According to a study published by a group of Romanian experts, Botosani, Salaj, Vaslui, Vranca, Vilca and Teleorman counties have a high fiscal imbalance, dependent on transfers from the state budget for survival. Otherwise, he said, they are easier to control politically, being dependent on money from Bucharest.

In these counties, transfers are the most important source of funding for county expenditures. Transfers to local authorities are actually designed to reduce differences in fiscal capacity between counties, but they can also function as an economic weapon.

Below is the dependence of each county in Romania on the state budget (measured by the fiscal deficit):

According to American University economics professor Wallace Oates (in the work “Fiscal Federalism”), fiscal decentralization promotes economic development, which translates into local indicators, improving economic, social and territorial unity.

Theoretically, fiscal decentralization is very good, because local administrations are closest to citizens, know their needs and capabilities best. Decentralization is often praised for its beneficial effects on potential economic benefits or the “economic dividend of decentralization”.

But if this is not done directly, it can deepen the gaps between regions (or, on the contrary, mitigate them), taking into account that richer regions have the advantage of being more efficient and having a better institutional infrastructure. Decentralization can also shift economic development from the periphery to the center if the state allocates resources to address regional inequality, the cited study also shows.

Bucharest is the most autonomous local administration in Romania. Other counties with a tendency to increase local financial autonomy are Arges, Brasov, Cluj, Constanta, Ilfov, Sibiu and Timișoara, especially in recent years, as local authorities have found ways to increase their own revenues (both through better collection and through development programs on based on the development of the business environment).

In terms of own revenues, there are significant differences in the ability of counties to generate their own revenues

The Audit Chamber of Romania speaks in its reports about unrealistic local budgets, not related to the real needs of the local community or real financial resources.

“There is little concern on the part of local public authorities regarding the identification and capitalization of income that may arise as a result of the development of economic activity or the capitalization of assets from their public and private heritage,” says the report of the Accounting Chamber.

There are counties with a high level of GDP per capita, but with minimal provision of public services (Gorge, Alba), or counties with a low level of GDP per capita, but with a significant level of local government spending (Iasi).

A high level of fiscal responsibility was registered in Timisoara, Constanta, Cluj, Prahova, Brasov, Bihor and Iasi, the authors of the document also testify.

The richest district, which is undoubtedly Bucharest. The poorest district of the country is Vaslui.

The capital in terms of purchasing power parity is 263% of the average in the European Union, that is, it is more than 2.5 times richer than the average. Unfortunately, we are also well represented at the other end of the ranking, – Ionuts Dumitru, chief economist of Raiffeisen Bank, explained at the conference.

The poorest district of the country is Vaslui. The ratio between them (Bucharest and Vaslui) is almost six to one, that is, six times higher GDP per capita in Bucharest than in Vaslui, explained Ionuc Dumitru.

By the way, this ratio is one of the highest in Europe, and if we look at the county level, we will see that over the last 20 years, out of 42 counties, only 15 had a faster GDP per capita growth than the national average. The other 27 had a lower development rate, which worsened their relative location.

The counties performing the fastest in real convergence are Bucharest, Cluj, Timișoara, Alba, Salai, Tulcea and Sibiu. The counties that lost the most in relative distribution compared to the national average are Covasna, Ilfov, Constanța, Harghita, Mures, Galați, Vrança, Bihor and Bacău.

We have practically the Romania of extremes

We have the Bucharest-Ilfov region, which on a European scale ranks 14th out of 242 NUTS2 regions, with a GDP per capita level of 164 compared to the EU average of 100. This level is higher than such regions as Stuttgart, Vienna, Bremen, Cologne, that is, we have a very high level of economic development.

On the other hand, we also have the north-eastern region of the country, which is only 46% of the European Union average, at the bottom of the ranking. It ranks 226 out of 242 regions on a European scale, Ionuc Dumitru also said.