, institutions etc. Not to be submissive to any constraintsmeans being free. From this point of view, protectionism, throughout the rest rictions it imposes,alters individuals’ freedom. “…freedom is a whole …anything that limits freedom in one domain ofour life may affect freedom in the other domains.” (21)

The economic context at the beginning of the XXIst century does not corres pond though tothe classic pattern of international commerce, where the readymade wares were produced in onecountry and transported towards the commodity markets of other countries by air, water, or land.Presently more then one third of the international commerce is the inside-branch type, meaning thata firm outputs the components in a country and mount them together in other country, in order tosell them in a third country or to re -export them in the origin country. Additionally, world economyis influenced by the rapid proliferation of commercial blocks that change the traditional pattern ofinternational commerce.

The globalization phenomenon has extended the exposure degree of firms to theinternational competition; the markets have been liberalized , and the remarkable progresses in thecommunications technology domain have generated the integration of financial operations and havefacilitated the rapid transmission of market information.

In this kind of context, firms/nations can loose rapidly the comparative advantages theydispose of; in other words, the trade based upon the comparative advantage has become extremelyvolatile and precarious. When firms from different states have access to the same technologies, theycan borrow the capital at the same price, the departure between each ones comparative advantagesnarrow considerably. An insignificant variation of costs may determine a firm to rapidly migratefrom a country to another in order to maintain its competitiveness. This phenomenon is called“kaleidoscopic comparative advantage”. (22)

The change of the international context generated two major consequences for thecommercial policy (23):

-the firms acknowledged the fact that comparative advantage has gained a volatile characterand try to make sure that their rivals do not submit into what they consider to be unfair commerce;they try to pressure the governs and international institutions to harmonize policies in order for allcompetitors to activate within the same framework;

-international instability accentuation is accompanied by an amplification of the uncertaintyfeeling of workers; the problem of their jobs incertitude regards at the same time the qualified andunqualified labor; the alternative that firms would reconsider other locatio ns generates pressurescoming from the workers in order to introduce a settled framework that should protect their rights.

4. CONCLUSIONS

Economic liberalism has consolidated its concept based on freedom, on individual givenprimacy, on acknowledged virtues of free competition and free initiative. The key elements ofeconomic freedom are the free initiative, free trade, free competition and, individuals and prosperityprotection. The economical freedom also implies the government withdrawal from man y activities,as well as avoiding the blocking actions of free initiative, free trade and the liberty to access and tofreely compete on the wares and labor market. In this context the free trade shows like a naturalright; it is the expression for individ uals’ freedom to benefit from their work and the results of theirwork, to sell and to buy what they want, to whom they want, in the quantities they want and wherethey want (on the local or foreign market).

Free trade allows nations to benefit of the adva ntages of international specialization, in aworld economy of which predominant characteristic is interdependency. Free trade is the expressionof impartial implication of the state, in the purpose of settling and not orienting the commercialflows.

NOTES:

(1) D.Griswold– Seven Moral Arguments for Free Trade , Cato Policy Report, iulie/august, 2001(2) T. diLorenzo– Trade and the Rise of Freedom , www.independent.org(3) R. Paul – Pillars of Prosperity, Ludwig von Mises Institute, 2008, pag.291(4) T. Pugel-International economics, 12th ed., McGraw-Hill, 2004(5) T. Pugel - lucr. cit.(6) M. Rainelli – Comerţul internaţional , Editura ARC, Bucureşti, 2004, pag. 68 -69(7) A. Bal(coord.) – Economie Mondială, Editura ASE, Bucureşti, 2005(8) A. Smith – Avuţia naţiunilor. Cercetare aupra natu rii şi cauzelor ei, Editura Academiei RPR, Bucureşti,

1962, pag. 327(9) D. Ricardo – Principii de economie politică , , vol. I, Ed. Academiei RPR, Bucureşti, 1959, pag.236(10) Idem, pag.126(11) J.S. Mill – Principles of Political Economy with some of their Application s to Social Philosophy, Book

III, Chapter XVII, Longmans, Green and Co, London, 1848, www.econlib.org(12) J.S. Mill – lucr. cit(13) Idem(14) J.S. Mill – lucr. cit(15) I. Pohoaţă – Doctrine economice universale , Fundaţia Academică „Gh. Zane”, Iaşi, 1993(16) G. Popescu– Fundamentele gândirii economice , Editura Anotimp, 1993, pag. 251,252.(17) P. Samuelson – Economia politică, Editura TEORA, Bucureşti, 2000, pag. 804 şi următoarele(18) Idem, pag. 812(19) L.von Mises – Liberalism in the Classical Tradition, Misses.org Edition, 2002, pag.130, 136(20) M.& R Friedman – Liber să alegi, Editura All, Bucureşti 1998, pag.31

(21) Idem(22) B. Ingham – International Economics:A European Focus , Pearson Education, 2004, pag. 72(23) B. Ingham – lucr. cit., pag. 73

BIBLIOGRAPHY:

1. Bal, A. (coord.) – Economie Mondială, Editura ASE, Bucureşti, 20052. diLorenzo, T.– Trade and the Rise of Freedom , www.independent.org3. Friedman, M.& R – Liber să alegi, Editura All, Bucureşti 19984. Griswold, D.– Seven Moral Arguments for Free Trade , Cato Policy Report, iulie/august,

20015. Ingham, B. – International Economics:A European Focus , Pearson Education, 20046. Mill, J.S. – Principles of Political Economy with some of their Applications to Social

Philosophy, Book III, Chapter XVII, Longmans, Green and Co, London, 1848,www.econlib.org

7. Mises, L.von – Liberalism in the Classical Tradition, Misses.org Edition, 20028. Paul, R. – Pillars of Prosperity, Ludwig von Mises Institute, 20089. Pohoaţă, I. – Doctrine economice universale , Fundaţia Academică „Gh. Zane”, Iaşi, 199310. Popescu, G.– Fundamentele gândirii economice , Editura Anotimp, 199311. Pugel, T. -International economics , 12th ed., McGraw-Hill, 200412. Rainelli, M.– Comerţul internaţional , Editura ARC, Bucureşti, 200413. Ricardo, D. – Principii de economie politică , , vol. I, Ed. Academiei RPR, Bucureşti, 1959,14. Samuelson, P. – Economia politică, Editura TEORA, Bucureşti, 200015. Smith, A. – Avuţia naţiunilor. Cercetare aupra naturii şi cauzelor ei, Editura Academiei

RPR, Bucureşti, 1962

COMPETITIVENESS OF ROMANIAN TOURISM IN THE AGE OF GLOBALIZATION

University Lecturer, Ph.D. candidate Ştefăniţă ŞUŞU„Ştefan cel Mare” University of Suceava, Romania

stefanitas@seap.usv.roAssociate Professor Ph.D. Mihaela BÎRSAN

„Ştefan cel Mare” University of Suceava, Romaniamihaelab@seap.usv.ro

AbstractCompetitiveness issue is more present than ever, and must be approached at micro and macro -economic

level, as at present, unfortunately, there is a lack of competitiveness of the Romanian products/ services in the internaland external market and consequently of the national economy.

Competitiveness suggests certainty, efficiency, quality, high productivity, adaptability, success, modernmanagement, superior products, low costs. A company’s competitive force resides in competitive advantages anddistinctive capacities that it possesses in relation with other competitive companies. To consider a company ascompetitive it is necessary to accomplish a compelling analysis of that company and of its activity background.

Key words: competitiveness, romanian tourism, globalization, international standards, lasting development.

Clasification JEL: L83, O10

INTRODUCTION

As a natural condition, competition stands at the basis of selection. The same thinghappens in the economic environment, where it generates progress, being only a game with winnersand losers, in competitors’ perspective. Beneficiaries (buyers, consumers) have only to win as aresult of competition. The natural environment is the solely affected by competition’s loyal ordisloyal character, the effects being positive or negative.

If, micro-economically speaking, competitiveness is generally defined as being thecapacity of a micro-economic structure (unity, company, etc.) to gain a market segment or to defend(maintain) it, then macro – economically speaking, competition can be defined as being the capacityof a macro-economic structure to gain or to defend market fragments both at the exterior and at theinterior. The validity of this affirmation is supported by the fact that this competitiveness isgenerated at the micro level, but it is supported and reinforced at the macro level.

In the article “Create wealth, create competitiveness” Mark T. McCord definescompetitiveness as being “the creation of wealth”. He shows, speaking of the competitiveness indifferent countries on the globe, that, “the creation of wealth and accordingly competitiveness isconcentrated on the use of human, financial and educa tional resources as to ensure and maintain astrong foundation on which economics can flourish”. In other words, a rich country cannotautomatically be considered competitive, but the one which created its wealth through work, talentand organization, a country that possesses a productive and creative potential that should make itindependent from material resources.

The 21st century enterprises are developing their activity in an internal and externalcompetition environment extremely powerful and dynamic.

Confrontation on different markets, as a result of globalization, is especially harsh andcompetition must be regarded at its real dimensions, without having a too optimistic vision, as onlythat way one can take all necessary measures to reassure the sec urity and development of thecompanies, regardless their sector of activity.

COMPETITIVENESS IN TERMS OF GLOBALIZATION OF THE ECONOMICLIFE

The actual context, marked by the globalization of the phenomena and the more and morewide recognition of the interdependencies, has imposed new game rules: the prosperity of thenations involves competitiveness on the international markets and that of the enterprises involvesintegration in the chains of the world values.

Accordingly, the issue of competitivenes s has become an ardent theme at the level of eacheconomic actor, beginning with that of economic regions and continuing with that of anyorganization. At the same time, it is also acknowledged an evolution of competitiveness’ concept inthe sense of passage from static competitiveness, where the competitive advantage was given by theendowment with technical factors, to dynamic competitiveness, whose driving factors are: technicalprogress, income growth and modern management methods, that made the competi tive advantageovercome the economic dimension: the increase of the financial power and the productivity of thecountry, education, certainty, the quality of life, all these being components of the concept.

As for a company’s competitiveness, this represen ts the company’s capacity to win underthe conditions of competition on the internal and external market. It is connected to the procuranceof goods and services, to the development of some commercial or financial operations, high qualityservices and low costs compared to competitors, and that provides access, maintenance andconsolidation on a certain market, in relation to other similar products and services. Under theconditions of a strong competition on a market, the insurance of the competitiveness r epresents aprimary strategic objective, being a fundamental notion to the strategy and strategic analysis. Onecannot reach a competitive activity without an appropriate strategy that involves changes instructures, activities and management.

In 1954, Peter Drucker, one of the important classics of the management, a true pioneer indiscovering new trends and especially the actual economic openings, underlined the specialimportance of a company’s strategy, pointing out that this gives the answer to two que stions: “Whatdoes the business consists of?” and “Which should be the company’s object of activity?” Thenfollowed other approaches belonging to some famous specialists in management, and MichaelPorter is considered by all probabilities, currently the wo rld specialist in strategies. Using the termgeneric strategy, Porter showed that this consists of “the specificity of fundamental approach for theachievement of the competitive advantage pursued by the company, which provides the context forthe actions to do in each functional domain”.

Regardless the proportion and the object of activity of the firms, their competitiveness hasits origins in the quality of the strategies they adopt and apply. Romanian specialists in managementrecognize as definition of strategy “the assembly of major long term objectives of the company,primary achievement modalities, together with the allocated resources, in order to obtain theadequate competitive advantage to the mission of the firm”. The achievement of the competitiv eadvantage regarding essentially the cost and the quality of the product represents the centralpurpose in the elaboration of the strategy and the most important criterium for the evaluation of itsquality. One strategy that does not aim and ensure the ac hievement of the competitive advantage isnot useful for that company.

Without any doubt, the insurance of the competitiveness at the level of any company mustrepresent a major challenge for managers. But, in order to reach a certain level and after that toincrease competitiveness, the manager and his team must keep in mind the fact that the value andthe appliance of the strategies do not represent a purpose by itself, but it represents a majormanagerial instrument for the specialization of the manageme nt and the enhancement of thecompany’s performances.

The integration in the competition environment represents one of the most difficult issues acompany is confronted with. The foundation of the management on a compelling strategy bringsabout the facilitation and the amplification of the effectiveness of a company’s integration in thecomplex and dynamic competition environment it is placed in.

The competitive advantage within a sector can be highly increased through someinterrelations manifested betwee n the economic agents who compete in related sectors, if thoseinterrelations can be achieved. Internal competition has positive results in achieving and increasingthe competitive advantages.

The modern analysis of the competitiveness and of the competiti ve advantage, consideredas the necessary alternative to the theory of the compared advantage of ricardian inspiration, issubmitted to the same economic categories of cost and productivity, at least by general definition ofcompetitiveness alone, as being the capacity to obtain high productivity. The recognition of theduality of the porterian competitive advantage (through costs and differences) determinesultimately the recognition of its materialization in extra productivity versus the concurrent firms.

Michael Porter considered that “the competitive advantage is the key -factor for a companyto reach the performance on competitive markets and cannot be understood if we regard thecompany as a whole”.

It results from the multiple separate activities a com pany performs for the design,production, marketing, delivery and the ensured maintenance of its products. To analyze the sourcesfor the competitive advantage (competition) Michael Porter interpolates the notion of value chainthrough which a company is d ivided into activities relevant from a strategic point of view, in orderto understand the mechanism of costs and the potential and existent sources of differentiation.

Companies’ value chains within an economic field differ one from another, reflecting th epast of each company, the chosen strategies and the success in implementing. The relevant level forthe realization of a value chain is that of the activity of a company within a certain field. The valuechain of a company from a certain field can vary m ore or less for different articles in its productionline, or for different buyer categories, geographic areas or distribution channels.

To diagnose the competition advantage, we must identify the value chain required to becompetitive within the studied a rea, and then, to emphasize the advantages the company hasregarding the chain.

Consequently, this approach proposed by Porter is useful because it gives the company thepossibility to evaluate each competitive force, so that the firm can establish its own competitivestrategy, use in its advantage the rules that govern the competition on the market and thus ensure acompetitive position versus other companies that operate on the market.

The use of the value chain implies a compelling evaluation of the cost s generated by theprimary, cardinal and support activities. Besides the fact that it allows the company to determine itsposition in costs’ plan compared to rival companies, the value chain also offers indication regardingthe nature and localization of t he measures to be taken in order to reduce costs and increase thecompetitiveness from this point of view.

In Michael Porter’s vision, the system of the factors for the competitive advantage aims theinvestment and innovation theory. Within a new economy a nd the knowledge society,competitiveness and the competitive advantage acquire new approaches. Thus, competitivenesssupposes a concentration of the efforts towards investments in physical capital (new equipments,buildings, etc), investments in human cap ital, in advanced technologies and the enhancement of theexisting ones, and also the increase of productivity and the improvement of the productionconnections.

All the other advantages, mainly qualitative and largely non - quantifiable, are concretizedin the company’s economic results or performances. The managerial practice in the developedcountries companies shows that the companies that base their activity upon strategies, obtain clearlysuperior economic results.

COMPETITIVENESS’ HORIZON IN ROMANIA N TOURISM

One of the strategic fields - potentially competitive – that is capable to ensure a long termeconomic increase that should help it to recover the gaps that Romania has compared to theEuropean Union, is the tourism.

Among the arguments that jus tify this appreciation there would be in the first place itsmultiplying effect, the tourism acting as an actuation element for the entire global economicsystem, caused by mutations in quantitative and qualitative plan induced by its development at thelevel of all branches it is inter-dependent with.

The character of the inexhaustible resources it valorizes, under the conditions of a longterm development, makes tourism represent one of the economic sectors with real long termdevelopment perspective.

By its content, tourism is also an important factor of long term development. That is why,this option is perfectly integrated within the present strategy promoted world wide: “Economicstrategy for long term development”. Thus, in terms of respecting and pro motion of the principle fordurable development, tourism can represent a means for the protection, preservation andcapitalization of the cultural, historic, folkloric and architectural potential of the country.

By adopting a long term development strategy for tourism and the implementation of somemeasures for environment protection, of the fundamental values of human existence (water, air,flora, fauna, ecosystems, etc.), tourism has at the same time also an ecological vocation.

The existence of a large diversity of tourist resources, both natural and anthropic, amongwhich some with an increased level of attractiveness and originality, can ensure under theconditions of the optimal capitalization, a source for increasing the state currency, thus contribut ingto outweigh the balance of external payments.

At the same time tourism represents an important factor for regional development,ensuring the lowering of the imbalance between separate areas, also representing an importantsource for the increase of the population incomes, a safe market for the work force andredistribution of that dismissal form other economic restructured sectors.

Not last, we must accentuate the fact that tourism contributes through its effects in thesocio-cultural plan to the insurance of the life quality that represents a very important aspectregarding the fact that, in the present context, competitiveness at nations’ level must be consideredin more wide sense, which also includes the life quality.

The development of the Romanian tourism and its transformation in a successful sector,according to its potential, require the elaboration and especially the practical application of someadequate strategies at macro-economic and micro-economic level.

The extremely powerful competition m anifested on the tourist market and also theexigencies more and more strict that tourists manifest, impose that the general objective, at thesector’s strategy level for tourism development, to be the increase of the competitiveness of theRomanian tourism.

Because of the multiple interdependencies between tourism and other economic sectors,this development strategy must be correlated with the other sector strategies and with the regionaldevelopment strategy so that the stimulation of the activities of t he industries or activities that act assupport for tourism to be assured. That assumes on one hand, the understanding of the tourismimplications by its participants, and on the other hand, through the applied strategies, there must beensured the harmonization of all existent categories of interest, that is tourism planning anddevelopment to be realized so that it can provide economic and social benefices to all actors directlyor indirectly involved in realization of the tourist product. This implies th e elaboration of somenational and local strategies, and some facilities that should determine the economic agents toimplicate in this domain. Common tourist projects are the most profitable for the inhabitants of theRegion in this respect.

The construction and development of tourist establishments usually requires a largeinvestment volume. In these conditions, the stimulation of the investments in tourism can be doneby the stimulation of an active partnership between economic agents and the authorities involved atthe national, regional and local level, between private and public sectors.

At the same time it is necessary to join the management strategies with those of marketingat all levels, so that it can be achieved the maximization of the effects of those strategies.

In the market economy, the maintenance of competitiveness supposes a continuouscreativity, innovation in development of new more sophisticated and more refined (personalized)products and services.

The high volume of investments necessa ry for tourism’s developments supposes thepromotion of some partnerships, information and support in obtaining structural funds that gives thepossibility for financing tourist projects. The government is the one who has an important role inthe elaboration of the development strategies and politics, in facilitating and coordinating theactivity of the economic agents involved, and in their integration at national level.

Central authorities, aside to the attributions in the field of elaboration of tourism strategiesand policies developments, of improving the legislative setting, of cooperation with otherdepartments, of developing international relations, promotes forms of partnership with the localauthorities and with the regional and national tourist in dustry. At the same time, they have manyinstruments for the planning, organization and the performance of the tourist projects, to guide andcontrol them.

In return, the local and regional authorities have a key role in promoting the regionalpolitics for economic (including tourist), social and economic developments.

That is why tourist planning, improvement and exploitation must be a part of the long termdevelopment strategy of the region, to be registered in city planning documentation and territorysettlement that ensures the cohabitation of tourism next to the other socio -economic fields.

At the same time, the regional / local tourist development policy implies a verticalcoordination between central administration and local / regional authorities, be tween the state andthe public or private tourist enterprises, by establishing some mutual development programs,intermediation of collaboration with organization, investors or foreign financing funds etc.; ahorizontal coordination of the activity between different localities and regions, institutions,organizations, between public and private sector.

The state can facilitate this coordination by creating the institutional set of rules or bygranting some social and economic advantages.

To those, incentive measures for the tourism development in general or some forms oftourism in particular are added, for the institutionalization of some norms, quality systems,participation to the co-financing of some local tourism objectives through Development Fund forTourism, private international funds, and public funds for investments.

All these represent arguments that sustain the necessity for the elaboration of somerealistic, pertinent, flexible strategies that can ensure the increase of competitiveness of Roman iantourism which could represent, in terms of some scientific and durable capitalization, an importantfactor of economic growth.

The increased volume and complexity of the offer for tourist services have generated thedevelopment of some true traveling a nd tourism industry, which justifies the treatment of touristphenomenon as a distinctive branch of the national economy in full development, constituting acomponent of the tertiary sector. Through its nature, tourist phenomenon is particularly complex,with deep social, cultural and economic implications. The intergrowth of its heterogeniccomponents gives birth to unique and original specificity, which does not identify with any of thetraditional branches of national economies, thus explaining its treat ment in autonomous mode.

The development of tourist industry will be in the future in a permanent correlation withthe levels and rhythms of development of the other branches of the national economy.

The new concept regarding tourism development must take into account not only thevarious and complex relationships between tourism and other economic - social territorialphenomena, but it must refer to the tourist phenomena itself, as it will be outlined in the near future.For Romania, this concept takes into consideration the evolution of social phenomena in thecountry, which, under the conditions of the market economy, will generate the formation of somenew categories of potential tourists, of some new motivations for spending spare time andconsequently, the apparition and evolution of some new tourist requests.

The participation of Romania to the international tourism competition, on the continent andworldwide, under the conditions of the existence of a valuable tourist patrimony, at the Europeanand world level of the market’s requirements remains an issue of firm action of the Government.

The systemic vision of the long term development strategy of the Romanian tourism, in thecontext of structural adjustment of the entire national economy, brings into attention the fact thatthe tourism has become a primary economic branch in the organic interdependency with the othereconomic -social branches and sectors.

The deciding element in scientific and decisional plan is constituted by the definition ofsome firm, realistic concept regarding the capitalization of the patrimony and long termdevelopment of the tourism.

According to the reform and structural adjustment program, the transition towards themarket economy in our country, implies the growth of lucrati veness in all activities throughefficient capitalization of economic possibilities, implementing advanced technologies worldwideused.

The alignment of the Romanian tourism to these requirements is necessary because of itscharacteristic mobility and also because of the importance of this sector in the Romanian economicrebuilding.

As fundamental principles of such strategy, one could have in mind: the privatization of alltourist units, autonomy of economic agents and integration in the world tourist circ uit. Amongthese, the state plays a significant role through its politics for tourist development at national level.The objectives of a tourist policy are:

Extra-economical through implementation in practice of the free circulation andcommunication between countries and through cultural role of capitalization of natural, artistic andarchitectural patrimony;

economical: qualitative and quantitative because tourist policies favors some types ofconsumption in order to increase the production and guide towa rds sectors and regions that presentspecial interest and have a positive training effect on the economic growth of external commerceand employment of the workforce.

The tourist policy instruments are those that arise from the global economic policy, towhich there are added the sectors’ planning and the specific instruments for the tourist sector.

The global economic policy has numerous directions that favor the development of touristactivities, and they can be grouped in three categories: financial, fis cal and economic-socialdirections.

In establishing a planning strategy for tourism development, planning methods andprocedures are an important aspect. Political, economic and social environment, the market positionwith its implication at national and w orld level, leave their fingerprint on the structure of touristnational plans. The quantitative aspect of the planning regarding both the objective and the expectedoutcome consists in finalizing optimal provisions that should maximize the economic effect s of thetourist development under given economic, social and politic conditions.

The instruments of economic policy specific to the sector aim those measures that areapplied in tourist domain and use budgetary, monetary and fiscal instruments. Financing from thestate budget of tourist activities is destined to encourage the development of some areas andcomponents of tourist offer (eg. credit granting with small interest to encourage investment intourism). Monetary measures are adopted to maintain or ev en increase internationalcompetitiveness of tourist products to export. Fiscal measures have as purpose the stimulation oftourist companies through exempt, reductions or delaying of tax payment or by increasing budgetincome through differential taxation of tourist activities.

The way in which the main objectives are arranged and included in the developmentstrategies of Romanian tourism, and the ways in which this is accomplished, presents a series ofinteresting aspects to conceptualize the value system of our tourist patrimony, as it follows:

1. The growth of competitiveness of the Romanian tourist offer through thecapitalization of tourist potential, modernization and development of the technical andmaterial foundation of the tourism in accordance wi th international standards.

As to achieve such an objective, Romania can appeal to the following ways ofachievement: encouraging, supporting and stimulation of foreign capital investments in varioussectors of Romanian tourism; modernization of some repre sentative units in the capital, the bigcities of the country, Romanian coast and balneary and mountain resorts; elaboration of somefeasibility studies and technical and economic documentation regarding accomplishment of newhousing unities, nourishment, treatment, entertainment, etc. in the most important tourist areas ofthe country; development and launching of some offers of schedules and special tourist actions,destined to specific clientele; the promotion of some specific forms of tourism (hunting, equitation),diversification of resources in some tourist destinations (Aqua Magic – the first aquatic fun park inRomania, situated in Mamaia, having a surface of 2 hectares); the elaboration of an optimal systemfor automatic reservation of the housing p laces; the designing and the implementation of anadequate informational system to the new requirements in tourism activities, aligned to theinternational practice, sustained by a corresponding technical endowment of calculation; therestoration and the settlement of some architectural elements for their capitalization throughtourism; creation of Romanian hotelier chains and their introduction in international networks ofhotelier chains of some of our hotels.

2. Advancement of the organizational structur e required for the enhancement of acompetitive tourism

The analysis realized in this field emphasized the fact that one can distinguish thefollowing ways for fulfillment: international integration, at the level of central organisms, and ofregional unities, through their affiliation to various profile associations and organisms from abroad;privatization of tourism enterprises and growth of their capacities for the capitalization of the localresources, for the promotion and commercialization of their own offers, for the cooperation withcompanies from the country and from abroad; the application at a large scale of the auctions withlocal and international participation for the modernization and development of tourism technicaland economic foundation; the diversification of collaboration and cooperation forms withcompanies from the country and from abroad, for the construction and modernization of roads,receiving structures, realization of installations for cable transportation, casinos, night -clubs, fanparks, etc.

3. Diversification and growth of the quality of the tourist servicesThe research of the experience of the countries with modern tourist activity, underlines the

following priorities: diversification of the paid and non -paid services; the increasing preponderanceof supplementary services in the total of tourist services, amplification of the services in the domainof the automatic reservation of the housing places; the pursuit of the instauration of a climate oforder and discipline in all tourist units to the assurance of some high quality services.

4. The formation of a real image, in Europe and in the world, about Romania as atourist country

This objective can be realized through the organization of some promotional actions for there-launching of the Romanian offer on the European market and also on other continents’ markets,the improvement of the content and the quality of the advertising messages, the increase of the roleand attributions of the tourism centers in foreign countries, div ersification of tourist publicationsedited in more languages with international circulation.

5. Reconsideration of the commercialization action of the Romanian tourist productson the international market

The measures that must be implemented in the achie vement of this objective are: theassurance of an elastic system of tariffs and prices depending on the season, climatic conditions,traffic intensity and degree of solicitation; the ampleness of the competences of economic agents interritory in the domain of counteraction on external tourist market and for the fixation ofcompetitive tariffs and prices; the creation of travel agencies on the primary traditional markets and

the tourist offices on other issuer markets; the extension of cooperation in the do main ofcommercialization of some Romanian tourist products.

6. The development of tourism for the young peopleIn the purpose of the amplification of the tourist movement of the youth the following

objectives were proposed to the strategic policy for the development of youth tourism that wereaccomplished in direct collaboration with the Ministry of Tourism, the Ministry of Education,Research and Youth:

- the growth in youth participation to the internal tourist circulation;- the extension of program organization for the formation and perfection of the youth in

crafts with tourist character (animators, guides for different tourist actions);- the extension of participation projects of the youth associations, clubs, foundations or any

form of organization non-governmental to the congestion and co -management of tourist resourcesform the long term development perspective;

- the assurance and promotion of the tourist information for youth;- organization of tourist actions with educational character on inter cultural problems, of the

identity of national culture, of tourist and ecologic behavior, moral and religious.7. The insurance of the new work force adequate to the new programs, requirements

and tourist technologiesThat is made according to scientific c riteria of recruitment, selection, formation and

perfection of all tourism workers, the instauration of a system of stimulation and co interest of thetourism personnel, the progress of some formation classes and managerial perfection in tourism, theassurance of a contractual collaboration with specialized foreign organization and firms.

Realization of these strategic objectives will determine essential changes in Romaniantourism, with positive effects and very important from economic, social and ecologic point of view.The re-launching process of tourism and of its consecration as primary branch of the economyimplies stock-taking and coordination of all premises inside of a realistic development strategy andwell-integrated in the reform programs of the Romanian society.

The development of the tourism in Romania must be an objective and a means ofeconomical and social development as a whole, in the context of national politics for developmentand must follow the present economic context and this cannot b e imagined without a package ofmeasures that should aim:

The precise definition of the tourist activity’s objectives at macro -economic andmicro-economic level;

The assessment some high quality standards through the education of internalconsumers of tourist services and through investments in the quality of the technical component ofthe services provided;

The increase of the functional and relational quality, through reorientation of theorganization’s culture and the perfection of the training of the economic agents involved in thetourist offer, especially in market techniques studies, orientation of efforts in internal and externalconcurrency, in localization of the concurrency and in the conscious use of the environment as partof the investments in tourist activity;

Judicious assignment of the environment maintenance costs between the providers andconsumers of tourist services;

Creation of a “brand image” for the Romanian tourism by emphasizing the distinctivedifferences, primarily regarding to t he neighboring countries, and by emphasizing Romania’scompetitive advantages: the variety of relief, advantageous prices, multiculturalism, uniqueness ofsome reservations and of some cultural and natural monuments under international protection, etc;

The association of tourist activity with the concerns for the environment protection andwith the support for the regeneration of natural resources

The strategic objectives for tourism development are: The development of tourist product as to assure the super ior value of the conditions

and existing factors and increase of its quality and competitiveness.

The organization and structural reform, in the purpose of realization of touristactivities and for creation of the function mechanisms in conformity with the requirements of themarket economy, aims the development of the market’s forces and reinforcement of the capacity ofthe providers to enter and to resist on the international competition market, partnership betweencommercial sector and public sector, as the correlation of the strategies, programs and actions thatcontribute to the development of tourist sector and the quality of services.

The development of work force in tourism, the necessary instrument for the insuranceof a long term competition positi on.

Improvement and development of marketing and promotion activity has as purpose thecreation of a positive and fair image of Romania on the provider market, regain and development ofthe markets, advancement of mechanisms and instruments in marketing ac tivity, including thefinancing modality, the involvement of the private sector in coordinate and efficientcommercialization of tourist programs.

The integration of the Romanian tourism within the European and world tendencies,including the ones of accommodation of tourist current to and in Romania regarding: thedevelopment and promotion of a long term tourism, the harmonization of tourism’s specificregulations with legal provisions of the countries in European Union, the insurance and internalmaintenance of a safety and security climate for tourists, elimination of the obstacles regarding freemovement and internal and external facilitation of tourist circuit, active participation withininternational organisms and the elaboration of documents for Euro pean integration in the line oftourism.

The assurance of protection, security and tourist safety regarding consumers safety andinterests, aces to adequate information, training of consumers, which aims the Romania recognitionas a safe tourist destination that promotes the respect towards consumers and their rights.

The development of legal setting necessary to reach tourism development objectives,to the creation and advancement of its activity mechanism that aims the evaluation of its presentlevel of regulation and assessment of necessities, the harmonization of normative setting with theinternational legislation, the correlation of the activities and requirements for regulations with theother sectors of action, the promotion of proposals specific to tourism, the control regarding theapplication of the legislation regarding tourism.

Correlation of the politics in tourism field with the national economic politics, throughsettlement of legal proposals and of concrete measures that should facilitate tou rism development.

These would be broadly the directions of action, the ways of growth and development ofthe tourist sector at national level. On one hand, tourist companies can achieve all these, throughtheir policy, and strategies that aim, besides an i ncrease of their own competitiveness, also a growthof the sector they act in, but especially through the intervention of the state, through the macro -economic policy correlated with the measures that are undertook in order to align Romania to theEuropean standards.

As for the tourist companies, when modern tourism becomes more important, a specialissue that tourist industry is confronted with more and more is the insurance of high qualityservices. The quality is the component that weights on the growth of the efficiency of touristactivities and it must be considered by any development strategy at micro -economic level.

CONCLUSIONS

Romania has a huge tourist potential, but not enough exploited. From a tourist point ofview, Romania is behind the other c lose states, like Hungary and Bulgaria even if the Governmentdeclared tourism as a main sector. However, the perspectives are hopeful, Romanian tourism havinggreat chances to become competitive. According to the report regarding the perspectives of growt hin tourism industry, Romania occupies the seventh place among the 176 countries analyzed by theWorld Tourism and Traveling Council (WTTC).

Also, most visitors that Romania will have in 2008 will come from Germany, Austria,Italy, SUA and Israel. The inauguration of new hotels and pensions, the amelioration of services,but also a better infrastructure, are the reasons for the attraction of many foreign tourists in 2008, inthe opinion of National Association of Travel Agencies (ANAT). Romania received in 2007approximately eight millions foreign tourists, and 2008 is the year where are expected 15% moretourists, the countries that already have acknowledged being Germany, Austria, Italy, SUA andIsrael. The argument for this growth has as justification, a ccording to the same representatives, abetter infrastructure, the inauguration of new hotels and pensions, and the amelioration of thequality of services. On the other hand, according to the estimations made by the PatronageFederation in Romanian Tourism (FPTR), the Romanian’s interest to travel abroad will notdiminish, thus an increase of 30 -32% of the number of those that will leave abroad is expected.

The fact that the Romanians would rather spend their vacation abroad, and not in theircountry, would affect the internal tourism. However, this can be regulated by the improvement ofinternal offer and housing conditions. Totally, in 2008, an increase in all segments, internal,external, business, travel and charter is expected, and a factor that will c ontribute will be theimprovement of infrastructure, including the airport one.

Another trend for 2008 is the Romanians option for airplane trips, in Romania operating 47airlines with regular line and nine low -cost companies. Among these, charter flights will register anincrease of 25%. Charters have registered last year also a growth, being launched almost 80charters, and for 2008 it is estimated that their number will reach almost 100. An importanttendency is the appearance of charters in other citie s of the country, according to the NationalAssociation of Travel Agencies (ANAT).

In conclusion, Romania must know how to attract approximately 1,5 billion Europeans tovisit it, but it will take a few years until the citizens of European Union will learn to come in ourcountry, having in view that Spain, Turkey and Greece are traditional destinations for them.Moreover, in Romania, the quality/price proportion is most of the times improper and that bringsabout the dismissal of potential tourists. Sibiu i s one of the departure points for external promotion.The city that in 2007 was declared the European Cultural Capital represents a first step. Accordingto some specialists, on European market there is a tendency towards the personalized holidays, fromstandard tourist packages. That is why Romania should integrate in this evolution, by promotingmany types of tourism, form the cultural to adventure one.

BIBLIOGRAPHY

1. Neacşu, N., Turismul si dezvoltarea durabilă, Editura Expert, Bucuresti, 20002. Neagu, V., Managementul turistic şi al serviciilor turistice , Editura Sylvi, Bucureşti,

20003. Niculescu, O., Strategii manageriale de firmă , Editura Economică, Bucuresti, 19984. Porter, M., The Competitive Advantage of Nations , Harvard Business Review, March -

April 19905. Russu, C., Management strategic , Editura All Beck, Bucuresti, 19996. Stănciulescu, Gabriela, Managementul opratiunilor de turism, Editura All Beck,

Bucuresti, 20027. *** www.nord-vest.ro/Document_Files/PND_2007_2013_78nm8c.pdf8. *** www.biblioteca.ase.ro/downres.php?tc=79529. *** http://www.infotravelromania.ro/mamaia.html10. *** http://www.anat.ro/index.php?p=pro&pro=PRO0047369&cat=CAT004329511. *** http://www.wall-street.ro/articol/Turism/39007/FPTR.html12. *** http://www.euractiv.ro13. *** www.ciperomania.org/old_archive/articles/articol9.htm l

STRATEGIC OPTIONS OF THE LOW-COST COMPANIES

Assistant PhD. Student Laura DIACONUFaculty of Economics and Business Administration

“Al. I. Cuza” University Iaşi, Romaniadlaura_es@yahoo.com

AbstractThe market of the low-cost companies includes those firms, national or multinational, that offer goods and

services at low prices. The implementation of the price stra tegy, which is based on various methods of cutting costs, isfavourably influenced by the existence of some factors that act not only inside but also outside a firm. Among thesefactors there are, on one side, the level of costs, of the profits, the return s on investments, the terms of payments, theability of using the resources, the competitiveness of the products, their added value and, on the other side, the existenceof some substitutes for products, the competitive pressure and the consumers’ needs an d wishes. In order to explain allthese factors and to emphasize the way in which they generate competitive advantages to the low -cost firms, we made alarge analysis and synthesis of the approaches existent in the specialized literature. The proposed them e also requiredsome mathematic equations, whose interpretation justifies the essential role played by costs inside the price strategy.

Key words: low-cost companies, price strategy, cutting costs method, competitive advantage

JEL Classification: E64, P22, D24, D61

INTRODUCTION

The purpose of the present paper is to underline the competitive advantage of the low -costfirms, resulting from the implementation of the price strategy, and to identify the factors thatdetermine the low price, putting a pa rticular accent on the costs of production. These objectivesrequired not only an analysis and a synthesis of the approaches existent in the specialized literature,but also a personal interpretation of some mathematic equations, relevant for the present s tudy.Before debating the main problems, it is necessary to give an explanation and to illustrate theconcept of low-cost company.

The market of the low-cost companies includes those firms, national or multinational, thatoffer goods or services at low pr ices. In order to promote the smallest prices, these companies areusing various methods of cutting costs. A special category of low -cost firms is constituted by thosethat sell private label goods - products made by a firm but sold under the name of anoth er company.

A clear image about the market of the low -cost companies could be obtained by analyzingthe specialized literature related to this subject. For example, Rigsby and Greco (2003) talk aboutthe market of the low-cost companies when they presen t the strategy used by firms such as Wal -Mart, Ikea, Best Buy or Southwest Airlines, which could be explained with the help of the notion“low-cost provider” […]. “As a low -cost provider, they must dominate share per market, and inorder to do that, they would drive down their costs at every opportunity […]”. “They do notsacrifice quality, but emphasize best price”, their philosophy being “Every Day Low Price” (1).Consequently, by offering goods and services at low costs, these firms shape the market of t he low-cost companies.

Schnaars (1998) mentions “the market of the low -cost sellers”, referring especially toelectronics producers (Packard-Bell or Emerson) that, in order to have low prices, are using variousstrategies: they make standardized products , spending less “on R&D and advertising thandifferentiators” and they are “market followers, allowing others to innovate new product ideas,which they can imitate and produce in large volumes at very low costs” […]. “In services,Southwest Airlines, and some of the more recent upstars, follow a similar low -cost, low-priceapproach”(2).

Analyzing the airlines, Calder (2003) offers a generous explanation to the market of the low -cost companies. He argues that these firms offer services at low prices not on ly because they arecutting costs, but also because they are forcing the passengers that want a superior comfort to makean extra payment (for example, any drink or food has a price and, moreover, in the case of some

airlines – such as Wizzair – it has to be paid an additional tax for the cabin luggage, no matter whatis their weight).

THE LOW-COST FIRMS AND THE COMPETITIVE ADVANTAGE OF THE LOWPRICES

The development of a business strategy depends on two interdependent aspects: on themission and goals of the firms, on one hand, and on the ways that companies have chosen to act inorder to reach their purposes, on the other hand. This choice depends on the competitive advantageof each firm. Related to this, Treacy and Wiersema (1995) mentioned three di rections ofcompetitive advantage. The first one is at the low -cost companies, defined by the authors as thosefirms that are focusing on the cost control, offering goods and services of a certain quality at thelowest prices. The second source of the comp etitive advantage is held by the innovator orproduction leader that, having a strong brand, may fix a price level which exceeds the limit imposedby the market. The last type of competitive advantage could be found in the case of the servicesleader that has this position due to its personalized services, with a superior quality. Each of thesethree sources of competitive advantage is pointing out a particular segment of the demand: the firstone shows an elastic demand for the low prices, the other two st ressing an inelastic demand for theproducts with a high level of innovation and, respectively, for the personalized services. Theelasticity problem is also debated by Engelson (1995), which underlines the fact that a less elasticmarket would require a higher price.

It has also to be mentioned Porter’s approach (1998) that proposed two generic modelsthrough which firms can develop long term competitive advantages ( Figure no. 1). The first ofthese strategies is based on having prices lower than the competitors due to lower costs. Gaining acost leader position may be possible through scale economies in production, through the effects ofthe experience curve, through a tight cost control and also through a costs’ minimization in fieldssuch as research and development, services and advertising (3). The second strategy proposed byPorter consists in differentiating the products offered by a firm, by creating “unique” goods. In fact,this strategy coincides with the second source of the competitive advantage mentioned by Treacyand Wiersema (1995) because the differentiation is based on the customers’ loyalty for a certainbrand, on offering high quality services, on a last minute technology or on a unique design of aproduct.

Superior

Relative DifferentiationPosition

Inferior Inferior SuperiorRelative Cost Position

Figure no. 1 Developing competitive advantages

Source: Shank, J.K., Govindarajan, V., „Strategic Cost Management and the Value Chain”, Journal of CostManagement, vol. 5, no. 4, 1992, p. 12

Analyzing the sources of the competitive advantage, it could be easily observed the fact thata firm’s success may consists eithe r in its reputation and differentiation of the products, whichcould be sold at a higher price, or in its low prices, with a good relation between price and quality.

DifferentiationAdvantage

Differentiation withCost Advantage

Stuck-in-the-Middle

Low Cost Advantage

Consequently, a producer that neither differentiates from the others, nor is cheaper, will be quicklyeliminated from the market.

The low-cost firms’ strategy of cutting costs and promoting the lowest possible price inorder to eliminate the competitors has been largely implemented since the ’70s, also due to the factthat the firms were acquainted with the “experience curve” concept. Nowadays, the low -costcompanies are met in any field. For example, in the en -detail sales sector firms such as Wal -Mart,K-Mart or Toys ’R’ Us are efficient operators that have prices that discourage the competi tors.They promote a tough policy with suppliers, resulting gains that are translated in the low prices. InIT field, Packard-Bell or Emerson make standardized goods, available at a price much lower thanthe average level of the market. This is possible du e to the fact that they are spending a smallamount for the R&D and advertising compared to other firms that promote a differentiationstrategy. Moreover, such as many other low -cost companies, they are products’ imitators, allowingother firms innovate new goods that they will imitate with a very low cost, in huge quantities. Thelow price strategy is also used successfully by firms that act in the apparel and accessories industry.It is the case of Briggs & Stratton that already has 50% of the global mark et of gas engines, ofLincoln Electric’s, which produces and sells welding equipments all over the world, and of otherorganizations such as Emerson Electric, Texas Instruments or Du Pont that also promotes pricesthat discourage the competitors (4). In th e case of services, the airlines such as Southwest, Jet Blue,Blue Air etc., adopt a similar attitude of cutting costs that leads to low prices and to the eliminationof the competitors.

The low price strategy may even revolutionize a whole industry in w hich the base of thecompetition had been established in another manner and from this reason the competitors are noteconomically and psychically prepared to make the necessary steps in order to minimize the costs.It was the case of Harnischfeger that tri ed to revolutionize the industrial equipments sector in 1979.Having at the beginning a market share of only 15%, Harnischfeger reconceived its industrialequipment so that they could be easily produced, by using a smaller number of modularized parts.Moreover, the firm demanded larger quantities from the parts of the industrial equipment in order tocut its costs. The result consisted in offering products with an acceptable quality and a price 15%lower than the initial one, fact that allowed an increase o f the company’s market share at 35%.

It is noticeable that gaining a low -cost position often requires a high market share and alsosome advantages such as having favorable access to the raw materials, drawing up products thatcould be easily made, maintaining a large range of correlated products in order to divide the costsand serving the main types of clients for having a higher level of sales. The implementation of alow-cost strategy also requires substantial capital investments in equipments, an aggre ssive pricepolicy and the acceptance of some initial losses due to the need of having the largest market share.On its turn, the high market share will generate economies when doing the acquisitions, fact thatwill lead to a greater cost reduction. Conseq uently, the position of low-cost company will ensurehigh profits that have to be reinvested in new equipments and facilities so that the firm can maintainits cost supremacy.

Schnaars (1998) identifies two types of low -cost firms: those that usually gain lower profitsthan the companies that offer differentiated products, but have a larger market share which allowscutting costs and prices – they are called market leaders - and firms that are looking for the highestprofits. These last ones have a smaller market share, although their products are often differentiated,but their profit rates are greater. It is the case of the private labels that practice lower prices than thetraditional producers. Yet, as Porter (1998) remarked, in both case of the low -cost companies theprofits are above the average level of the market because the cost position gives firms a defensiveattitude towards the competitors. The position of the low -cost firms ensures them protection againstpowerful buyers because they can exerci se their strength only to reduce the prices of the nextcompetitor. The low-cost firms are also protected against powerful suppliers by having a largerflexibility in surpassing the inputs’ costs increase. The factors that generate a low -cost positionusually give the possibility to the firms of setting some barriers against other companies, in terms ofscale economies or cost advantage. Consequently, the low -cost position protects firms against all

the three competitive forces of the market because the dev elopment of their business will continueto erode the profits not only of the most efficient competitors but also of the less efficient ones,because they are the first affected by the competitive pressure.

Analyzing the competitive advantage of the low -cost companies, which results from thepossibility of cutting prices, D. Bosshart (2007) talks about “an era of cheap services and products”.In the context of this era, the message send to the consumers is to increase the demand for a smalleramount of money. Bosshart notices that what nowadays consumers want are the low prices whichactually constitute the powerful force of globalization.

DETERMINANTS IN CHOOSING THE PRICE STRATEGY

“More important than setting a price is the reason you choose it” (5). T herefore, in order toanalyze the methods used by the low -cost firms when implementing the cutting price strategy, it isnecessary, first of all, to identify the factors with a great impact on the level of price. Among theelements that influence the price decision, Baker (2006) identifies the level of costs, of the profits,the returns on investments, the terms of payments, the ability of using the resources, thecompetitiveness of the products, the existence of some substitutes for products, the consumers ’needs and wishes. On contrary, Shank and Govindarajan (1993a) consider that the price is the resultof the interaction among three factors: the production cost, the added value and the competitivepressure.

Indeed, the price of a good or service has to reflect a correlation between the production costand the value perceived by consumers. This value is influenced, on its turn, by the consumers’wishes and needs from a certain moment, by the products’ performances expressed through quality,speed, reliability, durability etc., by firms’ performances (brand name, financial records,distribution channels etc.), by the ratio price -quality of the products promoted by competitors andalso by the reputation of the rival firms (6). Engelson (1995) argues that we can talk about a “pricegap” when the price of goods and services differs from the price perceived to be ideal either by theclients, or by the firm, aspect shown in the figure 2. The center of the matrix from the figure 2points out the ideal price, any o ther position reflecting a price gap. While the first quarter shows thefact that the price is too high for the objectives settled by the firm and too low compared to thevalue perceived by consumers, the second quarter reflects a price too high not only f or theobjectives of the firm but also for the perceived value. In the third quarter the price is too lowcompared to the perceived value and to the firms’ objectives and in the IV th quarter the price is toolow for the ideal one, established by the firm, and for the value of the products.

Price versus firms’ objectives

Price versus perceived value

Figure no. 2 Price gap matrix

Price:

- too high forobjectives

- too low for value

Price:

- too high forobjective

- too high for value

Price:

- too low for objectives

- too low for value

Price:

- too low for objectives

- too high for value

Idealprice

Source: Engelson, M., Pricing Strategy – An Interdisciplinary Approach , Joint Management Strategy, USA, 1995, p.26Nagle and Hogan (2006), analyzing the price determinants, distinguish two types of price

strategies, based on costs and on the value perceived by consumers, according to the followingfigures:

Product → Cost → Price → Value → Customers

Figure no. 0 Cost-Based Pricing Strategy

Customers → Value → Price → Cost → Product

Figure no. 4 Value-Based Pricing Strategy

Source: Nagle, Th. T., Hogan, J., The Strategy and Tactics of Pricing: A Guide to Growing More Profitably ,4th edition, Prentice Hall, 2006, p. 4

The production costs seem to be closely related to the output level: on short term the averagecosts are decreasing while the volume increases, the other factors rema ining constant. Yet, there arecases when the average costs go up when the level of production increases (this situation was met inthe case of Kodak between 1950 and 1980). In order to determine exactly the factors that influencethe level of costs, it is necessary to include them into a mathematic approach. So, Shank andGovindarajan (1993a) see the costs as a function that depends on a range of factors that arepermanently interacting one with the other, according to the relationship:

Cost = Factor A x Factor B x Factor C x……… (1)It has to be mentioned that not all the factors have the same relevance. Their importance

may be reflected in an exponential weighting of each factor in the cost equation:Cost = Aa x Bb x Cc x ……, (2)where a, b and c are the level of the exponent for each factor, pointing out its importance in

the total cost.Assuming that there are only two factors, A and B, than the equation (2) may take the form

of a standard multiple regression equation:log Cost = a log A + b log B. (3)This form allows the cost equation be estimated from a series of observations of each of the

four explanatory factors and of actual cost over some time period.Considering these three equations, Shank and Govindarajan (1993b) try to determine th e

change in the global unitary cost if one of the two factors doubles. So, if the global cost is CT, it canbe represented as:

CT = Aa x Bb . (4)If A doubles, then the equation (4) becomes:CT’ = (2A)a x Bb , (5) meaning: CT’ = 2a x Aa x Bb, resulting that:CT’ = 2a x CT. (6)Consequently,CT final / CT initial = 2a . (7)According to the equation (7), the percent change in total cost when A doubles is given by

raising the number 2 to the a exponent, a being the exponent of the A factor from the regressionequation. The change in the total cost is given by the value (1 – 2a), expressed as a percentage.

In the case of some factors such as the scale or the experience, for which a greater quantityleads to a lower cost, the value of the 2a will lie between 0,5 and 0,99. The interpretation given byShank and Govindarajan (1993a) to this result consists in the fact that when doubling any factor thatreduces the total cost, the average cost will go down, but will not go below of the half of the initialvalue. Consequently, the unitary cost will diminish up to the moment when it has, at most, half ofthe initial value.

Riley (1987), analyzing the determinants of the cost, classifies them in two large categories:“structural determinants and execution determinants” (7). The category of the executiondeterminants includes those factors that are correlated to the ability of a firm to do successfully anyactivity. Consequently, these determinants play an important role in measuring th e performance of acompany.

From the structural determinants’ perspective, a firm has the possibility to choose at leastfive strategic solutions, according to its economic structure that influences the cost position for eachproduct category (8):

Scale economies: according to which it is established the level of investments inR&D, in production and in marketing resources;

Scope economies: that are closely correlated to the degree of vertical integration; Experience: resulted from the previous activities; Complexity: that reflects the amplitude of a range of products or services; Technology: according to which it is established the type of the technological

process for each of the stage from the firm’s value chain.In each firm, the analysis of the value c hain is a method used to divide the chain in relevant

activities in order to better understand the costs behavior. Once identified the value chain anddiagnosed the determinants of the cost for each activity, the firm can obtain a competitiveadvantage by the help of one of the two methods proposed by Shank and Govindarajan (1992):

A deeper control of the cost determinants than the control made by the competitors; Reconfiguration of the value chain.

Considering all these remarks, it can be concluded that the first requirement when adoptinga price strategy is to reduce the costs. From this reason, the analysis of the methods used by thelow-cost firms will be mainly focused on the cutting costs strategies.

CONCLUSIONS

Considering all the aspects ana lyzed in this study, we agree to the fact that the competitiveadvantage of the low-cost companies lies in the possibility of promoting low prices for good orservices that have a similar quality to those of the competitors. From all the factors that influ encethe price strategy - level of the profits, the returns on investments, the terms of payments, the abilityof using the resources, the competitiveness of the products, their perceived value, the competitivepressure, the existence of some substitutes f or products, the consumers’ needs and wishes – theproduction costs play an essential role. On their turn, the costs are influenced by two types offactors: structural determinants, among which we notice scale and scope economies, experience,complexity and technology, and execution determinants, meaning those factors that are correlatedto the ability of a firm to do successfully any activity.

Nowadays, the low-cost companies are largely spread not only geographically but also bysectors, being present in any activity field. Therefore, they can be met in the food industry, in theclothing sector, in IT, in auto industry, in the equipment and apparel industry and even in theservice sector, a good example for this being the low -cost airlines.

(1) Rigsby, J., Greco, G., Mastering Strategy. Insights from the World’s Greatest Leaders and Thinkers ,McGraw-Hill, 2003, pp. 20-21

(2) Schnaars, S.P., Marketing Strategy – Customers and Competition , The Free Press, New York, 1998, p. 61 (3) Porter, M.E., Competitive Advantage: Creating and Sustaining Superior Performance , The Free Press,

New York, 1998, p. 13 (4) Porter, M.E., Competitive Strategy – Techniques for Analyzing Industries and Competitors , Free Press,

New York, 2004, p. 36 (5) Gregson, A., Pricing Strategies for Small Business , Self Counsel Press, 2008, p. 10 (6) Kaplan, R.S., Cooper, R., “Get Your Costs Right”, Harvard Business Review, vol. 66, nr. 5, 1988, pp. 96 -

(7) Riley, D., “Competitive Cost Based Investment Strategies for Indus trial Companies”, în ManufacturingIssues, Booz, Allen and Hamilton, New York, 1987, pp. 71 -83

(8) Scherer, F.M., Ross, D., Industrial Market Structure and Economic Performance , 3rd edition, HoughtonMifflin Company, New York, 1990, pp. 217 -354

BIBLIOGRAPHY

1. Baker, R.J., Pricing on Purpose: Creating and Capturing Value , Wiley & Sons, Inc.,2006

2. Bosshart, D., Cheap? The Real Cost of Living in a Low Price, Low Wage World, KoganPage, London, 2007

3. Calder, S., No Frills. The Truth behind the Low -Cost Revolution in the Skies , VirginBooks

Ltd., 20034. Engelson, M., Pricing Strategy – An Interdisciplinary Approach , Joint Management

Strategy, USA, 19955. Gregson, A., Pricing Strategies for Small Business , Self Counsel Press, 20086. Kaplan, R.S., Cooper, R., Get Your Costs Right, „Harvard Business Review”, vol. 66, nr.

5, 1988, pp. 96-1057. Nagle, Th. T., Hogan, J., The Strategy and Tactics of Pricing: A Guide to Growing More

Profitably, 4th edition, Prentice Hall, 2006,8. Porter, M.E., Competitive Advantage: Creating and Sustaining Superior Performance ,

The Free Press, New York, 19989. Porter, M.E., Competitive Strategy – Techniques for Analyzing Industries and

Competitors, Free Press, New York, 200410. Rigsby, J., Greco, G., Mastering Strategy. Insights from the World’s Greatest Leaders

and Thinkers, McGraw-Hill, 200311. Riley, D., Competitive Cost Based Investment Strategies for Industrial Companies , in

„Manufacturing Issues”, Booz, Allen and Hamilton, New York, 1987, pp. 71 -8312. Scherer, F.M., Ross, D., Industrial Market Structure and Economic Performance , 3rd

edition, Houghton Mifflin Company, New York, 199013. Schnaars, S.P., Marketing Strategy – Customers and Competition , The Free Press, New

York, 199814. Shank, J.K., Govindarajan, V., Strategic Cost Management and the Value Chain ,

„Journal of Cost Management”, vol. 5, nr. 4, 1992, pp. 179 -19815. Shank, J.K., Govindarajan, V., Strategic Cost Management – The New Tool for

Competitive Advantage , The Free Press, 1993a16. Shank, J.K., Govindarajan, V., What drives cost? A strategic cost management

perspective, „Advances in Management Accounting”, vol. 2, 1993b, pp. 27 -4617. Treacy, M., Wiersema, F.D., Disciplines of Market Leaders , Basic Books, 1997

INTEGRATED MARKETING COMMUNICATION IN POLITICS?

Ovidiu-Aurel GHIUŢĂAssistant, University Ştefan cel Mare Suceava Roma nia

PhD. Student, University A.I. Cuza Iaşi Roma niaovidiughiuta@yahoo.com

Abstract:The current study has practical applicability in politic al domain and theoretical involvement at political

marketing communication level. The type of the research is a qualitative one, using as survey methods scientificobservation and documentary search. The aim of the research is to prove the applicability of marketing communicationconcept integrated in political marketing and global marketing communication. There are also exceptions, justanalyzing the industry – politics, in which integrated communication can’t be considered global communication.

The subject of integrated marketing communication is relatively a new one in marketing (two decades), but itsapplicability in political domain and the specifications that assumes this application represents o new vision atEuropean and worldwide level. This study clearly presents the differences between the integrated marketingcommunication and global marketing communication.

In documentary research, the author used studies belonging to Anglo – Saxons theoreticians and practitioners(Americans, Canadians, British) but also Europeans (French, Belgians, Romanians). The main reason is the fact that inmarketing domain on extremely narrow scientific sections the visions belonging to these two main orientations aren’talways equable. Also, in scientific observation, t he research analyses political events from United States of America,France and Romania. Due to this reason, we can affirm that the current study has not only a regional applicability butalso a global one.

Key words: integrated marketing communication, global communication, political communication, marketingcommunication in politics, political marketing.

JEL Classification: M31

INTRODUCTION

Marketing practice has been developing towards its object. The marketing methods aren’treserved anymore just for commercial companies. They can be practiced with success by culturaland religious institutions, political parties and people. Nowadays, there aren’t anymore reserveddomains where marketing principles can’t be applied. It’s impossible to consider pol itical marketinga simple sectoral branch, not even an application domain for traditional basic techniques. (Revuefrançais de marketing, 2006).

According to the most well known worldwide marketing manual (Marketing Management)between the ten types of entities where marketing can be applied we can identify six of them whichare in contract with political field: events, people, places, organizations, information and ideas.(Kotler, 2006).

This study belongs to a larger research whose theme is the brand influence in voter’sbehavior. The researcher utilized as methods the scientific observation and documentary research.

COMMUNICATION AND POLITICAL MARKETING

Professional political communication and political marketing concepts are dating from thesecond half of XX century. The introduction of marketing in politics is due to the elaboration of apolicy of political communication: a global step of conception, accomplishment and achieving theobjects of modern political communication.

The genesis of modern political marketing is related by the history of politicalcommunication from United States of America. The presence of modern political marketing onNorth American continent was quickly built: in less than one century between the presidentialelection from 1952 and those from 1960, it became indispensable.

Political parties manifested their interest for marketing methods that could be used in a wayto understand much better the profiles of voters and to influence them much easier. (Lindon, 1976)

Nowadays, in XXI century, there are often discussions about integrated marketingcommunication, meaning selecting the best communication channels, achieving the best media planand using a clear and coherent message. In this study we will approach global commun ication astaking part from integrated marketing communication, because in all specialists’ definitions, globalcommunication represents a clear and coherent communication for the entire organization. Theseconcepts can be also identified in integrated mar keting communication definitions.

For marketer there is a dilemma: increasing media number or number of means ofcommunication. A high number of sources bomb the consumer. For him, the communication of onepolitical party belongs to the same speech even if it’s created by the president of the party, thepresident of district organization of the party, spokesman at district or national level, if it’s anarticle about a remarkable member, a flyer found in post box, a mass on yahoo messenger or abroadcast spot at local/national television channel. All these persons and actions represent for thevoter the image of the party which is produced by his mind. We’d rather not use the enforcingformula “must” like all the representative members of parties and all t he communicationinstruments used to say the same thing. We talk about the same idea, direction and meaning but notabout the appropriation word by word of the same kind of speech.

MARKETING INTEGRATED COMMUNICATION

„Integration is a marketing catch phrase of the moment. Its value propositions seemunquestionable strong – the whole of a marketing initiative can be greater the sun of itsmultidisciplinary parts if those parts tightly together to assist one another .” (Sasu, 2005)

During the 80’s many companies recognised the necessity of a strategic integration ofpromotional instruments. They were interested in principles of integrated marketingcommunication.

In commercial marketing there has been a lot of talking, especially in the last decade, abo utintegrated marketing communication conception. Integrated marketing communication consists inthe elaboration of one global communication strategy which aims to create solid relations with theclients, showing to costumers that the company and its produ cts help them to satisfy their needs.

Marketing communication has its roots based on advertising, promoting the sales, publicrelations and direct marketing. Each of these fields had evolved in distinct ways and industries andthe only chance to communica te is the integration of each part of this amalgam.

To clarify these relative new notions I will present the specialists’ definitions from thedomain.

In the 8th French edition of The Marketing principles from 2007, Armstrong and Kotlercomprehend through integrated marketing communication a concept which represents the fact that acompany integrates carefully its numerous communication channels with the aim to launch a clear,coherent and attractive message about itself and its products.

Balloffet and Coderre (2005), teachers at North American universities, assert: „ Integratedmarketing communication consists in coordinating the elements of promotional mix and otheractivities of permanent marketing communication with clients of the company”.

In 2002, Duncan considers integrated marketing communication a process realised foradministrating relations with clients and giving a value for the brand. More precisely, it’s a crossedfunctional process for creating and maintaining profitable relations with the clients and shareholdersin order to control and influence all the messages that are send to each group, including datacollection and achieving a constructive dialog.

„An organisation’s unified, coordinated effort to promote a brand concept t hrough the useof multiple communications tools that « speak with a single voice»” represents the definition givenby Shimp, definition which brings the integrated marketing communication very close to brandingprocess and organisation’s brand. (Shimp, 2000)

A more complex definition, but less succinct is given by Pickton and Broderick: „ Integratedmarketing communications is a process which involves the management and organization of all« agents » in the analysis, planning, implementation and control of all marketing contacts, media,messages and promotional tools focused at selected target audiences in such as to derive thegreatest enhancement and coherence of marketing communications effort in achievingpredetermined product and corporate marketing communication objectives” , definition which hasas main vision the synergetic phenomenon of integrated marketing communication. (Pickton,Broderick, 2005).

The famous teacher and French practitioner Jaques Lendrevie used the concept of efficacyin integrated marketing communication: „Integrated communication through various channelsmeans the selective, complementary, united appropriation of many communication channels forspeaking with the same voice at maximum level of efficacy .” (Lendrevie, de Baynast, Riou, 2004)Later on, in the same book the author reverts in order to provide a more ambitious definition:„Integrated marketing communication has as objective the best re -entrance of communicationexpenses using a strategy founded on architecture of distingu ish channels which are functioning insynergy and spreads coherent messages. It’s orientated to clients, their perceptions and behaviors.Its efficacy depends on multidisciplinary competences of responsible people that are leading thecompany…”

Among first publications about integrated marketing communication it’s relevant the articlewritten by Duncan and Everett published in 1933 in Journal of Marketing Research. In this articlewe find the following regards: „ A concept of marketing communication plan ning that recognizesthe added value of a comprehensive plan that evaluates the strategic roles of a variety ofcommunication disciplines, e.g. general advertising, direct response, sales promotion and publicrelation – and combines these disciplines to pr ovide clarity, consistency and maximumcommunication impact. “

Analyzing the definitions we can notice that the main common idea is that in integratedmarketing communication the tools of communication that are used independently combined in away to allow the achievement of a synergetic level. The resulted communication is morehomogeneousness.

INTEGRATED MARKETING COMMUNICATION IN POLITICS?

In politician’s case we can talk about integrated marketing communication. If he is the onlyone who is representing his brand this means there are other persons around him that can radicallyinfluence his image. For a politician’s condition it is recommended the integration of messages indifferent communication channels. Analyzing the communication channels use d by Romanianpoliticians we can affirm: mass – media means (in the frame of these channels, communication canbe direct, by participating to talk -shows, different broadcasts, or indirect by journalists’ commentsabout politician’s statements for press age ncies) and non mass media means (public relations, directmarketing and personal blogs). Between mass media means that are used for politicalcommunication the researcher agrees that the most relevant media channels are: written press(magazines, newspapers), television, radio and billing.

Even a well prepared integrated marketing communication planning can produce littleunpleasant surprises, but this integrated marketing communication can save a politician from aneventual disaster in obtained positioni ng or a possible failure in elections. Let’s take as example thevirtual communication through internet. In Romania the rate of internet penetration is relatively lowin comparison with European averages. A study made by Internet World Stats effectuated in March2008 shows a penetration rate of 53,9 % while the European mean is 59,9 % and taking inconsideration the significant differences between urban and rural environment.

Therefore at uninominal parliamentary elections carried on November 2008, in Ias i, in urbanenvironment, from 15 candidates of district parliamentary parties for Deputy Chamber 11 of themhad and used a website or a personal blog for communicating with the voters. This candidates’

interest manifested for virtual mean is due to the str ategy of achieving the segments of youngeraudience, using the internet, but also for direct communication, without intermediates (which givesthe possibility to bias the message). The usage of websites and personal blogs offers the candidatesa total control of sent message, which is not available for the indirect communication in massmedia. A personal blog can be quite useful for a politician especially when he finds himself in theposition of defending from a negative campaign launched against his image . Many times thisnegative campaign is accomplished together with blocking the candidate’s access to some mediachannels (television, written press). This is the reason why, for a politician, it’s vital to own directcommunication means unmediated with vot ers.

GLOBAL MARKETING COMMUNICATION

Among worldwide specialist’s point of view, integrated marketing communication includesalso the global marketing communication which means the communication through one singlevoice of the same message regardi ng the organisation and its products in a global way of speaking.Integrated marketing communication includes also the concept of efficacy, the best usage ofcommunication medias and channels and the synergy of simultaneous appropriation of thesemethods.

Nevertheless integrated marketing communication isn’t and doesn’t mean always globalcommunication. The proof comes from politics. We have the example of new leaders’ ascending.The party isn’t an enterprise; it’s a democratic entity which allows the com munication of opinionsthat don’t have the same vision like its leadership. There are moments when the practice requiresdissident’s existence within the framework of party. The party is an organisation where there is apowerful internal competition for fo rce. In the positioning strategy through leader there is a momentwhen it must be achieved a strength takeover. If the leaders have a good image in voters’ perceptionand only time passing can change him (for example after 12 years of leadership of one par ty or aftertwo president’s seats) it must be achieved an image extension from the older leader to the new one.Here we must talk about global communication for one party where internal strokes are forbidden.

We have the example of Social Democratic Part y (PSD) from Romania, in 2004: PSD usedthe position through doctrine, especially through leaders. During 1990 – 2000 the incontestableleader of the party was Ion Iliescu and during 2000 – 2004 the change of the leader was producedwhen Adrian Năstase had to achieve that takeover of the power, realised in a considerableproportion, but not in total amount. In 2004, Ion Iliescu was capable to win a new seat as presidentor Romania, but the Constitution didn’t allow because he already used the maximum number ofmandates for becoming the president of Romania. Despite the fact that Iliescu was in electioncampaign with Adrian Năstase, the PSD candidate, he couldn’t transfer him a big part from hispopularity. This is one of the reasons why PSD lost the presidential elections and in this way starteda party decline.

There are situations when the leader’s image doesn’t help the party. For instance, when helost the elections at a big difference or he obtained an extremely faint outcome in comparison withthe expected one. In this case, the new team and especially the new leader must have a differe ntattitude and communication towards the leader that failed. There are tactics used for attracting theattention toward the party when a leader launches a false attack against the leadership, just forcreating hubbub in mass media. With this technique the attention can be cached and won thenotoriety chapter, showing that there is democracy in the party and all the members are free toexpress their opinions.

The third example of integrated marketing communication, but not a global one is theinternal elections in American parties for the investiture of being the representative of the party forpresidential elections: the most recent fact is the election campaign from United States of Americafrom 2008. In Democratic Party, Hillary Clinton competed with Ba rack Obama for investiture.Between them there was a real struggle in order to conquer the internal elections in the party and

during the competition. Many times, both candidates had different visions about the development,the external policy and economy of United States of America.

Another possible example when global communication isn’t indicated is the situation whenthe president of a district organisation has a contradictory opinion with the national leader of theparty, taking the defence in an imp ortant cause for the community members. In case he manages tosolve the problem in a favourable way for the voters and especially when the event takes place neara local election we can draw the following conclusion: this aspect can be a pre – campaign tactic ora well done campaign. The hypothesis is still available considering the fact that local and nationalelections don’t take place at the same time.

Integrated marketing communication is more significant for a bigger entity, a political partythan a politician. More messages are delivered by transmitters more the situation becomescomplicated and an integrated marketing communication is required. For a party it is necessary tocombine advertising, public relations, direct marketing, internet marketing in order to obtain asimpler, convergent, clear, persuasive and homogeneousness communication .

CONCLUSIONS

In order to understand the consumers it is required to know when and how to talk to them. Itis also good to know when to stop the communicat ion. It’s useful to posses more options in order tofind the best solution for communication. But a lot of options don’t provide in a necessary way ogood solution (Droga, 2008). Holding an optimal solution we need to accomplish an integratedmarketing communication.

For sure, we can successfully apply the concept of integrated marketing communication inpolitics domain. Although the global communication is included in integrated communication, thepolitics is the domain which proves that there are except ions where integrated communication canbe applied being in contradiction with the global one.

BIBLIOGRAPHY

1. Ace, Cathy, Successful Marketing Communications , Butterworth – Heinemann, Oxford,2001;

2. Armstrong, Gary, Kotler, Philip, Le Nagard, Emmanuelle, L ardinoit, Thierry, Principles demarketing, Pearson Education France, Paris, 2007;

3. De Pelsmacker, Patrick, Geuens, Maggie, Van den Bergh, Joeri, Foundations of MarketingCommunications. A European Perspective , Prentice Hall, Person Education, England, 200 5;

4. Droga, David, Il faut savoir dire non , in Un histoire de la publicité par Pincas &Loiseau,Publics Group, Taschen, 2008;

5. Duncan, T.R., Everett, S.E., Client Perceptions of Integrated Marketing Communication, inJournal of Marketing Research , mai/juin, Etas Unis, 1993;

6. Fill, Chris, Yeshin, Tony, Integrated Marketing Communications , Butterworth –Heinemann, Oxford, 2001;

7. Ghiuţă, Ovidiu-Aurel, master dissertation “Positioning strategies in political marketing ”,Iasi, 2006;

8. Kotler, Philip, Keller, Kevin, Dubois, Bernard, Manceau, Delphine, MarketingManagement, 12e édition, Pearson Education, 2006;

9. Lendrevie, Jaques, de Baynast, Arnaud, Riou, Nicolas, Publicitor, 6e édition, Dalloz, Paris,2004;

10. Lindon, Denis, Marketing politique et social , Dalloz, Paris, 1976 ;11. Pickton, David, Broderick, Amanda, Integrated Marketing Communication , 2end edition,

Pearson Education, England, 2005;12. Riou, Nicolas, Peur sur la PUB, Eyrolles, Paris, 2005;

13. Rossiter John, Bellman Steven. Ed. Pearson – Marketing communications, Prentice Hall,Australia, 2005;

14. Schultz, Don E., Kitchen, Philip J., Communicating globally. An integrated marketingapproach, Palgrave, New York, 2000;

15. Sasu, Constatin, Comunicarea integrată de marketing , Editura F&F International,Gheorghieni, 2003;

16. Sasu, Constantin, National Conference Facts and Economic Development Actions towardsRomania’s EU Integration vol.I, Marketingul integrat – între valenţe şi riscuri, Iaşi, 2005,pag. 236-241

17. Shimp, T., Advertising, Promotion, and Supplemental Aspects of Integrated MarketingCommunication, 5th edition, Dryden Press, New York, 2000;

18. Smith P.R., Taylor T., Marketing communications , third edition, Rogan Pagen, Oxford,2002;

19. Varey, Richard, Marketing Communication , Routledge, New York, London 2002;20. www.zf.ro21. ***, Revue francais de marketing , number 210, december2006, pag.1 -5;

COMPETITIVITY AND THE IMPA CT OF SERVICE COMMERCE LIBERALIZATIONON THE ACTIVITY OF TOURISM AGENCIES

Associate Professor PhD. Daniela FIROIUEc. PhD. Student Cristina Laura MANIU

Romanian – American University, Bucharest, Romaniadanafiroiu@yahoo.com

Abstract:Throughout time practice has demonstrated that the performance and competitivity of countries in certain

fields of activity is mainly generated by the countries’ ability to develop partnerships and strategic alliances based onfree flow of goods, capital and people. Such a mo del, nevertheless this time on a much larger scale is the EuropeanUnion itself, which has from its birth supported and promoted partnerships, free trade and common monetary policiesvia stimulation of investments of any type and in any segment of activity .

Key words: performance, competitivity, tourism agencies

JEL Clasification: M31, M21

INTRODUCTION

Consequently, this paper tackles a series of points of view that appear as a result of directresearch in the field of tour operators and tourism agencies which are active on the Romanianmarket (and not only), a recently-iintegrated member of the European Union.

The main objective of opinion pole research was to determine the impact of servicecommerce liberalization on the the activity of touris m agencies.

When we refer to tourism, things are much more obvious, as tourism in its essence isdefinable as existing inter-state, inter-regionally, internationally.

What is interesting to find out in this context of free trade and competition based oncollaboration is the point of view of entrepreneurs from the tourism industry, particularly that ofsuppliers and creators of tourism packages, who through the nature of their activity can definecompetitivity and the impact of service commerce liberali zation on economic performance at themost profound level.

In view of research of the activity of tourism agencies the collection of data through surveyswas necessary, the approached issues aiming at: the place occupied by the tourism agency (from ahierarchical point of view) on the market of Romanian tourism agencies, the market on which therespective agency functions, which are the coordinating functions of the activity of that agency, thetype of turism it practises, the perception the agency has on the degree of development of thenational and international tourism market, the extent to which the image Romania has on theexternal market influences the volume of sales of the respective agency, the factors affecting theagency profile, the extent to which the profitability of the investigated agency is affected by the lackof a brand for Romania as a tourism destination, the customer categories the agency targets - fromthe point of view of their income, the elements that impact on tourism service qu ality, businesspartners, the existence of standardized quality certificates, the strategic guidelines adopted byagencies for the improvement of product quality, staff recruitment methods, the services included inthe agency offer and the elements in that offer which are appealing to customers, employedadvertising techniques, the skills the personnel should possess in order to attract customers, the sizeof tourism agencies in relation to the number of employees and the year they were set up.

The main objective of opinion pole research was to determine the impact of servicecommerce liberalization on the the activity of tourism agencies.

Thus, the first issue to be approached in this research referred to the analysis of agenciesfrom the point of view of their size. To this question, 45,5% of the interrogated agencies declaredthemselves as small-size, followed according to the percentage by medium -size agencies (40,9%).The proportion of great corporations is small, only 13,6%. Small -size and medium-size agenciescan stimulate competition and diminish the monopoly of great corporations, limiting price increasedictated by them. Moreover, they generate the greatest number of employment positions.

The markets on which tour operators and tourism agencie s perform are also important. Asignificant fact is that more than a quarter of the agencies (27,3%) have declared that they performon all markets. From the analysis undertaken 68,2% of the responding agencies perform on theinternational market. This is a positive aspect and it denotes high competitivity of our tourismagencies, made possible due to effective management, capable of evaluating tourism nowadays withits necessities and requirements and to elaborate and implement strategies and plans that gu aranteesuccess on an increasingly internationalized market.

The coordinating functions of tourism activity was another aspect under analysis. Since themajority of answers (63,3%) referred to all five presented functions (of promotion, information,distribution, performance, creation), these answers have been distributed to each variant. Theconclusion based on the results is that agencies perform a diverse range of tourism arrangements,the tourism product including not only the suppliers’services, but also the logistics of combiningservices taken up, with the agency’s own services, which contributes to rendering a higher degree oforiginality to tourism products and implicitly greater satisfaction from the part of the customerspurchasing those services.

As far as tourism forms, the agencies practise two or three types of tourism. Themost practised forms are mass tourism (68,2%), business tourism (40,9%) and knowledge tourism(36,4%). Mass tourism was possible together with the developmen t of technologies that allowed thetransportation of a great number of people in a short lapse of time to the sites of tourism interest, aswell as with people’s increasing interest in benefiting of leisure time. In order to transform Romaniainto a mass tourism destination like Turkey, Greece or Egypt, the unitary application of a long -termstrategy is necessary. Nevertheless, Romania may, through investments in technology and theenvironment, offer tourism attractions at the Black Sea, for instance to att ract niche tourism.

The stage the international tourism market is at represents an important matter as well. Themajority of the respondents consider that the international market has reached the phase of maturity(31,8%) and the same number view it a s stationary. Since demand has gained a progressively elastictrend, it presupposes a matching supply. The diversification of tourism services through the supplyof a variety of tourism forms and activities is acute, for the following reasons: people grant anincreasingly greater importance to the need to travel, the degree of consumer welfare has increased,and they grant a significant part of their budget to relaxation, knowledge and other purposes, thethird reason being high competition on the market.

From the point of view of the degree of development of the tourism market in Romania,most of the interrogated agencies consider it as developing (63,6%). Romania is a tourismdestination that offers unique tourism attractions and travel experiences, a destination withhospitable people and services comparable to those supplied in Western Europe countries. Thepromotion of tourism products may attract new segments of the market and/or determine theprolongation of the visit/holiday duration in Romania an d implicitly the increase of revenue fromtourism activities.

Also, the proportion of agencies which deem that the image of Romania on the externalmarket does not affect the volume of sales has been of 18,2%. The difference of 81,8% is equallydivided among agencies which consider that the image of Romania affects to a great extent thevolume of sales and those which consider that it does so only to a small extent. From the studiesperformed by OMT, based on market information and analyses in countries ge nerating greataffluence of tourism flows in Europe, as well as inquiries among foreign tourists to Romania theconclusion is that Romania has a relatively limited offer, restricted to a few resorts, and within theseto a few hotels, the services being inf erior to those of competitor destinations such as Bulgaria,

Turkey, Greece or Cyprus. Entertainment does not raise to the standards of other destinations, thetechnical-road infrastructure is unfit, and from the point of view of value for money, Romania is notan attractive tourism market.

Impossible to overlook is also the proportion of revenue, of outgoing, incoming, domestictourism activities in the total amount of revenue. The conclusion based on the results is that thegreatest proportion in tourism agencies revenue is held by outgoing (70%). Population in Romaniaprefers foreign tourism destinations due to quality services and accessible prices, to the detriment ofRomanian ones. Only 16,7% of tourism agencies consider incoming as a main source o f revenue.

The most important factors directly impacting on the volume of sales, according to theanswers given by interrogated agencies, the factors with major impact (68,2%) are the attractivenessof offers as far as price and content, the customizatio n of offers to tourists’ requirements and thequality of supplied services. In the past few years, due to a highly competitive environment, as wellas the globalization of tourism services and technological progress, tourism agencies resort to moreflexible offers, so that diversification of tourist services should set itself the goal of grantingsatisfaction to as many tourist segments as possible, by offering a large variety of prices, tourismforms and activities (Andreea Marin -Pantelescu, 2007, pp. 87-97)

Service diversity and quality are the main factors of competitivity. Services supplied tocustomers have two components: a quantitative one – having mainly a material character, whichcan be evaluated on an objective basis – and a qualitative one – which cannot be objectivelyevaluated, but may play a crucial part in certain situations. The relationship the personnel has withthe customer, personnel behaviour and attitude, its manner of dealing with things and its reactionsrepresent essential criteria for the assessment of overall service quality, elements which generatecustomer satisfaction and content.

The influence that Romania’s accession to the EU has had over the volume of sales cannotbe denied. Thus, two thirds among the agencies (68,2%) consider that Romania’s accession to theEU has greatly/hugely influenced the volume of sales. The influence of the accession has bothadvantages and disadvantages for Romanian tourism agencies. Among the advantages we mayennumerate: Europe is the first destination in the world (it holds more than 60% of world tourism);a strong wish manifested by Europeans to discover tourism destinations in the Eastern countries; agreater consumer market, including tourists; rapid development of low -cost flights and their arrivalin Romania; elimination of customs check – trafic fluidization-; the imminence of road, railway,airport infrastructure development, financed from European public funds and not ultimatelycompetition development bearing positive effects on tour ism consumers. Among the disadvantageswe may ennumerate: the material basis, consisting in hotels and restaurants, unprepared forcompetition with the neighbouring countries; insufficiently developed infrastructure (especiallyroad infrastructure); high workforce taxes which determine migration of workforce to other marketsand the lack of settlement of commercial etiquette among tourism hotels and agencies, a powerfulhindrance in the correct functioning of the Romanian tourism market.

The inexistence of a Romanian brand as a tourism destination impacts on the agency’s long -term profitability. Almost half of the agencies (45,4%) consider that the inexistence of a Romanianbrand impacts heavily on profitability, whereas a third (36.4%) consider the impact as (very) low,and 18% as not impacting on profit at all.

What is obviously necessary is the creation of an image on both internal and external planesthat would highlight the advantages of Romania as a tourism destination and the image of itstourism brand. The Romanian tourism offer has not changed with time, thus becominguncompetitive in relation with the exigencies of tourism demand and similar tourism products onthe international market. The tourism hospitality structures and particularly the entertainment offerare obsolete, uncompetitive, tourism programmes and services are stereotypically tailored and ofmodest quality and the value for money is inconclusive. Consequently, the last 20 years havebrought a continuous decrease of external tourism demand for Romania.

To the question about the impact of the inexistence of a general infrastructure on thepromotion of Romanian tourism destinations, all the agencies have answered YES (100%). The

intrinsic advantages of a place (the beauty and diversity of the view, climate factors, air etc.) are notsufficient to attract customers. An adapted and effective infrastructure is just as necessary. It is notonly about airports, roads, railways and public services; tourism centres also need other typ es ofinfrastructure, especially in the field of culture, sports and shows.

As far as the main elements that influence the quality of tourism service supply (skilledpersonnel, maximum customization of services based on requirements, effective technicalequipment, quality management implementation, the promotion of quality practices in the contextof social sustainable development) are concerned, what is to be noticed is that 45,5% of theagencies have answered „all the above”, frequencies which have been added to each of the fouranswers, which means that they are aware of the factors influencing tourism service supply quality.The main aspects of the objective regarding the development of the tourism product aim at tourismdevelopment in the context of sustainability, i.e. having as a goal, in all objectives, programmes anddevelopment activities, the environmental protection and its improvement in tourist areas as well asthe development of programmes and strategies for the built environment in conformit y with thelegislation on environmental protection, urbanisation and territory fitting out and that which isspecific to tourism, whose purpose is environmental harmonization and optimization.

From the perspective of the partners on the tourism interna tional market, a notable fact is theway agencies have two or three types of partners on this market. The collaboration of agents withpartners on the external market is an advantage if we are to think of the quality of the suppliedservices. Tight collaboration with great tour operators is of significant importance, since besides thepart they play as creators of tourism packages, they also stimulate tourism travel and tourismdevelopment. At the same time, there are specialized tour operators who orient t heir product offeron niche products and design tourism packages or services for more sophisticated customers, whogenerally have more significant incomes and who prefer original holidays or holidays that may beincluded in a certain thematic (Daniela Firo iu , 2008, pp. 188-189).

An important aspect in this paper is the one bearing on the percentage from the totalturnover allocated by the agency to sales on the European and international market. Almost half ofthe interrogated agencies have received more t han 50% of their turnover from European andinternational tourism, relying on outgoing, which led to a shortage of ( -115 million euro) of thebalance of tourism services in 2008. In order to rebalance, tourism agencies must get involvedmostly in promoting domestic tourism.

Upon being asked if they deem that ISO standard certification would be a necessity, 75%have given a positive answer. In order to generate and render quality, the tourism manager has towork in conformity with management internationa l standards. Such a standardized managementsystem means documentation (textbook, procedures, instructions, registration forms, pluslegislation, applicable regulations and standards) as well as personnel which has clearly -appointedresponsibilities and authority at both managerial and operational and functional levels.

As far as the types of certificates held by the main partners (service suppliers), the answersare the following: 36,3% of the tourism agencies have answered that their business partners d o nothave ISO certificates, this being detrimental to them. (ISO 9000:2000 refers to fundamentalconcepts and defines technology used in the quality management system. ISO 9001:2000 comprisescompulsory requirements for the quality management system in ag reement with which thecertification is being performed. ISO 14001 represents the environment management system andISO 22000(HACCP) represents food safety management systems.)

If we were to take a look at strategic directions, the diversification of the offer and thepromotion of „prototype services”, increase of tourism offer appeal through originality and novelty,the completion of a number of rural tourism products on the external market, the organisation ofconferences, manifestations, assemblies adop ted by agencies on a larger scale in view of improvingproduct quality and implicitly increasing the volume of sales, what may appear of real interest isthat the first two strategic directions are applied simultaneously by 25% of the agencies. Classicalproducts from the tourism brochures and catalogues offered by tourism agencies are too

standardized and out-of-date for the present-day customer preferences. (European TravelCommission, 2006, p. 6)

The certainty of the demand evolution towards other types of products, packages andtourism services must convince tourism agencies that the future involves customer -orientation, thecreation of products tailored to the customer’s wishes, leaving behind traditional methods ofdesigning holiday packages for mass tourism. The continuous development, diversification andimprovement of products qualitatively, as well as their postage on various distribution channels,either traditional or modern, must represent another domain of interest for intermediaries andcreators of holiday packages, who will meet the expectations of customers who already possesstourism experience to a certain degree, as well as certain life standards, and their interests aim at thepackage quality and attractiveness. (Patricia Dodu, 2008, p. 6 7)

The state should support Romanian participation in fairs and exhibitions, conferences andother manifestations in the field, both technically and financially.

As far as „the advertising techiques most frequently used by the agency in the process ofcommunicating with the clients”, the results/answers have been the following: the sum of answers(232%) shows that on average every agency uses at least two advertising techniques (2,3) in orderto ommunicate with the clients. The most frequently used advertis ing technique in the process ofcommunication of the tourism agency with the customers is via internet, this being a positive factsince they access it on a daily basis, followed by e -mail campaigns. Nowadays, the internet isconsidered a universal communi cation and marketing tool. The internet and the mail also representmeans of market research, tourism agencies having the possibility to open forums in order toreceive feedback from tourists.

In analysing the skills needed in the process of human reso urces recruitment and selection,these are: 50% of the repondent agencies have appreciated that all these abilities are taken intoconsideration, reason for which the respective frequencies have been distributed within each skill.Consequently, the conclus ion is that agencies generally use at least three criteria (3,2) in therecruitment and selection process. Thus, the first two criteria/abilities are used by 72,7%simultaneously.

The relationship personnel-customer, personnel behaviour, their attitude, th eir way of actingand reacting represent essential criteria of assessing overall service quality, elements whichgenerate customer satisfaction and contentment. On the other hand, overall effectiveness of theorganisation depends to a great extent on the h uman resources, as through it the technical -materialas well as financial bases are exploited, and which is at the same time the only one qualified to haveinitiatives, to achieve the company accommodation to market changes, to create value, in otherwords it is the „living” element of incommensurable value. Business performance depends greatlyon the personality and skills of the individuals involved in its accomplishment, and among these,human personality leaves an imprint on every action, event, activit y.

Consumers look for high quality and diversity packages at very low prices. The tourist doesnot buy because s/he has to, but because it brings him/her satisfactionand, consequently, s/he waitsfor quality products, qualitatively standardized, but also diversified and innovative.

As far as the age of the business, the majority of tourism agencies (40,9%) on the Romanianmarket are more than 10 years old, followed by those 1 -2 years old (31,9%). Since most of theinterrogated companies are more than 10 years od on the Romanian market, this suggests us thattheir business is solid.

To the above-mentioned analyses the following comment may be added: there is a strongconnection, but one of relatively medium intensity, between the agency size and the influ ence ofEU accession on the volume of sales.

A significant connection between the agency size and the targeted consumer categories(according to their income) has also become visible, as well as between agency size and employedadvertising techniques.

The higher the incomes the consumers are willing to allocate for their holidays, the morerenowned the agency thay pick in order to satisfy their increasingly sophisticated requirements. In

fact this is the departure point of tourism agency managers in desig ning a holiday package. If theincome of the potential customers is not high or does not exceed the average, then it is difficult forthem to tailor a unique, innovative package. Also, tourism agency managers must take into accountthe status the consumer holds in society.

Regarding business tourism, the soliciting companies adress great tourism agencies as well,due to the complexity of the tourism offer which, besides general tourism services, must containspecific services too, such as: strategic plann ing and event management, rental of conference spacesand venues, rental of audio-video equipment and necessary technical assistance, conferencetranslators-interpreters, hostess, adjacent social programme organisation, production of customizedobjects and advertising means, printing of brochures, catalogues, portfolios and the volume ofconference scientific papers.

The bigger a tourism agency is, the more substantial the marketing and promotion budget,so that tourism agencies will use all advertising te chniques to promote the desired tourism products.Specialized fairs, exhibitions and presentation rooms represent an extremely effective marketingtool for tourism agencies, due to the specific way in which both the supply and demand for tourismproducts and services focuses, for a relatively short period of time, on providing significantpromotion and sale opportunities.

At the level of tourism agencies, promotion is made by each organisation individually.However, because of the high costs it commands, a lot of agencies resort upon most occasions onlyto seasonal prospect, flyer or catalogue publishing for the presentaion of the offers. There are onlyfew tourism companies which resort to TV or radio commercials, even announcements inmainstream written publications are relatively reduced in numbers, also due to costs.

CONCLUSION

To conclude with, Romania’s accession to the European Community has had a great impacton the volume of sales of medium and small size agencies, as the competitive environment createdas a consequence has determined these companies to revise their offers from a qualitative point ofview, to align their standards to the European ones and to implement quality management at alllevels of activity.

REFERENCES

1. Andreea Marin-Pantelescu (2007) - Diversifying tourist services and personalizing themwith the help of travel agencies , în The International Conference on Tourism , ASE,Commerce Faculty, Bucharest,

2. Daniela Firoiu (2008)– Tourism and traveller’s industry , Prouniversitaria PublishingHouse, Bucharest,

3. European Travel Commission (2006) – Tourism Trends for Europe , Bruxelles,4. Patricia Dodu(2008) –Opperational Techniques în Tourism Agencies , Prouniversitaria

Publishing House, Bucharest,5. V. Balaure, I.Cătoiu şi C. Vegheş ( 2005) – Tourism Marketing, Uranus Publishing House,

Bucharest.

SECTION 2

MANAGEMENT AND BUSINESS

ADMINISTRATION

ENTREPRENEURIAL PROGRAM FOR WOMEN: AN EVALUATIVE STUDY ON ASAAND BRAC

Associate Professor Mohammad SHA MSUDDOHADepartment of Marketing, University of Chittagong, Bangladesh.

Associate Professor Ph.D. Alexandru NEDELEAStefan cel Mare University Suceava, Romania

alnedelea@yahoo.com

Abstract:In Bangladesh, women are about half of the total population and most of them are dependent on family head

such as husband, elder son or daughter. Recognizing this fact, Government has changed its policy regarding womenand has acknowledged the fact that equal participation of women in the development activities is inev itable to ensure abalanced socio-economic growth and development in the country. Apart from this, Government is encouraging NGOsand private sectors to undertake steps for the development of women by liberalizing its policy. There are lots of NGOsare working in Bangladesh. All of them have their own agenda or work plan for implementation in the selected areas inBangladesh. This paper is specially focused on women and related entrepreneurial activities which have been backedup by the selected sample NGOs in Bangladesh. Therefore, the study has tried to reveal the present entrepreneurialactivities of selected NGOs for the development of women in Bangladesh.

Keywords: Women, NGOs, Bangladesh

JEL Classification: L26

INTRODUCTION

Women- A majority of the world’s population, receive an insignificant share ofdevelopment opportunities. They are excluded from education, better jobs, political system andeven from adequate health care (Human Development Report 1993).This paper explores issuesarising in relations between non-governmental organizations (NGOs) and women development.These relations have a long history and are complex. When NGOs co -operate, their joint impact onsocial and women development events can be quite powerful. Consequently, success or failure inNGOs co-operation will affect the direction and the pace of women development. No discussion ofpoverty, equality or development today is complete without considering the role of NGOs. Whetherin the North or the South, NGOs are a visible, respe cted and entrenched part of many societies.(Sarah Michael, 2002) Bangladeshi women contribute substantially to their households and to thecountry's economy. The majority of women workers are primarily involved in the informal sector ofthe economy. Within the formal sector, a large number of women work in export -oriented industries(e.g., garments), the source of 70 percent of Bangladesh’s foreign exchange. A significant numberof women also work as teachers, lawyers, journalists, government employees, an d fornongovernmental organizations (NGOs). Their activities, in turn, contribute to the transformation oftraditional values and gender roles of Bangladeshi women. There are over 1,000 local and nationalorganizations in Bangladesh that generate self -employment opportunities for over 8 million poor,mostly women, through micro credit and training in literacy, technical skills, and legal rights. Civilsociety, particularly women’s organizations, has been a strong force in bringing forward women’sissues and interests onto the country’s development agenda. Moreover, Bangladesh has more than18,000 registered NGOs of a diverse nature working on a broad range of development issues (ADBReport 2001). Women in Bangladesh are industrious and intelligent but they d o not know howabout the entrepreneurial tools and mechanism so that they can develop themselves and can able toearn much more revenues to establish them which will help the country in different aspects.

