Transition in Romania between 1990 and 2005 - An Econometric Approach

A Country's transition from centralised economy to market economy is characterized by the change in the dynamics of the GDP value and structure. The most frequent questions that emerge when such transitions are desired are: How long does transition last? How must it be made? What risks does transition imply? Most of these questions remain without an answer because both the transition period and the way in which it can be accomplished, as well as the risks implied, depend, to a very large extent, on the State's economic infrastructure and the population's mentality regarding change. The present article does not propose to offer recipes or advice on transition; on the contrary, by drawing on the power of the example, it wishes to offer an accurate image of the way in which a centralised economy State, as Romania was in the year 1989, has managed to pass through sixteen years of transition until it has reached the stage of a market economy, in 2005. The description of the transition period of the Romanian economy is made on the grounds of the econometric modelling of the relations between Romania's GDP resource categories expressed in real values. The econometric modelling process yields a system of linear equations that describes the relations between GDP resource categories estimated on the basis of the real values recorded for GDP resource categories between 1999 and 2005.