Academic journal article Informatica Economica

The Importance of Local Action Groups in the Romanian European Integration Process: An Empirical Study

Academic journal article Informatica Economica

The Importance of Local Action Groups in the Romanian European Integration Process: An Empirical Study

Article excerpt

This article aims to examine the factors affecting the implementation of local action groups in Romania. A relatively new member state, Romania has the highest share of EU rural areas which generates and maintains a long series of regional disparities. Because of these disparities, the economy faces a number of issues that undermine the quality of human and social capital and reduce the growth potential: precarious social and economic infrastructure, reduced access to markets and thus to goods, a low level of both economic cohesion and living standards and a difficult access to education and training. From this perspective, the local action groups can contribute to the revival and development of urban areas, through the promotion of economic activities in adjacent rural areas. Therefore, an empirical analysis was conducted to study how economic and social disparities in the regional development of Romania influenced the implementation of local action groups.

Keywords: Local Action Groups, Regional Development, Regional Disparities

(ProQuest: ... denotes formulae omitted.)

1 Introduction

Explaining the differences in levels of income across countries or regions is one of the main concerns among economists. Nowadays, high GDP levels are associated with high standards of living, quality of life, education and health. Thus, the most relevant question in cross-country or regional differences is what forces are driving that process that allows poor regions to grow faster than rich ones [1].

The regional policy of the EU aims to improve the economic well-being of its regions and also to diminish regional disparities. In the current 2007-2013 funding period, EU regional policy consists of three objectives: Convergence, Regional competitiveness and employment, and European territorial cooperation. The largest amount of regional policy funding (81.5%) is dedicated to the regions falling under the Convergence objective, whose aim is to allow the poor regions to catch up with the EU's more prosperous regions, thereby reducing economic disparity within the EU. This objective covers Europe's poorest regions whose per capita gross domestic product (GDP) is less than 75% of the EU average [4].

While there are a vast number of research papers on the convergence of EU regions and the impact of structural funds on convergence, the importance of local involvement often seems to have been neglected. In this paper we examine how formal recommendations supported and encouraged local development initiatives represented by local action groups.

The aim and thus the contribution of our paper is to examine the relationship between several factors (GDP per capita, level of employment, the village development index) and the value of the projects submitted by the local action groups. We study whether the involvement of the local communities depends on the level of income, employment or the development of villages.

The remaining part of the paper is structured as follows. Section 2 provides a review of the relevant theoretical and empirical literature. Section 3 provides a brief description of the Romanian rural development. Section 4 estimates a model in order to detect the relationship between several factors and the value of the projects submitted by the local action groups. Section 5 discusses the results, suggesting other possible factors behind the findings of the previous section. The last section concludes.

2 Literature Review

Only little empirical research has been devoted to local action groups promoted by the Leader initiative. Among the few papers is [10] who charts the operational terrain of local action groups in the Northern Ireland, suggesting that their strengths have been in developing the institutional capacity of rural communities and brokering connections in the local economy. The paper argues that multi-level collaborative activity is rooted in partnership governance, enabling a communicative process among local stakeholders. …

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