RATIONALE OF THE STUDY

Women in Bangladesh is a lmost half of the total population but the problem is 18% ofwomen in Bangladesh are involved with some activities and the rest are as dependent though theyare capable to be an efficient human resource which might help Bangladesh for the development ofhis economy in some extent. As a poor country, Government could not able to spread his activitiesamong all over the country. This is why non -government organizations (NGOs) were getting toppriority and scope to do work with the government for the sake of t he women development as wellas the whole country. This is why researcher feels to do some research on it and do study theelements that are involving to women development through NGOs in Bangladesh. This researchwill add some value and fill up the gap t hat motivated the authors to undertake such a study.

OBJECTIVES OF THE STUDY

The principal objectives are to evaluate some prominent NGOs like BRAC and ASA forwomen development. To accomplish this, the study has covered the following specific objectives

1. To examine the various programs of selected NGOs for women development inBangladesh.

2. To unearth the problems facing selected sample rural women who are working with theNGOs

3. To provide effective recommendations to overcome the existing problems faced by ruralpoor women.

SCOPE AND METHODOLOGIES OF THE STUDY

The study will cover two important NGOs – BRAC and ASA whose activities constituteabout 65% of total activities. The study was both theoretical and empirical ones. Both primary andsecondary data have been used in this regard. The primary data have been collected with the help ofpre-designed interview schedule from 50 respondents of the sample NGOs taking 25 from each andinterviewed 50 women who are currently enjoying facilities from the sample N GOs. The secondarydata has been collected from web sites, annual reports of relevant NGOs, Journal and books. Herethe researcher used statistical techniques for analyze the data.

LIMITATIONS OF THE STUDY

The study was confined to two prominent NGOs out of 18,000 NGOs in Bangladesh due totime and resource constraints at the researcher’s disposal, because it was a self -financed research.Therefore, the small coverage may nevertheless be incomplete on the whole depiction of womendevelopment progress. The study covered very limited number of sample women as well those whois relatively illiterate. Sometimes responders were not interested to express their honest opinion. Toovercome these limitations, an intensive study of existing literature in this field, foreign journal,annual reports, relevant publication by Government and other private agencies were studied.

ANALYSIS OF FINDINGS

The major findings of the present study are analyzed as follows -

ROLE OF NGOS FOR WOMEN DEVELOPMENT IN BANGLADESH

Non-Government Organizations (NGOs) have emerged as an integral part of theinstitutional structure for addressing poverty as well as rural development, gender equality,environmental conservation, disaster management, human rights and other social issues. The N GOs,

in order to support social and economic empowerment of the poor, have vastly widened theiractivities to include group formation, micro credit, formal and non -formal education, training,health and nutrition, family planning and welfare, agriculture a nd related activities, water supplyand sanitation, human rights and advocacy, legal aid, women entrepreneur development and otherareas. These organizations mostly follow the target -group strategy under which the poor withsimilar socioeconomic interests are organized into groups to achieve their objectives. The greatmajority of indigenous NGOs in Bangladesh are engaged in activities falling under the welfare’category and are registered under the Voluntary Social Welfare Agencies Act (as described, forexample, in ‘An Assessment of the Role and Impact of NGOs in Bangladesh’, Asian DevelopmentBank, December 1992). Such organizations are said to number over 13,000, but few of these arebelieved to be currently active. Main areas of operation include healt h and family planning, whilstother organizations come into activity only in response to natural calamities. Only some 200indigenous bodies registered under this Act are using foreign funding sources. More than 90overseas bodies also have such registrati on, even though many of these are in fact developmentallyfocused. Developmental NGOs wishing to receive foreign funding should be registered with theNGO Affairs Bureau and nearly 900 have such a registration (rising from only 300 in 1991). Theyshould then comply with the provisions of a series of Ordinances passed in 1978 and 1982 (seeSection 3.8.1). Other NGOs not under the view of the Bureau are registered with the Social ServicesMinistry, Department of Education, Department of Youth Affairs, Ministr y of Forests and theEnvironment or the Women’s Affairs Ministry and receive overseas project funding directlythrough the respective line Ministries. From an early stage, developmental NGOs have laidemphasis on empowering the poor against those above the m in the social system, notablylandowners, moneylenders and local politicians, which are often closely inter -connected oroverlapping categories. These members of the local elite are seen as depriving the poor ofopportunities to sustain themselves throug h productive activities and of monopolizing access toresources provided by Government. Early attempts to empower the poor had an ideological focus,placing emphasis on the process of ‘concretization’ through a cycle of action, reflection andimproved action, often in parallel with educational and training activities. Whilst some NGOs,(such as Nijera Kori, see Section 8.3) retain their concentration on this process, many others nowplace their major emphasis on provision of services, and most particularly credit, withconcretization remaining as a relatively minor component of activities in the field. Although themain emphasis of many NGOs has shifted from consciousness -raising activities, most still operateunder an ideological approach, which differs fro m that underlying government programs in similarfields. For example, in an ADB report (ADB 1992) it is observed that ‘many NGOs have micro -credit/employment-generation projects similar to the Government’s BRDB -Rural Poor Program. Inthe former, however, the care and attention given to the formation of borrower groups is muchgreater and is provided within a particular value-framework (Evaluation of Netherlands-fundedNGOs in Bangladesh, 2002).

EMERGENCE OF NGOS IN BANGLADESH FOR WOMEN DEVELOPMENT

Bangladesh, one of the poorest countries with enormous environment and developmentchallenges. It has probably the most active NGO sector in the developing world. It has over 6000registered NGOs out of which nearly a quarter are considered active and about 10 pe rcent play amajor role. Bangladesh has a few of the worlds largest NGOs with nationwide capacity andcoverage. Many more local NGOs provide services such as micro credit, social mobilization, health,literacy and education, sanitation, water, agriculture, forestry, fisheries, advisory technical, womenempowerment and development and consultancy services. A few policy think tanks with significantanalytical capability and skills have major impacts in policy and advocacy. Despite Bangladeshbeing a country where poverty, malnutrition and literacy are rampant and political conflict andcorruption distorts decision making, its farmers have managed to achieve self sufficiency in cropsproductivity. Further many NGOs in collaboration with the government have succ eeded in service

delivery to the poor covering over 20% of population, and have enabled particularly the poorwomen to participate in the development activities. There is also a greater recognition of the roleand services by NGOs in Bangladesh and many de veloping countries are learning from theBangladesh NGO sector. Most notably Sectors of demonstrated success include micro credit, socialmobilization, non-formal education, participatory resources management, empowerment of womenhealth and population management services and advocacy covering many areas. A more effectiveset of NGOs have focused on research, awareness raising and advocacy on sustainable developmentand livelihood issues of addressing poverty, access, governance and integrated and participa toryplanning. (Rahman. A. A., 2002).

EVALUATION OF THE WORKINGS AND SELECTED NGOS FOR THE WOMENDEVELOPMENT

Selected NGOs – BRAC and ASA have been found to provide various services for the sakeof the development of women in Bangladesh in particular.

ASA AND BRAC AT A GLANCE

ASA Bangladesh is one of the most prominent NGO in Bangladesh who are directlyinvolved with the development of women by giving trainings, education, micro credit, healthservice etc. ASA is also one of the most innovative Organiza tions, having introduced Systems andPolicies of Credit Management that aim at minimizing the Cost and maximizing the Income bydisbursing loan to all the members within a short time.

Participants are expected to learn from ASA model: How to minimize the O perational Costand maximizing the Income through accelerated expansion and How to attain an early financialSelf-sufficiency. In the other hand, BRAC Bangladesh is another large Micro -finance institution(MFI), MF is the principle component of its women d evelopment as well as rural developmentprogram. It has been following the Credit plus approach to Micro Finance and providing Socialintermediation services clubbed with its MF Program viz., elementary Education, Essential HealthServices, Business Development Services (BDS) marketing link -ups etc. BRAC also promotesdirect involvement of the poor as entrepreneurs in farm and off -farm sectors including horticulture,sericulture, fisheries, poultry, livestock etc. BRAC’s approach is a holistic one, as women needsupport services in terms of Capacity Building, and marketing inputs to sustain their ventures.Participants are expected to learn from BRAC Model: Credit Plus approach and How to provide ornetwork for Provision of Business Development Services and Capacity Building support services,along with the financial intermediation.

PROGRAMS TAKEN BY SELECTED SAMPLE NGOS FOR WOMENDEVELOPMENT

The NGOs are taking so many steps and programs to develop the poverty situation, socialempowerment, literacy, business knowledge, entrepreneurs, financial strength, technical mattersand other things through various programs, which is the base of women development. It formulatescircumlocutory assistance to socio economic development in Bangladesh. There are two types oftraining like (i) Human/Woman development training (ii) occupational skill development training.Human development training aims at providing participants with scientific outlook and enablingthem to comprehend the essence of development problems. Human development training hassignificant influence on all other programs of the select NGOs. Again, occupational skilldevelopment training is to equip participants with relevant knowledge and skills so that they canundertake different employment. Both the s ample NGOs are providing these training to their targetparticipants.

Table no. 1: BRAC and ASA at a glance

AchievementsNo.

Particulars

ASA BRAC

1.No. of District Covered

All districts (64) ofBangladesh

2. Population Covered 5.90 Crore 6.80 Crore

3. No. of Full time Staff 7189 28,071

4. No. of Members 20 Lakh 35 Lakh

5. Total Loan Disbursed Tk. 5099.81 Crore Tk. 7449.02 Crore

6. Operational Self Sufficiency 141.00% 137.00%

7. No. of Branches 1141 1652

8. No. of Groups 89,557 1,27114

9. Total Savings Tk. 208.32 Crore Tk. 443.04 Crore

10. Rate of Recovery 99.95% 99.12%

11. Financial Self Sufficiency 128.07% 132.25%

12. Capacity Support to ForeignCounterpart

37Not Found

14. School / Education Centers 18000(App) 34,000

15. Community Library 1700 (App.) 7,538

16. Legal Empowerment Training Not Found 82,840

17. Learners Completed Not Found 19.00 Lakh

18. Training & Resource Centers Not Found 14

19. Health Centers Not Found 98

Sources: (i) Annual Reports of BRAC & ASA(ii) Seminar on Micro-Finance Model of ASA & BRAC , Bangladesh”, Organized by Bandhan(iii) Field Survey

Table 1 shows that the sample NGOs has enough strength that contributes for womendevelopment as they doing so. Very important thing is that the recovery rate of both the sampleNGOs in Bangladesh is more than satisfactory level. Here, ASA and BRAC both are operatingtheir services in education and training sector. Some data has not shown due t o accuracy.

MAJOR SECTORS OF THE SELECTED NGO OPERATION FOR WOMENDEVELOPMENT

These sectors/programs are combined in various ways to meet local needs; BRAC & ASAhas the capabilities to meet the Bangladeshi government requirements regarding poverty all eviation,women development and sustainable development in the society. In addition to these specificactivities, many of which can be grouped under the broad rubric of women development, theselected NGOs have an underlying concern to raise the capacity o f the women to participate innational, social and democratic processes. This is undertaken through raising the organizationalstrength of the women by group formation and development, as well as by encouraging the womento avail themselves of government s ervices and to participate in national and local businessactivities. BRAC and ASA is in continuous development process by taking and innovation newprograms for the sake of women development is create an impression over these NGOs in thesociety as well as all over the country. Most of the sectors are agro based due to most of the women

are still engaged with the agro-based industry/sectors like paddy production, poultry farming, dairyfarming etc.. Here the researchers find various program introduced by s elected sample NGOs andclustered into two types like women development related programs and common programs for allthe men and women. The women related program of ASA and BRAC’s is more viable than otherNGOs working in Bangladesh because they are coveri ng more than 65% of population and all thedistricts of the Bangladesh. That is why they covered maximum number of women who areunderdeveloped, poor and illiterate. Because of their activities women are now getting educationfacilities, training on entrepreneurship, conscious about new business ideas, aware of socialobstacles, aware of laws and regulations etc. this the way of they learning day by day and keepcontribution to develop themselves, the society or community and the Bangladesh as well.

Table no. 2 Major sectors in which NGOs are currently operating are as follows:

Women Development relatedPrograms

Programs for all

Integrated rural women development

Family planning

Women’s development

Relief and rehabilitation

Social awareness and motivation

Child development

Agriculture

Fisheries

Children’s homes and orphanages

Legal aid

Human and civil rights

Rehabilitation of blind and/or disabled

Environment and forestry

Public health.

Savings and credit

Income generation and training

Health

Education

Adult education

[Source: Annual reports and Field survey]

Table 2 shows that selected NGO organization are emphasize the program on womendevelopment because women are comparatively illiterate than men. Therefore, they need specialconsciousness and training or education to make the level with men. That is why NGOs are givingimportance on women training education and training specifically. Here is also some programcomprising with all the people generally. This general program concludes me n and womenrespectively.

RANKING THE NGOS POPULAR PROGRAMS BY THE SAMPLERESPONDENTS

Table no. 3. Opinion of the respondents towards NGOs popular programs for women

Variables Average Score

Entrepreneurship Development

Leadership Development

Moral educational development

Credit management

Technical training

Table-3 shows that the aggregate overall score as per opinion of the respondents based onfive sub variables is 1.6 indicating nearer to moderate efficiency of the system. In fact, theprograms of NGOs practiced over the sample women’s are not quite efficient and it does not fulfillthem very much short of desired requirement. In this stage, information was colle cted as to theadequacy and efficiency of the programs taken by NGOs. Table -3 shows the responses of thesample respondents evaluated through seven -point bi-polar scale system wherein +3 would indicatequite satisfactory position, +2 moderate states and +1 would indicate low degree of satisfaction. Theminus scores would indicate the reverse position i.e. Unsatisfactory condition in the same degree asplus sign would reveal. This survey constitutes of five popular programs which is directly involvedwith the women development through building their self -conscious development, taking educationand business ideas.

IDENTIFICATION OF PROBLEMS

There are some most important limitations linked with women development programs,which are directly responsible for l opsided development of women entrepreneurs in Bangladesh. Inthe present study, women entrepreneurs under the study have identified these constraints. Theopinion of the sample respondents regarding the constraints associated with women developmentare ranked below:

Table no. 4.Problems identified by the sample respondents towards NGOs activities forwomen development

Variables AverageScores

Higher rate of Interest

Difficulty in getting Loan

Lack of Government activities

Premature recovery loan

Lack of technical/marketing knowledge

Table-4shows that the aggregate overall score as per opinion of the respondents based onfive problematic sub variables is 1.8 indicating nearer to modest efficiency of the system. In fact,the programs of NGOs practiced over the sample women who are not quite efficient and it does notfulfill them very much. There has short of desired requirement. In this stage, information wascollected as to the adequacy and efficiency of the programs taken by NGOs. Table -4 shows theresponses of the sample respondents evaluated through seven -point bi-polar scale system wherein+3 would indicate quite satisfactory position, +2 moderate state and +1 would indicate low degreeof satisfaction. The minus scores would indicate the reverse position i.e. Unsatisfactory conditionin the same degree as plus sign would reveal. This survey represented of five major fault donethrough various programs which is the obstacles of the women development.

SOME APPARENT LIMITATIONS OF NGOS IN BANGLADESH FOR WOMENDEVELOPMENT

Table no. 5 Factors influencing regarding the activities of selected NGOs

Limitations perceived by sample percentage Limitations perceived bysample respondents for

percentage

Respondents for selected NGOs selected NGOs program

Small size, scope and impact

Slack structure, often with limitedaccountability to beneficiaries

Inadequate attention to the ‘very poor’

Unduly influenced by donors’ interests,which may not reflect the priorities ofthe poor;

Insufficient attention to monitoring andevaluation

Weak planning and managementcapacity

Inadequate technical, professional, andmanagerial skills.

Inadequate and unintegratedsupply of fund

Difficulty in getting Loan

Higher rate of Interest

Premature recovery loan

Lack of education amongthe women entrepreneur

Inadequate training facilities

Lack of marketingknowledge

Lack of Governmentactivities

Lack of freedom

Table no.5 comprises the factors, which are directly involving with the NGOs itselfdevelopments and others are influencing factors to the respondents those who are taking andcontinuing the programs under the selected sample NGOs. Here the respondents answered morethan one choice at a time, which is why total is exceeding 100+. That means limitation of NGOsand its program has to improve more than one factor at a time.

CONCLUSION

In the new millennium, women have become one of the characteristic to judge the efficiencyand quality of the management of any business organization. Thus, women development policiesmust be supported by appropriate organizations or dynamic organizational, socio -economicalchanges for sustainable growth and development. In recent years, many NGOs have adopted anincreasing focus on women development programs provision for the rural and urban poor women.Some of these programs have been extremely successful and have expanded to becom e majorundertakings. In several instances, the NGO has become sufficiently effective to cover all of itsoperating costs from service charges on the credit provided. This represents a substantialdevelopment in the growth of self -reliance among Bangladeshi NGOs. Nevertheless, income fromfees and commercial activities of NGOs still accounts for a small proportion of the overall resourcesof the sector, which is still largely funded by overseas donors. Thus far, Bangladeshi NGOs havebeen able to continue and even enhance their attractiveness to donors. Self -benefiting NGOs areundoubtedly a more significant presence. These range from those established by local politicians orelite members to broaden their sphere of influence, to those set up by professional s or graduates as ameans of self-employment in the absence of other attractive options. In such cases, the key issue iswhether the organization provides or will provide an effective and needed service for the targetedpoor groups. This can only be invest igated through experienced local experts in the sector. Therehas tremendous prospect to women development through NGOs because they have also spread outall over the country and they can able to things easier regarding women development.

REFERENCES

1. ADB, 1992. An Assessment of the Role and Impact of NGOs in Bangladesh .A. A Rahman, Role of NGOs. 2002, p. 17.2. Asia Development Bank Report, 20013. ASA Bangladesh Annual Report 2002, 2001 & 2000 & official website of ASA

Bangladesh4. BBS,2002, Economic Statistical Report, 2002.5. BRAC Bangladesh Annual Report 2002 & 2001.6. BRAC. RDP Phase II Report.7. BRAC. RDP IV Project Proposal.8. BRAC, 1995. RDP, Half-Yearly Report.9. BRAC Annual Report 2001 & 200210. CCDB, 1995. An Impact Study on CCDB Savings Credit Program .11. DGIS, 1994. NGOs and Sustainable Land Use in Bangladesh .12. Dainik Kobbar, Vol-13, April 2003.13. Dr. A Atiq Rahman, Policy Livelihood Relationship in South Asia Role of NGOs In

Advocacy: Lessons Learnt14. From Bangladesh and South Asian Countries, January 2002, p. 6.15. Ministry of Foreign Affairs, Netherlands, 1989 –92. Country policy papers for

Bangladesh, 1989–92.16. Rutherford, S., 1994. ASA in Transition.17. Seminar on Micro-Finance Model of ASA & BRAC, Bangladesh”, Organized by

Bandhan, Supported by18. SIDBI & CARE India, December 01, 2002.19. Sarah Michael , The role of NGOs in Human Security, May 2002.20. Human Development Report, 1993.21. Evaluation of Netherlands-funded NGOs in Bangladesh, Netherlands Ministry of

Foreign Affairs, Policy and22. Operations Evaluation Department ( IOB), 2002, p.7023. http://www.brac.net , BRAC’s official website.24. http://www.govfinance.org , Ministry of Finance, Government of Bangladesh.

A STUDY REGARDING THE LEADERSHIP AND ORGANIZATION CULTURE OF ASERVICE PROVIDER

Professor Ph.D. Marian ZAHARIARomanian American University, Bucharest , Romania

marian.zaharia@rau.roProfessor Ph.D. Cristian-Valentin HAPENCIUC

University “Ştefan cel Mare”, Suceava , Romaniahapivali@fim.usv.ro

Lecturer Ph.D. Nicoleta-Rossela DUMITRURomanian American University, Bucharest , Romania

:nicoletad01@yahoo.com

Abstract:Organizational culture is a unique combination of factors that end up characterizing an organization, as well

as the way in which activities, human relationships and third -party relationships are structured. Starting from dresscode (even in the absence of a compulsory uniform) all the way to conflict management, everything makes up theorganization’s culture.

The present paper aims at identifying the organizational structure within a service -providing company. Theexample was chosen taking into account the company enlargement and the changes occurring on the domestic market.The practicing level of the respective organizational culture is analyzed by taking into account the followingdimensions: focus on result in relation with focus on process, focus on employees in relation with focus on labour,professional / limited cultures, open systems versus closed systems, loose control versus tight control, pragmaticcharacter versus a regulatory one. The third part of this paper compri ses a survey regarding the management stylesemployed by a service provider, starting from Victor Vroom and Philip Yetton’s model. The latter is a particularapplication of decision-making trees with 14 decision-making types, whereby alternatives are provi ded regardingsubordinate involvement in decision –making.

Keywords: leadership, organizational culture, service-providing

INTRODUCTION

People generally resist change and nobody particularly enjoys changing an already -existingpractice. If an existing practice results in satisfaction for those involved in this process, theneverything is fine. In tradition-preservation cultures, reluctant to changes, managers could fall preyto the so-called “strategic short-sightedness”. They nurture the conviction that acting in compliancewith old regulations, is the best. Renewal is not accepted and this could have dramaticconsequences for the respective organization.

Old practices are often obsolete and affect an organization in a competiti ve businessenvironment. It is thus necessary to constantly adapt to a new organizational culture. Failure to doso will only result in self -elimination. This is one of the most difficult things to do, if we are toquote former US President Woodrow Wilson: “Just try to change something, and you’ll definitelybe making yourself some enemies” .

If we take a mature organization into discussion, then culture is already given, and acts as arole-model from the start, yet even in such situation organizational cult ure is subject to ongoingredefinition through minor adjustments. A company lacking organizational culture is as vulnerableas a country lacking culture and history.

From this point of view, organizational culture behaves like a connection, a motivatingfactor bearing an educational and formative character. It is therefore essential that, as a companydevelops and comprises an increasing number of employees, it should try to set up a generalworking environment and not leave this to chance. Organizational c ulture triggers a certain type of

behaviour from its employees, an implicit, self -willed and natural compliance with certainstandards, thus turning them into supporters of a certain type of action.

The relationship between the culture of an organization a nd economic performance can beobjectified, for instance, through motivation (increased effort, maximum efficiency), loyalty (lowstaff turnover) or creativity (innovative solutions, making the best of opportunities). It becomestherefore important, in the way a regular medical check-up is, that companies should undergo aperiodical diagnosis process that would objectify what is good or not so good at a given point,including from the point of view of organizational culture.

IDENTIFYING ORGANIZATIONAL CULT URE DIMENSIONS

The reorganization process society is undergoing, correlated with outside environmentinfluences, entails a series of organizational and behavioural changes within any organization. Thecompany making the object of analysis is interested in culture strengthening and undertakesstrenuous efforts so that all employees should be familiar with the new company vision andmission. Staff recruitment is performed under very strict conditions; the organization is concernedwith new staff socialization and familiarization with the specific beliefs, values and behaviour, inorder to make it easier for new-comers to get accustomed and to mitigate their stress and fear of theunknown. They organize training sessions for all activities within the company’s TrainingDepartment or outside it. Annual investment in human resources training covers 2.8% of the overalllabour costs.

Aiming at increased effectiveness in focusing efforts concerning the company’s future, apoll was conducted among employees in order to identify their opinion at all levels of the corporateladder. The substantial changes that the company has undergone during the last year, both atorganizational and activity levels have also had a strong impact on employees as well.

This study aimed at identifying dimensions at practice level of the respective culture:o Focus on results versus focus on process. Most employees are result -oriented (graph. 1). The

quality of results holds more importance than the methods whereby those results have beenobtained. Every day at work is seen as a challenge. Employees feel at ease in special (non -standard) circumstances.

Yet there are also exceptions. Some of the employees interviewed feel threatened by exceptionsfrom their daily routine, would rather have al l days be similar, and are more concerned withregulation compliance than with the results obtained (a bureaucratic approach). It is worthpointing out, nonetheless, that the company primarily focuses on results.

o Focus on employees versus focus on labour . If staff can actually be simultaneously focusedon both employees and labour, in practice, organizational culture tends to favour either one ofthem. With some small exceptions, the desired focus is on employees (graph. 2). People feelthat their needs are taken into account.

It is generally considered that the organization is concerned with its staff welfare. Importantdecision-making is left to groups or committees. Employees perceive a low pressure to improvetheir work.

o Professional / Limited character. In relation to the focus on results that is typical for theorganization, there is a manifest professional orientation of the employees under interview (3).Most employees tend to identify themselves with their work up to a point. They see their privat elife as if it were a business looking forward into the future. A part of the employees know thatthe organization’s underlying recruitment criterion is workplace competence, and not socialstatus or privileged connections.

In this case, the professional focus is dominant, which means that a part of those favouringcollectivist organizations can be guided towards stress on the professional and resultdimensions.

o Open versus closed systems. There is a clear manifest orientation towards an openorganization. Both the organization itself and the employees are open to newcomers andstrangers (graph. 4).New employees need little time in order to find their own place and fit in the organization.

Organization integration is relatively easy, whereas adaptati on is a short-term process.

o Loose versus tight control. From the point of view of how tight the control perceived by theemployees is, the focus is on intense control, a little over the average (graph. 5). Within theorganization, the working environment i s generally focused on costs. Punctuality is not always adefining feature of those who have been interviewed. Jokes about work and the organization areaccepted, to some degree.

o Prescriptive (regulated) versus pragmatic. The organization is generally fo cused onpragmatism (Graph. 6).

Customer requests are deemed more important than rules. A market orientation is manifest. Therelatively pragmatic organizational culture is correlated with its professional culture and theorganization’s focus on result s.

FROM ORGANIZATIONAL CULTURE OF SERVICES PROVIDER TOMANAGEMENT STYLE

Let us proceed to a brief overview of leadership styles, starting from the authority /freedom ratio established by a leader in his/her relationship with employees. Starting from th eauthority and respectively, employee freedom percentages, four leadership styles can be identifiedin exercising leadership: coercive/authoritarian leadership, coaching/authoritarian leadership,consultative leadership, participative leadership.

Vroom and Yeton’s prescriptive model is a particular application of the decision -making trees where, in decision -making nodes, managers have to provide their own answersto seven questions regarding the degree up to which subordinates are allowed to participate indecision-making. These questions are the following: Is there a quality requirement such that one solution could be more likely than another? Do I have sufficient information to make a high quality decision? Is the problem structured? Is acceptance of the respective decision by subordinates critical to implementation? Should you take a decision, is it reasonably certain that it would be accepted by

employees? Do subordinates share assignments in order for the organizational goals to be obtained by

solving the problem?

Is there a likely conflict among subordinates, pertaining to the preferred solution?Referring to the answers to these questions, five fundamental methods (styles) of

leadership are defined, displaying subordinate involvement in decision -making processes: A1 Style (authoritarian method #1): Leaders make decisions on their own, based on

information at their disposal at that given moment; A2 Style (authoritarian method #2): Leaders obtain data from their subordinates, whether

they convey or not the issue content, and then take decisions on their own; C1 Style (consultative method #1): Leaders analyze the issue individually with those

subordinates deemed competent in relation with the problem, preserve their individualideas and suggestions, and then take decisions taking into account the proposed ideas andsuggestions or not;

C2 Style (consultative method #2): Leaders analyze the issue together with theirsubordinates in a group in order to obtain collective ideas and suggestions from them, andthen take decisions taking into account the proposed ideas and suggestions or not;

G2 Style (group method #2): Leaders analyze the issue together with their subordinates ina group (as a team), playing the part of “chairmen" without attempting to influence thegroup in decision-making and being willing to accept and apply the solution adopted bythe group.

Graph 7. The results of survey: the leadership styles preferred by a number of 24 managersand would-be managers (departmen t heads) within the company.

Throughout the vast transformation program that a service provider telecommunicationscompany is undergoing, a survey was conducted in 2006, related to the leadership styles

NONOYES

1 2 3 4 5 6

Q u e s t i o n s

preferred by a number of 24 managers and would -be managers (department heads) within thecompany.

Results thus obtained are illustrated in Graph. 7. These outline the fact that at the timethe study was conducted, 6 of the 24 managers subject to interviews (25%) state that they’drather lead by making dec isions on their own, function of the information at their disposal atthat given time; 7 ( 29%) also rely on information obtained from their subordinates, apartfrom data already in their possession; 2 ( 8%) of them believe that analyzing the problemindividually with competent subordinates is an adequate leadership style and decision -makingmethod; 3 ( 13%) of them feel that the issue should be analyzed in a group in order to comeup with productive ideas and suggestions that would pave the ground for deci sion-making;while 6 ( 25%) of them would rather have the whole team effectively participate in decision -making activities.

Consequently, out of the 24 managers who were interviewed, 13 (54%) would ratherhave the authoritarian style passed on from the tim es when the organization used to holdmarket monopoly.

CONCLUSIONS

An organizational culture represents a lifestyle relying on several components (companyvalues, company’s mission, employees’ rights and obligations, inside communication, the way inwhich management defines and operates decision -making, the degree of formality within thecompany, staffing policy or the creativity level, defining symbols, current regulations and practices,as well as its history), although not all these components are vis ible in the outside environment.Aside the company’s visible symbols (representative, colours, insignia and logo), which also bear acommercial brand identification value, organizational culture is not something visible yet it ishighly palpable and has deep implications. All these aspects are also representative from aneconomic point of view. It is therefore primarily an issue of mentality.

From the analysis of the collected data – from the large diversity of the marks gradedto the dimensions by the int erviewed persons – a general conclusion is that of a weak culture,in an ongoing process of development. This fact is underline by the recorded dispersion onone hand, and by the average score, on the other hand.

If the organization is willing to develop a specific culture in comparison with theanalysed dimensions, the obtained data could be a start point. In order to develop a specificorganization culture, the first step (sine qua non) is the definition of the features and thedimensions of the desired culture.

BIBLIOGRAPHY

1. Chişu V.A. Human resources specialist handbook, (Manualul specialistului înresurse umane), IRECSON Publishing House, Bucharest, 2002

2. Hofstede G. Multicultural structures management. Mind’s software,(Managementul structurilor multiculturale. Software -ul gândirii),Economic Publishing House, Bucharest,1996,

3. Mullins L. Management and Organizational Behaviour , Pitman PublishingHouse, London, 1992

4. Sackmann S. A. Culture and subculture: An analysis of organizational knowledge,Administrative Science Quarterly, No. 37. 1992,

5. Zaharia M. Organizational Culture and Behaviour , (Comportament şi culturăorganizaţională ), ProUniversalis Publishing House, Bucharest, 2005

6. Zaharia M. Consideration regarding the impact of organizational culture oncompany performance. A study regarding a service provider’s

organization culture “Proceeding of the 3 rd International ScientificConference Eco-Trend”, Târgu-Jiu, 2006

ASPECTS REGARDING THE EVOLUTION OF THE FOREIGN DIRECTINVESTMENTS IN ROMANIA BETWEEN 1990 -2007

Assistant PhD. Student Adrian Liviu SCUTARIU“Ştefan cel Mare” University of Suceava, Romania

livius@seap.usv.roAssociate Professor PhD. Carmen NĂSTASE

“Ştefan cel Mare” University of Suceava, Romaniacarmenn@seap.usv.ro

Abstract:Foreign direct investments (FDI) are the engine of the economic development in the developing countries, but

also in the high developed ones. FDI played an important role in the Central and East -European countries integrationin the world economy; these former communist countries had non efficient economies, and at the beginning of thetransition they did not had the physical and financial capital, necessary for the reorganization and economic growth.The FDI distribution in these countries was not equal, and their impact for some of these economies quite low. Romaniaregistered low values until 2003, because of the slow rhythm reforms and economic and political instability. Thebusiness environment, the incentives, the economy stability led to a very high volume of FDI starting with 2004,tendency maintained after the E.U. accession of Romania.

Key words: foreign direct investments, Romania, transition, development, European Union.

JEL Classification: F21, O16

1. INTRODUCTION

After 1990 Romania faced a se ries of imbalances which accompanied and delayed theeconomical transformation processes. Although at the beginning of the transition, the formercommunist countries were in similar situations, their evolutions were quite different.

The transition stages were delayed in Romania compared to other former socialist countriesfrom the center and east Europe. The economy was almost totally controlled by the state, with ahyper centralized leadership and without respecting the rationality criteria. The existence of somesuper dimensioned companies gave economy a high rigidity rate.

The reorganization took place slowly because of the low retechnologing capacity induced by alow investment rate. One of the causes was the relative low FDI volume, the one registered i nRomania being between the lowest from the countries in transition.

2. THE STATUS OF THE BUSINESS ENVIRONMENT AND INVESTMENTCLIMATE IN ROMANIA IN THE CONTEXT OF E.U. ADHERING

Once with the European Union integration, Romania must change its options, itsmechanisms and development instruments (1). The resources control must be replaced with thequalitative development by capital and investments infusion based on competitiveness. The sectoralapproach of the economic policies is replaced by a multisectoral i ntegrated approach of thedevelopment objectives.

The policies in the field of business and investment environment had among their objectivesthe investments stimulation. The investments attraction policy was an important part of theeconomic development policy, as well as the credibility and the trust in the business environmentsupport. The goal of the policy regarding the business environment is the creation of a functionalmarket economy by sustaining the private entrepreneurs and the free initiative st imulation.

In the E.U. accession process, Romania received the assistance of the international financialinstitutions and of the monitoring and post -accession evaluation mechanisms of the E.U. Thecommercial and cooperation links with the West -European countries have also increased.

Romania had an ascending trend of the macro economic performances, especially between2003-2006, fact emerged by (2) :

The solid GDP increase rate (over the average 5,9% between 2003 -2005), thanks to ahigh volume of investments and private consumption; Decreasing inflation, unemployment and budgetary deficit and a quite low current

account deficit (inflation of 4,87% in December 2006, compared to 8,6% in 2005, 9,3% inDecember 2004 and 14,1% in December 2003); Investments becoming the main factor of economic growth support beginning with

2005;Among the advantages for the foreign investors that Romania has, we can mention: the

economic and political environment stability, big market, qualified and relative cheap labor force,natural resources, the E.U. and NATO membership, functional market economy, small distance tothe markets of Asia, Middle East, Balkans, bilateral agreements with other states concerning themutual promotion and the protection of the investments.

3. THE EVOLUTION OF THE FDI FLUXES IN THE PERIOD 1990 -2007

The foreign direct investments (FDI) are defined as (3) investments which involves a long -term relation reflecting the interest and the long -term control of a economic unit belonging to aeconomy on other economic unit from another economy. FDI are made by the effective contributionof the capital owner, which participate at the design, achievement and exploitation of the objectivein a certain proportion with a beneficiary firm from the host country.

In Romania one can notice the increase of the FDI fluxes and progresses in the economicdevelopment, the two things having a connection. We expect that these FDI increases recorded inthe context of Romania’s integration in the E.U. to exist also in the medium term future, in theconditions of continuation of the market economy, institutions and law frame consolidation.

Table no. 1. The number of the firms with foreign capital participation and the value of thesocial capital subscribed in the period 1990 -2007.

Year Number of firms The value of the subscribed capitalNo. % Thousands USD %

1991 5.499 3,72 1.058.260,8 4,571992 11.765 7,97 573.271,2 2,471993 10.583 7,17 417.844,8 1,801994 11.053 7,49 881.673,3 3,801995 3.400 2,30 237.717,0 1,031996 3.630 2,46 573.594,2 2,481997 5.251 3,56 359.912,8 1,551998 8.801 5,96 755.475,3 3,261999 7.383 5,00 944.365,3 4,082000 8.567 5,80 839.143,8 3,622001 7.175 4,86 1.540.810,8 6,652002 7.518 5,09 1.078.746,2 4,662003 6.609 4,48 1.288.885,0 5,562004 10.167 6,89 3.032.218,4 13,092005 11.719 7,94 3.149.681,6 13,592006 12.823 8,68 3.127.314,6 13,502007 15.720 10,65 3.314.201,6 14,30Total 147.663 100,0 23.173.116,70 100,0

Source: National Office of Commerce Register (ONRC), Firms with foreig n participation at capital, statisticalsynthesis at 31 January 2008. http://www.onrc.ro/statistici/is_decembrie_2008.pdf

The increase of Romania’s attraction as destination country for the foreign investors have alsobeen seen through the fact that in the period 2004 -2007, approximately 34% of the total firms withforeign participation at capital have been registered in the period 1991 -2007.

Subscribed capital value

100015002000250030003500

Figure no. 1. The evolution of the social c apital value subscribed at the firms with foreignparticipation in the period 1990-2007

Source: elaborated using the data from the table no.1.

The evolution of the FDI fluxes (figure no.1) registered oscillations, the general tendency stillbeing of increase, at number of firms, as well as from the subscribed capital value point of view.The highest values have been registered since 2004 and being approximately twice bigger thanthose registered in the former years.

The privatization of Petrom, Electrica Banat and Electrica Dobrogea contributed at the highvalue registered in 2004; International Finance Corporation and BERD have also taken 25% fromthe BCR shares.

A series of firms increased their social capital in 2004: Automobile Dacia increased its capi tal with over 218 millions Euro; Telemobil with 217 millions Euro; Rompetrol Financial Group with 73,6 millions Euro.The highest value of FDI attracted by Romania have been registered in 2006 (11366 millions

USD), as a result of the business environment i mprovement and flat tax introduction.

40 77 94 341 419 2631215

1041 1037 1157 1106

6436 6483

Figure no. 2. The evolution of the foreign direct investments in Romania in the period1991-2007

The data source: UNCTAD (www.unctad.org)

At the beginning of 2008, from the point of view of FDI sold, the manufact uring industryhad the biggest share (30,5%), followed by the financial intermediations (24,5%) and the retail anden-gross commerce (12,3%) (figure no. 3).

11,70%16,30%

21,40%7,50%

6,10%4,70%

Manufactoring industry

Financial intermediations andinssurancesRetail and en-gross commerce

Post and telecommunications

Constructions and real estatetransactionsExtractive industry

Electrical and thermal energy, gasand waterOther activities

Figure no. 3. The repartition of the FDI sold on the main economic activities in Romania in2008

Source: BNR.

The first 5 countries ranked by the share in the FDI sold (4) at 31 December 2007 are:Austria (21,4 % compared with 23% in 2006), Holland (16,3% compared to 17,1% in 2006),Germany (11,7%, slow increase compared to 10,1% in 2006), Fran ce (8,8% compared 8% in 2006)and Greece (7,5%, which maintains its 2006 share).

Table no. 2. The rating of FDI by the origin country in the period 1991 -2007 (mill. euro)

Millions EURO % from totalTOTAL, from which: 42770 100,0

1 Austria 9161 21,42 Holland 6988 16,33 Germany 5020 11,74 France 3759 8,85 Grecee 3192 7,56 Italy 2617 6,17 Switzerland 2191 5,18 Cyprus 2015 4,79 Turkey 822 1,910 Hungary 738 1,711 Luxemburg 633 1,512 United States of America 581 1,413 Other countries 5053 11,9

Source: Romaniam Agency for Foreing Investments (ARIS), 2007

5,1; 5,10%

1,90%1,70%

1,50%1,40%

11,90%

6,10%7,50%

21,40%

16,30%

11,70%8,80%

AustriaHollandGermanyFranceGreeceItalySwitzerlandCyprusTurkeyHungaryLuxemburgUSAOther countries

Figure no. 4. The main investing countries in firms with foreign participation at capital fromthe point of view of the investments values between 1990 -2007

(Source: graphic elaborated using the data from the table no. 2)

In the FDI origin countries rating, the first six countries are from E.U. (Austria, Holland,Germany, France, Greece and Italy), being the main investors in Romania with a cumulatedpercentage over 71% from the FDI total fluxes. Other consistent investments come fromSwitzerland and Cyprus.

4. THE FOREIGN DIRECT INVESTMENTS IN ROMANIA AFTER THE E.U.ACCESSION AND PERSPECTIVES

Romania managed to keep a high level of FDI, which did not decreased significantly afteraccession, the way it happened in Hungary after 2004. Our country had the most FDI from theSouth-East Europe, approximately a half of the total FDI for this region.

From the investments recorded in the seven countries from the subregion of the South -EastEurope (5) in 2005, 51,3% were the FDI in Romania.

Romania recorded FDI of 9 billions Euro in 2006, with approximately 4 billions Euro morethan in 2005.

The FDI recorded in Romania in 2007 (6) had a value of 7,076 billions Euro, that yearbringing no high value privatizations. In 2006, without including the BCR privatization, the FDIwould have reached the value of 6,900 billions Euro.

With this performance concerning the FDI value, Romania reached the first place in theSouth-East Europe and on the secon d place in the Central and East Europe after Poland (15,4billions Euro) ahead countries with high values FDI tradition, such as Hungary and Czech Republic.

Concerning the 2008-2009 period, we consider that (7) Romania will keep its position in theSouth-East Europe. In the same time, the whole region is attractive for FDI because of thecompetitive cost of labor force and productivity increase.

The integration of Romania in the E.U. increases its attraction and brings real opportunitiesfor sustainable economic growth. The productivity also increases because of the technologytransfers, the structural founds for development and the increased competitive pressure from theEuropean common market.

Considering that the privatizations in the Romanian economy are almost finalized, theinvestments that Romania will be able to attract as E.U. member are the Greenfield type (from zero)and the Brownfield investments (the acquisition of the firm and the replacement of the productionline almost totally). A tendency us ually occurred after accession is the increase of number and valueof the cross border and/or international fusions and acquisitions.

The fields (8) where high values of FDI will lead to are the automobiles construction andcomponents sector, construction materials, wood processing, pharmaceutical sector, consumergoods, electronics, as well as services (IT and telecommunications, banks and insurances). Theretailing and real estate sectors, with a good evolution in the latest years, will still be attractiv e forthe investors.

One can notice that the Romanian economy became stronger, and the integration of Romaniain the E.U. brings elements of optimism are about to improve the forecasts about the economicfuture.

5. CONCLUSIONS

The foreign direct investments are the economical development engine, but also a way ofeconomy connecting to the free market economic system, to the world capitalism, the developingcountries and in the high developed ones acting in order to attract investors.

The Central and East Europe countries offered fiscal incentives and made privatizations, thesefacts leading to significant increases of the FDI fluxes.

At world level there is a globalization process concomitantly with the spectaculardevelopment of multinational firms, which have an important role in the field of investments.

FDI played an important role in the world economy integration of the Central and East Europecountries, which, at the beginning of the transition, did not have the physical and financial capitalnecessary for the restructuring and economic growth. The FDI distribution in these countries wasnot equal, and the impact for some of these economies was quite low.

The biggest FDI value stocks were attracted by Czech Republic, Hungary and Poland until2001; the values recorded by Romania were low until 2003, because of the slow rhythm of reformsand of the economic and political instability, but since 2004 consistent investments have come intothe country.

The business environment improvement, the effects of the flat tax introduction and thepositive attitude of the foreign partners towards Romania lead to the attraction of a very highvolume of FDI beginning with 2004, an outstanding value of 11.366 millions USD being recordedin 2006.

The E.U. accession with the advantage of a space with no internal borders membership and ofthe community unique market, maintained a high level of FDI, level that might decrease thefollowing years because of the global economic crisis.

ENDNOTES:

(1) Camera de Comerţ şi Industrie a României (http://www.ccir.ro/ccirweb/)(2) Camera de Comerţ şi Industrie a României – Direcţia Strategie, Relaţii Inter -Instituţionale(3) Liviu Voinea, Corporaţiile transnaţionale şi capitalismul glob al, Ed. Polirom, 2007, p. 14(4) ARIS, Raport 2007(5) ARIS, Raport 2006(6) ARIS, Raport 2007, p.3(7) ARIS, Raport 2007, p.34(8) ARIS, Raport 2007, p.35

BIBLIOGRAPHY:

1. Voinea Liviu, Corporaţiile transnaţionale şi capitalismul global , Ed. Polirom, 20072. Agenţia Română pentru Investiţii Străine (ARIS) - Raport Anual 2006 şi 2007

(www.arisinvest.ro)

3. Chirica Constantin, Investiţiile străine directe în România , (www.bnr.ro)4. http://www.9am.ro/stiri-revista-presei5. http://www.ase.ro/biblioteca/pagina2.asp?id=cap136. http://www.ccir.ro7. http://ro.wikipedia.org/wiki/Comisia_Europeană8. http://ro.wikipedia.org/wiki/Integrarea_Rom%C3%A2niei_%C3% AEn_Uniunea_European

%C4%83#9. http://www.wall-street.ro/articol/Economie10. http://www.uclm.es/lamusa/ver_articulo.asp ?11. http://www.unctad.org/sections/dite_dir/docs/wir08_fs_ro_en.pdf

HUMAN RESOURCES MANAGEMENT STATE OF THE ART IN TERRITORIALPROFILE

Associate Professor PhD. Carmen CHAŞOVSCHIStefan cel Mare University of Suceava , Romania

carmenc@seap.usv.roAsistant Otilia ALBU

Stefan cel Mare University of Suceava , Romaniaotilia@seap.usv.ro

Master Student Codrin COCIERUStefan cel Mare University of Suceava , Romania

codrin_sv@yahoo.com

Abstract:We live in a dynamic world, in each aspects of life, fact that changes c oncepts rapidly and force us to adapt. Is

easy to understand that the economic life is in the same process, but the actors are more aggressive than ever, thecompetition is high, the rules are not the same, and the punt is even more than ever. Within this context, for alleconomic agents, the adaptation becomes a condition to survive, and the ways to adapt and the benefits obtainedbecome a condition for performance. We consider technology and innovation as elements for competitive advantages,as main instrument in competing on a market which became the buyer’s market, fact that determine a significantgrowth of the customer importance. But, if we refer from a larger perspective, we find the main element for competitiveadvantages: human resources. The human resources are those that through their value, abilities, skills, attachment,team spirit, support the organization to reach performance. Therefore, more equitable is to say that human resourcesrepresent the most important advantage of a company to succee d. Of course, it is not enough, but offers more than thefinancial capital, because of the simple fact that the last one you can find it more easily but, finding the right peoplebecome more difficult and the human resources administration becomes the miss ion of human resources management.Here we can find many problems, their nature and cause being very different. It is well known that in the countries withexperience in market economy, human resources management has a vital role in organisation, so we wil l see how theRomanian companies will adapt to this trend and how many changes will have.

Key words: human resources management, counseling, skills, abilities, motivation, SWOT analysis,diagnostic analysis

JEL Classification: J24, J28, M53, M54

1. INTRODUCTION

We live in a changing world, in every domain. The technology represents an importantfactor but not the most important. It comes form the changing mentalities along the time. Thischange in way of thinking brings new trends, and the first domain affected by the “changes wind” isthe economic domain.

Referring to economic domain the “new” could brig many advantages and could head theorganization to performance, high quality products, consumer to satisfaction. The concept itself ofmanagement and human resources is a result of the contemporary age.

Even if the technologies are surprising, enthusiastic, bringing the competitive advantage,they do not represent the most important part of the capital. If we try to find the sources of theseinnovations we get to the human resources.

The present paper intent to present the results of a research done at regional level, based oninterviews operated in some successful organization in the county Suceava, with the purpose toidentify the maturity of Human Resources practices within these companies.

2. HUMAN RESOURCES AND HUMAN RESOURCES MANAGEMENT – THEROLE IN ORGANIZATIONAL PERFORMANCE

Humans, through their nature, beginning with the first stages of the history, have always hada creative side; ready to search for something different than it was known, trying to find newapplicability of different things in domains with no link apparently. It is true that there are fewpeople with special abilities in this domain, but this aspect gives a greater import ance to humaneresources, even greater than the one of technological or financial capital.

The humans created all the technologies; they are the promoters of any action and the mostvaluable good of an organization.

No matter of historical period or type of the society, the quality of the human factor determinedthe quality of the results. In this case, the affirmation that human resources represent fundamentalresorts of economical and social development not seems exaggerated in e period when humanresources management brings often into discussion the strategic role of human resources.

Without taking into account the attitude that we find in practice, which is not very goodoften, even the most reticent manager could not deny the fact that human resou rces are those whoidentify and give value the strategic opportunities in organization.

„The business world is in a continuous process of change”. This phrase dominated and theeconomy of the last decades and still does. The organisations makes strategic plans, try to foreseenthe change and to adapt to the changing environment, to the expanding markets, or to the consumersgrowing demands. Much more, much better, much faster.

Human resources must also be …at the right place…with the right abilities…at t he righttime. Employees are not anymore only workers and chiefs/bosses, but internal collaborators andofficial leaders, top managers, compartment managers, supervisors, project coordinators,consultants aso. The business success is always a goal to be r eached, and therefore a great pressurein putted on the employees – they are responsible with maximizing the business result.

The human resources management can be an instrument, a way of proceeding, a manner toimprove the results of the company, taking into account the employees interests. The employer -employees system works perfectly when the interests of both sides are identified and solved, andthe human resources management, together with its other roles, tries to identify also the levers thatcan satisfy, in the same time and same measure both the needs of the organization and the humanresources needs.

The situation described before is considered to be an idealistic one, but, unfortunately not sooften funded in practice. At a first look, the two s ides seem to have different interests: on the onehand, the organization goal is to obtain the best results using the human resources, and, on the otherhand, the human resources interest, considering that a growth of the organization requirements canlead to a great pressure on employees.

Human resources management can reduce the perception differences of the two sides andcan contribute to the satisfaction of the both groups’ interests. But this is not the onlyvocation/contribution of the human resource s management. Also identifies the best humanresources for the company needs, coordinates their integration into the company, evaluates theirperformance in activity, identifies the best ways to motivate them to accomplish their tasks, andfinds the methods to create the proper working environment, without conflicts, in order to obtain thebest results.

Referring to Romanian context, an economy in development, most of the managers andentrepreneurs motivate their failure in business especially because of th e improper financialresources management of the organization. Few of them realize that the failure could be caused byimproper human resources management, motivation or improper correlation between theperformances and recompenses.

3. HUMAN RESOURCES MANAGEMENT STATE OF THE ART IN ROMANIA

If we consider the training magazines or career management magazines, they all live you thesame sensation. Those, in Romania, the things are good. That we can focus on niche aspects. Mostof the time, the sensation – artificial – created is that in Romania the human resources managementis as good underlined at company level as in abroad. But, unfortunately the things are different.

A study, Romanian HR Profile 2007, ordered by Business -Edu and Corporate DynamicsInternational, confirm this aspect. The study, as a result of 501 Romanian companies questioning,from all the territory, can sustain that the situation of human resources managers have improved,but it is far from the desired one.

First evidence is shown by the average level of the budget allocated by the companies fortraining and development of their employees. In the knowledge society, the growth of the indicatorsrelated to learning and human development comes in advantage of each company that has a longterm strategy of development. But, if we relate this aspect to the decrease with 5,4 points inpercentage of the companies weight in studies regarding the employees opinion, we can concludethat the year of integration produced no significant change in st rategic human resourcesmanagement.

Romanian HR Profile 2007 study underlines the fact that the top -managers have thetendency to participate at trainings with almost one third less than the other employees. Theperception that the training is not a priority for some of the top -managers can be caused also by thelack of trust in training programs available in Romania. The study shows the fact that ă 48% fromthe human resources directors consider the qualification/tr aining on the job is the most efficientlearning method. The main problem, in the employer’s opinion, is still the recruitment and selectionof the personnel, for both qualified and unqualified. Therefore, the recruitment companies have adifficult mission, and most of the companies are not satisfied by externalizing this activity. Thehuman resources consulting market increased in the last two years, in terms of number ofcompanies, but also in terms of turnover. There are some services required. Many tend ers areorganized for performance evaluation, for example, but the companies require this servicegradually, not at strategic level. They mostly focus on creating the evaluation instruments and noton introducing the human resources strategic development s ystem. Therewith the analysis and jobevaluation is another service required by the clients.

The gap between theory and practice, in Romania is still significant. Even the companiessustain they apply strategies, measures, investments; the number of compa nies really applying themis still limited.

4. THE STATE OF HUMAN RESOURCE MANAGEMENT IN REGIONALPROFILE

In Suceava County, after 1990, the transition from the socialist period to capitalism was toofast comparing to the West -Europe countries, where this evolution was the result of many decadesof development and experiments, and the transition to the next levels was realised on a basis of awide experience. That is why we have a lack of human resources management culture, and as weargued before, this is the key factor in organisational performance.

Research about the human resource management state in regional profile

The concern for research about human resources management state in regional profile it isnot new in Faculty of Economic Science and Public Administration. The research started in 2005with a study coordinated by management department. The results were surprising and underlinedthe significant difference between practice and the recommendations of the theory.

In this year the study was updated, being used the same interrogation categories, only the listof the companies being changed. The research team was created with 8 students as interviewers and

the task was to investigate, on a questionnaire basis, the human resources managers a nd the generalmanagers from 39 companies around Suceava County.

The main goal was to make a detailed analyse of the human resources managementcharacteristics, comparing with the national trends, but also from its regional specificity point ofview, determined by the historical, political, social factors.

In a limited area (Suceava County respectively) the study was made, inter alia, to identifythe causes for eventual deficiencies, and pertinent ways to contribute for improvement of the stateof art.

The research was structured in four main stages:1: Diagnostic analysis of human resources management at the level of companies from

Suceava County;2: Data analysis, obtained after the SWOT analysis (human resources management

characteristics at the regional level);3: Identification of the main problems in the field of human resources management, at

regional level;4: Concrete proposals to solve the problems identified, using the P.C.M. method (Project

Cycle Management): Regional Centre for Counseling i n Human Resources Management.

Stage 1The main point was the diagnostic analysis of the organisational structure, in order to

identify the strengths and weaknesses, and to find the problems and also solutions.The target of the research was the companie s from the county, with good economic results,

starting with the premise that, on the one hand realisation and adaptation of an efficientmanagement lead the organisation to performance, and, on the other, that the companies with profitand success in activity have also a good administration of human resources. We have studied theguide of companies „Top Bucovina 2006”, realized by the Chamber of Commerce, Industry andAgriculture Suceava, where the companies were classified on profit and turnover criteria.

Have been selected the companies with high performances, on the motivation describedbefore. The homogeneity of the companies studied can be seen from these points of view:- qualitative, the companies from the top of performances obtained in the past y ear;- temporal, the companies was investigated in the same period of time with the best resultsreported;- territorial, all the companies are from the same geographical area, Suceava county;

From a total of 50 companies selected, we received a positive answ er for collaboration from39, number that assure an accurate result. The distribution of the companies in the county territorywas realised according to the weight of each locality in the total economical activity of the county.

Table no.1. Disttribution of the companies in territorySuceava Câmpulung Rădăuţi Siret Vatra

DorneiGura

HumoruluiFălticeni

No. ofcompanies

21 4 6 1 2 3 2

Weight 53,8 % 10,2 % 15,3% 2,5% 5,1 7,8% 5,1%

The distribution regarding the activity domain was sedate, in accordance of the regionalstructure on the main activities, internal trade being dominant 7 companies - 18%, light industry - 6companies 16%, constructions of machines, equipments, instalations, 4 companies - 11%.

The questionnaire applied includes 4 categories of information:identification of the company;identification of the weak points, strong points in human resources management;opportunities and threats;

causes for weaknesses identified. The part for identification of the weak points and strong points contain 49 closed questions

with 2 possibilities for answer, including the aspect at strong points or weak points, having thepossibility to make comments/suggestions, and the questions are structured in 5 modules: Generalaspects, Human resources panning, Recruitment and Selection, Human resources motivati on andrepay and human resources development.

The dates have been processed and summarized, each question being included at strengthsor weaknesses (where appropriate), according to responses of all 39 companies. Unfortunately, it isnot possible to make a graphic analyse of all questions or an individual interpretation, because ofthe limited space.

2nd phase – data processing after SWOT analysis

We opt for SWOT analysis because all the aspects investigated are highlighted, inaccordance with the answers received. This analysis offer significant advantages. After thequestionnaires have been applied, after data processing, we obtained the following results for thecompanies investigated.

Strong points Weak pointsAge structure in companies The human resources are not appreciated as sources

for competitive advantagesCooperation between human resources department anddepartment managers in human resourcesadministration/management

The human resources managers have no specificstudies (economy or psycho-sociological studies)

The personnel manager has the responsibility of humanresources management

Human resources managers did not attended trainingcourses in human resources management

The guiding role of human resources managers The other department managers do not appreciate thevalue and importance of the activities from humanresources department

Harmonisation of Work Code foresights and the owners orgeneral managers requests

The human resources manager do not contribute tothe strategic process of decision making related togeneral business aspects

The impact of the organisation’s goals on eachcompartment

Only the department managers have the responsibilityto guide/administrate the human resources

The personnel number is in accordance with the companyactivity

Human resources managers don’t have the power toinfluence and to implement their initiatives

Development of the recruitment strategies The mentor role and the services delivering role ofthe human resources manager is no t fulfilled.

Distribution of the personnel according to theirprofessional formation

Lack in collaboration with private consultants orhuman resources management consulting companies

Recruitment of a significant number of applicants Disparity between the internal measures and reformmeasures of the regional lifelong learning system(from labour market)

Recruitment from internal resources Lack in project development through regionalprograms for human resources development (Phare,Defit etc.)

Recruitment from external resources Few information about human resources programs orinstitutions related to human resources at regionallevel

Job description is well prepared No use of forecast methods to indentify the need ofemployees

Internal methodology for human resources selection No periodical evaluation of the human resourcescompetences deficit

Adequate selection techniques and instruments Neglecting the action plans for anticipation of thehuman resources need.

Fair selection organisation by selection responsiblepersons

No monitoring for future human resourcesavailabilities

Employees are involved in reaching the company’s goal Employees needs and interests are not identifiedPersonnel evaluation activity No wages related policies to attr act the best qualified

human resourcesThere is a motivation system for company’s employees The basic motivation theories are not knownImplementation of a evaluation system for individualperformances, on the basis of well defined criteria andmethods

No individualisation of motivation techniquesaccording to the employees needs

The training need of the employees is known No awareness related to investments in humanresources development

Internal trainers are used for employees training Employees attendance to external training andqualification programs outside the company

Job promotion Organisation of training programs inside thecompany is often neglected.

Opportunities ThreatsA dense network of schools and universities No active policies at regional level in human

resources development programs

Existence of basic conditions for human resourcesinvestments

Emigration of human resources after attending thetraining programs

Educational level is quite high Emigration of the high skilled human resourcesLow public budget for education

The NGOs involvement in social services and professionalformation/training.

Disparity between educational offer and labourmarket demand

Electronic service to link the demand and the offer on th elabour market, implemented by the National Agency forEmployment, available since 2002, no charge(www.semm.ro)

Consulting services providers with lack incompetence and accreditation

Phare programs for human resourc es development Lack of practical knowledge of high -school anduniversity graduates

Diversification of the offer for training programs and alsodistance learning

Increases in number of persons working inagriculture, because they had no opportunity foremployment

The human resources from Suceava County is welltrained, relatively young with good possibilities to adapt tothe market economy demands/exigencies;

Existence of „Ştefan cel Mare”University of Suceava

Existenţa of CEFIDEC and FAMD headquarter in VatraDornei (Mountain Agricultures Federation), bothorganisations offering coordination and guidance in therural tourism domain and also agriculture.

Suceava County is included in the area of North-EastDevelopment Agency, fact that determine a better futureimplementation of the regional development programs

Some observations must complete the SWOT analysis.Referring to opportunities, there is a need for high efforts regarding regional and local

development policies, sustainable modernization of the infrastructures, plans for expanding theschools network, and also a program to inform about the Centre for Professional Training in WorkRelations Domain (www.cpppim.ro ). This Centre is unique in Romania and organises trainingcourses for human resources managers.

3rd stage – Identification of the main problems in the field of human resources management,at regional level

As a result of the analysis some aspects must be presented:

The human resources are not appreciated as sources for competitive advantages ;The human resources managers have no specific studies (economy or psycho -

sociological studies);Human resources managers did not attended training courses in human resources

management;The human resources manager do not contribute to the strategic process of decision

making related to general business aspects ;Human resources managers don’t have the power to influence and to implement their

initiatives;Disparity between the internal measures and reform measures of the regional lifelong

learning system (from labour market)

From the main causes of the problems mentioned before we can mention:- Lack in knowledge regarding the modern motivation theories of the human resources

management;- The role of the personnel manager is not being recognised in the company;- The human resources manager is not consulted in strategic decisions related to business;- At the company level there are other business priorities, the human resources being often

situated on the last place;- The lack of time delays the elaboration and implementation of a human resources strategy;- No support from the general manager;

From the problems mentioned before, we have extracted a key problem: Lack in humanresources management in the area, sustaining the initial hypothesis. In order to find a solution tothis problem, we have continued with the elaboration of a regional project, which will beimplemented in partnership with the Chamber of Commerce, Industry and Agriculture Suceava.

5. CONCLUSIONS. CONCRETE PROPOSALS TO SOLVE THE IDENTIFIEDPROBLEMS

In our opinion, one of the most important inconvenient is the fact that the human resourcesmanagers do not have professional knowledge in the field of HRM. Many of them have otherqualification (juridical studies, philology also) and they never attended training programs. Thisaspect is most of the time the cause for lack of knowledge regarding mot ivation, strategic planningand other human resources functions, and, as a result an inadequate management of humanresources, with negative effects on organization. Unfortunately, at regional level there is nostructure to offer counseling and to prepare the human resources managers and such a structurecould support the organizations in human resources management, training, administration aso.

Therefore, the research team, most of them being members of CAST – EntrepreneurialStudent Club (Clubul Antrepre norial Studenţesc) proposed to the Chamber of Commerce andIndustry Suceava, to establish the Regional Centre for Counselling in Human ResourcesManagement.

The Centre should function as a part of the Chamber, offering services to the companiesfrom Suceava County. In present there are created the guidelines for this structure foundation, beinga Pilot-Centre for 6 month, supported and financed by the CCIA Suceava. For long term, the centrewill sustain itself through consulting and information services in the field of human resourcesmanagement, with the condition that, in these 6 months of pilot -project, the membership of thechamber (companies) will ask for support in human resources management. In order to establishthe goal of the project and the step s to reach the goal, we used the PCM method to identify theactions and indicators to measure the project impact.

We present shortly the goal of the project, target groups, specific objectives and the mainactivities developed by the Regional Centre for C ounselling in Human Resources Management.

(a) The goal of the project: development of human resources management throughcounselling and further training for human resources responsible from different companies fromBucovina region (Suceava County); train ing courses for initiation-perfecting in actions developedby the Regional Centre for Counselling in Human Resources Management;

(b) Target group: 1) human resources responsible/managers from different companies fromSuceava county; 2) CCIA Suceava consult ants, who will benefit from training and future trainingsin order to become counselors in human resources management; (3) graduated students who wantsto work in human resources domain;

(c) Main activities: Counseling for human resources management and organisation; trainingactivities; information about human resources policies and regional strategies.

The first step will be creation of a logistical and human structure - Regional Centre forCounselling in Human Resources Management – RCC-HRM that will offer efficient modalities forinitiation and/or further training in human resources management for different entrepreneurs fromthe region.

Specific objectives of the project :1) creation of a logistic structure in order to sustain the implementation and sustainable

development of RCC-HRM;2) creation and sustainable development/further training for the trainers group (lecturers)

that will offer counselling, training courses on human resources management different themes;3) realization of a newsletter – up to date in order to disseminate the human resources

strategies, developed at regional level, and also the up to date aspects from the human resourcesmanagement theory;

4) organisation of training courses for initiation -further training in HRM.To the train of trainers courses and human resources managers further training will

participate consultants from different domains, lecturers on the field of economic from the area,specialists with practical experience in the specific domain.

In order to create the training curricula, the human resources managers’ proposal will betaken into account, but will be created by the accredited trainers, responsible with the projectimplementation. For problems related to work legislation will be contacted specia lists (inspectorsand lawyers).

The Regional Centre for Counselling in Human Resources Management goal is to createhuman resources specialists in Bucovina region (Suceava county), but also in North -EastDevelopment Region, through development of human re sources organisation and administrationactivities, development of modern human resources motivation techniques, development ofcounselling competences for all stakeholders from human resources management domain, from thecompanies’ level – top-managers, compartment managers, human resources managers.

BIBLIOGRAPHY :

1. Chaşovschi Carmen Emilia – „Cercetări privind managementul resurselor umane încontextul dezvoltării regionale” , Editura Didactică şi Pedagogică , Bucureşti 2006 ;

2. Manolescu A. – „Managementul resurselor umane”, Editura Economică Bucureşti, 20033. Armstrong, Michael – „A Handbook of Human Resources Management”, Kogan Page,

London 20014. Andreson, Arthur – „Yield Management in small and medium -sized enterprises”,

Luxembourg, 20005. Leopold John, Harris Lynette, Watson Tony – „The Strategic Managing of Human

Resources” , Pearson Education Limited, Harlow, 20056. „Capital” Revue – 2006, 2007

GLOBALIZATION APPROACHES – IDEAS CONFRONTATIONS

Lecturer PhD. Mariana LUPAN“Stefan cel Mare” University of Su ceava, Romania

marianal@seap.usv.roProfessor PhD. Gabriela PRELIPCEAN

“Stefan cel Mare” University of Suceava, Romaniagabrielap@seap.usv.ro

Abstract:In the last years the humanity assists to the fundamental changes in economy no matter the level from which is

regarded. These changes are so fast and intensive that many times the humanity is confronting also with adaptationdifficulties and also with the collapses of some value systems which have proved themselves incompatible with newrealities to the world level. So, we’ve became the witnesses of a world in which the commercial bounds and the capitalfluxes between countries have grown so much that the globalizat ion of the world economy is a reality. Theglobalization is a term used to describe a multi -causative process which has as result the fact that the events whichtakes place in some part of the globe have more and more wide repercussive on the societies an d on the problems fromother parts of the globe. There isn’t any definition of the globalization in a universal accepted form and, probably, noteven final. The reason consists in the fact that the globalization sub -includes a multitude of complex processe s with avariable dynamic, touching diverse domains of one society. This can be a phenomena, an ideology, a strategy or alltogether.

Keywords: globalization, against-globalization, for-globalization, antiglobalizare, proglobalizare,mundialization, internationalization

JEL Clasification: E20, F23

1. INTRODUCTION

In the economical theory, the globalization concept is highly approached in the national andinternational debates, and the authors of these debates have tried and are trying to find a defin itionas adequate as possible, generating in this way a real dispute. In this work I will try to pass inreview a few of the definitions given to the globalization concept, considering the fact that anydispute involves the two parts: the globalization ade pts and the globalization opponents.

The globalization term was entered for the first time in the Webster dictionary in the year1951. Starting with the half of the 1989 year, the globalization concept is utilized more and morefrequently, being joined to some terms like: market, institutions, ecology, finances, life stiles,communications, migration, laws, factories, wars, conferences, civil society, events, risks etc.(Scholt, 1998)

2. THE APPARITION OF THE GLOBALIZATION CONCEPT AND THEEVOLUTIONAL PHASES

It is known the fact that in all the debates it is tried to identify first the moment when theglobalization term appeared, following the temporal evolution of the process because of after that,according to some evolutions of the society on the whole to be able to enunciate the best definitionof the concept.

For the beginning it seems interesting to me the Braudel’s appreciation regarding globality:“globality […] the whole of the wholly”, to which the author mentions when he talks about theforming of the universe-economy of the Europe into the centuries XVII -XVIII (Braudel, 1989). Istate that the author utilizes the globality term to designate the global character of the commerce ofthe time, which allows us its association with the present c oncept of the globalization whichdesignates a complex phenomenon of transforming the world in a unit all. If we consider themoment to which refers the author, when he affirms this, it’s corresponds the moment when theworld hegemony was kept by England. In that period of time had place the industrial revolution and

there were found the modern economy based on the development of the industrial technology,which makes me agree with the authors that plead for the fact that we are in the second wave ofglobalization, the first wave being generated by the industrial revolution. Therefore, I agree with theidea that we can talk about globalization since the beginning of the history, and its effects can befelt more or less in time, until the moment when the Ber lin Wall fall, when this process become areality.

Isn’t void of interest, not even the hierarchically evolution of the globalization process,made by Robertson (1992), which identify five phases of the globalization:

1) the seminal phase in the 1400-1750 period in Europe, the moment of the apparition of thefirst maps of the planet as a result of new geographical discoveries, when the humanitybecomes aware that lives on a planet which isn’t situated in the center of our solar system,period when is adopted the universal calendar and it starts to shape the borders of thefuture colonial powers;

2) the incipient phase also in Europe in the 1750-1875 period, when appears the nation -states, it develops the formal diplomacy between the states, appear the first internationallegal conventions and appears the first ideas about internationalization and universality;

3) the take-off phase in 1875-1925 period, when it starts to talk about international societies,an unique humanity, it takes place the amplificatio n of the commercial bounds betweenindependent nations, the communions are expanding and it starts the mass migration from Europeto America;

4) the phase of the disputes for the world hegemony in 1925-1969 period, which is launchedby the First World War, continued by the Second World War and which will be temperate by thefounding of the League of Nations and later the United Nations (UN). UN is the international bodywhom introduced the concepts of war crime and crimes against humanity and through the ag ency ofits specialized bodies draw the attention on the dangers that proceed from the ignorance of theglobal problems like: pollution, demographic explosion, the exhaustion of the natural resources,economical underdevelopment, malnutrition etc.;

5) the last decades of the XX century , starting with the year 1989, when it had placesignificant progresses in exploiting the cosmic space, telecommunications, IT, is appearing differentform of regional integration against unprecedented deepness of the inter national division of work.

Therefore, starting with the year 1989 we are in a new age of globalization, when it talksmore and more about the renouncement of the territorial limits, unlimited ascension of technology,free circulation of information and goods, free circulation of capital and human being, economyunification and, not lastly, about the politic alignment regarding a global government. But, we areasking now the imminent question, “how many of these characteristics of the present globalizati onprocess are truly fulfilled, because of this phenomena to be viable?”.

3. MODERN APPROACHES OF THE GLOBALIZATION

Trying to define the concept, the authors take into consideration a part of the characteristicsof this phenomenon, but few of them succ eed to agree. Further, I will present few of theseapproaches and I will also try to present an own approach.

An answer to the question “what is globalization” we find to Friedman, a passionatesupporter of the globalization, whom state that “the globaliz ation isn’t a simple inclination or afantasy, but is rather an international system. Is the system which now took the place of the ColdWar system and, as same as this one, the globalization has its own laws and its own logic, in kind toinfluence today, directly or indirectly, the politics, the environment, the geopolitics and theeconomy of each country from the globe.” (Friedman, 2000)

On the other side, reporting on the international manifestation of the globalization process,Korten (1995) – known as being a vehement critic of this process – state that “The forces of aglobalize financial system had transformed the corporations and the financial institutions, somedaysuitable, in instruments of a market autocracy which is propagate an all the planet as a cancer,

colonizing more and more vital spaces of Terra, destroying life stiles, dislocating human beings,making powerless democratic institutions and swallowing life in the insatiable search for money”(Korten, 1995).

This first confrontation of idea s makes me agree with the affirmation that “theglobalization is a concept extremely complex, which is based on radical changes in the economicallife, social-cultural and policy, changes flowed from the directly reality of our days, that can’t beframed in the old historical patterns and that can’t be explained with the help of the classical device[...] became meanwhile inadequate for the new economical processes and phenomena which aremanifesting of the international arena” (Popescu, 2004).

Regarding the used terminology, I specify that the Anglo -Saxon school utilizes, usually, theglobalization term, while in the French literature we often meet the mundialization concept.

The Canadian A. Ayoub uses instead of the globalization term the mundializatio n notion:“mundialization is far away of being a novelty or a new phenomenon. On the layout of theconcepts, the mundialization isn’t, as a matter of fact, but a new name of an old concept which,simply and solely, is the free -exchange” (Ayoub, 2001). Ther efore, he thinks that themundialization represents the free -exchange extended on the planetary scale: “the propagationprocess of the free circulation of the goods, services, capital, persons and ideas in all countries,leaving aside the political border which apart them.

The author states that at moment the evolution of the globalization phenomenon is muchfaster as succession of the technological progress, of the apparition of a new economy, of theknowledge and informatics. On the score of the analysi s which realize it in a sociological andeconomical way, Ayoub figures that some analysts combine the thesis of F. Braudel on the “monde -economy” with the Marxist analysis on the evolution of the capitalism and I see in the actualmundialization another systematic cycle of accumulation of the capital that couldn’t be concludedbut with a black crisis. It is, without doubt, a critique to the ones with apocalyptical vision on thecontemporaneous mundialization. In opposition with them, other analysts find “th e term ofmundialization clearly exaggerated and premature compared with the economical realities of ourdays. They think that is rather to talk about the economical international integration, being contentto see in mundialization rather an ideal to touch someday than a phenomenon already existent”(Ayoub, 2001). If we analyze these statements from the perspective of the events and the presentrealities, we can affirm the fact that we’ve entered in that “black crisis” foresighted by the author.

The French philosopher Regis Debrau, ex -counselor of external political problems in thetime of the president Francois Mitterand, considers that “the globality imposed incite to thepredominant particularism as homogeneity antidote (Debrau, 2000). He states that the economicalintegration is in contradiction with the disintegrator politic. Reporting on the beginning of theEuropean – economical integration and on that he considers as representing the globalization, theauthor state: “The globalization must be judged u nder his two aspects, retirement and unfolding,contraction and dilatation, un-enlightenment and re-enlightenment. All these became very clear forEuropeans to the discussions from the Maastricht Treaty about integration.” Therefore, the authorreaffirms the idea that the regionalism doesn’t deny the globalization, but represents the product ofglobalization. Should we understand that the present phenomenon of globalization respects the rule:“split then unify”?

The political personalities of the world dis cuss also about the globalization process and isremarkable the opinion of the ex -president of Russia Mihai Gorbaciov: [...] we assist to theglobalization of the economy and to the admission of the fact that the problems like environmentcan be solved only if we unify the efforts on all the meridians. We must understand that, even if theworld is contradictory, it is still an integrated world, which disturbs the nations. These are afraid notto lose the culture, the language, the life stile. It is good or bad? I say that is noble. In the same time,we need global security and economy for the future. But the globalization mustn’t be seen as aroller which to create total uniformity in the world without defer of the culture diversity.” (Gardels,2000) Here is therefore an opinion for globalization, but which sustain the conserving of the cultureand national customs to avoid uniformity, or I could continue to avoid monotony.

The owner of the Nobel prize for economy in 2001, Joseph E. Stiglitz, being also aremarkable personality of the American academically environment and with internationalrecognition, looks the globalization within the angle of an ex -employee of the two internationalorganisms of the globalization of the International Monetary Fund and of th e World Bank andoutlines “the devastating effect which globalization has on the countries under way for developmentand especially on the poor population from these countries” (Stiglitz, 2003), aspects which shouldbe a question mark in approaching the ph enomenon of globalization. We mustn’t think that theauthor is against globalization, but he don’t agree how is developing this process, considering thatis necessary the radical rethinking of the international commercial accords, which plays an essentialrole in eliminating the barriers assessed to the countries under way of development. Moreover,Stiglitz states: “the globalization had contributed to the improvement of the health state of thepeople, and also to the intensification of the fight taken by t he civil society for democracy andsocial justice. Not the globalization is the problem, but the way that she is developed until present.”(Stiglitz, 2003)

Zygmunt Bauman analysis the globalization from the perspective of the social effects,stating that „[...] the globalization represents the implacable destiny to which the world is pointing,an irreversible process that affects all of us in the same measure and in the same way.” (Bauman,2002). I don’t think that this statement is exactly realistic. I su stain that starting from the statementmade by Koolhaas that says that “the globalization involves also the apparition of the differences”.We come to complete this statement with Michael Manley’s explanation regarding the internationaleconomical system “each of us must find the place in the global economy and to pull us upper [...]”.

But, the most eloquent affirmation which came to sustain my opinion, that the globalizationis understood as being an advantage of the elite, is the one made by Martin and Sc humann (1996),whom assisted to the debates regarding evolution of the economy from the XXI century, which tookplace to San Francisco in September 1995 and to which participated “the world elite of the powerformed by 500 politics, concern chiefs, science people, all of them being personalities of the fore -ground”: “20% from the population able for work would be enough in the next century to assure theliveliness of the world economy. There is no need for more work force”, is the opinion of themagnate which leads the Washington SyCip. A fifth from those whom are searching for work willbe enough to produce all the goods and to provide high quality services which can afford the worldsociety.” (Martin, Schumann, 1999)

In this new age of the globalization we have to reckon with an unquestionable reality: awrongly international economical order which must be eliminated. Therefore, the countries of thethird world don’t have the possibility to compete with the countries which already have themonopole on the most advanced technologies and unlimited financial resources, which alreadymastered the majority of the markets. They will be gradually reduced to the simple zones producerof rough material and goods competitive from the point of view of the price, having the worst paidwork hand.

Regarding the demographical and technological development, the historical Paul Kennedy(2003) states that “the planet is cut today by a huge splitting line [...]. On one of its side are theyoung societies which are growing f ast, devoid by resources, underdeveloped and undereducated,and, on the other side are toe reach but old populations, with technological inventivity, but dyingfrom the demographical point of view.”

Therefore, the globalization should be the only way that could take to the worldreintegration, to the “equalization” of the “two worlds”, we could say. But, maybe the globalizationpasses this test? If we consider the society of only one fifth: 20% versus 80% (Martin, Schumann,1999), according which only 20% f rom the population able to work is enough to assure the worldeconomical liveliness, we can’t be enough optimistic. The pores will remain poor and the reacheswill be richer, and the precipice between the two worlds will be larger. By rights, the winner of theNobel prize, Henry Kendyll, was affirming that “if we don’t stabilize the population with justice,kindliness and mercy, then the nature will do it for us”, this stabilization representing the biggestchallenge of the globalization.

Into an interesting and controversial work published in 1995 in USA: : ”When CorporationsRule the World”, its author, David C. Korten, analyzing a wide documentary material, arrives to theconclusion that “economical globalization is partly a modern vision of the impe rialist phenomenonand it has approximately the same effects” (Korten, 1995). In the acceptation of the author, theglobalization represents a modern imperialism, distinguishing by the classical concept ofimperialism with the replacement of the world colo nial states.

An interesting conception on the globalization we find also to the known North -Americaneconomist John Kenneth Galbraith. The globalization is approached by the author in its lasts worksand is researched, especially, in his work”The Good Soc iety. The Human Agenda” (Galbraith,1996). It must be kept in mind the fact that Galbraith categorically pushes back the globalizationterm, and in an interview in which is discussing about the defiance of the new millennium, he says:“I am consultant to The dictionary of the American inheritance regarding the usage of the languageand I won’t allow the word globalization. It is an ugly term.” He prefers instead of the term ofglobalization a series of other equivalent terms like: “international relations t ighten in these areaslike: economy, culture, art, traveling and communication”; “the internationalization of theeconomical life, the associations between the states and its institutions”; “the partnership betweenstates and nations”; “the external econom ical opening of the countries”. In other circumstances, heprefers the term of internationalism instead globalization: “The international action withinconferences and within institutions like IMF, World Bank and WTO is an essential part of theinternationalism to which I guide. Note that I use the word internationalism and not globalization”(Galbraith, 1996).

John Kenneth Galbraith repudiates the globalization term, but not also the globalization assuch, to which it sees other content. He defines the gl obalization starting from two essentialpremise: “we live in a world situated in a continuous internationalization”, in which “theresponsibility for the economical and social wellbeing must be seen as an transnational concept”,and that the aim to which we must reach consist in searching “how we can stop up the tragicallyprecipice between the ones supported by the faith and the ones in need”/

Galbraith, in contrast with other theoreticians of the globalization, he conceives theglobalization as a result of the internationalization of the national economical life and of theforming of an integrated world economy. The difference of his approach consists in the way that heconceives the realization of this process and namely within its coordination by governs , that meansthe remaining of the states as national entities.

The French economist Jacques Percebois, is part of the camp of those whom prefer themundialization term instead of the globalization term. Into a study that is noticeable with the logicof the argumentation and the statistical documentation about the defective evolution of theeconomical gaps between North and South and the faith of the nation -state, the author conceives itsanalysis with the conceptual definition of the mundialization. In its work La mondialisation desactivities energetiques: quelles enjeux? (Percebois, 2001) the author brings up and underlie withstatistical data the gaps between North and South, evidencing the faith of the nation state in thecontext of the globalization process or actual mundialization.

Percebois, defines the mundialization as being “the process which in an context of growinginternationalization of the activities, takes to the starting up of transnational networks for decisionin the engine domains of the growth, like: information, research -development, finances, hightechnologies” (Percebois, 2001).

In the analysis of the mundialization/globalization, the author outlines the relation betweenthe national state and the international financial organizat ions (IMF, World Bank), as being andestructive relation for a nation that is at a dead end: “The dictatorship of the international financialmarkets is in the way that any state, which takes measures considered inadequate by theinternationals financiers, is punished with a decrease of its national currency value and with biggerdifficulties of access to the capital markets”. We consider that the role of the international financialorganism must be of sustaining of the economies situated in difficulty and not of degradation andexaggerate indebt of these. But, the reality demonstrates us the opposite.

The critical analysis of the author regarding the mundialization/globalization distinguishesthe difficulties of the market and of the economical liberalism m anifested also in the domain ofcoordinating the economical activities in the social domain, and also in the one of the internationaleconomical inequalities, and consider opportune “the necessity of a regulatory state” and even ““the emergence of a state administrator of new risks”. Therefore, the author conceives thecontemporary mundialization like a cooperation process between states, and the leadership of themundialization processes represents the step that can be realized through intergovernmentalbodies coordinators and not through creating bodies representative with functions over -states andover-national, which put to the issue the sovereignty and the borders of the nation -states.

The responsible with the elaboration of the “World development r eport 1999-2000: Theentry in the first century” from the World Bank, Shahid Yusuf defines and analysis theglobalization in direct relation with the localization, offering in this way an element of novelty inthe big contemporary dialogue about globalizat ion.

In its analysis, the author starts from the premise that “the scenery of the development fromthe beginning of the XXI century will be shaped by globalization and localization”, twophenomenon which unroll in the same time, but in opposite directions . Therefore, the globalizationis approached by the author as being “the integration of the countries with the rest of the world”,which is manifested as unifying force on the world level, while the localization represents thetendency of “the local groups to more autonomy”, suggesting in this way an internal action of thecountries to decentralize.

Shahid Yusuf appreciates that, thanks to the evolution which tend the two processes, theglobalization and the localization, had become two strong forces that “ offers to the poor countriesunprecedented opportunities for growth, but which can prove and un -stabilizer political andeconomical, when the institutional frame isn’t strengthen. [...] the answer of the nation -states tothese two forces will determine if the incomes of the poor countries converge with the ones fromthe industrial countries and if the efforts for eliminating the poorness are successful (Yusuf, 1999).

In fact, appreciating that by the reaction of the nation -states to these two processes depe ndsthe disposal of the poorness, he blames the international gaps and the difficulty of their disposal onthe poor countries, as like the developed capitalist countries, a lot of them big colonial powers until1960, wouldn’t have any blame for the existen ce of these gaps and their deepness into the post -warperiod and, so, not even any moral and material responsibility for contributing to their elimination.The globalization and the localization are two forces which shape the development in the newmillennium, but each of them has a distinct content and distinct influence on the development.

The globalization is appreciated by the author as being the process of integration of thecountries at a world level, which has also positive and negative effects. The positive effects refers tothe fact that “integrates the markets of the goods and of the production factors, and the mainnegative effect is the fact that affects, in the direction of degradation, the environment expose thecountries to the external shocks which can precipitate the financial and economical crisis.

The both negative effects which Shahid Yusuf predicted, since the year 1999, aremanifesting to the maximum intensity at present, but we are the witnesses of these events. We askif, indeed, the globalization process is directly responsive for producing these events that affects usnegatively. Maybe that satisfaction of the needs which are more and more elevated andsophisticated, which needs proper resources, could be one of the reasons of the unleashing of thepresent world crisis or maybe the interests of some groups from the top of the pyramid considereduseful its unleash.

Appearing on the stage of the international debates in a period when it wasn’t talked at all orvery less and confuse about globalization, the approach of John Naisbitt had surprised not only withthe anticipative power of its ideas but also with the capacity of its exposal to incite to reflection andto open new paths in the theoretical thinking of the development. Nai sbitt is considered by thespecialists of the World Bank as being the first modern author of the globalization concept: “theglobalization entered in the speech about development to the beginning of the 1980 year, once withthe publication of the book of J ohn Naisbitt: “Megatrends”, and its opinions about globalization

particularizes not only a conception of huge scientific rigor, but also a position deeply human anddemocratic (Yusuf, 1999).

In his commonly sense, the globalization is conceived by the auth or as a transition of “worldeconomical integration of the countries and national communities”, in which the nationaleconomies, “as a rule independent, proceed to the situation to be a part of an interdependent globaleconomy” (Naisbitt, 1999).

The synthetic appreciation of the globalization as transition process “from the nationaleconomy to the world economy” and the transforming of the last one into “world global economy”or into “planetary global state” is distinguished by the author with numerous con crete ideas whichcomplete its approach regarding globalization. Therefore, the author utilizes frequently theconcepts: “the globalization of the national economies”; “the globalization of the industry”; “theglobal model of the division of production”; “ global investment”; “thinking globally”; “thinkingglobally and acting locally” etc.

What it is interesting into the Naisbitt approach, is the fact that critics to “the Americanbusiness people for the lack of previsions and for the rush which follow immed iately profits”(Naisbitt, 1999), underlining that, in the global economy conditions “we must renounce to the oldindustrial obligations and to take care of the future obligations”. The old obligations means theenergo and materiofage industries, polluting and with expensive work force, and the new chargesmeans the development of the informational and knowledge industry – new forces of progress ofthe future.

It is necessary to evidence the critique brought to the business mans that follow only theimmediately profit, which the author talks about, and to put into contact with the world economicalrecession of the moment, which in our opinion is a consequence of this type of approach of thebusinesses.

What it is surprising is the fact that Naisbitt consid ered that “a way for attaching theglobalization is the bank system”. Analyzing deeply this affirmation, we can’t miss that the presentreality demonstrates the correctness of the analysis, of the previsions and affirmations of the author.

Alvin Tőffler is appreciated in the specialty literature as being one of the most valuablefuturologists, because of the analysis and predictions of huge value which enounced and published.He appreciates the globalization as being “the world system without national bord ers of the XXcentury”.

Using rarely the globalization term, Alvin Tőffler refers often to this process, using termswith equivalent value: „global system”, „globally”, „global network”, „a new global order”, „worldglobalize system”, “international hyper -connected interdependences”, “the mundialization of theproduction” etc. He refers to the globalization with different aspects, but appreciates as being aphenomenon generated by the shock of the future and induced by the “third wave”, in other words,by the present informational revolution. Even if they have a fragmentary character in its works,these references have a high rate of relevance for understanding the globalization.

The first idea which brings up the globalization concept is the phrase: “the global system ofthe XXI century”. Therefore, the author states that: “fewer words are thrown today with biggereasiness than the globalization term. There doesn’t exist any politics, UN official or press editorial,which isn’t prepared to speak about the globalization system. But this principle isn’t what imaginesthe big majority of the people. To understand it how it was yesterday, not the way he transformswith rapidity, even the best strategies can start the opposite. That’s why, the strategically thinkingof the XXI century has to start with a map of the global system of tomorrow” (Tőffler , 1995).

Alvin Tőffler critics the idea of the apparition of the new global system which coincideswith the end of the Cold War: “The end of the cold war continues to matter on the global s ystem.But, the changes generated by the decomposing of the Soviet Union are secondary and, actually, theglobal system would have been actually sized with revolutionary rummages even if the wall of theBerlin wouldn’t have been fall down and the Soviet Un ion would have been further existed”(Tőffler , 1995). The author considers that the forces which impose “the global system of the XXIcentury” have made felt the presence because of the informational revolution and as succession of

the new system of creating the richness involved by this revolution, namely the third wave ofchange in the history of the humanity.

Into one correctly expression, using directly the globalization term, Alvin Tőfflerappreciates that this is facilitated by the informational rev olution and asked by the new creatingsystem of the richness: “once what the spreading means of the information circle the Earthfacilitating the globalization asked by the new system of creating the richness, become more andmore difficult to keep the concrete information in the limit of the national borders (Tőffler , 1995).

If we make an analysis of the approach of the concept of globalization in the opinion ofAlvin Tőffler, we can consider that:

a) the globalization is an objective process generated by th e third wave, which has unequalthe countries, the one developed being favored by this process;

b) the globalization supposes the mundialization of the production and a new system ofcreating the richness;

c) the globalization involves the deterioration of the n ational sovereignty, the permeabilityof the national borders and the dislocation of the nation, as succession of the competencetransfer: one of them from the national to the international organisms and other from thenational centre down, to the national sub-units: regional and local.

4. CONCLUSIONS

The economical and social transformations which have rapidly succeeded in the last 20years have been so profound, that an economist or sociologist, who would have proposed himselfthe realization of a study about globalization, would have been forced to overtake the considerableobstacles. At present, this subject has the tendency to occupy the first place on the work agenda ofthe economist researchers, without saying that had became a commune fear. Inte resting is the factthat, as same as post-modernism or post-industrialization represented the concepts that were infashion in the 70’s, the globalization seems to became the key concept of the 90’s and of thebeginning of the XXI century, which permits us to understand better the evolution and thecoordinates of the humanity in the new millennium. Indeed, the controversies shown on thisconcept of globalization proved that, in this case, there isn’t the problem of the adaptation of the oldfunctionalist theories to the realities of the contemporary world, but it must be found reasons in thefavor of this phenomenon find out in full development.

In my opinion, the globalization is an integrator process which manifests especially ineconomy, spreading then also in the other domains. The growing trend unprecedented of themodern technologies and of the communications permits to this process to manifest, with a differentproportion, in all the corners of the world.

I consider that the globalization represen ts the present flow of economical thinking which,as the previous flows, has supporters and opponents. The transnational corporations, the fluxes ofdirect foreign investments, capital fluxes, commercial fluxes, and also the human capital mobilityrepresents the ways of manifesting the globalization.

What upsets me the most regarding the present age of the globalization is the fact that thisprocess generated, on short period of times, numerous crises, and these crises are manifesting withmore and more profound intensity and affects all of us equally.

BIBLIOGRAPHY

1. Albrow, M., The Global Age. State and Society Beyond Modernity , Stanford UniversityPress, London, 1996

2. Alvin Tőffler, Război şi antirăzboi, Ed. Antet, Bucureşti, 1995; Puterea în mişcare, Ed.Antet, Bucureşti, 1995; Al treilea val, Ed. Politică, Bucureşti, 1983; Al treilea val, Ed. Antetşi Lucman, Bucureşti, 2002

3. Ayoub A., Qu’ est-ce que la mondialisation? în: ”Liaison, Energie -Francophonie:Mondialisation et energie”, No. 50, trimestru l 1, 2001, p. 5

4. Bari, I., Globalizarea şi probleme globale , Ed. Economică, Bucureşti, 20015. Barnet, R., Cavanagh, J., Global Dreams, Simon and Schuster, New York, 19916. Barraclough G. (coord.), The Times Atlas of World History , Times, London, 19787. Bauman, Z., Globalizarea şi efectele ei sociale , Ed. Antet, Bucureşti, 20028. Braudel, Fernand, Timpul lumii, Ed. Meridiane, Bucureşti, 19899. Debray Regis, Dumnezeu şi planeta politică , în Schimbarea ordinii globale de N. Gardels,

Ed. Antet, Bucureşti, 2000, p. 4510. Friedman, T., Lexus şi măslinul. Cum să înţelegem globalizarea , Ed. Economică, Bucureşti,

200011. Galbraith John Kenneth, Challenges of the New Millenium (Sfidările noului mileniu), în

”Finance & Development”, decembrie, 1999, p. 212. Galbraith John Kenneth, The Good Society. The Human Agenda, New-York, 1996.

Traducerea în română cu titlul: Societatea perfectă. La ordinea zilei: binele omului. Ed.Eurosong & Book, Bucureşti, 1997

13. Gardels, N., Schimbarea ordinii globale , cap. „De ce am pus capăt războiului rece?”, Ed.Antet, Bucureşti, p. 104

14. Giddens, A., The Consequences of Modernity , Cambridge, 199015. Harold James, Is Liberalization Reversible? (Este liberalizarea reversibilă?), “Finance and

Development”, December, 1999, p. 1116. Held, D., McGrew, A., Goldblatt, D., Perra ton, J., Transformări globale. Politică, economie

şi cultură, Ed. Polirom, Iaşi, 200417. Jacques Percebois, La mondialisation des activites energetiques: quells enjeux? în:

“Liaison, Energie-Francophonie”, nr. 50/200118. Korten D., When Corporations Rule the Wor ld (Corporaţiile conduc lumea ). Raport asupra

marii finanţe internaţionale: FMI, Banca Mondială, BERD, PHARE, G7 , Editura Samizdat,1995

19. Martin, H.P., Schumann, H., Capcana globalizării. Atac la democraţie şi bunăstare , Ed.Economică, Bucureşti, 1999

20. Mulheart Chris, Howard R. Vane, Economics, Ed. MacMillan Fondation, London, 199921. Ohmae, K., The End of the Nation State , New York, Free Press, 199522. Popescu, I., Bondrea, A., Constantinescu, M., Globalizarea. Mit şi realitate , Ed. Economică,

Bucureşti, 200423. Robertson, R., Globalization: Social Theory and Global Culture , Sage, Londom, 199224. Scholt, J. A., Globalization and social change , Transnational Associations, Bruxelles, 199825. Shahid Yusuf, The Changing Development Landscape , in „Finance and Development”,

Decembrie 199926. Sharid Yusuf – The Changing Development Landscape. ”Finance and Development”, 199927. Stiglitz, J.E., Globalizarea. Speculaţie şi deziluzie , Ed. Economică, Bucureşti, 200328. Ulrich M., Die postwestfälische Konstellation, das Elend der Nationen und das Kreuz von

Globalisierung und Fragmentierung ; în „Vom Ewigen Frieden und vom Wohlstand derNationen”, Frankfurt/Main 2000, p. 172

MICROECONOMIC FUNDAMENTS OF FOREIGN DIRECT INVESTMENTSCONTAGION EFFECTS: ROMANIA AND EUROPEAN UNION CASE

Professor PhD. Ioan TALPOŞWest University, Timisoara, Faculty of Economics And Business Administration, Romania

ioan.talpos@feaa.uvt.roProfessor PhD.Bogdan DIMA

West University, Timisoara, Faculty of Economics And Business Administration, Romaniabogdan.dima@feaa.uvt.ro

Assistant Professor PhD. Ioan Mihai MUTAŞCUWest University, Timisoara, Faculty of Economics And Business A dministration, Romania

mihai.mutascu@feaa.uvt.roTeaching Assistant PhD. Candidate Oana Ramona LOBONŢ

West University, Timisoara, Faculty of Economics And Business Administration, Romaniaoana.lobont@feaa.uvt.ro

Abstract:The economic systems dynamics d oes not work "on emptiness", but in the context of real and financial

transactions it makes on external environment. Under the context of financial globalization, foreign direct investmentsform special categories of externalities which depend and influenc e a complex set of variables which arecharacteristics for reception economy.The general objective of this study is a double one. Thus, on the one side it analyzes some of the critical determinants offoreign direct investment and, on the other side, it s hows some of the effects they have in case of an emergent economy,like Romania's, respectively at European Union level.The main result of this study is that foreign direct investments are modulated by the intrinsic characteristics of receptoreconomies and they matter for the nature and particularities of these features. Also, an analysis of the causes andeffects of foreign direct investments which does not take into consideration the structure, functional, institutional andcultural-compartmental characteristics of reference economy are equal to a reference to „ Hamlet without the Princeof Denmark”.

Keywords: foreign direct investment, contagion effects

JEL Classification: E22, F21, C22.

1. INTRODUCTION

Foreign direct investments represent a cent ral component of financial flows associated to thecontemporary financial globalization processes. A vast theoretical and empirical body shows thepositive effects they have over receptor economic systems, via technological and informationaltransfers, the financial, material and human resources inputs, as well as the relatively stable natureof these inputs, which reduce the financial vulnerability degree of reference economies compared tothe possible inversions of real and financial flows in the exterior .

Also, foreign direct investments have great effects of systemic, structural, functional andinstitutional transformation, and change at a micro level and "short -termed" the macro cultural-compartmental paradigm which characterizes the decisions of reside nts contributes to increasinginstitutional quality in the host -economy and stimulates the real and nominal integration processwithin regional and international transnational structures.

The general objective of this study is a double one. Thus, on the one side it analyzes some ofthe critical determinants of foreign direct investment and, on the other side, it shows some of theeffects they have in case of an emergent economy, like Romania's, respectively at European Unionlevel.

The study proposes a global analytic environment of the foreign direct investmentsproblematic, based on a combination of macro and micro economic factors, an analytic environmentwhich renders the role of the characteristics of the real sector, respectively nominal, labor marketand the overall economic politics in attracting and mobilizing them.

The section reaches the conclusion according to which "the reduction of marginalinclination for consumption of the residents/reducing the anticipated level of inflation tensions,increase of efficiency and of current and anticipated "net" income of non -monetary assets, thereduction of anticipation errors level regarding the efficiency of various types of investments andthe "aversion to risk", the fiscal policy relaxation, the reduction of the differential of borrowedfinancial resources cost, the increase of "net" productivity of production factors and thedepreciation of local currency, contribute in an non -uniform manner to the increase of foreign directinvestments in the reference economy".

2. GENERAL CONCEPTUAL ENVIRONMENT

The analytic environment of the foreign direct investments can be analyzed by combiningsome of their micro and macro determinants in a unifying environment of a decisional theory.

Thus, the real sector of an " open economy" (which makes real and financial internationaltransactions) can be described in a conventional manner as:

ittittt

tttFAt

ittiitt

INFOPP

PEeENEN

ISDwiiINAIN

ENGINCY

where: Y is the output during the current timeframe, t , IN is the real investments stock performed byresidents and non-residents, G is the "net" volume of public expenses and EN represents the currentaccount balance ("net" inputs from "net" exports, "net" services provided by residents in favor of non-residents, "net" labor and capital income, as well as unilateral transfers), C is the final consumptiondepending on "marginal inclinations to consumption" of each of the N economical entities whichform the real sector, who, in their turn, depend on inflation anticipations they formulate these groups,

*P represents the anticipated inflation level in the current timeframe for the following timeframeskt , INA represents the direct investment realized in the reference economy by the residents,

investments which depend on ttFA wiitt

;; - the differential between the average cost of borrowedfinancial resources in the local financial secto r, Ai and, respectively, foreign Fi , the dynamics of realaverage salary, w and, respectively, that of the aggregated average productivity of production factors, , ISD represents the foreign direct investments inventory (a "significant" percent - e.g. 10% of aneconomic entity which is already created or the creation of a new such entity - Greenfieldinvestment), e represents the average weighted of local currency exchange rate compared to thecurrencies of the main partner economies and PE is an indicator of external competitivity whichreflects the position of local economic subjects of exportable goods and allows the discrimination insituations in which they are price takers, respectively, price makers, P is the inflation current level andINFO is an indicator of current information which is available and may influence the formation ofinflationist anticipations.

Formula (1) represents a relation to form output by combining final consumption, theinvestments of residents and non -residents, public expenses and operations with real assets ofresidents and non-residents. Formula (2) takes into account t he non-uniformity of "marginalinclinations to consumption", determined by the different inflationist anticipations the variousgroups of economic subjects groups formulate. More precisely, according to these anticipations,

each group realizes a self -classification of resources between current and further consumption.Formula (3) identifies some of the key variables of the investments of residents in the referenceeconomy: the differential of the borrowed financial resources between the local and foreignfinancial sector (financing argument) and, respectively, the real income and "net" productivity ofproduction factors (resources financing argument). At the same time, foreign direct investments are,in this stage of modeling, described by a "black box", the objective of the model being to "solve"the functional relationships which relate the other variables.

Public expenses are described by the formula (4) as being sensitive compared to thedifferential of financial resources costs. We should mention that it 's not only the classification ofpublic debts in "internal" and "external" components which finance the public expenses surplus, butalso its absolute level. It implies as hypothesis the fact that the fiscal authority confronts itself witha "strong" budget restriction, and the supposition of some connections between the allocation ofsome public financial resources and the costs differential associated to them is not justified.

"Net" export depend on the real exchange rate, as well as on the exportable go ods marketconditions. The changes effects in the exchange rate are mediated by the residents' capacity toinfluence these conditions. The more it is reduced, the more rigid are "net" exports compared to theexchange rate.

The way the inflation anticipatio ns are born is described within a model of limitedrationality: when the available information is "imperfect" (incomplete, non -uniformly distributedand costly) the "rational" economical entities form their anticipations by taking into considerationinformation from precedent times, as well as the total amount of current relevant informationavailable. Parameters , reflect the past and current information relative importance, importancewhich changes across time (for example, according to the anticipation errors made in previoustimes).

From the combination of formulas (1) -(6) it results that the social output is determined as informula (7).

According to this formula, the output depends on inflation anticipations, the relative cost ofborrowed financial results, the "net" performance of production factors, the exchange rate and theconditions on the exportable markets goods.

At the same time, at a "micro -economic" level, the output formation depends on thedecisions made by individual econo mic entities. A fertile description environment of these decisionmechanisms is represented by the paradigm of adopting decisions within some multi -periodicoptimization processes of the structure of owned patrimonies.

)PE;EN(eiiG

ISDλ;w;iiINA

INFOβPαco1

1ittitt

More precisely, we can assume that the economic system is formed by din N economicsubjects, each group having its individual utility function. Each group structures its patrimonies by

simultaneous incorporation of M classes of monetary financial assets classes and Q classes ofnon-monetary assets (financial and real). In this structuring process, the incorporation is made bytaking into consideration the budget restriction and looks after "balancing" the reportefficiency/risk associated to a certain chosen patrimony structure, structure whose "optimal" natureis tried to be kept during more patrimony management timeframe in order to minimize structuraladjustment costs. Thus, the optimization problem takes into c onsideration current and anticipatedcosts of non-monetary assets, the current and anticipated available income from labor and capital,as well as the treasury ones during previous ones, as well as efficiencies and risks related to owingcertain types of assets.

The difference between various types of economic subjects are reflected by the particularmanner in which within their individual function the efficiency/risk report is weighted in order totake into consideration the specific "risk profile".

Under these circumstances, the optimization problem is formed by: A logical restriction – the non-negativity restriction and of unitary amount of weights in

the patrimonies structure, by non -monetary assets; A budget restriction – the restriction of classifying acquisition expenses, owing and

using non-monetary assets and, respectively of acquisition, management and use ofavailable information which allow the formation of anticipations related to costs,income, efficiencies and related risks, as well as the expe nses for making "Monetarybalances" (of cash inventory) in view of available income in the current timeframe andtreasured by previous timeframes;

A function-objective, reflecting the purpose of patrimony structure, i.e. of "balancing"the efficiency/risk report;

A mechanism of forming anticipations – which describes the way in which in limitedrationality conditions, the relevant anticipations of economic subjects are formed bytaking into consideration all available information during current and previoustimeframes.

From a formal point of view, the optimization problem can be describes as:

11*β*α*E

10MAXxRR

9YYLLxcc

8tj,1,x0,x

1kttjkkjlk

1iijtijt

where:x is the weight of non-monetary asset i in the patrimony structure during the current timeframe t ,

N is the total number of non-monetary assets in the selection universe, c are the costs related toowing, managing and using non -monetary assets, as well as informing about them, L represent themonetary and "partially monetary" assets with a higher liquidity rate, Y are labor and capitalincome obtained during current times of treasured from previous ones, represent efficienciesassociated to non-monetary assets generated by monetary flows or the market prices variations, Rsub-summed risks of owing and using these assets and * shows the anticipated levels of the assetsinvolved, the anticipations formed during the current t imeframe for l future timeframes.

This description of the optimization problem means that: Each group of economic subjects tries to keep in a systematic manner an "optimum"

structure of the owned patrimony. Thus, if in the current timeframe this structure becomes"sub-optimal" for various reasons a "re -formulation" of the optimization problems willresult, which will generate transactions with monetary and non -monetary assets;

To minimize structural adjustment costs, a structure once sele cted should remain"sustainable" for a certain number of future timeframes;

The optimal level of "monetary balances" (payment methods and liquid exchange meansinventories) is obtained simultaneously with the level of non-monetary assets owing. Inother words, it is considered that the treasuring generated by prudence and specula doesnot have a "residual" nature;

Function-objective means a balance between efficiency and risk, so that the economicagents can be described as neutral to risk. Thus, they are ready to accept a higher risk levelcompared to subjects with maximum aversion towards risk, respectively an inferiorefficiency compared to subjects with maximum indifference towards risk. This hypothesiscan be critical for model viability if this means a simple description of the "averageeconomic subject", but also an autonomous hypothesis about risk social acceptancemechanisms: at aggregated level there are no "casino" economies, nor "pensioners"economies.

A particular aspect is represented by the wa y the concept of "risk" is defined. Thus, inportfolio management post -modern theories, there is a distinction between "risks", respectively"uncertainty". Risk represents the probability of registering a non -favorable result by adoptingan economic decision (including the decision of structuring patrimony). By "unfavorableresult" we understand any inferior result to the "level -target" result, determined in an"objective" manner (according to the results of the previously made decisions, by sector ormacro-economic performances, competition performances, other micro or macro economicvariables - e.g. passive interest rate, inflation rate, the efficiency of a representative amount ofthe capital market) or a "subjective" one. At the same time, uncertainty represents theefficiency deviation probability from its target level, regardless of the direction of thisdeviation.

Thus defined, "uncertainty" is a broader concept than "risk" which it sub -sums, includingthe case in which efficiency is superior to its ta rget level. If economic subjects are consideredpreoccupied by "risk" in the first place, but take into account to a certain level the "uncertainty",then, compared to the decision efficiency level compared to the target -level, three areas of "risk-uncertainty" can be identified:

Area I: the obtained effective decision efficiency is positive, but inferior to the target -level(risk area I);

Area II: the decision efficiency is negative (risk area II); Area III: the decision efficiency is positive, but higher than the target-level.

Area I and II form the "risk area" together. All three areas reflect uncertainty situations. Ofcourse, between the two risk areas, there are some differences: the economic subjects will notperceive the risk manifestation similarly if the decision efficiency is inferior to the target -level, but"positive" with those in which they register a loss as a result of adopting a certain decision.

Under these circumstances, a risk quantification methodology which would take intoaccount the existing distinctions between the three areas could mean certain stages:

1. The construction of a set of "risk values array" jtrin conformity with the following rules:

m3m1m2uc

ηtargetacad,targetη*m3

0ηacad,ηtarget*m2

0ηisηtargetacadηtargetm1*

rjtjjjt

jtjtjjtj

2. Determining a global risk measure for the refe rence timeframe as being the Euclid normof the "risk values array":

131,2,3m,ηtargetm...rrrRt

1kjkjmjt

On the basis of the specified methodology of estimating risk level, the optimization problemcan be re-written:

11*β*α*E

10.1MAXxηtargetmηtargetm

9YYLLxcc

8tj,1,x0,x

1kttjkkjlk

jimjikjim

1iijtijt

We can observe that the variab les included in the optimization problem are susceptible to beinfluenced not only by the characteristics of their formation sectors, but also to the nature,mechanisms and economic policies instruments, applied to the reference economy. Thus, the fiscalpolicy is ready to:

Influence the acquisition cost of non -monetary assets, especially be means of the volumeand structure of indirect taxes;

Influence the anticipations of economic subjects referring to their further income andavailable expense, the level and structure of treasuring and the report efficiency/riskespecially be means of direct taxes;

Influence the anticipations of economic subjects referring to further income and expensesas a result of the transfer and re -classification of social resources realized by means of"net" public expenses;

It is also capable to influence the general optimization problem rising by means of the"credibility bonus" which results from reaching and maintaining fiscal consolidation.

Thus, the optimization problem can be re-written to take into account various types of effectsinduced by the fiscal policy, for example:

11.1.*β*BDα*E

10.2.MAXxI,DηtargetmI,Dηtargetm

xI,DηI,Dη

9.1PEAP,DYPEAP,DY

LLxIcIc

8tj,1,x0,x

1kttjkkkjlk

jimkkjikjim

kkkkjzk

1iijtijt

where, additional to the previous notations:

D is a parameter of direct taxation (such as fiscal pressure calcula ted on the basis of this type oftaxation), I describes indirect taxation, A is associated to social re-distribution of income, PE are"gross" public expenses and BD is the general consolidated budget.

By combining this form of the optimization problem with the income formation mechanismdescribed by formula (7) it results that:

1klk*PE,lk*A,lk*P,lk*Dljzk*Y

1klpk*LpkL

1jkBD,kPE,kA,kP,kD

,lk*I,lk*Dljik*ηjitargetmmkI,kDjikηjitargetmmijkox

1klk*Ilijk*ckIijkc

1k kPE,kA,kP,kDjzkY

From formula (14) it results that:

1k kPE,,kP,kDjzkY

1 1 1lk*PE,lk*A,lk*P,lk*Dljzk*Y

1klpk*LpkL

1j ,kPE,,kP,kD

,lk*I,lk*Dljik*ηjitargetmmkI,kDjikηjitargetmmijkox

1klk*Ilijk*ckIijkc

1 11 11 11 1

.....(15)

Formula (15) allows the outlining of some determining factors of foreign direct investmentsby "extracting" them in the following formula:

)tPE;tEN(etFitAiGtλ;tw;

tFitAiINA

*PE,lk

*Dljzk

Dljik*η

jitarget

1k lk*

Ilijk*

1i tINFOtβitPtαN

1i itco1

According to formula (16), the foreign direct investments flows depend on: Marginal inclinations to consumption of various categories of economical subjects in the

reference economy; Their inflation anticipations, formulated under "imperfect information" conditions; Costs, income and efficiencies, current and anticipated of various categories of non -

monetary assets;

Anticipation errors regarding investments efficiencies in various real and financial non -monetary assets, as well as the "risk profile" of various categories of resident economicsubjects;

The fiscal policy and its defining elements (fiscal pre ssure associated to various types oftaxations and public expenses);

The costs differential of borrowed financial resources; Productivity and associated costs of production factors; Real exchange rate.

More precisely:

:C0 The reduction of marginal inclination for consumption of the residents/reducing theanticipated level of inflation tensions, increase of efficiency and of current and anticipated "net"income of non-monetary assets, the reduction of anticipation errors level regarding the efficiency ofvarious types of investments and the "aversion to risk", the fiscal policy relaxation, the reduction ofthe differential of borrowed financial resources cost, the increase of "net" productivity ofproduction factors and the depreciation of lo cal currency, contribute in an non -uniform manner tothe increase of foreign direct investments in the reference economy".

3. AN EMPIRIC ANALYSIS – EU 25 CASE

Testing the impact of foreign direct investments over economic growth (1) can be done inthe analytical environment described in the previous section based on a "two steps" testing strategy:1) testing existing connections between the dynamics of some "critical" macro -economic variablesfor economic growth and, respectively, 2) testing the impact o f net inflows of foreign financialresources, of technology, expertise and cultural paradigm over these variables.1) The list of variables associated to economic growth can include:

Variables formed on the labor market (unemployment rate, nominal/real salary rate);Variables formed in the economy real sector (inflation rate); Institutional variables;Synthetic variables for external of an "open economy" (for example the inflation rate in

economic systems which represents major business partners for the refere nce economy).2) The analysis of the impact of foreign direct investment over these macro -variables concretizes

an analytical measure which targets the identification of some transmission channels of level,structures and foreign investments characteristics i n the real economy sector over internaloutput.

We need to observe the fact that this type of "two steps" approach has as central purpose thefact that the general advanced analytical environment cannot provide a sufficiently strongargumentation to take into consideration some direct effects of foreign direct investments overoutput. More precisely, a method cannot be provided to separate these effects from the accordingeffects of local foreign investments (in other words, the objection according to which foreign directinvestment have an eviction compared to the internal ones; providing an argumentation to focalizeon the transfer of information goods and on the local "cultural paradigm contamination" exceeds thepurpose of this analysis). Evidently we can use the classical "black box" method: we can argue thatthere is not the possibility of a priori discrimination between quantitative and qualitative of foreignand local investments and that this is mainly an empiric problem. Such solution is not satisfactoryfor building an explaining environment and, moreover, if it has certain viability for the quantitativeeffects is not sustainable in the existence of qualitative effects.

To illustrate the potential of such approach, we performed an analysis on the E U 25 case forthe timeframe 2000-2007.

The vectors of the endogen variables involved can be shown from a formal point of view asfollows:

itittit

itttittit

where: itY 1 represents the investment dynamics of internal output in the econom ic system i in the

timeframe t ,1

1X represents hexogen "market" selected to explain this dynamics,2

1X the institutional

aspects of the economic environment evolution, itY2 is an endogen vector of selected explicative

variables and itISD represent "net" flows of FDI.

In conformity with the obtained results, which are not reported here, but available uponauthors request:

Making an adjustment on the labor ma rket contributes to accelerating the social outputdynamics;

Ensuring financial stability by ensuring prices stability measured on the basis of theHarmonized Index of Consumption prices has a favorable impact over economic growth;

The increase of the inflation rate in the main partner economies leads to increasingexternal competitivity of real exportable external assets produced in the EuropeanUnion;

The factors with the most ample explaining potential are associated to financial stabilityand labor market adjustments;

"Direct" impact exercised by foreign direct investments over economic growth is non -uniform and important discrepancies in case of "old" member and, respectively "new" ofthe Union. Thus, the results show that this impact has the clear mark and is significantlymore pronounced for new members compared to some of the "nucleus economies".Also:

The non-uniformity of effects of FDI over the determining factors of economic growthcharacterize the significance level and can be shown for each of t hese;

The difference of induced effects can be maintained in case of testing these connectionsbetween new and old state members of the Union.

4. FINAL ASPECTS

The results of this study over the determinants of the exercised effects of FDI can be thussynthesized:

At the basis of these investments there is a series of variables which characterized thehost-economy from a structural, functional, institutional and compartmental way,variables which are located in the real and nominal sector, in the global economic policyand within the specific cultural paradigm;

The sector impact of FDI in Romania is not equal and marks an insufficient level ofconvergence. Also, it can be observed a manifestation of a certain modification of theinvestment pattern without marking a clear orientation of the politics and mechanisms toattract and stabilize these investments;

The direct and indirect effects of FDI at the European Union level are non -uniform witha relatively net differentiation between old and new state membe rs as an expression ofthe unequal degree of economical and financial integration.

The relevance of these conclusions with a partially inevitable nature is dependant on theanalytical environment viability. But, taking into consideration the reserves that can be formulatedover one or another component of the methodology, we can conclude that, at least on a "long -term"

the FDI impact over the host-economy is critically modulated by the market, institutions, mechanismsand behaviors quality characterizing it .

NOTES:

(1) We use "economic growth" and not "durable economic development" because the construction of ananalytical environment to take into consideration this last concept leads to an additional complication of providing adescription of the mechanisms which ensure the persistence of the FDI induced effects .

REFERENCES

1. Adler,N.,1986, International Dimensions of Organizational Behavior, Kent PublishingCompany;

2. Bank of International Settlements, Working Group of Committee on the Global FinancialSystem, 2004, Foreign direct investment in the financial sector of emerging marketeconomies , Bank of International Settlements Publications;

3. Beck N., Katz J.N., 1995, What to Do (and Not to Do) With Time -series Cross-sectionData, American Political Science Review, 89(3), 634-647;

4. Campos N.F., Kinoshita Y., 2008, Foreign Direct Investment and Structural Reforms:Evidence from Eastern Europe and Latin America, IMF Working Paper Series, WP/08/26;

5. Cozzi, G. ,1998, Culture as a Bubble, Journal of Political Ec onomy, vol. 106, no.2: 376-394

6. Gachino G., 2007, Technological spillovers from multinational presence: towards aconceptual framework, United Nations University UNU-MERIT, Working Paper Series,2007-017;

7. Girma S.,GőRG H., 2005, Foreign direct investment,spillovers and absorptivecapacity:evidence from quantile regressions, Deutsche Bundesbank, Discussion PaperSeries1:EconomicStudies No13/2005;

8. Talpoş, I. & Dima, B. & Mutaşcu, M. & Enache, C. 2005, Agency, associations andculture: a tale of state and soc iety, Public Choice Society Annual Meeting, New Orleans,March 10-13.;

9. UNESCO, 1992, Universal Declaration on Cultural Diversity10. Zaman G., Vasile V., 2006, Aspecte ale eficienţei macroeconomice a investiiilor străine

directe în România , Revista de Economi e Teoretică şi Aplicată, Supliment „România înUniunea Europeană. Potenţialul de convergenţă”.

THE NATION STATE IN THE CONTEXT OF THE INTERNATIONAL MARKETGLOBALIZATION

Lecturer PhD. Student Carmen BOGHEANcarmenb@seap.usv.ro

Lecturer PhD. Mihai POPESCUmihaip@seap.usv.ro

Lecturer PhD. Mariana LUPANmarianal@seap.usv.ro

Lecturer PhD. Student Florin BOGHEANFaculty of Economics and Public Administration

“Ştefan cel Mare” University of Suceava, Romaniaflorinb@seap.usv.ro

Abstract:The impersonal forces of the world markets, integrated throughout the post -war period rather by the private

companies from the finances, industry and trade, than by the common decisions of the governments, are now strongerthan the states to which the fundamental political authority on society and economy is supposed to belong.

The failure of the modernist theories on the decline of the nation state may have been engendered by theirrefusal to make a connection between the consequences of the modernity and the part played by the cultural and ethnicbonds that appeared in the pre -modern periods. These bonds, as well as the ethnical identities, can be found mainly inthe local and regional communities, in the walks of life lying at the basis of the society that represented the core of thenational mobilisation.

An attempt to understand globalization and the emerging nationalisms must take into account both themodernisation process, and the pre -modern heritages, that constitute the basis of many national states.

Key words: globalization, the nation state, the state power and territoriality, centres of power, political

authority

JEL Classification: F52, H76

I. INTRODUCTION

Globalization represents that natural tendency (?) that tends to undo the traditionaleconomic, political and social ties, based on the authoritative, hierarchical state and to replace themwith a horizontal, flexible and unbounded network type structure, coordinated at the top by asupranational power. The globalization is a vast process of surmounting the boundaries appearedthroughout history, synonymous of the erosion of the national state sovereignty, which presentsitself as a „detachment” of the free market from de mor al norms and the institutionalised boundsbetween the societies.

The elements contributing to the globalization are as follows: technological changes, moreand more reduced costs in transportation and communication, trade amplification and the financialinterdependence between the countries. We have reassessed the labelling as "natural" of theglobalisation. Actually, this process is utterly anti -natural. It implies the authority dissolution at ahigh level of socio-political organisation, creates libertie s the human being has never known before,favours the disappearance of the cultural historical traits of different nations, leading thus to a massculture.

II. GLOBALIZATION AND DISOLUTION THE NATION - STATE

At an individual level, globalization means ge neralisation, standardization, being set freefrom the traditional restrictions (of a moral type), the effect, on the whole, being that of dissolution.

At an economic level, globalization favours the appearance of huge monopolies, possibly ofoligopolies. This leads to the disappearance of the possibility to protect the market locally (at the

same time with the disappearance of the interstate boundaries), so chances that new players willappear on the market are being reduced. Globalization favours the alr eady existent companies onthe market and gives them the possibility to improve their position. Also, the globalization favoursthe trade development, the concentration of the power within the multinational corporations’ ranks,the division of the world regions on specialized areas of industrial or agricultural production.

Analyzing the globalization necessity, from the territorial boundaries viewpoint, we see thatthe sovereignty, the state power and territoriality are, nowadays, complexly interrelated, t hrough theappearance of new non-territorial forms of economic and political organisation in the global domain– multinational corporations, international agents, social transnational movements -, that oblige thenation state to be much more dynamic in its relations to the exterior world, to yield some of itsattributes as the core or main form of governing and authority in the world.[6]

At a political level, the changes induced by the globalization are highly interesting. Theappearance of a "top-power" and the disappearance, in the long run, of the power represented by thenational governs may lead to a very effective control on the citizens ("nowhere to hide").

Legitimised by the objective need of development and democracy, and also by that ofjustification of the changes wished at the political and economical level, of portrayal of the politicaltransformations, the globalisation is systematised by a complex process. The interdependencywithin leads to enormous implications, obliging the states to coope rate in order to reach theirpurposes and to serve their interests. [5]

In most of the cases, the states preserve their national sovereign character; yet, the state isincreasingly seen as being too small for the big problems and too large for the small problems.Under these circumstances, the creation of new forms of state organisation and of new structures ofsuprastatal power becomes obligatory.

One of the biggest fears regarding the integration of the states in the international structuresis represented by the loss of sovereignty. If in the past the states were once “the masters” of themarket, now the markets are those which, in many essential problems, are the masters of the states’governments. The decline of the state authority reflects itself i n an increasing diffusion of authoritytowards other institutions and associations, towards regional organisms, as well as in an increasingasymmetry between the big states, with structural power, and the weaker states, with no suchpower.

After September the 11th 2001, we have noticed that the globalization favours theappearance and the proliferation of asymmetric threats ands risks whose negative effects are beingsensed in countries all over the continents. The terrorism becomes, thus, a global threat. Ifglobalization annuls the possibility of a war between the big powers, the terrorism, the organisedcrime and the proliferation of the weapons of mass destruction, the ethnical and religious extremismlie at the basis of the armed conflicts. Thus, the s tates are obliged to respond today to these globalprovocations (pollution, terrorism, informational war, etc.), which determines an intensification ofthe cooperation based on principles of subsidiary –at a regional level, for the time being.

III. THE CHANGE IN THE BALANCE STATE POWER – MARKET

In the past, the state, exclusively political, did not know how to interpret the signals sent bythe market and made serious mistakes. At present, the market, exclusively economic, no longerknows how to perceive the signals sent by the state, which leads to just as serious errors. There is anew connection between economy and politics, imposed by the globalisation. Through theinternationalisation, the links between the states multiply, through the globalization, t he verticalpower of the state is progressively replaced by the horizontal power of the market, strengthened bythe development of research, science and technology. Unlike the internationalisation, theglobalisation reduces the role of the nation states, b ringing along an increase in the level offunctional integration of a variety of activities. We are, indeed, witnesses to a growing market force,the market appearing to have regained its original fierceness. Throughout a century and a half,within the framework of the nation state, the market could be “domesticated”, civilised. Nowadays,

the globalization leads to the exceeding of the nation state boundaries; thus, the market is freed,little by little, from the political control, it becomes unstable, de -territorialised, while the politicalaspect remains engrained in the local level. On the grounds of the premise of the development ofthe new technologies, there have been created gaps between the political sector and the economicone, as well as between the political time and the economic one. While the economic sectors tend tobecome integrated, the political ones have a tendency towards fragmentation – the appearance ofnew countries on the map of the world, the phenomenon of the emerging local entities, towns,regions, which impose themselves as autonomous actors and as decisional centres. The politicalspaces become narrower and narrower, whereas the economic spaces, due to the integrationistprocesses, are vaster and vaster. The fragmentation of the po litical sector risks strengthening theeconomic power even more. This phenomenon penalizes the political power of the states.

The breakdown between the political space and the economic one is accompanied by thebreakdown between the political time and the economic one. The political time witnesses aslowdown, due to the fact that the state must consult the identity and pressure groups, in the alreadycomplex decisional process, which requires a lot of time. Contrary to this slowdown tendency of thepolitical time, the economic one accelerates. The development of technologies and the deregulationof the markets accelerate the innovations and reduce the cycle of life of the products. The bestexample is the software industry. This second breakdown between the political time and theeconomic one triggers, as a result, the weakening of the political sector.

In order to avoid the transformation of the market mechanisms into a jungle of thederegulation, it is mandatory to redefine the political activity and the ro le of the nation state. Whatthe state did in the past for the economy, and implicitly for the people, by creating the nationalmarkets, must be achieved, at present, by the political sector, which should become the vigilant anddiligent guardian of the human finality of the economic activity. It is not a choice between thenational sovereignty and its abandonment, for it is not a question of strengthening the sovereigntyprinciple; it is the concept of governing and the concept of quality of the state that need redefining.The nation states will not disappear, they will be redefined in terms of their role and even of theirgeographical boundaries, in accordance with the way in which distinct political identities intersect.For this adjustment to the globali zation, it is necessary to provide the nations with necessary tools:stronger political, economic, financial, social, educational and cultural institutions. Theglobalization must accept the “reinvented” political power to ensure it a person -centred orientation.This is a historic task: inventing a political control form for the international market, at a differentlevel from the national one. The entire process will last several generations and will be verydifficult, if not even impossible, the big concer n being related to the absence or the insufficiency ofthe control in this time interval. It will be difficult to surmount this period of time, for anycomeback will be made impossible and any step forward taken in a hurry, perilous. All this willcontribute, at first, to the diminishing of the political decisional system.

The study of the connection between the globalization and the reconstruction or thereconfiguration of the political, economic, cultural, military identities, as well as those relating toalliances, multinational identities and centres of power is extremely illustrative for the impact ofthis vast process in a globalizing world.

The development of the global networks determines a state interdependence in certainindustries. The capital markets are undergoing the process of globalization. There appear globalstrategic alliances, and also new actors that wish to become global competitors. The new political,economic and cultural identities lead to an increasing awareness of the world as a who le. Theanalysts accept, nowadays, a multicentre world, but they are also considering the postmodernistnon-centric variant.

We go deeper into a universal territory of the mankind, developed at a political, economicand socio-cultural level, by means of the democratisation of politics, the liberalisation of economyand the universalisation of culture. A global culture, with an imprecisely defined identity,artificially made. It may be built, but it will preserve its “ artificial condition “, the communitie s in

themselves, the nation-states or the ethnic groups, opposing themselves, in an active spirit ofidentity, to the dissemination of a global culture and identity.

The new global economic identity - resulted from the convergence of the values, of theinstitutions and of the national economic policies, that is, the convergence of the national economicsystems towards a unique model, proves the significant homogeneity of the national economic andsocial institutions. This makes the future of the global eco nomy itself appear rather uncertain, seenthrough the predicted instability caused by the economic regionalism, the financial instability andtrade protectionism, as well as by the lack of political foundations for a unified and stable worldeconomy. As for the future political identity of the world, this would be structured, following agradual evolution of the power, as „a global community with convergent interests, formalised, withsupranational arrangements which would undertake the security prerogative s of the nationalstates”.[1]. For this, it would take the USA contribution, the only post cold war superpower that canrepresent „the catalyst either for a global community or for global chaos”

There are a few paradoxes regarding the reversing of the bal ance state power – market. [7]The first one, that hides, to many people, the general decline of the state power, is the fact

that the state intervention as well as the state agents’ intervention in the citizen’s daily life seems tobe increasing. For the space of one’s life where the citizen used to be free to coordinate his life andactivities, the governments are now promulgating laws, founding institutions and planningauthorities. This generates the impression that there is only a small part (getting smaller andsmaller) of our daily life that remains immune to the activities and decisions of the governmentalofficialdom. The power is less efficient regarding the following fundamental issues the market itselfhas never been able to deal with: protectio n against violence, stable currency, infrastructure, lawsystem etc. The need for any kind of political authority, legitimized either by means of coerciveforce, or by means of popular consensus, or rather by means of a combination between the two, isthe fundamental reason for the existence of the state. In what concerns the fundamental problems,the states often become deficient. The government trivialization does not make its authority morerespected; on the contrary it is not rare that the reverse is tr ue.

The second paradox is that, while the existent state governments suffer from this progressiveloss of their real authority, the line of societies wishing to have their own state increases. But thisstatality, once gained, does not seem to provide real control over that particular kind of society ornature of the economy they wished for. We can thus conclude that the desire for ethnical andcultural autonomy is universal; what is not universal are the means of satisfying this desire in anintegrated world free market. Many, maybe most of the societies must content themselves with themere possession of autonomy that is with a statality facade.

IV. GLOBALIZATION OR MARGINALISATION OF THE NATION STATE?

The nation state globalization and marginalisation ar e phenomena that evolve concurrently.To support this statement, we can outline three main ideas. [8]. First of all, the nature of thecompetition between the states in the international system has been modified from the competitionfor territory, to the competition for markets. Secondly, the alteration of the form of the competitionbetween the states also modified its nature, the trade and financial policies becoming moreimportant than the external ones and those of security . Finally, it is argued that “ the state authorityon the economy and on the society passes through a period of diffusion, after having become, fortwo or three centuries, more and more centralised in the state institution”. The power transfer in theglobal arena is seen from three diff erent viewpoints: from the weak states to the powerful states;from the states to the markets, best represented by the transnational companies; and finally, part ofthis power “evaporates”.

The change in the balance of power is seen first of all through tw o factors:- impact of the technological innovations , promoted by corporations, that respects the

following trends: the American companies’ domination from the point of view of the income fromthe fees obtained through redundancy; the concentration of the income resulted from the

technological innovations in the developed countries; the technological flow to the developingcountries; maintenance of the qualitative gap between the flow sheets towards the developedcountries compared to the ones towards the developing ones.

- cost of the new technologies , that only the corporations will be able to afford. Not only dothe latter exercise their power of influence on the authority structure, but, moreover, even createnew power structures and modify the existing ones.

Strange’s hypothesis is argued against by Cable, who states that “the nation state has indeedyielded its sovereignty to the regional and global institutions and to the markets, but achieved, at thesame time, new control areas with a view to promot e national competitiveness” [8].

One of the most important analyses is done by Robert Cox who supports the idea of“internationalisation” of the state instead of its retreat – not destroying but altering it. [4]. Briefly,this author states that the state is undergoing a process of transformation from a guardian against theglobalization intrusion, into a mediator, a negotiator of the global political economy. In order toplay this part, the states must reconfigure their governing structures, laying more em phasis onfinance and trade in the process of economic regulation, rather than on the domain of industry andlabour. The state role becomes that of bringing support to the national economy in order to adapt itto the world economy requests. The sustained i dea is that of a globalisation “authorised” by thestate and surveyed by the governmental actors, being the optimal solution for the restructuring ofthe relations between capital and labour and for the management of the crisis situations in thecapitalist society.

Yet, the multilateralism remains not only a basic principle of global economy and politics,but has become a part of the daily reality regarding the elaboration of the sectorial policies.

The nature of statality in the international arena is sub ject to the inevitable transfer ofauthority, which does not mean the marginalization of the national states or governments, but onlytheir approach from a different viewpoint, as parts of a larger set of networks in the attempt to attaincertain common objectives. The globalization has deeply transformed each state’s governingcapacity. The new state of the world imposes redefining the nation -state.

The nation-state has constituted, in the last 350 years, the key -institution around which hasrevolved the unity of the economic, political and cultural life of the peoples. The nation -state, withthe territory, people and money, with its government, police, army and administration, is the spacewhere the rules of the economic and social life game are being defi ned. Or, the nation-state in itselfis the main victim of the globalisation process. The pillars of the state in the Westphalian system areundermined by the contemporary society. The governments lose control over the globaldevelopment.

The state sovereignty is eroded on all directions: top -down, bottom-up and laterally.- top-down – by the multiple networks that can no longer be controlled by the traditional

state: the financial, air, information (the internet) networks. In cyberspace there is no national lawor jurisdictition. The capacity of the states to fight against infringement of the protection of theprivate life, of copy-right or of the security of the payment methods on the internet is extremelylimited. The internet can easily become a fiscal pa radise where all the transactions can be made in avirtual currency, outside any taxes. The debates held at an international level concerning theseissues are, for the time being, far from outlining a solution;

- bottom-up – through the emancipation of the local communities;- laterally – by the growth of power of the new actors: multinational companies, NGOs, etc.Nevertheless, the nation - state, although in difficulty, has not integrally worn out its

resources. We are witnessing an increase in the number of states, the globalisation beingaccompanied by an increased fragmentation of the world: there were 46 states at the beginning ofthe century. Today, the world is organized politically into nearly 200 nation states. Such nationsappear very durable and we still to equate modern societies with nation - states. [3]

V. CONCLUSION

The nation - state can no longer claim to ensure the regulation of an economy which haslargely become global. In order to surmount this distance between a globalized economy and themainly national remaining institutions, it is necessary to create a new environment, an environmentof an efficient “governing”. It takes a totally new vision which means leaving behind the affiliationto old traditional political schemes.

The global economy imposes a new reflection on the act of “governing”, which liessomewhere between the obsolete hypothesis of the “status quo” and the utopia of the “global state”.This new form of governing refers to a system of management of the interdependen cies meant toenable the economy to overcome the contradictions engendered by it. This cannot be a merereproduction of the commonly known regulation ways ; on the contrary, it must take shape from aninterweaving between self -regulation and public regulat ion, a process that, in order to be legitimateand efficient, must involve new actors. The new form of governing must succeed in reconcilinginnumerable regulation levels: the local one, the national one, the regional one and, last but notleast, the international one.

REFERENCES

1. Brzezinski, Z., (2004) The choice: Global domination or global leadership , PoliticalReview no.45

2. Cable, V., (2001), The Diminished Nation-State: A Study în the Loss of Economic Power ,Daedal us, Journal of the American Academy of Arts and Sciences,

3. Chamsy, O., & Hayden, P., (2006), Critical Theories of Globalization, Palgrave Macmillan,New York, p.8

4. Cox, R., (2002), Approaches to World Order , Cambridge University Press,5. Gilpin. R., (2004), The World Economy in the XXI century . The Challenge of the Global

Capitalism, Editura Polirom, p.246. Popa, V., Implicaţiile globalizării asupra securităţii naţionale , Editura Universităţii

Naţionale de Apărare Carol I, Bucureşti, 2005, p.97. Strange, S., (2002), Retragerea statului. Difuziunea puterii în economia mondială , Editura

Trei, Bucureşti, p.208. Strange, S., (1995), The Defective State, Daedal us, Journal of the American Academy of

Arts and Sciences, 1995

THE FINANCING POLICY ON THE REAL ESTATE MARKET IN ROMANIA

Lecturer PhD. Oana Mihaela VĂSIOIUEcological University from Bucharest, Romania

oana_vasioiu@yahoo.com

Abstract:

Generally, the market notion designates a system of specific activities that are proceeding after some goodshave been projected from the production sphere and bef ore these overtake the consuming sphere. Also, the market canbe considerate as the meeting place between the buyers demand and the producers offer. In fact, on the market it isverifying, the concordance or the disparity between the volume, structure and the production quality (offer) with thelevel, structure and the consume quality (solvent demand). A real estate market is represented by a group of persons orfirms that come into contact one with each other with the purpose to make real estate transactio ns. The actors from themarket can be the buyers, the sellers, the renters, the creditors, the borrowers, the entrepreneurs, the constructors, theadministrators, the investors and the mediates. A real estate market is made by the market actors signed in real estatetransactions. The decisions regarding the allocation of the land to the different real estates destinations (farms, houses,offices, factories, shops, schools, hotels, football fields, parking places etc.), the number of the immovable that must bebuilt and of what type, the prices range to that the buildings and terrains are proceeded – are adopted on the real estatemarket. A market represent the space (as geographical delimitation and/or according to the good and servicescharacteristics) wherein are meeting buyers and sellers (certain or potentials) to make transactions, to a price, that resultfrom the demand confrontation with the goods or services offer. What individualizes the transactions with the real estateproprieties is the fact that this aren’t developing on a single market. The real estate market is developed, in fact, as twodifferent markets: the market for physical spaces and the market for financial active.

Keywords: real estate market, funding, investments, mortgage, real est ate property.

INTRODUCTION

The real estate markets don’t have the same characteristics as the more effectives markets ofother goods or services. The efficiency of one market is based on the hypothesis regarding thebuyers and sellers behavior and on the characteristics of proceeded products. Goods or services onan effective market are essentially homogenous, can be replaced one with another (fungible goods).Over against, each real estate lot id unique and the emplacement i s fixed.

On an efficient market there are a big number of buyers and sellers, which create a freemarket, competitive and none of these participants, become a market segment big enough to have adirect and quantifiable influence on the price. On real esta te markets, in the same time, can actionfew sellers and buyers inside a price interval and to an emplacement or mostly a compact area. Therelatively high value of the real estate properties needs big buying capacity and therefore the realestate markets are very sensitive to the change of salary level, to the establishment of venues and inproportion to work places. On an efficient market, the prices are relatively uniform, stabile and low.They represent most of the times primordial criteria in the buyin g or selling decisions, because atsome price range, the quality tend to be the same. On the real estate markets, the prices arerelatively high and the buying decisions are influenced by the financing type offered, the creditvolume that can be obtained, interests, advance payment amount, returning period.

FINANCING SOURCES FOR BUYING/CONSTRUCTING OF REAL ESTATES

Not any financing source is profitable from all points of view, even if this is perfect legally.An extremely important variable is the fi nancing cost. In a economy that functions properly, alsothe loaned (the client) and also the lender (the bank) has to survive and to develop, from theconfrontation of their points of view resulting the costs level. For financing the real estatesproperties, it is possible to appeal for several sources, each of them with their own advantages anddisadvantages: (Dragotă, V., Ţâţu, L. and others, 2005)

- own sources, that can be obtained from family and friends (as while as for these isn’tperceived a cost as interest or other advantages, fixed “a priori”, and for the payment isn’t set aclear refund term, features that would transform, more or less, the characteristics of the loan fromfriends into bank credit);

- loans from banks or other able financial institutions.The own financial sources have an advantage from the point of view of their constancy, and

also for the fact that there exist a full liberty regarding the manner that it can be used. On the otherhand, must keep in view an important aspect: buying a real estate can be seen as an investment. Thegains that brings this investment (from the rents and f avorable price variations of the real estateproperties) should be interpreted as an opportunity cost, as a “lost chance” cost, respective of thegains that would have been possible if, instead buying this property, it would had been invested inother financial instruments (or, it would had been just consumed).

For the loaned sources the cost can be much more easily determined, on the base of theinterest rate inscribed in the contract. The bank has a higher certitude regarding the creditrepayment, but the client will have to adapt himself to the contractual clauses that refer essentiallyto the pay on time of the expired rates, if not intervening some measures with punitive character,like pulling out for sale the real estate properties bought with bank credit. From the theoretical pointof view, because the creditor is more protected against risks, the cost of financing sourcesborrowed, should be inferior to the own financing sources cost.

The decision for the ponders in which we’re financing on th e own sources account,respective borrowed, must regard of the risks associated tot the indebtness, risks which cancompensate, or even cancel, its positive effects. For example, a rate of indebtness that is too large(up the repayment capacity of the owne r) or some payment delays registered in past by the ownerconstitute alarm signals for banks, that won’t agree to give new loans or, will increase the solicitedinterest rate level, in the same time with the risks amplification.

A person can be forced to contract a credit, by a certain amount, which should cover thevalue of the house he want to buy or it can choose for different values of the credit, as to use onlypartially his own savings. In the last situation, for financing, the person can use h is own sources andborrowed sources in different ponders. To the basis of choosing a certain financing structure mustbe taken into consideration the costs of each source individually, also the direct visible ones (forexample, in the case of own sources, the cost can be given by the impossibility of using this moneyin other purpose, so by the renunciation to some material or spiritual benefits).

THE LENDING POLICY OF THE REAL ESTATE PROPERTIES IN ROMANIA

The credit is the operation within it takes in directly control resources, in exchange of oneassurance of future returning, normally accompanied by the payment of an interest that remuneratesthe lender. In the social reproduction frame emerge, on the one hand, supplementary necessities ofcapital, which don’t have other hold security possibilities, but with credit, and, on the other hand,available capital resources. In this way, the available resources (back account availabilities) areengaged within credit in order to satisfy the capital needs. The creditor is the banking society whomhires the own resources, the available ones in bank accounts and the loaned ones and otherresources for financing the capital necessities, and the debtor is represented by the population, theeconomic agents having cap ital necessities, bank credit beneficiary. (Ciumaş, C. and others, 2006)

The real estate market development in Romania depends very much by the buying capacityof the population and, in the same time, the financial facilities which this market can offer at onemoment. The main problems that is confronting with this market are the following:

- the financing conditions imposed by banks, as well as other institutions that offer realestate credits, that limit or make even impossible the credit access of the persons withsmall salaries;

- the insufficient informing of the Romanian citizens regarding the investment andeconomizing, but also the question amount relatively high of these toward some financialinstitutions;

- the insufficient development o f the economize-investment culture of the population fromRomania. For example, in 2003, between 60 -70% from the Romanian citizens didn’t hadany relation with the bank system, and only 59.300 from the Romanians had assumed theactive investor role on the mutual funds market. Meanwhile, there has been registeredprogresses in this direction, whereon a special contribution had the changes supervened inthe payment modality within the bank cards of the salaries and other remuneration forms,what “forced” the population to familiarize with this payment system and, generally, toline un more with the bank system; the legislative frame, that can restrict or, contrary, canfacilitate the access to real estate credit, with a direct impact on the development processof the real estate market in Romania. (Dragotă, V. and others, 2003)

In the purpose of facilitating a fast access of the citizens to the mortgage credits, had startedto function in Romania mortgage societies, whom want to back up the acquisition, renovation, andhouses construction. The mortgage societies try to attract natural and juridical persons interested toobtain this type of credits, mainly with the fact that they present themselves as organisms thatassures fast access to the financial sources because:

- doesn’t solicit the existence o f some work contract of the solicitant made on anundetermined period, as long as the venues are constants;

- fundament the financial decision on the base of analyzing case by case the creditapplications, and not on a scoring credit base, what assures a per sonalization of creditsreceived by clients and facilitates the access to this type of resources of a much biggernumber of persons that, even if they don’t present a grown risk of un -returning credit,are eliminated within the score system applied by the creditor;

- doesn’t impose minimal age conditions and any minimal value of the credit.The main source for financing the acquisitions or the houses modernizations in Romania, in

this moment, remains the real estate/mortgage bank credit. The conditions regarding the allocationof these credits by the Romanian banks can be found or on the websites of the banks from Romania,or on the websites of the publications that concern this domain. The characteristics of one real estatecredit are: the destination, the pu rpose which for is solicited; the currency in which is contracted thecredit; the value of the credit; the advance payment solicited; the interest rate; the commissions takeby the bank; penalties; minimum venue solicited to the client; guaranties solicite d; endorsers;insurance policy solicited; requests regarding the evaluation report of the building; age conditionsand stability of the work place of the client.

a) The purpose for the credit contraction. The destinations of the given credits can be:buying buildings, houses construction, as well as their renovation. Some banks assure financing forall three types of operations, while other back up only the building acquisition.

b) The currency in which is expressed the credit. The real estate credits can be expressed inlei, euro or dollars, some banks assuring the access to all three variants, as other ones reduce thepossibilities to one or two of the currencies. Choosing between different currencies in which it canbe expressed the credit must be made according to the rate of exchange evolution of the nationalcurrency against the foreign currency, the currency in which is made the payment to the seller of thereal estate property, but also according to the currency in which is expressed the salary take n by theclient.

c) The credit value. Some banks practice also minimal values, and maximum limit of thecredit, other impose only one of these restrictions, according to some criteria, like the age of thesolicitant, the value of the guaranties, the exis tence of some co-payers etc.

d) The credit duration. The maxim term for giving a credit is different according to thepurpose of solicitation of the credit, usually between 5 and 30 years from the real estate acquisition,respective between 5 and 20 years in the case of the credits for renovation. As long as the credit

duration is larger, the payment rates will be smaller, but the incertitude regarding the venuerealization from where are paid these rates will be larger.

e) The advance payment solicited. T he majority of the banks solicit a minimal advancepayment, according to B.N.R. norms, which is varying between 10% and 30% from the total creditamount. In March 2007, The Rule regarding credit risk limitation of the credits for natural persons,adopted by B.N.R., has eliminated the indispensability of assuring the credit advance, abrogatingthe 10/2005 and 20/2006 Norms, in which the credit institutions were obligated to solicit anadvance payment of at least 25% for the credit of real estate investments.

f) The interest rate. As regarding the interest solicited by banks, there is a diversity of offers,both related to it’s level, the moment of perception, and regarding the applied system (determinateor variable). There exist also advantages and limits f or both base systems regarding the interest rate,determinate or variable.

g) Applied commissions. In the category of costs involved by obtaining a real estate bankcredit must take into consideration also the commissions taken for different services made bybanks: credit file analysis, credit administration/instrumentation. These are expressed in absoluteamounts or in percents applied on the credit value.

h) Penalties for delay returning of the expiration rate. To discourage the delay tendency inthe payment of the expiration rates, banks applies penalties for the period in which wasn’t paid theamount due, usually expressed according to the level of the overdue amount. Some banks applypenalties for advance returning of the credit, usually applied to t he value of the amount of moneyreturned over the monthly payment rate.

i) The minimum venue solicited to the client. Banks practice different systems for takinginto consideration the minimum solicited venue. In some cases there is the possibility to take intoconsideration also the cumulated venues of the family members.

j) Real estate guarantee. Closing an assurance policy is obligatory, but there existdifferences regarding the methods wherethrough this is made: or the client assures the house to theassurance society chosen by him, or the assurance cost is included in the interest and is paid by thebank, this being realized only to assurance societies approved by the bank, being declared as freeassurance (which the client doesn’t pay it independently , but it exist in the credit cost).

k) The assurance in case of decease of the client. Some banks impose the closing of oneextra assurance, inaptly named “lively”, within the bank is protecting against the decease risk of thesolicitant, what makes to be about a decease assurance. In some cases, banks are much moreprudent, asking also assurance for permanent/temporary invalidity. (Dragotă, V., Ţâţu, L. andothers, 2005)

l) The evaluation of the acquisition property. The evaluation is made my a bank evaluator orapproved by the bank, but there are also cases (for small value credits) when the bank doesn’timpose the evaluation or accept also an internal evaluation.

m) The age and the credit solicitant occupation. It is used the stabilization of the minimallimit of the credit solicitant age, of the maximum age or both of them. Sometimes it is alsoimportant the type of activity ta ken by the debtor. Also, it is possible to impose certain stability tothe work place, directly or limiting the number of work places changed in the last few years.

n) Endorsers. In some cases, banks can solicit the existence of some endorsers to give thecredit or can offer, as a facility, the possibility to cover the percent of over 100% from the guarantyvalue with the real estate goods value that the endorsers have. In Romania, the banks consult a database administrated by B.N.R., called The Station of Bank Risks, to verify the declarations of thenatural persons, potential clients and their endorsers. In this data base are inscribed all the personsthat had solicited and received credits from the banks from Romania, existing the possibility toverify the way in which these had accomplished their obligations until that moment.

o) The mortgage on the immovable. All real estate credits that are given, concern mortgageon the bought immovable, which in some cases must cover over 100% from the credit va lue (thecredit plus the interest for a certain time period). The mortgage is a real claim on the real estatesaffected on the paying of one obligation, that doesn’t involve the dispossession by the good brought

in guaranty period of that that close it. Th e bank practices the conventional mortgage, whichsupposes the volition accord of the parts. As the credit develops, even if it was paid a part of thedebt, the mortgage will still exist on the entire real estate. (Ciumaş, C. and others, 2006)

THE APPLICABLE LEGISLATION REGARDING THE MORTGAGE CREDIT

The mortgage credit is settled by the Law no. 190/1999 regarding the mortgage credit forreal estate investments, O.U.G. no. 200/2002 regarding the mortgage credit societies, O.U.G. no.201/2002for the modifying the Law no. 190/1999, the Law no. 541/2002 regarding the saving andlending in collective system for the locative domain and the Law no. 34/2006 for the modificationand for completing the Law no. 190/1999. In the Law no.190/1999 regarding the mortgage creditfor real estate investments is taken into consideration the following aspects:

- the mortgage credit and its guaranty;- the institutions that give mortgage credits and the persons that can beneficiate by the

mortgage credits;- the mortgage credit contracts and the assurance contracts;- the execution of book debits of institutions that give mortgage credits;- the cession of the mortgage and privileged book debits and their transforming into value

titles.The object of the mortgage credit is the financing the construction, buying, rehabilitation,

consolidation or expansion the real estates with locative, industrial or commercial destination. Thecredit is given for minimum 5 years to the juridical persons, respective 10 years to natural persons.O.U.G. come back on this restriction and filled this stipulation mentioning that it is possible toaccept shorter periods of the mortgage credit, of the express demand of the client. Also in the samerestriction it was specified that the loan can be expressed in lei or into a convertible currency.(Dragotă, V., Ţâţu, L. and others, 2005)

The institutions that can finance these credits are the universal banks and mortgage creditbanks, the National Housing Agency, the mortgage credit societies and any other entitie s settledwithin special laws to give mortgage credits for the real estate investments. According to the Lowno. 152/1998 regarding the foundation of the National Housing Agency, modified within theEmergency Ordinance, no.105/2005, can beneficiate for cre dits for building a house within A.N.L.natural persons with Romanian citizenship domiciled in Romania, regardless of the age, givingfacilities for the payment before the term.

The mortgage book debts that are part of one authorized by law institution p ortfolio, can becession to other institution of the same time or to other authorized institutions and settled in thispurpose with special laws. This operation must be notified in at most a 10 days term to the clientwhich it was given the mortgage contra ct. In the case in which the releasor and the releasee don’tagree in other way, the mortgage credit refund for real estate investments will be made by thereleasor, whom action as mandatory of the releasee. The releasor will give to the releasee theamount obtained, and the expenses generated by the receiving and transmitting the sums will besupported by the releasee in the limit of the amount determinate within the cession contract of themortgage book debts.

The 2002 year brought fillings in the legis lative plan, regarding the institutions which canfinance the investments in the locative domain, within the Law no. 541/2002 regarding theeconomy and the lending in collective system for the locative domain. It is about:

savings bank for the locative do main – defined as banks or saving banks authorized tofunction according to Law no. 541/2002 and according to the legislation.

banks for economies and lending in collective system for the locative domain, to whichit is possible to constitute deposits, un der whom it is possible to give credits with fixinterest for activities in the locative domain.

Practically, it creates a dependence relation: the client of the saving bank for the locativedomain had saved a certain amount of money and under the clien t quality receives the right to

contract a credit to cover the difference between the total amount that he needs and the amountalready saved. In the case of the other representative financial institutions, doesn’t exist thiscondition for giving the cumulated mortgage credit. The law refers to the possibility of given acredit, at the market interest, to the client that didn’t cumulated the minimum amount of savingestablished with the saving-lending contract, to which is paid only the interest and which w illtransform in credit with determinate interest in the moment of filling all the conditions stipulated inthe contract. (Dragotă, V., Ţâţu, L. and others, 2005)

The Law no. 34/2006 for modifying and completing the Law no. 190/1999 had broughtsome important modifications regarding the legal frame of the mortgage credit, mainly, the accessof the un-resident Romanian citizens and of the foreign citizens for buying real estates under someloans that can be given by authorized institutions. Also, according to the new law, the refunding canbe made only with a new mortgage credit for real estate investments, which will be guaranteed withthe mortgage on the immovable object of the real estate investment, for whom financing it waspreviously given the mortgage credit of which refunding is financed. Of course, the law sees alsothe possibility to transfer the mortgage on the other immovable, within the parts agreement, given inthe authentically form. The degree of the mortgage transferred on the new immovable w ill bedetermined from the entry date of the new mortgage in the Landed Book. Also, the Law no.34/2006 sees that, for the opposability of cession for third persons, less the underwriter, must bemade its entry to the Electronically Archive of Real Estates Guaranties.

CONCLUSIONS

In the evaluation of activity in generally and in estimating the market values in privately,knowing the market on some real estate property helps to choose the investigation criteria, selectionand interpretation of the comparability with other properties. Sellers and buyers of real estatesproperties interaction on different aspects/segments of activity, for different reasons and asregarding different types of properties. Consequently, the real estates markets are shared insegments based on differences between properties types and on their attractiveness against theparticipants on the market. All real estates markets are influenced by attitudes, motivations andinteractions of sellers and buyers which, are under the acti on of some social, economical,governmental or even physics influences.

The reality from the real estate market is transforming in time, as consequence of evolutionof the market conditions and of the persons aspirations. A real estate market must assure thedevelopment or the space contraction for satisfying the condition from a changing economicalenvironment. This change must follow the individual objective satisfaction, also for natural personsas for juridical persons. In spite of all this, there are also moments in which this developmentappears as consequence of the general politics of the state.

BIBLIOGRAPHY:

1. Ciumaş, C. (coord.), Manualul agentului imobiliar , Ed. Risoprint, Cluj-Napoca, 2006;2. Dragotă, V., Ţâţu, L. (coord.), Gestiune imobiliară , Ed. A.S.E., Bucureşti, 2005;3. Dragotă, V. (coord.), Gestiunea portofoliului de valori mobiliare , Ed. Economică,

Bucureşti, 2003.

THE IMPACT OF CULTURAL AND MOTIVATIONAL ENVIRONMENT WITHIN ANORGANISATION UPON HUMAN RESOURCES

Lecturer Ph.D. Alunica MORARIU“Stefan cel Mare” University of Suceava, Romania

alunica.morariu@gmail.comEc. Ph.D. Candidate Răzvan SERGHIUŢĂ”Al. I. Cuza” University of Iasi, Romania

sales@cotnari.roAssociate Professor Ph.D. Carmen CHAŞOVSCHI“Stefan cel Mare” University of Suceava, Romania

carmenc@seap.usv.ro

Abstract: Organisational-motivational culture has a very strong influence on all employees and employersand, therefore, on the success of the organisation. Human capital is the main source which can be a tool for the rest ofthe resources in order to obtain quality and performance. The main objective of this paper is to underline the impactupon values, mission, motivation at an organisational level and human resources belonging to that entity.

The bases of this paper were empirical research, statistic methods, dynamic and comparative, research usingthe theoretical and scientific support.

Key words: human resources, organisational -motivational culture, motivation, performance, quality.

JEL Classification: M14, O15

INTRODUCTION

The analysis of practical experience of human resources shows the fact that among others,an organisation’s collective standards of thinking, attitudes, values, convictions, norms and habitsplay a paramount role in attracting and keeping the personnel.

All integrated system of social behaviour, way of thinking and feeling accumulated andtransmitted through non - biological mechanisms from generation to generation within a societydenotes the culture (1) of a collectivity, of a nation.

Eldridge and Crombie (1974), in their paper The Sociology of Organisations , present, that,in general, the culture of an organisation refers to the singular configuration of norms, values,convictions and ways of behaviour. It characterises the manner in which the groups and individualscombine in order to determine the fulfillment of certain tasks. (2)

Organisational culture got researchers’ attention after the paper In Search of Excellence hasbeen published. It has been elaborated by T. Peters and R. Waterman, who have dem onstrated thecorrelation between the dimension of organisational culture and performances obtained by famouscompanies.

Organisational culture has a very strong influence upon all the employees and, therefore,upon the success of the organisation. Its eff ects are not directly quantifiable, but they create aframework of result influence.

In the Romanian society, most of the time, organisational culture is conceived or used justas an instrument of recruiting employees. It is a method which produces short -term results. It doesnot ensure the long-term stability within the organisation, focusing more on employing qualifiedpeople, and expecting performance from them. In this context, we can consider that only a solidculture can align with business strategies to ensure the completion of the tasks. Therefore, the utilityof analysing organisational culture and the way in which this can influence and motivate personnelin their need to obtain organisational performances is highly emphasized.

ORGANISATIONAL CULTURE AND HUMAN RESOURCES IN THE ROMANIANAND INTERNATIONAL COMPANIES

An organisation’s culture is determined by its functioning. The cultural factor has a strongimpact upon the management functions and upon managers’ actions. The stronger a culture is, theeasier it is for the employees to accept this organisation’s values and trust them.

The culture is precisely the social link which generates the feeling of togetherness. Thus, itcounteracts the processes of differentiating which are, to a certain ext ent, impossible to avoid in theorganisational life. Organisational culture offers a great deal of significations which are the basis forcommunication and positive feedback. If functions cannot be accomplished, culture risksdiminishing an organisation’s efficiency and performance (3).

Organisational culture became a modern concept. It appeared for the first time in Englishliterature in the 60s and became part of the common language with the help of Peters andWaterman’ book In Search of Excellence.

Even though there is no standard definition of the concept, most of the experts show that anorganisational culture has the following characteristics:

- holistic – a whole is more than the sum of its components;- historically determined – it reflects the organisation’s evolution- socially fundamented – it is created and kept by a group of people;- difficult to diversify;Hofstede “sees” organisational culture as a “collective mental programming which

differentiates the members of an organisation from the members of another organisation”.There are some specific fundamental components in defining organisational culture. This

can be described using such terms as value, norms, subjective manifestation or artefacts (4).Regarding the value hierarchy of organisational cul ture, Romanian firms (5) consider

professionalism to be the most important, closely followed by the value of obtaining performanceand by quality. The close connection between these values reflects the interdependence which existsbetween qualification level, experience, attitude, personnel behaviour at different hierarchy levelsand obtained results. It establishes clear objectives and familiar to the whole team, according todefined quality standards.

In order to provide quality services, some organisatio ns have implemented and applied theISO 9001/2001 system. This establishes some requirements for a quality management system whichis applied more and more. The quality of products, services and management represents a decisivefactor for the activity within any organisation on the global market. Broadly, this system includes 8principles:

client - oriented;leadership style;personnel involvement;process management;management systematic approach ;sustained improvement;fact based decision;advantageous mutual relationships among suppliers. As for the state and efficiency of the motivational system, it is the same for all Romanian

firms. The conclusion is that the importance of motivation is well -known in order to obtain goodperformance and competition within the firm, efficient shaping of personnel’s attitude andbehaviour. These are necessary, periodical and stimulating.

Stanford University, Professor Richard Pascale’s studies, show that an organisation whichhas a strong culture, would submi t its employees to a laborious process of socialising. The newemployees have to follow some steps (6) which are specific for human resources managementrelated to strong cultures.

Gratification and promotion are, as well, essential instruments in consolid ating theorganisational culture. Therefore, we invoke the European Culture Survey, done during 1998 –1999 by TMI among around 100 000 employees from Central and Western Europe, which isevidence for the effects which these two components of organisationa l culture can have (7). Theemployees from several economical sectors and with different position within the company havebeen invited to answer some direct questions asked by TMI operators. Alarmingly, these results gotmanagers’ attention:

1 out of 10 employees had been searching for a job without informing his/her boss; 4 out of 10 employees answered “no” to the question “Are you proud of being anemployee of this company?”; 8 out of 10 employees were indifferent to the company and did not feel responsi ble forits results; only 2 out of 10 employees were proud to work in that certain company, they weretalking positively about the company, criticising only within it, in a constructive way andwere ready to take initiative to improve its results.

On the organisations’ nationality, we show that: the French have a higher degree of honour, they are proud of being part of a certain job

section or organisation. They do not take criticism very well and interpret freely and personallytheir rights and professional duties.

Germans, as far as they are concerned assign a certain negative connotation to the word“business”, unlike Americans, for example. Within the enterprise, they emphasise loyalty andprofessional conscience, as well as a certain degree of obedience .

Belgians do not feel comfortable with authority and settlement. Italians have the tendency to get attached to their company and to strongly develop the

value of “work”.In all European countries we find a high degree of individualism unlike African and Asian

countries (8). Individualism is accompanied, sometimes, for example, in Germany, by stronginterpersonal distances. The meaning of ‚private’ is very developed. This can also happen in Franceand the UK, in the form accepting foreigners (if 88% of Ger mans speak one or more languages, inthe UK, only 50% and in France 62%, unlike Belgium, Sweden and the Netherlands where thenumber of polyglots is impressive) (9).

A number of human resources experts analyse the cultural differences which can hardlyproduce or which cannot generate a homogenous practice in human resources management.

The studies of Geert Hofstede, with the help of the employees from IBM have highlightedthe differences in practice and values (10). Therefore, on a national level, the cul tural differenceshave more to do with practices and less to do with values.

A certain level of occupational culture has been observed. It is situated half way from nationand organisation. The same expert has discovered that a national culture determines differences invalues and attitude towards labour, higher than the position within the organisation, profession, orsex.

Hofstede concludes that a number of differences regarding both the managers and theemployees can be emphasized with the help of four dimensions:

1. individualism/collectivism;2. distance from power (power intensity);3. avoiding uncertainties (the degree to which people feel threatened by new situations);4. masculine/ feminine.Culture mainly reflects the attitude towards change. T his attitude can be:

conservatory – reluctant to change, determined “to do things as always”; opportunist – paying attention to every opportunity for change, without complying with the

organisation’s objectives and activity; enterprising – constantly developing new programmes and services; expansionist – determined to increase the number of beneficiaries, clients, members.

But, what change of organisational culture means, and the way of implementing it representsa subject of challenging analyses. Expert s consider that recruiting, motivating, keeping anddeveloping people means, precisely, creating an environment where people feel challenged andsustained. They are permitted to be creative, innovating, and are encouraged to develop strong workrelations, therefore, a constructive culture. (11)

As for the organisation’s is cultural -motivational environment, this can be defined throughcollective mental programming of the mission, values, norms and subjective manifestation relatedto direction (12), effort (13) and persistence (14) of the human component, to rationally achieve theorganisation’s objectives.

RELATION BETWEEN ORGANISATIONAL HUMAN - CULTURE CAPITAL,CONSTANT CHANGE HARMONISED WITH THE CLIENT’S EXPECTATIONS

According to the latest development of global economy, the only really useful constant is change.What was useful for efficiency and quality some time ago, proves to be useless and even inconvenient after ashort while, because of the rapid changes in the business environment. (15)

Therefore, taking into account practitioners’ suggestions, ideas which might answer thechallenge to form a human capital in order to express and apply, a truly customer -orientedorganisation policy, (16) we talk about:

1. communicating to “internal client” its ow n vision, on providing a product, exceptionalservice;

Internal clients are the company’s employees, with whom it is important to analyse, define,standardise the value which the clients have for the results of the company. It is important to defineusing direct and comprehensible terms what it means to provide products, quality services. Theorganisation must ensure that employees have acquired these principles and values, creating anenvironment where people can feel encouraged to provide excellence in what they do.

2. The evaluation of their own organisation’s cultureIt is efficient to examine the organisational culture, if this is based on values such as: trust,

quality, respect, integrity, team work. If these values are accepted and promoted within t hecompany, the employees are dedicated to satisfying and meeting the customer’s expectations.

3. Clients’ messages analysis using its own employeesThe dialogue between employees (especially the ones that have direct contact with clients)

and the analysis of their opinion about clients: what are their expectations? What are the problemsthey are confronted with? What exactly creates discontent regarding the offered product andservices? It will motivate and improve the quality of their work, underlining palpable details andsolutions, with a real benefit for the company.

4. Recruiting personnel endowed with “quality for client”A selection of the human capital taking into consideration performance standards and the

employees’ involvement in the process of recruitment and selection can clarify the potentialemployees who will fit with the existent team and company values. Certain skills can be acquiredby the employees by training or at the work place, but skills and personality cannot be directly“assimilated” like this thus creating the need for a thorough selection according to preset standardsand values.

5. Recognition and rewardPositive feed-back to employees and encouraging them in order to be additionally motivated

to reach performance is highly eff ective. Involving innovation and finding new solutions to directlysolve service duties, will have a positive attitude towards their own activity and organisation.

6. Performance according to set objectives and standardsEstablishing high objectives and st andards will motivate personnel to obtain high

performances by imposing hard to get objectives. Personnel needs to become responsible withachieving set standards.

Therefore, during this era of globalisation, companies will be oriented towards the client a ndprovide high – quality products and services, according to the organisational values. They will beone step ahead other companies in gaining competitive advantages.

THE ORGANISATION MOTIVATIONAL –CULTURAL IMPACT UPON HUMANRESOURCES

Identifying the values of organisation culture, among people who compete for a job,determines managers, most of the times, to hire people who have these similar elements.Compatibility can be an important criterion when selecting. For example, a study of US FederalTrade Commission reveals the fact that for the selection decision it is more important to considerregional norms and values, school association, political links rather than graduating a university. Inother organisations, hiring or promotion decision depend more on the way in which people fitorganisational norms and less its objectives. (17)

The organisation functions under the direct or indirect impact of some factors related to thehuman capital motivation on which each collectivity performance depends. Result quality and alsoits continuity, development and adaptation to a competitive market, impose the correlation ofindividual competition with the group competition and development of qualities and skills for eachof the team members.

Team culture refers to the collective effort, of all employees for the common good andpromotes creativity and communication. On the other hand, power culture highlights the leader asbeing the first who formally exerts a rigorous control, while academy culture emphasizes personaldevelopment and attracting new individual talents in top domains. (18)

Therefore, if a person or a collectivity can change an organisation, the other way around isstill true. It is normal, therefore, for any organisation, as a social organism, to build a set of functionrules and norms to ensure its identity and success in the domain that it covers, to define theprinciples which can ensure maximum profit and visibility. That is why the company attempts toconfigure people according to this profile. One of the main functions of the recruiting service is toidentify people who are willing to easily accede to already created norms. This process does notstop here. Continuously, since the very moment of their employment, the new comers are testedthrough a process of integration and influence that is meant to harmonise the individual purposeswith the group norm. This is perfectly justifiable, because any lack of adaptation and major conflictstates are eliminated from the start. An organisation can achieve i ts objectives mostly relying on itsresources and values, motivational and cultural impact upon human component and quality.

Motivational and cultural impact upon human resources can have many forms:I. According to the influence environment of the impact zone (19):1. We are talking about an intrinsic impact when the expectation of the human component

refers strictly to personal evaluation, individual needs, regarding the motivational and culturalcomponents; elements which motivate people to have certain att itudes and to follow an individuallydefined direction;

2. The second form, an obvious one, is the one of extrinsic impact. It is characterised bythe increase and decrease changes, positive or negative ones which are presented in the motivationaland cultural environment and which are challenged by anyone or any situation coming from outsidethe individual status of the employee.

II. According to the organisation ideology, we can identify: (20)1. The power impact – refers to the conflict zone between the motiva tional cultural support

and the human resource oriented towards competition, domination and excessive control;2. The accomplishment impact characterised by the relation between the motivational -

cultural support and the responsibility assumed by the individua l emphasizing action andenthusiasm;

3. The task impact – based on the organisation orientation and its values, its personnel, toobtain results and fulfilling the task. The emphasis is on the expert’s power, knowledge andcompetences, related to the motivati on lever;

4. The role impact – gets our attention by the applying of procedures, rules, legality,legitimacy and bureaucracy, by personnel work control over the motivational – cultural andpersonal sector.

INSTEAD OF CONCLUSION

Motivational – cultural norms, function norms, written (for example, The InternalNormative) or unwritten, appear only after accumulating commercial market experience, being itsstakeholder. Norms can regulate behaviours such as client relations, relations between employees,relations between employees and employers, etc. Traditionally, the culture of an organisation isopenly focused on the three major concepts: Values, Mission, Vision. Declared values subsume,also, an important part of an organisation’s identity. Sometimes, these v alues are focused within thefirm’s logo: ”We believe in quality”, “Our client is our master”… It is enough to undergo a relevantanalysis of a firm’s logo to understand the people they want and the ones they don’t. “The mission”covers the organisation’s major objectives. It indicates increase and development efforts, thedirection where employees’ efforts need to focus once they are motivated and encouraged.Organisations also differ from one another through their inner motivational -cultural climate whichwas ensured and engraved. That is why, some organisations are wanted, and also because they areknown they prefer quality, impartiality, education, a high standard of motivation for its employees,favouring personal development and contribution (so -called academy organisations). Many timeswe talk about excesses, though, because of the uniformed pressure which is too great. A lifestyle iscreated, respected outside the organisation, especially when referring to known and well knowncompanies. Clearly, even though there are exceptions, under the constant influence of anenvironment, people change. Many times, the career, without the pressure of financial needs,becomes more important than family, friends or personal values. So, finally, the familiar confli ctbetween career and personal life becomes for many a fact, diminishing the role of pecuniarymotivation, family role and friends.

Within the organisation, the motivational -cultural impact upon human resources, regardlessof its form, as well as the pract ises applied for integrating, keeping and motivating the personnelcan be related to the Individualism – Collectivism dimension. (21)

The motivational – cultural dimension of the human component proves to be paramount. Ithas secondary level effects which are unsuspected during a first analysis, going as far as shapingsome individual and group destinies, professional and organisational performances which arealways, more or less, adapted to market demand.

NOTES:(1) Pânişoară Georgeta, Pânişoară Ion -Ovidiu – Managementul resurselor umane – Ghid practic, ediţia a II -

a, Editura Polirom, Iaşi, 2005, p. 205(2) Armstrong Michael – Managementul resurselor umane – Manual de practică, Editura Codecs, Bucureşti,

2003, p. 181(3) Ibidem, p. 183(4) Ibidem, p. 184(5) Nicolescu Ovidiu (coord.) – Managerii şi managementul resurselor umane, Năstase Marian – Cercetare

empirică privind cultura organizaţională în firmele din România, Editura Economică, Bucureşti, 2004, pp. 454 şi urm.(6) With these stages, we start with a very close selection of the candidates, scanning for some experiences to

induce accepting the organisational norms and values, training within organisation, which leads to being qualified forthe main subject, gratifying and control system, precise finished for behaviour consolidation which proves to beessential for market success, acceding to values which ensure reconciliation with personal sacrifices, and finishes byassuming the consolidation and consistent role models.

(7) Chisu Viorica Ana (coord.) – Manualul specialistului in resurse umane, Casa de editura Irecson,Bucuresti, 2001, p. 410

(8) Hofstede, Geert – Cultural Consequences: International Differences in Work -related Values, Sage,Beverley Hills, Calif, 1987

(9) Emilian Radu, Tigu Gabriela, State Olimpia, Tuclea Claudia – Managementul Resurselor Umane,http://www.biblioteca-digitala.ase.ro/

(10) Hofstede, Geert – Managementul structurilor multicu lturale. Bucureşti, Editura Economică, 1996, p. 17(11) Cum să schimbi cultura organizaţiei într -un an, Revista Cariere, nr. 134, p. 16(12) Towards what does a person try to align throughout his/her activity?(13) What is his/her activity intensity?(14) How long does he/she continue, insist to achieve and exceed the objectives?(15) Câmpeanu-Sonea Eugenia, Sonea Adrian – Evoluţia culturii organizaţionale – probleme de competenţă şi

structură, p. 71, www.managementmarketing.ropdfarticole24.pdf(16) http://www.sfin.ro/articol_10479/notiuni_despre_cultura_organizationala.html(17) Enache Ionel, Planificarea şi organizarea serviciilor de bibliotecă, Editura Uni versităţii din Bucureşti,

2004, http://ebooks.unibuc.ro/StiinteCOM/planif/4.htm(18) Tanţău Adrian Dumitru, Rolul culturii organizaţionale în promovarea inovaţiilor, p 17,

www.managementmarketing.ropdfarticole30.pdf(19) We refer to motivation forms, as well.(20) To study the clasification of organisational culture according to Harrison, R. – Understanding your

Organisation’s Character, Harvard Business Review, 5, pp. 119 -128, (1972); Handy C. – UnderstandingOrganisations, Penguin, Harmondsworth, (1981); Schein, E. H., Organisation Culture and Leadership, Jossey Bass,New York, (1985); Williams, A, Dobson, P, and Walters, M. – Changing Culture: New Organisational approaches,IPA, London (1989)

(21) Individualism – collectivism dimension it is the most representative psycho – sociological one, withtranscultural resources, capable to provide evaluation on national cultures of intercultural variations. This describesthe direction of a person related to the others from his/her environment.

BIBLIOGRAPHY

1. Armstrong Michael – Managementul resurselor umane - Manual de practică, EdituraCodecs, Bucureşti, 2003

2. Câmpeanu-Sonea Eugenia, Sonea Adrian – Evoluţia culturii organizaţionale – probleme decompetenţă şi structură , www.managementmarketing.ropdfa rticole24.pdf

3. Chişu Viorica Ana (coord.) – Manualul specialistului în resurse umane, Casa de editurăIrecson, Bucureşti, 2001

4. Emilian Radu, Tigu Gabriela, State Olimpia, Tuclea Claudia – Managementul ResurselorUmane, http://www.biblioteca-digitala.ase.ro/

5. Enache Ionel – Planificarea şi organizarea serviciilor de bibliotecă, Editura Universităţiidin Bucureşti, 2004, http://ebooks.unibuc.ro/StiinteCOM/planif/4.htm

6. Hofstede, Geert – Managementul structurilor multiculturale. Bucureşti, Editura Economică,1996

7. Nicolescu Ovidiu (coord.) – Managerii şi managementul resurselor umane, Năstase Marian– Cercetare empirică privind cultura organizaţională în firmele din România, EdituraEconomică, Bucureşti, 2004

8. Pânişoară Georgeta, Pânişoară Ion -Ovidiu, – Managementul resurselor umane – Ghidpractic, ediţia a II-a, Editura Polirom, Iaşi, 2005

9. Tanţău Adrian Dumitru, Rolul culturii organizaţionale în promovarea inovaţiilor,www.managementmarketing.ropdfarticole30.pdf .

10. Revista Cariere, nr. 134, Bucureşti, noiembrie 200811. http://www.sfin.ro/articol_10479/notiu ni_despre_cultura_organizationala.html

FOREIGN DIRECT INVESTMENTS – CATALYST FOR ECONOMIC GROWTH INCENTRAL AND EASTERN EUROPE

Lecturer PhD Roxana HETEŞWest University of Timisoara, Faculty of Economics and Business Administration, Romania

roxana.hetes@feaa.uvt.roLecturer PhD student Cosmin ENACHE

West University of Timisoara, Faculty of Economics and Business Administration, Romaniacosmin.enache@feaa.uvt.ro

Associate Professor PhD Nicoleta MOLDOVANWest University of Timisoara, Faculty of Economics a nd Business Administration, Romania

nicoleta.moldovan@feaa.uvt.ro

Abstract:Nobody can dispute the principle according to which, given an increased liberalization process, the capital

will shift from the places in which it is excessive to places in which it is needed, in other words places in which it isgranted a higher rate of return. Reducing the obstacles that lie in front of the investment flows has, as expected,generated an increase in the foreign investments’ shifting speed. A contiguous problem t hat arises in this context isabout their impact and effects on the investing companies, as well as on the host countries.In a broader view, it can be considered that all these effects have a positive impact on the global activity, a growingnumber of firms finding themselves in the situation of carrying out operations in more than one national jurisdiction.From all of them, the biggest transnational companies (approximately 300) control more than 70% of the total foreigndirect investments and, approximately, a quarter of the existing assets from all over the world.

Keywords: foreign direct investments, economic growth, Central and Eastern Europe

JEL Classification: E22, F21, O49, O52

INTRODUCTION

Transnational companies’ activity and foreign invest ment flows are highly related to themicroeconomic restructuring process in the host countries, in a sense that foreign direct investmentshave the ability to substitute a certain industrial policy, through the selection of the firms with thehighest growth potential. Restructuring and changing the local companies’ behavior have thetendency to happen very quickly, despite some factors that tend to put a break to this process, i.e.inadequate infrastructure and commercial channels, local firms’ organization al problems, unclearlegal framework, legislative instability, bureaucracy.

The microeconomic restructuring process generally focuses on several aspects, from whichthe most important refers to perfecting management methods in the field of labour organiza tion,special divisions’ development, accounting system, cost and quality control (Hanson, 2001).

On the other hand, foreign direct investments are seen as a true improvement feature of thelocal firms’ competitiveness (Konings, 2001). The foreign capital flow directly influences the newbranch’s or new bought firm’s performances, through technological and know -how transfers, thusresulting in more competitive firms on the national, as well as international market. Indirectly, theforeign direct investments have an effect on the local firms’ performances through the createdexternalities, therefore being privileged those firms that have direct business relations with theforeign investors, or that are the latter’s clients or suppliers.

FOREIGN DIRECT INVESTMENTS – CATALYST FOR ECONOMIC GROWTH

All the evolutions induced by the foreign direct investment flows at the receiving countries’level, generally show the existence of their direct relationship and contribution to the economicgrowth through four different channels: capital accumulation, technology transfer, access to theglobal market and job creation. Therefore, foreign direct investments constitute a further source offinancing for property exchange and gross capital formation, directly contributing to capital

formation if the flows relate to investment financing or, indirectly, if investors, that became owners,facilitate technology transfer. On the other hand, foreign direct investments and, especially those inadvanced sectors, induce more importan t shifts at the level of industrial specialization in the hostcountries, from traditional to more advanced sectors, which can only be of benefit for a country’sdevelopment. Foreign direct investment flows further facilitate a larger access to the global market,due to the partnership between the direct investor on the foreign market. Furthermore, newcompany creation through foreign direct investments increases the job creation process.

Although there is a relationship between foreign direct investments and economic growthcannot be doubted, the complexity of the adjacent interactions raises a series of essential questions:Do foreign direct investments play a catalyst role or not? Can there be some “malign” effects ofthe foreign direct investments? By which factors is the foreign direct investments’ contribution at asustained growth process conditioned?

Regarding the foreign direct investments’ role as a catalyst, this is not unanimouslyaccepted, as there are some approaches that state that foreign direct investments do not significantlyinduce economic growth in the host countries (Edwards, 2001). The “malign” model for foreigndirect investments is substantiated on the imperfect national and international markets’ interaction.More precisely, foreign investors from international imperfect industrial markets, which benefitfrom a preferential access to the local capital and money markets, can obtain both benefits andcapitals in such a way that the effect on savings and investments is at least unexp ected: the gap isnot surpassed but, on the contrary is amplified. The “malign” model of foreign direct investmentflows also implies the bankruptcy of local producers, the extension of transnational companies’power on the local market and, repatriated pr ofits. The impact on income distribution and socialdevelopment is neither beneficial. Intensive technology brought by foreign investors, favours the“elite” of the work force, while the other workers are excluded, moreover if the labour market isrigid. On the other hand, the tight control of technological transfers, managerial competencies andexports, hinders the accomplishment of positive externalities in the host countries(Nunenkamp/Spatz, 2003) .

Given all these aspects, the only factors that could t ransform foreign direct investments in asource of economic growth, relate to the host country’s characteristics, the most important featurebeing the adequate development of the economic sector. The host country’s specific features, thatconsolidate the relationship foreign direct investments -economic growth, are usually grouped,under the sintagm “power of absorbtion” ( Carkovic/Ross, 2002). First, as the economies have morehuman capital and a sufficiently high GDP per capita, they also have ability to ob tain benefits fromthe technological transfer initiated by the foreign branches to the national companies. Second, if thehost economies become more open to the international trade, then the imports of intermediarygoods is less restricted. Third, the inst itutional development level (the legal framework, the size ofcorruption, public management quality, protection of the property right) is a condition for thetechnology and know-how transfer to the subsidiaries. Last, the underdevelopment of the financialmarkets hinder host countries from taking advantage of all the advantages brought by the foreigndirect investment flows.

In order to take advantage of the positive externalities, the national countries need resourcesin order to finance the reorganizatio n of the internal structure, equipment acquisition, managementdevelopment, and hiring qualified personnel. The absence of funds or their high costs hinder thedevelopment of the national firms, thus they become unable to face the international competitionand to beneficiate from the foreign presence in their country.

Another aspect that must be considered related to the foreign direct investments -economicgrowth relationship, regards the nature of the flows. The different forms of the foreign directinvestment flows, in the initial phase or at maturity, can have an asymmetric impact on theeconomic growth because of their nature and fundamental characteristics (Wang/Sunny, 2005).

On an exact example, if we were to compare the “Greenfield” investments with mergers andacquisitions, their diverse character can be emphasized starting from the fact that “Greenfield”investments involve the creation of new units, allowing for capital accumulation, while mergers and

acquisitions, that imply the acquisition or tak eover of existent firms, do not always allow for suchan accumulation, but only in the case in which it is stipulated in the contract, or the sums allocatedare spend in this direction. On the other hand, while acquisitions imply the closing of certainproduction lines or activities, or layoffs, “Greenfield” investments have an incontestable effect onthe economy, because they create new production lines, new job opportunities, new consumers andnew tax subjects. In what concerns the level of efficiency, th e “Greenfield” foreign directinvestments are much better ranked than acquisitions and mergers. Taking all these aspects intoaccount, it could be recommended that, in order for the foreign direct investments to improveeconomic performances, the volume of the “Greenfield” investments surpasses the acquisition ofthe state owned control packs (Hunya, 2002).

Regarding the level of maturity of the investments, the ones that have reached maturityprove to be less volatile and capable to improve economic perfor mances. As the foreign investmentapproaches the maturity phase in its life cycle, the less volatile it becomes and, there is a guaranteedlong term effect on economic growth. Vice versa, the more close that the foreign investor is to theinitial, opportunity exploring, phase, the more volatile it becomes and the economic growth is nolonger guaranteed. So, the long term effect on foreign direct investments on economic performancesof the host country depends on the volatility of the capital flows and, even more in the case of aweak financial sector and in the absence of connections of the foreign investor with the hostcountry’s economy.

Investors’ motivations and the specifics of the sector in which they invest can induceasymmetric effects on economic gr owth (Nunenkamp/Spatz, 2003) . For example, “efficiency -seeking” foreign direct investments have a strong impact on economic growth because thetechnology and the know-how brought by investors can be internalized without any difficulties inthe host country due to the reduced complexity. The investment itself creates important externalitieson the local market, allowing for many export activities. Another category of investments, the“market-seeking” investments, are less favorable to development, despite t heir contribution to thelevel of production and spending. In fact, market oriented investments have the risk of eliminatingthe domestic competitors and of repatriation of huge profits, in the absence of exports.

The contribution of foreign direct inves tments to economic growth is also conditioned bythe existence of a relationship between investment flows and technological gaps. In this directionone must distinguish between foreign direct investment flows that respond to technological gapsand the ones that either integrate in the company’s global strategy, or respond to marketattractiveness, or seek to compensate the disadvantage derived from commercial restrictions and thefavouritism for national producers (Carkovic/Ross, 2002). Given these categories of flows, if for thefirst one it is expected to have a significant impact on economic growth, the others are less probableto have more than the medium profitability.

In the second half of the 90s, foreign direct investment flows have started becomingimportant capital flows for more and more countries in Eastern and Central Europe, allowing themto integrate in the world economy step by step. If, before 1990, foreign direct investments in thesecountries exceeded $1billion, in 1995 they reached a level of $14 billion and almost $70 billion in2006 (WID, 2007). The percentage of the Central and Eastern European countries in the globalforeign direct investment flows, increases from less than 1% before 1990 to 4% in 1995, which thendecreased to 1,9% in 2000 and increased again starting 2001 (8,3% in 2006). The fluctuation can beexplained through the growth of foreign direct investments between developed countries, until2000, and their decline in 2001, in contrast with a relatively constant increase in the region. InEastern and Central Europe, the average growth rate of the foreign direct investments, between1986-2005, has exceeded 40% in most of the countries, like Bulgaria, Hungary, Romania andSlovenia (WIR, 2007).

ANALYSIS OF THE CORRELATION FO REIGN DIRECT INVESTMENTS –ECONOMIC GROWTH

As shown before, between foreign direct investments and economic growth there is apositive interdependence, as they influence each other, without being simultaneous. Given theevolution of this correlation it can be observed that the growth trend of the foreign directinvestments, more prominent in the 90s, was accompanied by economic growth (table no. 1)

Table no. 1 The evolution of foreign direct investments and economic growth in Cen tral andEastern European countryes between 1994 -2006

FDI flows($ mil.)

Real GNPgrowth rate

FDI flows($ mil.)

Real GNP growthrate

1994 6240 -8,02 2001 26.723,95 3,801995 14.721 -0,97 2002 31.145,84 4,651996 13.650 -0,60 2003 29.089,73 6,521997 18.285 2,33 2004 40.938,68 7,241998 22.284 -1,16 2005 55.657,45 7,401999 25.071 3,89 2006 53.532,76 6,792000 25.953 7,45

Source: UNCTAD, World Investment Report, 2007

More precise, between 1994 and 1997, the interdependence between foreign inv estmentflows and economic growth was more obvious in 1998, highlighting a breaking point, as theinvestment surplus did no longer lead to the acceleration of growth, but, on the contrary to itsrelaxation. In the region, economic growth was re -established in 1999, as the investments startinggrowing, reaching a maximum in 2000.

The year 2001 brought about a diminishing in foreign direct investment flows, accompaniedby a slowdown of economic growth. Still, starting g 2002, we can observe certain stability in thiscorrelation (a slight change in 2006), which defines more clearly this trend.

If we analyze this correlation for a more reduced group of countries (e.g. Romania,Bulgaria, Hungary and Slovenia) (1) there can be observed a series of evolutions and contrastinginteractions (table no.2).

Table no. 2 Foreign direct investment and economic growth in Romania, Hungary, Bulgariaand Slovenia, between 1994-2005

Romania Bulgaria Hungary SloveniaFDIflow

Real GDPgrowth rate FDI flow Real GDP

growth rate FDI flow Real GDPgrowth rate

FDIflow

Real GDPgrowth rate

1994 342 4,57 105 2,86 1.143 2,96 129 4,951995 420 7,77 90 3,85 4.518 1,55 177 3,831996 264 4,52 108 -8,61 2.274 1,45 195 3,481997 1.215 -5,55 504 -4,84 2.166 4,75 375 4,701998 2.031 -4,33 537 4,73 2.037 5,09 249 3,571999 1.041 -0,67 807 2,99 1.977 4,39 180 5,582000 1.026 2.61 999 6,10 1.692 5,45 177 3,912001 1.157 6,18 813 4,78 3.936 4,10 370 2,672002 1.144 5,51 905 5,60 2.994 3,75 1.686 3,312003 2.213 5,33 2.097 4,99 2.162 3,20 337 2,512004 5.174 8,66 2.488 6,24 4.167 4,49 516 4,572005 6.483 9,77 3.862 6,5 7.619 4,5 496 4,652006 11.394 11,5 5.172 5,2 6.098 3,72 423 4,23

Source: UNCTAD, World Investment Report, 2007; UNCTAD, National Accounts Main Aggregates Database,Statistics Division

In Romania’s case, the foreign direct investment flows appear to be very encouragingbecause of their contribution to economic growth in the last years, although in the transition periodthere have been some negative growth rates. A similar evolution can be observed in Bulgaria aswell, while Hungary and Slovenia have a constant evolution, without extreme cases. Slovenia, with

average growth rates, was not a favourite destination for investors during the whole trans itionperiod, as well as in the last years.

Regarding the relationship foreign direct investment funds – economic growth, if in the caseof Romania and Bulgaria a certain interaction is obvious, in Hungary, this correlation is less clear,while Slovenia appears to confirm the “malign model” of foreign direct investments.

The evolution of Hungary, regarding this correlation, can be explained by the fact that theforeign direct investments that have successively been accumulated until 1996, have beenaccompanied by market decreasing pace, while, between 1997 and 2001, the extraordinary growthto be sustained by the foreign direct investment accumulations until 1996. In other words, theeffects of economic progress were not felt immediately, but with a few year s lag, when therespective investments reached maturity.

The fact that the plus brought to the foreign direct investments, after 2002, tends to beaccompanied by a new relaxation of growth, suggests a cyclical evolution. It is important to noticethe fact that, in the case of Hungary, it cannot be identified a linear evolution, in which theaccumulation of foreign direct investments immediately reflects an acceleration of economicgrowth (figure 1).

In what concerns the evolution of Slovenia, for the promot ers sustaining the economicgrowth through foreign direct investments, it appears at least surprising. The periods in whichgrowth and the reduction of foreign direct investment accumulation are accompanied by economicprogress, or regress, were very short (1997, 2001, and 2002). Most frequently, we can observe aninverse interaction that appears to confirm the malign model of foreign direct investments (figure2).

In the case of Romania, unlike the first years (1994 -1996), when foreign direct investmentaccumulations were little significant and less correlated with economic progress, starting 1997, astronger correlation between the two emerged.

The foreign direct investment accumulations have contributed, step by step, to the shift fromnegative to positive growth rates, with important leaps between 1998 and 2001. Even if 2002 hasseen a decrease in this sense, the correlation foreign direct investments -economic growth, remainedin the following years, close to the previously defined trend. In the future w e could expect anacceleration of economic growth of 0,11% at a 1% growth of foreign direct investments (figure 3).

Given the negative growth rates until 1997 for Bulgaria, in only 2 years time period itreached a positive 5% growth rate , strongly susta ined by the foreign direct investmentaccumulations, which, in this period have increased from 4% to10% in GDP. The followingevolutions, with small variations (2001) have followed the same growth trend, a 1% growth inforeign direct investments leading to a 0,38% increase in economic growth (figure 4).

An explanation of the different evolutions is also related to the process of joining theEuropean Union, Hungary and Slovenia belonging to the first wave of integration. One of theprinciples that lie at the basis of the European unification was that according to which the access toa large market will imply firm efficiency, in the sense of lower prices, competitivity and qualityincrease on the foreign markets.

Starting from this idea, the extension of the European Union to the Central and EasternEuropean Countries has created an adequate economic framework for newly integrated countries tointeract with the old members of the union, especially through foreign direct investments, thespecific competition, created through the market game and that has, at the basis, technical progress,innovation and research that create new products, new companies and industries, hence acting in thedirection of economic growth.

Although the expansion of foreign direct invest ments in Central and Eastern Europe,starting from the end of the 90s, is obvious, its weight in the global flows, continues to remain littlesignificant, and there are several explanations for the low performances in attracting newinvestment flows in the initial stages of the transition.

1 9 9 4

1 9 9 5

1 9 9 6

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

S t o c u l d e IS D (% d in P IB )R a t a d e c re ş t e re a P IB -u lu i re a l

19 9419 95

19 9619 97

19 9819 99

20 0020 01

20 0220 03

20 0420 05

S to c u l d e IS D (% d in P IB )R a ta d e c re ş te re a P IB -u lu i re a l

Figure 1. The FDI and economic growth in Hungary, 1994-2006 Figure 2. FDI and economic growth in Slovenia, 1994-2006

1 99 4

1 99 5

1 99 6

1 99 7

1 99 8

1 99 9

2 00 0

2 00 1

2 00 2

2 00 3

2 00 4

2 00 5

2 00 6

S t o c u l d e IS D ( % d in P IB )R a t a d e c r e ş t e r e a P IB - u lu i r e a l

1 99 4

1 99 5

1 99 6

1 99 7

1 99 8

1 99 9

2 00 0

2 00 1

2 00 2

2 00 3

2 00 4

2 00 5

2 00 6

S t o c u l d e IS D ( % d i n P IB )R a t a d e c r e ş t e r e a P IB - u l u i r e a l

Figure 3. FDI and economic growth in România, 1994-2006 Figure. 4 FDI and economic growth in Bulgaria, 1994-2006

Source: UNCTAD, World Investment Report, 2007; UNCTAD, National Accounts Main Aggregates Database, Statistics Division

1 0 0 0

1 2 0 0

1 4 0 0

1 6 0 0

1 9 9 2 -1 9 9 7

1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6

E u r o p a C e n t r a lă ş i d e E s tG lo b a l

Figure. 5 FDI evolution at the global leveland Central and Eastern european countries 1992-2006 (miliarde de dolari)

CONCLUSIONS

First, the delays in the accumulation of significant foreign direct investments is explainedthrough the dependency on the structures inherited from the socialist system (2), to w hich we canadd the governmental actions oriented to the protection of domestic producers, in the wish to avoidthe situations in which foreign investors put away the domestic companies or slow down theirdevelopment (Ekholm, 2002).

Second, economic policies, not adapted to the new framework (frequent legislative changes,the lack of coherent economic strategies, economic and political instability), found in hostcountries, have driven away foreign investors.

Not last, the extreme situations, such as disi ntegration, war and ethnic conflicts, found in thecase of former Yugoslavia, have had adverse and strong effects in what concerns the efficientresource allocation, wealth destroying, transformation and adaptation of institutions to a wareconomy, being, obviously negative signals for investors (3).

ENDNOTES

(1) The choice for this sample is justified by the fact that the four countries have a similar past, havingexperienced a centralized economy, however at different levels, with different natural re sources and different policiesduring transition. Moreover, we can distinguish between two pairs of countries: Hungary and Slovenia, on one handand, Romania and Bulgaria, on the other hand, due to their belonging to the first and second wave of integratio n in theEuropean Union. An interesting point to observe is given by the similarities and differences in performances andpolicies carried out in relation with the foreign direct investments.

(2) Because of teh rigidity of the systems that characterized a centralized economy, the shick associated tostructural changes was huge and difficult to internalize (countries like Romania, Bulgaria and Albania have confronted

with significant problems , in the case of former Yugoslavia, the structural defficiencies were fewer, while thereestablishment of relations with Western Europe was more easy for Croatia and Hungary).

(3) The desintegration of teh former Yugoslavia, has meant a forced divisioning of the potential market in theeyes of the foreign investors. Ge neraly, in small host countries, the dimension of the market is not perceived in apositive way by the foreign investors.

REFERENCES

1. BERD, Integration through flows of capital and labour, Transition Report, 20032. Bonciu, F., Investiţiile străine directe pe plan mondial, Tribuna Economică, no.45, 2001;3. Carkovic, M.; Ross, L., Does Foreign Direct Investment Accelerate Economic Growth?, World

Bank Conference: Financial globalization: a blessing or a curse?, 2002;4. Damijan, J., Technology Transfer through FDI : How Important are Direct Effects, Horizontal

and Vertical Spillovers?, William Davidson Working Paper, no.549, 2003;5. Edwards, S., Capital mobility and economic performance: are emerging economies different,

NBER Working Paper, no. 8076, 2001;6. Ekholm, K., Foreign Direct Investment and EU-CEE Integration, „Danish and International

Economic Policy” conference, Institute of Economics, Copenhagen, 2002;7. Hanson, G., Should countries promote Foreign Direct Investments?, G-24 Discussion Paper

Series, United Nations, 2001;8. Hunya, G., FDI in South-Eastern Europe in the early 2000s, WIIW, 2002;9. Ikiara, M., Foreign Direct Investments and Technology Transfer, ATPS Special Papers Series,

no.16, 2003;10. Kejak, M.; Seiter, S.; Vavra, D., Accession Trajectories and Converge nce: Endogenous Growth

Perspective, CERGE-EI Working Paper Series no. 219, 2005;11. Konings, J., The Effects of Foreign Direct Investment on Domestic Firms, CEPR Discussion

Paper, no.2586, 2001;12. Krkoska, L., Foreign direct investment financing of capital formation in central and eastern

Europe, EBRD Working Paper, no.67, 2001;13. Lankes, P.; Stern, N., Capital Flows to Eastern Europe and the former Soviet Union, EBRD

Working Paper, no.27, 1998;14. Nunenkamp, P.; Spatz, J., Foreign Direct Investment and Economic Grow th in Developing

Countries, Kiel Working Paper, no.1176, 2003;15. Şerbu, S., FDI role in promoting the economic growth – a problem still ambiguous, SSRN

Working Paper Series no.962, 2007;16. UNCTAD, National Accounts Main Aggregates Database, Statistics Division; World

Investment Directory, 2003, 2005, 2007; World Investmen t Report, 2000 – 2007;17. Wang, M.; Sunny, W., What Drives Economic Growth? The Case of Cross -Border M&A and

Greenfield FDI Activities, NBER Working Paper, no.10231, 2005;

MARKETING BUDGET DURING THE ECONOMIC CRISIS PERIOD IN ROMANIA

Assist. Professor PhD. Candidate Monica BÎJAAssociate Professor PhD. Ramona LILE

Aurel Vlaicu University, Faculty of Economic Sciences, Arad, Romaniamonicabija@yahoo.com

Abstract:The purpose of this article is to present the influence of the present economic crisis on the marketing budget.

The financial and economic recession is a real phenomenon that cannot be ignored and which affects directly orindirectly every aspect of the world economy. Every company and business whether multinational or just local is, orwill have to adjust to this new, changing world. This international level crisis can be compared with a natural selectionphenomenon and in the end will survive only the fittest.

Key words: marketing budget, economic crisis, crisis strategies.

JEL Classification: M31“When there is a period of economic crisis, lack of investment in marketing or drastic budget reduction is as if youprepared your exile of a market.” Nick Baum, vice-president of TBWA/Europe

INTRODUCTION

During crisis times, companies will struggl e to resist on the market; they will take measuresand adopt new strategies in order to overcome their more and more acute financial problems. Somecompanies will fire their staff, others will cease certain activities, and some will try to create newproducts, while most companies will be forced to reduce their expenses. The managing staff has totreat with utmost care these cut offs so as not to make reductions in the areas that might assure thesurvival of the enterprises. Even though there is the tendenc y to reduce advertising costs, managersshould refrain themselves from doing so. A great company such Coca -Cola for example cannotafford to reduce its advertising in a period like this because its sales would decrease and thereforeits problems would increase. After all, it is very well know that commerce cannot exist withoutadvertising, especially nowadays when there is a wide range of goods from which to choose.Therefore the ones who will know how to promote their products in the most efficient way and willnot be afraid to keep their marketing budgets will be the winners of the post crisis world.

THE IMPACT OF INTERNATIONAL FINANCIAL CRISIS ON THE MARKETINGBUDGETS

The beginning of the year 2009 brought only dark predictions for marketers, mass -mediaand advertising. Companies are announcing that they will drastically reduce the advertising budgetswhile the great mass-media groups are forced to lay off many of their employees. Advertisersdiminish the expenses for all media type; however it is cl aimed that in the case of TV advertisingthe cut offs will be less. During the last few years the whole economy underwent an importantdevelopment. The marketing budget received funds but there were many cases in which the moneywas used for inefficient advertising. When there are problems and financial difficulties the tendencyis to reduce expenses. This is a normal situation since nobody can waste money forever. Marketingmeans business. The marketing budgets should not be spent but invested. During econ omic crisisthe amount of sales is the one that decides whether a company survives or not. Having a goodimagine does not means that you have carried out only half of your work. At the end of the day thesales figure will tell you if you were successful or not. The equation is not very complicated:incomes minus expenses. Are you over or under the line? Everybody will have to prove that themoney they spend bring even more money. It is high time to get rid of the advertisements that haveno other purpose but to annoy the target audience and keep the ones that raise the viewers’ interests.Lower budgets mean that every cent is worth a diamond. One can no longer use all the available

media and therefore should stick to the most advantageous ones. Moreover a co mpany can nolonger promote all of its products and therefore should choose the ones that are certain to bringimportant profits. There is no money for the advertisement to reach all people and thus it isnecessary to focus on those that might purchase the respective product. Despite the fact that theseare basic marketing notions they are very often ignored. The economic crises teaches certain peopleto be better marketers, to listen to their clients, to take strategic decisions, calculate the marketingshares profitability and compare marketing strategies according to their efficiency.

Consolidation and reorganization will be the most widespread words in 2009 amongcompanies that operate on the local market. The measures taken in order to overcome the eco nomiccrisis will vary from one company to another; thus some will fire people or will cease certainactivities while others will have to cope with the reduction of their production capacity and with thepostponement of investments.

The marketing budget is among the firsts to be cut off when it comes to reduce expensesbecause of economic crisis. A viable solution would be the Internet which is a medium thatfacilitates the approach of new marketing solutions with low budgets and which is continuouslyexpanding. The internet is a recent medium and therefore unreliable, determining advertisers to quitit sooner. However, it is not advisable to cut the internet off from the marketing expenses listbecause its audience is increasing while the content and the t raffic range have improved a lot. Eventhough most of the media agencies representatives consider that there are not and will not bechanges in the advertisement budgets because of the economic crisis, the agents of the on -linedomain claim that if the present economic situation is understood and tackled properly than it mightbe beneficial for the Romanian internet not only for the business already put up during this periodbut also for the attracted budgets.

The Romanian on-line had in 2007 a value of nine million Euros and it was supposed thatby the end of 2008 it would reach a value of twenty million Euros. Furthermore, specialist in thedomain consider that newspapers will have nothing but to gain when it comes to internet budgets: in2009 and 2010, the internet will bring newspapers 20% of their advertising incomes, a percentageconsidered normal on developed markets. However the advertising tariffs might not havespectacular increases.

Considering the present financial context, the media planners cl aim that very good resultscan be obtained out of sales by addressing the target market and taking advantage of the people’snew consumption habits: an increasing interest for high quality information and for TVconsumption. Television is the first option for many companies that want a national level campaign.The economic crisis may increase the audience of TV channels because television is after all, one ofthe cheapest modern ways of entertaining.The marketing strategies no longer have to focus on pure profit but on brand awareness. All of asudden niches are becoming more and more important while money is spent with utmost care.Being one of the most important economy vectors, marketing has to be adjusted to this period aswell. We have been witnesses and still are to the way in which companies are waiting and testingthe markets at the very moment. Huge marketing campaigns are missing nowadays just becausethey have to be better planned than before. We are not talking about fear but about a carefulcondition analysis. These days, analysts throughout the world are trying to predict what will happenin the future. It is a well known fact that the one who will manage to anticipate correctly will be thewinner.

The companies that will know how to understan d their customers and anticipate theirmovements will be the winners on a very volatile market. There are no longer certainties or suresuccess recipes and therefore in the following months the market will be invaded by new,innovative campaigns, real adve rtising works of art. The marketing of the future will be a better onebecause the purchasing possibilities are decreasing and are sustained by a real, solvent economy andthe market share is shrinking thus creating panic and need for new, improved ideas.The nowadays marketer has to identify his/het target customers. It is very easy today to use theeconomic crisis as the perfect excuse; however this is not the solution. People are not stupid and it

is very important to overcome this prejudice. People kno w what to choose and how to investlogically their financial resources. If marketers understand that, than they will learn to think formthe customer’s point of view, this being the only vision that can assure them success in times likethese. The financial crisis does nothing else but to highlight that the time of advertising campaigndone for the sake of art has passed.

Life goes on. The only chance that marketers have nowadays is adjustment to a changingworld. Real marketing based on actual results is the only possible future for a successful business.How was the marketing domain affected by the financial crisis? We have to adjust to the financialcrisis. I feel sorry for the marketing department but it will have to recalculate its budget for thecurrent year…….we will increase it, we shall focus on a strategy based on communication with theclient, a strategy without reduction costs though an efficient one. It is very important to beconscious of the financial crisis realities.

Even though on the Romanian market, the financial crisis has not been yet so acute, INGwhich has had to face a 27% decrease of its stock shares and has lost more than 500 million Euroshas decided as being appropriate to adopt a transparency policy towards its clients and off ered theman official report of the crisis situation. Companies such as Unilever and Hankel have beendetermined by the financial crisis to recalculate their advertising budgets because of the devaluationof the national currency and fuel price raise and t hus deciding to change the budget according to thesituation on the Romanian market. On the other hand, Orange Romanian is keeping the sameadvertising strategy, without making any major changes in the last year’s expenses or in the onesestimated for the next year, claiming that there is enough room for development on the Romanianmarket. When compared to other European countries it is obvious that Romania has not yet reachedthe amount of money that were spent by these for advertising campaigns and commun icationstrategies. It is essential not to forget that communication budgets are not only a form of trust in themarket but also a condition for company development, Romania being among the few markets thatis still increasing. Under the circumstances it i s possible that the communication budgets will not bedrastically reduced but we may no longer witness the spectacular growth of the last few years. Themarketing budgets are calculated according to the objectives and many of the top advertisers arestill on an ascendant trend. If the business stagnates or can no longer be framed within increaseparameters, then it is very likely that, especially in the case of multinational companies, there willbe marketing budget reductions.

The Romanian market will be a pretty lively one, or at least this is what the advertisingagencies representatives claim. The banks not only will launch new products especially in the areaof deposits and savings but also imagine campaigns in order to regain brand trust. In Romania, theautomobile industry, in spite of the worldwide crisis, will keep to its launching calendar inaccordance with the international launchings. The retailers will communicate promotional offerseven more aggressively in order to stop the descend trend of s ales that marked the beginning of thepresent year. Even though car dealers will have to cut off from the advertising budgets, this industrywill remain among the most important investors in advertising because the launching of newmodels cannot be postponed, even if companies have financial problems. The insurance companiesmight bring millions of Euros on the advertising market this year, because of the introduction of thecompulsory house insurance: the advertising campaigns for it might be similar to th e one done forthe private pensions, when the involved companies spent more than 20 million Euros onadvertisements. It will be the same with compulsory insurance for houses. There is also an electoralcampaign for the presidency and for the European Parl iament, all these implying importantbudgetary expense. Advertising agencies estimate that this year there will be a reduction in theadvertisement done for luxury products, credit loans and real estate. The industries that last yearspent the most on advertising campaigns are: telecommunication, automobile industry, financialservices, newspapers and magazines, beer, shampoos, fizzy drinks, detergents, the cosmetic anddiary industry.

STRATEGIES TO FOLLOW IN CRISIS PERIODS

According to the analysis entitled “Optimizing the Marketing Budget in Recession” carriedon by the Ogilvy group for the clients affected by the crisis, the investment in marketing andcommunication should not be stopped so as to have a solid business in the post -recession period.

There are companies that are successful during the recession period. These consider theeconomic crisis as an opportunity for development. While their competitors are panicking they aredrawing up increasing strategies through sustained investments. The i mprovement of the marketingbudget is only one of the problems that these companies have to face. The ones that decide to investin marketing usually develop more as if they had in a normal period.

In the following lines are presented some pieces of advic e taken from this study:Consumers pay more attention when purchasing products, especially financial ones, in times ofeconomic crisis. This can be an opportunity to create new and efficient brands and products.Research can be used in order to indentify l oses. When costs are cut off, that won’t be feltimmediately. The decline in the consumer -brand relation will be seen in the research only after sixmonths.

During recession periods, companies have the opportunity to gain more market share than ina normal period.

A profitable company should spend even its last cent in order to continue the developmentprocess.

The companies that reduce expenses will have even more problems and it will take themlonger to return to the ante recession period.

An economic analysis proposes three scenarios for expenses:a. To keep them at the same levelb. To reduce expenses with 50% for a year and then return to the usual onesc. To reduce/cut off expenses with 100% for a year and then come back to the usual onesIn most cases companies chose the second alternative and in takes them two years to recover

the market costs, while the ones that chose the third variant need four years to recover the costs.The companies that want to recover the costs within a year after the recession have to spend onmarketing with 60%n more than the sum they managed to save by cutting off from the initialmarketing budget.

The competitors’ weakness in a period when most consumers still spend can be a goodopportunity for new business, brands or campaign i deas. The most successful campaigns andproducts were launched during secession times (Disney, Microsoft, Apple, iPOd).Companies should not appeal only to the rational side of thought in communication. They shouldappeal to emotions as well. The emotional campaigns sell better than the rational and persuasiveones, because brands are built on emotions.

Television is one of the most efficient media types. The campaigns that use television have ahigher success rate (66%) than the ones that do not use it (49 %). The arguments for using televisionwould be that this medium is more efficient and emotional.

The best way to measure the marketing impact on short term sales is to create aneconometric model. The models are based on two elements:

a. Brand salesb. All factors that affect sales. Such as price, distribution, new products and competitive

advertisingThe survival of the company has priority and the reductions are inevitable. The most secure

reductions for a company may be:-to cut off budgets for small brands n ot for important ones

-small brands often have a disproportion of marketing expenses because they are trying toincrease, but important brands already have a great probability to bring high incomes on a shortterm

-exploit temporariness so as not to make r eductions during high sales periods.There will be fewer loses.The marketing budgets can be reduced, maintained and even increased in order to bring

more sales and steal clients form the competitors that want to reduce expenses as much as possibleand totally abandon advertising.

CONCLUSIONS:

The effect of the financial crisis on the local media market- Lowered increase rhythm form 15 -35% to 6% in 2009- The television media market lost in the first nine months of 2008, approximately 110

million Euros card rates only from the first three advertisers- The clients will choose safer strategies, that will have as purpose more efficient

campaigns with lower budgets

BIBLIOGRAPHY

1. Avraham, Eli – Media Strategies for Marketing Places in Crisis , ButterworthHeinemann; 2007;

2. Bradley, Frank – Marketing internaţional, Editura Teora, 2006;3. Gamble, Paul R.- Revoluţia in marketing. O abordare radicală pentru o afacere de

success, Editura Polirom, 20094. Hughes, Mark - Buzz Marketing, Editura Publica, 2008;5. Kotler, Philip – Marketing de la A la Z - 80 de concepte pe care trebuie să le cunoască

orice manager, Ed Codecs, 2004 ;6. Knight, Peter - Planul eficace de marketing. O metodă verificată pentru companiile de

orice mărime, Editura: ALL, 2005 ;7. Levinson, Jay Conrad - Guerrilla marketing fără costuri pentru luptătorul de gherilă -

100 de tactici fără, costuri pentru promovarea afacerii si energizarea pro fiturilor tale,Ed. Business Tech, 2005;

8. Saffir, Leonard – PR cu buget restrans, Editura Brandbuilders, 2008;9. Zyman Sergio , Brott, Armin - Sfârsitul advertisingului asa cum îl stim , Editura Publica,

2008;10. Zyman, Sergio - Sfârsitul Marketingului , Editura Nemira, 2002;11. http://www.revistademarketing.ro/12. http://www.ogilvy.com/13. http://basicmarketing.ro/

SHORT INTROSPECTION IN FORMATION PROGRAMS FROM ROMANI A AS EUSTATE MEMBER

Assistant PhD. Student Lucia MOROSAN -DANILA„Stefan cel Mare” University of Suceava, Romania

luciad@seap.usv.roAssisant Otilia Maria ALBU

„Stefan cel Mare” University of Suceava, Romaniaotilia@seap.usv.ro

Abstract:The present paper intends to present the situation of continuous formation programs in Romania, including

them in the strategies and Directives of the European Union. This field is poorly researched and analysed in Romania,present studies being elaborated by state institutions, which are trying to fold to the requirements of EU, that wants tobecome the most competitive and dynamic economy based on knowledge form the world, motive that imp osesinvestments in human resources development with the purpose to encourage the employees to obtain new competencesand to accept occupational mobility. Unfortunately, in Romania and all Member States, training is seen as a cost,which must be minimized, and not as an investment. In the present situation, given by the financial and economic crisis,the sole solution for the development of this sector is strong involvement of the Government and its institution.

Key words: continuous formation, training, lifelong learning, qualification, occupation

JEL classification: M12

INTRODUCTION

Te purpose of the paper is to analyse the need of training/professional formation inRomania, resulted from the new context as member state of European Union. Labour market inRomania has undergone significant transformations in the context of economic transition,manifested in particular by reducing the active population and employed population, by maintainingat a relatively constant rate of unemployment and by increase of the long-term unemployment,being particularly affected by limited ability to create new jobs. The slow process, but continuous,of the aging demographic, has resulted in an increase of "pressure" of older population on activeadult-potential population and on some important systems from the society (health, socialassistance, social insurance budget).

TRENDS OF FORMATION PROGRAMS IN ROMANIA

Current structure of the population employed by level of education reflects a shortage ofpeople with higher education, in these conditions, even the few sectors with high added value of theRomanian economy facing with problems in meeting the demand for skilled labour. This justifiesthe need to move the focus to investing in education and training, especially in continuousformation.

As a result, the training itself has a weak structure, most of the elements being ad hocconstruction, directed to the achievement of short -term goals rather than to develop a long termstrategy. The quality assurance system, if put into practice, are in an incipient stage of development.Many providers do not yet see the need to adopt them, because they think that the market is notprepared to cover their costs and thus investing in these expensive systems will provide only smallreturns. Cooperation with commercial agents is still a weak point being limited to the conventionsof training practice. Typically, employers are involved very little or at all within training. The onlyexceptions are the training courses held by companies bu t, even they seem to have a very narrowguidance and not structured as it should be. Trainers of such courses do not have teachingexperience of any kind.

The strategy on short and medium term training continues 2005 -2010, made in accordancewith the Government Program 2005-2008, which provides as the major objective of educationalpolicy and training, the investment in human capital as the most profitable long -term investment,has set itself a target for Romania the average of participation in the process of learning throughoutthe life of 7% until 2010, for the adult population (age group 25 -64 years).

In the present everybody leads to the fulfilling the Lisbon strategic goal: European Union tobecome until the 2010 " the most competitive and dynamic knowl edge based economy in the world,capable of sustainable economic growth, with better jobs and more and greater social cohesion. "In this context, lifelong learning must be approached as an objective necessity imposed by thetransition to an economy and a knowledge based society.

Orientation to a knowledge based society involves investment in development of humanresources in order to encourage employees to acquire new skills and to support occupationalmobility. Meanwhile, it is important to promote the qu ality of supply of training and to ensure itsrelevance in relation to skills, knowledge and individual needs.

Trends of the continue training market revealed by the study The continuing vocationaltraining in the technological development process from the Romanian economy are:

- The entrance in EU will lead to further amendments and new restructures of the sectors ofRomanian economy, and implicitly of their under -summative occupations;- Development of new sectors of activity, penetration into new marke ts or market niches,developing and expanding private sector, reengineering, to adapt to customer needs,increasing competition in the field, adjusting the legal framework with the EU, will determinechanges in structure and content of occupations;- Trend of evolution towards a flexible, quality employment, especially for the area ofservices, because:

• occupation of perforation is developing on new areas (on market niches) with highdemands on the level and quality of necessary skills • occupation perforation tend to be charged with the partially work program or contractwith fixed-term employment, • how it increase the added value of economic activity carried out, increases the possibilityto motivate employees by flexible time or by ways of recon ciling family life with work.

- There is a relatively low awareness on the changing content of the activity.Foreseeable effects on economic and social environment include:- Can show deficits of skilled labour in the new activity / new occupations, un -correlationsbetween the offer and demand for labour and employment at non -European level;- Appears the need for training - the need to update the skills of labour force by training;- There is a risk of exclusion from the labour market for people without financialopportunities to keep pace with changes and the elderly, which is most pregnant, thephenomenon of lack / shortage of skills / qualifications.Changing trends of Romanian occupational system, revealed by the study "Evolution of

occupations in the labour market in Romania for 2010", will lead to an exacerbated need foradoption of some appropriate policies for continuous training of labour, to keep pace with technical/ technological changing and new communication technologies.

Development and implementation of suitable permanent training programs for employmentwill help to prevent shortages of qualified / competent labour in certain fields and relatedoccupations. It requires a change of mentality in terms of training, to increase awareness about theimportance of continuous learning, the degree of motivation for increasing knowledge anddeveloping skills of individuals.

Development of continuing professional education system can not be conceived in theabsence of partnerships built with the cont ribution of all factors that can influence the evolution ofthe system, in particular the social partners, but also the state and its regulatory authorities,professional associations, training providers, civil society etc.

Variety of training needs arising from profound economic and social changes that had placeand to be held in Romania are not evaluated properly, one of the explanations is that, at policymakers level, and society in general, is not still recognized the fundamental importance of trainingto overcome problems arising from structural changes. Also, there is no evaluation about thecontinuous training that takes place in present, or about the projected one or about the potential ofcontinuing professional training in Romania.

The following areas will require special efforts:• Raising skill levels. Poorly qualified individuals are at risk of economic and social

exclusion. Persistent cases of early school leaving, low participation in lifelong learning activities ofolder workers and the low skilled and low skilled migrants is a cause for concern in most countries.In the future, in a knowledge based economy, the labour market will require an increasingly higherqualification from a work force increasingly less numerous. The problem of low qua lifications willbecome a challenge even more important;

• Strategies for continuous learning. Most countries have made progress towards thedefinition of a coherent overall strategy. In this context, progress is evident in preschool education,qualifications frameworks and the validation of non -formal and informal learning. However,innovative learning partnerships and sustainable financing in order to education and professionaltraining of high quality, efficient and fair, still lacking in many countries , the more so as increasinginvestments saw an apparently slow. Ensuring that reforms are implemented effectively representsan important challenge for all;

• The knowledge triangle (education, research, innovation). Triangle of knowledge plays adecisive role in stimulating economic growth and employment. It is therefore important toaccelerate the reform, promoting excellence in higher education and university and businesspartnerships, and ensure that all sectors of education and training play their ful l role to promotecreativity and innovation.Adapting education and training systems to new requirements of skills through: a betteridentification of occupational needs and key competences, and anticipation of future skills needs,expanding the supply of education and training; staff support development for transparency ofqualifications, their effective recognition and validation of informal and non -formal learning;ensure attractiveness, openness and high standards of quality for systems of education an d training.

Adult training should provide to the employees and the unemployed the possibility to adaptquickly changes to the demands in continuous change of the labour market. In this context,diversification and increase of the quality of supply of train ing should be a permanent concern.

OFFER AND REQUEST FOR FORMATION PROGRAMS

Following the creation of legal and institutional framework for continuing professionaltraining, in January 2004 began the process of approval of providers of training for adul ts.

Up to date 01.05.2005 were authorized 856 providers of professional training for 2307training programs, of which 1887 of qualification, 177 of initiation, 177 of improvement and 75training programs for specialization.

Reducing the tax of authorisati on from three average net wages in the economy at twominimum gross salaries, in October 2004 resulted in increasing the number of authorized trainingproviders.

In Romania, the training is based on occupational standards, the legislation providing theobligatory development of training programs subject of authorization on this basis. Insufficientnumber of occupational standards and the fact that the complex task of their development returnscurrently to training providers and other interested organization s is an impediment to theauthorization of training providers for many occupations, limiting, in some areas, offer of training.

Providers of training are, generally, small institutions, non -specialized, who adapts quicklythe offer of training to immediate market needs. In general, they offer programs for Level 2 ofqualification, initiation of programs for computer use or acquisition of skills for foreign languages.

There is a low offer of programs for qualifications that require major investments by provi ders oftraining.

Offer of authorised training programs not reflects only partially the training needs of the job.The most efficient form of linking the training content with the market needs is done when trainingtakes place at the request of businesses, and practice is conducted in real conditions of work orwhen training providers cooperate closely with businesses from certain sectors. Training at theworkplace is the most frequent method of training, being, on the one hand, inexpensive, and, on theother hand, inevitable, required by the development of activity itself.

Offer of training tends to focus on programs for complete qualifications or on programs fordevelopment of general competencies. Also, the offer of professional training is still veryfragmented, because it addresses more likely to people and not to companies, orienting on punctualrequests of labour market

The system is focused in particular on the provision of certificates and less on developmentof skills necessary for employment. Long LLL programs, makes them unsuitable for persons placedin employment.

Figure no. 1. Participation of the population at continuous training programsSource: European Commission

According to data provided by the European Commission (presented in the t able above)Romania is on the last place in the population participation to programs of education and training(1.3% of the total population with aged between 25 -64 years), situating much under the average of10% at EU level.

Another important factor that acts as a brake in the current system of LLL, is that currentlegislation does not permit certification of partial qualifications, although the demand of labourmarket training is often oriented to narrow qualifications.

For many employers, especially in i ndustries with low added value, where there is a largesupply of labour and workers' wages are low, investment in continuing training is not considered anecessity.

As long as in the Romanian economy will prevail jobs with low wages, which are focused inindustries with low added value, where education and training bring little benefits, it is possible thatthis situation and the perception to continue.

Development of industries with high added value will help change employers' attitudes andmentality towards investment in education and training.

Low income of individual and relatively high costs of the training programs are the mainobstacles to access to training, while the offer of training has tended to focus on programs lasting

longer for complete quali fication. Both economic units and individuals manifest a greater demandfor modular courses of short time, directed by acquiring certain skills.

Employers prefer to hire staff that is already prepared. So, people who have invested in theirtraining are in a better situation than young school graduates, workers with no experience and thosereturning to the labour market after a period of unemployment.

Training is seen as a cost, which must be minimized, and not as an investment. Investmentsof employers in human resource development are low and general expenditure of training arecovered in particular by individuals.

RESEARCH IN FORMATION PROGRAMS FIELD IN ROMANIA

This field is poorly researched and analysed in Romania, present studies being elaborated byten state institutions. These studies are trying to fold to the requirements of EU, that wants tobecome the most competitive and dynamic economy based on knowledge form the world, motivethat imposes investments in human resources development with the purp ose to encourage theemployees to obtain new competences and to accept occupational mobility. In the same time, isimportant to promote the quality of formation offer and to ensure its relcatlessness comparing withperson’s abilities, knowledge and needs.

The studies related to the field are: Reports and studies made by the Ministry of Work, Family and Equity, Direction of Programs

and Strategies for Working Force, National Observatory of Occupation and Professional Formationof Working Force:

- European regulations in domain of working force occupation and professional formation,Bucharest, July 2007

- Continuous professional formation in the process of technologic development fromRomanian economy, Bucharest, April 2007

- Evolution of European politics in doma in of working force occupation , Bucharest, August2007

- Present problems of yang people form Romania , Bucharest, May 2007 Studies made by National Council for professional Formation of Adults and program GTZ for

Romania:- Analysis of working market and ident ification of formation needs, Bucharest, 2002- Assurance of professional formation quality of adults in Romania, Bucharest, 2002- Explorative research concerning adults professional formation, Bucharest, December 2001

National Plan for Development 2007 -2013, Romanian Government, Ministry of Public Finance LLL in the service of knowledge, creativity and innovation , project of common report for 2008

concerning the progress, of the Council and the Commission, regarding application of “workingprogram Education and professional formation 2010” {SEC(2007) 1484}, Bruxelles, 12.11.2007 Decision no 970 from 07/26/2006 Published in Official Monitor, Part I no 698 from 08/15/2006

concerning approval of the National Action Plan in the Field of Occupation PNAO - 2006 Strategy of the medium and short term for continuous professional formation 2005 -2010

REGULATION OF FORMATION PROGRAMS AT EUROPEAN LEVEL

Education is a permanent concern of the governments of all Member States, but the structureof education systems differ considerably from country to country. In this context, the EU is a usefulforum for exchanging ideas and best practices. The EU has no common policy on vocationaltraining, but on the contrary, its role is to create a system of cooperation between Member St ates bymaintaining the right of each Member State to decide on the content and organization of educationand training.

Regarding transparency and recognition of diplomas and qualifications for academicpurposes was created, in 1984, at the initiative of the European Commission, a network of National

Centres for Recognition of Diplomas that are found in all EU Member States and the EuropeanEconomic Area as and all the associated States of Central and Eastern Europe. They provide adviceand information on recognition of diplomas and periods of study undertaken abroad. Regardingtransparency and recognition for professional qualifications is currently creating a network ofNational Information Points for vocational qualifications which will be a first point of contact forissues related to professional qualifications.

This field, particularly important for the concept of the single European market, is regulatedat the level of Directive.

Following the request made by the European Council from Stockholm in Ma rch 2001, theEuropean Commission proposed a new Directive on recognition of professional qualifications inorder to create a more uniform, transparent and flexible frame to modernize the entire Europeansystem of recognition of qualifications.

Proposal for a Directive aimed to bring together the 15 existing directives - 3 of the generalsystem of recognition of qualifications and 12 sectoral directives relating to the professions ofdoctor, nurse, dentist, veterinary surgeon, midwife, pharmacist and archi tect – for who are set fordifferent systems of recognition. It is estimated that this Directive will contribute to the relaxationof labour markets, to accelerate liberalization of the provision of services, to encourage automaticrecognition of qualifications and to simplify administrative procedures.

Therefore in 7 September 2005 have been approved the Directive of the EuropeanParliament and Council no. 2005/36/EC on the recognition of professional qualifications which arerepealed the Directives 77/452/EEC, 77/453/EEC, 78/686/EEC, 78/687/EEC, 78/1026/EEC,78/1027/EEC, 80/154/EEC, 80/155/EEC, 85/384/EEC, 85/432/EEC, 85/433/EEC, 89/48/EEC,92/51/EEC, 93/16/EEC and 1999 / 42/EC.

The Directive applies to all citizens of Member States who wish to pursue a r egulatedprofession, as employees or self -employed, in a Member State, other than where they obtained theirprofessional qualifications.

Is not covered by this regulation the directives relating to the right of free circulation ofservices and for lawyers (Directives 77/249/EEC and 98/5/EC), because they are not relate torecognition of qualifications, but the authorisation of law practice. Recognition of professionalqualification of lawyers was previously covered by Directive 89/48/EEC and, therefore, is coveredby the new directive.

Recognition of professional qualifications allows the recipients to engage in the hostMember State the profession who have obtained qualifications in the Member State of origin, andthe right to carry out this work under th e same conditions as nationals of that State, where theprofession is regulated.

Directive makes a distinction between "freedom to provide services” and “freedom ofestablishment", based on criteria identified by the European Court of Justice: duration, f requency,regularity and continuity in services.

In the first case, the person may provide services in temporary and occasionally based on theoriginal qualification document, without the need for recognition of his skills. If the profession isnot regulated, the service provider must prove also professional experience of 2 years.

In the second case, involving the establishment in another Member State, the Directiveprovides for three systems of recognition:

� General system of recognition of professional qualifications - Chapter I: The systemapplies to all professions where there are no specific rules for recognition, and if the person doesnot meet the conditions laid down in the other scheme of recognition. This general system is basedon mutual recognition, subject to compensatory measures where there are large differences betweenindividual preparation and necessary training to conduct business in the host Member State. Thesemeasures may relate to an adaptation period or an aptitude test.

The system of automatic recognition of qualifications attested through professionalexperience - Chapter II: The industrial and commercial, craft activities listed in the Directive are

subject, in the conditions set by this, to automatic recognition of qualifications attested byprofessional experience.

The system of automatic recognition of qualifications for certain professions -Chapter III: This recognition can be done when performing a cumulative minimum of training inthe following professions: doctor, nurse, dentist, dental practitioner, veterinary surgeon, midwife,pharmacist and architect.

As regards the requests of knowledge of the language of the host Member State, theDirective provides the possibility of fulfilling this necessary condition for activity unfolding.Assessing the knowledge of language is separable from the recognition of qualification and it canbe done on the basis of tests adapted to the knowledge of linguistic level necessary to serviceprovision.

Directive also contains provisions relating to certain administrative aspects relatingcooperation between Member States.

Thus, for the application of Directive: Each Member State should designate a coordinator to ensure the uniform application of

the Directive; Each Member State shall designate points of contact not later than 20 October 2007.

These contact points will have the role of informing citizens in this area and assist them inexercising the rights established by the Directive;

Each Member State shall designa te a representative to the Committee for the recognitionof professional qualifications.

VOCATIONAL EDUCATION AND TRAINING IN EUROPE

Within the LLL process and continuous formation field, the European Commissionestablished in October 2005 The European N etwork for Quality Assurance in Vocational Educationand Training (ENQA-VET), in order to support the implementation of the Copenhagen Declaration.The main purpose of the Network is to create a structured and sustainable platform for membercountries to exchange information and experience, learn from each other and build consensus onquality assurance issues in vocational education and training (VET).

The ENQA-VET Work Programme, working on the principles of the Open Method ofCoordination (OMC) within the Lisbon and Copenhagen processes, provides support to membercountries to work together towards the achievement of common priorities and objectives. This isachieved by establishing best practice, common principles and guidelines and using indicators toevaluate activities and monitor progress.

The thematic groups are a major pillar of ENQA -VET’s work. They contribute to policydevelopment and the achievement of the Network’s strategic objectives, through the production of arange of material which will con tribute to evidence-based policymaking, within Member States andat EU level.

The groups build on the previous work undertaken as part of the Network and provide thebackbone to ENQA-VET’s current work. Each group has a specific mandate consistent with thestrategic objectives of ENQA-VET and brings together experts from the Member States and theSocial Partners.

Current thematic groups address the following topics: Making VET more attractive, QualityIndicators, Guidelines for supporting quality in VET sys tems and Peer Review.

Making VET moreattractiveHost country: Malta

The role of this thematic group is to support ENQA -VET in its reflectionon the role of quality assurance in making VET more attractive. It isworking on development of concrete suggesti ons which will supportpolicy implementation within national and/or regional systems asappropriate.The group’s deliverables are to provide:

• Medium term analysis of successful measures which are needed toensure that VET is seen as an attractive option for learners and• Longer term stock-taking report to contribute to policy development atEuropean and Member State levels.

Quality IndicatorsHost country: CzechRepublic

The mandate of this thematic group on indicators is to support the work ofENQA-VET in its reflection on the choice and use of indicators, tomeasure progress in relation to the implementation of the EuropeanQuality Assurance Reference Framework. In particular the group’s workwill focus on the indicators proposed in the European Commi ssion’s“Proposal for a Recommendation on the Establishment of a EuropeanQuality Assurance Reference Framework” published in April 2008.The deliverables for this group are:• A reflection on the feasibility of the indicators proposed in the EuropeanCommission proposal• A reflection on the use of indicators to measure progress in qualityassurance of VET and in particular an examination of the feasibility of thelonger standing VET related indicators developed by the Standing Groupon Indicators.

Guidelines forsupporting quality inVET systemsHost country:Netherlands

This thematic group is examining the use of the European QualityAssurance Reference Framework (EQARF) and the experience ofMember States in using the framework. The group will look at h ow policyis turned into practice with a particular focus on supporting systems andkey factors in developing a culture of quality assurance.Agreed deliverables for the group are:• Discussion papers and monographs on various issues relating to thepractical implementation of the EQARF;• Presentations of practices which support the use of EQARF in a varietyof VET contexts in Europe and• Guidelines which will facilitate the use of EQARF in Member Statescontexts.

Peer ReviewHost country: Austria

This group will prepare a strategic vision of how to most appropriately inVET through sustainable European cooperation and exchange of goodproduce proposals for developing a system of European peer review inSpecific deliverables for this group are:• Prepare a proposal for a process and structure for peer reviews at• Prepare a strategy for the further development of the European peermutual learning from European peer review in higher education

CONCLUSIONS

European Union to become until the 2010 " the most competitive and dynamic knowledgebased economy in the world, capable of sustainable economic growth, with better jobs and moreand greater social cohesion." In this context, lifelong learning must be approached as an objectivenecessity imposed by the t ransition to an economy and a knowledge based society. Unfortunately,in Romania and all Member States, training is seen as a cost, which must be minimized, and not asan investment. Investments of employers in human resource development are low and genera lexpenditure of training are covered in particular by individuals. Interjects here the regulations ofEuropean Union given by the Directive 2005/36/EC, which sets the basis of qualificationrecognition at European level, the fact that should motivate and impulse the employees andemployers to participate and develop lifelong programs.

At institutional level, Romania should take some measures, like powerful stimulation ofcompanies to invest in human resources, to develop their potential as a main source o f profitability.The new European regulations in this sector are very little observed in Romania, all activities beingin stage of idea. In the present situation, given by the financial and economic crisis, the solesolution for the development of this sec tor is strong involvement of the Government and itsinstitution.

BIBLIOGRAPHY

1. Analiza pieţei muncii şi identificarea necesarului de formare, Consiliul National deFormare Profesionala a Adultilor, Program GTZ pentru Romania, Bucureşti, 2002

2. Evoluţia politicii europene în domeniul ocupării forţei de muncă, Ministerul Muncii,Familiei si Egalităţii de Şanse, Direcţia Programe si Strategii Forţă de Muncă,Observatorul Naţional sl Ocupării si Formării Profesionale a Forţei de Muncă,Bucureşti, August 2007

3. Formarea profesională continuă în procesul dezvoltării tehnologice din economiaromânească, Ministerul Muncii, Familiei si Egalităţii de Şanse, Direcţia Programe siStrategii Forţă de Muncă, Observatorul Naţional sl Ocupării si Formării Profesionale aForţei de Muncă, Bucureşti, Aprilie 2007

4. Hotărâre nr. 970 din 26/07/2006 Publicat in Monitorul Oficial, Partea I nr. 698 din15/08/2006 privind aprobarea Planului naţional de acţiune în domeniul ocupării PNAO- 2006

5. Învăţarea continuă în serviciul cunoştinţelor, creativităţii şi inovaţiei , Proiect de raportcomun pentru 2008 privind progresu l, al Consiliului şi al Comisiei, referitor la punereaîn aplicare a „programului de lucru Educaţie şi formare profesională 2010” {SEC(2007)1484}, Bruxelles, 12.11.2007

6. Planul Naţional de Dezvoltare 2007 -2013, Guvernul României, Ministerul FinanţelorPublice

7. Probleme actuale ale populaţiei tinere din România, Ministerul Muncii, Familiei siEgalităţii de Şanse, Direcţia Programe si Strategii Forţă de Muncă, ObservatorulNaţional sl Ocupării si Formării Profesionale a Forţei de Muncă, Bucureşti, Mai 2007

8. Reglementări europene în domeniul ocupării forţei de muncă şi formării profesionale ,Ministerul Muncii, Familiei si Egalităţii de Şanse, Direcţia Programe si Strategii Forţăde Muncă, Observatorul Naţional sl Ocupării si Formării Profesionale a Forţei deMuncă, Bucureşti, Iulie 2007

9. *** www.enqavet.eu10. *** www.cnfpa.ro11. *** www.europa.eu

SECTION 3

ACCOUNTING - FINANCES

ASSESSMENT AND RECOGNITION OF STOCKS IN ACCOUNTING ACCORDING TOINTERNATIONAL STANDARD OF FINANCIAL REPORT IAS 2 – STOCKS

Professor PhD. Elena HLACIUCStefan cel Mare University of Suceava, Romania

elenah@seap.usv.roProfessor PhD. Dorel MATES

West University of Timisoara, Romaniadorel.mates @yahoo.com

Assistant PhD. Student Marian SOCOLIUCStefan cel Mare University of Suceava, Romania

marians@seap.usv.ro

AbstractIn life accounts of an enterprise stocks represent a very important topic in the light of their c ost reflected in the

profit and loss account on the one hand, and the value of assets shown in the balance sheet on the other hand.In practice are met two categories of enterprises for which stock accounting are very important.

The first category is represented by commodities traders, who have typically a single class of stock: goods. Inthis case the trader buys stocks for the purpose of resale. The second category is the producers of goods, which usuallymeet three categories of stocks: the raw materia ls, progress production and finished products.

It is obviously that the assimilation process of accountancy standards culture will have repercussions onmedium and short term over the management controlling system, and over the informational system, in f orthwith time.The informational system, understood as an assembly of technical means and human resources, of methodologies andprocedures, of data collected and finally of information, which will have to be proper with a view to draw up a balancein accordance to the new accountancy rules.

These changes will be especially of technical -accountancy nature and will foresee: the accounts plan, theconnections between different drawing up and collecting of data systems, the financial reports and the disclosure andreclassifying procedures

Key words: evaluation, recognition, IAS/IFRS, stocks, financial statements

JEL Classification: M 43

INTRODUCTION

Accounting for stock is offered by IAS 2 – Stocks. The standard provides guidance on therecognition of the value of stocks at the balance sheet date, the cost of inventory and recognition ofexpenses for stock, considering any record net realizable value. [1]

Also, standard provides guidance on the practical procedures for determining the cost ofstocks.Related to stocks accounting, both dealer, and manufacturer, should answer to the followingquestions:

• Under what conditions an entity must recognize stocks in its assets?• At what value is stocks evaluated at the entrance in entity and which costs that the entity is

employing must be included in the cost of stock?• When stocks are recognized as expense and which are the formulas for determining the

cost? [3]• At what value stocks are recognized in the balance sheet?[2]• What information should be presen ted in the annual accounts?

IAS 2 applies to accounting of all stocks reflected in financial statements prepared on the historicalcost, except:

• progress production obtained in the construction contracts, including those of servicesdirectly related to them (IAS 11 - Construction Contracts);

• financial instruments (IAS 39 - Financial Instruments: Recognition and Measurement );• stocks of agricultural products, forestry, minerals belonging to producers when are valued

at the net achievable rate, based on the specific practices of each sector separately.

DEFINITIONS, DEMARCATIONS AND STRUCTURES REGARDING STOCK

The international reference defines stocks as assets:• held to be sold during the normal conduct of business;• under production to be sold in subsequent periods;• in the form of raw materials and consumable materials, used for production of goods or for

services.This separation of stocks does not take into account the nature of the item, but the

destination of the company who owns the pr operty. Also, the standard does not specify an upperlimit value or a maximum duration of use.Example:

An entity can buy apartments in order to resell them. In most cases, the apartments arepurchased by an entity for rent or to use for administrative pur poses. In this case they will beclassified as fixed assets. If the aim is to resell them, the apartments will be classified ascurrent assets (stocks).

Moreover, we meet situations where stocks are devoid of a natural substance (a kindimmaterial), such as services and un-invoiced.

The definition puts in evidence three criteria according to which they are classified anddefined in financial accounts physical condition, the destination and the cycle phase of operation .

If is taken into account the phys ical condition of the stocks, are individualized following structures:[7]

• goods, namely goods which the entity buys them for the purpose of resale or productsdelivered to own stores for selling;

• raw materials which directly participate in production and are found in the finishedproduct integrally or part, either in their original or converted shape;

• materials (auxiliary materials, fuel, packaging materials, spare parts, seeds and plantingmaterials, animal feed and other consumables), which partic ipate in or help to the manufacturingprocess or operating without a trace, usually in the finished product;

• materials of the objects inventory nature;• products as semi products, finished products, scrap, waste and recoverable materials;• young animals, animals fattened, birds and colonies of bees;• packaging, including reusable packaging, purchased or manufactured, destined to sold

products and which temporary can be kept by others, with the refund obligation as stipulated incontracts;

• running production, representing the production which has not gone through all phases(stages) of processing, provided in technological process, and products not given tests and technicalreceipt or entirely not completed. Within the running production includes, a lso, works and services,and ongoing execution or unfinished.

If is taken into acount the destination, stocks can be defined as:

• stocks for achieving the activity object of which is found in products manufactured orservices: stocks of raw materials an d materials supplies;

• stocks manufactured in the company stock and for sale: semiproducts, finished products;• Stocks in running production (WIP);• stocks bought for the purpose of resale: goods, real estate properties for resale.

Depending on the phase of exploitation cycle, stocks are off the following structures:• Stocks in phase supply;• stocks in production stage;

• Stocks in stage of outlets.

NATIONAL APPROACH

National stocks take over the definition from the international reference. Un like IAS 2, thenational accounting rules that have more of a role of regulation, than to lay down principles,explicitly details the categories of stocks, and their way of accounting. [6]

Within an enterprise, are individualised two basic informational st ructures on stocks: astandardized financial structure (built by the chart of accounts) and a management structure.[5]

Standardized financial structure is part of financial accounting and is done with the help ofaccounts of the General Plan. In the financ ial accounts of the company stocks are defined andclassified according to four criteria: physical, destination, phase cycle of exploitation and thecreation of management.[4] Compared with the three criteria for classification and delineation ofthe stocks found in the definition of IAS 2, we observe that national regulations operate with afourth criterion and, namely the place of creation of management. In relation to this criterion stocksare grouped into:

• Stocks in locations of the enterprise;• stocks on third parties;• stocks received in custody, for processing, etc..;• stocks delivered, but un-invoiced;• stocks charged, but not delivered.

Internal or management structure is one non-standard and is specific to management accounting. Itoperates with the analytical accounts appropriate to the range of stocks and stock management.

RECOGNIZING STOCKS

INTERNATIONAL APPROACH

Example:

In the case of stocks, the potential to contribute to cash flow to the company, is oneproductive, belonging to current activities (operational).Usually, stocks are used by the enterprise for the production of goods and services tosatisfy customer needs. That is way customers are willing to pay to purchase these goods,and cash came from the stock sale or prov ision of services gives the company anadvantage, because it allows the control of other resources.

The second criterion for recognition of stock, is the credibility of the assessment. Theassessment, in itself, should not cause a problem, since the ent ry into the unit, stock element isclearly identified. If however, the stock value should be expected, this fact did not affect thecredibility of accounting information related to the cost of stock. [9]

However, there may be some situations and conditions in which recognition of stock mayraise some problems. It is the case of immaterial stocks and stocks for which can not be provedgeneration of future economic benefits attached to them.

Example:

1. Within the activity process the enterprise is supplyi ng with items that can not be stockedor utilities (electricity and heat, water, etc.). In these circumstances it is unlikely that theseelements to generate future economic benefits and to be recognized in the balance sheet ascurrent assets and will be recognized as expenses in the period.2. There are situations in which companies will recognize as stocks and items that lack

physical substance. Is the case of running works and services wich will be classified asstock in the balance sheet.

Another issue raised by the stock recognition of that related to associated legal rights,primarily of ownership. IASB Framework does not make the recognition in the balance sheet of anasset of ownership associated with it.

Ownership is not always essential for de termining the existence of an active, if the entitydoes not control the economic benefits generated by the property in question. In such cases, inwhich the legal form of transactions do not reflect economic substance, must be applied theprinciple sostanza sulla forma for recognition of stocks. [8]

Example:

There are situations where one entity owns the stocks in the consignment. Legal status ofthese stocks is governed by contractual provisions. If from the consignment contract resultsthat the owner of goods has transferred the risks and benefits associated with stock, thenthe entity that has stocks may recognize them in its assets (it has the ability to control theeconomic benefits). Examples of contractual clauses which, taken together, transfer t herisks and benefits on stocks:• stocks are held by a receiver an agreed period of time;• are returned in case of not -selling in the state in which they were received;• receiver due to interest payments and compensation for stocks that were not sold duringthe period covered by the contract.

NATIONAL APPROACH

National regulations classify stocks as current assets. For the meaning of the currentregulations an asset is classified as current assets if: [12] -[13]

• is purchased or produced for own consumption or for sale and is expected to be completedwithin 12 months from the balance sheet date;

• is represented by debt related to exploitation cycle;• is represented by treasury or treasury equivalent whose trade is restricted.

By operating cycle is understood the period of time from the purchase of raw materials entering intoa process of transformation and complete them in treasury or equivalent of treasury.Synthesizing, the items are recognized in the balance sheet as stock, if:

• meet the conditions for recognition of assets;• are purchased or produced for own consumption or for sale;• is expected to be completed within 12 months from the balance sheet date.For recognition of an item as a stock, we see that is not important its nature, but the purpose

for which it is intended and lasting achievement. Also there is no reference to an upper value limitdepending on which to make the delineation from other assets (compared to fixed assets forexample).[10] –[11]

Example:

An enterprise specialized in metal processing, purchases two lathes. A lathe is purchased foruse in the production, and the second lathe to sell to a subsidiary in Italy. Accountingtreatment of the two lathes is as follows:• lathe purchased to be used for productive purposes is classified by the entrepreneur asfixed assets. The purpose of purchase was to use it on a continuous basis, a longer period(over one year);• lathe purchased for resale, is classified by the entrepreneur as a stock item (commodity).Although the goods are similar, because of different purpose that entity gives it, they will be

accounted differently.

CONCLUSIONS

General framework for the preparation and presentation of financial situations of IASBdefines the recognition as the process of incorporation into the balance sheet or in the account ofprofit and losses of an item that meets the criteria for recognition.

As assets, stocks are recognized in the criteria within are met criteria for the recognition ofassets and, namely: is likely that any future economic benefit associated to enter or come in or outof the enterprise; the item has a cost or value that can be evaluated credibly.

The first criterion refers to the uncertainty degree in achievement of future benefits relatedto stocks, in our case. To evaluate the degree of uncertainty must be taken into account availableinformation at the time of recognition.

Future economic benefits associated with stocks are the potential to contribute directly orindirectly to the flow of cash and cash equivalent to the enterprise. In this article has beenapproached the subject of reassessing the tangible assets, emphasizing on the two methods formanaging the amortization on the reassessment date. After analyzing the examples supplied it isnoticed that both methods generate the same amortizable value after reassessment. No matter if onemethod or the other will be chosen, the economic entity will have to supply, in its financialstatements, the following information: date when the reassessment will enter in force, whether theentity employed an independent assessor, the significant methods and assessments applied forestimating the hones value of the elements, the reassessment excess, thus identifying the modifyingcorresponding to the period o f time and the limitations as regards distributing it to the shareholders.For each reassessed category of tangible assets it is necessary to mention the accountancy value thatwould be obtained if the cost model would be applied.

We must take into account that improving a company’s performances involves the operativeand as exact as possible measuring the efforts and the effects, as well as efficiently using thetangible assets. Organizing and leading the accountancy management of the tangible assets relie smore and more on careful researching the structure and dynamics elements, but especially ondecoding the evolution tendencies of the phenomena that occur in the company and in its externalenvironment. An economic entity will be able to change its accoun tancy option as regards thetangible assets’ elements only if it will prove that the new option will have an important effect inthe current period of time or in the next periods. The main effect of adopting the new option mustbe more accurately and more authentically presenting the tangible assets in the financial statements.

BIBLIOGRAPHY

1. Azzali S., L’informativa di bilancio secondo i principi contabili nazionali einternazionali, G. Giappichelli Editore, Torino, 2005

2. Balducci D., Il bilancio d’esercizio, Edizioni FAG, Milano, 20073. Borgia M., L’evoluzione e l’applicazione dei principi contabili internazionali nelle

aziende di credito, G. Giappichelli Editore, Torino, 20064. Bostan I., Auditul Intern al Companiei , Editura ALFA, Iasi, 20085. Bostan I., Hlaciuc E., Andronic B., Borş L. , Consideration Concerning Finanacial

Statement In The Context Globalization , Simpozionul ştiinţific internaţional ”Durableagriculture in the context of environmental changes ”, 16 - 18 octombrie , Iasi, 2008

6. Hlaciuc E., Contabilitatea financiară armonizată cu Directivele contabile europene şistandardele internţionale de contabilitate (OMFP 306/2002) , Editura Didactică şiPedagogică, Bucureşti, 2002

7. Hlaciuc E., Mihalciuc Camelia Cătălina, Organizarea contabilităţii financiare a e ntităţiloreconomice. Abordări teoretice şi applicative conforme cu prevederile OMFP 2374/2007 şiStandardele Internaţionale de Contabilitate, Editura Didactică şi Pedagogică, Bucureşti,

2008.8. Mates D., Bostan I., Grosu V., Socoliuc M., The Importance Of The Accounting

Information In The Process Of Communication , Conferinţa Internaţională organizată deUniversitatea „Eftimie Murgu” Reşiţa, Facultatea de Ştiinţe Economice şi Administrative,cu tema: Economia României post -aderare, Sectiunea III: Finanţe, Con tabilitate,Gestiunea Afacerilor, publicat in revista „Caiete de Drept International” „Analele UEMR– ZEC 2008, S.3, Reşiţa - Crivaia 21-22 noiembrie 2008

9. Santesso E., Sostero U., Principi contabili per il bilancio d’esercizio , Il Sole 24 Ore,Milano, 2001

10. Turcanu V. (ASE Chişinău), Bostan I. , Mateş D., Socoliuc M., Grosu V., The EvolutionOf The International Standards Of Accountancy Ias/Ifrs, Area Of Application And TheMechanism Of Adoption, The Annals of The "Ştefan cel Mare" University SuceavaFascicle of The Faculty of Economics and Public Administration, ISSN: 1582 -6554,www.seap.usv.ro/annals, No.8, pp. 142-146, 2008

11. *** Codul fiscal al Romaniei, 200812. *** Ordinul Ministerului Finantelor Publice nr. 1752/2 005, Monitorul Oficial al

Romaniei nr. 1.080. bis13. *** Standarde Internationale de Raportare Financiara (IFRS) 2007

THE REGIME OF INFORMATION DERIVED FROM THE APPLICATIONPROCEDURES FOR STATUTORY AUDIT

Professor PhD. Ionel BOSTAN “Ştefan cel Mare” University of Suceava, Romania

ibostan@seap.usv.ro

Abstract:The statutory audit is given by the audit activity of financial annual situations or of consolidated financial

annual situations, corresponding to the communitary legislation transcript in national settlement. The statutorylistener is “natural person authorized by the competent authority, respective the Room of Financial Listeners fromRomania (CAFR), to accomplish statutory audit. The statutory listeners and the audit firms must accomplish inconformity with International Audit Standards (ISA). On the audit accomplish, the audit listeners and audit firms canapply a national standard, adopted by CAFR, as long as European Union did n ot approved one ISA which refers to therespective problem, mentioning this aspect in the audit report. In this context , the information regime about therespective activity is special. We refer too in this intervention of a few elements of this aspect.

Key words: Confidentiality, professional secret, information divulge, information transmission, internationalco-operation.

1. INTRODUCTION

Abreast bookkeeping professionals it’s known that all the information and documents wherethe statutory audit or audit firms access, when they accomplish a statutory audit, it must beprotected according to the adequate rules about the confidentiality and professional secret, from theregulations issued by the Room of Financial Listeners from Romania (CAFR).

But, in the context in which Romania, as a member state with entire rights of EuropeanUnion, has transcript in the personal legislation the Norm 2006/43/CE from 17 may 2006 of theEuropean Congress and of the Council about statutory audit of the annual account, the situation getsa special importance.

2. THE CONFIDENTIALITY OF AUDIT INFORMATION

According OUG Nr.90/2008-about statutory audit of annual financial situations and of theconsolidated annual financially situations, the informatio n regime about the respective activitybecomes extremely rigorous.

For example, in the case in which a statutory listener or a audit firm is replaced with anotherstatutory audit or another audit firm, the ex statutory listener or audit firm will assure th e access ofall the relevant information about the audited entity to the new statutory listener or the new auditfirm.

More, if a statutory listener or an audit firm stopped being employed in a certain auditmission makes in continuation the object of sho wn restrictions, about that audit mission.

The statutory listener and audit firm as well as the audit firm employers must take anyinformation as confidentiality during their activity, excluding the case when the laws or normsprovide differently and excluding the case when the person that the information gave his consentabout giving up the confidentiality obligation.

The confidential information obtained as a result of professional relations or businessrelations can not be used in personal interest or in the interest of a third part, excepting theinformation that make the object of other relations stipulated by contract with audited entity or ofthe information obtained in the conditions of the consent.

Inserting in this debate some aspects about reporti ng the audit as well, we emphasize that inthe case that a audit firm accomplishes a statutory audit, the audit report is signed at least by thestatutory listener (listeners) that accomplish the audit in the name of the respective firm.The report in cause must contain clear the name of the person which has type it, as well as theindividual registration number in the public Register.

In exceptional circumstance, settled by norms issued by CAFR and approved by the Councilfor Public Supervision of the Stat utory Audit Activity (CSPAAS), it establish the conditions inwhich the signature not to be divulged to the public. This kind of exceptions refers to the case whenthis divulgation could get to an imminent and significant threatening for the personal secur ity of anyperson. Any way, the name of the person involved in the accomplishment of the statutory audit isbring to knowledge CAFR and/or CSPAAS.

3. THE PROBLEMS OF STATUTORY AUDIT TRANSPARENCE

For transparence perspective, we show that the statutory liste ners which accomplishstatutory audit of the entities of public interest publish on the personal website, in 3 months timefrom the end of any financial exercise, a annual report about the transparence, which includes atleast the following:

a) a legal form description and a stockholder description of the audit firm;b) a network description and a legal and structural accords from the network description, in

the case in which the audit firm belongs to a network;c) a description of the audit firm leading structure;d) a description of the internal control systems of the existent quality in audit firm and a

declaration of the administrative body or leading about the efficacy of those function;e) a indication of the date when the last independent verifica tion for quality assurance had

place;f) a list with the public interest entities for which there were made statutory audits by the

audit firm in the preceding financial exercise.At this includes a declaration with audit firm’s politics about the independ ence, which

confirms, as well, that had place a intern verification of the way in which it was respectedindependent and another about the audit firms’ politic and professional permanent forming of thestatutory listeners.

As well, the statutory listeners and audit firms which accomplish statutory audit of publicinterest entities publish on the website financially information as well which show the audit firmimportance, as total business number divided on emoluments from the statutory audit of annualfinancial situations and of the consolidated annual financial situations, as well as emolumentsperceived for other professional services necessary to the improvement of the information quality,services of fiscal assistance and other services that are not of audit, as well as information about thebase for partners remuneration .

But, we add that, in exceptional circumstances, CAFR can suspend, with CSPAAS notice,the presentation of the information from lit. (f) in the report about transparence, this thing be ingnecessary for reducing a imminent and significant threatening at the personal security address ofany person.

The report about the transparence signs by the statutory listener or by the legalrepresentative of the audit firm, including by the electron ic signature, according the legal foresightin force.

4. PROFESSIONAL SECRET AND CO -OPERATION WITH THE MEMBER STATESOF UE

Talking about professional secret and co -operation with the Member States in the auditregulation domain, we show that CSPAAS, in the capacity of competent authority, it co -operates

with competent authorities from other member states responsible for the authorization of thestatutory listeners and of the audit firms, registering, quality assurance, inspection and disciplineany time it is necessary and confers assistance to those, in the purpose of the accomplish of it’sresponsibilities on the grounds of the normative personnel in force.

The co-operation with competent authorities from other member states refers, in essence, atthe exchange of information, documents, assistance, and at the investigations succeeding about theeffectuation of the statutory audit too.

CSPAAS has the obligation to take measures for the communication with promptitude ofinformation, documents and assistance de liver by the authorities which request them, but, exclusivewith respecting all the legal foresight.

The persons that are or were employed by CSPAAS have the obligation to keep theprofessional secret and respect the confidentiality demands. The informati on that make the object ofthe professional secret can not be revealed to any other person or authority, excepting the case whenthis thing is stipulated for other normative documents in force, by special foresight in this respect.

CSPAAS and CAFR are make confidential information exchange, but the informationchanged this way forms the object of the professional secret, which apply to the employed personsor previously employed by the Council and the Room.

As we have showed above, CSPAAS and CAFR, by the specialty departments, deliver atdemand and without a unjustified late, any kind of requested information on the grounds of the law,and when the Council or the Room receives this kind of demands, takes the necessary measures tostore up, with no unjustif ied late, the information requested. The delivered information makes theobject of the professional secret, which apply to the employed persons or previously employed bythe CSPAAS and CAFR.

In the case when the competent authority from Romania that rece ived the demand can notdeliver the information requested with no late, this notifies the reasons of the late to the competentauthority in the statutory audit domain which addressed the demand.

Still, CSPAAS and CAFR can refuse to take into account to a i nformation solicitation when:a) the communication of the requested information would compromise the sovereignty,

security, and public order of Romania;b) there were already initiated judiciary procedures about the same actions and against the

same statutory listeners or audit firms by the Romanian authorities which received the demand;c) there was already adopted a final decision about the same actions and against the same

statutory listeners or audit firms by the Romanian authorities which received the demand;d) the demand is justified by other intentions but the afferent to the authorities competence

accomplishment which requests the information, about the public supervision and the control of thestatutory audit activities of financially situations and of the implementation of procedures relating tothe statutory audit exercise.

The refuse can intervene even if the persons which were employed or are still employed bythe authority which requests information are not amenable to professional confidenti ality or if itestimates that there is a significant risk that the information, documents, or assistance requested tobe presented to other persons or authorities but the authority that request them.

It excludes the case when this sort of presentations ar e not authorized in the context ofprocedures established by legislative foresight, by regulation or administrative relating to thestatutory audit exercise.

The information and documents received of CSPAAS and/or CAFR in the context of co -operation with authorities from other member of European Union states which exercise similarpowers with their power can not be used in one other way but in the purpose of exercise charges orin the context of procedures relating to the exercise of statutory audit.

If in practice CSPAAS or CAFR find that it commits or there were perpetrated acts oppositeto the Directive 2006/43/CE about the statutory audit of the annual account and consolidated on theterritory of another state member, this/ that informs/ notify the c ompetent authority from that

member state of European Union about this finding, exposing as clear as possible the reasons thatgot to this conclusion.

We add that in the case in which the competent authority of another state member informsCSPAAS about the commit on Romania territory, of the statutory listeners or audit firms approvedto develop statutory audit activity in Romania, of acts contrary to the legislation relating to statutoryaudit, CSPAAS must take the corresponding measures.

As a consequence, CSPAAS will inform the competent notify authority about the result ofthe undertake measures and, in measure in which is possible, informs about the temporarysignificant evolutions.

5. CONCLUSIONS

As a part of statutory audit any information brought to knowledge with the occasion ofapply the specific procedures must be treated as absolutely confidentially.

It except the case when the laws or regulations foresee differently and of the situation inwhich the person information refers to gave the conse nt about giving up the confidentialityobligation.

Relevant, in the context of our approach, is the fact that confidentially information obtainedas a result of professional relations or business relations can not be used in personal interest or of athird part, excepting the information which make the object of other relations stipulated by contractwith audited entity or of the information obtained in the conditions of the consent of the part.

Even if, in current mode, CSPAAS and CAFR are make confident ial information exchange,but the information changed this way forms the object of the professional secret, which apply to theemployed persons or previously employed by the Council and the Room.

BIBLIOGRAPHY:

1. Marcel Ghiţă, Ionel Bostan, Introducere în teoria şi practica auditului , Ed. Universitas, Iaşi,2004.

2. Directiva 2006/43/CE din 17 mai 2006 a Parlamentului European si a Consiliului privindauditul statutar al conturilor anuale si al conturilor consolidate, de modificare a directivelorConsiliului 78/660/CEE si 83/349/CEE si de abrogare a Directivei 84/253/CEE aConsiliului, publicata in Jurnalul Oficial al Uniunii Europene nr. L 157 din 9 iunie 2006.

3. OUG nr. 90/2008 privind auditul statutar al situatiilor f inanciare anuale si al situatiilorfinanciare anuale consolidate, publicată in Monitorul Oficial, Partea I nr. 481 din30/06/2008, adoptata prin Legea nr. 278/7 nov. 2008, publicată în Monitorul Oficial, ParteaI, nr. 768, din 14.11.2008.

4. OUG nr. 75 din 1 iunie 1999/ R - Monitorul Oficial al României, Partea I, nr. 649 din 31august 2002.

5. www.ceccar.ro/_b/ro/pp8.pdf

THE PERTINENCE OF INFORMATION FURNISHED BY FINANCIAL SITUATIONS

Lecturer PhD. Student Florin BOGHEAN“Ştefan cel Mare”University of Suceava, Romania

florinb@seap.usv.roProfessor PhD. Elena HLACIUC

“Ştefan cel Mare”University of Suceava, Romaniaelenah@seap.usv.ro,

Lecturer PhD. Student Carmen BOGHEAN“Ştefan cel Mare”University of Suceava, Romania

carmenb@seap.usv.ro

Abstract:In contemporary economy, which unde rgoes perpetual transformation, spectacular changes occur within a short

time span, on the basis of financial decisions made by using accounting information and relying on its accuracy andrelevance. However, if this information proves to be incongruous wi th the economic events that generated it or ismisunderstood, the decisions’ result will be far from what is expected.But what is information in economic terms? How can we distinguish between information and non -information? Howcan we know that we are really informed? These are questions that are featured in many national and internationalconferences.

In our opinion, information represents a set of data that determines the change of the probabilities expected bythe beneficiary after future events take place. The information’s value depends on the impact it has on future decisions,which results into a high degree of subjectivity as to its interpretation and use. Cost is also an important element inchoosing alternative sources for information. From an accounting point of view, information is valuable if it is of use tothose who possess it in a form of decision -making that leads to the expected results

Key Words: financial decisions, cost, financial situations, management .

Jel Clasification: M41

1. INTRODUCTION

Our scientific research undertaken through this work has as its main objective the approachof the financial situations, as the starting point in the decision -making process. Thus, the firstobjective was to collect the data, the precise inform ation whose analysis allows us to acquire abetter understanding of the relation, of the phenomena and of the correlations which exist betweenthe different constitutive elements of the financial situations, and in this way to be able to drawsome conclusions concerning the improvements that could be brought on the theoretical -practicalplan so that the decisions made on the basis of the financial situations be opportune andknowledgeable.

We notice the fact that, in the last period of time, both in the fi nancial-accounting literatureand in the management vision, started to manifest some reticence regarding the usefulness and thequality of the relieved accounting information, resorting more and more often to other informationsources. Starting from these grounds, we appreciate to be very useful the approach of the financialsituations from the perspective of the main conceptual frames which leave, at the present time, theirmark on the world-wide accounting systems: the international conceptual frame (IASB ), theAmerican conceptual frame (FASB) and the European directions. We also mention the fact that, atthe world level, already appeared the first initiatives of laying the foundations of a uniqueconceptual frame.[5]

The objective of the financial situati ons is to offer information regarding the activity of anenterprise or entity, which must be useful to a large gamma of users in their decisional processgrounding.

Starting the specifications of the General frame concerning the drawing up and thepresentation of the financial situations , in order to be able to respond to the managers`informational necessities, it becomes obvious the necessity of the presentation within the structureof the information’s financial situations about the financial position, the performances and the

modifications of the enterprise’s financial position. In what concerns the financial position, theinformation must reflect:

The economic resources which are under the control of the enterprise and which areuseful for the determination of the enterprise’s capacity to generate monetary flows in future;

The financing structure, which is useful in order to be able to perform a quantification ofthe future loan needs, as well as the possibility to get these loans;

The assignment of the future treasury flows and benefits, the enterprise’s winding up andsolvency and its capacity to adapt itself at the environmental changes, where the enterprise is acting.

The information regarding the performance pursues: The evaluation of the probable modifications of the economic resources that the

enterprise could control in the future; The possibility to express hypothesis about the efficiency of some new resources use.

2. THE BALANCE – SYNTHESIS OF THE ECONOMIC ENTITY’SFINANCIAL POSITION

The concept of financial position, with all its associated aspects more or less semantic, isconnected most of the times with the balance, through its defining as a situation - constitutive part ofthe financial situations which reflect the financial position of an enterprise at a certain moment intime. This concept has engaged the attention of the FASB and IASB conceptual frames. Thus, theFASB, in the SFAC 5 Recognition and Measurement in Financial Statements of BusinessEnterprises, defines the presentation of the financial position as a situation which offers informationregarding the assets, the debts and the personal capital of an enterprise and the relations betweenthese at a certain moment in time, as reflections of the economic resources on the one hand and ofthe financing structure on the other hand, resulted from the users` needs. Frank J. N. makes aninteresting remark, observing the fact that the multitude of the users of financial situations leads toa multitude of financial position figures [2].

This idea is taken over by Kollaritsch [3] who broaches the interest regarding the creditors`,investors` and managers` financial position on the information from other points of view. Thus, thecreditors are particularly interested by the insurance of the granted credits recovery as well as theirextension. In this way, it becomes necessary the correlation of the time element with the debtselement, generating the need of the short and long term classification. Also, the creditors searchinformation regarding the guaranteeing of the granted credits. Kollaritsch considers that not for allthe creditors the financial position is reflected by the same information. Thus, the commercialcreditors broach differently the financial position in comparison with the fi nancial creditors. Themultitude of creditors of an enterprise, according to the same author, can be grouped in twocategories: creditors with significant interest in the activity of the beneficiary enterprise andcreditors without a significant interest in the enterprise’s activity. As the interest diminishes,diminishes also the concern to seek information regarding the assets owned by the enterprisecorrelated with the benefit generation, as well as the interest regarding the continuity of the activity.The other conceptual frame IASB develops the concept of financial position based on four bigpillars: economic resources controlled by the enterprise; enterprise’s financial structure; enterprise’swinding up and solvency; enterprise’s capacity to adapt itself to the environmental changes.

The economic resources are recognized by the IASB conceptual frame as assets only if theysatisfy a series of conditions: to be controlled by the enterprise (the enterprise can derive profitfrom the economic benefits incorporated in the asset and at the same time has the capacity togenerate future economic advantages for the enterprise (respectively the asset’s capacity tocontribute to the future windings up flows).

The financial structure, reflected through the permanent elements of debts and personalcapitals, relieves useful information for the anticipation of the credit needs and for the enterprise’scapacity to be credited in the future as well as for the way in which the results and the future cashflows will be distributed to those directly interested by the enterprise. A debt represents an existing

obligation of the enterprise which results from passed events and through the discount of which it isexpected to result a resources issue which incorporates economic benefits.

In order to define the enterprise’s capacity to adapt itself to the environment where isacting, maybe it should be necessary to start from the notion of the unquoted enterprise. Thedifficult situation can be translated through the progressiv e loss of the control over the possibledifficulties and obstacles which appear in the enterprise’s environment, which is caused on the onehand by the managers` incapacity to lead efficiently the enterprise and on the other hand by itsdevelopment in the economic context. As long as the carrying on of the exploitation is not troubled,we can appreciate that the enterprise adapts to the environment where acts, practically it runs a„normal” situation.

The opinion unanimously accepted by the users of financi al-accounting information, in whatconcerns the balance, is that it reflects the enterprise’s financial position at a certain moment intime, allowing in this way the formation of some opinions about the passed activity and thus theelaboration of some previsions regarding the enterprise’s future activity.

We ask ourselves the nature question: Which are the perspectives regarding the balance, sothat it ensures a quality as good as possible of the information relieved through it ? In an articlepublished by Deloitte&Touche in the series Integrity & Quality - Quality of Financial Position, TheBalance Sheet and Beyond it is appreciated that there are a lots of qualitative and quantitativefactors which influence the financial position of an enterprise and whic h are not pointed out by thefinancial situations. Consequently, in order to ensure a better quality and transparency of thebalance, it is essential to approach the term of financial position by far over the elements enclosedin the balance, offering information much more detailed regarding the economic resources, theobligations and the personal capital. Thus, in order to complete the information regarding thefinancial position, it would be necessary an additional presentation of some elements such as:

The enterprise’s winding up degree: has the enterprise sufficient winding up in order toget through its obligations?

The nature of the enterprise’s activity: which are the inherent risks? Does theprofessional reasoning regarding the selection and the a ppliance of the accounting methods rely ontheir content or just on their form?

The use of the historical cost method or of the fair value method: which are thedifferences which would result from the appliance of the two methods?

The use of the estimations or assumptions in the financial situations : are theseestimations reasonable? Are they in a credible way determined?

The taking into consideration of the politics of the elements depreciation: are thesepolitics for the evaluation of the reasonable and credible depreciations?

The use of contracts that cannot be recognized in the balance considering the existingcriteria of recognition and evaluation: how significant are these contracts that, by definition, cannotbe recognized in the balance?

The quality and the efficiency of the internal control: are these controls capable tomonitor the accounting activities?

In our opinion, we appreciate that for as a good as possible satisfaction of the financialinformation needs it is essential that the account ing approach of the elements classification in thebalance to direct its steps towards a financial approach, which will insist on the reflection of theinformation regarding the equilibrium between the uses and the short and long term resources.

3. THE PROFIT AND LOSS ACCOUNT – PERFORMANCE INDICATOR OFTHE ECONOMIC ENTITY

In the perspective of the I.A.S. 1 “Presentation of the Financial Situations”, the profit andloss account can be presented in two variants:

The first in which is performed a classificat ion of the expenses depending upon thefunction and,

The second, in which the grouping of the expenses is made depending upon the natureAccording to the Expenses classification depending upon nature called also the method of

the “cost of sales”, the expenses appear as a part of the sales, distribution and managerial activitiescost. This classification offers relevant information to the users, but the costs assignment dependingupon functions considerably involves the professional reasoning. The enterpri ses which present theexpenses depending upon the function must communicate the additional information regarding thenature of the expenses, including also the sinking expenses and those of the personal. The analysisdepending upon the nature of expenses of the profit account is simpler than the analysis dependingupon the function, as it does not necessitate a reassignment of the expenses without nature of thedifferent enterprise’s functions. Such an analysis is convenient especially for the small enterpr ises,as it does not require a reassignment of the expenses depending upon functions. If in the profit andloss account it is not accomplished a detailed presentation of the expenses as it is recommended inthe annex at the IAS 1, in the remarks to the fin ancial situations must be included an analysis of theexpenses by using one of the two classifications. Also, the enterprise must present either in theprofit and loss account, nor in the remarks, the value of the dividends on share, owned or proposedfor the period to which refer the financial situations. The understanding of the performancesaccomplished by an enterprise and the evaluation of the future possibilities to obtain certain resultsis possible by means of the information from the profit and los s account.

The profit and loss account was considered for a long period of time also a completion ofthe information presented through the balance, reflecting elements as costs, expenses, losses,incomes, benefits and result. The increase of the informati onal needs of the users of financialsituations in what concerns the enterprise’s performance determined an increase of the part whichstarted to occupy the profit and loss account in the structure of the financial situations, theenterprise offering in this way information presented and recognized in an unitary way related to theperformance.

The concept of result has a very subjective character and this because of the existence ofsome very different categories of users, each one of them having a differen t center of interests andsometimes being involved even in a relation of conflict of interests. Also, the existence of certainaccounting principles, accepted only in a specific accounting system, and of the accounting politicsregarding the evaluation, de termine the relative character of the result.

If we take into consideration the increase of the importance given to the professionalreasoning in the interpretation of an event or of an economic transaction, then the result ischaracterized even more through subjectivism (1). In addition to these, a series of events andtransactions supposes the use of the estimations and professional judgments, such as: theestimation of the useful life length, of the residual value, different methods of stocks evaluati on.

4. THE SITUATION OF THE PERSONAL CAPITAL MODIFICATIONS –THE REFLECTION OF THE ECONOMIC ENTITY’S GLOBAL PERFORMANCE

The result can be determined either as a difference between incomes and expenses and thusit is projected in the structure of the financial situations through the profit and loss account, nor as avariation of the personal capitals excluding the transactions with the shareholders. The combinationof the historical cost with other different evaluation bases determines the necessity of therecognition among the financial situations of some benefits and losses not accomplished. The fairvalue variations of some elements from the balance are not recognized in the profit and loss accountof the period, but are directly recognized in the personal ca pitals. Thanks to this aspect, it becomesnecessary the global approach of the result, according to which the result is generated by themodifications in the personal capital during the financial exercise and it is calculated as a differencebetween the net asset at the end of the period and the net asset at the beginning of the periodexpressed in fair values, adjusted with the capital transactions with the shareholders.

I.A.S. 1 “Presentation of the financial situations” introduces the recommendation that theenterprises shall present as a distinct constitutive part of its financial situations, a chart which points

out the modifications of the personal capital. Any modification of the enterprise’s personal capitalbetween two dates of the balance reflects an increase or a reduction of the net asset or of the wealthduring that specific period.

The global modification of the personal capital usually represents the result generated by theenterprise’s activity. However, there are also situations when the modi fications of the personalcapital are not directly generated by the company’s activity, but also by its transactions with theshareholders (new contributions to the capital, the payment of the dividends).

Some examples of situations where the profits and t he losses are not reflected in the profitand loss account would be:

The reevaluation of the corporal and non corporal immobilizations; The variations of the currency resulted from the conversion of the external entities`

financial situations. The subsequent evaluation of the financial assets available for the sale; The modifications of the accounting politics and the errors correcting; The current and delayed taxation of the profit, etc;The main objectives of the situation of the personal capital mod ification are: To determine the total benefits and losses resulted from the enterprise’s activity during

the financial exercise; To analyze the elements of these modifications in order to be able to evaluate the

enterprise’s global performance and its ca pacity to generate cash flows.Starting from the premise that the users of the financial situations are inclined to give a

greater importance to the profit and loss account than to the situation of the personal capitalmodifications when analyzing the perf ormance of an enterprise, it becomes prior the achievementof an unique situation which reflects the global financial performance.

5. THE RELEASE OF THE INFORMATION REGARDING THE ENTITY’SDYNAMICS THROUGH THE CHART OF THE TREASURY FLOWS

The treasury represents a main indicator for the financial analysis, because it offersinformation regarding the variation of the treasury elements between the beginning and the end ofthe period, an enterprise able to generate constantly a -significant treasury, being in this way, asolvent and profitable enterprise, able to assure its development, and the recipients of the financialsituations can estimate the changes in the enterprise’s financial structure and foresee its potentialcapacity to adapt itself to the environ mental changes in which the enterprise is acting.

The situation of the treasury flows is useful on the internal plan to the management and onthe external plan to the investors and to the creditors. The management uses The situation of thetreasury flows in order to determinate the enterprise’s winding up degree, to establish the politics ofdividends and to evaluate the effects of some major strategic decisions regarding the investmentsand the financing. In other words, the management can use the situati on of the treasury flows toestablish if majoring or diminishing the dividends and to plan the investments and the financingneeds.

For the investors and for the creditors, the report is useful for the determination of thecompany’s capacity to manage the treasury flows, to generate in future positive windings up flows,to pay their debts, to pay the dividends and the interests and to prevision their additional financingneeds. Also, they could use the report to explain the differences between the net incom e reflected inthe Account of results and the net windings up flows generated by the activity of exploitation.Moreover, the report shows both the monetary effects and the non monetary effects of theinvestments and financing activities carried on during t he accounting exercise.

6. THE CONTRIBUTION OF THE EXPLANATORY NOTES AND OF THEACCOUNTING POLITICS FOR THE DECISIONS MAKING.

The explanatory notes comprise additional information, relevant for the users` necessities inwhat concerns the financial posit ion and the results obtained. The explanatory notes must bepresented in a systematic manner. Each significant element of the balance, of the profit and lossaccount, the situation of the treasury flows and the situation of the personal capital modificatio nsmust be enclosed by a reference to the note which contains information attached to that significantelement.

The following information must be clearly presented and repeated each time is necessary,for their good understanding:

The presentation of the information regarding the grounds of the financial situationsdrawing up and the specific accounting politics used;

The presentation of the information required by the international standards of financialreference, but which are not presented in the balan ce, in the profit and loss account, in the situationof the personal capitals modifications or in the situation of the cash flows.

The offering of additional information which are not presented in the financialsituations, but which have a relevant charac ter for the understanding of the financial situations byits users.

For the elements mentioned in the explanatory notes, it will be usually presented, also thesum corresponding to the previous year to which it is referring. For the situation when thecorresponding sum is not comparable, this must be adjusted, by presenting the adjustment result,the effectuation mode and the reasons for which it was performed.

7. CONCLUSIONS

By analyzing, simultaneously, the main conceptual frames which „lay down” the regu lationof the accounting standards on the world plan, together with the one regulated by the Romanianstandards developers, we can draw a first conclusion, namely that in spite of the greater importancegiven to the accountant’s professional reasoning whic h characterizes the IASB and the FASBconceptual frames, however in the Romanian accounting system, the importance of the professionalaccountants` reasoning is still enough moderated. We appreciate that the main reasons areconnected to the fiscal reasons which are still enough prevalent in the Romanian accountinglegislation. But which is the significance of the professional reasoning? [4] This should lead theprofessional accountant to choose those ways of acting, so that he relieves a higher degree offaithfulness of the information provided by the financial situations, and thus the users place anincreased confidence in the information presented. But following the logical thread of things otherquestions arise:

• To what extent can we rely on the accoun tants` professional judgment, so that we canachieve the wanted results?

• Supposing that we can rely on their judgment in choosing those options capable to assurethe wanted quality of the information relieved from the financial situations, how big must be theiraction specter, so that they don’t become liable to some penalties for the violation of certain normsand accounting regulations, considering the character still fiscal enough, which characterizes ouraccounting regulations?

REFERENCES

1. David. A. & J.E., (2006), A True and Fair View of the Principle / Rules Debate , ABACUS,vol. 42, No.2

2. Frank, J.N., (1959), Accounting for investors, The Fundamental importance Earning Power ,The Journal of accountancy

3. Kollaritch, F.P., (1960), Can the Balance Sheet Reveal Financial Position?, The Accountingreview, Vol. 35.

4. Lande, E. (2005), La reforme des cadres comptable conceptuels de IASB et du FASB: quelleévolution? Quels enjeux ?, Revue Française de Comptabilité, septembre, no.380

5. Miller, J. (2006), Un cadre conceptuel mondial , CA Magazine, Canada.

A RESEARCH ON THE FINANCIAL DISCLOSURE CHOICES WITHIN LISTEDCOMPANIES

Associate Prof. PhD. Daniela Artemisa CALUASE Bucharest, Romania, danielacalu@yahoo.com

Lecturer PhD. Mădălina DUMITRUASE Bucharest, Romania, madidumitru2007@gmail.com

Lecturer PhD. Ileana Cosmina PITULICEASE Bucharest, Romania, micospit2004@yahoo.com

Associate Prof. PhD. Viorel AVRAMASE Bucharest, Romania, viorelavram32@yahoo.com

Associate Prof. PhD. Aurelia ŞTEFĂNESCUASE Bucharest, Romania, stefanescu.aura@gmail.com

Lecturer PhD. Student Andreea PONORÎCĂASE Bucharest, Romania, andreeaase@gmail.com

Abstract:Romanian listed companies must prepare and present their financial statements according to IAS/IFRS

standards. These standards are characterized by a certain convergence trend demonstrated by the acceptance of asmall number of choices for the same accounting issue. However, companies are able to choose among severalaccounting treatments. Our research aims to demonstrate that there are correlations between certain particularities ofthe group (e.g. industry type, reporting basis) an d the accounting policies it chooses. In this regard, we want toresearch the accounting policies published in 2007 financial statements by companies included in Fortune Global 500top, to establish through statistical methods correlations among dependent and independent variables and to explainthe option for a certain accounting treatment. In this research we included the options concerning the disclosureformats of the financial statements.

Key Words: Financial statements, IAS/IFRS, Accounting Issue, A ccounting Treatments, Accounting Policies,Statistical Methods

JELClassification: M40, D53

INTRODUCTION

In this research(1) we started from the idea that there is a correlation between the country,the standards it uses or the industry in which a comp any operates and the accounting policies itchooses. In order to prove it, we selected a sample of listed companies that are included inFORTUNE'S GLOBAL 500 top (2).

FORTUNE'S GLOBAL 500 top is published annually by Fortune Magazine and it isprepared by its editors and reporters from all over the world. It was first dated in 1955 and sincethen more than 1,800 companies have appeared on the Fortune 500.

The accounting policies are the specific principles, bases, conventions, rules and practicesapplied by an entity for the preparation and disclosure of the Financial Statements. In this categorywe include the depreciation of the fixed assets (method and depreciation period choice), therevaluation of the fixed assets or the use of the historical cost, the capitalization of the borrowingcosts or its recognition as an expense, the choice of the method for the inventories valuation etc.

The management of each entity has to establish accounting policies for the transactionsperformed. These policies have to be chosen after taking into account the specific of the activity byeconomic and technique specialists that know the industry and the strategy adopted by the entity.

For this paper we analyzed only a part of the accounting policies of the companies, namelythe format of disclosure of the Balance Sheet, of the Income Statement and of the Cash FlowStatement. The study is important for more reasons. First, it provides information about the processof convergence and company preferences for particular policies a cceptable under US GAAP,

IAS/IFRS, Japanese GAAP and others. Next, we selected companies from different industries.These groups are used to investigate how the industry (that we consider that define the firm’sattributes) impacts on companies’ accounting policy choices. We also tried to prove that theselection of accounting policies is influenced by the national rules. For this, we defined a fewhypotheses concerning the accounting policies and the origin country.

1. LITERATURE REVIEW, RESEARCH OBJECTIVES A ND HYPOTHESES

This correlation research aims to measure some variables and look for relationships betweena set of variables, defined in the following Table:

Table no. 1Variables Semnification Type

Var 1 Balance Sheet Format Nominal Independent variable

Var 2 Income Statement Format Nominal Independent variable

Var 3 Cash Flow Statement Format Nominal Independent variable

Var 6 Reporting Basis Nominal Dependent variable

Var 7 Countries Nominal Dependent variable

We present as follows the litera ture review performed by the authors on the set of variablesdefined above. The influence of the format of the financial statements on the decision -makingprocess was tested on more categories of users throughout the time.

1.2. LITERATURE REVIEW

Klammer & Reed (1990) investigated the impact of operating cash flow format on thedecision making process. The results of their study show that there was less variability in the size ofthe loans that would he granted when analysts received the direct method, as opposed to the indirectmethod of the statement of cash flows. According to the authors, “These findings suggest that thedirect method of presenting cash flow information may be preferable to the more commonly usedindirect format”.

Hard & Vanecek (1991) investigated the association between presentation format and taskwhen subjects used financial statements. In their experiment each participant completed one of fourtasks (varying from low task levels to high task levels) and used one of two presentation formats(either tabular or graphical) when they responded to questions about financial statements. Theexperiment examined decision performance as measured by efficiency and accuracy. The results ofthis experiment suggested that presentation format, with respect to the task being performed, doeshave a relationship to the decision -making process of financial decision makers.

Lungu (2005) has performed an empirical research based on a questionnaire sent to 238companies. Unfortunately, only 10 answers were received. The conclusions were:

most of the companies use the account format for the Balance Sheet (80%); most of the companies use the list format for the Profit and Loss Account (86%); most of the companies present information about the Cash Flow Stateme nt using the

direct method (84%).Calu et al. (2007) searched the tendencies that exist at the level of the forms of presentation

for the balance sheet, profit or loss account, cash flow statement of the companies included in theFortune Global 500 top, us ing a sample of 285 companies. On the same sample they also tested thepreference of the companies to use certain accounting policies for the evaluation of inventories andfor certain depreciation methods. The conclusions were:

there is a dependency relationship between the reporting standard and the Balance Sheet andIncome Statement chosen;

even if there is no statistical prove of the dependency between industry and inventoriesvaluation, for instance, they notice a use of the weighted average cost for mo st of thecompanies applying IFRS while for the companies applying US GAAP they has the samepercentage for the weighted average cost and LIFO.The financial statements represent the interface between the “internal” and “external” sides

of the company. Both the components and structure can be different according to some variablesbeing identified one tendency or another. At the world’s level there are more bodies issuingaccounting standards, and their norms are different. The common element is the process of theaccounting convergence that has as a purpose to establish the same direction for some structures oraccounting systems.

IAS1 Presentation of Financial Statements assures the basis for the presentation of thegeneral financial statements, in order t o assure the comparability of an entity through time toidentify trends and of different entities to evaluate relative financial position. According to IAS 1(2004, par. 8), a complete set of financial statements includes the following components: BalanceSheet; Income Statement; Statement of Stockholders Equity; Cash -Flow Statement; Accountingpolicies and explanatory notes.

According to US GAAP the Financial Statements prepared by the American companies are:Balance Sheet, Income Statement, Cash -flow statement, Statement of Stockholders Equity andNotes to financial statements. Besides these documents and with the same importance is presentedthe Statement of the Global Result (economical) that can be reported separately or within theStatement of Stockholders Equity – Ristea et al. (2006). None of these documents has a standardformat and even the name of the statement can vary from one company to another (for instance theBalance Sheet can also be named Statement of Financial Position or Statement of Fina ncialCondition).

Our study was reduced to the format of three of these financial statements: Balance Sheet,Income Statement and Cash Flow Statement.

The Balance SheetIn the last variant, IAS 1 gives up on the model current/non -current for the account form of

disclosure and uses the list form, computing the Net Assets. This indicator appears in the BalanceSheet between the long term liabilities and the stockholders equity. The persons involved infinancial reporting reached the conclusion that the accou nt form is not useful for the users ofaccounting information which transferred this emphasis on aspects like ownership and equity. Inthis format the liabilities are classified into long term/short term and the net assets are calculated.This is why IAS 1 recommends the list form (Lungu, 2005).

The American standards present the Balance Sheet starting from the equation Total Assets(which show the structure of the company’s resources) = Liabilities + Owners’ Equity (whichpresent the financing sources of t he company). The elements that have to be presented in theBalance Sheet are similar to those required by IAS 1. So, the format used by the companies thatapply the US GAAP is the account type.

The Income StatementIAS 1 asks the companies to present the expenses in the Income Statement according to

their nature or according to their function and it suggests that one should analyze within the IncomeStatement the classification chosen. It is important to keep in mind that IAS 1 does not claim oneclassification or another but if the company chooses the function form it will have to presentadditional information about the nature of the operating expenses in Notes.

According to the American standards the Income Statement should be presented either:- in a short form in which the elements are classified into two groups: revenues and expenses.

All the expenses are classified according to their function and are deducted from the totalincome, generating the profit before tax. The detailed information is presented into theNotes; or

- in a longer form, in which appear intermediary groups and subtotals that present separatelythe elements from the ordinary activity and the other items. The Sales Cost is deducted fromthe Sales and the Gross Margin is obtained. After t his indicator other revenues and expensesare presented before the Profit before tax is obtained.A reason for choosing an option concerning the profit and loss account is given by M.

Ristea (M. Ristea, 2001). The author starts from the indicators that the two forms focus on (theturnover and the production of the year for the nature form and the turnover and the cost of goodssold for the function form) and notices that the form by nature assures information useful to thefinancial analysts and to the pers ons that contribute to the value creation and distribution, in general(investors, creditors, employees etc.) (the financial perspective of the performance), while thefunction model is more useful for management by reporting the costs of different functio ns to theproduction sold and obtaining information about the efficiency of the production, administrative orselling areas (the economical perspective of performance).

The Cash Flow StatementBoth the international and the American standards ask for the disclosure of the Cash Flow

Statement a detail of the inflows and outflows of cash on each kind of activity (Operating,Financing and Investing activities). Both standards allow a presentation according to the direct andindirect methods.

In the direct method the information is presented for each type of inflow our outflow ofcash, usually extracted from the accounting entries. The rulers encourage the choice of the directmethod because it observes the reason of the preparation of this statement that is to report in parallelthe inflows and outflows of cash. The same requests are encountered in both standards.

The indirect method reports the same amounts of cash flows as the direct method, but indifferent form: it starts from the result and it adjusts it w ith the differences in assets and liabilitiesand with the elements that do not involve cash.

The direct method is preferred by the investors because it allows them to establish the valueof the company by forecasting the cash flows, while the indirect met hod is preferred by theaccountants (because it is easy to compute) and by the managers as it hides the real image of thecompany’s liquidity and solvency to the external users.

1.2. ANALYSIS OF THE CHOICE IN THE PRESENTATION OF THE FINANCIALSTATEMENTS

Knowing that the analysis of the information collected pointed out the fact that from thetotal of 285 companies investigated, 115 companies use the IFRS standards and 101 companies usethe US GAAP, the other reporting standards (e.g. Japanese GAAP, Canadian GAAP, India GAAPetc.) were regrouped in the category Others.

Their distribution is the following:

REPORTING BASIS

IFRS; 40%US GAAP; 35%

OTHERS; 24%

Figure no. 1 Reporting basis

We also used an analysis of the companies according to their industry. The industries takeninto account within the chosen sample are represented in the chart below:

Figure no. 2 Industries

Starting from these ideas we had in mind the following: The form for the Balance Sheet’s disclosure:

o List, using the relationship: Assets – Liabilities = Shareholder’s Equity oro Account, based on relation: Assets = Liabilities + Shareholder’s Equity;

The form for the Income Statement’s disclosure:o Using a classification of the expenses by nature (e.g. raw materials expenses,

wages expenses, depreciation expe nses) oro Using a classification of the expenses by function (e.g. cost of goods sold,

administrative expenses, distribution expenses); The form for the Cash Flow Statement’s disclosure:

o Using the direct method (Inflows – Outflows) oro Using the indirect method (starting from the result).

The hypotheses used for this matter were:H10: Balance Sheet format and reporting basis are independentH11: The two criteria of classification are not independentH20: Balance Sheet format and industry are independentH21: The two criteria of classification are not independentH30: Income Statement format and reporting basis are independentH31: The two criteria of classification are not independentH40: Income Statement format and industry are independentH41: The two criteria of classification are not independentH50: Cash Flow Statement format and reporting basis are independentH51: The two criteria of classification are not independentH60: Cash Flow Statement format and industry are independentH61: The two criteria of classification are not independent

2. RESEARCH METHODOLOGY

Sample descriptionThe research methodology is based on empirical analysis. We chose to survey a series of

accounting policies presented in 2007 Financial Statements from listed companies enclosed inFORTUNE'S GLOBAL 500 top. We started in our research from classifying the companiesaccording to the industry in which they operate. The sample searched was chosen as follows. Fromthe existent industries we have eliminated banks and insurance companie s because they use specificreporting standards. We have also eliminated the industries that included less than five companies

in order to prevent a dispersion of the information. Another part wasn’t included in our samplebecause the companies did not hav e information in English or French. After this selection we had285 companies left.

Results and analysisIn order to see if there is any correlation between the independent and dependent variables

we chose Chi-square test (χ2). It tests a null hypothesis that two criteria of classification areindependent. If two criteria of classification are not independent, there is an association betweenthem. In our research, we computed χ 2 using Statistica soft.

Analyzing the way are chosen the forms of the financial statementsFor testing the independency of the Balance Sheet form we considered earlier we tested the

following null hypothesis:

H10: Balance Sheet format and reporting basis are independentAfter applying the statistical test χ 2 the following information was obtained:

Table no. 2Chi-square df p

Pearson Chi-square 13.97294 df=2 p=.00092

M-L Chi-square 16.26902 df=2 p=.00029

After calculating χ2 we notice that the probability at which χ2 is computed is smaller than thecritical. χ2 is 0.00092 (for Pearson Chi-square) and 0.00029 (for M-L Chi-square), both values beingsmaller than 0.05 (maximum accepted amount). As a consequence we con clude that the nullhypothesis (H10) is rejected and there is a relationship of dependency between choosing theBalance Sheet form and the reporting basis, meaning that the accounting standards used determinethe preference for one form of Balance Sheet or another.

Even though both the international rules IFRS and the US GAAP offer the option ofchoosing one or another balance sheet forms, the preference for one option or another is strictlyconnected to the reporting basis chosen. Following the distributio n of the reporting form we noticethat in the countries where a US GAAP reporting is preferred a greater polarization appears; manyof the companies consider using the account form for the balance sheet. This polarization of thepreferences can be explained by the fact that the companies applying the US GAAP are from USA,while the companies applying IFRS or other standards (OTHERS) are from many countries, theirpreference for one form or another being probably given by the reporting model used especially atthe national level.

The conclusions are convergent with the ones of a previous study (Calu et al., 2007), basedon the reports of the companies included in the Fortune Global 500 top, for the year 2006.

H20: Balance Sheet format and industry are indep endentThe existences of the frequencies that equal zero indicate the fact that the results obtained

concerning the rejection or the acceptance of the null hypothesis are not conclusive. As aconsequence we choose a graphical presentation of the registered frequencies.

Figure no.3

We notice an emphasized preference for the account form of the Balance Sheet on the extentof the list form in the case of the Petroleum Refining industry and Motor Vehicles & Parts. In theother industries (except for Mining , Crude-Oil Production) we observe as well a tendency for theaccount form but this is not so obvious. For Mining and Crude -Oil Production we couldn’t identifyany tendency.

These conclusions are convergent with the ones of the previous study of Calu et al . (2007).

H30: Income Statement format and reporting basis are independentAfter computing χ2, we obtained the following information:

Pearson Chi-square 9.379445 df=2 p=.00919

M-L Chi-square 9.282248 df=2 p=.00965

In this case we also notice that the probability at which χ 2 is computed is smaller than thecritical χ2. It is p=0.00919 (for Pearson Chi-square) and p=0.00965 (for M-L Chi-square), bothvalues being smaller than 0.05. We conclude that the null hypothesis ( H30) is rejected. Inconclusion, applying a certain set of accounting standards is correlated to the choice of a form forthe Balance Sheet.

Considering the distribution of the reporting form we notice that in the countries where a USGAAP reporting is preferred a greater polarization appears; many of the companies consider usingthe destination classification for the expenses for the income statement. Just as in the case of thebalance sheet, this polarization of the preferences can be explained by the fact t hat the companiesapplying the US GAAP are from USA, while the companies applying IFRS or other standards(OTHERS) are from many countries, their preference for one form or another being probably givenby the reporting model used especially at the national level.

These conclusions are also convergent with the ones of the previous study of Calu et al.(2007), based on the reports of the companies from Fortune Global 500 top for the year 2006.

H40: Income Statement format and industry are independentThe existences of the frequencies that equal zero indicate the fact that the results obtained

concerning the rejection or the acceptance of the null hypothesis are not conclusive. As a

consequence we choose a graphical presentation of the registered frequencies. The analysis of thefrequencies registered indicates a high preference for the form in which the expenses are groupedby function in Petroleum Refining and Electronics, Electrical Equipment industries. In the case ofthe other industries we couldn’t notic e a clear tendency for one model or another.

Figure no. 4

H50: Cash Flow Statement format and reporting basis are independentAfter computing χ2, we obtained the following information:

Pearson Chi-square .2586139 df=2 p=.87870

M-L Chi-square .2716847 df=2 p=.87298

In this case we notice that the value at which χ 2 is computed is bigger than the c ritical χ2.We have p=0.87870 (for Pearson Chi-square) and p=0.87298 (for M-L Chi-square), both valuesbeing bigger than 0.05. We conclude that the null hypothesis ( H50) is accepted. As a consequencethere is no connection between the Cash Flow Statement method (direct or indirect) and theaccounting standards used. On the other hand, the small number of companies that use the directmethod for the preparation of the Cash Flow Statement (11 companies out of 285) indicate anobvious preference towards the i ndirect method, without connection to the accounting standardsused.

These conclusions are also convergent with the ones of a previous study (Calu et al., 2007)),based on the reports of the companies from Fortune Global 500 top for the year 2006.

H60: Cash Flow Statement format and industry are independentThe existences of the frequencies that equal zero indicate the fact that the results obtained

concerning the rejection or the acceptance of the null hypothesis are not conclusive. As aconsequence we choose a graphical presentation of the registered frequencies. For these twomethods we notice an obvious preference for the indirect method, no matter the industry.

Figure no. 5

CONCLUSIONS

Based on the statistical correlations we have noticed that two null hypothesis were rejected(H10: Balance Sheet format and reporting basis are independent and H30: Income Statement formatand reporting basis are independent). The rejection of these hypotheses signifies that there is adependency relationship between the reporting standard and the Balance Sheet and IncomeStatement chosen.

In this study we have also tested some other correlations (e.g. disclosure forms – industry)but because of the dispersion of the information the χ 2 test applied is not relevant.

The limits of the present research consist in the fact that we didn’t pur sue an evolution alongthe time, on a series of at least three years for the companies included in this top. Another limit isthat we didn’t analyze separately the companies presented in the first sample (one year ago, in thearticle of Calu et al. 2007) and the newly entered companies in order to obtain comparative results.

1. Research financed by CNCSIS ( The National University Research Council), contract 1779/2009 “ Romaniafacing a new Challenge: accessing the structural Funds for the sustainable Development in Agriculture.The Convergence of Financial Reporting of the native Entities with the European Realities” and contract2811/2008 “The Development of a functional optimization Model for the National Strategy concerning theFinancial Reporting of the Entities in the Private Sector in Romania”

2. The authors thank Mr. L. M. Cacace, Senior List Editor, FORTUNE for the information emailed about theterms of ranking into this top.

REFERENCES

1. Calu, D.A., Pitulice, C., Brăescu (Dumitru), M., (2007) - A Research On The AccountingOptions Choices Within Listed Companies, Accounting and Management InformationSystems, 2007

2. Craycraft, C., Sedo, S., Gotlob, D. (1998) - Foreign Operations and the Choice ofInventory Accounting Methods, Journal of International Accounting, Auditing andTaxation, Volume 7, Issue 1, pag. 81-93

3. 3. Cullinan, C.P. & Knoblett J.A. (1991) - Unionization and Accounting PolicyChoices: An Empirical Examination International Journal of Product ion Economics, 23,11-16 1 1 Elsevier

4. Daniel W., Terrell J. (1986) - Business Statistics, Houghton Mifflin Company5. Dhaliwal, D.S., Salamon, G.L., Smith, E.D. (1982) - The Effect of Owner Versus

Management Control on The Choice of Accounting Methods Journal of Accounting andEconomics, Volume 4, Issue 1, pag. 41-53

6. IASB - IAS 1 Presentation of Financial Statements, Standardele Internationale deRaportare Financiara (IFRS) 2006, Ed. CECCAR

7. IASB - IAS 2 Inventories, Standardele Internationale de Raportare Fin anciara (IFRS)2006, Ed. CECCAR

8. Klammer, T.P. & Reed, S. A (1990) - Operating Cash Flow Formats: Does FormatInfluence Decisions? - Journal of Accounting and Public Policy , Volume 9, Issue 3, pag.217-235

9. Kwok, H. (2002) - The effect of cash flow statement format on lenders’ decisions, TheInternational Journal of Accounting 37, pag. 347–362

10. Lungu C. (2005) - Teorie şi practici contabile privind întocmirea şi prezentareasituaţiilor financiare , Teza de doctorat

11. Nancy J. H. & Vanecek, M.T. (1991) - The Implications of Tasks and Format on the Useof Financial Information Journal of Information Systems, Volume 5, Number 2

12. Porojan D. (1993) - Statistica şi teoria sondajului, Editura Şansa13. Ristea M. (2001) - Opţiuni şi metode contabile de întreprinderi , Bucureşti, Ed. Tribuna

Economică14. Ristea M., Olimid L., Calu D. (coord) (2006) - Sisteme contabile comparate , Bucuresti,

Editura CECCAR15. Tarca A. (2002) - Achieving International Harmonisation through Accounting Policy

Choice, http://papers.ssrn.com/sol3/results.cfm?Request Timeout=5000000016. money.cnn.com/magazines/fortune/global500/

CORRELATIONS CONCERNING THE ASPECTS OF CORPORATE GOVERNANCEAND THE USERS OF FINANCIAL – ACCOUNTING INFORMATION

Lecturer PhD. Camelia Cătălina MIHALCIUC „Ştefan cel Mare” University of Suceava, Romania

cameliam@seap.usv.roProfessor PhD. Silvia Melania PETRESCU„Al. I. Cuza” University of Iaşi, Romania

psilvia@uaic.ro

Abstract:Nowadays, the concept of adding value for the shareholder knows a growing enthusiasm and this the more it

knows the pressure of the shareholders regarding the continuous spread of the corporate governance concept, whichcame from the United States.

The specialty literature and the practice offer a lot of possibilities of terminological designation of thisconcept, part because of the different translations of the Anglo -Saxon expression of “corporate governance”.

The concept of “corporate governance” has developed from the agent theory which refers to the relationshipbetween investor/ shareholder and manager/ administrator. And the problems that appear with that, and then extendingto the whole range of relationships between all of those involved directly or indire ctly in the enterprise’s activity, takingthe concept from its narrow sphere of the micro -economy in the more width one of the macro -economy.

In general, in an agency relationship, the leaders are mandated to enterprise any action according to theshareholders interests. Never the less, at the same time, they dispose of specific administration competences of whichthe shareholders are deprived of and have better information regarding the enterprise and its environment. Thisasymmetry of information allows t he managers to orientate the enterprise’s administration according to their interests,which can differ of those of the shareholders.

Keywords: corporate governance, the informational asymmetry, the agency relationships, financial market,shareholder, stakeholder

INTRODUCTION

This paper has tried to present the main correlations concerning the aspects of governanceenterprise and the users of the financial -accounting information, withholding here elements thatconcern the concept of corporate governance, represented the system through which enterprises arelead and controlled and informational asymmetry. This phenomenon knows an extension at thelevel of all the relationships between managers and external users of the financial a nd accountinginformation. and the existence of the possibilities to attenuate its effects through accountancy, thisoffering enterprises the possibility of communicating on the financial market of all the necessaryinformation for the users in order for t hem to evaluate the profitability perspectives.

The social accountancy together with the audit, correlated, offer one of the few mechanismthrough which organizations can combine the new conceptions of accountancy, like social corporateaccountancy and social responsible accountancy and the concept of corporate governance as asuccessful model of business concentrated o stakeholders. Stakeholders represent those organismsand categories of persons with major interests in the deployment and results of the en terprise’sactivities, which if taken into consideration by the managers have a major impact on theorganization’s performance.

The importance of the corporate governance for the development of the capital markets isuncontestable. Thus, a series of resea rches (Brown, Lawrence, Caylor, Marcus - CorporateGovernance Study: The Correlation between Corporate Governance and Company Performance,Institutional Shareholder Services, 2004) show that enterprises with a good corporate governance,measured in coefficients such as CGQ have financial performances with 18,7% up to 23.8% biggerthan those with a weak corporate governance, according to the type of financial market where theyare listed.

THE CORELATION: INFORMATIONAL ASYMMETRY/THE AGENCYRELATIONSHIPS

The informational asymmetry is a new problem in the Romanian economical and financialfield, but is reflected, just as it is in the countries that have been up to this concept for a longerperiod of time, mainly in the agency relationship, as managers - shareholders, or managers-creditors, this phenomenon knowing an extension at the level of all the relationships between themanagers and the external users of the financial and accountant information, therefore diminishinghis effects through accountancy.

Thus, accountancy offers the enterprises the opportunity of communicating the financialmarket all of the information necessary for the users in the process of evaluating the profitablenessof their perspectives, the forces manifested on this market rarely all owing the publication of fullinformation.

The study of the financial markets starts from the hypothesis that all public and privateeconomic agents know at one time all of the information available on the market, this being theideal case of the efficient market in the financial theory. The non -compliance with this hypothesistranslates into informational asymmetry manifested through strong, semi -strong and weakefficiency of the financial markets.

The appearance of the informational asymmetry is generated by the existence of the agencyrelationships, this being defined in the vision of Jensen and Meckling, as a contract in which at leasta person called “principle” has appealed to the services of a person called an “agent”, to fulfill, inhis name, a certain task, which implicates a delegation of decisional nature of the agent. This typeof relationship inducts an informational asymmetry because of the fact that the agent has certainknowledge or information unknown and inaccessible to the principle, and th e principle tries tocontrol and observe the agent’s behavior, to know the way his business is administrated, observingthat every principle is trying to maximize his interest in the down -size of the other one, thuscreating a conflict.

THE CONCEPT OF ENTREPRISE GOVERNANCE AND ITS MODELES

The enterprises governance groups the entire range of mechanisms that aim the solving ofan agency problem, therefore the conflicts of interests between shareholders and leaders as well. Itmay be a control effectuated by the administration council, of an attractive remuneration system, ofthe shareholder’s activeness or of the financial market’s pressure through the public offers.

Two big enterprise’s governance models have emerged in the specialty literature: the shareholder type, where the control over the opportunist behavior of the leader is

exerted in an external manner throughout the market; the stakeholder type, where, the main objective is to defend the interests of both

participant sides (shareholders, employees, those that are responsible with the work ceased by amain entrepreneur, clients, the environment, etc.).

The corporate governance concept is based on the assurance of a fair treatment, un -discriminatory for all the investors, accomplished through a set of principles as: access to theenterprise’s information (those with a public character not the confidential ones) and thetransparency of the decisional act (assured though the participation at the general ordinary andextraordinary gatherings).

In defining the concept, a short synthesis of the most important clarifications can containthe following:

the corporate governance is the field of the economy that studies the manner in whichenterprises can become more efficient by using institutional structures li ke constitutiveacts, flow charts and the legislative casement this field being limited in most cases to theway in which the shareholders can assure and motivate the enterprise’s directors, so theycan get the expected benefits from their investments;

from the Organization for Cooperation and Economical Growth - OCDE, point of view,the corporate governance is the system through which enterprises are lead and controlled,as a result of norms, traditions and behavior patterns developed by every legislativesystem. In detail, it refers to the way in which rights and responsibilities are dividedbetween the participants to the enterprise’s activity, like the Council of Administration, themanagers, the shareholders and other interest groups, also specifying th e way in which thedecisions are taken for the enterprise’s activity, how the strategic objectives are defined,which are the resources used to reach them as well as how the financial performances aremonitored. Thus, the concept is seen as having two side s: the behavior one ( which refersto the way the enterprise’s managers, shareholders, employees, creditors, clients andsuppliers, the state and other groups of interest inside the enterprise’s general strategyinteract) and the normative side (which ref ers to the set of regulations in which theserelationships and behaviors described above fit in - he law of the commercial societies, thelaw of real estate and of the capital markets, the law of bankruptcy, the law ofcompetition, requirements for quotati on on the market etc.);

the World Back defines the corporate leadership as being a set of laws, norms, regulationsand conduit codes adapted voluntarily, which allow an enterprise to attract human andmaterial resources necessary for its activity, offering it as well the possibility to run anefficient activity that will generate value on long term for the shareholders, groups ofinterest and for the enterprise as whole. In the same opinion, the corporate governancerefers to promoting rightness, transparen cy and responsibility at the enterprise’s level.

Shleifer and Vishny present the following definition, where the corporate leadership refersto the way in which the fund suppliers of an enterprise are assuring themselves of the factthat they will receive the rightful benefits from their investments.

International Federation of Accountants - IFAC defines corporate governance as a numberof practices of the Administration Council and of the executive management, used withthe purpose of assuring the strategi c action directions, the fulfillment of the goals, themanagement of the risks, and the responsible use of the financial resources.

in the French specialty literature we encounter the expressions “ gouvernementd’entrerprise” (the governance of the enterpri se, in communicates of the OCDE or inauthors like Gomez, Marois, Bompoint, who are leaned towards a juridical approach) and„governance corporative” (corporate governance, in author such as Perez, Pollin, who aremore marked by the economical and financia l dimension of the problem).

in the Romanian literature (the press or the specialty literature) we can identify more thanone expressions that signify this concept: “corporate governance” (Financial Week, no. 47,06.02.06), “unit trust governance” (in the context of establishing the unit trust principles –The International Audit Standard no. 260 - “the communication of the audit aspects tothose responsible for the unit trust”, p. 2, dec. 2004). Also, we can find in practice the termof “enterprise’s governance” (the qualification norm 2130 in the professional norms of theinternal audit – www.cafr.ro).In the year 1999 there have been elaborated the OCDE principles regarding the corporate

administration, which are today t he only set of unanimously world wide accepted set of principles,which are recognized as one of the 12 basic piers of the international financial stability, theseprinciples of the OCDE serving as a reference point in the making of a national collection o f codesregarding the corporate governance. They are concentrating first of all on the publicly marketableenterprises, approaching as well problems regarding the enterprises with a large number ofshareholders, but which are not listed, some aspects regar ding the administrators of small privateenterprises and the administrators of public enterprises being useful as well.

These principles refer to the following situations:- the rights of the owners and their protection (the right to dividends, the right to be

informed regarding the decisions that have a major impact on the enterprise’s life, theright to participate and to vote in general meetings, the respect for their right pre -emption);

- the equitable treatment of all shareholders, including the minoritar y and foreign ones;- the role and the rights of the stakeholders – it is about the role of the employees, the

creditors, the suppliers and of the clients in the enterprise’s administration, which must berespected as it is defined in the national legislatio n;

- the transparency of the information and their prompt release (reporting to the shareholdersof all the current, financial, administrative, extraordinary activities regularly, in full and attime, correctly, etc.);

- the responsibilities of the Council of Administration and of the executive leaders (thenumber of members of the Administration Council, number of independent members, theirappointive, revoking, remuneration etc.).

The principles have been enounced extremely general, leaving it up to the count ries thepossibilities of applying them and giving a bigger or smaller importance to some of the aspects, it isspecified that they do not wish to impose a universal model of corporate governance, but thetendency on the long run is to advance to global st andards.

THE IMPORTANCE OF THE FINANCIAL AND ACCOUNTING INFORMATIONIN THE ENTREPRISE GOVERNANCE

Inside the concept of corporate governance, a central place is taken by the transparency ofthe financial and accounting information, because it is the basi c of any decisional process and mustsupport different categories of users in choosing between optimal solutions, it’s a explanationvector, but also an anticipative one. For this, the financial and accounting information must have acertain quality, which can be appreciated by the time t take for the information to get from theremittent to the user, its rhythmicity, accessibility, actuality, relevance, credibility, comparability,etc. Quality and prompt financial and accounting information contribute to t he efficientadministration of the enterprise and to the growth of its market value. But, in administering anenterprise, the main actor is the manager, him playing a key role in giving the enterprise’s value,also capable to influence its repartition. The manager’s decisions are a condition of the enterprise’sperformance, but also the wealth of the shareholders, and in the situation in which they increase theenterprise’s value; they will receive remunerations and other facilities accordingly, thus observ ingthe manager’s tendency to manipulate the financial and accounting information, thus the financialposition of the enterprise and its performance.

Good corporate governance has as prime objective sending coherent signals to the financialmarket and to the investors. In matters of governance it is important to always have in mind thebasic problem, that of the property and of the control, allowing us this way to continue studying thelegitimacy of the governance problems approach from a different view tha n that of the shareholders.The shareholder represents the traditional category marked by the governance issues – he is theowner of the enterprise, but doesn’t have control over his property, therefore comes into discussionthe already reminded context of the agency theory. Even more, his extremely vulnerable position(especially in the case of minoritary shareholders) is given by the informational asymmetry thatmarks the relationships between shareholder and manager. Inside this vision based on theshareholder (which is of Anglo- Saxon manner) we can identify several elements:

- the actors of creating and redistributing value are the shareholders (actual and potentialones), the financial creditors and the managers;

- all of the contract with the capital brin gers are signed by the manager;- the corporate governance system is resumed to two external mechanisms, the financial

market ad the manager’s market, and to just one internal mechanism, the administrationcouncil, which can act over the manager by motivatin g him with superior remunerationsor, on the contrary, by substituting him

- the other actors have an auxiliary role, especially in influencing the parameters in whichthe agency costs are established;

- the only criteria of efficiency for the system’s evaluat ion are the bourse value.

Numerous opinions come to criticize today’s shareholders vision, by giving an importantrole to other partners of the enterprise (especially the employees). This alternative vision is a“continental” one, characterizing the loan b ased economies, and it is desired for it to be coherentwith concepts such as knowledge based economy, social responsibility, human capital.

CONCLUSIONS

As a final reflection, regarding the governance system of the enterprise, a couple of ideashave the vocation to present a special ring in the chain of governance and that is the audit in a widesense, as manner in which the enterprises are lea and controlled, the importance of this ring beingdemonstrated by the resounding cases of world financial frauds , in the first part of the decade 2001 -2010, eloquent being the Enron case. Thus, in the analysis of the audit, we must take intoconsideration the different ways aimed by an optimal process of audit (internal versus external), itsplace in the governance system passing through the study of the audit committee’s role as aorganizational structure generated directly by the administration council.

According to the definitions presented during the paper, I can conclude that, “thegovernment of the corporation represents the rule and normative system either of an institutional ora market nature, in which take birth or are being watched diverse categories of stakeholders,shareholders, management, public administration, depending personnel, consumers and so on. Thisdefinition is being completed with the express objective indicated by the “Principles of CorporateGovernance” of the OSCE (1999) of “Insuring the strategic leadership of the society, the effectivecontrol of the management on behalf of the trust coun cil and the loyalty of the associates”.

Therefore, it is clearly shown also the tight bond between the corporate governance and thewell functioning of the competition on the market. The transparency and the protection of theminorities are for not only a fair repartition of the risk within the economical activities domain ofthe entity, but also a fair functioning of the market, in the complex way: this must provide powerfulmechanisms, depending on which the leading departments will act in favor of the sh areholders,maximizing the economical value of the enterprise.

In conclusion, we can state the fact that the corporate governance means more thangenerating positive relations wit the public, underlining the enterprise’s commitments towards theethical principles.

REFERENCES

1. Airoldi, G., Bruneti, G., Coda, V., (1999), Lezioni di economia afiendale ”, Il Mulino,Bolognia.

2. Allen, F., Gate, D. (2002), A Comparative Theory of Corporate Governance, The WhartonFinancial Institutions Center, Philadelphia, PA.

3. Brian P. Schaefer (2008) , Shareholders and Social Responsibility , Journal of BusinessEthics (2008) 81:297–312, DOI 10.1007/s10551-007-9495-0

4. Charreaux, G., (2001), Gouvernement d’entreprise et comptabilité, Encyclopédie de gestion,Economica, Paris.

5. Daily, C., Dalton, D. and Canella, A. Jr (2003), Corporate governance: decades of dialogueand data, Academy of Management Review, Vol. 28 No. 3.

6. Du Plessis, J., McConvill, J. and Bagaric, M. (2005), Principles of Contemporary CorporateGovernance, Cambridge University Press, Port Melbourne.

7. Durden, C. and Pech, R. (2006), The increasing cost of corporate governance: decisionspeed-bumps for managers, Corporate Governance, Vol. 6 No. 1.

8. Eisenhardt, K. (1989), Agency theory: an assessment and review , Academy of ManagementReview, Vol. 14 No. 1.

9. Feleagă, N. (2006), Importanţa informaţiei contabile în funcţionarea procesului deguvernanţă a întreprinderii, Congresul al XVI-lea al profesiei contabile din România,intitulat „Profesia contabilă şi Globalizarea”, Editura CECCAR, Bucureşti.

10. Holly, J., Gregory, (2000) - The globalization of corporate governance , OECD BusinessSector Advisory Group on Corporate Governance.

11. London Stock Exchange (2004), Practical Guide on Corporate Governance , London StockExchange, London.

12. Shleifer, A,. Vishny, R.., 1997, - A Survey of Corporate Governance , Journal of Finance nr.52.

13. www.encycogov.com14. www.ifac.org

THE CONSEQUENCES OF THE CAPITAL REGULATION IN CREDIT INSTITUTIONSACCORDING TO THE BASEL I AGREEMENTS

Lecturer PhD. Student Mariana VLAD“Ştefan cel Mare” University of Suceava, Romania

marianav@seap.usv.ro,Associate Professor PhD. Mihaela TULVINSCHI“Ştefan cel Mare” University of Suceava, Romania

mihaelat@seap.usv.ro,

Abstract:Capital is one of the key factors to be considered when the safety and soundness activity of bank is evaluation.

An adequate capital based serves as a safety network for a variety of ricks to which a bank is expose d in the course ofits business. He absorbs the possible losses and provided a basis for maintaining depositor confidence in bank. Also,the capital is the ultimate determinant of a bank’s lending capacity. A bank’s balance sheet cannot be expanded beyondthe level determined by its capital adequacy ratio. Therefore, the availability of capital consequently determines themaximum level of assets.

Keywords: bank, capital adequacy ratio, capital’s bank, solvency,

JEL Classification: M10, G21, G24, G32

INTRODUCTION

In this article we have proposed ourselves to show the influence of the capital adequacyregulation over the crediting activity, because the banks, when taking the decision of placing theirmoney under some type of credit, they must take int o consideration the amount that will be placedas well as the risk that comes with it, in such a way that they don’t brake the minimum levelestablished for the solvency index and their objective of profit maximization.

1. THE CONCEPT OF BANKING CAPITAL

The capital represents the wealth of the banks owners, or the richness owned by theshareholders or associates in a bank. The primary role of the capital is to keep the bank open, so itcan continue its activity, thus time an profits can absorb the losses, and the public doesn’t losses ittrust in the bank. More than anything, trust is important for the bank’s shareholders and clients. Tosustain the high levels of assets and deposits, a bank must posses an adequate capital. The adequacyof the capital has been a constant essential preoccupation of the banking management and profileregulation, because of its significance regarding the bank’s solidity and safety of deposits. Furthermore, the adequacy of the capital has an important competitive dimension; wel l capitalized banksare more likely to attract resources: either form deposits, either from advantageous loans. In thebank’s policy of measuring the banking capital adequacy, very important is the determination of theextent to which the capital can be av ailable to serve other objectives and functions foe the capitalfunds, even though it is invested in buildings and equipments, like covering the effects of the creditrisks, market risks, and other types of risks hanging over the financial condition of the bank.

Thus, the capitalization level determines directly the credit institution’s capacity to absorb losses generated either byexogenous shocks inducted by the macroeconomic internal and international framework, either by inadequate practice ofadministration over the endogenous risks in the banking activity.

2. THE REGULATION OF THE BANKING CAPITAL

In order to encourage safe management of the risks associated to this unique structure of thebalance sheet, the authorities have introduced in most countries certain demands of capitaladequacy. The capital adequacy of the banks means that maintaining a level of capital adequate tothe nature and the risk profile of the bank. To establish the adequacy level of the capital, one must

take into consideration the effect of the credit risks, market risks and of other types of risks that arehanging over the financial condition of the bank. The types and size of risks in the bank’s activitydetermine the measure in which the capital should be above the minimum level i mposed throughlegal regulation in order to handle the unwanted consequences. It is monitored, using measures,rules and rates established by the National Bank of Romania, and through the solvency index.

The legal restraints are the most significant factor s that limit the use of the financial lever bythe commercial banks. This kind of legal restraints are often in conflict with the shareholderswishes of owning bigger profits and higher incomes. The banking authority states, under multipleforms, the banking capital regime, its minimum value, ways of subscribing, structure, sizeaccording to the risky assets. The size of the banking capital depends mostly of the credit portfolio’squality and the bank management.

The prudential regulations of the central ba nk refer to the adequacy of owned funds to theassumed risks, the self-owned funds representing the last warrant of solvency against all risks. If thefunds are not adapted according to the risk level for whatever reason, nor the solvency risk andother risks, nor the performance measurements are well withheld.

Now days, the main legal norms ruling the banking capital in our country is:

The BNR order no.12/2007 regarding the reporting of the minimum capital requirements forcredit institutions: transposes into the Romanian legislation the reporting forms of COREP(Common solvency ratio reporting framework ) elaborated by the Banking Supervising Committee(CEBS), which represents the instrument for banking supervision according to the Basel IIprincipals. The new legal norms impose the obedience, both on individual and consolidated level, ofthe requirements regarding the self -owned funds and the capital requirements for the credit risk,market risk, operational risk, the risk of diminishment of the claim val ue, the position risk, thepayment risk, the credit risk of the counterparties, the merchandise risk. Regarding the creditinstitution’s options, it is mentionable that Romanian juridical banks have chosen the standardapproach for credit risk. Also, for t he operational risk, 22 Romanian juridical banks have chosen thebasic approach, 9 banks the standard approach and one bank for the advanced approach.

The BNR rule- CNVM no.13/2006 regarding the determination of the minimum capitalrequirements for credit institutions and investment firms and connected regulations : it imposes tothe credit institutions maintaining a level of the self -owned funds at least equal to the sum of capitalneeds for credit risks, risk of diminishment of the claim value for the e ntire activity, the positionrisk, payment risk, the credit risk of the counterparties, exchange rate risk, merchandise risk andoperational risk, The capital requirements are different according to the approach chosen by thecredit institutions, which are the basic approach, standard approach, standard alternative approachand the advanced approach. The capital requirements are used to prevent the unjustified extent, tostop the growth of the bank beyond its capacity and quality of its banking assets.

An adequate level of capitalization indicators for the credit institutions represents a warrantyfor maintaining the stability of the financial system as whole, given the fact that these represent themost important component of the Romanian financial market.

3. SOLVENCY INDICATOR

The solvency indicator expresses the self -owned funds, as a ratio from the total assets andelements outside the balance sheet, subtracted commissions adjusted according to risks.

The numerator of the solvency indicator – self-owned funds of the banks: are made out ofself-owned funds of level 1 and self -owned funds of level 2. In the self -owned funds of level 1 areincluded the social capital, reserves (all reserves minus those from reevaluation), the audited profitand are deducted the incorporeal immobilizations. The self -owned funds of level 2 are structuredthis way: own funds of level 2 that include the reevaluations reserves and own supplementary fundsof level 2 which include preferential cumulative shares on a determined perio d, subordinate loans.From the self-owned of level 1 and 2 the bank deduces the value of the shares and other capital

titles owned in credit institutions over 10% from their social capital, as well as the participations ininsurance companies (through part icipation we understand 20% or more from the capital).

The denominator of the solvency indicator –assets and elements outside the balance sheetadjusted according to risk- known also as net exposure, means that the assets are attributed withcredit risk grades in percentages. Thus, the value from the balance sheet of each asset will bemultiplied with the adequate percentage to obtain the adjusted value according to risks. Accordingto the legal legislation at hand we have four percentages of risk: 0%, 20%, 50%, 100%, which aredistributed to assets by taking into consideration the nature of the debtor, its origin country or thenature of the operation.

Thus, the value of the weighted average sum according to the risks of the assets is thedenominator of the solvency

Due to the self-owned fund’s structure in credit institutions on both components, of level 1and 2, banking solvency can be calculated trough two formulas which are:

The solvency index calculated as a ratio between the level of self -owned funds and the netexposure

100xassetsweightedRisk

)Capital2and1Tier(ownFundsSolvency (1)

The solvency index calculated as a ratio between the self -owned capital and the netexposure.

100xassetsweightedRisk

)Capital1Tier(capitalimaryPrSolvency (2)

The “ratio of the self-owned funds of level 1” index reflects the measu re in which the creditinstitutions are financing their activity.

Until 31dec 2006, the prudential norms which apply in Romania established a minimumratio of solvency of 12%.

In 2007, the credit institutions have calculated the solvency ratio according to the Basel Iprincipals, respectively the BNR legal norm no 12/2003 regarding the supervision of the solvencyand high exposures of the credit institutions, with the following modifications and completions.After this date, the minimum limit of the index was toned with that applicable on European level,which is 8%. This year the decreasing trend from the past few years registered by the aggregatesolvency report, calculated for credit institutions, has emphasized, the index loosing 5,4%percentage points in comparison to the level registered in December 2006, up to 12,7%. It isconsidered tat the main factor responsible for this evolution is the continuing growth of the non -governmental credit, n terms in which the self -owned funds of the credit instituti ons have registeredan inferior growth rate. Never the less, the solvency report maintains itself at an adequate level,superior to the minimum threshold imposed by the banking prudence regulations stated in Romaniaever since 2007 and also, on European an d international level (8%).

4. THE BANKING SOLVENCY ANALYSIS

The main objective of the capital management is to fulfill the external demands regardingcapital, maintaining healthy capital rates to support businesses and maximizing the shareholder’svalue. The bank administrates the structure of the capital and makes the necessary adjustments inorder to align to the economical conditions and to the characteristic risk of its activity.

The bank will maintain a level of self -owned funds that can be used at an y time and withpriority to cover the unavoidable risks from its activity, which don’t implicate fixed costs for thebank and are effectively at the bank’s disposal, respectively they are fully paid.

The regulation authorities have their role in implementi ng banking capital administration.The regulation authorities are forcing banks to have a capital, which they consider adequate in orderto protect the deponents and the banking system.

Thus, the prudential restrains of first rank, between which the solven cy ratio influences to aconsiderable extent the banking strategy and balance sheet administration. Their impact can beanalyzed in strategic, commercial or financial terms.

Strategic: From strategic point of view, the most obvious effect of the prudentia lregulations was creating a strong restraint on the balance sheet dimension, leading to the banksorientation towards objectives such as profitableness and risk control. The restraints on the balancesheet were generated by the solvency ratio, which on st rategic plan leads to a limitation of theactivity’s capacity to evolve. In order to respond the prudential demands, banks can, from strategicpoint of view to: either increase self -owner funds, either to reduce the activity volume, orientatingtowards les demanding activities or to give out certain assets (trough transfer of titles , transferclaims, subunit transfer)

According to the BNR studies, the analysis of the solvency ratio evolution calculated ongroups of banks according to the assets owned criter ia shows the continuation of the drawback trendfrom the past few years. In the context of competition for market share, it has been shown that bigbanks (those banks whose assets are more than 5% in the total assets) continue to have the lowestlevels of solvency- 10,8% at the end of 2007, in drawback with 3,3% from the level registered at theend of 2006, inferior to the average of the banking system. Also, for the second year in a row, thelevel of calculated solvency for the group of small banks (those whose assets are less than 1% outof the total assets) equal that of the medium banks (those whose assets own a share between 1 and5% in the total assets) – 19% at the end of 2007, in drawback wit 6 % from the level registered inDecember 2006, showing their further more active implication in the crediting activity. Thediscrepancy of approximately 3% in the calculated solvency ratio drawback for big bankscomparative to the other two groups is reflected also in the drawback of the concentrating level inthe Romanian banking system. Thus, contrary to the registered evolutions during 2006, the marketshare of the top 5 banks in the total portfolio of credits has downsized with 6,4 %, down to 57,1% atthe end of 2007, and in the total aggregate assets with 45 , down to 56,4%.

Commercial: The incidence of prudential regulations for capitals on the commercial policyis evident in selecting the clients and some activities low on self -owned funds consumptions. Fromthe selection of the customers’ point of view, we must remark that banks have the interest ofselecting the credits distributed according to the ratio given to them according the solvencycoefficient.

In a strategy based on saving the self -owned funds, which are a rare resource, banks arepreoccupied in developing some activities, who are from a regulatory point of view, weak on self -owned funds consumption. Commercializing financial products and administrating assets areactivities whose needs for self -owned funds are limited, thus allowing the growth of commercialrelationships with the clientele without the bank having to increase its risks.

Of an increased importance is also the growth of the market activities and those outside thebalance sheet, considering as being incorrect the substantiation of the exceptional development onthe financial market only on the restrictions of the prudential regulation. Taking into considerationthe needs of self-owned funds and of the cost of these funds, has lead to the localization of bankingadministrators’ interest towards the profitability of these activities and products. The new sectors ofactivity might conciliate finding an accelerate growth with a strong profitability, while respectingthe prudential demands.

It is known that comparing to the previous periods, solvency has reduced itself in 2007,because the rhythm of crediting has increased more than the one of bank’s self -owned funds. Thus,four the first time in eight years, three banks have reported a level of the solvency index between8% and 10%, while other three banks have registered a level between 10% and 12%. The biggest

concentration is found between the intervals of 12% -16%, in which fits the solvency index of 12banks. At the end of 2007, only 5 banks were still registering a solvency level bigger than 30%, incomparison to the situation in December 2006, when a number of 8 banks were reporting such alevel. Continuing the same crediting policies will mean also the adequate increase of the self -ownedfunds for the banks that have their solvency rati o near the minimum limit of 8%.

Financial: From the financial strategy point of view, we must say that a long period oftime, banks played an essential role in structuring the short and long term financing, after which theincreased demands of the shareholders for obtaining a satisfying remuneration of their contributionsand the guidelines of the prudential regulations have changed banking strategies. The application ofthe solvency ratio had as an immediate effect the banks search for methods to fast an d significantincrease of the self-owned funds. Banks have made increases in capital or have resorted to releasingsubordinate titles.

Now, banks have reached a new stage in which they use new, sophisticated techniques:using title operations, derived inst ruments regarding credits (derivate credits), which has created theopportunity of making new operations without having to bare the cost of the prudential regulations.Parallel to these operations, the needs for self -owned funds have been able to be better appreciated,and certain banks have decided to regain their shares and distribute important dividends instead ofincreasing their capitals.

For example, according to the BNR studies in the year 2007 there was an increase of theself-owned funds belonging to Romanian juridical persons and respectively of their maincomponent level 1 self -owned funds, in a rhythm inferior to that of the previous three years.Analyzing the financial grade’s evolution of the credit institutions activity from self -owned funds(reflected by the self-owned funds of level 1 ratio), in the year 2007, we can see that it continues thetrend of drawback down to 6,8%, with approximately 2 % less than last year. Also, we still havedifferences between the financing level from self -owned funds at the disposal of the groups ofbanks according to the size of their assets. Thus, big banks continue to dispose of the mostrestricted level of the self -owned resources (5, 6% at the end of 2007, in dropdown with 1percentage as to December 2006). In exchange, the proportion of self -financing for small andmedium banks has maintained at the level registered last year (approximately 10%).

Also, the structure of the self -owned funds belonging to Romanian juridical persons hasregistered a series of modifications in 2007. The position of the self -owned funds of level 1 hasconsolidated itself, fact stated by the increase of its contribution to financing the self -owned fundsup to 77%. At the same time, it has been registered a drawback of the self -owned funds of level 2ratio down to 30% from the volume of self -owned funds of level 1, respectively with 5% under theone last year. In these terms, the growth potential of the self -owned funds of level 2, which includesecondary sources of capitalization of the credit institutions, stay high still. Among the componentsof the self-owned funds of level1, the social capital stays the most important element, next to the netprofit of the current exercise. The position of social capital has straightened itself in 2007, troughincreasing its ratio up to 65%, in comparison to 63% registered during 2004 - 2006. It is remarkablethough that, from a number of 40 credit institutions Romanian juridical persons and subsidiaries ofthe foreign credit institutions who were e ngaging activities in Romania (three f these being newlyestablished) , only 15 (13 banks Romanian juridical persons , a subsidiary of a foreign bank and theco-operative organization for credit CREDITCOOP) have increased their social capital in the year2007 in comparison to the previous year, when 23 credit institutions have registered newcontributions of capital.

Regarding the profit resulted from the banking activity; the year 2007 has markedrevitalization, reflected in a real annual growth rhythm of 14% (in comparison to 4% in December2006). This evolution has lead to the increase of the profit contribution in sustaining the self -ownedfunds of level 1 with 1 percent in 2007 up to 16%, inferior ratio to that registered during 2003 -2005.

Among the self-owned funds of level 2 components, the subordinate loans contracted bybanks have registered an outlined growth the past two years (27% in 2007 and 69% in 2006), in

such a way that in December 2007 they were sustaining 70% out of their volume. Accordingl y, thecontribution of the reserves from the patrimony’s reevaluation in financing the self -owned funds oflevel 2 has diminished.

CONCLUSIONS

In conclusion, we can appreciate that, although the year 2007 has registered the outline ofthe drawback trend of the regulated solvency report, this evolution is due to the increased degree offinancial intermediation assured by the banks in Romania, which is situated still a lot below thatregistered in countries of the European Union. The Romanian banking system stays wellcapitalized, and on short term the level of solvency won’t cause problems, given the comfortablereserve of the aggregate level of this index number in comparison to its regulated minimum. Neverthe less, for many of the Romanian banks whose so lvency ratio is near the minimum limit of 8%,wining and consolidating the market share will depend on the increase of the self -owned funds(trough new contributions of social capital brought by shareholders, engaging subordinate loans,increasing reserves, etc.). It remains difficult to measure exactly, at this moment the impact ofcoming into effect of the new banking prudential regulations regarding capital adequacy, whichimpose the application of the Basel II principals starting January 1 st 2008. On short term, we canappreciate never the less, that the level of solvency won’t be a problem, given the comfortable rateof it in comparison to the regulated one, for most banks in the system. From 2008 the central bankwill give up the 12 % level and will al ign the Basel II regulations of 8%, which contains animproved methodology regarding risk management.

BIBLIOGRAPHY:

1. BNR Regulation – CNVM 18/23/2006 regarding the self -owned funds of the creditinstitutions and investment firms , M. Of. no. 1034bis from 27/12/2006.

2. BNR Regulation – CNVM 22/27/2006 regarding the capital adequacy of the creditinstitutions and investment firms, M. Of. no. 1035bis from 28/12/2006.

3. BNR norm no.12/2003 regarding the solvency supervision and large exposures of thecredit institutions, M. Of. no.

4. www.bnr.ro

HARMONIZED STATUTORY AUDIT - LEGAL LIABILITY AND SANCTIONS

Professor PhD. Ionel BOSTAN“Ştefan cel Mare” University of Suceava, Romania

ibostan@seap.usv.ro

Abstract:Recently, the normative native framework as regarding the audit has realized the assimilation of the

2006/43/CE from 17 May 2006 Directive of the European Parliament and of the Council regarding the statutory auditof the annual accounts. Thus, it created a supervisi on public system for the statutory auditors and the audit firms underthe European principles, bringing significant modifications and additional fillings OUG no. 75/1999 regardingfinancial audit activity.

Keywords: Statutory audit, Auditors chamber, p robation access, financial situations, ethical code, sanctions.

1. INTRODUCTION

Romania, as member state with full rights of the European Union, has the task to transposein its own legislation the 2006/43/CE Directive from 17 May 2006 of the European Parliament andof the Council regarding the statutory audit of the annual accounts.

Under this circumstance, the Executive has emitted the OUG no. 90/2008 – regarding thestatutory audit of the annual financial situations and of the c onsolidated annual financial, publishedin the Official Gazette no. 481 from 30/06/2008 (approved per Law no. 287/7 Nov. 2008)

Except the rigorous settlement of this domain, the new normative act assigns also the rulesof creating a public supervision system for the statutory auditors and audit firms under the Europeanprinciples, bringing significant modifications and additional fillings OUG no. 75/1999 regarding thefinancial audit activity.

2. THE ACCESS IN THE PROFESSION. THE APPLICATION IN THE STATU ARYAUDIT PRACTICE OF THE STANDARDS AND OTHER PROFESSIONALNORMS.

Let’s remember that statuary audit represent “the audit of the annual financial situations orof the consolidated annual financial situations, as it’s scheduled of the EU law, transposed i n thenational settlements”, and the statuary auditor is “individual person authorized by the competentauthority, respective the Chamber of Financial Auditors of Romania (CFAR), to perform statutoryaudit”.

Statutory auditors and audit firms must effect uate the statutory audits according toInternational Audit Standards (IAS). To the audit performing, statutory auditors and audit firms canapply a national standard, adopted by CAFR, as long as European Union didn’t approved an IASthe refers to that problem, specifying this aspect in the audit report.

The audit activity is complex, auditors requiring multidisciplinary knowledge: generalbookkeeping, preparing the annual financial situations, IFRS, financial analysis, price bookkeepingand managerial bookkeeping, risk management and intern control, the audit and the professionalaptitudes, professional standards regarding the statutory audit and the statutory auditors, IAS,professional ethic and independence.

Otherwise, the probation auditor access te st covers domains settled by the law of thecommercial societies and by the corporative governance, insolvent law, fiscal legislation, civiliancode and commercial code, social assurances law and the work code. Concomitantly there is alsotested information technology knowledge, financial economy, general and business economy,mathematics and statistics, financial management.

Obviously, sustaining that test is conditioned by the existence of the academically diplomain the economical domain (or in other do main, but with specialty master) and by a 4 year financial –bookkeeping seniority activity. Statutory auditor or the audit firm is called by the general meetingof the shareholders/partners of the audited entities. Statutory auditors or the audit firms ca n beresigned only when there are solid reasons. By no means, the opinion divergence regarding thebookkeeping treatments or the audit procedures represent a solid reason for demission.

3. JURIDICAL CONSEQUENCES OF THE NORMATIVE SPECIFICBACKGROUND INOBSERVANCE

Respecting the investigations and sanctions, The Council of the Public Oversight Board forthe Statutory Audit Activity (CSPAAS) establishes efficient systems for detecting, correcting andpreventing the inadequate performing of the statutory aud it. Applied sanctions (according toChapter VII, OUG 90/2008) must be efficient, proportional and discouraged regarding the statutoryauditors and to the audit firms, in case that the statutory auditors aren’t effectuated correspondingthe specific normative background.

In the same time, applied sanctions don’t have to bring touch to the civil liability regime andthe measures taken or the sanctions imposed to the statutory auditors and to the audit firms requireto be properly presented to the public.

The audit firms respond, according to OUG no. 90/2008 – regarding the statutory audit ofthe annual financial situations (art. 32 -37), if one of the associates, administrators or employees,that don’t have the statutory auditor quality, interferences in the independent exercitation of thestatutory auditor profession. This, only if the interference manner can damage the independence ofthe statutory auditors that develop this activity in the name of the audit firm.

Such action is sanctioned with penalty fro m 10.000 lei to 20.000 lei. Then, is contraventionsanctioned with penalty from 50.000 lei to 100.000 lei and the nullity of the prepared audit report“the usage of the statutory auditor quality or of the audit firm quality in other conditions than thosescheduled by OUG 90/2008)

For “the exercitation statutory audit activity without annual visa emitted by the competentauthority or by the unregistered persons in the Public register” it can be administrated a penaltyfrom 10.000 to 20.000 lei. The asce rtainment of the contraventions and the sanction appliance ismade by the persons powered by CAFR or CSPAAS, the normative background being registeredwith the dispositions OG no. 2/2001 regarding the general juridical regime of the contraventions.

Noteworthy that, the exercitation of the statutory audit activity without having the statutoryauditor quality constitutes an infraction and it is punished corresponding to the penalty law. Thesanctions applied by CAFR to the statutory auditors and to the audi t firms are: castigation, writtenadvertisement, the suspension of the right to practice the activity of statutory audit (in a period sizedwith 3 months and one year) and the recession of the authorization, attended by loosing thestatutory auditor quality.

We point out that the recession of the audit firm authorization brings the dissolution byrights and its liquidation. Then, in the suspension period, that person doesn’t have the right topractice under any form of statutory audit, can’t make use of the statutory auditor quality and can’tparticipate to the CAFR activity.

The deviations that for it is applied sanctions as well as the acknowledge and sanctionprocedure are established through the CAFR Statute, with the CSPAAS notice, and the appliedsanctions, definitively remained after covering all the legal contestation forms, are published in theOfficial Gazette. In the case that the law courts pronounce definitive decisions to convict a statutoryauditor for the penal acts joined by the exercitation of this activity, it is effectuated his radiationfrom the Public register.

Statutory auditors or the audit firms respond for any induced damage, aware or as result ofthe negligence, as succession of their mission. An audit firm is responsib le, with the statutoryauditor that effectuated a mission in its name for the damages made by the statutory auditor.

For this reason, also the statutory auditor (independent person) and the audit firm is imposedto make an obligatory assurance to cover th e professional risks.

We don’t close our intervention without making some mentions to the auditor obligationsthat derivate from the Ethic Code appliance. CSPAAS, with CAFR, is ensuring that all the statutoryauditors and all the audit firms respect the p rofessional ethic principles that refer at least to theirperformance in the public interest, integrity and objectiveness, professional competence and theattention deserved.

In this case, when it effectuates a statutory audit, the statutory auditor and/or the audit firmis independent by the examined entity and it isn’t involved in the decisional process of theexamined entity. The persons to whom it was attributed the quality of Chamber member can’t hireor develop activities that brings prejudices or that can prejudice their integrity, objectivity,independence or professional reputation.

A statutory auditor or audit firm mustn’t effectuate a statutory audit in case that exist anydirect or indirect financial relation, business relation, employmen t or other relation – including theextra services performance, other than that of the audit – between the statutory auditor, audit firm orthe network of the audit firm, in one side, and the audited entity, on the other side, in thesecircumstances in that a third objective part, reasonably and informed could conclude that theindependence of the statutory auditor or of the audit firm can be compromised.

If there are situations that can lead to threats to the auditor independence, as that ofverification of its own activity, own interest, representation or family relations, must applyprotection measures to reduce this threats.

In case that the importance of this threats compared to the protection measures applied issuch as the independence is compromis ed, the statutory auditor or the audit firm mustn’t effectuatethe statutory audit. The report made in those circumstances is stricken of absolute nullity.

The fact that an statutory auditor or a close associate is in a certain relation with the auditedentity or is in the relation with key -employees or with the directorate of this entity, and thisrelations could lead to situations that affect the independence or the objectivity of the statutoryauditor, makes that the respective statutory auditor can’t e xamine the financial situations of thatentity.

4. CONCLUSIONS

The violation of the stipulations regarding the independence and objectivity, scheduled inthe normative act to which we’ve made reference earlier, is calculated to lead to sanctions,including the recession of the statutory audit authorization or of the audit firm, according to therules emitted by Chamber and approved by the Public Oversight Board - CSPAAS

A serious deviation is considered the exercitation of the statutory audit activit y withouthaving the statutory audit quality that is considered an infraction and is punished according thepenal law. The sanctions applied by CAFR to the statutory auditors and to the audit firms are:castigation, written advertisement, the suspension of the right to practice the activity of statutoryaudit (in a period sized with 3 months and one year) and the recession of the authorization, attendedby loosing the statutory auditor quality.

The deviations that for it is applied sanctions as well as the acknowledge and sanctionprocedure are established through the CAFR Statute, with the CSPAAS notice, and the appliedsanctions, definitively remained after covering all the legal contestation forms, are published in theOfficial Gazette.

In this scheme of the sanction approach, remembering about some consequences, let’s addthat the recession of the audit firm authorization brings the dissolution by rights and its liquidation.Then, in the suspension period, that person doesn’t have the right to practic e under any form ofstatutory audit, can’t make use of the statutory auditor quality and can’t participate to the CAFRactivity.

Obviously, if the law courts pronounce definitive decisions to convict a statutory auditor forthe penal acts joined by the exercitation of the audit activity, or applies the penal sanctioncomplementary to the interdiction of practicing this activity, it is effectuated his radiation from thePublic register.

BIBLIOGRAPHY

6. Ionel Bostan, Auditul companiei, Ed. Alfa, Colecţia ACADEMIC, Iaşi, 2008.7. Marcel Ghiţă, Ionel Bostan, Introducere în teoria şi practica auditului , Ed. Universitas,

Iaşi, 2004.8. Directiva 2006/43/CE din 17 mai 2006 a Parlamentului European si a Consiliului

privind auditul statutar al conturilor anuale s i al conturilor consolidate, de modificare adirectivelor Consiliului 78/660/CEE si 83/349/CEE si de abrogare a Directivei84/253/CEE a Consiliului, publicata in Jurnalul Oficial al Uniunii Europene nr. L 157din 9 iunie 2006.

9. OUG nr. 90/2008 privind auditul statutar al situatiilor financiare anuale si al situatiilorfinanciare anuale consolidate, publicată in Monitorul Oficial, Partea I nr. 481 din30/06/2008, adoptata prin Legea nr. 278/7 nov. 2008, publicată în Monitorul Oficial,Partea I, nr. 768, din 14.11.2008.

10. OUG nr. 75 din 1 iunie 1999 - Textul iniţial a fost publicat în MONITORUL OFICIALnr. 598 din 22 august 2003. Ave m în vedere şi modificările şi completările aduse deORDONANŢA nr. 37 din 29 ianuarie 2004. Republicarea s -a făcut în temeiul art. III dinOrdonanţa Guvernului nr. 67/2002, publicată în Monito rul Oficial al României, Partea I,nr. 649 din 31 august 2002, dându -se textelor o nouă numerotare. De reţinut căOrdonanţa de urgenţă a Guvernului nr. 75/1999, publicată în Monitorul Oficial alRomâniei, Partea I, nr. 256 d in 4 iunie 1999, a fost aprobată cu modificări şi completăriprin Legea nr. 133/2002, publicată în Monitorul Oficial al României, Partea I, nr. 230din 5 aprilie 2002, lege rectificată în Monitorul Oficial al României, Parte a I, nr. 383 din3 iunie 2003. Ulterior a mai fost modificată şi completată prin Ordonanţa Guvernului nr.67/2002, publicată în Monitorul Oficial al României, Partea I, nr. 649 din 31 august2002, aprobată cu modificări şi c ompletări prin Legea nr. 12/2003, publicată înMonitorul Oficial al României, Partea I, nr. 38 din 23 ianuarie 2003.

SUPREME AUDIT INSTITUTIONS. COMPARATIVE STUDY FOR THE CENTRAL ANDEASTERN EUROPEAN COUNTRIES MEMBERS OF THE EUROPEAN UNION

PhD. Student Mirela-Oana PINTEAFaculty of Economics and Business Administration, Babeş -Bolyai University Cluj-Napoca, Romania

mirela.pintea@econ.ubbcluj.roLecturer PhD. Sorin Adrian ACHIM

Faculty of Economics and Business Administration, Babeş -Bolyai University Cluj-Napoca, Romaniasorin.achim@econ.ubbcluj.ro

Abstract:The Supreme Audit Institutions play a major role in auditin g the counts and the activities of the public

institutions and in promoting a healthy financial administration of public funds and general responsibility inside thegovernment. The Supreme Audit Institutions from Central and Eastern Europe are in a process of institutionalmodernization as one of the request of the process of european integration. We intended to realize a comparative studyfor some Central and Eastern European countries regarding some criterions. Through this study we intended to obtainan overall image over the Supreme Audit Institutions taken into consideration in this study, to present the similaritiesand the differences that exist in the present time between these institutions. Due to the fact that countries differ at thelevel of individual reform in this area we founded differences in the organization of these institutions and in theirevolution since their foundation. Their mission of the institution is to audit and evaluate the operation of the financialsystem of public finances and to promote its development. We observed that there was a rapid development of the AuditOffices in the region due to their joint efforts. These institutions face different limitations because of countries’ distinctconstitutional, legal, social, economic and political system.

Key words: audit, supreme audit institution, performance audit, financial audit, regularity audit

INTRODUCTION

The Supreme Audit Institutions play a major role in auditing the counts and the activities ofpublic administration and in promoting a healthy financial administration of public funds and ageneral responsibility inside the governments. Taking into consideration the growing expectationsof the citizens, of the internationals donors of funds and th e expectations of the nationalsgovernments, these governments depend on the Supreme Audit Institutions to help them toguarantee the responsibility concerning the accountancy of the public administration.

While in the private sector we have a competitive environment regarding the providers ofaudit services in spite of the concentration of the services in the hands of The Big Four, the externalaudit in the public sector has one essential characteristic and that is the monopoly of theSupreme Audit Institu tions. That’s way these institutions are responsible for the auditing of thecounts and activities of the public administration.

The Supreme Audit Institutions face different characteristics because of countries’ distinctconstitutional, legal, social, economic and political system.

We realized a comparative study on the Supreme Audit Institutions of several countriesmembers of the European Union. For this study we selected countries from Central and EasternEurope and Romania is one of them. The point fro m which we started the selection of thesecountries is that Romania in this geographic region and the fact that all the countries that weselected are countries in course of development.

Taking into consideration the aspects mentioned above we selected the following countries:Romania, Bulgaria, Hungary, Republic of Slovenia, The Slovak Republic, Poland and The CzechRepublic. For each of these seven Supreme Audit Institutions we focused our attention towards thefollowing aspects:

1. The moment of the establishment of the institution;2. The moment when the institution became a member of INTOSAI;

3. The organization of the Supreme Audit Institution;4. The mission of the Supreme Audit Institution;5. The types of audit exercised by each Supreme Audit Institution.

The article contains a short presentation of each county, that we selected for the study, regarding allthe aspects mentioned above.

1. Romania

The Court of Accounts is the supreme body of external subsequent financial control on theformation, administration and use of the financial resources of the state and the public sector. Therole of the Court is established through the Constitution of the state. The Court of Accounts ofRomania was established in keeping with the Law of January 24th 1864 under the name of “TheHigh Court of Accounts”, for the whole Romania. According to art.15 in the law “The Court shallbe charged with the investigation and adjudication of all accounting operations in connection withthe income of the treasury, general county pay -offices as well as those of the administration ofindirect taxation, and with the closure of accounts in connection with expenditure incurred by allaccounting agents”.

The activity of the Court is regulated by the Law no.94/1992 on the organization andfunctioning of the Court of Accounts completed and modified in keeping with Law no.99/1999concerning certain measures for the acceleration of the economic reform, Law no.204/1999 on themodification and completion of Law no.94/1992, Law no.77/2002 and , Law no.217/200 8 themodification and completion of Law no.94/1992, legalizes in full compliance with art.139 in theConstitution : “ The Court of Accounts is the supreme body of financial control over the way ofestablishment, administration and use of the financial res ources of the State and of the public sector.The Court of Accounts also exerts jurisdictional attributions, as provided by law”.The Court of Accounts is member of INTOSAI ( International Organization of Supreme AuditInstitutions) and EUROSAI (European R egional Working Group) since 1993.

The Court of Accounts of Romania consists of a president, vice -presidents, a secretarygeneral and the Plenum of Court of Accounts . In the administrative-territorial units the Court exertsits functions through the distri ct chambers of accounts. The Secretary General Office of the Courtof Accounts is led by a secretary general. Within the framework of the Secretary General Officeoperates directorates, compartments and offices. Other compartments with specials attribution s areInternal Audit Compartment, External -Internal Relations Compartment and Legal Compartment.

The mission of this institution is to promote professional excellence in the process ofobtaining and utilization of useful and quality information. By the controls of legal persons, theCourt of Accounts mainly considers the exactness and truthfulness of the balance sheets and of theprofit and loss accounts; the discharging of financial obligations towards the budget or other fundsestablished by law; the use of the funds allotted from the budget or from special funds, according tothe established purpose; the quality of economic and financial management, if this affects the rightsof the state, of the administrative territorial units or of the public ins titutions or if obligations areimputed to them; the economy, efficiency and effectiveness of public acquisitions.

The Romanian Court of Accounts realize the following types of audit: financial audit in thepublic sector, regularity audit in the public se ctor and performance audit in the public sector. Themain interest of the audits is to estimate the legality of spending. The performance audit is recent inits activity. In 2002 the law mandated the Court to carry out performance audits.

2. Bulgaria

The Bulgarian National Audit Office (NAO) is the Supreme Audit Institution in Bulgaria.The National Audit Office continues the budgetary control traditions of the Supreme Chamber ofControl, which was established by law in 1880 and was operating until 1947. The N ational AuditOffice is elected by the National Assembly on the grounds of art. 91 of the Constitution of the

Republic of Bulgaria from 1991 . The National Audit Office is a government authority responsiblefor the external audit of the public budget and ot her public resources and activities .

Its organization, mandate and procedures for its activity are regulated by the National AuditOffice Act (Promulgated, Official Gazette No.109/18.12.2001; Amended, Official Gazette,No.45/30.04.2002; Amended №31/2003; A mended, 38/11.05.2004).

The Bulgarian National Audit Office is member of INTOSAI (International Organization ofSupreme Audit Institutions) and EUROSAI (European Regional Working Group) since 2001.

The National Audit Office reports its activity to the Nati onal Assembly and informs thepublic on the results of its audits. The National Audit Office audit s: the state budget; the budget ofthe state social security scheme; the budget of the National Health Insurance Fund; The budgets ofmunicipalities, the budget expenditures of the Bulgarian National Bank and their management andother budgets adopted by the National Assembly . The Law on Political Parties adopted in 2005gives NAO the mandate to perform financial control on political party activities and theirmanagement. The National Audit Office is independent in performing its operations and it reportsto the National Assembly

The National Audit Office consists of President and 10 members, elected by the NationalAssembly for a term of 9 years. The organizational structure of the National Audit Office includes10 departments, 6 Regional Offices in the country with respective sectors and administration.

The mission of the National Audit Office is to contribute to the sound management ofbudgetary and other publ ic funds, and to provide the National Assembly with reliable informationon the use of funds, in accordance with the principles of legality, effectiveness, efficiency andeconomy and for the truthful reporting of the execution of the respective budgets.

The National Audit Office shall perform its auditing function by conducting financial audit,which includes auditing financial management and auditing financial statements; performance auditand other specific audits. The National Audit Office of the Republ ic of Bulgaria performsindependent audit of the budget and other public funds, guarantees the public trust in theexpenditure of funds and contributes to the sound financial management in the country.

3. Hungary

The first independent Hungarian Audit Office was set up in 1870. In 1914 its name waschanged to Hungarian Supreme Royal Audit Office and the institution functioned until 1949 whenit was dissolved by a decree. After forty years, through an amendment of the Constitution in 1989the State Audit Office of Hungary was established once again in Hungary. This Supreme AuditInstitution is a member of INTOSAI since 1968.

The State Audit Office of Hungary is the financial and economic audit organization of theNational Assembly and the supreme organ of state auditing. The aim of this institution is to auditthe management of public founds and public property as an organization being independent fromthe government.

The audit mandates also covers the financial management of social security and separatedstate funds, local and minority governments, country regional developing councils, economicchambers, public foundations, non -profit organizations, credit institution, political parties and otherrelated foundations.The State Audit Office of Hungary consists of a president, vice-presidents, a secretary general,senior officials, auditors and civil servants, administrators and employees under the Labour Code.

In the SAO’s organization two directorates operate: one audits the central level of publicfinances while the other audits the financial management of local governments, social organizationsand foundations. General directors of audit head both directorates.

Based on the Constitution and the relevant legislation the mission of the institution is toaudit and evaluate the operation of the financial system of public finances and to promote itsdevelopment. The purpose of audits is to serve and reinforce the security of public financing.Audits are carried out upon consideration of legality, expediency and effe ctiveness.

State Audit Office of Hungary audits can be divided into three main groups: regularity,performance and comprehensive audit. Regularity audits focus on organization and their operation(activities, programs and the related financial processes). The purpose is to asses their legality andcompliance with the relevant rules. The purpose of performance audit is to establish whether theorganizations have accomplished projects and activities in economic, efficient and effectivemanner. Comprehensive audits evaluate the organizational framework s as well as the conformityof all these by applying the system -based approach.

4. Republic of Slovenia

In accordance with the Slovenian Constitution the Court of Audit of the Republic ofSlovenia is the highest body for supervising state accounts, the state budget and all public spendingin Slovenia. The Constitution further provides that the Court of Audit is independent in theperformance of its duties and bound by the Constitution and law. The Court of Audi t cannot becategorized within any of the three branches of power, legislative, executive or judicial. Thisinstitution was established in 1994 less than four years after the declaration of the independence ofthe Republic of Slovenia. The firs foundation of this institution was in 1761 when the EmpressMaria Theresa has established the Accounting Chamber - the body with fairly wide powers both inthe area of audit of accounts and the accounts management. This Supreme Audit Institution is amember of INTOSAI and EUROSAI since 1994.

The Court of Audit is the highest body for supervising state budged and all public spending.In relation to other state authorities, the Court of Audit is an autonomous and independent stateauthority. No body, institution or oth er entity may order it to carry out tasks nor give it instructionsas to how to perform tasks, what sort of audit it should carry out or what it should audit.

The members of the Court of Audit are the President of the Court of Audit, two DeputyPresidents and a Secretary. Members of the Court of Audit are appointed for a term of nine years bythe National Assembly. The President of the Court of Audit and the two Deputy Presidents of theCourt of Audit constitute the Senate of the Court of Audit. The Court of Audit can have up to sixSupreme State Auditors, who head the audit departments and Secretary of the Court of Audit, whohead the support services.

The mission of the Court of Audit is to inform the public about important audit findingsfrom the audits of the state bodies, and other public funds users in a timely and objective manner. Inaddition the institutions delivers best practice advice to state bodies and other users of public foundson how to improve their financial management.

Every year, the Court of Audit must audit the state budget; the public institute of healthinsurance; the public institute of pension insurance; the budgets of municipalities; the publicutilities providers and the providers of non -commercial public services.

The Court of Audit may carry out regularity and performance audits. Regularity auditsprovide relevant and sufficient data to enable an opinion to be expressed on compliance ofoperation with regulations and guidelines that any user of public funds is required to observ e in theconduct of business operation. Performance audits provide relevant and sufficient data to enable anopinion to be expressed on economy, efficiency and effectiveness of business operation.

5. Slovak Republic

The Supreme Audit Office of the Slovak R epublic is declared directly in Constitution of theSlovak Republic as an independent authority auditing the management of budgetary funds, stateproperty, property rights and government claims.

As early as in 1761 the Empress Maria Theresa has established the Accounting Chamber -the body with fairly wide powers both in the area of audit of accounts and the accountsmanagement. On January 1, 1993 the Slovak Republic was created as an independent sovereignstate. Its Constitution includes also the Act on th e Supreme Audit Office of the Slovak Republic. As

per Constitution the competence, powers and structure of the Office are regulated by SupremeAudit Office of the Slovak Republic Act No. 39 of the National Council of the Slovak Republic ofJanuary 19, 1993.

The mandate of the institution covers the funds of the state budget, extra -budgetary funds,and the management of all state property and the use of funds from abroad. It also audits thecompanies where the state holds more than 34%.

The official authorities of the Office are the President of the Office and the two Vice -Presidents of the Office. The Office is headed by the President as a statutory authority. ThePresident is deputised by the designated Vice -President. The President and two Vice -Presidents areelected and recalled by the National Council of the Slovak Republic by secret ballot. The term ofoffice of the President and the two Vice -Presidents is seven years.

The mission of this supreme audit institution is the improvement of the quality andefficiency of independent auditing activities, as well as internal control systems through the bodies,employees and optimally distributed network of regional offices in mutual support and co -operationwith other audit institutions resulting in better manage ment of public state property.

The mandate of this institution is not very precisely, it isn’t mentioned if the Office shouldaudit the performance of the activities or only the efficiency of the operations of public entities sothe Office can offer an opinion regarding the relation cost -efficacy , an opinion regarding theefficiency of the activities of public entities or regarding the success of these activities. So the typesof audits conducted by the Office are financial audits and performance audits.

6. Poland

The Supreme Chamber of Control is one of the oldest state institutions in Poland, createdunder the Second Republic on February 7, 1919, barely 3 months after the restoration of Poland'sindependence. In its present form the institution has existed for over 80 years. The Constitution of 2April 1997 was passed emphasizes the institution’s independence of the government and stresses itssubordination to the Sejm. The basic issues concerning the audit institution’s organization areregulated in the Act on the Supreme Chamber of Control of 23 December 1994. This institution hasbeen a member of INTOSAI since 1959 and actively participates in the activities of its regionalworking groups, EUROSAI.

From its very first day, the Supreme Chamber of Control h as been the country's supremesupervisory body, empowered to exercise wide -ranging control of the revenue and expenditure ofthe state and all institutions and corporations that make use of public funds. The Supreme Chamberof Control is entitled to audit all state institutions, government and local government administrativeunits, together with those corporate bodies and non -governmental organizations which performpublic contracts or receive government grants and guarantees.

Under the current regulations, NIK is answerable to Sejm, which appoints its chairperson fora 6-year term, with the approval of the Senate. According to the Act on the institution there may be2, 3 or 4 Vice-Presidents. The Act establishes also the post of the Director General. The Su premeChamber of Control operates through its departments and delegates' offices. There are four kinds ofdepartments: departments carrying out audit tasks (8), departments supporting audit tasks (2),administrative departments (4) and regional offices (16 - equals that of the voivodeships). Thedivision into departments reflects the scope of the matters it controls.

The mission of the Supreme Chamber of Control is to promote economic efficiency andeffectiveness in the public service to the benefit of the Republic of Poland.

According to its Act this institution is allowed to perform the following types of audit:financial audit in public sector, regularity audit in public sector and performance audit in publicsector. The Supreme Chamber of Control undert akes audits from the point of view legality,economic efficiency, efficacy and integrity.

7. Czech Republic

In the Czech Lands which were a part of the Austro -Hungarian monarchy until 1918, thefirst audit institution was the Court Accounting Chamber, set up in 1761. The name of theinstitution whose area of activities was the whole Habsburg monarchy was changed several times.After the Czech Republic became a separate independent state in January 1993, the presentSupreme Audit Office was established in J uly 1993. The existence of the institution has beenenshrined in the Constitution of the Czech Republic, and in contrast to the past, its mandate isconceived in an entirely new way. The Supreme Audit Office performs its functions independently,being dependent neither on the legislative power (parliament) nor on the executive power(government). Act No. 166/93 on the Supreme Audit Office is the act of the institution.

On the basis of this law, the Supreme Audit Office audits the management of state propert yand financial resources collected under the law, e.g. for health and social insurance. It also auditsthe revenue and expenditure items of the state budget, e.g. payment of taxes by all liable persons,and their correct calculation and collection by the revenue authorities.

Organizational bodies of the institution are: president appointed by the President of theRepublic upon the proposal of the Chamber of Deputies for a term of nine years, vice -president alsoappointed for a term of nine years, Board, Se nates, and Reproach Chamber of Supreme AuditOffice. Activities of the Board, the Senates, and the Reproach Chamber follow the institution’s Lawand rules of procedure that are consulted and authorized by the Board. According to theorganizational structure, the Supreme Audit Office consists of several sections. The director of theSupreme Audit Office President’s Office, heads of the sections, and directors and chiefs ofdepartments and secretariats are among managers of the institution.

The main mission of institution is to provide constitutional institutions and citizens withreliable and competent information on the management of taxpayers' resources, resources collectedunder law, and state property.

The majority of the audit processes are regularity a udits that are focused on conformity withthe laws and directives applicable in Constitution of the Czech Republic. The financial andperformance audit are had begin in a pilot program in 2002 and since that the Supreme Audit Officemade big progresses in both domains.

CONCLUSIONS

At the level of the Supreme Audit Institutions of the countries members of the EuropeanUnion and not only those, it should be recognized the importance and the actuality of theimprovement processes of the institutions’ activit y in the context of the European vector. Theadhering to the European Union represented for the member states a point from which it started thereform process of the institutions from the domain of external public audit and financial control.

The supreme audit institutions differ between them regarding their structure and theiroperating way. The similarity is that all the institutions from this study are managed by a President.In general there are two main types of supreme audit institutions and these are the “Courts” and the“Offices” of Audit. Between these two types there are differences concerning their organizationstructure and their way of functioning.

The oldest supreme audit institutions are those from Czech Republic, Slovak Republic andRepublic of Slovenia. In the lands of these countries were a part of the Austro -Hungarian monarchyuntil 1918 so the first audit institution was the Court Accounting Chamber, set up in 1761 for all ofthem.

The results of our study are presented in the table belo w:

Table no. 1. The study results

Criterions

Country

Name ofinstitution

Yearofestablishment

Year ofadheringtoINTOSAI

Themanagement ofthe institution

Financialaudit

Performance audit

Regularityaudit

Romania Court ofAccounts

1864 1992 President andvice-president

Bulgaria NationalAudit Office

1880 2001 President and 10elected members

Poland SupremeChamber ofControl

CzechRepublic

SupremeAudit Office

1791 - President andvice-president

RepublicofSlovenia

Court ofAudit

1761/1993

1993 President andtwo vice-presidents

SlovakRepublic

SupremeAudit Office

1761/1995

1995 President andtwo vice-presidents

Hungary State AuditOffice

Source: authors* it isn’t use the term performance.

We can notice that the younger supreme audit institution, Supreme chamber of Control ofPoland is also the first that adhered to INTOSAI. Regarding the three types of audit that wementioned we observed that only one country doesn’t practice one of them: we couldn’t find thespecific use of performance audit for the Republic of Slovenia.

The mission of the supreme audit institution is the same but maybe it is expressed withdifferent words. The main mission of institution is to provide constitutional institutions and citizenswith reliable and competent information on the management of taxpayers' resources, resourcescollected under law, and state property.

END NOTES:

1. "Investeşte în oameni!" doctorand bursier în "Proiect cofinanţat din Fondul Social European prinProgramul Operaţional Sectorial Dezvoltarea Resurselor Umane 2007 -2013"

BIBLIOGRAPHY:

1. Clark C., De Martinis M., Krambia -Kaparadis M., Audit Quality Attributes of EuropeanUnion supreme audit institutions, European Business Review, Vol.19, N0.1, 2007, pg.40-71 available in the Emerald database;

2. Nikodem A., Bibo I., Constitutional Regulation of Supreme Audit Institutions in CentralEurope in a comparative perspective, Managerial Law, Vol.46, Nr.6, 2004, pg. 33-52available in the Emerald database;

3. Tiron Tudor A., Performance audit in public sector entities – A new challenge forEastern European countries , Transylvanian Review of Administrative Sciences,No.19E/2007, pg. 126-141

4. www.oecd.org;5. www.intosai.org6. www.eurosai.org7. www.sigmaweb.org8. www.rcc.ro9. www.bulnao.government.bg10. www.nku.cz11. www.asz.hu12. www.nku.gov.sk13. www.rs-rs.si14. www.nik.gov.pl

COMPARATIVE STUDY REGARDING EVOLUTION OF THE HARMONISATION OFTHE ACCOUNTING PROCESS AT NATIONAL, EUROPEAN AND INTERNATIONAL

Associate Professor PhD. Felix ARIONUSAMV-Cluj Napoca, Romania

felixarion@usamvcluj.roUniversity Assistant PhD Student Veronica GROSU“Stefan cel Mare” University of Suceava, Romania

doruveronica@yahoo.itLecturer PhD.Cristian PERES

West University of Timisoara, Romania,cristian.peres@feaa.uvt.ro

University Assistant PhD. Student Bogdan COTLETWest University of Timisoara, Romania

toldo_bogdan@yahoo.com

Abstract:Contemporary evolution of accounting is marked by three phenomenons: normalisation, harmonisation and

internationalisation. In present is manifesting more and more the contingencies in the national sphere in accounting inthe favour of global alignment in the field, and which has as result creation of the modern system of accounting. Theunit market concept has at base phenomenons that are created by multinational companies, economic and culturalinternationalisation. This needs truly a regulation almost identical in each stat. A complete harmonisation /convergence cannot be made only if exist the economic environm ent (fiscal regulation, companies’ rights, financingways, management systems of the companies).

Then significant difference met within the political, economic and social systems of Continental Europecountries towards those traditional Anglo -Saxon (Nobes, Poker, 1999) is that they impose reflections over the level ofadaptability of international accountancy standards towards the productive reality of European economic entities, andespecially to those of our country, as a rethinking over the control them atic that within the entity became not justifiedany more by the content of economic agent costs, thus being necessary finding their theoretical localization, of modelsand rules on the same line with own necessities of the entity .

A real acknowledge of Romanian economic entities becomes necessary, over the impacts that new standardsperform over collecting, elaborating and communicating of information process, and over the sequels that these willhave over the systems of measuring the economic performance

Key words: harmonisation process, normalisation, national accounting, economic entities, IAS/IFRS

Jel classification: M 43

INTRODUCTION

Applying IAS/IFRS determined and will continuously provoke a growth at the disclosurelevel of enterprises, thus increasing the quantity of information having managing character(information within business department, information of profit and casualty, business conectionswith partners, etc.), which will create the necessity of stronger integration of informa tionalmanaging system and of civil informational system.

The subsequent changes will intervene over the assembly of measurements that theenterprise management and the investors use upon evaluating the activity’s output, often makingconfrontations with similar indicators, but as concerns the competitor enterprises (spatialconfrontation) or as concerns the same enterprise, but viewing the previous financial accountingbalance (temporary confrontation). [3]

One may say that logic conceptual differences wi ll rather intersect with IAS/IFRS andnational regulations than those simple accountancy differences. Determining such changes becomesenough on considering the references of certain IFRS, upon using some basic techniques as regardsbringing up to date the future treasury flows or upon advance using of evaluation criteria (othersthan the historical cost), such as evaluating the immaterial immobilizations on their properly value.The same quantity of information requested by IFRS, much superiorly of that us ed by the national

standards and of Romanian normalization, might determine the enterprise management onmodifying the frame of indicators used on evaluating the performance as concerns the own activityand as it was already mentioned, with advanced techni ques of measuring the process of valuecreating.[2]

The international harmonization process of accountancy balance is developed in Europe by aconvergence towards the International Standards of Accountancy issued by ISAB. EU and IASCOhave individualized within the International Standards of Accountancy a potential instrument moreefficient on convenient and efficient accomplishment of common objective, which aims towards onimprove the functioning of capital market and on protecting the financial resources of the investors.In this way, EU adopted a series of provisions that impose on quoted companies to carry out thereinforced balance in accordance to IAS/IFRS. It will be thus treated: [1]

- a directive that introduces the proper value – as an evaluating parameter of certain activeand passive classes (Directive no. 65/2001 of 27 th September 2001);

- a regulation that, after a homologation process, recognizes the accountancy standards issuedby IASB as reference parameter on drawing up and editing the reinfor ced balance for thecompanies groups, as securities quoted on EU countries stock exchanges (Regulation no.1606/200 of 19 th July 2002).The Romanian enterprises make out their own balances, in accordance to a system of laws

and regulations differentiated on economic activity sectors, on juridical nature of the economicentity, on its dimension, on quoted and unquoted companies.

As it is known, OMFP no.1752/2005, actually replaced with OMFP no. 2374 of 12/12/2007(MO no. 25 of 14 th January 2008), inserts Directive IV (no. 78/660) and Directive VII (83/349) ofEEC, foresaw specific diagrams of yearly financial situations and enlarged the accountancyevaluation criteria, which the economical entities have to use towards those used until then.International accounting harmonisation / convergence is about reduction of differences betweennational accounting regulations.

Accounting normalisation is the process through which is harmonised the presentation of thedocuments from synthesis, accounting methods and terminology, taking into account threefundamental purposes: [4]

• obtaining homogeneous information’s regarding enterprises;• capitalisation of accounting information by extern users (comprising in time and space) ;• contribution to a better allocation of financial resources at a state level.

EVOLUTION OF THE ACCOUNTING HARMONISATION PROCESS

At is tern, international accounting h armonisation / convergence is the process throughwhich the national rules or norms differ from a country to anothe r, sometimes divergent, areperfection to be comparable. Harmonisation /convergence is different by normalisation, whichimplies first of all total smoothing of the rules. It permits elimination of the main obstacles inrealisation of international compari sons.

The main argument in the favour of harmonisation is research of efficiency in internationaltransactions. The lake of information and comparability of accounting information constitutes anobstacle in international investments. [9]

A second motivation that leads to harmonisation / convergence of accounting systemsrepresents the wish of unification of competition conditions between countries. A synthesis of thephenomenon and aspects that can be considered as causes which lead to the necessity of aninternational accounting harmonisation/ convergence includes:globalisation more and morepowerful of the economies; requirements of users of financial situations (factor which results fromthe first). In this sense it will be taken into account a smoot hing of the economic language and inthe same time of accounting, considered instrument of informatics communication; process ofEuropean Union enlargement; phenomenon of capital market globalisation.

Tendency of increase and globalisation of activities of big companies determined a largenumber of acquisitions by foreign companies. This lead to the increase of their financial necessities,reaching at the end development of capital international markets. Taking into account de worldtrends, the companies wish to apply a uniform accounting system. In a first phase they tend to anefficient economic functioning.

Leaders of these businesses reach to an optimal convergence between the internal andexternal information. For multinational companies is very imp ortant to comply with the demands ofusers. In a market economy, the accounting harmonization / convergence and normalization have asobject organization of their rules of operation of the accounting information market, in order tooptimize financial communications.

Accounting information can be regarded as a "legal" product because the specificproduction, presentation and dissemination should be regulated. Optimizing financialcommunication assumes control of the quantity - quality / price report, in terms of accountinginformation.

Harmonization / convergence and accounting normalization are needed because of thediversity of economic agents that contribute to the definition of the accounting information supplyor demand and because imbalances that may e xist between supply and demand. To prevent theseimbalances, the normalisers, in their quality of referees of the accounting social game, it must findsolutions to reduce inherent "wear" to organization of accounting system.

Fundamental problem of harmoni zation / convergence of accounting are related also to thenote of credibility given to accounting. The statement is based on the level of confidence of users tothe situation in which the same public society, for the same period, in different countries, h avedifferent images of the size of the equity and results, as result of compliance with the rules of thosecountries.

By those mentions, international accounting harmonization / convergence represents apositive phenomenon which achievement is determined by current trends of economic life ingeneral and accounting in particular.

But, like any process, accounting normalization has also some limits of applicability, basedon the following issues: in detriment of harmonization / convergence can be shown that this breaksthe social equilibrium, does not take into account the specific role of accounting in each country. Itsrealisation implies costs supported primarily by small and medium enterprises, while the benefitsreturn in large part to large companies; another problem is that of defining / determining the area inwhich will manifest harmonization / convergence, if this should consider all the enterprises or tolimit to some of them, especially quoted companies, capital companies or those of size exceedi ng acertain threshold; for some enterprises, harmonization / convergence involves significant costs. Achange of method can change the image of the company's financial condition and therefore willrequire the information of the user accounts on the effec ts of change.

At internal level the company supports the costs of training and information adapting. Ingeneral, accounting costs are relatively more important for small companies than large ones,because the last ones can allocate those costs (partly fix ed) on a larger number of transactions.A full harmonization / convergence cannot be achieved unless exists the economic and socialenvironment (regulatory tax, company law, financing arrangements, management systems of theenterprise).

Accounting approach in multinational firms and which aims creation of a commonaccounting language worldwide has focused enormous efforts. On 29 June 1973, accounting bodiesfrom Australia, Canada, France, Germany, Japan, Britain, Ireland, Netherlands, Mexico and theU.S. established in London, The International Accounting Standards (International AccountingStandards Committee: IASC). This buddy will have as objective elaboration and publication, in thepublic interest, the international accounting rules to be followed in p resenting the annual financialstatements, and ensure the acceptance and application of these rules.

Today, the IASB together over 120 professional accounting organizations (including theBody of Expert Accountants and Accountants of Romania - CECCAR) of over 90 member states,its efforts materializing in 98 accounting rules and 7 projects of rules in progress.The first drafts of the General framework of the IASB had a broader vision. They aimed an overallanalysis of external financial information. In re ality, its efforts have seen only on the financialstatements. Architecture of General framework of the IASB comprises 110 sections and treats thefollowing issues: objective of financial statements; quality characteristics of them; parts of thefinancial statements; recognition of items of financial statements; the measurement (assessment)system; concepts of capital and maintenance capital.

IASB Framework states that, although the financial statements may be similar from onecountry to another, there are differences in their level, whose causes must be studied in the diversityof economic, social, political and legal circumstances and concrete situation in various countriesregarding mainly the information needs of different users. IASB is committed t o closer thepositions, seeking to harmonize regulations, accounting rules and procedures relating to thepreparation of financial statements.

USING IASB STANDARDS AT EUROPEAN

Since its publication in 1995, of the new strategy in accounting, the Europea n Commission had asdeclared policy preservation of the consistency between accounting directives and internationalaccounting standards (IAS). This policy is consistent with the interests of European companies,usually those very large, which, under the p ressure from international capital markets that fund,wish to apply the IASB rules. In order to harmonize these practices, one of the upgrade strategies ofthe European Commission in the accounting is application of a specific mechanism to provide alegal basis to IASB standards, compliance with European directives.

THE EVOLUTION PROCESS OF NORMALIZATION AND HARMONIZATION INROMANIA

Before 1990, in the conditions of centralized economy, evolution of national accounting hasbeen dominated by the concept of the accounting norms which means making the rules, instructionsand details of organization of accounting, based on plans of accounts. [5]

The basic rules regarding planning, record and calculation of costs were developed by theMinistry of Finance together with the former Committee for State Planning for the main branches ofthe national economy. Accounting harmonization started since 1990 imposed a new series ofessential coordinates of the national accounting system operating the developed savings mar ket,such as: the primacy of the practical application of accounting concepts , in particular regarding theaccounting objectives and the principles generally accepted in relation to the accounting rules andregulations that refers with preference to the ru les, basic methods and detailed accountingprocedures; the primacy of accounting dualism in relation to accounting monism whose essenceconsists in the fact that is in the conditions of market economy, at least a part of accountinginformation, particularly those related to: economic situation, the economic and financial results,relations of economic agent with the third parties, must be made public through financialstatements;the primacy of the financial system across the current account system , in which the opticof accounting system of data proceeding had to change fundamentally.[6]

Within monist accounting systems operated and operates with a stream accounting centredon exhaustive registration in accounts of the economic cycle: manufacturing - distribution -movement - consumption, based on the primacy of reflections of the production process, consideredthe source of value. In this case the role of the financial statements is marginalized because ofintervention by managers on the basis of financial – accounting analysis is highly limited by thecentralized economic system itself.

The dualist accounting systems adapted to the needs of developed competitive marketeconomies operates with an accounting of results in which in the spotlight will be financ ialstatements, in their quality of instruments of information of third parties. Using the current accountis linked to the objectives of accounting: a faithful image of the company’s situation, theestablishment of results and real economic and financial situation of the company, the control of theinternal production conditions; fundamental reconsideration of the importance of different featuresof accounting information .

Under this coordinate tier accounting systems over -auctions completeness and compar abilityof accounting information, features which created the possibility of centralized control of work.Dualist accounting systems over -auctions features related to effectiveness and efficiency ofproduction of accounting information, namely: the relevan ce of information (usefulness in decisionmaking), reliability of information (insofar as they render reality), and the relative importance(production of accounting information at a lower cost advantage to them who procure theirusefulness);the fundamental reconsideration of priorities given the various functions of accounting .In tier accounting theories are listed and described a series of functions: the function of exhaustiverecord of a business in order to achieve the activity control, the verificatio n function, monitoringand evidence in legal force.In dualist accounting systems, accounting functions are structured as follows: Financial accounting functions:

- The function of transaction registration of an enterprise to periodic determines financ ialposition, performance and change of financial position;

- The function of economic and financial information of third parties;- The function of verification and evidence tool generated by legal and tax reasons;- The function of information supply of needed for the macroeconomic summaries;- The function of meeting the information requirements of as many users of accounting

information. Accounting management functions :

- The function of costs determination on products and sectors;- The function of determination of the profitability of products, works and services;- The function of production and supply of information required to prepare budgets of

income and expenditure, upgrade the management indicators needed in forming the board pa nel ofthe company;

- The fundamental re-evaluation of the principles of heritage and management in relation tothe evolution of demand-supply report;

- The fundamental re-evaluation of accounting normalization in the sense of openingaccounts at international level.

THE EVOLUTION OF NORMALIZATION AND HARMONIZATION /CONVERGENCE PROCESS ON INTERNATIONAL LEVEL

Analysis of this development is done with the basic study, fundamental differences betweenthe two accounting cultures prevalent worldwide , which is manifesting on the following essentialplans: on political - strategic level, Anglo-Saxons give priority to information needed for decision -making by investors, their design bears the hallmark of economic liberalism, giving less importanceor applications over national accounts, while the French concept of accounting normalization wantsmore balanced among accounting information protagonists which must be provided in a much moreformal frame.[8]

Under the influence of these two major power blocs of accounting, national accountssystems shows large differences, which have generated especially in the post -war period initiationof a process of harmonization, of approach of accounting systems of different countries and groupsof countries; on institutional level the mainland accounts is highly codified, standardised anddirected by a general accounting plan, including a large number of mandatory rules, while Anglo -

Saxon accounting is based on traditions and customs, not formalized in a general account ing plan;on technical – applied level the mainland accounting operates with economic classification ofexpenditure and revenues, which generates objectively the keeping of the two types of accountings:financial and management, while Anglo -Saxon accounting operates with the classification ofexpenditure and revenues by destination, which not imposes a strict separation of financialaccounting for the management accounting.

This harmonization is required primarily, but not exclusively, by the major intern ationalinvestors, who wish to be able to guarantee compare the equal criteria, opportunities of capitalplacement, which cannot be achieved if companies are not subject to the same rules of publicationof economic - financial information.

In the regional level have been constituted several international governmental organizations orNGOs whose purpose is active contribution to the harmonization of accounting.

The most representative actions of accounting normalization have been those initiated by thefollowing organizations: the Western countries most industrialized (OECD) which in 1976published a document on guiding principles appropriate for multinational enterprises asrecommendations which aim in particular better public information on the structure , activities andpolicies of these companies.

Without legal constraint, practical applicability of these recommendations is based on thesupport of social partners: business circles and trade unions, which have been associated with theirdevelopment; intergovernmental group of UN experts, established in 1982, whose main objective iswatch of the interests of developing countries, UN members, regarding the publication ofaccounting data considering that multinational companies do not provide sufficient acc ountinginformation to permit the control by developing countries of the activities of multinationalcompanies on their territory; the group of EU countries, which developed and distributed tomember countries, since 1968, a General Accounting Framework a nd has adopted several importantdirectives such as: Directive IV, VII and VIII (which recently was repealed by Directive2006/43/EC of 17 May 2006).

Fourth Directive aims structure, content and presentation of annual financial situations -balance sheet, the profit and loss account and explanatory notes. Directive VII of aimed preparation,publication and control of the consolidated accounts. Directive VIII refers to the rights andobligations of persons authorized to audit the financial statements.These directives are recommended to Member States, and they are obliged to implement in nationallaws their provisions.

At the beginning, these directives were viewed favourably, were later criticized by some areasof the European accounting world. Prost and Klee teachers from NHIC Paris, in an article entitled,"The unseen face of European accounting directives " indicates that in their application are putmany obstacles that must overcome, such as: language barriers; national traditions; managementand information techniques; options game on the principles for drawing up, evaluation, presentationand publication of financial statements.

The most important barrier seems to be the language regarding the concept of “true and fairview” that is reflected in nation al accounting laws of all community countries in the variousmeanings, oscillating between a dual and unit expression, namely:Dual-expression: true and fair: true and fair (UK and Ireland); true and correct: true and correct(Italy); true and appropriate : true and proper (Portugal).Unified expression: faithful: determination, sincerity (France, Belgium, Luxembourg, Spain,Netherlands); according to fact: according to the facts (Germany); real: real (Greece); looking right:correct, not-misleading (Denmark).

From this classification of the concept of true and fair view results that it constitutes a commondenominator of all Community accountings, but the significance of the concept, especially theimplementation way, creates yet significant differences. Quality of the “true and fair view” must beachieved through the explanatory notes in three ways, namely: development which explanatorynotes behave, like specifying the applied evaluation principles and rules; information complements

of explanatory notes, such as presentation of claims and liabilities according to maturity; operatedderogations in draw up the balance sheet and profit and loss account, with their implications on thefinancial position, performance and change of the company's financial posi tion, social partners:business circles and trade unions, which have been associated with their development;Worldwide, in terms of accounting harmonizing, are active mainly two organizations: the IASB andthe IFAC. IASB created in 1973, regroups 143 profe ssional accounting organizations in 104countries, aiming development and publication of International Accounting Standards onpresentation of financial statements, and ensure their acceptance and implementation worldwide.Although these standards are not mandatory, they exert a strong influence on national accountingpractices and regulations. IFAC founded in 1977, has concerns particularly linked to theInternational Standards on Auditing, professional ethics and professional accountancy training.

These professional organizations are strongly influenced by the American AccountingNormalization Board FASB, mainly on the following elements: the objectives of financialstatements: content, performance, evolution; quality characteristics of financial inform ation:clarity, relevance, reliability, capacity for comparison; component elements of financial statements:assets, liabilities, income and expenditure; methods of assessing the component elements offinancial statements.

These issues constitute the mai n domain of accounting harmonization dispute that follows theconcepts, accounting and conventions rules that do not represent nor at national level, neither atinternational level a scientific paper, but rather a process of drafting accounting rules, stra tegic-complex, in which each party shall defend their rules.In perspective, the process of international accounting harmonization will be in a relationship forcebetween: professional organizations, international political organizations, large multinatio nalcompanies, the powerful industrialized nations, international audit offices, particularly those ofAnglo-American origin, who vehicles the model and manage most of the time to impose it in thisinternational competition.

An important role tend to occupy in the next period the supervision organism of financialinstitutions, regarding the capital market, insurance – reinsurance institutions, credit institutions,etc., through their option for the accounting system used in order to prudential supervision of thesesectors of activity.[7]

IASB aims to develop and publish in the public interest, international accounting standardswhich should be observed during the presentation of the annual financial statements, and to ensureacceptance and application of th ese standards worldwide. They have no legal force of communityaccounting directives.

IASB works are refined in development of the International Accounting Standards /International Financial Reporting Standards (IAS / IFRS), whose procedure is long and ca lls tonumerous consultations, both at the advisory group, as well as members of the IASB, materializedin the following steps: after discussions, the IASB council chooses a subject considered as requiringa uniform accounting standard for recognition and presentation of financial statements and isassigned to a working group.

All member organizations are invited to send their ideas; working group, assisted by thesecretariat of the IASB, examines the issues raised and presents a statement on the various p ositionson the issue; working group gathers the board’s comments and prepares a preliminary draft for theproposed standard; the Board reviews the draft that sends to all member organizations, forcomments; the working group prepares a revised draft which after the approval of at least two-thirdsof the board members, is published as a survey statement.

Any interested party is invited to comment; in each stage of preparation of projects, memberorganizations are counselled by the accounting research commi ttees of their own organizations; atthe end of each period of comment, they are sent to the IASB, to be studied by the working groupresponsible for the project; working group then submits the revised draft to the board, for approvalas IAS / IFRS; publication of an IAS / IFRS requires a favourable vote from three -quarters of

board members, after voting the IAS text is sent to all member organizations for translation andpublication.

International Accounting Standards can be used in many ways, the most common are: directapplication, as the national accounting standards, such as in Singapore; as useful documentation inthe development of national accounting rules; as a reference to ensure comparability of nationalaccounting rules with international acc ounting standards.

In this context Gerald Gilbert (as member of the IASB and liaison officer with Frenchnormalizators) believes that the IASB does not advice in an over -normalized which federalizeseverything, but the work of this body submits for the na tional or regional normalizators twointerests: serves as a documentary basic reference; serves as support for a thorough reflection on theaccounting objectives and even the whole conceptual accounting framework.

Compared with the drafting of internation al standards, development of European accountingrules browses another route. This process is being subject of the preparation of a project by theEuropean Commission. The object is subject to the Council of Ministers which transmits it to theapproval of European Parliament and the Economic and Social Committee for comment. After aseries of negotiations concluded with a review of the project is done drafting the directive, to beapplied by Member States through its full incorporation into national laws.

CONCLUSIONS

Although this provision is mandatory, most Member States have not made a general reviewof national accounting laws, they are thanking by complement of national legislation only withcertain provisions based on their interests, the options o ffered by the Directive IV being verypractical.

This directive states that the main objective of the annual accounts is to present an accuratepicture of the enterprise situation, while French accounting requires that these accounts to meet theconditions of regularity and sincerity. Dealing the content of Directive IV in French law wasrealised directly by adding the term of accurate picture in the accounting rules which states that thefinancial statements should be fine, honest and provide an accurate picture of the company.

From here detach the conclusion that national accounting laws continue to have differentbases, being related to aspects of the economy and society as a whole. This affects influences alsothe way of selection and application of ac counting principles, assessment rules and its presentationway.

BIBLIOGRAPHY

14. Azzali S., L’informativa di bilancio secondo i principi contabili nazionali einternazionali, G. Giappichelli Editore, Torino, 2005

15. Bostan I., „The Approach'S Regarding the Harmonization Process and the FiscalConcurrency in U.E.”, International Conference on "Trends of economic developmentin the context of EU integration", The Scientific Bulletin of Bukovyna State FinanceAcademy: Economic Sciences , The Scientific Department of Bukovyna State FinanceAcademy (BSFA), Shtern str., Chernivtsi, 58000, Ukraine, November 7, 2008

16. Bostan I., „Risk Management and Prevention for Financial Instruments BasedInternational Standards of Financial Reporting IAS 32 and IAS 39” , Social ScienceResearch Network (SSRN), lucrare prezentata la The 14 International Conference -The27-29 of November, 2008, Sibiu, Romania, Universitatea Nicolae Balcescu, Sibiu

17. Bostan I., Mateş D., Grosu V., Socoliuc M., Implications Of Fiscality Over AccountingIn Agriculture, Al 7-lea Simpozion Internaţional “Perspective Ale AgriculturiiMileniului Iii”, Organizat De Universitatea De Ştiinţe Agricole Şi Medicină VeterinarăCluj-Napoca 2-4 OctombriE, 2008, Sectiunea: Economie agrară şi

management, Telefon: +40-264-596.384 (int.158), Fax: +40-264-593.792. Apărut înBulletin of University of Agricultural Sciences and Veterinary Medicine Cluj -Napoca.Horticulture, Vol 65, No 2 (2008)

18. Hlaciuc E., Contabilitatea financiară armonizată cu Directivele contabile europene şistandardele internţionale de contabilitate (OMFP 306/2002) , Editura Didactică şiPedagogică, Bucureşti, 2002

19. Mates D., Grosu V., Impactul Standardelor Intenaţionale de Raportare finanaciarăasupra evoluţiei Sistemului Contabil din Romania -Rivista Economie Teoretică şiAplicată/ Teoretical and Applied Economics, vol. 3, Bucuresti, 2008

20. Mates D., Grosu V., Socoliuc M., Iancu E., Risk insurance evalution accorting to IFRS4.The solvency of the insurance company, methods of calculation of the solvency rateavailable in the accountancy , Revista – Contabilitate şi Informatică de Gestiune, Nr. 23,2008

21. *** Standarde Internationale de Raportare Financiara (IFRS) 200722. ***Financial Reporting Advisory Board Paper , IAS 40 Investment property , HM

Treasury, FRAB (85) 06, 19 March, 2007

THE LIQUIDITY RATIOS AND THEIR SIGNIFICANCE IN THE FINANCIALEQUILIBRIUM OF THE FIRMS

Lecturer PhD. Student Ciprian Dan COSTEAVasile Goldis West University of Arad, Satu Mare branch , Romania

costea_cd@yahoo.comPhD. Student Florin HOSTIUC

Alexandru Ioan Cuza University of Iasi, Romaniaflovashos@yahoo.com

Abstract:The year of 2008 was an important inflection point of the world’s economy evolution. Most of the economists

talk about a banking crisis, some of them talk about a financial crisis, and a part of them agree that we are facing alsoa liquidity crisis. Following this idea, the objective of this working paper is to analyze the liquidity ratios and theirsignificance in the financial equilibrium of the firms. The working paper points out the most important liquidity ratios:general liquidity ratio, intermediar liquidity ratio, fast liquidity ratio, acid test, their indicated values, the importance ofusing the quick-selling value in calculating the ultimate liquidity ratios, the connection of this ratios with the economicequilibrium of the firms. The conclusions underline the importance of permanent monitoring the liquidity ratios,interpreting their values facing the economi c branch the firms are dealing in, and the importance of deep and detailedfinancial analysis using the ultimate liquidity ratios

Keywords : liquidity, liquidity ratios, quick liquidity ratios, quick -selling value, financial equilibrium

JEL clasification : M 41, M 51

INTRODUCTION

The analysis of liquidity focuses on the measure in which the companies have the ability tohonor their obligations having an eligibility term less than a year, current debts that must be coveredfrom the assets with a simila r term of transformation in liquidity.Among the factors that influencethe liquidity are the domain of the activity, the degree of maturity of the company and its size, theseason of the business, the economic circumstances, the structure of the assets, th e structure of thecurrent assets, the rotation speed of the current assets, the financial structure.

DEFINITIONS AND OPINIONS REGARDING LIQUIDITY

The logic of the liquidity analysis is in the opinion of Univ. Prof. Dr. Petru Stefea the moreand more severe testing of the payment capacity of the short term debts from the elements ofcurrent assets nature which have greater and greater liquidity degrees.[7] - [8]

Within this frame there are three possible calculations of the liquidity indicators:The rate of the current or general liquidity : it measures the capacity of the company to

honour its obligations on short term from the current assets and to compare all the potentialliquidities associated to the current assets with all the debts due to be paid in less than one year.[17]

The calculation formula supposes the reporting of the Current Assets to the short termDebts, and the reference margin of the indicator is set between minimum and inclusive 1 andmaximum 2. When the value is below 1 we talk abou t a decapitalisation of the company, of thelack of payment capacity on short term. No value that is bigger than the number two is an advantagebeing associated to an inadequate administration of the current assets; in this case we talk about atoo high exigibility degree.[13]

The ratio of the rapid liquidity: it expresses that capacity of the company to pay its shortterm debts from the claims, the short term cash and financial investments. It must be noted that thestocks that have the slowest potential t o be transformed in liquidities, are excluded from thecalculation of this indicator.

Thus, the calculation formula means the report between the current Assets from which wededuce the stocks and the short term debts. The reference period of the indicator is between the

minimum and inclusive 0.6 and maximum 1. When the value is below 0.6 we talk about aninadequate structure of the current asset, with a too big weight of the stocks. No value that is biggerthat 2 is an advantage as it is associated to an in adequate administration of the current assets, whichmeans a level of the claims that is too high, which leads to a risk of receiving the cash, as well as atoo high volume of the available cash. [1]

The rate of the immediate liquidity reflects the capacit y where the short term debts can becovered by cash availability and short term financial investments. The reference interval is betweenminimum and including 0.2 and 0.6. When the value is under 0.2 we talk about an inadequateadministration of the claims and implicitly of the current asset from the point of view of theliquidity. No value that is bigger than the superior limit is regarded as an advantage beingassociated to a passive management of the availabilities or, on the contrary, the sign of an eff icientadministration of the cash excess as a result of financial investments.[11]

According to Univ. Prof. Dr. Silvia Petrescu, the author of the book The Financial –Accounting Analysis and Diagnosis, second edition, issued at CECCAR Publishing House,Bucuresti 2008, the liquidity measures the ability of the company to face the short term obligationsand it reflects the capacity to rapidly transform the current assets in cash. A company is consideredliquid when the resources issued by the current operati ons of the exercise supplies enough cash inorder to face the short term payment settling day and the liquidity degree expresses the quality ofthe financial balance of the company on short term. [6]

Concerning the advanced indicators, the following are pr esented:- the general liquidity installment, which expresses the potential liquidity degree and it

varies function of the sector, it is usually sub unitary in distribution, for example, and almost 2 inindustrial sectors having long cycle, and the calculati on formula is represented by the reportbetween the Current Assets and the Current Debts.

- The reduced liquidity installment which reflects the reimbursement capacity of theshort term debts: the optimum indicated value being over 0.5.

- The immediate liquidity installment, rapid or the acid test, which is also called thetreasury installment, it reflects a liquidity warranty for the companies, and the advanced values inorder to be optimum are situated at a minimum level of 0.2 -0.3.

According to the financialaccounting dictionary on the site www.expertizacontabila.ro, theliquidity indicators are explained as follows: [9]

Current liquidity: it reflects the possibility of the patrimony elements to transform inshort time in liquidities in order to pay current debts, if the total value of the current liabilities isgreater than the total value of the current assets than this indicator is sub unitary and this couldshow that short term financing has been used for acquiring “long term assets”, which, normally isregarded as dangerous, although there are branches for which a smaller value than 1 of thisindicator is regarded acceptable, the current liquidity is considered satisfactory for values between1.2 and 1.9 the calculation formula: current assets/ current debts.

Quick liquidity: it reflects the possibility of paying the debts on short term from thecash that is in the cashier, of the cash in the bank, and from the short term investments. In order tobe considered favorable, the indicator must be oriented to a unitary size. Calculation formula:Treasury/ Short term debts.

Rapid liquidity (acid test): it shows the possibility of the current assets transformedin claims and treasury in order to cover the current debts; the stocks are excluded as they have theleast liquidity character among the current assets. The rapid liquidity is satisfactory for values thatare between 0.65 and 1. Calculation formula: (current assets - stocks)/ current debts.

According to the applicable OMFP 1752/2005 a series of indicators need to be calculated,for the liquidity area the indicators that are recommended are:

Liquidity Indicators

a. Current liquidity: the ration between the Current Assets/ Current debts. Thisindicator aims at the operating capital and offers the warranty of covering the current debts fromcurrent assets. The recommended value for this indicator is around 2.

b. Quick liquidity : the ratio between (Current assets - Stocks)/ Current debtsThis indicator is also known a s “The acid test” and it has the same significance as the

previous indicator, but on a smaller area.According to the economic analyst Adrian N Ionescu author of the article “The liquidity of

the company”, published in the edition from 14th March 2008 of the business journal BusinessStandard, the current installment of the liquidity is calculated reporting current assets from thecompany balance sheet, corresponding to a certain period of time, to the current debts (on a shortterm.)

According to a more or less didactic interpretation, the current installment of the liquidityreflects the possibility of the current patrimony elements to be transformed in a short period of timein liquidity in order to pay current debts. If the total value of the current l iabilities is greater than thetotal value of the current assets, then this indicator is sub unitary and this can indicate at least acertain discomfort for the financial manager to finance the debts. This discomfort can come fromfinancing some long term acquisitions, from the resources on a short term, which usually is contraindicated. There are some economic branches for which a sub unitary value of the currentinstallment is considered acceptable. The general liquidity is considered satisfying on the v aluemargin between 1.2 and 1.9. [15]

The quick liquidity is also known as the “acid test”. It is calculated reporting the differencebetween the operating assets and the value of the stocks to the current debts. The quick liquidityreflects the possibility of the claims and of the treasury to cover the current debts. The value of thestocks is not considered in the total operating assets, because they are the most difficult to betransformed in liquidities and because there is a greater risk of losses to be registered compared totheir registration value. The quick liquidity is satisfactory for values that are between 0.65 and1.[14]

You can see there are various opinions, and ways to regard the liquidity, as an element ofbusiness worthiness which influences the balance of a company. As we can see there are elementsthat unifies these approaches, such as the definitions and the calculations options of the indicators,their interpretation, as well as the elements that differentiate them, such as the referen ce intervals ofthe liquidity indicators.

PERSONAL CONSIDERATIONS REGARDING THE LIQUIDITY RATES

From my point of view the liquidity reflects the capacity of the company to transform assetsin cash, as the Americans say. There is a very important aspect which is not considered in anydefinition, and in many professional areas it is regarded as a useless detail: there is no reference inany calculation formula as to the value at which this transformation is made, fact that will affect thevalues of the indicators as well. There is an aspect that in these crisis circumstances has given a lotof work to the creditors in economy, as well as to the responsible managements and investors.Would this be the net accounting value, the value that can be made, the mar ket value or the fairvalue? Or is it a certain other value? What value would that be?

Let us take the definitions of these categories one by one.The net accounting value represents the entrance value, less the depreciation and the

adjustments for the depreciation or loss of value, cumulated.The net value to be realized represents the estimated sale price which could be obtained

during the normal course of the activity, less the estimated costs for finalizing the good, when it isthe case, and the estimated costs necessary for the sale.

The market value represents the price at which the transaction of a good, a service or somework can be made in the specific conditions of the respective market.

Fair value represents the amount for which the asset could be changed willingly between theparties within a transaction with the price objectively determined.

As far as the products are concerned, the production cost contains the acquisition cost of theraw materials and the other materials used in production and t he production costs directly attributedto the product. The production cost or the cost of processing the stocks contain the direct expensesattributed to the production, such as: direct materials, the energy used in technological purposes,direct labour force and other direct production expenses, as well as the indirect costs quota that isallocated rationally as being connected to their production. Within the production cost a reasonableproportion from the expenses that can be indirectly attributed to t he product can be included, asa faras these are onnected to the production period.

As far as the merchandises are concerned, the acquisition cost contains the purchase cost,the importation costs and other taxes (except those that the society can recover from the financialauthorities), the transportation costs, manipulation and other expenses that can be directly attributedto the acquisition of the respective goods. According to OMFP 1752/2005 the commercialdiscounts given to the supplier are not inclu ded in the purchase cost.[12]

If we go further in details, we can shortly comment upon all these: the net account valuemight not be of date in the circumstances of an economy where there is inflation and deflation. Thenet accomplishable value represents a price that can be obtained under the circumstances of anormal activity deployment. That is all right, but what do we do when there are troubles in therespective business (conflicts between associates, a business that generates loss that must becovered, debts that must be urgently paid) or in the whole economy, as it happends now? Themarket value is a specific value of the parameters of a market. When there is urgent need ofliquidity, the priority will be to acquire it and in this way any legal attemp t is made to valorize it,not necessarily in the terms of a certain market. [5]

The fair value means according to its definition parts that are aware, or, when the cash isneeded, it does not really count many times if the one that buys one of your assets is aware nor ifthe price is objectively determined. In order to foresee these elements and to correct them, in theprofound liquidity analysis we use a value that is called liquidity value. This value represents acertain percentage from the values state d before, established by the specialists in evaluations and itreflects the value equivalent of the price that can be obtained in the circumstances of quick sale ofthe assets for the generation of liquidity. Using these liquidity values in the calculation formulaslead to obtaining the so called last instance liquidity rates.[3] –[4]

Practically I consider that it is absolutely necessary to permanently use the analysis modeldetailed by using the liquidity values corresponding to the balance structures o f operating assets.

CALCULATION FORMULAS OF THE LIQUIDITY RATES

From the point of view of the calculation formulas I propose the following:

Operating assets- general liquidity rate = -------------------------------- (1)

Short term debts

From the point of view of the reference interval we can generically accept the interval [1 –2), but it is necessary to analyse the business worthiness based on liquidity, of the respectiveeconomy branch, of the economic circumst ances, so that the little plus or minus variations wouldnot automatically be transposed in imperative conclusions. For example, a commercial companythat deploys its activity in the field of processing the agriculture products harvested summer –autumn (of the corn, flour) being connected to the season character in the agriculture, will havedifferent liquidity indicators in different times of the year, for the reasons related to the very goodcost of the autumn stocks, it will purchase many stocks in that period of time, even by accessingsome credit lines (which are, as it is well known short term debts) and thus it might seem that this

indicator is not the best one for the company. But these companies benefit from extremelycompetitive costs for their raw materials in that period of time (in these times out of season the costof the raw materials of this type can be double or even triple), generating in this way economies thatwill be found in the cash flows and the profit in the period of winter - spring, when the liquidityindicator enters again in the parameters that I (we) accept.

Operating assets - Stocks

- Intermediary liquidity rate = ------------------------------------------------ (2) Short term debts

From the point of view of the interpretation of the reference interval we can genericallyaccept the interval [0.51 – 1), but I underline again the importance of the detail of the analysisfunction of the activity, domain, branch, etc. As we can observe, the significance of this indicator isdeeper, as it does not include in the operating assets, the stock elements that are accepted as havingthe most reduced probability of transforming them in cash. Thus we still have in the calculation theclaims, the short financial investment s, and the cash availabilities. In this stage of the analysis thestructure of the claims becomes extremely important. The majority of the economic agents createtheir claims after operations of sale on commercial credit, accepting checks and/or promissory note.Their payment terms can be also different. In my practical activity I have seen cases of long termcontractual commercial between partners where the payment term of the creditation titles weregreater than 18 months. In such cases the claims that a re greated than one year must be drawn outfrom the calculation of the liquidity rates. In the same time the structure of the claims can influencethe capacity to transform these in cash flows. The great part of the claims that are based on checksand order payment reflect a great risk that is taken by the administrators that can lead to negativeliquidities as a consequence of non payment (willingly or by chance) on the side of their partners. Inthe present times, in Romania, 90% of the commercial transac tions are paid with a medium dely of120 days, according to the data from the risk management company Coface Romania. Thus, thereare opinions among the economic analysts that state that a operating asset structure that has greatpart of the claims based on commercial credit is more dangerous than the one based on stocks. [16]

Operating assets – Stocks - Claims

- quick liquidity = ------------------------------------------------------------------ (3) Short term debts

From the point of view of the reference interval we can generically accept the interval [0.2 –0.50], but again I must underline the importance of detailing the analysis function of the activity,domain, branch, etc. As we can notice, the significance of this indica tor is even more profound, as itecludes form th operating assets, the stock elements that are accepted as being the most reducedprobability of being transformed in cash and the claims, which form the point of view of thepotential to become cash can rais e similar problems as those that we stated previously. At the basisof the calculation of this rate of liquidity there still remain the short term financial investments andthe cash availabilities. It is essential to read correctly this indicator.

The short term financial investments are liquid especially when at the basid of thetransaction there is a regulated market such as the capital market, but under these circumstancesthere is the risk of decreasing their value. Among the short term financial inves tments the mostliquid sure and efficient are the investments in state titles. In the same time it is accepted that a partof this quota of the financial investments made on medium and long terms, which form the momentof the analysis become due for paymen t in less than a year, such as some parts of the obligationsemissions.

On the second hand it is important to underline the fact that is is not good that this indicatorshould have a high value also for the reason that the most inefficient assets from the point of viewof the returned profits are the cashier money and form the current accounts, so that the managementof the liquidity must take into account this aspect as well. It is well known that the cash that is in thecashier does not generate profit, but its weight in the firms with relevant activities is insignificantbecause there are anyway legal limitations regarding the cashier limit and the cash operations, andthe liquidity from the current accounts are rewarded only with a small rate of interes t, several timesunder 0.5% per year. An improvement if this indicator, especially at the firms that have a high levelof cash is realized by the overnight deposits and of the economy accounts, which generate entrancesthat are much more efficient for the firms and in the same time it does not affect the capacity oftransforming them in cash, due to the terms that are extremely low (under 24 hours, or at sight.)Also, the reference limits for this indicator must not be regarded rigidly. Thus at the financia linvestment societies and in the banking institutions we will meet oftern higher rates of thisindicator, due to their business specific.

I would like to make one more comment: the majority of the opinions in the specialtyliterature do not clarify one a spect: what is the “acid test?” and if this liquidity indicator isoverwritten on the quick liquidity. I wish to make a clarification whih for me is obvious and Iconsider also correct: the acid test refers to the ratio between the Cash Availability and th e Shortterm debts (attention: without financial investments on short term) and it is an indicator of liquiditythat is meant to verify the capacity of the companies to face the imediat liquidity risk which istranslated through the impossibility of making urgent payments.

Now I should return to what I call last instance liquidity. Following the calculation formulasstated previously in the calculation of the liquidity rates, the difference between these and the lastinstance liquidity rates is the value t hat we use. I underline again that these last instance liquidityrates reflect some sort of stress test of liquidity, a capacity to find liquidities under pressure and inan extremely short period of time. Because of that instead of the values written in t he annualfinancial statements it is important to use in the detailed liquidity analysis the liquidity valuescorresponding to the positions that reflect the operationg assets.

As a short example: we suppose that the value of the operating assets in a com pany writtenin the annual financial statements is of 1.000.000 Ron, and the short term debts are of 800.000 Ron.It is requested to calculate the general liquidity and the last instance liquidity rate. After theprofessional expertise of an evaluation com pany it was established a liquidation value of theoperating assets at the equivalent of the amount of 750 000 RON.

The rate of general liquidity+ Operating assets/ Short term debts= 1.000.000/800.000RON=1.25

Last instance liquidity rate= Operating asset s at the liquidation value/Debts on short term=750.000 Ron/800.000 Ron. =0.93

Interpretations: the company can under normal functioning conditions of the market andbusiness to face in good consitions the need to pay short term debts but under the circum stanceswhere the economy begins to function under pressure or there are crisis situations on the market, orthe company will be liquiditated as a matter of emergency, and under the circumstances of a rapidliquidation of stocks in order to cover short ter m debits, this will have problems in total payment ofshort term debts.

Judging in a balanced manner (and not on the extremes) the situation of the general liquidityof this company is good and under the conditions of a good management it can overpass in goodconditions a situation of crisis. Otherwise, the arithmetic average of the two rates (1.25 +0.93/2) iswithin the agreed interval as being acceptable for this indicator.

FINANCIAL LIQUIDITY AND BALANCE LIQUIDITY RATES AND THE TRADINGCAPITAL

The liquidity cannot be analysed only from one angle, that of the rates. TThis must beregarded from two points of view:

- The liquidity calculated based on the structure of the balance sheet and whichreflects in the net amount the financial Trading Capital of the company (the so calledthe balance sheet liquidity)

- The liquidity calculated as a ratio between two elements of asset, which expresses I npercentage the possibility to rapidly change and counter currency the liquidity degreeof the company (the liquidity rates.)

Referring to the balance sheet liquidity, which sets in connection the interdependence thatexists between the liquidity rates and the financial balance of the economic entities, the startingpoint is represented by the calculation of the tr ading capital. The calculation basis is the financialblance sheet. This structure of balance sheet supposes that the resources with long exigibility willbe regrouped in a new post that is called permanent capital.[10]

Thus:Permanent capital= Owned capi tals + Debts at a greater term than 1 yearThe trading capital represents the part from the permanent capitals that remained after

financing the immobilizations, which the companies use for financing the operationg assets.

Table no 1. Financial balance sheet

Asset 200.000 u.m. 200.000 u.m. Capitals and debtsImmobilised assets

(Net)120.000 u.m. 150.000 u.m. Permanent Capitals

Operating assets 80.000 u.m. 50.000 u.m. Short term debts

Note: u.m. = monetary units

From the point of view of the calcu lation formula there are the following variants ofdetermining the level of the Trading Capital:

Based on the upper part of the balance sheet:The trading capital=Permanent Capitals - Immobilised Assets (Net)This calculation manner underlines the part o f the permanent capitals which remained after

financing the immobilizations. This part is destined to finance assets having a sufficiently highliquidity degree. The existence of a trading capital positive is beneficial for the company as in thiscase we talk about the existence of a security margin of the company because part of the operatingassets is financed from the permanent capitals.

Following the given example:Trading capital= 150.000 u.m. – 120.000u.m.= 30.000 u.m. (plus 30.000 u.m.)The existence of a positive trading capital is in direct equivalence with a rate of the global

liquidity over unitary.Rate of global liquidity = Operating Assets/ Short term Debts = 80.000u.m. / 50.000 u.m.=

1.6On the lower part of the balance sheet:Trading capital = Operating assets – Short term debtsThis method underlines the finality of the trading capital, the method underlying the

potential liquidity excedent when the amount is positive or the deficit of potential liquidity whenthe amount is negative. When the trading capital has a positive value the interpretation associated tothis method of calculation is that the Operating Assets that can be transformed in liquidities allownot only the payment of the debts on short term but also the release of excedenta ry liquidities.

Again I must underline the connection between the supraunitary rate of global liquidity andthe positive trading capital.

Taking the given example:Trading capital = 80.000 u.m.– 50.000 u.m. = 30.000 u.m. (plus 30.000 u.m.)Global liquidity rate= Operating Assets / Short term debts= 80.000 u.m./50.000 u.m. = 1.6In other words we can draw the conclusion that a supraunitary rate of the global liquidity

supposes the existence of a positive trading capital and this situation is a favourable situation to thecompanies, being a security margin that secures the company in its activity and defends it fromperturbations of the cash and payment cyles.

A subunitary rate of global liquidity leads to the existence of a negative trading capital,situation that reflects an alrming state in the balance of the company because the permanent capitalsare not sufficient for the financing of the immobilized assets and plus this financing is partiallycovered through the short term debts.Moreover, the value of the operating assets that can betransformed in cash is not sufficient for covering the short term debts.

Besides the considerations mentioned above for a good interpretation and professionalreasoning it is important to analyze permanently also the necess ary trading capital and the nettreasury.

The necessary trading capital is represented by the money that must be rouled in aneconomic entity in order to ensure its functionement, financial needs generated by the execution ofsome repetitive operations tha t compose the current exploitation cycle, which must be covered atlest partially out of stable resources.

If the trading capital reflects the long term balance, the necessary trading capital reflects thecurrent balance of the company that is much more f luctuant. The necessary trading capital isinfluenced by the turnover, the manufacturing cycle, the production costs, the rotation duration ofthe stocks, the duration of the real commercial credit (the difference between the rotation of thecustomers and the rotaion speed of the suppliers.) [13]

Following the calculation formula, this determines that the difference between the operatingasset from which we deduce the cash availabilities and the short term financial investments (cyclicneeds) and the short terms debts from which we deduce the short term financial debts (cyclicresources).

The necessary trading capital= (Ciculating assets - Csshier and banking accounts) - (Shorttermd debts- Short term financial debts.

The positive value of the necessary tradin g capital usually reflects a favorable situation tothe firms because in practice the most often it is generated by slowing the cash of the claims and thespeeding of the payment of the debts, but when it is generated by investments reflects a normalsituation.

The negative value of the necessary trading capital reflects a favorable situationbecause the rule implies an accelaration of the rotation speed of the claims, but also of the stocks,and a relaxation of the payments, which are negociated with fu rther payment terms. [19]

From the point of view of the connection with the liquidity rates, the evolution of thenecessary trading capital can be followed in report with an indicator that some financial analystscalculate it eliminating from the value of the general liquidity rate the value of the acid test andplacing the result obtained in the accepted limits obtained after the same logic of deduction. Frommy point of view it is not the most relevant because from the calculation base (short term debts) arenot excluded the current financial debts.[18]

As far as the net treasury calculated as the difference between the trading capital and thenecessary trading capital is concerned (or by analogy as a difference between available cash andcurrent financial debts) it is important that it is positive because in this situation, the availabilitiesoverpass the current banking credits.However, the positive values of the net treasury must be wiselyused because if they are kept without utilization (without money rotation) does not generate profitfor the firms. It is important to take into account this aspect as well. In this context there are also thebanking abalysis an indicator of liquidity which is called the indicator of the treasury liquidity and

which reflects the report between the available cash and the short term financial debts, and as anaccepted value for a good balance is over 1.

CONCLUSIONS

As a consequence of the last period evolutions, which have generated the so calledeconomic and financial crisis, that is called liquidity crisis by a great part, it is for the first time inthe economic history of mankind that the problem of observing the liquidities of the economicentities was seriously taken in consideration, irrespective of the fact that they are banking or nonbanking.

In this purpose it is very important to observe and analyze on a permanent basis the liquidityindicators, calculated as instalments. Due to the structure of the operationg assets, which representthe start bais for the calculation of the liquidity indicators, the analysis of the installments must bemade in stages of analysis, and in this purpose we calculate the general, intermediary and quickliquidity rate.

Each indicator was allocated a certain generic value accepted a s being appropriate to reflecta balance at the level of the economic entitye which is analyzed, but I underline with maximumresponsibility that these limits must not be regarded as unflexible, but as a general trend.

The liquidity rates are greatly influ enced by the industry, the branch, the market where theeconomic entity deploys its activity, but also by its financial, accounting and general management.

The liquidity rates must be permanently correlated with balance indicators, especially withthe trading capital, as the evolutions of the general liquidity rate values and of the trading capitalhave a direct conncetion. In this way we can make more profound and more relevant analysis.

De to the discrepancies between the values contained in the annual fi nancial statements(which respect as weknow the principle of the historic cost) and of the actualized values, in thefinancial analysis it is indicated that in the calculation of the liquidity indicators to be taken intoconsideration and the quick selling values, which in essence represent fair values that are correctedwith an index of quick valorization, in force. These values must not be interpreted sine facto, butthey can reflect a structure closer to the reality on the marketor from the industrial br anch where thefirm deploys its activity, and must always correlated with the rates calculated having at basis theamounts from the annual fionancial statements.

Unfortunately in practice, due to the extremely high cost of the professional services of thespecialized companies (of those which are also professional) in the field of evaluations andprofound analysis, the profound analysis are not used.

BIBLIOGRAPHY

1. Batrancea Ioan, Raportari financiare. Evolutii, Continut, Analize, Editura Risoprint, ClujNapoca, 2006

2. Ilies Ciprian, Fluxurile de trezorerie -expresie a modalitatilor de finantare a intreprinderiipe termen scurt si foarte scurt, Studia Universitatis seria Stiinte Economice,Universitatea de Vest Vasile Goldis Arad, nr. 16, 2006, vol. III,

3. Mates Dorel, coordonator, Contabilitatea Intreprinderii - aplicatii practice, EdituraMirton, Timisoara, 2004

4. Mates Dorel, Contabilitatea financiara a intreprinderii, vol I si vol. II, Editura Mirton,Timisoara, 2004

5. Mates Dorel, Matis Dumitru, Cotlet Dum itru si colectiv, Contabilitate financiara aentitatilor economice, editura Mirton, Timisoara, 2006

6. Petrescu Silvia, Analiza si Diagnostic Financiar -Contabil, Ghid teoretico-aplicativ, editiaa II-a revizuita si adaugita, Editura CECCAR, Bucuresti, 2008

7. Stefea Petru – note de curs, modulul Analiza Pozitiei si Performantei Financiare aEntitatilor Economice, ciclul de studii doctorale, Facultatea de Economie siAdministrarea Afacerilor, Universitatea de Vest Timisoara, 2008

8. Stefea Petru, Analiza rezultatelor întreprinderii, Editura Mirton, Timişoara, 20029. Stancu Ion, Finante, Editura Economica, Bucuresti, 200210. ***Standardele Internationale de Raportare Financiara, Editura Ceccar, 200611. ***Ghid de aplicare al Standardelor Internationale de Contabilitate, Editur a Economica

200112. ***OMFP 1752/2005 pentru aplicarea reglementarilor contabile conforme cu

Directivele Europene,Monitorul Oficial 1080 bis/200613. *** Colectia Business Standard 2008, ianuarie 200914. *** Norme si proceduri de creditare si de risc Volksbank Roman ia S.A.15. *** Norme si proceduri de creditare si de risc Banca Transilvania S.A.16. *** Norme si proceduri de creditare si de risc MKB Romexterra Bank S.A..17. *** www.dexonline.ro18. *** www.ceccar.ro19. *** www.internationaleconomics.net

OFFSHORE AREAS – THE KEY TO SUCCESS IN THE FISCAL REGIME

Economist Engineer Florin Ovidiu HURJUI“Ştefan cel Mare” University, Suceava, Romania

ovidiuh@seap.usv.roProfessor PhD. Gheorghe SANDU

“Ştefan cel Mare” University, Suceava, Romaniasandu@seap.usv.ro

Abstract:The main advantages of fiscal paradises result from the fact that: some countries do not demand any income

tax, on capital plus values, on wealth; other countries have established a tax demand on the related incomes of aterritorial base: if the benefits do not have their source on the territory of the respective state, there is no income; othercountries still have low taxing rates; certain countries offer specific advantages for specifi c types of companies.The fiscal policy in Romania has been revised repeatedly, having a sinuous and unsteady character and, because of thecreated uncertainties (the high number of exceptions and exemptions) it has been less propitious for the businessenvironment – and although, ironically, a lot of the operated changes and the granted exempts were supposed to havebeen destined to the stimulation of businesses.

Keywords: fiscal paradises, offshore companies, harmonization, fiscal facilities, fiscal comp etition, fiscalpolicy

JEL Classification: G100, O420, F430

INTRODUCTION

The main feature of fiscal paradises consists of not paying any tax to the local authorities(besides the authorization taxes) or the payment of extremely low taxes. This feature is tempting foreconomic agents from some countries with high taxation, among which Romania occupies a topposition.

The existence of fiscal paradises puts pressure on tax rates, even if many actions againstthem have been carried out. Because reducing the rates cannot go on forever, the extension of thearea of taxation is a solution, but neither this can go on without end.Therefore, the European Union proposed that the fiscal paradises should give up their facilities forforeigners, but three European countries refused.

HARMONIZATION AND FISCAL COMPETITION

The harmonization and the fiscal competition are two elements which are completelyopposed. The harmonization involves reducing compliance costs, transparency for the tax payers,fiscal neutrality, while the fiscal competition refers to, firstly, diminishing the fiscal pressure.

The fiscal competition manifests itself through the reduction of tax rates.The compensation is achieved by increasing the tax base, the passage of the fiscal pressu re

on to direct taxes, but also reducing budget expenditures.A lot of facilities which are found in internal regulations are not actually created for fiscal

competition purposes (attracting foreign investments), but wish to be supportive elements to som eactivity sectors (preferential amortization in the case of Small and Middle Enterprises).

From the point of view of income tax, physical persons with a high qualification and whichare indispensable to the good functioning of an economy, benefit from p referential fiscal regimes,in Romania in such a situation being the IT people [1].

Nowadays, according to the statistics of the Organisation for Economic Co -operation andDevelopment (OECD), there are thirty five fiscal paradises in the world. The busines ses performedthorough these have reached unimaginable proportions.

Economic analysts state that almost 70% of the world money mass is run from the shadowsof the fiscal paradises. If, in 1978, American corporations transferred to fiscal paradises, under theform of direct foreign investments, capitals numbered at 23 billion US dollars, and the corporationsof Western Europe paid in advance financial resources estimated at 160 billion US dollars,nowadays, at the beginning of the XXI century, the volume of capital operations run in paradise -countries are evaluated at 1,600 billion US dollars, as representatives of the UN claim.

Some American economists state that the turnover of the fiscal paradises would represent50% of the world economy, unlike 5%, 20 y ears ago [4].

Firstly, these juridical entities offer fiscal advantages, compared to other fiscal entities,companies that set their head office or physical persons which reside on their territory. The purposeconsists in attracting expanding companies, at tracting capital and the stimulating the appearance ofactivities necessary to assure the economic and social balance.

The fiscal facilities used in achieving the followed goal are multiple: tax relief ofincomes/profits made or applying extremely low rat es. Another essential feature consists inprotecting through a law the financial or commercial operations made by physical or juridicalpersons [2].

The fiscal advantages linked to relocating operations and profits from onshore to offshoreare easy to understand.

Taking advantage of the fiscal legislation which favours these special states, the offshorecompanies and implicitly their owners, can obtain substantial savings from paying taxes owed tothe state/states (source of income). There are however oth er types of benefits which can be accessedin offshore areas: [3]

the elimination of currency exchange – usually, offshore companies can run theirfinancial transactions in any currency and can keep they financial reserves in anycurrency, without any special permission;

the lack of obligation to keep accounting evidences – a lot of fiscal paradises do not askoff-shore companies to keep accounting evidences which means substantial savings;

Considerations related to prestige – many times, especially in transition economies ordeveloping ones, a foreign company may benefit from more advantageous terms andconditions than a national company, an autochthon one. Moreover, the presence of“foreign capital” in a national society leads to the obtaining a better image of thissociety, to a trust in the international perspectives of this society, being able to assure insome cases tax reliefs.

In the case of offshore centres, besides the stabile legislation and favourable taxation, otherpossible advantages of using these areas are: [5]

exploiting the possibilities offered by the evolution of the treaty systems and ofinternational fiscal agreements (the so -called “treaty shopping”);

using the facilities offered by some states concerning the non -taxation of the interestspaid to non-residents and protecting the assets (especially in the USA);

using the almost 1,500 areas of free trade in the world.These entities permanently adapt their taxation legislation in order to assure a privileged

taxation regime, according to its evolution on an international scale. Let us not forget that the factthat some fiscal paradises dispose of fiscal agreements in order to avoid the double taxation ofincomes with the industrialised countries.

What is sought through this is assuring the reduction of the taxes normally applied toforeign investments as opposed to the one applied in the signatory countries.

Other features concern: developing a banking system lacking in restrictive regulations andconstraints, which assures the rapidity of the operations inside and outside the borders, theabsence/limitation of a control of currency exchange, excepting the operations linked to foreigncurrency, as well assuring some means of communication (phone, Internet connection, air services)at a highly functional level.[2]

To attract international businesses and in order to be competitive at an international scale,these jurisdictions must come forth with new financial instruments and products and lower costs offinancial services.

The question which may arise is that if these lower costs aren ’t obtained on behalf of somegaps in the banking regulation and supervising system of the taken risks. What’s more, the statesfrom which the physical/juridical persons come from which act in the offshore are as are interestedto quantify the danger formed by these permissive jurisdictions for the national and internationalfinancial system.

The fiscal paradises present certain predominant features: the location in the immediate vicinity of seas and oceans; most of fiscal paradises are small states, just recently independent, or

autonomous territories with an exotic setting and a small population; offer fiscal advantages, comparable with other legal entities, to the companies

which establish their head office or the physical persons which have theirresidence on the territory of these fiscal paradises, having the purpose toattract expanding societies, to attract capital and stimulate the appearance ofactivities necessary to assure the economic and social bala nce;

the protection guaranteed by the law of the financial or commercial operationsmade by physical or juridical persons;

the bank secret; the lack of control over the currency; they permanently adapt their fiscal legislation according with its evolution on

the international stage. [5]The main advantages of fiscal paradises result from the fact that: some countries do not

demand any income tax, on capital plus values, on wealth; other countries have established a taxdemand on the related incomes of a ter ritorial base: if the benefits do not have their source on theterritory of the respective state, there is no income; other countries still have low taxing rates;certain countries offer specific advantages for specific types of companies (for instance hol dings,exempt companies, etc.)

The purpose of using the fiscal paradises is simple: „pay less and earn more” [1].In the conditions of globalization and integration of the financial markets, the problems of aninstitution located on an offshore can have re percussions on certain elements of the financial systemsituated in any part of the world.

For instance, an onshore bank which establishes a subsidiary in an offshore must be capableto control the risks taken by the bank from the offshore.

The latter could take up too big risks, in the absence of the regulation and supervision of thebanking system in the jurisdiction of registration, risks which wouldn’t have been accepted in theonshore jurisdiction of the mother -bank. If a great part of the risk of a bank system is located in anoffshore, then the viability of the entire system could be compromised, enhancing the risks of themother bank.

All these mentioned features contribute to the creation of a setting just right for thedevelopment of economic operations with or without fiscal motivation, the only condition being thecompatibility with the legislation of these territorial entities.[5]

Considering the profit taxation, Romania could also be viewed as a fiscal paradise. Because16% is a low taxation margin. We can affirm that the Romanian state cannot decrease any moretaxes, but on the contrary, it will increase them. The 16% regime is very advantageous for the typeof economy Romania has. Still the 16% has been a good way to attract the undergroun d economy tothe surface, because it is easier to pay this percentage than tormenting one’s self to find solutions.

Offshore companies are, generally, viewed as illegal fund hiding places. Still, if they areestablished and correctly managed, they can assu re substantial fiscal savings, remaining, at thesame time, at the edge of the law. On a developing market, but without too many specialists, it ispredicted that the number of offshore companies established by Romanians will grow every year, as

the world will realise that the intelligent use of such a company can reduce, postpone or completelyeliminate some taxes which would otherwise have been paid.

CONCLUSIONS

The fiscal policy in Romania has been revised repeatedly, having a sinuous and unsteadycharacter and, because of the created uncertainties (the high number of exceptions and exemptions)it has been less propitious for the business environment – and although, ironically, a lot of theoperated changes and the granted exempts were supposed to ha ve been destined to the stimulationof businesses. The fiscal policy has also suffered from the impact of an economy marked bystructural tenseness.

Romania has known a considerable decrease in budget revenues. In this sense, Romania seems to be aparticular case, having fiscal revenues and non -fiscal revenues which vary around 30% of the GDP, whereas thecountries in transition from Eastern Europe and the Baltic area have the same types of budget revenues at 40%.Generally it can be assumed that these coun tries (where the reform is much more advanced) have a better fiscal systemand a superior tax collection. The reasons which lie at the basis of this situation have their roots in: the quality of thepublic administration, the capacity to implement rules an d regulations, the transparency level, the inclination of thecompanies to avoid taxes and to act in the underground economy, the intensity of the battle against corruption (havingthe effect of reducing tax evasion) and last, but not least, the structure of the fiscal debts.

The rates of the taxes in Romania are generally comparable with the mid level from theother countries of Central and Eastern Europe. This state of things points out what should the fiscalpolicy achieve.

On one hand, the alignment o f the fiscal structure must be continued with a firm grip; thiswould lead to the widening of the tax base and improvement of tax collection.

The fiscal policy will coherently follow the acceleration and deepening of the reform inthis domain, which will materialise in the reduction of the taxation degree, both through theabolishment of the contributions to some special funds, and also through the resettling of the fiscalburden and the ratio between the direct and indirect taxes, to encourage work, savi ng, investments,exports through:

the full exempt from paying customs taxes and VAT for the import of machines andequipments, raw materials and materials destined to modernise the SME.

the revision of the instalments and tax rates of the population’s mon ey incomes both tostimulate the work process , in the purpose to grow and strengthen the middle class,and to increase the buying power of persons with low incomes;

the strengthening of financial discipline, both through the stimulation of payment ontime and in the legal quantum of the budgetary obligations of the economic agents, andthrough the firm punishment of bad tax payers.

the increase of transparency and understanding of the fiscal administration towards thetax payers by simplifying the procedur es and the taxation documentation.

the full exempt from paying customs taxes and VAT for the import of machines andequipments, raw materials and materials

Also, it is compulsory that the source of inspiration for the new laws should be the presentlegislation of the European Union, a proposal justified by the fact that Romania is in the course ofaccession, as a member with complete rights to the European Union. This is why:

the fiscal facilities, once granted, shouldn’t be withdrawn; the unpredictable andunstable character of the taxation system should be eliminated.

the mechanism which sets taxes, like the one which collects these must be optimised inorder to eliminate arbitrary interpretations, prolonged procedures and frequents andaggressive audits;

the elimination of the double checking of the companies; the Romanian legislationshould foresee that once the authorities have carried out a tax audit of a company, theaudited periods and aspects shouldn’t be subjected to further investigation.

The official strategy in the taxation domain is like a nebulous and is contrary in manyaspects to the programmatic promises made. On the other hand, the increase of the VAT rate is ameasure that risks to encourage practices related to the underground economy , favouring taxevasion, corruption, precisely those phenomena which the authorities presently deal with.

The increase of the VAT will trouble the categories of the population with small incomes,which even so couldn’t benefit from the introduction of th e single tax rate and which will be forcedto support new and unjustified price increases.

The governments are now trying to thaw the crediting, strengthen the financial institutions, reduce the interestsrates, to toughen the safety nets and revive the c onsume and investments – all these to stimulate businesses whichprovide jobs for the people, but also to build the foundations for a future growth. These steps will be as effective as therespective states will act together, in a way that allows mutual su pport. Economic nationalisms, which seek to obtainprofits from the misfortune of others, will generate even more risks. Global challenges demand global solutions.

As the world emerges from the present financial and economic emaciation, we must look forwar d. Today’scrisis reflects the extraordinary speed as a feature of an interconnected world. The factors which produced globalizationoffer more opportunities of overcoming poverty, of increasing the chances and opening of societies.[3]

BIBLIOGRAPHY

1. Filip, Gh. (2007), Finanţe Publice II, Suport de curs, anul II, semestrul II profil ŞtiinţeAdministrative, specializarea Administraţie Publică, anul universitar 2007 -2008.

2. Minea, M.Şt., Costaş, C. F. (2006), Fiscalitatea în Europa la începutul mileniului III,Editura Rosetti, Bucureşti.

3. Moşteanu, T., Catarama, D., Tâtu, L., Câmpeanu, E. (2005), Politici fiscale si bugetareeuropene, Editura Universitaria.

4. http://www.romanialibera.ro/a142880/modernizarea -multilateralismului.html accesatdecembrie 2008

5. Sandu, Gh. (2007), Buget şi fiscalitate în ţările Uniunii Europene, Note de curs,Universitatea „Ştefan cel Mare” Suceava.

SECTION 4

STATISTICS, DATA PROCESSING

(INFORMATICS) AND MATHEMATICS

BACKTRACKING APPLICATIONS DEVELOPED IN C #

Assoc.Prof. PhD. Valeriu LUPU „Stefan cel Mare” University, Suceava,Romania

valeriul@seap.usv.roPhD. Student Engineer Cătă lin LUPU

Ministry of Administration and Interior, Suceava, Romanialupucata@yahoo.comGrigore VASILACHE

Financial-Banking College, Head of IT Departament, Chisinau, Moldovavasilache@moldnet.md

Abstract:In this article presents applications of Backtracking method using object -oriented programming in C #.

Object-oriented programming means programs with new types that integrates both data and methods associated withthe creation, processing and destruction of such data. To gain advantages through abstraction programming (theprogram is no longer a succession of processing, but a set of objects to life (Figure 1), have different properties, arecapable of specific actions and interact in the program). Spoke on instantiation new techniques, derivation andpolimorfismul object types.

Keywords: Backtracking, constructor, destructor, class, member, court

JEL Classification: C61

1. METHOD BACKTRACKING PRESENTATION

Backtracking method applies to issues in which the solution can be represented as a vector -x = (x1, x2, x3, XK ... ... Xn) € S, where S is the problem many solutions and S1 S = S1 x S2 x… xSn And are finished with it mulţimi items and xi €, and (¥) i = 1 .. n. For each problem giverelations between the components of the vector x, which are called internal conditions, possiblesolutions that satisfy the conditions are called internal solutions result. The method of generating allpossible solutions and then dete rmining the solutions result by checking the conditions requireinternal very long time. Backtracking method avoids this generation and more efficient. Itemsvector x, get on line in order of increasing value indices, x [k] will receive a value only if the y wereitems x1 attributed values .. x [k -1]. The award value of x [k] verify fulfillment of conditionsrelating to continue ... x1 x [k -1]. If these conditions are not met, to step k, this means that anyvalues I attribute his x [k +1], x [k +1], .. x [n] will not reach a solution result. Backtracking methodbuilds a vector solution progressively from the first component of the vector and going to last withthe possible returns on atribuirilor earlier.

The method is applied as follows:1) is the first choice and value sin S1 is given his x1;2) is generated involve elements x1 ... x [k -1], with values of S1 .. S [k-1]; for the generation

of x [k] to choose the first element of S [k] available for the choice is testing conditions to continue.May occur following situations:a) x [k] meets the conditions to continue. If it comes to the final solution (k = n) then

displays the solution obtained. If not reached final solution to switch to the next generation item - x[k-1];

b) x [k] does not meet condition s to continue. Try the following value available from S [k].If you do not find any value in S [k] to meet the continued return to the x [k -1] and resumealgorithm for a new value thereof. Algorithm ends when they were taken into account all elementsof S1.

The problems solved by this method requires time than running, so it is appropriate to usethe method only if we have no other solution algorithm.

If crowds S1,S2,…Sn k have the same number of items the time required forimplementation of the algorithm is k n. If the crowds at S1, S2 .. Sn not have the same number of

items, then it notes with "m" minimum cardinalelor crowds S1 ... Sn and "M", the maximum. Timeis running in the [m to n .. M to n]. Backtracking method has exponential complexity in most c asesineffective. But it can not be replaced with other variants of solving fastest in the event that isrequired to determine all the solutions to a problem.

Generating permutation. Reads a natural number n. To generate any permutation set(1, 2, 3, ..., n).

Generating permutation will be made taking into account that any permutation will becomposed of distinct elements of the crowd A. For this reason, to generate a permutation, we willensure that the numbers will be distinct.Algorithm properly present the case n = 3 (Figure 1).

1 2 31 2 2 2 2

1 1 1 1 1 1

1 2 33 3 3 3 11 1 1 1 2 2

1 2 3 11 1 1 2 3 32 2 2 2 2 2

Figure no. 1. Presentation algorithm - generating Commutations

. load stacked on level 1 value 1;

. loading value of 1 on the 2nd is not possible, because this value is placed on Level 1 of the stack;

. loading value of 2 on the 2-century is possible, because this value is no longer seen;

. 1 of the value of the 3rd fall on level 1; 2 of the value of the 3rd fall on the 2nd;. 3 a value of the 3rd not encountered on previous levels, whereas the 3 is completedcorrectly. Print: 1 2 3... ...Algorithm continues until the stack becomes empty.The source is as follows:

Varianta C# - OOP

using System;

using System.Collections.Generic;

using System.Linq;

using System.Text;

namespace ConsoleApplication1

public interface back

Continuare ( I )

} while (_n < 0 || _n > 100);

public void cit_p()

Console.WriteLine(_sir);

_p =int.Parse(Console.ReadLine());

} while (_p < 0 || _p > 100);

public virtual void init()

bool a_s

bool e_v

int[] stiva

int[,] matrice

string sir

void init();

void succesor();

void valid();

bool solutie();

void tipar();

void run();

_st[_k] = 0;

public virtual void succesor ()

if (_st[_k] < _n)

_st[_k] = _st[_k] + 1;

_a_s = true;

_a_s = false;

public virtual void valid()

int i;

_e_v = true;

for (i = 1; i <= _k - 1; i++)

if ((_st[_k] == _st[i]) ||(Math.Abs(_st[_k] - _st[i]) ==Math.Abs(_k - i)))

_e_v = false;

public virtual bool solutie()

if (_k == _n)

return true;

return false;

public virtual void tipar()

int i;

for (i = 1; i <= _n; i++)

Console.Write("{0},",_st[i]);

Console.WriteLine(" \n");

Console.ReadLine();

public virtual void run()

_k = 1;

init();

while (_k > 0)

public class dame : back

public static int _n;

public static int _p;

public static int _k;

public static bool _a_s;

public static bool _e_v;

public static int[] _st;

public static int[,] _matrice;

public static string _sir;

public void cit_n()

_n = int.Parse(Console.ReadLine());

(continuare II)

(Continuare din II)

public int n

return _n;

_n = value;

public int p

return _p;

_p = value;

public int k

{ succesor();

if (_a_s)

valid();

} while (!((!_a_s) || (_a_s&& _e_v)));

if (_a_s)

if (solutie())

tipar();

_k = _k + 1;

init(); }

_k = _k - 1;

} (Continuare I)

} (Continuare din I)

_st = value;

public int[,] matrice

return _matrice;

_matrice = value;

public string sir

return _sir;

_sir = value;

return _k;

_k = value;

public bool a_s

return _a_s;

_a_s = value;

public bool e_v

return _e_v;

_e_v = value;

public int[] stiva

return _st; (continuare in II)

(continuare din II)

return true;

return false;

public class comb : aranj

public class perm : dame

public override void valid()

int i;

_e_v = true;

for (i = 1; i <= _k - 1; i++)

if ((_st[_k] == _st[i]))

_e_v = false;

public class aranj : dame

int i;

_e_v = true;

for (i = 1; i <= _k - 1; i++)

if ((_st[_k] == _st[i]))

_e_v = false;

public override void tipar()

int i;

for (i = 1; i <= _p ; i++)

Console.Write("{0},",_st[i]);

Console.ReadLine();

public override bool solutie()

{ if (_k == _p) (Continuare in I)

(continuare din I)

public class testare

public static void Main(string[]args)

perm PERM = new perm();

PERM.sir = "N = ";

public override void succesor()

if (_st[_k] < _n - _p + _k)

_st[_k] = _st[_k] + 1;

_a_s = true;

_a_s = false;

int i;

_e_v = true;

for (i = 1; i <= _k - 1; i++)

if (_st[_k] == _st[i])

_e_v = false;

if (_k > 1)

if (_st[_k] < _st[_k - 1])

_e_v = false;

PERM.cit_n();

Console.Write("N = {0},",PERM.n);

PERM.stiva = new int[100];

PERM.a_s = true;

PERM.e_v = true;

PERM.run();

Console.ReadLine();

2. OBJECT-ORIENTED PROGRAMMING IN C #

Object-oriented programming means programs with new types that integrates both data andmethods associated with the creation, processing and destruction of such data. To gain advantagesthrough abstraction programming (the program is no longer a successi on of processing, but a set ofobjects to life (Figure 2), have different properties, are capable of specific actions and interact in theprogram). Spoke on instantiation new techniques, derivation and polimorfismul object types.

Figure no. 2. Representation of objects using OOP

An abstract data type is an entity characterized by a data structure and a series of operationsto these data. Operations that are accessible from outside the entity formed its interface. A type ofdata object is a type of data that implements a type of abstract data. We'll call the operationsimplemented in the type methods. Say that the data and methods are members of a given type ofobject. The use of such involves type: the definition of its existen ce, call methods and access todate.Crearea a court in November of a type object, assumed operations specific "construction" of anobject, the appropriate method bearing the name of the manufacturer. Analog, dissolved a court andfreeing memory space for i ts data, apply a specific method called destructor.

ClassesIn C #, classes are written exactly as in C + +.Syntax:[attr] [Change] class [nume_clasa] [: clasa_de_baza] [corp_clasa]• declarative attributes represents information on the entity define d.• Modifiers is a sequence of key words: new public protected internal private (changing

access) abstract sealed (changing legacy).• Class base from which to inherit the current class, and there may be one such class.• Corp_clasă is a block of members of the class declaration:

a constant (class values); a fields (variable); Types of data a user-defined; methods (subroutine); constructions; One destructor; A properties (features that can be consulted or set); an Events (signaling instruments); an indexed (indexing that allow courts in the respective class); an operators.

Following example defines a hierarchy of classes, namely (Figure 3):

class dame {

Obiect1 Date1 Met1

Obiect4 Date4 Met4

Obiect3 Date3 Met3

Obiect2 Date2 Met2

Public void cit_n(string mes, ref int n){ }Public void init(int k,ref int[] st) { }Public void successor(ref bool a_s, ref int[] st, int n,int k){ }Public void valid (ref bool ev, ref int[] st,int k ){ }Public bool solutie(intn, int k) { }Public void tipar(int n,int[] st) { } }

Class perm:dame {

Public void valid(ref bool ev, int[] st, int k) { }}Calss aranj:dame{

Public void valid (ref bool ev, ref int[] st,int k ){ }Public bool solutie(int n, int k) { }Public void tipar(int n,int[] st) { }

Class comb:aranj{

Public void successor(ref bool a_s, ref int[] st, int n,int k){ }Public void valid (ref bool ev, ref int[] st,int k ){ }

}Class partitii:perm{

Public void successor(ref bool a_s, ref int[] st, int n,int k){ }Public void valid (ref bool ev, ref int[] st,int k ){ }Public void tipar(int n,int[] st) { }

}Class colorare:dame{

}Class comis:dame{

Public void init(int k,ref int[] st) { }Public void successor(ref bool a_s, ref int[] st, int n,int k){ }Public void valid (ref bool ev, ref int[] st,int k ){ }Public void tipar(int n,int[] st) { }

}Class suma:dame{

}Class part_nr:dame

partitii

Partitii

colorare

Combinari

{Public void init(int k,ref int[] st) { }Public void successor(ref bool a_s, ref int[] st, int n,int k){ }Public void valid (ref bool ev, ref int[] st,int k ){ }Public bool solutie(intn, int k) { }Public void tipar(int n,int[] st) { }

}Public class testare{Public static void Main(string[]) args) { }}

Figure no. 3 Example of the hierarchy of classes for Backtracking method

Constructionspublic Complex(float a, float b)

{ re = a; im = b; } public Complex(float a) : this(a, 0) { }

public Complex() { }MembersMembers of the classes and methods are given.• fields, properties. Properties are some fields more "smart", meaning they are accessed likeordinary fields, but their implementation is that the methods. get, set and value are keywords in C #.

private float re, im; public float Re { get { return re; } set {

re = value; } } public float Im { get { return im; } set { im = value; } }

Metode: public double Modul() { return Math.Sqrt(re * re + im * im);

// supraincarcarea metodei ToString() mostenita de la Object public override string ToString()

{ string result = re + (im<0 ? " -" : "+") + Math.Abs(Im) + "i"; return result; } Overload operatorsIt implements static methods, using the keyword operatorpublic static Complex operator +(Complex A, Complex B) { Complex result = new Complex(); result.re = A.re + B.re; result.im = A.im + B.im; return result; }

CONCLUSIONS

This article presents the advantages of dbacktracking method and object -orientedprogramming. One of the major advantages of object oriented programming is the ability to reuseexisting code. Can design new classes using a lready constructed class is called inheritance. If aclass A inherits class B, then B and class methods will be considered as belonging to class A.Heritage and create a class "base" in order to store the common characteristics of different classes,such properties will not be specified in each class separately. Main advantages of using objectoriented programming are:

ease of design and code reuse:Once tested the correctness of the operation objects of an application, they can be used without anyproblem in another application. This advantage can be exploited by the formation of libraries ofobjects. Regarding design, it facilitates the decomposition of complex problems in simplesubprobleme, which can be easily modeled using objects (variables will descri be properties ofobjects shaped their actions and methods).

abstraction:

Designers can obtain an overall view to the behavior of objects and interactions between them, thedetails are buried in the composition of objects.

safety data:Able objects to behave like "black boxes", it can be used without the knowledge of theircomposition, providing privacy and decreases the frequency used appearances and the errors relatedto wrong handling of types of data.

REFERENCES

1. Dorel Lucanu - Bazele proiectării programelor şi algoritmilor II: Tehnici deprogramare - Editura Universităţii "Al. I. Cuza" , Iaşi, 1996

2. Tudor Sorin - Tehnici de programare - Editura L&S Infomat, Bucureşti, 19943. Tudor Sorin - Tehnici de programare - Editura Teora, Bucureşti, 19944. Valentin Cristea - Tehnici de programare - Editura Teora, Bucureşti, 19935. Ioan Odăgescu - Metode şi tehnici de programare - Editura Intact, Bucureşti, 19946. Ioan Odăgescu - Olimpiadele naţionale şi internaţionale de informatică - Editura L&S

Infomat, Bucureşti, 19967. *** - Gazeta de informatică - Editura Libris, Cluj, 1991-20018. http://thor.info.uaic.ro/~dlucanu/9. Cristian A. Giumale – Introducere în analiza algoritmilor - Editura Polirom Bucursti,

200410. Livovschi L.,Georgescu H., Sinteza şi analiza algoritmilor , Editura Ştiinţifică şi

Enciclopedică, Bucureşti, 198611. Knuth D.E., Tratat de programarea calculatoarelor. Algoritmi fundamentali , Editura

Tehnica, Bucureşti, 197412. Knuth D.E., Tratat de programarea calculatoarelor. Sortare şi cautare , Editura

Tehnica, Bucuresti, 197613. Morariu N., Limbaje de programare , curs ID, 200114. Visual Basic 6.0 – Ghidul programatorului , Editura Teora, 200315. Richard Grimes, Dezvoltarea aplicatiilor cu Visual Studio .NET, Editura TEORA,

Bucuresti,200716. Lucian Sasu, Visual C#, curs C#, 2005

THE SYNTHETICAL INDICATORS OF VARIABILITYAN APPROACH IN TOURISM

Associate Professor PhD Elisabeta R. ROŞCA„Stefan cel Mare” University of Suceava, Romania

elisabetar@usv.ro

Abstract:The paper „The Synthetical Indicators of Variability. An Approach in Tourism” develops the variability of

frequencies distributions and the statistical methods of analysis of it. Among these are included the estimation and theanalysis of synthetical indicators of variability which are: the average linear deviation, the standard deviation, thedispersion and the coefficient of variation. These indicators measures the degree of variability of individual items offrequencies distributions in comparis on with an indicator of central tendency, as a rule the average and sometimes themedian. In the analysis of dispersion, the standard deviation is finding the application also in the Chebyshev’s theoremand in the empirical rule, enunciated in the paper. I n the case of multidimensional distributions the total dispersionresults as a sum of dispersions (the group dispersion and the dispersion between groups) under the form of rule ofaddition the dispersions. The paper presented a concise study of tourism in Romania in 2005, using the dispersionindicators in the analysis of travel duration, in the case of internal travels of the residents for vacations and business,on the touristic zones.

Keywords: variability, standard deviation, dispersion, coefficient o f variation, the rule of addition thedispersions.

INTRODUCTION

The variability in statistics is determined by the influence of essential and random factors onthe elements of a population, which according with the intensity of their action determine a biggeror a smaller deviation of the individual values in comparison with the central tendency. As thecomplexity degree grows the variation of individual values is bigger and the correct using of theindicators of central tendency in the substantiation of decisions needs the verification of the stabilityand the signification of values registered by these. The estimation and the analysis of the individualvalues variation from the typical values which characterize the central tend ency give the possibilityto solve some problems of statistics knowledge extremely useful in the substantiation the decisionsamong which we include: the analysis of the homogeneity degree of data from which haveestimated the central tendency indicators a nd the verification of the representation of these astypical values of series, the comparison in time and/or in space of more distributions byindependent and/or interdependent characteristics, the selecting of the factors with significantinfluence which determine the structures in the population, the separation of the action of essentialfactors from the action of random factors, the indentification of the way in which the essentialfactors change their action from a group to another, the concentration o f the individual values of thecharacteristics and their variability in comparison with typical values, the application of differenttests of mathematical statistics.

The analysis of the total degree of individual values variability of the variable in com parisonwith the indicators of central tendency is materialized in the estimation and the analysis ofsynthetical indicators of variation in a unidimensional/multidimensional distribution which are: theaverage linear deviation, the standard deviation, the dispersion, the coefficient of variation and therelationship among dispersions in the case of multidimensional distributions.

THE SYNTHETICAL INDICATORS OF VARIATION IN THE UNIDIMENSIONALDISTRIBUTIONS

An unidimensional statistical series presents the registered values of one variable in thestatistical population or a succession of values for a quantitative/qualitative variable nixi 1,

which characterized a population. The synthetical indicators of variation computed in such kind ofdistributions are: the average linear deviation, the standard deviation, the dispersion and thecoefficient of variation (Biji, E. M., et al., 2000), (Isaic – Maniu, Al., et al., 1999).

The average linear deviation - xd is computed as a simple or weighted arithmetic averageof the deviations the terms of series from their central tendency taken in absolute value. The centraltendency can be characterized using the average or the median (Badia, J., et al., 1997), (Korka, M.,et al., 2005).

When the deviations of the individual values are computed and analysed in comparison withthe average, the average linear deviation is determined with the formula:

- in the case of simple series:

- in the case of grouped data:

In some statistical analysis is interested the average linear deviation of the individual valuesfrom the median

eMd (Biji, E. M., et al., 2002). This is determined usi ng the following formula:

- in the case of simple series:

eMd =n

The average linear deviation presents the disadvantage that it didn’t ta ke into account thatthe greatest deviations in absolute value have a greatest influence on the degree of variation of avariable, in comparison with the smaller deviations. In the same time, from the algebraic point ofview, it isn’t recommended to give u p in an arbitrary way at the sign of values from which iscomputed an average. It is a less used indicator in the analysis of frequencies distributions becauseit didn’t characterized the theoretical distributions and also because it is expressed in the me asureunit of variable and so it isn’t useful in the dispersions of variables comparison (Biji, M., Biji, E.M., 1979).

Standard deviation - is computed as a square average of the all deviations of the variantsof distribution from their arithmetic average.

The formula are:- in the case of simple series:

At the standard deviation computed as a square average by the amounting to square it givesmore importance to the greatest deviations in absolute value. As a consequence the standard

deviation will be always bigger than the average linear deviation, computed for the same dataseries. It is estimated that for a distribution with clear tendency of normality the average lineardeviation is equal with 4/5 of the standard deviation value ( 5

4xd ).

The standard deviation is a basic indicator which is used in the analysis of variation at theestimation of selection errors, in the calculus of correlation. Near by the average, the standarddeviation represented a parameter which defines different types of theoretical distributions andserves especially at the interpretation of the curve of normal distrib ution.

Applied in according with the Chebyshev’s theorem , the standard deviation becomes usefulfor the establishing the proportion in which the data of a population or a sample borders in a certaininterval of variation. In according with Chebyshev’s theo rem, being given any series of data and anumber k1, the part from these data which are between k standard deviation of the average is at

least2

k . Because this theorem is valid for any distri bution of observed data it is applied so for

samples as for populations. The theorem is used to determine the minimum value which representsthe part of observed data situated in the interval ( WW kxkx , ), where w represents thestandard deviation in sample. This interval of values, which has as central value the average,contains a number of data so bigger as k is bigger. For example, the interval ( WW xx 3,3 )contains a number of values bi gger than the interval ( WW xx 2,2 ). In according with the

Chebyshev’s theorem, this part of data situated in the interval ( WW kxkx , ) is at least2

(Keller, G., et al., 1988).So, if we applied the theorem for some specific values of k we obtain:- for 1k , the information delivered is unsignificant, that the part of data situated in

the interval ( WW xx , ) is at least 0;

- for 2k we find at least4

k from the data are situated in the interval

( WW xx 2,2 ).In the Table no. 1 we find the correspondence between some values of k and the proportion

in which the observed data are situated in the interval established by Chebyshev’s theorem.

Table no. 1. Chebyshev’s theorem for variable values of k

k Interval Part of observed dataincluded in interval

1 ww xx , at least 0

2 ww xx 2,2 at least

2,5 ww xx 5,2,5,2 at least

3 ww xx 3,3 at least

Source: Keller, G., Warrack, B., Bartel, H., 1988, Statistics for Management and Economics. A Systematic Approa ch,Wadsworth Publishing Company, Belmont, California, 58 -59

The importance of Chebyshev’s theorem results from the fact that it is applied in any

distribution of data, indifferent of their distribution. As a consequence, the value2

k represents a

minimum level for the observed data included in the interval ww kxkx , and in reality ininterval could exist much more data. With other words, as long as the part of observed data includedin the interval ww kxkx , varies from a distribution to another is recommended to establish a

minimum value of this part which is correct for any distribution. For a certain distribution, the partof values situated in the interval can be much bigger.

The empirical rule is valid for the sample data, if their distribution is normal. In accordingwith the empirical rule, if the observed data of a sample is normal distributed then:

- the interval ( WW xx , ) contains about 68% from the registered data;- the interval ( WW xx 2,2 ) contains about 95% from the registered data;- the interval ( WW xx 3,3 ) contains all the registered data.In the Table no. 2 are presented, in according with the empirical rule and Chebyshev’s

theorem the percentages of data incl uded in the interval.

Table no. 2. Proportions of including the observed data in the interval

Interval Percentages by the empiricalrule

Percentages by theChebyshev’s theorem

( WW xx , ) 68% at least 0%

( WW xx 2,2 ) 95% at least 75%

( WW xx 3,3 ) 100% at least 89%

Source: Keller, G., Warrack, B., Bartel, H., 1988, Statistics for Management and Economics. A Systematic Approach ,Wadsworth Publishing Company, Belmont, California, 60 -61

The standard deviation, as the average linear deviation, is expressed in the same measureunits as the analysed variable. From this reason, these indicators are used at the comparison thedegree of variation only for the distributions which refers at the same statistical characteristic. In thecomparison of the degree of variation for two or more different variables is used the coefficient ofvariation. This is a relative measure of the dimension of relative deviation in comparison with theaverage or, with other words, is a relative mea sure of dispersion.

The dispersion can be measured as a difference between two values selected from apopulation of observed data. The easiest methods of measure the dispersion are: the range, theinterfractile range and the quartile deviation (Levin, I. R ., 1987).

The range is the difference between the biggest and the smallest observed value. Theindicator is easy to understand and determine, but as a measure of dispersion has a limited characterbecause it didn’t take into consideration the most part of the observed values and ignores the natureof their variation, but is influenced by the extreme values. Because is computed from only twovalues, the range can change from a sample to another in a given population, even if the individualitems between the two extremes are in the most part similar.

The interfractile range is a measure of variation between two fractile in a frequenciesdistribution or, with other words, is the difference between the values of two fractiles. These canhave distinct name, which depend by the number of equal parts in which they divide the data. So,the fractiles which divide the data in ten equal parts are named deciles, those which divide the datain four equal parts are named quartiles, those which divide the data in one hundr ed equal parts arenamed percentiles.

The interquartile range and the quartile deviation show us how much we deviate from themedian for limit a half of the observed values. For computing this distance we divide the data infour parts, each of them contain ing 25% from the observed values of the distribution. The quartilesare the biggest values in each of these parts and the interquartile range is the difference between thevalue of the first and the third quartile.

Interquartile range = 13 QQ In the Figure no. 1 is illustrated, in a diagrame, the concept of interquatile distance. We

mention that the distance between quartiles isn’t necessary to be the same.

The half of interquartile range is a measure named quartile deviation, determined with theformula:

Quartile deviation =2

13 QQ (8)

This indicator measure the average of distance between the first and the third quartile and isrepresentative for the variability of all the data as it i s computed like an average and it isn’t choosesfrom a population. Also, we observe that the interquartile range and the quartile deviation are basedonly on two values from the population and these are not the extreme values but are values situatedin the middle half of data which give they an advantage in comparison with the range whichdetermined from the extreme values. These indicators are intermediaries for the analysis ofdispersion of a frequencies distribution (Roşca, R. E., 2008).

The dispersion - 2x is computed as a simple or weighted aritmetic average of the sqares of

terms deviations in comparison with their average (Ţarcă, M., 1997).The formula are:- in the case of simple series:

2 (10)

The dispersion of a characteristic represent at the same time, the centrat moment of secondorder, computing without to be necessary the e stablishing beforehand the individual deviations ofvariants from their average.

The dispersion is computing with the following formula:- in the case of simple series:

the lessobserved

values

the highobserved

values

the interquartile range

¼ from theobserved data

1st quartile 2nd quartile(the median)

3rd quartile

Figure no. 1. The interquartile rangeSource: Levin, I. R., 1987, Statistics for Management , Forth Edition, Prentice – Hall, Inc.,

Englewood Cliffs, New Jersey, 11 4

that is

- in the case of grouped series:

So the dispersion as the standard deviation are computed by the simplified calculus usingthe formula:

12 axhn

, (13)

where:a represents a constant choosed depending on a new origin of variation, so that to obtain less valuesof the variants;h represents an over-unit coefficient with which if all the terms of distribution are decreased, thenew dispersion is by k2 times less than the dispersion of initial distributio n.

In the case of simple or frequencies distributions as the dispersion value is closed by zero sothe degree of variability in series is reduced. The dispersion hasn’t a concrete measure unit and itsdimension is direct influenced by the size order of the distribution values, being considered anintermediary indicator in the characterizing of the variability degree of this.

The coefficient of variation - v is computed in comparison with standard deviation and thedistribution average and usually is express ed in percentages. The formula is:

v (14)

When is known only the average linear deviation, then the coefficient of variation iscomputing also with the formula:

The coefficient of variation can take values beginning with zero. As the value is smaller sothe distribution is much homogeneous and the average is much representative. It is appreciated thatin the case of a coefficient of variation over 35 – 40% the average is no more representa tive and thedata must be separated in components by groups depending on the variation of another groupvariables. So this indicator is used as a test of verification in the using of the group method at theanalysis of observed data.

The Shappard’s correct ion is used to decrease the computed dispersion value for adistribution with group intervals at which the values of variable X are computed supposing that inthe interval the fequencies are distributed at equal distances and their av erage will be equal with thesimple average of the two extreme values. Shappard considers that in certain conditions the

dispersion can be corrected by decreasing12

1 from the square of the interval of variation. The

dispersion corrected in this mode 2 ’ is equal with:

2 ’ =12

22 h (16)

where:

h represents the dimension of intreval of variation.It conditions the application of this correction only for the series which prese nts the followingcharacteristics:- the frequencies distribution is continued;- the frequencies tend to zero in the both directions;- the number of observed cases is smaller than 1.000 units and the group is much large thanthose in which the interval of variation represents the twelfth part from the range of variation.These conditions suppose a normal or easy asymmetrical frequencies distribution in which isensured a compensation of deviations also in the inside of intervals not only on the population .So, it isn’t recommended to be used for the distributions with a great degree of asymmetry, forwhich the application of the Sheppard’s correction didn’t reduce the value of error and isinfluenced even in the sense of increasing it. As a result, the app lication of Sheppard’s correctionneeds prudence, by verification beforehand if the conditions of normality and volum ofdistribution are achieved.

DISPERSION IN MULTIDIMENSIONAL DISTRIBUTIONS. THE RULE OFADDITION THE DISPERSIONS

How the phenomena are more complex so the degree of variation of the variables whichdefine them is bigger. From this reason the units submissive the observation must be structured ingroups depending on the variation of determined factors. In this case the total variation is t he resultof combination the action of random and nonregistered factors presented inside of groups with theessential registered factors, which operate from a group to another. To measure the degree ofvariation determined by the combined action of the two categories of variable factors is used theanalysis of variance based on the decomposition the total dispersion in the two components (Jaba,E., 1998), (Baron, T., et al., 1996).

Total dispersion - 2y is computed on the base of all individual deviations from the average

of population using the formula:

. (17)

If we consider that the individual values appear under the influence of all the factors and theaverage of population supposes that all the factors ar e constant these means that the total dispersionmeasures all the variation of studied variable Y , produced by the essential and nonessential,registerd and nonregistered factors. How the value of this indicator is bigger as the chara cter of thepopulation is more heterogeneous and it is influenced by a great number of essential andnonessential, constant and variable factors, presented from an interval to another or in thebackgroud of the same interval.

The dispersion of group- 2i is computed on the base of all deviations of variants of a group

in comparison with their average, weighted with the group frequencies

jij nn

1.. , using the

formula:

2 (18)

This indicator ensures the measurement of the influence degree of variable factors whichoperate inside of each group and how it has a bigger value as the group is more heterogeneous andit is approached by the variation degree of population. To synthetize this variation in one singleindicator computed on the all population we resort to the average.

The average of group dispersion - 2y is computed as a simple or weighted aritmetic

average of all the group dispersions determined in the analysed population. If the intervals are equalas volum is used the simple aritmetic average and if the intervals are unequal is computed aweighted aritmetic average.

The average of group dispersions is computed in two variants which are:- as an average of group dispersions, u sing the formula:

. (19)

- as a sum of deviation squares inside of groups from the average of the groupweighted with the groups frequency, using the formula:

The dispersion among groups - 2/ xy is computed on the base of deviations of group

averages from the average of population and it measures the influence degree of the group factor onthe variation of analysed variable.

The dispersion among groups is computed using the formula:

. (21)

Among the three indicators exist the following relationship: dispersion in population isequal with the average of group dispersions at which is added the dispersion among the groups ofpopulation, that is:

22xyyy (22)

This formula is known under the name of the rule of addition the dispersions .The relationships between the standard deviation computed on population and the standard

deviation among groups are achieved thr ough the realtions between the corresponded dispersions,because the standard deviation in population is equal with the square root from the sum of theaverage of group dispersions and dispersion among groups, that is:

2yy (23)

The indicators of variation are computed also using the relative frequencies, with thecondition to respect the quantitative relatioships between absolute and relative frequencies, to takeinto account the fact that the absolute value of a percentage of the relative frequencies is the samefor all the elements of population.

THE USING OF VARIATION INDICATORS IN THE ANALYSIS OF TOURISTICTRAVEL DURATION

In the case of sample data the group is achieving by the necessities of analysis, by thegroups achieved in a previous similar research or by the aim and necessities of present analysis. InRomania, the average travel duration has situated, in the period 1990 – 2005, under 4 days,registered even an easy tendency of decrease. On the development regions, the less value wasregistered in Region of North -East, where the computed averages are under 3 days and in theRegion Bucharest – Ilfov, where the average travel duration is even under 2 days, in the consideredperiod. However the two mentioned regions hav e remarkable touristic resources and the forms oftourism which characterized these regions are cultural tourism, which has an itinerant character,scientific, transit, religious, affairs tourism a.s.o., all of them having reduced travel duration. Wemention the regions South – East (which include the littoral tourism) and South – West Oltenia (arich zone in cultural touristic objectives), where the average travel duration is over the average ofthe country (Zaharia, M., Gogonea, R. M., 2005).

The indicator the number of overnight stays on the touristic zones in 2005 has a higher valuethan in the case of balnear tourism (about 5,3 millions overnight stays), in the residence of districttows (5,2 millions overnight stays), in the littoral zone (4,0 millions overnight stays), in themountainous zone (2,0 millions overnight stays) a.s.o. The average travel duration was 3,2 days onthe country level, in 2005, with variations from 8,2 days in average in the case of balnear tourism,5,6 days in the case of littoral tourism, 2,4 days in the case of mountainous tourism a.s.o. TheRomanian touristic statistic offers a group of internal touristic travels of residents for holidays andbusiness, on the touristic zones by the travel duration, presented for 2005 in Table no. 3.

Table no. 3. Internal travels of residents for holidays and business on touristic zones, by theduration of travel in Romania, in 2005

Touristic zonesTravelduration(overnight stays)

Thenumber

ofinternaltravels

(millions)

Littoral

Mountainous

Health

resorts

Danube

Diverse

circuits

Others

1-3 5,17 0,13 0,83 0,05 0,01 0,06 4,084 -7 2,29 0,49 0,57 0,04 0,02 0,02 1,15

8 -14 0,99 0,36 0,19 0,05 0,01 0,02 0,3715 – 28 0,22 0,04 0,05 0,02 - - 0,1129 andover

0,07 - 0,01 - - - 0,06

Total 8,74 1,02 1,65 0,16 0,04 1,0 5,77Source: Anuarul statistic al României – ediţie electronică, INS Bucureşti, 2007

We observe that by elimination from the analysis “other zones”, in the mountainous zoneare registered the most touristic trav els, followed by the littoral and “diverse circuits”. In themountainous zone the most travels have a duration travel by 1 -3 overnight stays, in the littoralzones by 4 – 7 overnight stays, in the health resorts by 8 – 14 overnight stays a.s.o. (Biji, E. M., etal., 2006).

The average of internal travels duration of residents in Romania in 2005 was by 4,7overnight stays and the average linear deviation was by 3,19 overnight stays, which means that inaverage the individual values deviate from the level of average with 3,19 overnight stays. Thestandard deviation is 4,87 overnight stays and the dispersion of the individual values from theaverage is 23,7. The coefficient of variation has values over 40% as computed by using the standardor the average linear deviation. By applied the Chebyshev’s theorem as it is presented in the Table

no. 1 we observe that at least ¾ from the observed data are situated in the interval [ -5,04; 14,44], atleast 21/25 from the data are situated in the interval [ -7,475; 16,88] and at least 8/9 from the dataare situated in the interval [ -9,91; 19,31]. The empirical rule can’t be used in this case because thedistribution is asymmetrical.

CONCLUSIONS

We ascertain that the analysis of characteristic of variability in the freque ncies distributionsconsists in the estimation of the synthetical indicators of variability, which measures the degree ofvariation of the individual values from an indicator of central tendency as a rule the average andsometimes the median. The average l inear deviation has some disadvantages connected by notaking into consideration of the bigger influences of bigger deviations in absolute value on thevariation degree of a characteristic and also connected by the expression in the unit of measure ofcharacteristic, which make that the indicator can’t be used in the comparison of dispersions ofdifferent variables in frequencies distributions. More useful in the analysis of dispersion is thestandard deviation used in the estimation of sample errors, in co rrection calculus, as a parameterwhich defines the theoretical distributions and serves at the interpretation of the normal curve ofdistribution. The standard deviation is finding the application also in Chebyshev’s theorem, at theestablishing the proportion in which the data of a population or a sample is appointing in an intervalof variation, indifferent how is the form of data distribution or in empirical rule, where has the samerole but in the case of normal distributions. How the value of the disp ersion indicator is less thatshows a smaller degree of variability. It didn’t have a concrete unit of measure and so it isn’t usedin the comparison of frequencies distributions in the absolute expression, but in the relativeexpression under the form of coefficient of variation which value as it grows shows a bigger degreeof nonhomogeneity of distribution and of nonrepresentative of the average. In the multidimensionaldistributions the total dispersion is determined as a sum of the average of group disp ersions whichresults from the action of nonessential factors and of the dispersion among groups, determined bythe action of essential factors. Used in the touristic activity, the analysis of the internal residentsdistribution by the touristic duration t ravel in Romania, in 2005 has emphasized a high degree ofnonhomogeneity, a nonrepresentative average by this group and the necessity of group again onother intervals of variation to obtain the increasing degree of homogeneity in distribution.

BIBLIOGRAPHY:

1. Badia, J., Bastida, R., Haït, J. R., 1997, Statistique sans mathématique , Ellipses, ÉditionMarketing S.A., Paris

2. Baron, T., Biji, E. M., Tövissi, şi alţii, 1996, Statistică teoretică şi economică, EdituraDidactică şi Pedagogică R. A. Bucureşti

3. Biji, M., Biji, E. M., 1979, Statistică teoretică , Editura Didactică şi Pedagogică,Bucureşti

4. Biji, M., Biji, E. M., Lilea, E., Anghelache, C., 2002, Tratat de statistică , EdituraEconomică, Bucureşti

5. Biji, E. M., Lilea, E., Roşca, R. E., Vătui, M., 2000, Statistică aplicată în economie ,Editura Universal Dalsi, Bucureşti

6. Biji, E. M., Lilea, E., Vătui, M., 2006, Unele probleme privind analiza statistică adistribuţiei pe regiuni de dezvoltare a activităţii turistice , în volumul „Dezvoltarearegională în contextul integrării în Uniunea Europeană”, Editura Economică, Bucureşti,199 - 203

7. Isaic – Maniu, Al., Mitruţ, C., Voineagu, V., 1999, Statistica pentru managementulafacerilor, Editura Economică, Bucureşti

8. Jaba, E., 1998, Statistică, Editura Economică, Bucure şti

9. Keller, G, Warrack, B., Bartel, H., 1988, Statistics for Management and Economics. ASystematic Approach, Wadsworth Publishing Company, Belmont, California

10. Korka, M., Begu, L. S., Tuşa, E., Manole, C., 2005, Bazele statisticii pentru economişti ,Editura Tribuna Economică, Bucureşti

11. Levin, I. R., 1987, Statistics for Management , Forth Edition, Prentice – Hall, Inc.,Englewood Cliffs, New Jersey

12. Roşca, R. E., 2008, Analysis of Repartition Form in Distributions of Frequencies , în TheAnnals of the “Stefan cel Mare” University Suceava, Fascicle of the Faculty ofEconomics and Public Administration, Section 4. Statistics, data processing(informatics) and mathematics, Year 8, No. 8, Editura Universităţii Suceava, 191 - 201

13. Ţarcă, M., 1997, Tratat de statistică aplicată, Editura Didactică şi Pedagogică R. A.Bucureşti

14. Zaharia, M., Gogonea, R. M., 2005, Circulaţia turistică pe destinaţii turistice în zonelegeografice ale României , în volumul „Teorie şi practică în dezvoltarea regională”,Editura Economică, Bucureşti, 185 – 199

15. * * Anuarul statistic al României–ediţie electronică, INS Bucureşti, 2007

SOME ASPECTS OF DATA WAREHOUSING IN TOURISM INDUSTRY

PhD. Mirela DANUBIANU“Stefan cel Mare” University of Suceava, Romania

mdanub@eed.usv.roPhD. Candidate Tiberiu SOCACIU

“Stefan cel Mare” University of Suceava, Romaniasocaciu@seap.usv.ro

PhD. Candidate Adina BARILA“Stefan cel Mare” University of Suceava, Romania

adina@eed.usv.ro

Abstract:In this paper we make a study of the possibility and necessity to deploy a Data warehouse for the tourism

industry that aims to support decision makers by giving them different views for the same pie ce of data. We first pointout the three sides of tourism: economic, social and cultural. Then the focus is moved on the information systems thatare actually used in domain and we show that the advanced information technology is still lower used than in o thereconomic and industrial sectors. We continue with some concepts regarding data warehouses. Finally we try todemonstrate the need of data warehousing for industry tourism in Romania.

Keywords: data warehouse, data warehousing, information systems, mu ltidimensional model, on-lineanalytical processing

JEL Classification: C61, C81, C89

INTRODUCTION

Romania has a huge tourist’s potential, unfortunately, too little valued and exploited. As aresult, one of the strategic developments of the economy aim ed the tourism industry.

But strategies are based on different trends obtained from sophisticated analysis of data.Providing the managers in the tourism industry with information about and insight into the existingdata is the key function of the data war ehouse systems.

A data warehouse (DW) is a collection of technologies aimed to enabling the decisionmaker to make better and faster decisions. It is designed to support On Line Analytical Processing(OLAP). There are some previous works that are related to the general architecture of a datawarehouse and the development of data warehouse prototypes in fields like telecommunication,banking, and insurance. However, to our knowledge, there are no previous works related to datawarehousing for the tourism industry. It is the reason for in this paper we study the need and theopportunity to design and to implement a data warehouse in this field.

First we focus on the three dimensions of tourism: economic, social and cultural and wepoint out the major implica tion of tourism industry in economy. Then we make a short analyze ofthe information systems actually used in this area and we show that advanced technology used inthe different components of this sector is still low. Section 3 is dedicated to general con ceptsregarding data warehouses. Here we point also the advantages of using these projects. In Section 4we demonstrate the need of using a data warehouse in tourism industry.

TOURISM – ECONOMIC, SOCIAL AND CULTURAL PHENOMENON

Branch of the national economy and part of the tertiary sector, tourism has an important rolein economic and social life acting as an element that stimulates the global economic system, as ameans of diversification of economic structure and as an element of education. Due to therelationship with many other sectors, tourism is an industry of interference and as a result of that isbased on results obtained in other branches of activity is an economic branch of consequence.

Tourism demand leads to a continuous adjustment of the off er. This is materialized in thedevelopment of tourism structures which entail increased production industries that are directly orindirectly involved in supporting these structures.

In a study conducted by the United Nations World Tourism Organization (U NWTO) effectson the economy can be grouped into following categories:

- global effects on the national economy by stimulating the production and use of labor;- partial effects on the balance of payments equilibrium, on the level of the exchange rate, on

money supply and movement of money, on the distribution of income, regionaldevelopment, rural environment and population movements and

- external effects on the quality of the environment, on professional training, on habits ofconsumption, on education and on cultural and social changes.

The economic importance of tourism is underlined by the following aspects [1]:- tourism is a creator and user of national income;- it is a means to exploit resources;- supports diversifying economic structures;- generate new jobs;- is a stimulating of investment.

In addition to the economic consequences, tourism has a strong social implication. Thespecific actions have a direct effect on tourists and on population and environment of the areasvisited.

On the international level tourism is an important contributor to the creation of gross worldproduct (7%), and in terms of exports, tourism is ranked on the first places.

OVERVIEW OF INFORMATION SYSTEMS ACTUALLY USED IN TOURISMINDUSTRY

Information technology was initially viewed by the tourism industry as a back -officefunction that supports the finance and accounting areas. The industry has advanced far beyond thisview during the past decade. In some sessions tourism industry leaders pondered the role oftechnology. Among the conc lusions reached were: “Going forward, technology will be the mostcompetitive weapon for any touristic company. If touristic organizations want to competesuccessfully, they must do so by using technology to drive value to both the customer and to thefirm.”[4]

Actually, the most used information systems in tourism industry are the front -office systemsand the reservation systems.

Front Office Information Systems

Front-office information systems are those data processing systems that provide reports invisual or written form. They are used mainly in the management of tourist accommodation (hotels,motels, hostels or cruise ships) or in the travel agencies activities.These systems may be used for:

- tourists registration when the personal data about tourists are collected;- marketing of various tourism products, such as rental cars;- rooms management, when are collected and processed data regarding the rooms status,

(allows instant viewing of room availability for all room types, indicates whether rooms aredirty or clean, allows rooms to be placed out of inventory or out of order to restrict rental)

- tracks of revenues, providing transaction processing and obtain information about any debtsand credits in relation to customers

Information Systems Used for Res ervations

This kind of systems provides rapid access to information and ensures the accuracy of thisinformation. They bring information services, booking and selling and are used both by individualtourists and travel agents or commissioners.Such systems can be classified into the following categories:

- information systems that function as data banks accessible through the transmission systemsfor consultation;

- availability systems that provide information on the status of free or completely occupied alocation at a time;

- computerized reservation systems.Most often this type of systems uses Web technologies. These systems use hardware and

software specific to conduct them activities. Although providers of tourist services in Romaniacurrently use such systems for ticketing most, is well to remember that these systems can be usedfor marketing or management activities.

Despite the fact that tourism is a dynamic industry with important implications on theeconomy to adopt advanced technology of the different components of this sector is still low.For example, according to a study conducted by the magazine e -Business Watch, the percentage oftourism organizations adopting and using application in different areas (such as customerrelationship management CRM, enterprise resource planning ERP or supply chain managementSCM) is sensibly lower than in other economic and industrial sectors (Fig. 1).

Figure no. 1. Diffusion of advanced software solution in European tourism industry comparedto the average diffusion in seven industry sectors (e-Business Watch, 2004)

Information Systems Using Data mining Techniques

In the tourism industry knowing the guests - where they are from, how much they spend,and when and on what they spend it - can help a company to formulat e marketing strategies andmaximize profits. Due to technological development touristic companies have accumulated largeamounts of customer data, which can be organized and integrated in databases that can be used toguide marketing decision [5].

Since identification of important variables and relationships located in these consumer -information systems can be a difficult task, some companies have attempted to raise the power ofinformation by using data mining technologies that exploits the data regarding the consumer. Suchdata-mining technology allows these companies to predict consumer -behavior trends, which arepotentially useful for marketing applications.

ERP SCM CRM

turism

media celorlaltesectoare

WHAT IS A DATA WAREHOUSE

Data warehouse is a relatively new concept, appeared from the need to place a source ofcoherent and consistent data at managers’ disposal to enable obtain information necessary for thesubstantiation of decisions. Data warehouse has emerged as a result of economic necessity but itwas a challenge for Information Technol ogy professionals.

So, what is a data warehouse? William H. Inmon [2] defines a data warehouse as “acollection of integrated, subject -oriented databases designed to supply the information required fordecision-making”.

A data warehouse contains data extra cted from the many operational systems of theenterprise, possibly supplemented by external data. Each of these operational systems recordsdifferent types of business transactions and enforces the policies of the enterprise regarding thesetransactions. If each of the operational systems has been custom built or an integrated system wasnot implemented as a solution, then it is unlikely that these systems are integrated.

For example, Customer A in an operational system and Customer B in another operationa lsystem may be one and the same person —but there is no automated way for anyone in theorganization to know this. A data warehouse brings together data from the various operationalsystems to provide an integrated view of the customer and the full scope o f his or her relationshipwith the organization.

Traditional operational systems focus on the data requirements of a department or division.With the advent of business process reengineering, enterprises began espousing process -centeredteams and case workers. Modern operational systems, in turn, shifted their focus to the operationalrequirements of an entire business process and aim to support the execution of the business processfrom start to finish. A data warehouse goes beyond traditional information views by focusing onenterprise-wide subjects such as customers, sales, and profits. These subjects span bothorganizational and process boundaries and require information from multiple sources to provide acomplete picture.

The data warehouse is an enviro nment, not a product. It is an architectural construct of

information systems that provides current and historical decision support information that is hard toaccess or present in traditional operational databases. The generic architecture of a data wareh ouseis presented in Fig. 2.

Figure no. 2. The general architecture of a data warehouse

In practice is used the term data warehousing technologies to refer to the gamut oftechnology components that are required to plan, develop, manage, implement, and use a datawarehouse, the term data warehouse itself refers to a large, read-only repository of data (Fig.2). Atthe very heart of every data warehouse lie the large databases that store the integrated data of the

enterprise, obtained from both internal a nd external data sources. The term internal data refers to alldata that are extracted from the operational systems of the enterprise. External data are dataprovided by third-party organizations, including business partners, customers, government bodies,and organizations that choose to make a profit by selling their data.

An important feature of Data Warehouse is that store both detailed data and data on differentlevels of summarization. Granularity refers to the level of detail or summarization of the units ofdata in the data warehouse. Granularity is the single most critical design issue in the data warehouseenvironment because it profoundly affects the volume of data that resides in the data warehouse andthe type of query that can be answered. The volume of data in a warehouse is traded off against thelevel of detail of a query. The lower level of granularity corresponds to the more versatile query thatcan be issued. The higher level of granularity corresponds to the less versatile query that can beissued.

Also stored in the databases are the metadata that describe the contents of the datawarehouse.

The Extraction, Transformation, and Loading (ETL) processes include operations for dataunification, integration, cleaning, and data transferring fr om data sources into data warehouse.On the other side different types of software are required to access, retrieve, distribute, and presentwarehouse data to its end users.

Using DW offers a wide range of benefits [3].The data warehouse provides access t o integrated enterprise data previously locked away in

unfriendly, difficult-to-access environments. Business users can now establish, with minimal effort,a secure connection to the warehouse through their desktop PC. Security is enforced either by thewarehouse front-end application, by the server database, or both. Because of its integrated nature, adata warehouse spares business users from the need to learn, understand, or access operational datain their native environments and data structures.

The data in the data warehouse are consistent and quality assured before being released tobusiness users and data warehouse becomes the common information resource for decisionalpurposes throughout the organization. This is the way to provide a single “version of the truth”.

Many of the figures and numbers that managers receive have little meaning unlesscompared to historical figures. Actual historical values are not stored on the operational system norderived by adding or subtracting transaction values again st the latest balance. Historical data areloaded and integrated with other data in the warehouse for quick access.

The ready availability of different data views also improves business analysis by reducingthe time and effort required to collect, format, and distill information from data.

At the end of each business process reengineering (BPR) initiative come the projectsrequired to establish the technological and organizational systems to support the newlyreengineered business process. Although reengine ering projects have traditionally focused onoperational processes, data warehousing technologies make it possible to reengineer decisionalbusiness processes as well. Data warehouses, with their focus on meeting decisional businessrequirements, are the ideal systems for supporting reengineered decisional business processes.

NEED FOR A DATA WAREHOUSE IN ROMANIAN TOURISM INDUSTRY

In order to correct any deviations in performance, managers in the tourism industry oftenneed timely analysis reports to measu re and monitor the performance rate, increase and decrease intourist numbers, tourism nights, and percentage of hotel occupations, visits to monument places,and the total revenue from the tourism sector at the national level. They also need timely analys isreports to assist in making long-term decisions. It has been observed that most of the reporting andanalysis, time was spent on collecting data from the various systems before the analysis can bemade. Managers want and need more information, but analy sts can provide only minimalinformation at a high cost within the desired time frames [6]. In order to provide information for

predicting patterns and trends more convincingly and for analyzing a problem or a situation moreefficiently, a data warehouse for this particular purpose is needed.

Evaluation of current tourism industry activity is done by means of statistical indicatorssuch as number of visitor arrivals (total and area of origin - for foreign tourists), spent in hotels andsimilar establishments, the average length of stays, etc. These indicators allow only an analysis oftourist activity, but without offering the possibility of strategic decisions make in tourism or forthose areas with direct or indirect impact on tourism. For this purpose th e managers or, on a higherlevel, the governors may have the possibility of analysis from different perspectives, such as thetype visited tourist areas (mountains, seaside resorts spas ...) the type of accommodationestablishments, the type of tourism pra cticed, the profile of tourists who prefer certain destinations,so on. These tests are complete if allow comparisons over time for those indicators.

The multidimensional model, characteristic of data warehouses allows such analysis ondifferent dimensions and hierarchical levels.

For example, data stored in a Data warehouse allow in every moment to quickly answer toquestions of following type: What was the activity (expressed in number of tourists’ arrivals) forthe 2 stars, 3 stars or 4 stars hotels in t he mountain area for the first quarter of 2008 comparedwith the same period in 2007.

In this case on make an analysis from the perspective of follows dimensions: establishmentof tourist accommodation, tourist area and time.

In the above example we refer the quarter level for time dimension. But for this dimensioncan define multiple hierarchies, such as: day -week-month-year, week-month-quarter-semester-year,so on. Starting from the query above, if it is necessary a more detailed analysis (e.g. related t omonths) there is the possibility of finding immediate response by a drill -down operation.

So decision makers in the tourism industry need more and more analytical information tocapture the whole picture of their tourism environment, and it is exactly th e role of data warehouseto give them this global view and wide capability for analysis.

CONCLUSION AND FUTURE WORK

Since the tourism industry has became one of the major objectives of development,especially for Bucovina we think that deploying a data warehouse project, even for this area isreally useful. Based on this idea we intend to develop a prototype for a data warehouse to allow theon-line analyze of tourist activity, like numbers of arrivals, spent in hotels or similar establishmentsand the average length of stays from the perspective of establishment of tourist accommodation,tourist area and time. Also we intend to develop some data mining tools in order to describe theprofile of tourists interested on Romanian tourism.

REFERENCES:

1. N. Dumitru, Contribuţia turismului în procesul creşterii economice, Journal of tourism , Nr3.

2. W. H Inmon,. Building the Data Warehouse; QED Technical Publishing Group, 1992,ISBN: 0-89435-404-3

3. M. Humphries, M. Hawkins, M. Dy, Data Warehousing Architecture and Implementation,Pearson Education,

4. Olsen, M., Connolly, D., (1999) Antecedents of Technological Change in the HospitalityIndustry, Tourism Analysis, Vol. 4, p. 29

5. M. Danubianu, V. Hapenciuc Improving Customer Relationship Management In hotel industry byData Mining Techniques, Proceeding of “Competitiveness and Stability in the Knowledge -BasedEconomy”, Vol: CD, 30-31 Mai, 2008, Craiova, Romania, ISSN/ISBN: 978 -606-510-162-3, Pagini:2444-2452

6. J. Dyche. e-Data Turning Data into Information with Data Ware housing, Addison-Wesley,Reading, 2000.

7. K. Chau, Y. Cao, M. Anson, J. Zhang. “Application of data warehouse and DecisionSupport System in construction management. Automation in Construction”. Elsevier, 2003.

ECONOMETRIC ANALYSIS ON THE INFLUENCE OF DIF FERENT FACTORSOVER THE SHARE OF TURNOVER IN TOURISM

Lecturer PhD. Student Anamaria G. MACOVEI“Ştefan cel Mare” University of Suceava, Romania

anamariam@seap.usv.roAssistant PhD. Student Ionuţ BĂLAN

“Ştefan cel Mare” University of Suceava, Romaniaionutb@seap.usv.ro

Abstract:Romanian tourism in our country is the economic sector which has a val uable development potential, yet

sufficiently unexploited. Tourism development would increase the GDP as well as the profit obtained from the tourismentrepreneurs. Economic phenomena are complex and are influenced by several factors, leading to the develo pment ofmore complex models. In this paper we present econometric modeling share turnover of Romanian tourism, for theperiod 1992 - 2006, depending on the share of the staff engaged in tourism, the number of tourist establishments,number of beds and number of tourists accommodated, and this analysis is done with a regression model of Cobb -Douglas function. Based on the data from the sample we build an econometric model, estimate and test modelparameters, we calculate the correlation report and the de termination report, classical hypothesis testing modelanalyzed using SPSS.

Keywords:econometrics, non-linear multiple regression, autocorrelation, correlation report, determinationreport

JEL classification: C01, C13, C51, C87

1. PROBLEM PRESENTATION

Romania has a huge tourism potential, unexploited. In a market economy, the developmentof Romanian tourism has a particular importance, since it would contribute to the growth of PIBand profits obtained by entrepreneurs in tourism.

Due to the complexity of economic phenomena, there are situations in which a result or aphenomenon can be explained by several factors which led to the development of multiple non -linear models. These factors which appear in the econometric model are independent variables , andthe rest of the influences is taken from residual variable. As with simple models,there are severaltypes of multiple models that show liniarizabile and polynomial models.

The best known model in this category is Cobb -Douglas. This function express es therelationship between input and output for a company or the national economy. There are manyexpressions of the production function, based on the number of factors taken into account and theway they are expressed.

2. STATISTICAL DATA AND DEFINING T HE MODEL

The model of the share turnover in Romanian tourism, for the period 1992 - 2006, is builtbased on data provided by Romania's official statistics. In our analysis we took the variables: theshare of turnover, the share of the staff employed in t ourism, the number of tourist establishmentsand the number of tourists accommodated.

Further econometric analysis show the share of turnover in Romanian tourism, for theperiod 1992 - 2006, depending on the share of the staff engaged in tourism, the numbe r of touristestablishments, number of beds and number of tourists accommodated.

Econometric modeling of the share turnover of Romanian tourism in the period 1992 -2006, can be done using a regression model of Cobb -Douglas function.

Table no. 1. Evolution of share turnover, the share of staff employed in tourism, the numberof tourist establishments and the number of tourists accommodated in Romanian tourism, for

the period 1992 – 2006

Data Shareturnover

Share staffemployed in

tourism

Numberof tourist

Number ofplaces

Number ofaccommodated

tourists

1992 65.30 42.30 3277 302533.0 8015.00

1993 69.10 45.40 2682 293036.0 7566.00

1994 77.00 59.60 2840 292479.0 7005.00

1995 79.90 63.70 2905 289539.0 7070.00

1996 73.30 71.30 2965 288206.0 6595.00

1997 69.90 73.20 3049 287943.0 5727.00

1998 71.90 75.10 3127 287268.0 5552.00

1999 73.40 76.60 3250 282806.0 5109.00

2000 74.70 81.70 3121 280005.0 4920.00

2001 74.00 82.60 3266 277047.0 4875.00

2002 76.10 84.20 3338 272596.0 4847.00

2003 79.10 86.00 3569 273614.0 5057.00

2004 77.80 85.10 3900 275941.0 5639.00

2005 78.80 85.60 4226 282661.0 5805.00

2006 81.10 86.70 4710 287158.0 6216.00

Source : www.insse.ro

The estimated equation of the non -linear multiple regression model, such as powerfunctions, takes the following form:

31 2 4

1 2 3 4 1 2 3 4X X X XY X X X X e ,

where:- Y is dependent variable (LN_CIFRA - Share turnover);- X1 is independent variable (LN_PONPE - Share staff employed in tourism)- X2 is independent variable (LN_UNIT - Number of tourists)- X3 is independent variable (LN_LOCUR - Number of places)- X4 is independent variable (LN_TURIT - Number of accommodated tourists );- is the aleatory or residual variable the error.

The regression equation is:- is the regression coefficient that shows the average value of dependent variable Y when

1 2 3 4 1X X X X ;

- 1 2 3 4, , , is the elasticity of the dependent variable .To check the intensity of links between each independent var iable and dependent variable

we build the matrix of the correlations .For each estimated correlation coefficient, SPSS program calculated a level of significance

(sig.) t test to check whether links exist between variables. It can be noticed that most si mplecorrelation coefficients between independent variables and dependent variable are significantbecause the level of significance is less than 0,05. The relationship between share turnover and theshare of staff employed in tourism is the largest, and t he correlation coefficient is equal to 0,686.

Table no. 2. Matrix correlations

3. ESTIMATING MODEL PARAMETERS

Determination of parameters for the non -linear multiple regression model using the methodof the least squares is made by liniarization mod el with logarithm function.

If we logarithm the equation 31 2 4

1 2 3 4 1 2 3 4X X X XY X X X X e , we obtain model liniarization:

1 2 3 4 . 1 1 2 2 3 3 4 4ln ln ln ln ln lnX X X XY X X X X .

Estimated liniarization multiple parameters model will lead to estimations of the initialmodel parameters, with one exception. For parameter , estimation is obtained indirectly, since themodel liniarization estimated a value for the parameter ln . Applying the reverse, ie, exponentialfunction, the estimated value in the model liniarization we obtain an estimation for the parameter . Estimated point parameter of the linear regression model are presented in tablel 3, the secondcolumn.

Table no. 3. Estimated regression model

The equation estimated is :

1 2 3 4 . 1 2 3 4ln 17,753 0,333ln 0,0301ln 1,499ln 0,484lnX X X XY X X X X or

1 2 3 4

17,753 0,333 0,0301 1,499 0,484. 1 2 3 4X X X XY e X X X X

To an increase of the percentage share of staff employed in tourism, the share of turnoverwill increase on average by 0,333 percent. At one percent increase in the number o f touristestablishments, the share of turnover will decrease on average by - 0,0301 percent. At a one percentincrease in the number of places of accommodation in tourist establishments, the share of turnoverwill decrease on average by - 1,499 percent. To an increase of a percentage share of the touristsstayed, the share of turnover will increase on average 0,484 percent.

Estimation of the confidence interval is based on the selection of estimator distributions and i , 1,4i of parameters and i , 1, 4i .

In the estimation of confidence intervals the statistics of the Student are used:

i i t n k

Confidence intervals for regression coefficients i , 1, 4i estimated for a sample are

defined by the observed relation : ˆ/ 2i

ib t s . Analogous to parameter , we determine the range:

ˆ/ 2a t s .The value of regression coefficients and the average errors are obtained by selecting the

coefficients in Table SPSS. The value / 2t read in the Student table, for 10 degrees of freedom and

0,5 . For our example we: / 2,15 2,228t .

Conform to this table we have the confidence for the regression coefficient 1 is

(0,102;0,564) , for the regression coefficient 2 is ( 0, 215;0,155) , for the regression coefficient

3 is ( 3,166;0,169) , for the regression coefficient 4 is (0,173;0,795) , and for the coefficient

is ( 2,091;37,597) . With probability a coefficient of regression 0,95 the parameter i , 1, 4i and respectivily of our model is covered by the (0,102;0,564) , ( 0, 215;0,155) , ( 3,166;0,169) ,(0,173;0,795) and respectivily ( 2,091;37,597) .

4. TESTING THE MODEL PARAMETERS

Stages of testing:1. Formulation of hypothesis

Testing significance of regression coefficient i , 1, 4i departing from the formulationfollowing assumptions:

H0 : 0i (link between the two variables is not significant )

H1 : 0i (link between the two variables is significant )

2. Choice and calculation of test statistics :ˆ

3. Decision rule:For a risk 0,5 , if

.Sig : accept hypothesis H0

.Sig : hypothesis H0 is rejected, with a confidence 95%4. Statistical Decision

For a threshold of significance,we read from Student table the theoretical value of the test

/ 2; 2nt = 2,228 which will be compared with the value calculat ed from the observed sample.

To test the significance of regression coefficient 1 we use the statistics defined by t:

0,3333,201

0,104calc

which is a statistic that follows a law student division of 10 degrees of

freedom. For a risk 0,05 , if 1 / 2, 5calc nt t (3,201 > 2,228) hypothesis H0 is rejected, ie

regression coefficient 1 is considered significantly different by 0.Decision may be taken on the basis of the Sig., which SPSS is found in the table of

coefficient column 5, so:

.Sig : hypothesis H0 is rejected, with a confidence 95%So, for the example given we have Sig .= 0,009, which is less than 0,05 . This can be

interpreted as follows; a probability of 0,95 rejects the null hypothesis, ie there is a link betweenshare turnover and staff share in tourism.

0,3010,363

0,083calc

which is a statistic that follows a law student division of 10 degrees

of freedom. For a risk 0,05 , if 2 / 2, 5calc nt t (-0,363 < 2,228)we accept the hypothesis H0, that

is the regression coefficient 2 is equal to 0. For 2 we Sig.= 0,724, is greater than 0,05 . Thiscan be interpreted as follows;with a probability of 0,95 null hypothesis is accepted, that is, there isno significant relation between share turnover and number of tourist establishments.

1, 4992,003

0,748calc

which is a statistic that follows a law student division of 10 degrees

of freedom. For a risk 0,05 , if 3 / 2, 5calc nt t (-2,003 < 2,228) hypothesis H0 is rejected, ie the

regression coefficient 3 is considered significantly different from 0. For 3 we have Sig.= 0,006,

is less than 0,05 . This can be interpreted as follows;with a probability of 0,95 null hypothesisis accepted, ie there is no significant relation between share turnover and number of places ofaccommodation units turistice.

0, 4843, 472

0,139calc

which is a statistic that follows a law student division of 10 degrees of

freedom. For a risk 0,05 , if 4 / 2, 5calc nt t (3,472 > 2,228) we accept the hypothesis H0, that

is the regression coefficient 4 is equal to 0. For 4 we have Sig.= 0,724,which is greater than

0,05 . This can be interpreted as follows; a probability of 0,95 rejects th e null hypothesis, iethere is a link between share turnover and number of tourists accommodated.

5. REGRESSION MODEL TESTING

The F test is used to test the model and multiple linear regression and is defined by therelationship:

ˆˆ1 1

where: n - the number of values observed , k - number of model parameters estimated by regressionand - estimator of the correlation, in assumptions:

H0 : 1 2 3 3ln 0 (liniarizat regression model is not significant)H1 : not all coefficients are simultaneously zero, ie the model is statistically significant

Table no. 4. Model summary

Estimation for the report determination calculated is presented in the SPSS Model Summarytable (Table 4), 2 0,771R . The estimated value of determination report shows that 77,1% of theshare of turnover in tourism is explained by the share of staff employed in tourism, the number oftourist establishments and the number of tourists accommodated.

Using Table 4, we obtain:2

15 5 0,77110 8,396

1 1 1 0,771calc

or the value .calcF using SPSS from Model Summary table. If . ,1,10calcF F (8,396>4,965) then

hypothesis H0 is rejected, with a confidence of 95%.Decision may be taken on the basis of the Sig., which is found in SPSS in Model Summary

table, as follows:.Sig F : accepts hypothesis H0

.Sig F : hypothesis H0 is rejected, with a confidence of 95%So for example we have Sig.F = 0003, which is less than 0,05 . This can be interpreted

as follows; a probability of 0,95 rejects the null hypothesis, ie there is a link between the share ofturnover from tourism and the share of staff employed in tourism, the number of touristestablishments and the number of tourists accommodated.

In the ANOVA table are shown estimations of the two components of variation,corresponding degrees of freedom , estimations of the explained and residual variations,calculatedvalue of the Fischer report and si gnificance of the test.

Table no. 5. Table ANOVA

Sig. value for test F is less than 0,05, therefore the model explains the dependence of theconstructed variables through a linear relation, which is considered significant.

6. CORRELATION REPORT AND DETERMINATION REPORT

Correlation report is an indicator of the intensity of the connections that can be applied inboth linear regression and simple non -linear or multiple regression. From Table 4 we have

0,878R . High value of the correlation shows that there is a strong link between the value and the

volume transactions. From Table 4 we have 2 0,771R . The estimated value of determinationreport shows that 77,1% of the share of turnover in tourism is explained by the share of staffemployed in tourism, the number of tourist establishments and the number of touristsaccommodated.

Regression model assumptions concern residual variable and the independent variable. Themost important assumptions are : normality of errors: 2(0, )i N , ie residual variable follows a law of normal distribution of

zero mean and variation 2 ; homoscedasticity: 2 2( ) ( )i iV M , ie variant error is constant in the conditi onal

distributions of the type i iY X x ;

ancorelation errors: cov( , ) 0i j , ie the errors do not affect each other ;

lack of correlations between the independent variable and the variable error : cov( , ) 0i ix .

( ) 0iM Table no. 6. Results of hypothesis testing

In table 6 we have the calculated value of the test 0,000 less than 0,05 and significance testSig. = 1, which allows the decision of acceptance of null hypothesis for this test , ie the assumptionthat the average error does not differ significantly from zero. ( Test Value = 0)

Jarque - Bera test is built on the estimator parameters form a distribution : 33

asymmetry - skewness, S = 0 for a normal split , positive or negative in case of asymmetry ) and

(K is boltirea - kurtosis, K = 3 for a normal distribution).

Estimators for those two parameters have the following relations :23

, respectively

Jarque – Bera test takes the following expression :2

2 2ˆ( 3)ˆ (2)

n KJB S

From Table 7 we have the calculated value of the test Jarque - Bera

2215 0.380

0,225 0,21681256 4calcJB

In chi-square table we have 2 (2) = 5,99. We can notice that the value calculated

0,2168125calcJB is much smaller than the theoretical value, thus the decision to accept the nullhypothesis with a probability of 0,95. is taken.

Table no. 7. Error estimate distribution shap e parameters

The hypothesis homoscedasticity ho implies a variation of the errors in the conditionaldistributions of the iY X x . This complies with the relationship : 2( )iV . When the

assumption is violated, the model is called heteroscedastic.To test homoscedasticity we use the correlation test between the nonparameters i and Xi

.Testing phases are:

- regression

1 2 3 4 . 1 1 2 2 3 3 4 4ln ln ln ln ln lnX X X XY X X X X is performed, notwithstanding the assumption of homoscedasticity;- i errors are estimated at sample ;- determine the ranks of absolute values and errors estimated for the independent variable ;- determine the correlation coefficient of Spearman ranking bet ween i and Xi ;

- to test the correlation coefficient using the Student ;test- if it supports the hypothesis that the coefficient of correlation is not significant,it accepts andassumes homoscedasticity as well, otherwise the model is heteroscedastic .

Relations used in this approach are :- estimator of correlation coefficient :

2ˆ 1 6

where di differences between mean ranks for the two variables, and n is the sample volume ;- test Student:

ˆ 2( 2)

nt t n

Spermean values of correlation coefficient non -parametric in Table 8 are close to zero. Thisshows, together with the appropriate level of significance, there are no links between variable errorand independent variables, ie the model i s homoscedastic.

Table no. 8. Results of testing Spearman correlation coefficient between i and Xi

To test autocorrelation errors we use Runs test. This test is based on the idea that residualvalues are variable in sequence or the sets of positive or negative, called runs, which succeed in aspecific order or randomly.

Table no. 9. Results Runs test

Stages of testing:1. Formulating hypothesis:

H0 : 0 ( no autocorrelation of errors) H 1 : 0 ( assumption is violated)

2. Choice and calculation of test statistics : Z 0.3. Decision ruleFor a risk 0,5 , if

.Sig : hypothesis H0 is rejected, with a confidence of 95%

4. Statistical decisionFrom table 9 we have Sig .= 1, which is much greater than 0,05 , null hypothesis is

accepted, ie errors are not autocorr elated between them.

6. CONCLUSIONS

In this paper we analyzed the influence of staff share in tourism, the number of touristestablishments, number of beds and number of tourists accommodated share of turnover inRomanian tourism, for the period 1992 to 2006. Using the database provided by a Romanianofficial statistics, www.insse.ro, and analyzing these data using a regression model of Cobb -Douglas function, we see that the share of turnover of Romanian tourism is influenced significantlyby the staff share tourism, the number of tourist establishments and the number of touristsaccommodated and less by the number of places.

BIBLIOGRAPHY:

1. Jemna, D. V. – Econometrie, Editura Universităţii "Al. I. Cuza" Iaşi, 2007;2. Jaba, E., (colectivul) – Econometrie aplicată , Editura Universităţii "Al. I. Cuza" Iaşi,2008;3. Jaba, E., Grama, A. - Analiza statistica cu SPSS sub Windows, Polirom, Iaşi, 2004;4. Jaba, E., Jemma, D. - Econometrie, Editura Sedcom Libris, Iaşi, 20065. www.insse.ro

IMPLEMENTATION METHOD "DIVIDE AND IMPERA" USING OBJECT -ORIENTEDPROGRAMMING IN C #

PhD. Student engineer Cătălin LUPUMinistry of Administration and Interior, Suceava, Romania

lupucata@yahoo.comAssoc. Prof. PhD.Valeriu LUPU

„Stefan cel Mare” University, Suceava, Romaniavaleriul@seap.usv.ro

Professor of Informatics Petru ARCANNational College of Commerce , Chisinau, Moldova

arptr_us@yahoo.com

Abstract:In this article presents applications of “Divide et impera” method using object -oriented programming in C #.

Main advantage of using the "divide et impera" cost in that it allows software to reduce the complexity of the problem,sub-problems that were being decomposed and simpler data sharing in smaller groups of data (eg sub -algorithmQuickSort). Object-oriented programming means programs with new types that integrates both data and methodsassociated with the creation, processing and destruction of such data. To gain advantages through abstractionprogramming (the program is no longer a succession of processing, but a set of objects to life, have differentproperties, are capable of specific action s and interact in the program). Spoke on instantiation new techniques,derivation and polimorfismul object types.

Keywords: Divide et impera, constructor, destructor, class, member, court

1. INTRODUCTION TO THE FIELD - THE PRESENTATION METHOD "DIVIDEAND IMPERA"

The method of programming Divide and IMPERA problem lies in dividing the initial size[n] into two or more smaller. In general, is running sub -problems dividing into two approximatelyequal size, namely [n / 2]. Are Sub -problems sharing in place until their size is sufficiently small tobe resolved either directly (if basic). After solving the two runs sub -problems phase of combiningthe results to solve the whole problem.

Divide and IMPERA method can be applied to solve a problem that meets the followingconditions:

can decompose in (two or more) sub -problems; these sub-problems are an independent against another (no sub -problem a resolve on the

other and does not use the other); these sub-problems these are similar to the initial problem; sub-problems in turn can decompose (if necessary) in other sub -problem simpler; these simple sub-problem can immediately solve the simplified algorithm.Because few problems meeting the conditions above, the application of the method is quite

rare.As the name suggests "separating and rule" steps to resolve a problem (called the initial

problem) in Divide and IMPERA are: decomposition problem initial sub -problems independent, similar to the basic problem,

smaller; gradual decomposition of sub-problems other sub-problem increasingly simple, until

you can resolve this through simplified algorithm; solving sub-problems simple; combination of solutions found for building solutions sub -problems sizes increasingly

large;

combining the latest solutions getting determine the initial problem solution.Method Divide and IMPERA recurring implementation, because sub -problems initialproblem are similar, but smaller.

The basic principle of recursivity is a recall sub -programs when it is active, what happens ata level happens at every level, taking care to ensure the condition of termination of repeated calls.Similar happens in the case method divide and Imperia, to a certain level are two possibilities:

it was a (sub) problem which allo w a simple solution immediately, in which case isresolved (sub) problem and return the call (to subproblema earlier, the larger);

it was a (sub) which does not allow for an immediate solution, in which case thedecomposition in two or more subprobleme a nd each of them continues recursive calls (ofthe procedure or function).

In the final stage of the method and divide Imperia is produced combining subproblemelor(already resolved) by sequences of return calls from recurring. Stages method divide and Imp eria(shown above) can be represented by the following general subprogramme (procedure or function)recurring expressed in natural language:

Subprogramme divimp (probably);

If the problem is simple prob Then resolve to obtain and soil solution Otherwise i = 1, k running DIVIMP (probably) and get ground 1; Combine ground solutions 1, ... , Soil K and gain ground;

end_sub-program;

So subprogram divimp is calling for the initial test session, to allow the decomposition ksubprobleme simple, for they redials recurring subprogram; finally combine these solutions ksubprobleme.

Usually, the initial problem fester in the second subprobleme simple, in this case stagesgeneral method of divide and Imperia may be, the pseudo -code language, by a recursive procedureas follows:

The procedure divimp (li, ls, soil); If ((ls-li) <= eps) Then REZOLVATE (li, ls, soil);else

divide (li, m, ls);divimp (li, msol1);

divimp (m, ls, sol2);combine (sol1, sol2, soil);

End_procedure;

Divimp procedure is called for the initial size of which is the lower limit (li) and the lowerlimit (ls), if (as) the problem is simple (ls -li <= eps), then the procedure is the solution solves themimmediately and return occurs recursive call, if (as) the problem is (still) complex, then divide aprocedure divided into two sub-problems, choosing between the position I have and ls, for each ofthe two sub-problems it redials recurring procedure divimp; finally returns Call of producing acombination of the two solutions sol1 and sol2 by combining the procedure call.

TOWERS OF HANOI PROBLEM

PRESENTATION SOLVING ALGORITHM

Whether three vertical sticks marked A, B, C. On A rod can be found seated in differentdiameter discs, in ascending order of Diameter on the top down. Initially, rods B and C are empty.To show all the movements that discs on the rod to move the rod B, in the same order, using as arod for maneuver C and within the following rules:- Every step to move a single disc;- A disc can only settle over a disc with a diameter greater.Resolving this problem is based on the following considerations logical:- If n = 1, then move it immediately A ->B (move on the disc A B);- Where n = 2, then the string of moves is: A->C, A->B, C->B;- If n> 2 proceed as follows:- Dumb (n-1) A->C discs;- Move a disc A->B;- Move the (n-1) discs C->B.

We see that the initial problem fester into three sub -problems simpler similar problem of adumb (n-1) A->C discs, the latest move disc B, move the (n -1) discs C -> B. Sub-problems thesedimensions are: n-1, 1, n-1.

These sub-problems are independent, as originally rods (which are disks), rods and finalintermediate rods are different. Note H (n, A, B, C) = string of move s discs from an A to B, usingC.

for n = 1, A->B n> 1, h (n, a, b, c) = h (n-1, a, c, b), ab, h (n-1, c, b, a)

end_for

Visual Basic version C# version

Sub Button20_Click()

Dim n As Integer, a As sir, b As sir, c As sir

d = ""

a.s = "A"

b.s = "B"

c.s = "C"

n = InputBox("n=", ib_title)

hanoi n, a, b, c

MsgBox d

End Sub

Sub hanoi(n As Integer, a As sir, b As sir, cAs sir)

If n = 1 Then

d = d + "(" + a.s + "->" + b.s + "),"

using System;

using System.Linq;

using System.Text;

class var_globale

public int n;

public string sir;

public int[] vector;

class Program

hanoi n - 1, a, c, b

d = d + "(" + a.s + "->" + b.s + "),"

hanoi n - 1, c, b, a

End If

End Sub

static void cit_n(string mes, ref intx)

Console.WriteLine(mes);

x = int.Parse(Console.ReadLine());

} while (x < 0 || x > 100);

static void hanoi(int n, char a, charb, char c)

if (n == 1)

Console.WriteLine(" {0} {1}", a, b);

hanoi(n - 1, a, c, b);

Console.WriteLine(" {0} {1}", a, b);

hanoi(n - 1, c, b, a);

static void Main(string[] args)

var_globale v_g = new var_globale();

cit_n("N = ", ref v_g.n);

char a, b, c;

a = 'a';

b = 'b';

c = 'c';

hanoi(v_g.n, a, b, c);

Console.ReadLine();

Sort QUICK (QUICKSORT)

In a painting is completed by elements in real numbers. To ascending order using themethod of sorting fast. The problem is based on the following steps implemented in the pr imary:

procedure is called "quick" with the lower limit were = 1 and the upper limit ls = n; the "poz" done in moving the item [s] on exactly what position it will occupy in the

final vector ordered, the "poz" return (in k) position of this item; in this way, vector V is divided into two parts: li ... k-1 and k 1 ... ls; for each of these parties redials the procedure is "quick", with the modified

accordingly; in this way, the first element in each part will be positioned exactly the position that a

final deal will finally ordered the vector (the "poz"); each of the two parties will thus divided into two parts, the process continues until the

parties come to overlap, indicating that all elements of the vector have been moved onexactly what positions they occupy in the final vector; vector is so ordered;

at this time to produce your recursive calls and the implementation of its ends.Remarks:- If the item is left, then compared with elements of the right and jump (j: = j -1) elements

of greater than him;- If the item is right, then compared with elements of the left and jump (i: = i +1)elements smaller than him.

Visual Basic version C# version

Sub Button18_Click()

Dim n As Integer, a As vector

cit_n "n = ", n

cit_date "a", n, a

'MsgBox "Sirul a este"

tipar "Sirul a este", n, a

divimp 1, n, a

'MsgBox "Sirul a sortat este"

tipar "Sirul a sortat este", n, a

End Sub

Sub cit_n(mes As String, n As Integer)

n = InputBox(mes, y)

using System;

using System.Linq;

using System.Text;

public interface sortt

Loop Until n > 0 And n < 100

End Sub

Sub cit_date(mes As String, n As Integer, a Asvector)

For i = 1 To n

a.v(i) = InputBox(mes + "(" + Str$(i) + ")=", y)

End Sub

Sub tipar(mes As String, n As Integer, a Asvector)

sir = ""

For i = 1 To n

sir = sir + Str$(a.v(i)) + ","

MsgBox mes + " " + sir

End Sub

Sub sort(p As Integer, q As Integer, a As vector)

Dim m As Integer

If a.v(p) > a.v(q) Then

m = a.v(p)

a.v(p) = a.v(q)

a.v(q) = m

End If

End Sub

Sub divimp(p As Integer, q As Integer, a Asvector)

Dim m As Integer

If (q - p) <= 1 Then

sort p, q, a

m = Int((p + q) / 2)

divimp p, m, a

divimp m + 1, q, a

interc p, q, m, a

End If

End Sub

Sub divimp(p As Integer, q As Integer, a Asvector)

int[] a

string sir

public class sortta : sortt

private int _n;

private int[] _a;

private string _sir;

public void cit_n()

Console.WriteLine("N = ");

_n = int.Parse(Console.ReadLine());

} while (_n < 0 || _n > 100);

public void cit_date()

_a = new int[_n+1];

for (int i = 1; i <= _n; i++)

Console.WriteLine("a[{0}]= ", i);

_a[i] = int.Parse(Console.ReadLine());

public void tip_date()

// aa = new int[n];

Dim m As Integer

If (q - p) <= 1 Then

sort p, q, a

m = Int((p + q) / 2)

divimp p, m, a

divimp m + 1, q, a

interc p, q, m, a

End If

End Sub

for (int i = 1; i <= _n; i++)

Console.WriteLine("a[{0}]= {1}, ", i,_a[i]);

// aa[i] =int.Parse(Console.ReadLine());

public void sortare()

int i, k, x;

k = 0;

for (i = 1; i <= _n - 1; i++)

if (_a[i] > _a[i + 1])

x = _a[i];

_a[i] = _a[i + 1];

_a[i + 1] = x;

k = 1;

} while (k == 1);

public void insertie_directa()

int i,j,r;

for(i=2;i<=_n;i++)

_a[0]=_a[i];

j=i-1;

r = 1;

while ((_a[j]>_a[0])&&(r==1))

_a[j+1]=_a[j];

j=j-1;

if (j <= 0)

r = 0;

_a[j+1]=_a[0];

public void insertie_binara()

int i, j, s, d, m, x;

// _a = new int[100];

for (i = 2; i <= _n; i++)

x = _a[i];

s = 1;

d = i - 1;

while (s <= d)

m = (int)((s + d) / 2);

if (_a[m] > x)

d = m - 1;

s = m + 1;

for (j = i - 1; j >= s; j--)

a[j + 1] = a[j];

a[s] = x;

public void selectie()

int i, j, k,x;

for (i = 1; i <= n - 1; i++)

k = i;

x = _a[i];

for (j = i + 1; j <= _n; j++)

if (_a[j] < x)

x = _a[j];

k = j;

_a[k] = _a[i];

_a[i] = x;

public void selectie_performanta()

int i, j,min, x;

for (i = 1; i <= n - 1; i++)

min = i;

for (j = i + 1; j <= _n; j++)

if (_a[j] < _a[min])

min = j;

x=_a[min];

_a[min] = _a[i];

_a[i] = x;

public void sortarea_prin_ame stecare()

int j,k,l,r, x;

l = 2;

r = _n;

k = _n;

for (j = r; j>=1; j--)

if (_a[j-1] > _a[j])

x = _a[j-1];

_a[j-1] = _a[j];

_a[j] = x;

l=k+1;

for(j=1;j<=r;j++)

if (_a[j-1] > _a[j])

x = _a[j-1];

_a[j-1] = _a[j];

_a[j] = x;

r=k-1;

} while(!(l>r));

public void shellsort()

int i, j, k, s, x, b;

k = _n;

k = k / 2;

b = 1;

for (i = 1; i <= _n - k; i++)

if (_a[i] > _a[i + k])

x = _a[i];

_a[i] = _a[i + k];

_a[i + k] = x;

b = 0;

} while (b == 0);

} while (k != 1);

public void quicksort_recursiv()

int m;

m = 1;

sortare(m, _n);

public void sortare(int s, int d)

int i, j, x, w;

i = s;

j = d;

x = _a[(s + d) / 2];

while (_a[i] < x)

i = i + 1;

while (_a[j] > x)

j = j - 1;

if (i <= j)

w = _a[i];

_a[i] = _a[j];

_a[j] = w;

i = i + 1;

j = j - 1;

} while ((i <= j));

if ( s<j)

sortare(s, j);

if (i < d)

sortare(i, d);

public int n

return _n;

_n = value;

public string sir

return _sir;

_sir = value;

public int[] a

return _a;

_a = value;

class Program

static void Main(string[] args)

sortta SORTTA = new sortta();

SORTTA.cit_n();

Console.WriteLine("N = {0}",SORTTA.n);

SORTTA.a = new int[100];

SORTTA.sir = "Vectorul initial este : ";

SORTTA.cit_date();

SORTTA.tip_date();

// SORTTA.sortare();

//SORTTA.insertie_directa();

//SORTTA.insertie_binara();

//SORTTA.selectie();

// SORTTA.selectie_performanta();

//SORTTA.sortarea_prin_amestecare();

//SORTTA.shellsort();

//SORTTA.heapsort();

SORTTA.quicksort_recursiv();

SORTTA.sir="Vectorul sortat este : ";

SORTTA.tip_date();

Console.ReadLine();

CONCLUSIONS

This article presents the advantages of “divide et impera” method and o bject-orientedprogramming. One of the major advantages of object oriented programming is the ability to reuseexisting code. Can design new classes using already constructed class is called inheritance. If aclass A inherits class B, then B and class meth ods will be considered as belonging to class A.Heritage and create a class "base" in order to store the common characteristics of different classes,such properties will not be specified in each class separately. Main advantages of using objectoriented programming are:

ease of design and code reuse:Once tested the correctness of the operation objects of an application, they can be used without anyproblem in another application. This advantage can be exploited by the formation of libraries ofobjects. Regarding design, it facilitates the decomposition of complex problems in simple sub -problems, which can be easily modeled using objects (variables will describe properties of objectsshaped their actions and methods).

abstraction:Designers can obtain an overall view to the behavior of objects and interactions between them, thedetails are buried in the composition of objects.

safety data:Able objects to behave like "black boxes", it can be used without the knowledge of theircomposition, providing privacy and decreases the frequency used appearances and the errors relatedto wrong handling of types of data.

REFERENCES

1. Dorel Lucanu - Bazele proiectării programelor şi algoritmilor II: Tehnici de programare -Editura Universităţii "Al. I. Cuza" , Iaş i, 1996

2. Cristian Masalagiu, Ioan Maxim, Ioan Asiminoaei - Metodica predării informaticii - EdituraMatrix Rom, Bucureşti, 2001

3. Tudor Sorin - Tehnici de programare - Editura L&S Infomat, Bucureşti, 19944. Tudor Sorin - Tehnici de programare - Editura Teora, Bucureşti, 19945. Lucian Sasu - Visual C#,20056. Valentin Cristea - Tehnici de programare - Editura Teora, Bucureşti, 19937. Ioan Odăgescu - Metode şi tehnici de programare - Editura Intact, Bucureşti, 19948. Ioan Odăgescu - Olimpiadele naţionale şi internaţional e de informatică - Editura L&S

Infomat, Bucureşti, 19969. Mihai Oltean - Culegere de probleme - Editura Libris, Cluj, 199710. Mihai Mocanu - 333 probleme de programare - Editura Teora, Bucureşti, 199311. Diana Gruiţă - Culegere de probleme - Editura Libris Agora, Cluj, 199812. **** Programarea Orientata pe Obiecte si Programarea Vizuala cu C# .Net – documentatie

BHP UNIVERSALITY HYPOTHESIS VERIFICATION FOR BET-FI INDEX OFBUCHAREST STOCK EXCHANGE

PhD. Student Tiberiu SOCACIU“Ştefan cel Mare”University of Suceava, Romania

socaciu@seap.usv.roPhD. Mirela DANUBIANU

“Ştefan cel Mare”University of Suceava, Romaniamdanub@eed.usv.ro

Abstract:In this paper we show the assumption of BHP universality BET -FI index from BVB (Bucharest Exchange

Stock) on the assumption of universality issued paper [4] on the Dow Jones index composition (DJIA30) and Standard& Poors 100 (S & P100) by Gonçalves and Pinto. BHP (S. T. Bramwell, P. C. W. Holdsworth, J. F. Pinton) distributionis a non-parametric probability distribution from GHT (Gumbel-Fisher-Tippett) distributions classes discovered from amagnetization problem. Universality of this distribution was shown in electricity, hidrology, stocks. This paper extendresults from [9]-[10] recently submitted in spirit of [4] using some software tools developped.

Key words: HP distribution, universality hypothesis, BET -FI, BVB.

JEL Classification: C02, C12, C16.

INTRODUCTION

We will define α-daily fluctuation of an index and we present the universality conjecture of2/3-daily. Based on link beetween Uniform distribution of [0,1] and BHP distribution we can teststatistical hypothesis based on conjecture. We used as application data captured from BVB.

1. α-DAILY FLUCTUATION OF AN INDEX

In [4], Gonçalves and Pinto have proposed a new way to check the universality hypothesisabout stock indexes. They were tested in [4] hypothesis on the component indices Dow Jones(DJIA30) and Standard & Poors 100 (S & P100) on the New York Stock Exchange. We present theconstruction of Gonçalves and Pinto: Let I an index from a Stock Exchange with composition

COMP(I) = {s1, s2, ..., sn}

where s1, s2, ..., sn are n traded symbols. Let denote P(I,t) closing value on day t of index I and P(s,t)closing value on day t of symbol s . For a symbol or an index s, we denote daily return on day t as:

R(s,t) = (P(s,t) - P(s,t-1)) / P(s,t-1)

or alternative, we can use for daily return formula:

R(s,t) = ln P(s,t) – ln P(s,t-1).

For each day t define mean of index at closing the day t as:

m(I,t) = [ Pa(s1,t) + Pa(s2,t) + ... + Pa(sn,t) ] / n,

and dispersion of the day t :

s(I,t) = { [ P2a(s1,t) + P2a(s2,t) + ... + P2a(sn,t) ] / n - m2(I, t) } 1/2.

With these notations define the α-daily fluctuation of the index I as:

df(I,t) = (Pa(I,t) - m(I,t)) / s(I,t).

2. BHP DISTRIBUTION

S. T. Bramwell, P. C. W. Holdsworth, J. F. Pinton introduced (v. [1]) a new non-parametricdistribution (called BHP) after studying some magnetization prob lems in 2D. Probability densityfunction of distribution is:

})]1ln(4

xarctg

where λk are eigenvalues of adiacency matrix of some specific graphs (v. [2]). C. Pennetta, E.Alfinito, L. Reggiani re-discover (v. [6]-[8]) this distribution at one specific electrical rezistivityproblem. Structural, a BHP distribution is a particular Gumbel distribution (v. [3]) - namedsometime Fischer-Tippett distribution (v. [11]). Probability density function (pdf) of BHP can beaproximated (v. [1]) with:

fBHP(x) = K * exp{a * [t - exp(t)]}

where parameters are (v. [1], [8]):

t = b * (y - s)a = π / 2b = 0.936s = 0.374K = 2.15

In [2] suggested values are:

t = b * (y - s)a = 1.5806801b = 0.9339355s = 0.3731792K = 2.1602858

In [6], [7] suggested values are:

t = b * (y - s)a = π / 2b = 0.936 ± 0.002s = 0.374 ± 0.001K = 2.15 ± 0.01

BHP pdf and normal distribution’s pdf in lognormal scale can be seen bellow (chart wasgenerated via a Visual Basic for Application program in Microsoft Excel):

Densitatea BHP si normala

-12.00000

-10.00000

-8.00000

-6.00000

-4.00000

-2.00000

0.00000

-0.7 0.0

log10(fBHP(y))

log10(fnorm(y))

Figure no. 1 BHP pdf and normal distribution’s pdf in lognormal scale

3. HYPOTHESIS OF 2/3-DAILY FLUCTUATION

Based on notations can issue the following conjecture (reviewed in [4] for the U.S. stockmarket indices remember where):

Conjecture (of BHP universality) : For a = 2/3, the series (df(I,t)) t>0 verifies the BHP distribution.

Note: The type of P (.,t)2/3 are called in [4] as Cubic Root of the Daily Return Squared (abbreviatedCRDRS).

4. CONJECTURE VERIFICATION ON BET-FI FROM BVB

We try to check conjecture with the following values of the Bucharest Stock Exchange (see[9]), where trading Romanian regional Financial Investment Companies (SIF Moldova, SIFMuntenia, SIF Transilvania, SIF Oltenia, SIF Banat -Crisana) and is computed daily BET -FI index.Composition of BET-FI index is:

COMP(BET-FI) = {SIF1, SIF2, SIF3, SIF4, SIF5}.

We will resume the procedure as in the case presented by Gonçalves and Pinto about WallStreet, namely:

a = 2 / 3I = BET-FIn = 5s1 = SIF1s2 = SIF2s3 = SIF3s4 = SIF4s5 = SIF5.

First we will capture data from [12] (we choose 2nd semester of 2008) with a Vi sual Basicfor Application scripts. All the elements were also calculated necessary to assess the dailyfluctuation df. A chronogram of df can be view bellow:

2/3 df pentru BVB

-3.0000-2.5000-2.0000-1.5000-1.0000-0.50000.00000.50001.0000

Figure no. 2 A chronogram of df

From df series we build a new series z by:

zi = s - ln (- ln (dfi)) / b

where parameters b and s are specific of BHP distribution:

b = 0,936 ± 0,002s = 0,374 ± 0,001

Testing universality of df are reduced at testing uniformity on (0, 1) for z. A simplehistogram for df (see next figure) shows that we have not uniformity, agglomeration benefits in anarea value of 0.5:

z1.000000.800000.600000.400000.20000

Histogram

Mean =0.53245Std. Dev. =0.12008

N =125

Figure no. 3 A simple histogram for df

This can not be certified unless a statistical test is applied. Applying Kolmogorov -Smirnovtest for uniform distribution using SPSS 15.0 obtain a low de gree of significance, which convinceus that the uniform distribution for z is rejected, i.e. the assumption of universality is rejected for df:

One-Sample Kolmogorov-Smirnov Testz

N 125Minimum .29356Uniform

Parameters(a,b) Maximum .93461Absolute .377Positive .377

Most ExtremeDifferences

Negative -.151Kolmogorov-Smirnov Z 4.216Asymp. Sig. (2-tailed) .000

Sig. .000(c)Lower Bound .000

Monte Carlo Sig. (2-tailed) 95%

ConfidenceInterval

Upper Bound.000

a Test distribution is Uniform.b Calculated from data.c Based on 10000 sampled tables with starting seed 299883525.

5. CONCLUSIONS. FURTHER WORKS

In our opinion, check the assumption of universality 2/3 -fluctuation of BET-FI index wasnot conclusive, and we can not confirm or reject conjecture. Explanation can be based on:

a) the accuracy of density function estimates for BHP (an approximation was used GFT) anddistribution function, defined as full from -7 (below this value the area under the graph isnegligible) amount approximated Darboux-Newton, with the rule division 0.1;

b) use df for a relatively short range (approximately 120 days of trading at BVB in semesterII of 2008, unlike the cited paper that used a series of thousands of days).

Several directions of development of ideas are listed below:1) recalculation of density function of BHP distribution using numerical methods and

methods like Monte Carlo;2) finding a suitable statistical test for BHP distribution and implementation of the software;3) verifying the hypothesis of universality for all stock indices on the BVB to define the

period of their life;4) approaches the quality of universality, that of forcing the parameter (I have seen it is

fixed, a = 2/3, as the paper cited).

REFERENCES

1 S. T. Bramwell, P. C. W. Holdsworth, J. F. Pinton, Universality of rare fluctuations inturbulence and critical phenomena , in Nature, vol. 396, 1998, pp. 552-554.

2 S.T. Bramwell, J.Y. Fortin, P.C.W. Holdsworth, S. Peysson, J.F. Pinton, B. Portelli, M.Sellitto, Magnetic fluctuations in the classical XY model: The origin of an exponentialtail in a complex system , in Phys. Rev. E, 63, 041106, 2001.

3 Carroll Croarkin, Paul Tobias, NIST/SEMATECH e -Handbook of Statistical Methods,online at http://www.itl.nist.gov/div898/ handbook/ , last access at 2009 january 10.

4 Rui Gonçalves, Albert Pinto, Universality in the stock exchange , preprint online athttp://arxiv.org/pdf/0810.2508v1, last update at 2008 october 14, last access 2009january 20.

5 Elisabeta Jaba, Ana Grama, Analiză statistică cu SPSS sub Windows , Editura Polirom,Iaşi, 2004, ISBN 973-681-609-5.

6 C. Pennetta, E. Alfinito, L. Reggiani, S. Ruffo, Non-Gaussianity of ResistanceFluctuations Near Electrical Breakdown , preprint online athttp://arxiv.org/PS_cache/cond-mat/pdf/0310/0310643v1.pdf, last access at 2009january 20, last update at 2003 octomber 28.

7 C. Pennetta, E. Alfinito, L. Reggiani, S. Ruffo, Non-Gaussian Resistance Noise nearElectrical Breakdown in Granular Materials , preprint online athttp://arxiv.org/PS_cache/cond-mat/pdf/0401/0401352v1.pdf, last access at 2009january 5, last update at 2004 january 20.

8 C. Pennetta, E. Alfinito, L. Reggiani, Resistor Network Approach to ElectricalConduction and Breakdown Phenomena in Disordered Materials , online athttp://www.cmtg.it/leccemeeting/prin_networkw.ppt, last access at 2009 january 9.

9 T. Socaciu, I. Maxim, PP Plot and QQ Plot tool for BHP Universal Distribution ,submitted at AFASES 2009, Brasov.

10 T. Socaciu, M. Danubianu, BHP Universality Hypothesis Verification for BET-FI Indexfrom BVB, submitted at AFASES 2009, Brasov.

11 Fisher-Tippett distribution, in The Free Dictionary by Farlex , online athttp://encyclopedia.thefreedictionary.com/Gumbel+distribution, last access at 2009january 5.

12 http://www.bvb.ro

SECTION 5

LAW AND PUBLIC ADMINISTRATION

PUBLIC POLICIES FOR FLEXIBILITY CONCERNINGTHE EUROPEAN MARKET OF HUMAN RESOURCES

Lecturer PhD. Alunica MORARIU“Stefan cel Mare” University of Suceava, Romania

alunica.morariu@gmail.comAssociate Professor PhD. Vadim DUMITRAŞCU

„Petre Andrei” University of Iasi, Romaniadumitrascu@upa.ro

Associate Professor PhD.Marian JALENCUState University from Moldova,

jalencu_marian@yahoo.comLecturer PhD. candidate Cristina BĂLĂNEASA

“Stefan cel Mare” University of Suceava, Romaniacristinab@seap.usv.ro

Abstract:The measures of improving the problems of the human resources market, proposed wit h the occasion of the

many reunions of the macro-managerial factors in the EU countries show that the European authorities have notalready tackled in an adequate manner the real nature of these problems even before the world financial crisis. Thedeterioration of the world economic climate, including the European one, as a consequence of the reverberations of thefinancial crisis has implicitly leaded to the unemployment increase according to the statistical data supplied by theInternational Organization of the Labour and EUROSTAT. Regarding the proposals of improving the situation of thewest-European work force market we observe a lot of controversies, but the need of referring to the policies forflexibility is invoked by the majority of the theorists a nd of the practitioners of the human resources macro -management, even in the context of the world financial crisis.

On the basis of this work elaboration have been the empirical research, the dynamical and comparativestatistical methods, the research using also the theoretical-scientific base.

Key-words: human resources, unemployment, labour market, labour force, wage.

JEL Classification: O15, J64

1. PRELIMINARIES

The measures of improving the problems of the human resources market proposed with theoccasion of the many reunions of the macro -managerial factors from the EU countries show that theEuropean authorities have not already tackled in an adequate manner the real nature of theseproblems, so that, as a consequence, they haven’t already succeed ed in accomplishing pertinentpolitical programs which can determine the meaningful diminution of the high level of theunemployment rate which exists even before the anchoring of the present world economic crisis.

The acceptance of the intervention progra ms adopted until the European level comespartially from the idea that the unemployment is “ a calamity due to causes that escape from thegovernment control and maybe from the profit growth and generally, from the inequalities inincome assessment”. (1)

The deterioration of the European economic climate, as a consequence of the reverberationsof the financial crisis has determined the European Central Bank (ECB) to reduce the interest rateof the monetary policy with 0.5 percent points, in the attempt to pr otect the European economyagainst several effects of the recession. The rate of the key interest has been reduced to 2%, themost reduced level so far. The ECB action is a signal of the growing preoccupation for theEuropean countries economy, which could point to a recession as serious as the one that has alreadyaffected the United States and the Great Britain. (2)

In the same context, the International Organization of the Labour (IOL), in the GlobalEmployment Trends report, warns that, this year, the p resent economic crisis, signalled at the globalscale, could result the reducing 51 million jobs, then when we will have 230 million unemployedpeople in the world, and the global rate of the unemployment will reach 7.1%. It would be for the

first time after 1991 when at the global level would be more than 200 millions unemployed people.IOL states that, according to the estimations made so far, before starting to quiet down, the presentcrisis will extend even more. According the most optimistic script for ecast by IOL, the globalunemployment rate will be of at least 6.1%. In this case, at the end of this year there will be 198millions unemployed people, with 18 million more than at the end of 2007. The unemployment rateof 6.1% will register only if the s timulating financial packs will prove efficient. But IOL considersthat, before improving, the situation will get worse. Moreover, the people who will succeed inkeeping their job, will receive smaller wages and the workplaces will become less secure (3).

At the European level, according to Eurostat (4), in the euro area – EA15 – (5) theunemployment rate (6) has an increasing tendency, registering 8.0% in December 2008, incomparison with 7.8% in November 2008, and 7.7% in October of the same year (7).

This one was 7.2% in December and in November 2007. The unemployment rate – EU27 –(8) was 7.4 in December 2008, in comparison with 7,2% in November 2008, 7.1% in October 2008and in November 2007 it was 6.9%, rate which was about to drop in December 2007 to 6.8%.

Eurostat was estimating for December 2008 a number of 17.911 million of unemployed menand women in EU27, of which 12.472 million in the euro area, higher values than those estimated(17.466 million in EU27 of which 12.180 million in the euro zone) a nd compared with the realvalues from November 2008, 17.602 million of men and women in EU27, of which 12.242 millionin the euro area.

Compared with December 2007, the number of the unemployed people has grown with 1665 000 in EU27 and with respectively 1 397 000 in the euro area (9).

Table no. 1.

Source: EUROSTAT

Among the member states, the lowest rates have been registered at the in December 2008 inHolland (2.7%) and Austria (3.9%), and the biggest ones in Spain (14.4%) and Latvia (10.4%).

In the same month (December), in comparison with the precedent year (2007), 9 membercountries registered the drop of unemployment rate, 14 of those registered growths and 4 remainedstable. The biggest drops have been observed in Poland (from 8.2% to 6.5%) an d Slovakia (from10.3% to 9.4%), and the biggest growths have been registered in Spain (from 8.7% to 14.4%) and inEstonia (from 4.1% to 9.2%).

In November 2008, the lowest rates have been registered in Holland (2.7%), Austria (3.8%)and Cyprus (3.9%), and the highest ones in Spain (13.4%), Slovakia (9.1%) and Latvia (9.0%).

Table no. 2.

Source: EUROSTAT

In the same month (November), if compared with the precedent year, 13 member statesregistered a drop of the unemployment rate and 14 among these registered growths. The biggestdrops have been observed in Poland (from 8.5% to 6.5%) and Slovakia (from 10.5% to 9.1%), andthe biggest growths have been registered in Spain (from 8.5% to 13.4%) and in Estonia (from 4.1%to 8.3%).

The unemployment rate for men grew from 6.4% to 7.6% from December 2007 untilDecember 2008 in the euro area and from 6.3% to 7.2% in EU27. The unemployment rate forwomen grew from 8.1% to 8.5% in the euro area and from 7.4% to 7.7% in EU27.

Still in December 2008, the unemp loyment rate among young people (under 25 years) hasbeen of 16.4% in the euro area and of 16.6% in EU27. In December 2007 this one was of 14.5%and, respectively, 14,7%. The lowest rates have been observed in Holland (5.3%) and Austria(6.9%) and the highest ones in Spain (29.5%) and Hungary (22.5%).

In December 2008, the unemployment rate was of 7.2% in the USA, compared with 6.7% inNovember 2008. In Japan it is registered in November a rate of 3.9%.

In order to explain the growing or the constant rate of the unemployment in the EuropeanUnion countries, apart from the imminent causes of the world financial crisis, we discovered a lot ofpossible causes which are differ varying with the politic orientations.

2. THE “PROFILE” DIFFICULTIES AND THE SEARCH OF THE REMEDIES

Regarding the proposals of improving the situation on the west -European labour forcemarket we notice a lot of controversies, and the need to refer to the policies for flexibility is invokedby the majority of theorists and practitioners o f the human resources macro-management, even inthe context of the world financial crisis.

“Today, we don’t realise that the American idea about the labour market, applicable inEurope too on a large scale, even if it were possible, it doesn’t blur the fa ct that the State-Providence systems adopted in Europe are inspired from very different cultures and from differentmodalities of interpreting the principles of solidarity and equality.

Nevertheless, in order to fight against the unemployment we should in troduce a greaterflexibility in the European labour markets, together with, there where it is necessary, an adaptationof the legislation regarding the employee security, a growth of the territorial transparency of theagreements on the collective negotia tions, a policy of opening the gates of the enterprises and ofputting into practice the measures that facilitate the territorial mobility of the labour.” (Fr.Modigliani, 1999).

But, from objective reasons, the policies in favour of the flexibility of t he labour market, incontradiction with the macroeconomic administration, cannot be adopted in an unitary manner byall the European states, they must be adapted to the particular situations from each country and fromeach area.

In Europe, the unemploymen t problem doesn’t have a homogenous feature and it variesaccording to the regional peculiarities. The differences which exist on the labour market in thedifferent European states are due, to a great extent, to the uniformity of the wages imposed by thetrade-unions or by the habits, to the negotiations at national level, to the passing -by of the evidentdifferences of productivity between the various regions.

For putting an end to such situations, we have to create the adequate environment forapplying the differentiate policies which must take into account the regional differences in thelabour force cost per working hour and they have to reflect the regional differences of productivity.

However, in order to obtain a wide consensus regarding these refor ms, they must beaccompanied by measures to compensate the negative effects on the income distribution.Nowadays, we agree on the fact that it is very difficult to make radical reforms on the labourmarket, even if they have evident effects on the redistri bution of the income to certain socialgroups.

Frequently, the most radical aspects of the reform packs are confronted to the toughopposition of the most affected groups. In order to remedy these difficulties, it is necessary to offercompensations to the most affected persons.

As regards the correlation of the wages with the productivity, it is fundamental to emphasizenot on reducing the wages, but on reducing other necessary costs for obtaining the “finite” product.

We can also remark that in certain areas, there where the unemployment rate has a highpercentage, the inferior level of the productivity and the higher rates of the unemployment can beexplained by the absence of the managers and/or of the financial policies which aren’t favourable tothe investments. In the less developed areas it is considered that we should adopt more efficientpolicies for encouraging the new enterprises for supporting the small and medium enterprises thedevelopment of which can be accelerated through directional meas ures, specific to the respectiveterritory.

Even so, it is also necessary the introduction of several reforms concerning the industrialdistricts which could enhance and develop their capacity and dynamism. The number 1 objective ofthese measures cannot be situated outside the creation of the organisms of assistance in theadministrative, fiscal, financial and technological domain.

As regards the new technologies, we must emphasize on the importance of thereorganization and of the expansion of the organ isms destined to the workers’ formation, and of thediversification of the changes between the enterprises and universities or research institutes.

Another common feature of a great number of underdeveloped areas is the credit restrictionand the high levels of the interests which disadvantage, in general, the recent small and mediumenterprises. A common situation to the Romanian economic situation too, these reclaim thedifficulties the young managers are confronted with when making the files for small l oans, of therisk rate and of the monopoly, practiced, in fact, by the local banks.

In these areas, the difference between the active and the passive interests is, in most cases,enormous and quasi-injunctive, fact which discouraged the small enterprises and their renewalinitiatives.

3. POLICIES FOR FLEXIBILITY IN THE HUMAN RESOURCES DOMAIN

Form the large inventory of reforms proposed by the occidental economists (among these,Fr. Modigliani, B. Moro, D. Snower, R. Solow, A. Steinherr, P. Sylos Labini), to whom we totallysubscribe, a great number of them being adequate to the Romanian economy too, we select thefollowing measures, considered more representative:

A policy of forming the labour force and of reforming the goods market capable toreduce the barriers which block the forming of the labour force. We have in view, for example, anefficient fiscal reform and a milder legislation, which, at the moment, blocks the enterprises,“limits” the land usage and “hinders” the free circulation of the product s on the market, but alsomeasures to avoid “blocking” the flexible labour schedule or the part -time schedule.

They contribute not only to the re -employment of some people who are now unemployed,but also to the support of the enterprises in the sense of restructuring their production capacities andof improving the activity of the human resources compartment in accordance with the newprogresses registered in the flexible production and information technology domains. The rigidregulation of the labour contracts performed nowadays in many European countries, deserves apeculiar attention for the definition of the market labour reforms.

A reform of the minimal wage. The institution of the minimal -contractual- wage isproblematic because it is a potential s ource for the unemployment. At present, we cannot request itsabolition because the aim of guaranteeing a minimal life standard for the full -time workers must bedefended. The problem comes from the fact that the present legislation levies a tax to a minim alwage level, superior to the one that can encourage the managers to absorb the labour force in excesswhich is formed at this level.

When this happens, the only way to solve the problem is to create an equilibrium betweenthe labour force cost and the r emuneration received by the worker. In fact, this kind of differencealready exists, but in the direction opposed to the desirable situation to the extent in which thelabour force cost is already much bigger than the plain wage which appears on the pay li st; in theEuropean countries, this difference represents even 50% from the labour force cost.

In Romania, the plain average salary has been of 1.361 lei in November 2008, with anincrease of 2,6% (34 lei) compared to the anterior month of 2008 and with 2 1,4% compared to thesame month of the year 2007, according to the data of the National Statistics Institute (NSI).

The greatest values have been registered in the air transporting activities (3.373 lei), and thesmallest ones in clothes fabrication (768 lei).

As against October 2008, the greatest wages increase, of over 10%, have been registered inthe industry of calculation techniques and office means (11,1%), respectively in health and socialassistance (10,5%), while the most important wage drop, of over 7%, have been in the metallurgicindustry.

Form a nominal point of view, against 2006, in 2007 the Romanian wage earners’ incomesgrew with 25,5%. As regards the wages increase adjusted with the inflation, Romania occupies thethird place among the EU countries (Eurofund, 2008). In this top, the first place is occupied byLatvia with a medium wages increase of 2007 of 18,3% compared with 2006. Romania is afterLithuania and it has registered in the same period a wages increase with 12,2%. If we have i n viewthe evolution of the wages in the period 2003 -2007, we notice that the EU countries divide into fivecategories. Romania, together with Bulgaria and the Baltic Countries, is classified in the group ofthe countries in which the wages had a very sign ificant increase, with 4% over the annual average.We have then the group with important increases (between 2% and 4%) – Poland and that withmedium increases (between 1% and 2%) in which are included Finland, Greece, Ireland, Sweden,The Great Britain, the Czech Republic and Slovakia. Other two groups include the countries withlittle increases (under 1%) – the EU nucleus (15) plus Hungary and Malta and those with “zero ornegative increase”, that is Cyprus, Germany and Slovenia. If we are to consider the data from 2007,regarding the minimal wage, it increased in Romania (in 2007 compared with 2006) with 18%, butwith an absolute value, the minimal wage appears to be very reduced compared with the minimalwages from the other European countries. For exampl e, compared with 131, 92 euro (440 lei), thevalue of the minimal wage in Romania in 2007, in Luxemburg “the minimum” was 1.570 euro, inBelgium-1.283 euro, in Estonia-288 euro. In the end, we have to mention the fact that starting with1 January 2009, according to the Governmental Decision no. 1051 from 10 September 2008, theminimal gross wage is 660 lei. Within the Agreement regarding the minimal wage value it is

forecast that the minimal gross wage, in 2014, will have a value of 1 325 lei, representing 50% fromthe average gross wage per month, at the moment this percent being of only 31% (10).

The extension and the generalization of the labour on determined periods and with part -timeschedule favors the young people and the women, so the chances to fin d an employee are oftenrelated to these forms of more flexible contracts. In most cases, the present regulation prefers onlythe labour contract on undetermined period, with a fixed schedule, which is actually much lessflexible.

A reform of the legislat ion regarding the employee’s security which could reduce the reportbetween the costs of the dismissal and the minimal wages. In the specialty literature there have beenalready formulated critics for the politicians which, by defending the employee’s secu rity, leaded toa blockage situation, in which the dismissal became practically impossible.

Even if in general the situation has improved, it is obvious that in many European countriesthe existing institutions still contribute to the aggravation of the u nemployment problemdiscouraging the enterprises in employing workers on undetermined period, even confronted withan acute application. The measures destined to reduce the unemployment must be preceded by avast reform of the legislation regarding the emp loyee’s security.

This last point is extremely interesting as regards the young people’s unemployment which,in many countries, according to the EUROSTAT indicators which have been introduced, constitutesa serious problem. Considering these reforms as es sential, we often say that attentively choosing themoment of their application is important. The actual state of facts condemns a great number ofpersons to join the unemployed people, thus provoking an increase of the unemployment rateinstead of diminishing it. As a consequence, this initiative is confronted with the tough oppositionof a certain part of the trade-unions which could succeed in defending the statu quo.

However, the respective reforms should be introduced when the conditions on the labourmarket will be more favourable and harmonized with policies such as:

Policies which stimulate the search of a job together with reducing the costs of thisresearch. These ones could mean the developing of the activities of offering advices regarding thetypes of job or by informing on the available jobs.

Policies of stimulating the workers’ mobility which to facilitate, for example, thepassing from an institution to another of the rights to pension and of the medical insurances.

The reforms of the allowances for unemployment. The systems of the allowances forunemployment should be reformed in the sense of stimulating the unemployed people to search ajob when there are available jobs, guaranteeing, at the same time, a minimal income when therearen’t available jobs.

We must also say that, even if the putting into practice of the microeconomic policies is aproblem which addresses especially in an individual manner the member states, these states, on thewhole, have a common interest in defining the employ ment policies and in assuring that thesepolicies are widely and vigorously applicable and applied.

This relies on the consideration that, by increasing the mobility of the production factorswithin the EU and due to the community laws of free access to t he labour market and thetransnational concurrence market, the level of the real subvention in defining the employmentpolicies doesn’t exclusively stop to the level of the member states.

Each of them has a real and concrete advantage (the unemployment de creases in the otherstates through the fact that it itself contributes to the decrease of the unemployment).

This is the reason for which the European Commission must apply a juridical andinstitutional structure which allows the making of the necessary reforms on the labour market,needing to ensure that these reforms will be rapidly made.

4. CONCLUSIONS

A solution to the unemployment problem in the EU should be concentred upon two axes: awide rage of policies regarding the job offer and a policy of ma naging the demand.

The global increase of the demand is necessary for obtaining the correlative increase of theinvestments. However, if we don’t adopt at the same time the measures regarding the job offer, theincrease of the demand can determine a recru descence of the inflation and not an increase of thejobs number, due to an imperfect correspondence between the demand and the offer.

We should also emphasize on the fact that the demand and the offer policies arecomplementary and they must be simultane ously adopted by all the European states for avoidingthe phenomena of competitive displacement and for exploiting all the positive effects which thiscomplementary situation could produce.

NOTES:(1) Franco Modigliani, (holder of the Nobel Prize for econom y), Manifeste contre le chomage , BNL Quarterly

Review, 1998 .(2) http://rador.srr.ro – (BBC WORLD SERVICE)(3) http://www.capitalul.ro – The world economy could lose 51 million jobs in 2009, http://rador.srr.ro – (BBC

WORLD SERVICE)(4) According to the Eurostat norms for the data semination, when the EU and the euro zone enlarge, the total

data series refer to the official components of the euro zone for the most recent months in which the data areavailable. So the Informing Communications having the monthly data until December 2008 we will analyzethe EA15 series, while the data beginning with January 2009 analyze the EA16 series.

(5) The euro area (EA15) consists of 15 Member States up to 31 December 2008: Belgium, Germany, Ireland,Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia andFinland. From 1 January 2009 the euro area becomes (EA16) by inclu ding Slovakia.

(6) Eurostat harmonises the unemployment rates for individual EU Member States, the euro area and the EU. Theunemployment rates are based on the recommendations of the International Labour Organisation (ILO).The measurement is based on the source called the European Union Labour Force Survey (LFS).

Based on the ILO definition, Eurostat defines unemployed persons as persons aged 15 to 74 who:- are without work;- are available to start work within the next two weeks;- and have actively sought employment during the previous four weeks.

The unemployment rate is the number of people unemployed as a percentage of the labour force. Thelabour force is the total number of people employed plus unemployed.

The number of unemployed and the monthly unem ployment rates are estimated based on the results ofthe LFS which is a continuous unemployment which takes place d out in all countries on the basis of agreeddefinitions. The results are interpolated/extrapolated to monthly data using the national survey data and/orthe national monthly series on registered unemployment. The most recent figures are provisional; resultsfrom the Labour Force Survey are available 90 days after the end of the reference period for most MemberStates.

Monthly unemployment and employment series are calculated first at the level of four categories foreach Member State (males and females 15 -24 and 25-74 years). These series are seasonally adjusted and allthe national and European aggregates are calculated.

Member States may publish other rates categories or other correspondent surveys. These rates mayvary from those published by Eurostat due to different definition or methodological choices.

Current deviations from the definition of unemployment in the EU Labour Force Survey are identifiedin: Spain, Italy, and the United Kingdom: Unemployment is restricted to persons aged 16 -74. In Spain andItaly the legal age limit for working is 16 and in the Netherlands: Persons without a job, who are availablefor work and looking for a job are included in unemployment only if they express in a “clear” manner thedesire to work.

(7) In October 2008 the unemployment rates for the euro area and the EU27 published in News Release 167/2008of 28 November 2008 remain unchanged. Among Member State s, the rate has been revised by more than0.1% for Belgium, Estonia, Ireland, France, Luxembourg and the Netherlands. Larger revisions (of morethan 0.4%) have been registered in Bulgaria, Denmark, Latvia, Lithuania, Austria and Slovakia. Therevisions are primarily caused by the inclusion of the most recent EU Labour Force Survey data in thecalculation process.

The LFS data are used in the calculations of the monthly unemployment rates published in this News Release:For Germany, Finland and Sweden up to and including November 2008. For the Netherlands up to andincluding September-October-November 2008 (3-month rolling average). For the United Kingdom up to andincluding August-September-October 2008 (3-month rolling average). For Belgium, Bulgaria, the CzechRepublic, Denmark, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg,Hungary, Malta, Austria, Poland, Portugal, Romania, Slovenia and Slovakia up to and including the thirdsemester of 2008.

(8) EU27 includes: Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain,France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland,Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the Great Britain. For Sweden, we have inview provisional data: the Swedish Labour Force Survey was forced to take further account of the EUmethodology in April 2005. This may affect the reliability of the seasonal adjustment.

(9) The figures are published by Eurost at, the Statistical Office of the European Communities.

(10) Bostan I., “Salariul in ecuatiile macroeconomice” (I and II), in Ziarul de Iasi, the Economy section, from 1and 8 September 2008

BIBLIOGRAPHY

1. Franco Modigliani, Manifeste contre le chomage , BNL Quarterly Review, 1998.2. Franco Modigliani, La flexibilite et la marche du travail , Milano,1999.3. N. G. Niculescu (et al.), Economie politică, vol.I, II şi III, Ed. Polirom, Iaşi, 1998.4. N. G. Niculescu, I. D. Adumitrăcesei, Real economy at a historical cross , Junimea (RO),

2003.5. I. Bostan, Managementul recompensei, Ed. Univ. “Ştefan cel Mare” Suceava, 2006.6. *** News Release Euroindicators, 13/30 ianuarie 2009, EUROSTAT.7. *** News Release Euroindicators, 3/8 ianuarie 2009, EUROSTAT.8. *** Raportul Comisiei de finanţe a Senatului Franţei , Paris, 1999.9. *** http://rador.srr.ro - (BBC SERVICIUL MONDIAL )10. *** http://www.capitalul.ro - Economia mondială ar putea pierde 51 milioane de

locuri de muncă în 2009 .

ECONOMICS’ DIPLOMACY AND ROMANIA’S FOREIGNINTERESTS PROMOTION

Lecturer Ph.D. Marilena-Oana NEDELEAStefan cel Mare University Suceava, Romania

oanad@seap.usv.ro

AbstractThe objective of the economic diplomacy is the utilization of all the instruments of foreign policy in order to promotethe economic interests of Romanian investors and Romanian state. The promotion of Romanian interests abroadsuppose lobby in order to facilitat e the Romanian firms expansion, solving the Romanian business people problemsabroad, organization of business events (conferences, reunions, seminars), conceiving of strategies and a calendar ofactions in order to promote the Romanian interests abroad.

Kew words: economic diplomacy, promotion, institutional cooperation, Romanian economic objectives

JEL Classification: M31, M38, H83

I. INTRODUCTION

From the ancient times, diplomacy was and still is one of the most important promontoryinstruments for the realization of states’ foreign policy.

Nowadays, diplomacy has certain openness, the conversations are frank, and the economics’diplomacy makes the front line. (Constantin, 2006) This happens due to the specific collaborationregarding the import-export relations, trade exchanges, economic cooperation and confrontation.The cultural diplomacy, parliamentary diplomacy, the relations between countries proceed towardstheir continuous extension, at the same time with the ceaseless extension of economy’s diplomacy.Concurrently, many states practice both opened and transparent diplomacy, but there are states thatwish to keep their leadership position in some domains and appeal to means that do not correspondwith their friendship statements. Among these means we mention: interception of governmentalconversations, attempts to obtain confidential economical and political information.

If in the future the diplomacy would be based upon a close collaboration between stateswhich adopt independent economic a nd social development options, which will entirely concordwith the national interests and aspirations then diplomacy couldn’t be performed in the situation ofone state dominating another. In general, in diplomacy reference works, diplomacy is presented a sthe activity that enables the foreign policy to achieve its goals.

II. ECONOMIC DIPLOMACY

Economic diplomacy represents the foreign policy function that correlates the foreignpolicy strategies and the economical wellbeing of a state’s citizens. (Boj escu and Miron, 2005) Thishas as general objective the use of all foreign policy instruments in order to promote the economicinterests of all Romanian entrepreneurs and at the same time of the Romanian State. Economicdiplomacy represents the efficient m edium for international institutional cooperation, aiming torealize the proceedings regarding Romania’s economical objectives promotion outside the country’sborders.

Economic diplomacy has the objective to use all foreign policy instruments in order topromote the economic interests of all Romanian investors and at the same time of the RomanianState. This concept implies the organization of an efficient institutional cooperation framework, inorder to outline some concentrated stages for the abroad prom otion for Romania’s economicalobjectives.

When talking about public administration marketing we distinguish a contemporary conceptthat is the marketing of consular and diplomatic services. Visualizing the world’s political leaders’

agenda, we notice that the economical issues prevail, and these often become the main targets thatare approached during the bilateral and multilateral meetings.

III. ROMANIA’S FOREIGN INTERESTS PROMOTION

The promotion of Romanian economical interests abroad, regards activ ities like: mediationof information and Romanian businessmen contacting, in order to facilitate their access on theforeign markets; organization of economic character events (conference, seminars, reunions,forums); assistance and help for abroad organiz ation of economic missions; stressing out thepresence of Romanian economical interests throughout the good use of the potential engaged byRomania’s honorary consuls; the elaboration of an action strategy/ calendar in order to promoteRomania’s economical interests.

On the embassy level we can mention that in the diplomatic missions participate theeconomy department and relevant personnel – the economic attaché being responsible forpromoting the economical interests of the state which they represent in t he creditor country.

To exemplify the online promotion of Romania’s interests through economic diplomacy wecan refer to an illustrating reference point which is Romania’s Embassy in Washington. Within theeconomic section we find a Business guide book for Romanians who are interested to developeconomical activities in USA.

Illustrating is the involvement of economic diplomacy in the international organizations’policy or in the strategies elaborated by the worlds governs. We can mention here the NATOsummit which was organized in Bucharest between 2 and 4 of April 2008, where, beside theparticipation of appreciated political leaders of the moment, the participating missions wereaccompanied also by investors from various domains.

On international scale we notice that great European and American tabloids have classifiedas reference point for Vladimir’s Putin 9 years of activity in Kremlin, the fact that Russia’s energyresources became, in the foreign context, a veritable diplomacy weapon.

We can at the same time understand and exemplify the economic diplomacy role andsustainability on the European stage through the unification of the main economical forces leaderswithin the Paris summit developed for president Nicolas Sarkozy initiative at the begin ning ofOctober 2008, having as main topic the actual financial crises. Besides Nicolas Sarkozy, theactivating president of European Union, at the summit took part the German chancellor, AngelaMerkel, British prime minister, Gordon Brown, and Silvio Berl usconi the Italian prime minister. Atthe summit also participated important officials from the economical domain as Jean -ClaudeTrichet, the president of the European Central Bank.

The reunion proved to be the first step towards the revival of the financi al capitalism. Spite,the event preparation was emphasized by a series of misunderstandings between France andGermany. Berlin criticized harshly and without any doubt France’ idea according to which thereshould be created an European found for saving the banks from critical situations, following theUSA rescue plan. At the Paris summit there was an attempt for harmonizing the Europeans crisesfeedback and avoiding those actions that could disturb the European Union’s general equilibrium.

On the global context we must mention the G-8 meetings that developed as a necessity toovercome the first petroleum shock in the 70’ as the club of seven first industrialized countries:USA, Japan, Germany, Great Britain, Canada, France and Italy.

The preamble of the first Declaration at the G-7 in Rambouillet (17 November in France)mentions: “We gathered because we share the same beliefs and the same responsibilities. Thegrowth and stability of our economies will help the industrial world and developing countries toprosper … We decided to intensify our cooperation within all the international organizations.” In1997, for the scope of the 23 rd reunion, there was invited Russia as well, obviously not for theindustry, but, for the military resources and power and this way the G-7 became the G-8.(Dobrescu, 2008)

Between the 8 and 9 of July, the G -8 industrial country Group was hosted by Japan on theHokkaido Island. The meeting was labeled by the increase of food and petroleum prices, but therewere discussed issues like the global warming or the Zimbabwe overall picture. The level reachedby the petroleum international price has also caused worries. Japan invited at the most wealthynations’ reunion other two great powers like China and India, which are potential group mem bers,but also South Africa, for stressing the great and greater importance that this continent plays in theactual geo-political interests.

Within the Foreign Affairs Ministry of Romania, functions the Economic DiplomacyDepartment which has the role of interface between Romania’s diplomatic residences abroad, thebusiness medium and the other institutions with economical duties.

The main action directions of the Economic Diplomacy Department are: Abroad promotion of Romanian economical interests; The cooperation with international economical organizations; The cooperation between economical profile institutions; Offering of economical expertise within the Foreign Affairs Ministry.

Promotion of Romanian interests abroad implies the following steps:- lobby in order to facilitate the expansion of Romanian businesses abroad,- information and contacts mediating for Romanian businessmen so to ease their

access on the foreign markets,- dialogue facilitation between the Romanian businessmen and the foreign

diplomatic missions in Bucharest, pursuing the solutions for the problems thatRomanian entrepreneurs confront themselves with while developing theirbusinesses abroad,

- organizing meetings with economic character (conferences, reunions,seminars, forums),

- assistance for the organization of economical missions abroad, illustrating thepresence of Romanian economical interests by putting good use to Romania’shonorary attachés‘ potential,

- the elaboration of an action strategy / calendar aiming at promoting Roma nia’seconomical interests,

- dissemination of economic character information for the business domain,comprise on the MAE site of important information especially for Romanian/foreign businessmen.

Another action direction of the Economical Diplomacy Depar tment is represented by thecooperation with international economical organizations. Here we mention:

Coordination of the activities developed by Romania along with the Cooperationand Economic Development Organization (CEDO);

Promotion of Romania’s intere sts, along with other enabled institutions (WorldMonetary Fond, World Bank Group, Reconstruction and Development EuropeanBank, World Trade Organization, CEFTA, etc);

Valuating the Romania’s delegates presence at/along the economic internationalorganization;

Monitoring the reports elaborated by various economic international organizations,as well as the country qualifying given by the rating agencies, including financierinstitutions.

Economical cooperation between institutions implies the following: Perfection of the economic information system between the main actors (Economical

Diplomacy Department within the Foreign Affairs Ministry – diplomatic missions –business medium – economic character institutions);

Dialogue and information exchange facilitat ion regarding the local and central publicadministration institutions, as well as business medium and the realization of a better

coordination between the institutions in order to develop a promotion and lobbyaction for Romania’s economical interests;

Link consolidation between ministries in order to support and efficient the foreigneconomical representative component;

Participation within the work ministries groups and commissions, on economicissues.

Offering economical expertise within the Foreign Af fairs Ministry implies the followingsteps:

Foreign policy objectives, strategies and actions fundament; Economic projects’ promotion and developing with economical strategic interests

for Romania; Editing economical informative reports for the Foreign Aff airs Ministry and

diplomatic missions; Realizations of economic analysis on great interest for the diplomatic missions and

the Foreign Affairs Ministry.Economic diplomacy implies support for the foreign economical representatives, in order to

concord with the business medium and its competitiveness at international level. So, the activity ofthe personnel with economical responsibilities that’s sent abroad is organized as the EconomicalCounselor Office within Romania’s diplomatic missions abroad, or Trade Offices of the states.

One of the important aspects of the economic diplomacy is the Romanian companies’extension in the region. A country can’t be competitive as long as it isn’t characterized by anopened economy, characterized by export and import rat e growth within the internal gross product.This implies a step by step elimination of the protection barriers, a liberalization of the entireeconomy in order to allow national and international competition. Also, the opening of an economymust be done at the same time with monetary flux and assets accentuation, bilateral goods andservices flux with the rest of the world, at the same time with other countries’ promotion ofinformation exchange.

Awareness of a certain state’s performance and results can b e recognized only at aninternational level and the great failures are the result of self development which relied on theinternal resources without reaching for the opportunities that the rest of the world has to offer. Astate can fit in the economic cir cuit by taking two steps: the states may involve more on the worldmarket and throughout winning over more consistent market segments for the products they have inexcess. Now we can mention the fact that in the recent years, Romania’s governmental policy reliedonly on increasing attractivity throughout improving the conditions within the business medium andexports promotion.

Romania’s opportunity to developing better conditions for abroad investments shouldn’t beneglected. An illustrative example can b e the following: even from 1998 Romania was present inTop 25 of Central and South-Eastern European multinational companies, due to SNP Petrom, thatwas later undertaken by Austrian Group OMV. Throughout this example we sustain the abovehypothesis, according to which, a country’s level and economy is measured on the internationalmarket also by taking into account the greatness of its multinational companies based on owncapital that develop their activity in other states. Concluding, if Romania aims to become obviouson world stage, it must undertake big efforts in order for those own companies to be present in othercountries throughout their subsidiaries.

Small states’ position in comparison with great nations was always determined ongeopolitical rations, especially when having for neighbors great powers and strategic interests oncontinent level, and finally on world level. In case of unequal relations between states, of powerpolicy primacy, the small countries and even the middle ones were obliged, in the compulsory way,to maintain friendship relations as good as possible with the neighbors, on one side, and to avoidconflicts that would put them in obvious inferiority, on the other side.

Between the great countries there were competitive relation s dictated for the conflict ofinterests in the nearby areas or even for far away regions. Small countries that found themselves

between the big ones became inevitably the trend objective for the great powers due to economic,politic, military or even stra tegic rations. History states that small countries were many times forcedto use secret diplomacy, as a mean for surviving, for protecting their existence and integrity, whenthey were confronting with the greater powers that aimed to take them into their domination or evenfinish them out as national entities.

There existed various situations when small countries were temporarily annihilated by thegreat powers’ policy, but their freedom aspirations towards independence couldn’t ever be stopped,not even throughout rough repercussions, regardless the ideologies they served.

Economic diplomacy must be looked at by Romanian diplomats as one of the main foreignpolicy means that serve Romania’s national interest. It is time to evolve and leave behind us theclassic promotion of national companies, of capturing foreign investors and mediation between thenational and international economic entities – as we traditionally name it commercial diplomacy.Romania’s diplomacy must take a step towards a modern and prag matic diplomacy that negotiatesglobal architecture of economic government, sets the standards within the international economicorganizations, administrates alliances and complex coalitions between the specific interest parties,shapes up the development for socio-economic and environment policies.

Romania’s economic diplomacy attaches must have the capacity to influence the economic,national or multilateral policies, in the states or international organizations where they have theauthority, in order to achieve Romania’s economic strategic purposes.

In this way, the essential characteristics for Romanian diplomacy activity should be theefficiency, the continuity, the consistency, the credibility, the competitiveness and web work. So,Romanian attaches must be involved for engaging business contacts in the countries they are sentin, to develop the relations with the businessmen from the Romanian diasporas communities, in theexchange of specialized information with the European Committee missions and dip lomaticrepresentative of other Union’s member states.

The recommendation is to realize a better coordination between the ambassadors andForeign Trade Department attachés, as well as the establishing for each ambassador of a majoreconomic project that should be implemented in collaboration with the central Foreign AffairsMinistry.

These requirements do not imply neglecting the traditional role of attracting foreigninvestments and promoting abroad the national companies’ interests. The ambassadors must equallytreat state companies, big, middle and medium foreign companies that wish to make a point on theoutside market.

The activity of Romanian economic new diplomacy must take into account the new statutethat Romania earned as a member of the European Union, that offers big development andpromotion opportunities but also great challenges, throughout which valorizing Romania couldrecover the disadvantage towards the older Union’s partners.

Our country proceeding is sustained by arguments like our co untry’s strategic positionregarding the main energy transportation roads towards Europe and our engagement towardsEurope’s energetic security insurance, the role we play across the European Union eastern boarder,the strategic partnership with USA, the a ctive role within UNO, but also the dynamic concern onregional level.

This context imposes also the rehabilitation of market relationships with the RussianFederation, Middle Orient, South -East Asia, as well as with Latin America, that was a leit -motif ofRomanian diplomacy objectives in the recent years.

Among the present themes of Romania’s economic diplomacy we can mention: the waythat our diplomacy should answer to the contemporary global economic challenges; energydiplomacy; promotion of Romanian products on foreign markets; positioning Romania in the wayof international investments flow; Lisbon strategy; public diplomacy and cultural diplomacy role inadministrating the world level challenges and while realizing the politic dialogue.

IV. CONCLUSIONS

As member state of the European Union, Romania needs an adequate economic diplomacy.Romania must become an excellence pole in the region, one of the average powers in the EuropeanUnion, both from a politic and economic point of view.

Romania grew into an interesting country by proving to be capable to overcome itsachievements. The recent economic growth is the result of a systematic effort, based upon fourprinciples: free economy mechanisms, investments and continuous development stimulation,inflation diminishing policy and support for the healthy growth of the economy. In consequence,Romanians met a 23% revenue growth related to 2007, and for each of the past years the revenuesgrew with 15%-20%. There have been created 600.000 jobs and substa ntially reduced the black andgrey labor market. The real convergence (related to the average level of the European Union)increased from 33% in 2004 to 41% in the present, with a forecast to 60% in 2012.

The investments’ dynamic places Romania in the firs t line in The European Union: in thefirst semester of this year, they registered a growth with 35%. Also, Romania proved to be afavorable ground for the implantation of famous companies in the South East Europe.

As member state of the European Unio n, Romania’s strategic objectives are linked to theinside evolutions of the Union, and in the following period, the accent must be set on the maximumvalorizing of the European funds that Romania benefits of, the complete integration in the Unionthroughout the adhering to the Schengen and euro area, Romanian economy competitivenessgrowth as in the context of European economic medium and economy adaptation to the irreversibleenergetic and ecologic constraints of the XXI century.

For reaching these goals and for maintaining the actual economic growth, the diplomacyplays an essential role, to support the Romanian companies. In many states of the world we have aRomanian community trying to expand, that begins to be more and more integrated in the localsocio-economical medium.

BIBLIOGRAPHY

1. Anghel, I.M., Dreptul diplomatic şi consular, Lumina Lex – Publishing House,Bucharest, 2002;

2. Bojescu, V., Miron, D., Valenţe şi limite ale diplomaţiei economice, ASE–PublishingHouse, Bucharest, 2005;

3. Ciachir, N., Bercan, Gh., Diplomaţia europeană în epoca modernă, Bucharest, 1984;4. Constantin, Vlad, Diplomaţia secolului XX , Titulescu European Foundation, Bucharest,

20065. Dobrescu, E.M., G-8: instituţia care protejează pe mai -marii lumii de maladiile

economice, www.financiarul.com6. Felthan, R. G., Ghid de diplomaţie, European Institute, Bucharest, 2005;7. Helen Wallace, William Wallace şi Mark A Pollack, Elaborarea politicilor în UE ,

European Institute in Romania, Bucharest, 20058. Maziliu, D., Diplomaţia. Drept diplomatic şi consular, Lumina Lex-Publishing House,

Bucharest, 2006;9. Nicholson, H., Arta diplomatică, Politică-Publishing House, Bucharest, 1996;10. www.idr.ro – Institutul Diplomatic Român/ Romanian Diplomatic Institu te;11. www.mae.ro – Ministerul Afacerilor Externe/ Foreign Affairs Ministry;12. www.fdsc.ro – Fundaţia pentru Dezvoltarea Societăţii Civile/ Foundation for Civile

Society Development;

THE ROLE OF TRADE UNIONS IN REGULATING LABOR RELATIONS

Lecturer Ph.D. Candidate Cristina BĂLĂNEASA“Stefan cel Mare” University of Suceava, Romania

cristinab@seap.usv.roProfessor PhD. Aurel MANOLESCU

Academy of Economic Studies Bucharest, Romaniaaurel.manolescu@man.ase.ro

Abstract:The most important concern of trade -unions is direct communication between management and employees and

the loyalty and responsibility employees show towards the company. Trade -unions reason for being is to re -establishthe balance of power between employers and employees. Trade unions participate with their own representatives, bythe law, to negotiations and conclusions of collective labor contracts, to transactions or agreements with the publicauthorities and employers associations, and also in the specific structures of social dialogue.

In the context of present transformation, with an instable labor market, we can ide ntify somedifficulties for trade-unions, such as:

- inability to organize themselves effectively in profession sectors of activity, which leads towardsan impossibility of the trade union representative;

- decentralization of regulations regarding the l abor relations in what concerns the economicalagents and working place, with the consequence of infidelity issues from employees towards the unionsthey are members of;

- highly different qualification for the employees, making thus heavier the unificati on of theirinterests.

As an answer to a demand of trade -union recognition, the management usually must determine the level onwhich they sustain the unionist representation, and to find out in what degree trade -union may become a negotiatingagent. We only speak about a partially recognition, if the employer limits the role of trade -unions only when speakingof representing their members in working conditions problems.

Due to globalization process, in Romania, trade -unions lost increasingly more the opp ortunity to exercise theirpressure upon international companies, facing in the same time to a decreasing number of members, as we shall see inthe present material.

Key words: trade union organizations, employer, syndication, collective bargain, social d ialogue.

Classification JEL: J51, J52, J 53

INTRODUCTION

Associative-type organizations, unions have a multiform character; they arise from historyand their social, economic and political surroundings without being determined only by thoseaspects. This paper suggests the understanding of the role trade unions have in regulating thecollective work relationship. Lately there has been registered a decline in most European countriestrade unions. This fall is not a result of the disbelief employees have in this association or law, butto the changes the economy suffered, the reduction of institution with a large number of employeesand the emergence of small and medium enterprises, the impact of unemployment and so on.

1. TRADE UNION – CONCEPT AND SETTLEMENT

The term “union” has its roots in the Latin word “syndicus” and the Greek one “sundikos”,both of them naming a person who assists somebody in justice, that is an official. Trade unionsstand for the materialization of fundamental right to asso ciation and an important piece in theprocess of establishing the uprightness between social partners.

According to a specialized opinion (Cole, 1997), trade union is an employee’s organizationwith the main purpose of protecting and promoting employee’s interests at the working place,mainly through negotiations means and collective consulting with the employers.

The juridical frame for organizing and running trade -unions in Romania is primarily assuredby the Law 54/2003 (1). This Law states, in art.1, that “unions are established for protecting the

rights stated by national legislation, in agreements, pacts and international conventions to whichRomania is a part of, but also in collective labour contracts and advancing the professional,economical, social, cultural and athletic interests of its members.” The law also provides theindependence of trade unions associations towards the public authorities, politic parties andemployers associations.

There are also some other internal acts which define an d characterize trade unions in thefollowing manner:

- art. 9 from the Constitution: “trade unions, employers associations and occupationalassociations appear and develop their activity by the law, according to their rules. They contributeto defending the rights and promoting their members occupational, economic and social interests”;

- art. 217 line 1 from Labour Code “trade unions represent independent legal person, withoutpatrimonial interest, formed for defending and promoting collective and individu al rights, and alsothe occupational, economic, social, cultural and athletic interests of its members”.

Internationally speaking, this occupational association was recognized by the Conventionsof International Labour Organization (ILO) and by acts decre ed by Europe and European Union’sCouncil: ILO Convention no. 87/1948 regarding the unionist freedom and unionist right protection,ILO Convention no. 135/1971 regarding the protection of workers’ leaders, article 11 from theEuropean Convention of human r ights and fundamental freedoms approved in 1950, EuropeanSocial Charter approved in Strasbourg 1996, ratified by Romania (2), article 118 from Rome’sTreaty.

Taking into consideration the texts mentioned above, trade unions can be defined asorganizations – independent juridical persons – constituted with the scope of defending andpromoting occupational, economic, social, cultural and athletic interests of its members –employees, public servants, other professionals or persons about to be qualified – provided ininternal labour law and in international papers, and also in the collective working contracts, whowork according to its own regulations (Voiculescu, 2003).

2. THE ROLE OF TRADE UNIONS .

Trade unions reason for being is to re -establish the power balance between employers andemployees (Armstrong, 2001), endowing with a “common voice” the employees and making theirgrievances heard.

Relating to union members, in order to fulfill the purposes trade unions want to achieve, inthe context of defending and promoting social interests of its members, trade unions can develop alarge scale of activities, including also from economic, social, commercial or banking field. In thisregard, Romanian law disposes that trade unions can: financially sustain thei r members in fulfillingtheir occupation, to create their own accommodation houses, to organize and sustain financially andmaterial the athletic activity gathered in associations and sports clubs, and also cultural -artisticactivities, editing and printing their own publications in order to increase the level of knowledge ofits members and to defend its interests. According to The Country Report achieved on June 2006 inRomania regarding discrimination, only 8% of the interviewees appreciated the role of trade unionsin fighting against discrimination.

Lately, trade-unions’ capacity to serve its members and the way in which they do this haschanged. Their position is now more defensive, and tries to protect their members from abusivefiring and from modifications of contracts and procedural agreements. (3).

Relating to power, trade unions are characterized as being pressure groups which act in asocio-politic frame in order to assert their members interests. In all factories, no matter theirbigness, employees union can be organized in fact, and the patronage cannot oppose to thisinitiative. Each representative trade union can create unionist departments at the level of productionunits (workshops, sections, factories, plants) which will name its own trad e-union assignees. Theshop stewards represent their organizations in relation with the management of the factory. We canappreciate that together with political parties - specific institutions of the political life, trade unions

have an influence on the political games. Although in their charters it is written they don’t wantpower, (which even legally is impossible) but they only want to have an influence with the meansthey are familiar to trade unions are a stabile presence in the areas in which the pol itical decisionsare made. From this angle, trade unions are categorical type associations, that is, they put togetherindividuals according to the division of labour – the criterion of occupation, activity area (industrial,commercial or agricultural).

Socially, an important role is given to trade unions in the context of social dialogue. Incountries such as Romania, Czech Republic, Slovakia, Slovene, Estonia and Hungary the process ofglobalization had an influence, and trade unions lost their possibili ty to pressure the internationalcompanies, facing in the same time a number reduction of its members.

Currently, Romanian legislation is on the same line with the communitarian acquis, in thefield of social dialogue. The current juridical frame instituti onalizes the tripartite social dialogue toall levels of national economy, giving in the same time, the base for bipartite social dialogue, butthere are still important lacks that must be solved in what concerns the enterprise and division level.Among the causes of this situation, we can cite present criteria of representatives and excessivefragmentation, especially of patronal organizations, and also the low rate of syndication in smalland medium enterprise and in the private field.

Tripartite social dialogue takes place among the following structures: Social andEconomical Council, sectorial tripartite social dialogue, social dialogue in territorial ground.

A higher form of social partnership is given by the negotiation and signing of socialagreements at a national level, from who’s considerable results we may notice the elaboration andsustain all together of various bills and acts with distinct social impact.: Labor Code (Law no.53/2003), Management Law (Law no. 356/2001), Trade unions Law (Law no.54/2003), The lawregarding encouraging labor employment and social protection of unemployed (Law no. 76/2002).Partnership has an important role in the decreasing number of labor conflicts in the late years inRomania, and also in the disappearance of nationalist claiming unionist movements, thedissatisfaction coming only when talking about the problems with an impact on certain area orfrequently local. According to the quarterly statistic bulletin in the labor and social security field,the complete number of clashes in 2006 decreased from 121 (registered in 2003) to 95.

Bipartite social dialogue (trade unions, patronages) is mostly found in the process ofnegotiation and concluding collective working contracts and also in the ones that speak aboutsolving collective conflicts, stated by the Law 168/1999. We appreciate that the perspectives ofdeveloping bipartite social dialogue based on the increasing of social partners capacity will generatetheir highly involvement in solving the economical and s ocial problems and will create new formsof profitable partnership to assuring a peaceful climate and social stability in Romania.

In unionist activities we can identify four main groups of main interests. (4).1. collective contracts (agreements) , highly affecting the salaries of employees and

conditions of employment;2. procedural issues of trade-unions, authority, employers arbitrary and ensuring the

protection of employees at working places, the righteness of promoting and continuous professionaltraining of employees, and also production regulation and distribution of work;

3. state contribution, that is setting the minimum gross wage per country from whereresults also the financing of social policies and facilities, specifying the structure of political an dlegal actions trade, macro-economic policies with an impact on the employment of personnelconduct, firing the employees and so on ;

4. another group of interests sees in a special way the consumption, the environmentand housing, services and so on.

3. TRADE UNIONS RECOGNITION AND INVALIDATION

A key area of „strategic option” in the management of labor relations is related with theaspect of trade union recognition, for collective determination of terms and conditions ofemployment (Lock, 1992).

Trade union recognition by an employer is made with the sole purpose of having a collectivenegotiation, which will lead to an agreement regarding the wages and hiring conditions. If theemployer limits the role of trade unions only when speaking of working conditions of its members,we only speak about a partial recognition.

Nowadays, employers have the possibility to decide if they recognize or invalidate atrade union, to choose the desired trade union and select the conditions they agree to. Realizinga dialogue with one or more unions is rarely a spontaneous action from the management, forthe sole reason that this requires expenses and commitments: bigger wages than the rest of themarket (about 14 % up), better working conditions, and statutory guarant ees. There are alsosome advantages, most measured are about reducing changing of working hand and increasingthe professional capacity (Gazier, 2001).

When speaking about new businesses, employers can deny trade unions recognition.The organization which must decide on the recognition or invalidation of a trade union, isusually taking into consideration some or all of the following factors:

a. the way in which the importance of introducing a new specific procedure thatwill control the collective bargains;

b. if there already exists a trade union, the degree in which the management canexercise the power – for example modifying working agreements and introducing flexiblearrangements or multi-qualification;

c. the history of trade union relationships;d. the number of trade union members and the degree in which they consider they

need the protection offered by the union;e. the decision of cancelling the recognition must take into consideration if the

benefits obtained are more valuable than the consequences generate d by the changing of status-quo;

f. preferences for a certain trade union, regarding the reputation or the degree inwhich he can maintain satisfactory relationships.

Regarding the recognition of trade unions as a social partner by the EU, this thing is alr eadyknown by adopting a series of important norms. EU already recognizes the employees and theirrepresentatives as “social partners” in their own institutions. They accept representation, consultingand taking part to various tripartite organizations of EU.

Being a part of trade unions goes between 87.5% in Denmark to only 9.1% in France.Members are multiple in organizations with over 200 employees. This variation reflects differenttraditions of European member countries, from the capitalist pattern of free market in UnitedKingdom, to social market concept wide spread in Germany. Brewster ends stating that trade unionsfrom Germany, different from the ones in United Kingdom, “tend towards being more involved andhave more positive working relations wit h the employers”.

Approaching and applying the EU legislation by the European Commission and Court, isshaped by their understanding of the “European social pattern”, that sees trade unions as socialpartners (Bercusson, 2002).

EU main norms (5) regarding the information and consultation, enlarges the role ofemployees representative when speaking of companies that hire at least 150 workers or workinginstitutions with at least 100 employees. This fact had to be applied by national governmentsstarting with 23 March 2005. This norm asks for a process of 9 stages of information andconsultation:

- transmitting the information/data;- familiarization with the data and examining them;

- leading an appropriate study;- preparing for consulting;- formulating an opinion;- meeting;- employers’ rational answer to opinion;- “the exchange of views and establishing a dialogue, discussion, in order to make a

decision or to reach an agreement”;- “employer’s and employee’s representatives must cooperate and pay due attention to the

mutual rights and obligations, taking into account the interests of the institution or enterprise andthe ones of its employees”.

Due to political changes in Central and South Europe, a number of unions have joined theEuropean Trade Union Confederation, an d in 2002 their member’s number arrived at 76 nationalconfederations of trade unions from 35 countries together with another 11 European industrialfederations, representing some 60 millions members. The Confederation is recognized by the EU,by the Council of Europe and the European Association of Free Trade as a representative part of thetrade union movement to European level.

The main objectives of the Confederation are:- to influence the direction of European legislation and policy -making process through

representation in EU institutions and participation in consultation processes including the Economicand Social Committee of the EU;

- to engage in regulating employment working with employees at European level throughEuropean processes of social dialog ue. UNICE and the Confederation are recognized by EU associal partners and are allowed to negotiate agreements falling within the European level. Thisresulted in three such agreements which relate to parental leave, part -time work and fixed-termcontracts, which are now part of EU legislation under the ratification of the EU Council ofMinisters;

- campaigns for the rights of employment through union actions, including theorganization of demonstrations in European cities to promote union causes.

4. TRADE UNIONS IN ROMANIA

In Romania, the immediate effect of the Revolution from December 1989 was the abolitionof the type of unique union by enterprise, organized on territorial base and it’s replacing withoccupational unions or similar occupations, more ef fective way for knowledge and protection ofprofessional interests. Experience has highlighted the reverse of the coin, however: breaking intopieces the power and weaken their resistance in confrontations with employers (Burloiu, 2001).

Changing the ownership of companies, bankruptcy or restriction of activities, developmentof a sector of small and medium enterprises, foreign capital penetration and multinationalenterprises, the emergence of new business, acted as pressure waves, constantly changing eco nomicand social foundations on which the social partners build their own institutions. In addition to thesechanges, an important catalyst for change was adapting to the criteria the European social model,adopting a legal framework and the creation of st ructures compatible with those of the EuropeanUnion member states.

Each of the factors mentioned above gave birth to new restrictions and forced to changesand re-assembling between different unions. To those disturbing factors are added some otherpsychological one, strongly related to the first. In conditions in which employees found that theirworking places disappear, their wages are deteriorating in real terms, and the union fight fails tostop such trends, the appetite for trade unionism of those who remained at their working placereduced. Moreover, in this context, it was inevitable that the natural movement for attracting newmembers and give rise to greater competition between organizations, including attempts to changeexisting affiliations of organizations from lower levels.

According to a study conducted in 2002 on 22 branches of the national economy,

syndication rate of employees in Romania was 44%, compared with about 90% in the early 1990s,you could say that the range of trade unions was co nfined to about half. However, the number oftrade union organisations increased from 2615 in 1996 up to 6852 in 2004. (6).N ational tradeunion confederations exist, so remember: the National Confederation of Free Trade Unions inRomania – FRATIA (CNSLR-FRĂŢIA), having around 800,000 members; the NationalConfederation of Trade Unions “Cartel ALFA” (CNS Cartel ALFA), representing over1,000,000 members; the National Bloc of Trade Unions (BNS), the Confederation ofDemocratic Trade Unions in Romania (CSDR); the National Trade unions ConfederationMERIDIAN (CSN MERIDIAN).(7)

In various branches, there are notable differences in this point of view. Thus, the syndicationrate is maintained in the extractive industry to a high level (85%), this branch b eing on the firstposition at this indicator. A close level was recorded on heavy industry as a whole (83%). Thefollowing locations were the branches of chemistry, oil processing, rubber and plastics (76%),electricity, gas, water and health and social wo rk (61%), transport (57%), light industry (50%),Agriculture (37%), Public Administration and Commerce, hotels and restaurants (30%) andForestry (27%). In Commerce branch, hotels and restaurants, which hold the largest share of totalemployees in the national economy (14.6%), were recorded one of the lowest rates of syndication(30%).

5. Labor relations in the context of global crisis

Collective bargaining retains an important role in Europe, despite a moderate decline intrade union membership (from 27.4% in 2000 to 25.6% in 2005). In 2006, almost two -thirds ofEuropean workers were covered by a collective agreement. Membership of employers'organisations – which largely determines collective bargaining coverage – appears to be stable.However, there are marked differences between the Member States. Membership of trade unionsranges from 8%-80% and membership of employers' organisations from 20% -100%. Whilebargaining coverage is 68% in the EU -15 Member States, it is 43% in those countries that joinedthe EU since 2004. (8)

Wage bargaining seems to have had an impact on the gender pay gap, wage inequality.Minimum wages are an increasingly important component of wage setting in the EU. Statutoryminimum wages now exist in 20 Member States. Only in Member Sta tes where strong employers'organisations and trade unions negotiate for a large number of firms and workers in a coordinatedway is the lowest wage floor set by collective agreement rather than statutory minimum wages.Commission considers that social par tner organisations themselves need to be strong and must builda relationship based on trust. That is why the EU has substantially increased the support to socialpartners through the European Social Fund, in particular in the Member States that have joine d theEU since 2004.(9)

CONCLUSIONS

High quality industrial relations are a key element in managing economic change andreducing its costs, helping workers and companies adapt to change while protecting them fromtransitory shocks. Good relations between workers and employers produce positive economic andsocial effects, both in times of slowing economic growth.

A structured dialogue between workers and employers representatives can help the EU facethe economic crisis. Policies on working conditions and training and labor market policy can notremain the sole responsibility of the state, unions and employers play an important role in thissense.

ENDNOTES

(1) Published in the Official Gazette no. 73 / 5 February 2003, as amended;(2) Revised European Social Charter was ratified by Romania by Law no. 74/1999;(3) W. David Rees, "The Art of Management", 2005;(4) F. Paşa, Modernization of trade unions, in the journal "Reports of work, no. 10/2007, p. 51;(5) EC Directive no. 91/533 of 14 October 1991 on the employer's obligation to inform the worker aboutconditions of employment;(6) Luminiţa Dima, The evolution of labour law in the member states of the european union, 1995 -2006,country study of Romania, p.10, www.europa.eu, http://www.insse.ro/Anuar%202005/CAPITOLE/cap15.pdf , p.56;(7) International affiliation of the trade union confederations: BNS – ETUC (1996), ICFTU (1995); CartelAlfa – ETUC (1996); CNSLR Fratia – ETUC (1996), ICFTU (1993); CSDR – ETUC (1995), WCL (1996);(8)Industrial relations en Europe 2008”, European Commission, Luxembourg, 2009, , www.europa.eu;(9) European Commission „High quality industrial relations can help EU face crisis” Bruxelles, le 3 février2009.

BIBLIOGRAPHY

1. Armstrong, M., „A Handbook of Human resource Management Practice”, Kogan Page,London, 2001, Romanian translation CODECS Publishing House, 2003; p.686;

2. Gazier, B., “Human Resource Strategies”, European Institute Iaşi, 2003;3. Lock, D, „Gower Handbook of Management”, Editura CODECS, 20014. Lewis, P., Thornhill, „A Employee relations: Understanding the Employment Relationship”,

Prentice Hall Publishing House , London, 2003;5. Manolescu, A., Lefter, V., Deaconu, A., “Human Resources Managemen t”, Economic

Publishing House, Bucharest, 2007, p.581;6. Nicolescu, O., (coord), Lefter, V., “Managers and Human Resources Management”,

Economic Publishing House, Bucharest, 2004, p219;7. Popa, N., “General Theory of law”, Editura All Beck, Bucharest, 2002, p.568. Price, A., “Human resources management in a Business context”, Thomson Learning

Publishing House, London, 2004p.632;9. Voiculescu, N., “Labor law. Internal regulations and Community”, Editura Rosetti,

Bucharest, 2003;10. http://www.mmuncii.ro;11. http://www.europa.eu

THE JUDICIAL COOPERATION IN CRIMINAL MATTERS WITHIN THE EUROPEAN UNION

Professor PhD. Vasile PAVALEANU“Stefan cel Mare” University of Suceava, Romania

pavaleanuvasile@yahoo.com

Abstract:The stuhy is anchored in reality, that reagarding of the criminal phenon in the organiyed crime of dealing, of

the traffic of weapons and perons, serious crimes exceed the boudari es of certain states and examines the measurewhich to be taken to fimly repress such crimes.

The study introduce a serises of preoccupations in order to harmonize the law depositions of material andprocedural criminal law, a gradual increase of the mutua l confidence in the judicial acts of the member state of theEuropean Union and the enlargement of the cooperation between the judicial bodies in view of preventing seriouscriminel deeds.

We espress our conviction that sooner or later there will be an Eur opean Criminal Cod an European criminalprocedure with unifying dispotions, in parallel with the national criminal legislation.

Key words: criminal law, criminal procedure, communitarian fraud, European Court, criminality, judicialcooperation

JEL Classification: K14, K33

1. INTRODUCTION

Under the conditions of globalization, the criminal phenomenon expanded beyond nationalborders, the legislations of the states being unable to efficiently fight against it and thereforeappropriate measures need to be taken on an international plan.

Such an endeavor is difficult to achieve as the norms of criminal law have a domesticcharacter and the creation of an international criminal law has been contested by certain authorswhile accepted by others.

In this light, professor Vintila Dongoroz (1) could not conceive the possibility of creating aninternational criminal law, as there is no juridical organization of the international community,which requires a power superior to that of the sovereignty of each state, able to impose a commonjuridical order, opinion which was later shared by other authors, such as: Manzini, Maggiore,Bettiol, Garraud, etc.

This reality was also acknowledged through international treaties of the European Union.However, the realities after World War II imposed the creation of certain international

criminal courts for the trial of the greatest war criminals, such as the Nuremberg Court.

2. THE JUDICIAL COOPERATION IN CRIMINAL MATTERS

Through the UNO resolution 808 from February 22, 1 993, the International Court wascreated, with the headquarters in Hague, for the trials of people who allegedly violated theprovisions of the international humanitarian law on the territory of former Yugoslavia after 1991(2).

Then the idea of the regiona lization of international criminal law appeared, sustained duringthe colloquium of the International Criminal Law Association held in September 1992 in Helsinki.On this occasion, it was admitted that the term globalization has in view the development of meansof international collaboration among at least three independent states belonging to a determinedgeographic entity.

One of these means refers to the creation of an European criminal law which, as someauthors(3) claim, is formed of a series of crimi nal norms (substantial, procedural, prison related)which are common to several European states, to be used against crime and especially against

translational organized crime. Starting from this definition, several authors(4) wondered whether aEuropean criminal law is backed up by a necessity, invoking several obstacles.

One of the first obstacles is the idea of sovereignty claiming that the realization of criminaljustice is an attribute of sovereignty and therefore impossible to achieve elsewhere but in side thenational borders.

A second obstacle comes from the national particularities of criminal law and especially ofcriminal procedure. In Europe there are two systems, one of the continental criminal law, born fromthe Roman law and another, named com mon law, represented in England, but no measures havebeen taken yet to bring the two closer together. Thus, in England a Public Ministry was founded in1986 and the legislators from continental Europe introduced probation(5). Although the distinctionbetween the continental procedural system (inquisitorial) and the British system (accusatorial) tendsto fade out to a certain extent, it is less likely that a unique law shall apply to the whole Europe. Thejuridical, sociological and cultural differences are against it and probably for a long time from nowon as well.

However, the two obstacles cannot prove determinant, as within the general criminal lawseveral institutions can be unified, such as the causes for the lack of punishment, situation alsofound in the special criminal law, especially the incrimination of communitarian fraud, anindispensable measure to protect the financial interests of the European Communities. Severalnational legislations have already incriminated the communitarian fraud, such as Germany, Italyand Romania, which, through Law no. 161/2003 introduced in Law no. 78/2000 Section 4 1

regarding crimes against the financial interests of the European Communities.Some other states haven’t, namely France and Holland, where the prosecut ion is possible

only on the basis of common law incriminations regarding forgery, trickery, fraud, smuggling,deceit, which make it possible that for certain acts no criminal liability is triggered.

From this reason the problem of the incrimination of the communitarian fraud has beenraised. In relation to this, at the request of the Parliament and of the Commission, experts from themember states of the EU have framed a series of norms regarding the protection of the financialinterests of the Community(6), namely Corpus Juris(7), which comprises 35 articles, grouped intwo parts, one dedicated to criminal law and the other to criminal procedure.

The first eight articles suggest the incrimination of certain acts regarding the defrauding ofthe communitarian budget and corruption, work abuse, money laundering and the association inview of committing crimes.

Part two is dedicated mainly to the European Public Ministry(8) which later was suggestedto become the European Prosecutor and later the European Cou rt. Thus, according to art. 69 line 1of the Lisbon Treaty(9) for the modification of the Treaty regarding the European Union and theTreaty of creation of the European Community for fighting crimes against the financial interests ofthe Union, the Council may institute a European Court, entitled to investigate, prosecute and send totrial, together with EUROPOL, the authors and co -authors of crimes against the financial interestsof the Union.

The statute of the European Court, the conditions for its exer cise of powers, the applicableprocedure for its activities as well as the applicable norms for the jurisdictional control of theprocedural acts adopted in the exercising of its attributions are set through regulations.

The European Council may adopt, si multaneously or subsequently, a decision ofmodification of line 1 to the purpose of extending the powers of the European Court to include thefight against serious crimes of trans -border dimensions and to the purpose of the appropriatemodification of line 2 with regards to the authors and co -authors of serious crimes affecting severalmember states.

Another Institution of the EU is Eurojust, which, on the basis of article 69D of the Treaty ofLisbon, has the mission to support and consolidate the coordin ation and cooperation betweennational authorities of criminal investigation and prosecution in relation to the serious forms ofcriminality which affect two or more member states which require criminal research on commongrounds, through operations conduc ted by the authorities of the member states and by Europol.

In this context, the European Parliament and the Council determine the structure,functioning, field of action and attributions of Eurojust, which may include:

- the beginning of the criminal inves tigation as well as the proposition for criminalresearch conducted by the competent national authorities, especially the onesreferring to crimes against the financial interests of the union;

- coordination of research and criminal investigations;- consolidation of judicial cooperation including solving competence conflicts and

in close relation with the European Judicial Network.The conditions for the implication of the European Parliament and of the national

parliaments in the evaluation of Eurojust are cu rrently being established.The official acts of juridical procedure within the above mentioned investigations are carried

out by the national competent authorities.The judicial cooperation in criminal matters within the Union, in the light of article 69A of

the Treaty of Lisbon, is based on the principle of mutual recognition of court decisions and includesthe acceptance of rightful acts and administrative norms of the member states in certain fields.

To this purpose, the European Parliament and the Coun cil adopts measures regarding:- The creation of norms and procedures meant to ensure the recognition, in the

entire Union, of all categories of court and judicial decisions.- The prevention and solving of competence conflicts between member states;- The support of professional training of magistrates and personnel in the judicial

branch- The facilitation of the cooperation between the judicial authorities or their

equivalent of the member states in matters of criminal investigation andenforcement of decisions.

To the extent it may turn out to be necessary to facilitate the mutual recognition of court andjudicial decisions, as well as the police cooperation in criminal matters exceeding the nationalborders, the European Parliament and the Council may establis h a set of minimal norms which takeinto consideration the existent differences between the judicial traditions and the law systems of themember states and referring to:

- mutual admissibility of evidence among member states;- the rights of people in criminal procedure;- the rights of victims of criminality- other special elements of criminal procedure which the Council has previously

identified in a decisionThe adoption of these minimal norms doesn’t stop the member states from maintaining or

adopting a higher level of protection of people, nevertheless, the levels established at the level ofthe community shouldn’t be ignored. We can mention here that Romania, through the revisedConstitution of 2003, has established in art. 23 that the remanding in custody of a person may notexceed 24 hours, while in France, Spain, Italy, Moldavia, it may extend up to 4 days. Througharticle 27, line 3 of the fundamental law, it was stipulated that the search warrant is granted by thejudge and it is carried out under the c onditions and forms stipulated by the law, which means thatthe previous exceptions regarding fragrant crimes and the consent of the person being searched areno longer in force, although the legislations of several states from the European Union still all ow it.

The European Parliament and the Council may also establish, according to art. 69B of theTreaty of Lisbon, minimal norms regarding the definition of crimes and sanctions in the fields ofserious criminality which exceeds the national borders, result ing from the nature or impact of thesecrimes or from the special requirements in fighting them.

These fields of criminality are as follows: terrorism, traffic of persons and sexualexploitation of women and children, narcotics and weapon trading, money l aundering, corruptioncounterfeit of means of payment, organized crime.

Depending on the evolution of crime, the Council may adopt a decision to identify otherfields of criminality.

3. CONCLUSION

In the event the acknowledgement of acts and administra tive norms with the powers of a lawin criminal matters proves to be indispensable to ensure the efficient enforcement of a policy of theUnion, minimal norms regarding the definition of crimes and sanctions may be established for thatparticular field.

Finally, the European Parliament and the Council may establish measures for encouragingand supporting the action of the member states in the field of crime prevention, excluding everyharmonization of rightful acts and administrative norms of the member sta tes.

The transposition in practice of these provisions will lead to a harmonization of thedispositions of material and procedural criminal law, to the gradual increase of mutual trust inprocedural acts of the judicial bodies of the member states and the enlargement of their cooperationfor the suppression of serious crimes exceeding the national borders.

We express our conviction, alongside with other authors(10), that in the near future therewill be a Criminal Code and a European Criminal Procedure wi th unifying dispositions of materialand procedural criminal law, in parallel with the national criminal legislation.

We could therefore speak of the creation of a criminal European space and of a uniformcriminal law, but it is still debatable whether th e authorities of the EU and the national authoritieswill get involved and cooperate against serious criminal offences.

(1) Vintila Dongoroz, Drept Penal, Bucharest, 1939, page 179.(2) Jean Pradel, Geert, Droit penal europeen, Dalloz, Paris, 2002, page 2.(3) Ibidem, p.3;(4) A. Tsitsoura, Este necesar un drept penal European , Pouvoirs, no. 55, 1990, p. 133.(5) J. Pradel, Droit penal compare, Dalloz, 1995; passim.(6) V. Pavaleanu, Spatiul judiciar European, Revista de drept penal, no. 2, 2004, p. 44.(7) Mireiile Delmas-Marty, Corpus Juris portant dispositions penales pour la protection des interest financiers

de l”Union Europeenne, Editura Economica, Paris, 1997.(8) N. Neagu, Scurt istoric al evolutiei protectiei penale a intereselor financiare ale Uniunii Europene prin

mijloace de drept comunitar, Dreptul, no. 8, 2006, p. 135.(9) Signed in Lisbon, on December 13 th, 2007, ratified by Romania through Law no. 13/2008, published in

Romania’s Official Monitor no. 107 from February 12, 2008.(10) G. Antoniu, Implicatii penale ale Constitutiei Europene, Revista de Drept Penal, no. 3, 2005, p. 24.

BIBLIOGRAPHY

1. Antoniu, G. - Implicatii penale ale Constitutiei Europene , Revista de Drept Penal, no. 3,2005, p. 24.

2. Delmas-Marty, Mireiile - Corpus Juris portant dispositions penales pour la prote ction desinterest financiers de l”Union Europeenne, Editura Economica, Paris, 1997.

3. Dongoroz, Vintila - Drept Penal, Bucharest, 1939.4. Neagu, N. - Scurt istoric al evolutiei protectiei penale a intereselor financiare ale Uniunii

Europene prin mijloace de drept comunitar, Dreptul, no. 8, 2006, p. 135.5. Pavaleanu, V. - Spatiul judiciar European, Revista de drept penal, no. 2, 2004.6. Pradel, J. - Droit penal compare , Dalloz, 1995.7. Pradel, Jean; Geert - Droit penal europeen, Dalloz, Paris, 2002.8. Tsitsoura, A. - Este necesar un drept penal European , Pouvoirs, no. 55, 1990.

DECENTRALIZATION AND DECONCETRATION - NECESSARY CONDITIONS FORTHE EMERGENCE OF LOCAL DEMOCRACY ELEMENTS

Lecturer PhD. Student Irina Adriana BILOUSEAC„Stefan cel Mare” University of Suceava, Romania

irinab@seap.usv.ro

Abstract:The article deals with the issue of decentralization and deconcentration as specific elements in achieving local

democracy, pursuing a comprehensive analysis of these principles. We can say that democracy is a form o forganization and political leadership of society in consultation with citizens, taking into account their will and interestsand the aspirations for the progress of the country. It is governance by the people, the supreme power being exercisedby the people directly or through elected representatives under a free electoral system. The ultimate aim is to transformpeople's lives and eradicate poverty by giving political, administrative and financial power to people, in order for themto be able to control their own destiny effectively and to take action for the entire process to be supported. The objectiveshould be to transform the Romanian administration into an efficient and performing administration, the localgovernment thus becoming the true engine of development in Romania. At the end of this process, it is expected thatboth central and local government will be equal partners in developing the country. Also, it is desired that the entirecivil society participation in governance, greater transparency and accountability, respect for rule of law, soundstrategies for poverty eradication, main gender and other issues related to disadvantaged groups, were maintained andsustained.

Key words: democracy, decentralization, deconcentration , tehnichs descentralization, principle of localautonomy

JEL Classification: H83

1. INTRODUCTION

The paper presents issues regarding the process of decentralization and deconcentration inthe context of the reform strategy of local government, introducing the principles and rules thatsupport the process of decentralization and the link between decentralization and deconcentration,on the one hand, and the emergence of local democracy elements, on the other hand.Decentralization involves democratization and involvement of people in their own development.

Democracy is a type of political regime, but also a way of life. It is the product of society,but is also producing life styles and collective styles of existence. The st udy of democracy includesa set of laws that govern collective life, social feelings, emotions etc.

To make and keep a democratic government in a given society is a difficult thing, a factrecognized in political science, whose history is based on the wor ds of Aristotle, that "the purposeof a state is to be, where possible, a society of equal people".

2. DEFINITION OF DEMOCRACY

Trying to define democracy is very difficult. Democracy has evolved over history, takingvery different forms nowadays. A def inition of democracy shows that this means "rule by peoplefor people".

In the Greek language it means "rule of the people", a form of state organization andmanagement in which power comes from the people and the latter express it either directly or (an d)indirectly. Democracy has emerged on the European continent, first in the Greek polis as a direct orimmediate democracy.

The classical definition of democracy belongs to Joseph Schumpeter in his Capitalism,Socialism and Democracy : "Democracy is that institutional arrangement for arriving at politicaldecisions in which individuals acquire the power to decide by means of a competitive struggle forthe people’s vote.”

Francis Fukuyama in "The End of History?" in The National Interest says that the world hasbecome increasingly integrated into a capitalist economy and democracy does not appear to haveany significant competitor. The main thesis of Fukuyama is that the disintegration of communismleaves free hand to democracy making it unique in the pre sent ideological space without a visiblecompetitor.

A democratic government is the basis for achieving the Millennium Development Goals andour need to be applied a comprehensive approach; therefore better governance is the key to asuccessful development policy. The key element of good governance is the recognition that the bestdecisions are made at the level closest to the citizen.

3. THE APPLICATION OF THE PRINCIPLES OF DECENTRALIZATION ANDDECONCENTRATION LEADS TO AN ADMINISTRATIVE SYSTEM

In the administrative law theory, there are several government systems: a centralized and adecentralized system, as the predominant factor is the central or the local one. Between them thereare a number of intermediate systems: deconcentration, a system in whi ch local authorities,although with major powers are not elected but appointed by the centre and the administrativesupervision, which implies the existence of a right of control of the central authorities on the localdecentralized government.

The analysis of the legal framework regarding the organization and operation of the localpublic administration local detaches the following basic principles which the local publicadministration system is based on:

- The principle of local autonomy;- The principle of decentralization of public services;- The principle of deconcentration;- The principles of subsidiarity and proportionality;- The principal of eligibility of the local government members;- The principle of consultation of citizens in local is sues of particular interest.Reforming any system in the direction of decentralization is always a an extremely sensitive

political process and a very complex one as well.Decentralization and deconcentration are subject to serious divergences, polemic s and effort

in the whole world. From this perspective, decentralization is a long term effort that requiressystematic actions of getting acquainted with institutions, public policies and public perception oflocal and regional actors on the whole phenome non of decentralization. Decentralization is aconstitutional principle and a tool for assessing the degree of local, financial and patrimonial andadministrative autonomy.

The application of the principles of decentralization and deconcentration leads to anadministrative system and institutions of government able to provide greater transparency andresponsibility, respect for the rule of law, solid strategy for eradicating poverty and solutions toother problems.

We believe, along with other authors, t hat to qualify a system as decentralized or centralizedmeans to determine what types of relationships exist between the authorities at the centre, on theone hand, and those in territory on the other hand. In administrative law theory, there are severalmanagement systems: a centralized and a decentralized system, as the predominant factor is thecentral or the local one. Between them there are a number of intermediate systems: deconcentration,a system in which local authorities although have major powers are not elected but appointed by thecentre and the administrative supervision, which implies the existence of a right of control of thecentral authorities on the decentralized local government.

Public administration in any state will not be able to so lve its tasks which are set only bycentral administrative bodies; they will necessarily have to be arranged throughout the country. Inthis context, decentralization means that administrative organization which allows collectivities (orservices) to manage themselves. Therefore decentralization occurs as an administrative regime

opposed to centralization, local authorities are not hierarchically subordinate to the central ones, buthave some autonomy, and their documents will not be canceled by the central authorities, althoughthe state reserves the right to control the activity of these authorities. Local autonomy is afundamental principle of functioning of the local collectivities and involves solving the localproblems by the representatives of the adm inistrative territorial units. This principle is enshrined inboth international documents and national laws of each state. In the present context the reform ofthe administrative system is discussed more and more often. However, it is difficult to talk ab out areform of the public administration in the absence of local decentralization.

Decentralization produces favorable conditions for the emergence of local democracyelements, as it delegates to elected local authorities the right to exercise their own responsibilities,confirmed by free and universal vote. Decentralization appears as a system based on the recognitionof local interest which is different from the general one through making local collectivities withinthe state collectivity, the former h aving functional organizational structures and their own heritagefor the fulfillment of local interest.

Decentralization is seen as an indispensable corollary of democracy, for the organization ofpublic administration. Moreover, the problem about the r elationship between democracy anddecentralization has been quite frequently discussed. The experience of the Central and EasternEuropean countries prove the essential role decentralization and democratization of publicadministration in the territory pla yed in the wide process of reform of the societies in transition. Adifference must be made between established democracies with a long tradition, based on soliddemocratic political regimes and the democracies of the recently listed countries in the "wave " ofdemocratization. Local territorial collectivities are intermediaries between the individual and thecentral power, generating rules adapted to each geographical framework and personalizing the stateauthority according to local problems. (1)

Decentralization is an expression of democracy applied to administration, providing asystem in which citizens participate in the government through local authorities elected by them.The political foundation of decentralization is recognized by the European Cha rter of localautonomy as one of Europe's common democratic principles.

Citizens have many ways of local democracy through which they can participate in the selfgoverning: the local elections, the right to petition and reclaiming, support in the delibera tivemeetings, participation in local referendums, and in some cases general initiatives, etc.

4. THE PRINCIPLE OF CONSULTATION OF CITIZENS - COMPONENT OFLOCAL DEMOCRACY

The principle of consultation of citizens on matters of local interest (or local r eferendum) isa component of local democracy , allowing the direct intervention of local communities in solvingcertain problems. The principle of consultation of citizens derives from local autonomy, as the localreferendum is a genuine feature of it. [156 , p.196]

In a democracy, power is designated by general elections, equal, free, secret and direct,those who come into its possession having a mandate limited in time. Elections are democratic onlywhen there are several alternatives.

A true democracy involves the continuation of political and administrative decentralization,amplifying the meaning of direct and indirect involvement of citizens in decision making and incontrolling this process. The transfer of power must be doubled by appropriate trans fer of resources,without which decentralization fails and compromises itself. Local government is the first publicspace with which a citizen is in direct contact. It is known that the right to local autonomy belongsto local authorities who exercise it v ia the authorities chosen by them. Local collectivities keep theirright to intervene directly in some cases in the administration, through a referendum or other formsprescribed by law. The principle of consultation of citizens on matters of local interes t or localreferendum is a component of local autonomy enjoying constitutional regulations.

The way to the modernization of public administration requires a new development phase inthe development of states, of the democratic regime and in ensuring effe ctive constitutional rightsand freedoms.

In matters of local concern which is the concern of a part of the population of theadministrative-territorial unit there may be organized, with this part, consultations, public trials andcalls according to the law.

Local collectivities keep the right to intervene directly in some cases in the administration,through a referendum or other forms prescribed by law. The principle of consultation of citizens onmatters of local interest or local referendum is a com ponent of local autonomy enjoyingconstitutional regulations.

The local referendum as well as the national one is an element of semi -direct democracy, asit provides local communities with the opportunity to intervene directly in resolving issues of loca linterest. For example, Article 8 of the Law on local government in the Republic of Moldova readsthat in matters of importance for the administrative -territorial unit the population may be consultedby referendum, according to the Electoral Code.

It is however necessary to emphasize that this direct intervention in a consultativereferendum cannot be considered as truly a form of participation of local communities to exerciselocal autonomy, since the referendum, the local collectivity expresses their a ttitude and not theiropinions on the problem addressed, so the decision will be made by the mayor or the local council.

Therefore elections are the criterion that decentralization is based on which depend on thefree exercise of rights and freedoms of citizens at the local level. The mayor or the local councilshould take into account the expression of will of the holder of the right to local self -governance. Inmatters of local interest which concern a part of the population of the administrative -territorial unit,consultations, public trials and discussions may be organized.

Democracy implies the participation of individuals in society and lack of participationendangers its democratic functioning. This implies a participation of citizens in the loca lgovernment. But through this direct intervention, citizens express their opinion only on a specificissue, the decision having to be made by the mayor or the local council.

The active participation of citizens in making administrative decisions and in making lawsaim to:

- To increase the level of responsibility of the local administration to the citizen as recipientof the administrative decision;

- To stimulate the active participation of citizens in making administrative decisions and inmaking laws;

- To increase the level of transparency throughout the public administration.Public participation is an important tool in local development activities, adding quality in

making decisions and enhancing the support offered by the public in their imple mentation.The harmonization of public governance with the technical, administrative and economic aspects ofEU legislation requires the adoption of a strategic vision regarding the objectives, means andprecise destination of decentralization in the stat e, linked to public sector modernization, thedelineation of powers and the insurance of the functioning of the local and sub -national publicadministrations.

The principle of consultation is closely linked to the principle of local autonomy, whichshows that addressing public and local administration is ensured not only by the elected bodies ofthe local government but also through direct participation of the public to the realization of the localadministration’s prerogatives. In this process of democra tic representation, the transfer ofadministrative and economic powers from central to local and regional decentralization will beaccelerated, decentralization and deconcentration being evaluated by criteria and assessment toolswhich actually measure the degree of citizens’ satisfaction with the public services provided tothem.

5. CONCLUSIONS

In conclusion we can say that due to decentralization, democracy has been strengthened andextended leadership has become clear and reliable, planning is fro m lower to higher levels and thereare also projects owned by people.

We can say that decentralization is an essential element of the public administration reform,has been a priority of Romanian society as a whole and involves the transfer of decision a ndresponsibility from the centre to each locality in the country (where people know their interests andcan make the most of everything), as well as the transfer of financial resources, patrimony andhuman assets. To better meet citizens' expectations and the standards of Romania’s integration inthe European Union, it is necessary to achieve a profound reform of the institutions. These twophenomena deconcentration and decentralization of the management in the administrative -territorialunits interfere with each other, there is no Chinese wall. As specialists in the public right claim, inthe administrative organization of a state, there cannot be only the decentralization or centralization,between them there are many intermediate elements: deconcentratio n, administrative guardianship.

Although it is not a perfect system of organization and functioning, administrativedecentralization has proven its effectiveness in all countries with developed democracy and marketeconomy in which it has been applied an d should therefore be promoted and applied, but thisprinciple of local government should not affect the national and unitary character of the state, theorganization and functioning of administration being done according to the law and to enforce itsprovisions, providing a balance between local and central authorities. No matter how wide theautonomy is and therefore the competence of the elected authorities to solve social problems, theseauthorities are engaged in an activity within a (unitary) state an d not outside it.

Given the facts, we believe that decentralization should be an objective of national interestfor Romania for the next years, a goal which should be endorsed and supported by the entireRomanian political class.

NOTES:

(1) Verboncu, Ion, Lifelong Learning in the Economic Field in the European Integration Context ,Review of International Comparative Management No:9 Vol.2 / 2008, pp. 33-45

(2) Vida, Ioan. Puterea executivă şi administraţia publică , Editura Regia Autonomă „Monitorul OficialBucureşti, 1994, p.196

REFERENCES:

1. Alexandru, Ioan, Drept administrativ comparat, Editura Lumina Lex, Bucureşti, 2006;2. Apostol, Tofan Dana, Drept administrativ, vol. I, Editura C.H. Beck, Bucureşti, 2008;3. Bilouseac Irina, Pascariu, Liana, Descentralizarea – principiu fundamental de

organizare şi funcţionare a administraţiei publice locale din România , Sesiuneaştiinţifică „Globalizarea încotro?”, aprilie, Bucureşti, 2006;

4. Bobircă, Ana, Miclăuş Paul-Gabriel, Services sector regulation: a theoreticalapproach, Caiete de Drept Internaţional, Nr. 16 (3/2007), Facultatea de ŞtiinţeEconomice şi Administrative din cadrul Universităţii „Eftimie Murgu” din Reşiţa,2007;

5. Djildjov, Aleko, Metode şi tehnici de management al reformelor privinddescentralizarea în Bulgaria, în Controlul descentralizării şi reformele administraţieipublice în Europa centrală şi de est, Open Society Institute, Ungaria, tradus de BogdanUilecan, Editura Tehnica-Info, Chişinău, 2004;

6. Manda, Corneliu, Drept administrativ, Editura Lumina Lex, Bucureşti, 2007;

7. Popa, Victor, Autorităţile publice ale Republicii Mold ova. Compendiu privindstructura, organizarea şi funcţionarea lor , Editura Tish, Chişinău, 2004 ;

8. Verboncu, Ion, Lifelong Learning in the Economic Field in the European IntegrationContext, Review of International Comparative Management No:9 Vol.2 / 2008;

9. Vida, Ioan. Puterea executivă şi administraţia publică , Editura Regia Autonomă„Monitorul Oficial Bucureşti, 1994.

THE EUROPEANIZATION OF THE CIVIL SERVICES IN THE COMMUNITYTERRITORY

Lecturer PhD Student Ciprian UNGUREANU"Ştefan cel Mare" University of Suceava, Romania

ciprianu@seap.usv.ro

Abstract:Europeanization of the civil services it’s about a few main principles as transparenc y, effectiveness and

efficiency A very important process of Europeanization of civil services regards the traditional aspects of careersaccording to the principle of freedom of movement of the work force. Even if people believes that Europeanization hasnothing to do with civil services in reality it is much tied with public administration. The European Community can notdictate the law governing each civil service but can have effects on national civil services. In reality we can’t sayexactly how European Union influences national administrations.

Despite these Europeanization of the civil services we must not underestimate the importance of nationaladministration traditions. The Europeanization of administrations mean besides other principles, converge nce ofadministrative structures and values.

We can say that Europeanization it’s not a result from a single cause but also the product of the interactionbetween European policy and national law.

Keywords: Europeanization, civil services, careers, EU po licy

JEL Classification: K39

1. PRINCIPLES OF EUROPEANIZATION

The first real form of Europeanization of the civil services considers the followingprinciples: firstly, fundamental principles(1), stated by Article 6 of the Treaty of Nice thatstipulates that the EU is based on the respect for fundamental rights; secondly, principles such astransparency, effectiveness and efficiency that might be established by the Court of Justice.(2)

The concept of “good administration” has been acknowledged by Ar ticle 41 of theFundamental Rights Chapter of the Treaty of Nice. This right for good administration has beenintroduced by the Government of Sweden (3) and consequently included in the ConstitutionalTreaty.

Article III-398 stipulates that: “in accompl ishing their own missions, the Unioninstitutions, offices and agencies must have the support of an efficient and independent Europeanadministration”. Indeed, the principle has been developed in the context of the European Code ofgood administrative conduct, introduced by European Ombudusman in 2002(4).

However, less specifically, this code only applies to civil servants and Communityinstitutions.

The most important effects are mainly considered as linked to the provisions governingnon-discrimination and equality as stipulated in Article 13 and 141 of the EC. Article 141 of thetreaty (5) has important repercussions for civil servants in the member states and thus generated“debates on equality” that have long been lead by national philosophies.

The so-called Bundeswehr (6) judgement has been and still is a measure of the extent towhich the European law can intervene in the national civil service regulations. According to thisjudgement, women who may be excluded from a certain profession, have bee n accepted, based onthis judgement of the European Court of Justice. The rejection of women in certain professions wasa violation of the provisions of the Council Directive 76/207/EEC of February 9 th 1976 whichreferred to the implementation of equal tre atment for men and women with regard to labour marketopportunities and treatment at work. The European Court of Justice confirmed in the Dory case (7)that compulsory military service for men is not affected by the directive.

Article 141The Council Directive 75/117/EEC of 10 February 1975 on the approximation of

the EU laws in applying the principle of equality between men and women.The Council Directive 76/207/EEC of 9 February 1976 on the equal treatment for

men and women with regard to labour ma rket opportunities treatment at work.

The Council Directive 79/7/EEC of 19 December 1978 with regard to theprogressive implementation of the principle of equality between men and women in socialsecurity issues.

The Council Directive 2000/43/EEC of 2 9 June 2000 with regard to theimplementation of equal treatment between people, regardless of ethnicity.

The Council Directive 2000/78/EEC of 27 November 2000 with regard to theestablishment of a framework for equal treatment in the event of employment.

There is a large number of decisions of the European Court of Justice, with regard topayment for men and women from civil services. Article 141 of the EC Treaty and the Directive75/117/EEC of 10 February 1975 stipulate the application of the princip le of equality between menand women. ECJ has analysed each case in a different manner, according to the differentcircumstances involved. There is no particular trend that would suggest that the ECJ will accept thediscrimination against women as a genera l rule, as seen in the Gruber case.(8)

The national provisions contradict the principle of equal payment, if the civil servant canprove that the period spent taking care of the children is not included in the number of years ofactual work.

A German case has played an important role in the past few years. This was the Lakebergcase (9), involving a teacher from North -Rhine. This teacher had been working part -time, teaching15 hours a week. In December 1999, the plaintiff worked an extra 2,5 hours, on req uest, but hasn’tbeen paid. This occurred because the regulation does not allow teachers to be paid for overtime,unless these hours exceed by three the number of hours taught monthly (10) ECJ ruled that thisprovision could breach Article 141 of the EC Tr eaty and Article 1 of the Directive 75/117/EEC of10 February 1975, under the following conditions:

Full-time employees and part-time employees do not receive equal treatment This inequality affects women more This unequal treatment cannot be justified by a certain objective but can only be described

as sexual discrimination;The European Court of Justice confirmed that the first condition has been found. In

making this decision, the Court based its arguments on the fact that the payment for overtime workshould be regarded as separate from basic salary. Indeed, the duration of work is proportionallyhigher than that of full-time employees: three hours means approximately 3% of one person’s 98hours, but approximately 5% of another person’s 60 hours a week work duration. In this particularcase, the unequal treatment was generated because when the issue of overtime arose, these hours arenot proportionally reduced for someone who works part -time. In summarising their decision, theECJ has quoted its own case study of equal treatment for full -time or part-time employees inrelation to the volume of work they performed, according to Art. 141 of the EC Treaty and Art. 1 ofthe Directive 75/117/EEC of 10 February 1975 with regard to the details of the equal payme ntprinciple.

On the other hand, as far as the retirement age is concerned, there may be differencesbetween men and women. Article 7 of the Council Directive 79/7/EEC of 19 December 1978 withregard to the progressive implementation of the equal treatmen t principle for men and women insocial security issues, grants the Member States the right to establish the retirement age outside thescope of the Directive. However, in order to assess whether different retirement ages for men and

women can be justified, one must first establish if the national regulations observe the rulings of theCouncil Directive 79/7/EEC. Differential treatment is permitted if it can be somehow justified.

The principle of gender-based equality is also subject to limitations. In the past, theEuropean Court of Justice has concluded in some cases – the Johston case (11), the Sirdar case(12)- – that gender can be an essential prerequisite for certain professions, such as prison guard oractivity in certain combat units. Thus, a certai n member state can restrict these activities to men orwomen, along with professional training needed for this kind of activities. However, the principle ofequality covers a much larger interest area than just that of equality between sexes. Thus, accordi ngto Article 2 (2) of the Directive 2000/78/EEC (13), direct discrimination appears when a person istreated less favourably than another. One of the issues mentioned in Article 1 is age. In the future, acandidate will not be forbidden to apply for a job if he or she does not meet the age requirements.This will be otherwise considered direct discrimination.

2. THE EUROPEANIZATION OF CAREERS

A second process of Europeanization of civil services deals with the traditional aspects ofcareers according to the principle of freedom of movement of the work force. The provisions allowwaivers for civil services, as stipulated in Article 39 (4) of the EC treaty.

The strict interpretation of Article 39 (4) of the EC Treaty by the European Court ofJustice allows for a wider interpretation of the obligations in order to insure freedom of movement.The Statement of the European Commission of December 11 th 2002 (14) stipulates that eachnational in a member state has the right to work in another member state. Usin g the interpretation ofthe concept of “worker” as stated by the European Court of Justice, the Commission defines it as“any person considered as honest and who works efficiently under the guidance of another personand is paid for that particular activit y”. Moreover, the Commission clearly states that stateemployees and public sector employees are also workers in this context. Consequently, a placementtrainer tends to be a professional trainer who teaches some classes and is paid for this activity, but isthus regarded as a worker, according to Article 48 of the EC Treaty (15).

The Court specified in 1980 that the efficiency and scope of the Treaty provisions on thefreedom of movement of the work force is not restricted by the interpretations of the con cept ofpublic service.(16)

There have been constant debates on the boundaries of the concept “activity in the publicservice”. The diplomatic service, the judicial system, the armed forces and the police forces arecertainly included. Consequently, the Me mber States may restrict the access to these positionsagainst foreign civil servants. On the other hand, forbidding an European citizen to apply for acertain position in a foreign Ministry, for instance, would not meet the requirements of theEuropean Court of Justice, by observing Article 39 of the EC Treaty.

The statement of the Commission from December 11 th 2002 is very clear with regard tothis particular aspect: “specifies functions of the State and similar structures such as the armedforces, the police, the judicial system and the diplomatic bodies.” These positions may not berestricted to the nationals of the hosting Member States(17). This shows the transition from a basissector to a job system and a profession system (18.) The European Court o f Justice recentlyconcluded that the presence of a foreign official will not affect the interests of a Member State(19).

According to estimations, 60-90% of civil services positions are subject to the provisionsof the freedom of movement as stipulated in Article 39 of the EC Treaty. In other words, 10 -40% ofthe civil services positions imply the involvement in using the power assigned by the public law.

The opening of the public sector to civil servants and the employment of other applicantsfrom other Member States has some kind of a domino effect. The first consequence is that it isnecessary to draw up a clear job and career system in order to decide whether or not the gates mustbe opened for other nations as well. A series of measures must be introd uced in order to guaranteethe mutual recognition of qualifications, of experience, performance and also allow the access andembedding in the ranking and hierarchy systems, all these leading to a revaluation of the existing

systems. Finally, the opportuni ties must be created for civil servants in order to be internationallymobile in the EU and these aspects have repercussions on social security and the pensions system(20).

Article 39 of the CE TreatyThe EEC regulation no. 1612/68 of 15 October 1968 on t he freedom of movement

of of workers in the Community.The EEC Regulation no. 1408/71 of June 14 th 1971 with regard to the

enforcement of the social security scheme for employees within the Community, accordingto Regulation no. 1606/98 of June 29 th 1998.

The Council Directive 89/48/EEC of December 21 st 1988 with regard to thegeneral system for the recognition of higher education degrees with a duration of at leastthree years.

The Council Directive 92/51/EEC of June 18 th 1992 with regard to a generalsystem for the recognition of professional training.

The Burbauddin decision (21) of September 9 th is a symptom of this effect. It is stipulatedthat a Portuguese national with six years of experience is entitled to apply for an administratorposition in a hospital in France without any preliminary examination. However, this request forrecognition and acknowledgement of experience in another Member State has been confirmed bythe European Court of Justice ever since 1994 (22), this regulation being necess ary in order todifferentiate the career from accession by means of examination, even if this requirement is anessential prerequisite of the French civil services. There are many opinions that support a widerange of restrictions. Some of them refer to so vereignty: the protection of national identity and ofthe trust the citizens have in the State, these require that certain activities be performed by thecitizens; while fulfilling their duties, foreigners may be subject to loyalty conflicts, especially in themilitary field. Along with the introduction of the European citizenship, it is becoming increasinglydifficult to accept that citizens of the EU could experience conflicts of interest and thus jeopardizethe security of another Member State.(23)

It is interesting to mention that there is a political and legal residence of the EuropeanCourt of Justice with regard to Article 39 (4). A number of member States hold a very broaddefinition of the positions covered by the derogation and hence the restrictio ns for their owncitizens. However, the formal mobility agreements established by the member States already coverprofessional fields. The police exchanges via EUROPOL, as well as the military exchanges,demonstrate the space between the principle of derog ation from the provisions of Article 39 (4) ofthe EC Treaty. The exchange activities in the Ministry of Foreign Affairs between France andGermany could be mentioned in this context; certain diplomatic exchanges go back as far as 1963 atthe Elysee treaty. The concept, according to which the ability of a civil servant is necessary, isrelated to the fact that citizenship is becoming less and less relevant (24).

A statistical analysis could be conducted in order to analyse the real effects of the strategyof Europeanization of careers, mainly restricted by linguistic difficulties. Taking into considerationthe very limited mobility, estimated between 1 and 5%, especially in the fields of education andhealth – which have evolved in the 1988 campaign(25) - the saying “much ado about nothing”applies rather well.

CONCLUSION

The first real form of Europeanization of the civil services considers the followingprinciples. Firstly, fundamental principles, are the ones stated by Article 6 of the Trea ty of Nice.Secondly, there are principles such as transparency, effectiveness and efficiency that might beestablished by the Court of Justice. The so -called Bundeswehr judgement has been establish tomeasure the extent to which the European law can inte rvene in the national civil service regulations.Another principle it is the gender -based equality. The article mention a few cases studies very

important for these area of studies. There are many opinions that support a wide range ofrestrictions. Some of them refer to sovereignty: the protection of national identity and of the trustthe citizens have in the State, these require that certain activities be performed by the citizens; whilefulfilling their duties, foreigners may be subject to loyalty confli cts, especially in the military field.

NOTES:

() Speer B, Die Europaiche Union als Wertegemeinschaft, Die Offentliche Verwaltung , No. 23, December 2001(2) Lais M, Das Recht auf eine gute Verwaltung unter besonderer Berucksichtigung in der Rechtsprechun g des

Europaichen Gerichtshofes , No.2 2002; OECD-PUMA, European Priciples for Public Adminsitration ,No.27, 1999

(3) Rules and Principles of Good Administration in the Member States of the European Union , Stockolm, 6-7December 2004

(4) European Ombudsman, the European Code of good administrative conduct, 2002(5) Art. 141 of the EC Treaty on the equality between men and women(6) The Kreil case, ECJ, C-285/98, 11 January 2000(7) The Dory vs Germany case, ECJ, C -186/01, 11 March 2003(8) The Gruber case , ECJ, C-249/97, 14 September 1999(9) ECJ, C-285/02, 27 May 2004(10) Paragraph 78 A of the Law of civil services in the North Rhine(1) ECJ , C- 222/84, 15 May 1986(2) ECJ, C- 273/97, 26 October 1999(3) The Council Directive 2000/78/EEC of 27 No vember 2000 on the establishment of a framework for equal

treatment in the case of employment .(4) The Statement of the European Committee, „free movement of workers: reaching the benefits and potential”

, Brussels, 11 December 2002(5) ECJ 31 July 1986, C.66/85, Lawrie-Blum vs Land Baden-Wurttemberg, ECR, p. 2121(6) Decision of 17 December 1980, Comisia vs Belgia(7) COM 2002 694 final(18) Lemoyne de Forges, J.M. Exigences communautaires et exigences manageriales se rejoignenet -elles?

AJDA, 27 October 2002, p. 1920(9) ECJ, C- 405/01, Colegio de Oficiales, the decision of September 30th 2003; ECJ , C - 47/02, Anker, decision

of September 30th 2003() See Ziller J, „EU Integration and Civil Service Reform ,”, Preparing Public Adminsitration for the E uropean

Administrative Space, SIGMA, op. cit; ECJ, September 2003, Burbaud vs the Ministry of Work andSolidarity , C- 285/01

(20) The case C- 419/92 Scholz ECR 1994, the case C -15/96 Schoning, the case C-187/96, Cominia vs Greece(21) See Kammerer J A, „Europainsierung des nationalen Dienstrechts , ”Europarecht EUR, No. 1, 2001(22) Demmke C, Linke U, „Who is nation and who is european? Exercising public power and the legitimacy”

Art. 39 4 EC, EIPASCOPE, No.2/2003(23) The freedom of movement for worke rs and access to employment in the public service(24) Speer B, Die Europaiche Union als Wertegemeinschaft, Die Offentliche Verwaltung , No. 23, December

2001(25) The Kreil case, ECJ, C-285/98, 11 January 2000

BIBLIOGRAPHY:

1. Council Directive 2000/78/EEC of November 27 th 2000 on the establishment of aframework for equal treatment in the event of employment

2. Lais M, Das Recht auf eine gute Verwaltung unter besonderer Berucksichtigung in derRechtsprechung des Europaichen Gerichtshofes, No.2 2002; OECD -PUMA, EuropeanPriciples for Public Adminsitration, No.27, 1999

3. Lemoyne de Forges, J.M. Exigences communautaires et exigences manageriales serejoignenet-elles? AJDA, 27 October2002

4. ECJ, C- 405/01, Colegio de Oficiales, the decision of September 30 th 2003; ECJ , C- 47/02,Anker, the decision of September 30 th 2003

5. ECJ , C- 222/84, 15 May 19866. ECJ, C- 273/97, 26 October 19997. Kammerer J A, „Europainsierung des nationalen Dienstrechts, ”Europarecht EUR, Nr. 1,

20018. Rules and Principles of Good Administration in t he Member States of the European Union,

Stockolm, 6-7 December 20049. Speer B, Die Europaiche Union als Wertegemeinschaft, Die Offentliche Verwaltung, No 23,

December 2001

BOOK REVIEW

BOOK REVIEW FORTHE GOVERNMENT OF THE EUROPEA N UNION, DIEGO VARELA

Andreea GOVNADegree in Political Science at the “Alexandru Ioan Cuza” University of Iaşi, Romania

Currently Master in Public Policy and Institutional Management at the “Alexandru Ioan Cuza” University of Iaşi, Romaniaandreeagovna@gmail.com

The book has appeared at the European Institute of Iaşi; year of publishing: 2008; Collection:European Studies; Field: European Studies; number of pages: 228; Format: 165x235 mm ; ISBN:

978-973-611-571-4

The Government of the European Union is a book published in Spain in 2008, and it waslaunched the same year in Romania at the Europe an Institute in the European Studies Series,number 18. Unlike the Spanish version of the book, the English version includes changes due to thetransformations that have occurred in the European Union.

Diego Varela Pedreira, the author of the book , is the coordinator of the Jean Monnetmodule- Government of the European Union, at the University of A Coruña. He studied economicsat the University of A Coruña, has a Masters in European Studies, a Ph.D. in Government, obtainedat the London School of Economics, the University of London. It is also an associate professor atMA Management and Public Policy of the Faculty of Economics of the University of A Coruña.Previously, he was a scholar Robert Schuman in the European Parliament and assistant at theLondon School of Economics. The choice of the theme of the book is very interesting and courageous at the same time,especially if we take into account the changes brought by the EU enlargement and the Treaty ofLisbon. The book launch in Roma nia is very appropriate if we consider that the EU elections takeplace this year.

The book has an accessible and attractive style combined with scientific rigor, and eachchapter starts with a case or a story, and uses advanced methods of research: graph ical models ofthe vote, the theory of principal -agent, the index of power, multidimensional scaling, regressionmultiple etc. So was born this book, which exposes the main issues on EU, combining threecomponents: a detailed description of the realities; a presentation of the main models and theories tohelp us understand this reality, and, last, but not least, a critique of what doesn’t go as it should andmust be reformed.

Chapter 1: To which species does the European Union belong?

Even if the EU is not a state it has the characteristics of a national political system and thuscan be studied using models characteristic to political science compared. Approximately 80% of theregulations that impact economically and socially on us are community rules. Th e Union is complexin permanent change and constant adaptation.

The European Union is not a state; it has no monopoly of legitimate violence, so neithershould be judged by criteria applicable to a state. But its influence on our lives is immense: theallocation of economic resources, social and economic regulations, regulations that applythroughout the EU. The European Union concentrated at first on the economic integration,gradually acquired new connotations and among the most important achievements it can benominated the unique market.

Interesting is the organization based on three pillars: communitarian, foreign policy andcommon security and justice and home affairs, organization assimilated to a temple with columns.Are not to be neglected the ins titutions: the European Commission, the Council of the EuropeanUnion, the European Parliament and European Court of Justice and thus in the Union we can note

the existence of three powers: legislative, executive and judiciary. It is impressive development ofthe Union, the waves of enlargement, the permanent adaptation and the changes brought by thetreaties.

Chapter 2: The link with the citizens: Elections and interest groups

The European elections, even if they were classified as national ele ctions of second rank,are actually useful for the democratization of the European Union. The interest groups alsocontribute to a better link between citizens and institutions of governance of the Union. The first European elections were he ld in 1979 and then every 5 years. The vote presencehas been constantly declining, and a new phenomenon is the migration of votes from classic partiesto new parties, protester ones. The European elections were however considered to be nationalelections of second rank, often through them the citizens showing their disapproval towards thesituation of their country.

The Union comprises 27 countries and approximately 15,000 lobbyists representing variousinterests. The purpose of lobbying activity is inf luencing the decisions and there are two kinds:internal and external. Of all the work we can underline one component: the possession ofinformation. No less important is its transmission, and also the possession of persuasive skills.

Chapter 3: Legislative Policy

The legislative policy of the European Union is the result of a process of negotiationbetween the three main EU institutions (the Commission, the Council and the Parliament). Thepower of each one of them depends upon the legisl ative procedure applied (consultation, assent andco decision). If there are considered the cases presented to the ECJ there can be an inter -institutionalconflict, but when we speak about the legislative policy we mustn’t loose of sight of the procedure.As regards the procedures, here are also observed the development and change of the share ofprocedures. Since 1993, by extending the co -decision procedure, it was an attempt to give greaterpowers to Parliament, which is consulted and giv en the right of veto. However, the Parliament doesnot have legislative initiative.

Chapter 4: Executive Policy

The executive policy of the European Union can be defined as a relationship of delegationbetween a principal (legislature, the tandem Coun cil-Parliament) and an agent (the EuropeanCommission). The degree of discretionary authority will depend on how divergent are the principaland agent preferences and the complexity of the legislative domain. The legislative has a multitudeof forms of control of the Commission.

The Commission is responsible for the budget execution, law enforcement, has themonopoly of legislative initiative, administrates funds and is delegated by the Council with certainresponsibilities but a constant in this process is incertitude, thus there might be the possibility ofcertain discretionary powers entrusted to there should not be missed the fact that the executivepower is applied both by the Commission and the member states, part of legislation beingimplemented by states. To avoid the abuse of the legislative power, it has a series of controlprocedures: the motion of censure, the adoption of new legislation - and methods of post- thecommittee procedure which takes place simultaneously with the implementation of policies.

Chapter 5: Judicial Power

The Court of Justice is active and it has promoted the European integration more than themember states could approve within the Council, the main reason being that the judges decide by asimple majority instead of a qualified majority or unanimity. The member states hold the power toappoint judges and renew them, which is a form of control of a possible excessive activism of thejudges.

The community treaties have a direct effect and enjoy of supremac y in relation to thenational legislation. By the existence of the ECJ, the member states are no longer tempted to breakthe law. It shouldn’t be forgot the mutual recognition principle, the basic principle for marketing inthe EU. However, it is thought that the ECJ has representativeness issues. While it has the feature ofvariety it doesn’t assure the representativeness, a state with a small population being considered assame as a state with a large population. Also, another problem is th e lack of transparency inappointing judges and the operation of the Court.

Chapter 6: Monetary and Fiscal Policy

The monetary policy pursued by the Central European Bank is a struggle between states withhigher economic growth (which want h igher interest rates) and states with a lower growth whichwant lower interest rates. The rule one -state-one-vote makes the decisions of the European CentralBank not always in the interest of citizens. The monetary policy decisions are taken by the Council of the Governors of the CEB,composed of members of the Executive Committee (President, Vice -President and four othermembers) and the national central bank governors of the countries that have adopted the euro. Theprimary objective of moneta ry policy is to ensure price stability. Thus, is observed the level ofinflation of the member states, there are controlled the interest rates and the public deficit.

Chapter 7: Institutional Organization

The internal organization of the EU institutions is a balance between specialization (divisionof labor) and coordination. We speak of Parliament and parliamentary committees, the Council ofthe European Union and the Council unities, the Commission, Commissioners and portfolios, theCourt of Justice and the specific courts. The distribution of power involves both costs and benefits.

Chapter 8: Coalition formation

Coalition formation in the EU institutions can be considered ( a priori) using mathematicalindices of power and (post) by analyzing the results of voting. Forming coalitions is a complex,interesting process to observe. Significantly for this chapter is the quote: "If the voting powerestablished by a treaty is a solid foundation, the one who entrust his future in the preferen ces of itsallies, builds on weak foundation."

Chapter 9: Democracy and reform

The European Union can be more democratic than it is now. It is necessary to reform theinstitutions and procedures. The democratic deficit, the lack of demos, the of back regionalism, thecriticism of democracy in Europe, the enlargement process and the need for a "constitution", allthese issues are addressed in the last chapter.

The Government of the European Union is not a treaty which addresses scientific specialistsbut is also a book that can answer the questions of all of readers, be they teachers, students of

Political Science and International Relations and European studies, and researchers, masters orsimple citizens eager to understand how the Euro pean Union works. EU is not a state, but having in regard all the matters presented in this paper, we canconsider that it may be classified as a potential democratic political system.

INSTRUCTIUNI UTILE PENTRU AUTORI / AUTHOR GUIDELIN ES

RORevista The Annals of the Stefan cel Mare University Suceava. Fascicle of The Faculty of Economics and PublicAdministration primeste articole, din toate domeniile economice, pe cele 5 sectiuni:

Economie, comert, servicii

• Management si administrarea afacerilor

• Contabilitate-finante

• Statistica, informatica si matematica

• Drept si administratie publica

Este recomandabil ca lucrarile sa fie bine struct urate astfel încât sa asigure claritatea continutului precum si esentatemei tratate. Toate articolele trebuie sa prezinte cercetari originale care nu au mai fost publicate sau trimise sprepublicare în alta parte. Lucrarile prezentate la conferinte sunt a cceptate cu conditia ca ele sa nu fi fost publicate înîntregime in volumul conferintei. Lucrarile vor fi redactate în întregime în limba engleza. Lucrarile vor fi recenzate insistem blind review.Titlul lucrarii

Se va scrie cu Times New Roman, caracter 1 2, bold, centrat în partea de sus a paginii, si se va scrie cu majuscule.Autorii lucrarii

Numele lor se va scrie la un rând după titlul lucrării, centrat, precizându -se: titlul stiintific, universitatea/instituţia,localitatea, ţara si e-mailul. Se va folosi Times New Roman, caracter 10, cu litere mici.

Rezumatul lucrarii

Rezumatul se va scrie după autori, lăsând un rând liber înainte; trebuie sa cuprinda informatii suficiente pentru cacititorii sa poata aprecia natura si semnificatia subiectului, caract erul adecvat al metodei de cercetare, rezultatele siconcluziile lucrarii. Rezumatul nu este o introducere, acesta prezinta în sinteza rezultatele esentiale ale cercetarii.Rezumatul se va scrie cu Times New Roman, caracter 10, italic, justify. Este necesa r ca el sa aiba un numar de 200-250de cuvinte, spatiate la un rând.

Cuvinte cheie

Selectati 5-6 cuvinte cheie (cuvinte sau expresii) care surprind esenta lucrarii. Enumerati acesti termeni în ordineadescrescatoare a importantei lor. Acestia se vor scrie cu Times New Roman, caracter 10, la un rând liber după rezumat.

Clasificare JEL

Se va trece unul sau mai multe coduri JEL, in care lucrarea poate fi inclusa din perspectiva subiectului abordat. Lista cucoduri o gasiti la adresa: http://www.aeaweb.org/journal/jel_class_system.html

Introducerea

Pentru introducere, formulati scopul lucrarii, motivatia temei alese si explicati pe scurt modul de abordare siargumentele necesare. Înainte de introducere se lasă 2 rânduri libere.

Continutul lucrarii

Organizati corpul lucrarii utilizând titluri si subtitluri pentru a accentua atât continutul cât si claritatea acesteia. Titlurileşi subtitlurile se vor scrie cu litere mari, 12, bold, a liniate la stânga. Se va lăsa un rând liber înainte şi unul după.Trebuie avute în vedere urmatoarele:

terminologia recunoscuta a domeniului pentru a descrie orice subiecte sau proceduri experimentalefolosite pentru colectarea si analiza datelor;

includerea metodelor detaliate, astfel încât cititorii sa poata urmari prezentarea materialului;

formularea rezultatelor în mod clar si succint;

evidentierea rezultatelor cercetarii si impactul acestora, atât global cât si specific.

Textul lucrarii se va scrie cu Times New Roman, caracter 12, spatiat la un rând. Tabelele si figurile sa fie dimensionatesi plasate în corpul lucrarii asa cum doresc autorii sa apara în revista. Trebuie avut grija ca acestea sa se încadreze pe osingura pagina. Continutul lor se va scrie cu Times New Roman, caracter 10, iar titlul coloanelor tabelelor se va scrie cuTimes New Roman, caracter 10, bold.

Titlul si numarul tabelelor vor fi pozitionate deasupra acestora, iar titlul si numarul figurilor, sub acestea. Atunci cândeste cazul se va mentiona si sursa. Numarul tabelelor si figurilor va fi amplasat în corpul textului, într -o paranteza, acolounde se fac referiri la ele, de exemplu: (fig. nr. 1); (tabel nr. 1)Graficele trebuie sa fie clar executate astfel încât sa ofere copii a lb-negru cât mai lizibile. Numerotati toate ecuatiile siformulele folosite plasând numerele lor în paranteze, în dreapta acestora.Explicati abrevierile si acronimele prima data când apar în corpul textului, chiar daca au fost definite în rezumat.Nu folositi note de subsol, dar sunt permise note la finalul lucrarii (endnotes), situate înaintea bibliografiei. Ele se vorscrie cu Times New Roman, caracter 10, italic.Concluzii

Concluziile pot recapitula punctele principale ale lucrarii, dar nu trebuie sa reproduca rezumatul. Ele pot cuprindeaspecte legate de importanta lucrarii sau pot oferi sugestii referitoare la aplicatii ale acesteia sau directii de extindere acercetarilor.

Bibliografie

Referintele bibliografice, din introducere sau corpul lucrarii, se fac prezentându-se, într-o paranteza, în ordine, numeleautorului si anul aparitiei lucrarii, de exemplu: (James, 1984); (Collins si Fermont, 1977 - când sunt doi autori).);(Collins si altii, 1988 - când sunt trei sau mai multi autori).

De asemenea, trimiterile bibliografice, din textul lucrarii se numeroteaza cu cifre arabe [1], iar când sunt mai multetrimiteri se va scrie [1] - [2].

Lista bibliografica, de la sfârsitul lucrarii, se va scrie în ordine alfabetica, dupa numele autorului, numerotându -se. Cândanumite studii, lucrari, articole sunt publicate în volum, atunci se va mentiona numarul acestuia si paginile.

Precizari importante

Articolele trebuie sa aiba 6-10 pagini, pe formatul A4, marginile stanga, dreapta, sus, jos: 2 cm. Lucrarile trimise trebuie sa fie formatate în Word cu extensia doc. Articolele care nu respecta aceste instructiuni vor fi respinse inainte de a fi date la peer review. Va rugam să nu numerotaţi paginile. Fişierele vor fi denumite după numele de familie ale autorilor ur mate de "_EN" sau "_RO", dacă este în

limba engelză sau, respectiv româna. Exemplu: GEORGESCU_IONESCU_EN.doc .Vă rugăm manifestaţi foarte mare grijă pentru corectitudinea traducerii în limba engleză.Vă rugăm să trimiteţi şi varianta în limba română a art icolului, necesară pentru controlul ştiinţific. Veţi primi un răspunsîn urma procesului de recenzare.Lucrarile se vor trimite pe adresa: cercetare@seap.usv.ro , menţionând la subject secţiunea pentru care optaţi (ECS,MAF, CF, SIM, APD); exemplu: “articol ECS” . Termenele limită vor fi afişate pe site.Pentru alte detalii sau noutăţi vă rugam urmăriţi site -ul revistei: www.seap.usv.ro/annals .

ENThe Annals of the Stefan cel Mare University Suceava. Fascicle of The Faculty of Economics and PublicAdministration, welcomes theoretical and empirical articles, from all economic fields, according to the 5 sections:

• Economy, trade, services• Management and business administration• Accounting-finance• Statisitics, data processing (informatics) and mathematics• Law and public administration

It is expected that manuscripts will be organized in such a manner that maximize both the substance and clarity of thedocument. All articles should report original research that has not been published or submitted for publicationelsewhere. Papers presented at conferences are accepted, provided that they have not been published in fu ll inConference Proceedings. The papers will be all written in English. The papers will be checked in blind review system.Paper Title

Must be in 12-point bold type, Times New Roman, centered across the top of the page and will be writen in uppercase.Paper Authors

Author’s names will be written under the paper title after a blank line, centered across the page, single spaced specifing:title, university/institution affiliation, country and e -mail address. It must be written in 10 point type, Times NewRoman in lowercase.Paper Abstract

It will be written after authors leaving a blank line before. The abstract must include sufficient information for readersto judge the nature and significance of the topic, the adequacy of the investigative strategy, the na ture of the results andthe conclusions. An abstract is not an introduction, it summarizes the substantive results of the work. The abstract will

be written in 10 point type italic, Times New Roman, justify. It must have 200 to 250 words, single spaced typ e.Keywords

Select 5 to 6 keywords (words or expresions) that capture the essence of your paper. List the words in decreasing orderof importance. All the key terms must be translated in English and attached to your abstract. It will be written in 10point type, Times New Roman, after abstract leaving a blank line before.JEL Classification

Please put one or several JEL codes, according to the subject of your paper. The codes can be found here:http://www.aeaweb.org/journal/jel_class_system.html

IntroductionFor introduction, state the purpose of the work, the motivation of the chosen theme and, briefly explain your approachand the necessary arguments.Before introduction ple ase let 2 blank lines.Paper Content

Organize the body of the paper using titles and subtitles to emphasize both content and clarity. The titles and subtitleswill be written in caps, 12, bold, left aligned. Please let a blank line before and one after. Co nsider the following:

the accepted terminology of the field to describe any subjects or experimental procedures used to gatherand analyze data;

include detailed methods, so readers could be able to follow the investigation; state the results clearly and succinctly; the implications of the findings and minutely discuss the impact of the results, both globally and

specifically.Typeface must be 12-point Times New Roman type single spaced. Tables and figures should be sized and placed in thebody of the paper just as the authors want them printed in the journal. Care should be taken so that tables and figurescould be on one page. The tables contents will be written in 10 point type, Times New Roman and the heading of thetables will be in 10 point type bold, Times New Roman.The titles and numbers will be positioned above the table and the title and number of the figures bellow. When it isneeded, the source will be mentioned. The number of the tables and figures are to be positioned in the body of the te xt,in a paranthesis, wherever they are mentioned, for example: (fig. nr.1), (table nr. 1).The graphs must be executed clearly so as to give clear black and white copies. Number all the equations and formulasused positioning the numbers in paranthesis on their right side.Define abbreviations and acronyms the first time they are used in the text, even after they had already been defined inthe abstract.Avoid the use of footnotes, but endnotes are encouraged at the end of the paper before the reference s. Endnotes must bein 10 point, Times New Roman, bold type.Conclusions

Conclusions may review the main points of the paper, do not replicate the abstract as the conclusion. A conclusionmight elaborate on the importance of the work or suggest applicatio ns and extensions and extensions of the research.References

Related to in-text referencing cite the name of the author(s) and year of publication (James, 1984), (Collins andFremont, 1977 – for two authors) and (Collins et al., 1988 – for three authors). Also, references in the articles will benumbered with [1] and if there are more than one reference with, [1] – [2].Sources should be in alphabetical order by author’s last name, the list being numbered. When certain studies, research,articles are published in a volume, the volume numbers and pages will be specified.Important Specifications

The articles must be at least 6 to 10 pages long in the style A4 sheet, margins left, right, top, bottom: 2 cm. Submitted documents must be in PC-formatted Word (.doc) file. The articles that don't respect specified guidelines will be rejected before they are sent to peer review. Please do not number the pages of your work. The files will be named with the family names of the authors followed by "_EN" or "_RO", if it is in

English or Romanian. Example: GEORGESCU_IONESCU_EN.doc .You will receive an answer after the scientific check of your article, after the paper review process.The manuscripts should be submitted to: cercetare@seap.usv.ro , mentioning at subject the section that your paper fits(ECS, MAF, CF, SIM, APD) ; example: “article ECS” . The deadlines will be posted on our website . For other details ornews, please visit: www.seap.usv.ro/annals .

PENTRU COMENZI VA RUGAM SA NE CONTACTATI PE ADRESA DE E -MAIL A REVISTEIMENTIONATA ANTERIOR.

FOR COMMANDS, PLEASE CONTACT US BY E -MAIL AT THE ADDRESS MENTIONED BEFORE.

SOME ASPECTS OF DATA WAREHOUSING IN TOURISM INDUSTRY

Documents

Transcript of SOME ASPECTS OF DATA WAREHOUSING IN TOURISM INDUSTRY

The Dawn of New-Age Warehousing - TCIL

Oracle Data Warehousing Masterclass

CS 2032 : DATA WAREHOUSING AND MINING TWO MARKS ...

कककककककक कककककक कककक - Central Warehousing ...

Contextual factors for omni-channel warehousing

A Survey of Spatio-Temporal Data Warehousing

Retirement List 2019_121018.pdf - Central Warehousing ...

RAMPUR (UP) - Central Warehousing Corporation

Overview of the India Warehousing Industry - Care Rating

TOURISM - Hubilo

Making Views Self-Maintainable for Data Warehousing

Warehousing and Analyzing Massive RFID Data Sets

Medical tourism

t - Central Warehousing Corporation

केंद्रीय भंडारण निगम - Central Warehousing Corporation

Naimisharanya tourism

data warehousing in higher education

HOSPITALITY & TOURISM

Eastern Automotive Warehousing/Auto Machinery - Autosphere

FORWARDING AND WAREHOUSING TERMS AND ...