North-East Romania: the current state of the art

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North-East Romania: the current state of the art

The North East Regional Development Agency (North-East RDA) works to stimulate economic development in a region covering the north-eastern part of Romania. Traditionally, this is part of the historical region of Moldova (mainly Western Moldova and Southern Bukovina). The agency is a generator of economic and social development in the its region of Romania. It develops and promotes strategies, attracts and capitalises on resources, identifies and implements financing programs, and provides services to stimulate sustainable economic growth, partnerships, and entrepreneurship.

The main objectives of North-East RDA are:

  • Development of the entrepreneurial skillset and mentality, based on talent and creativity;
  • Smart and efficient economic assessment of regional resources;
  • Facilitating innovation, technology transfer, and cooperation between companies and R&D centres;
  • Identification of solutions for societal issues by working closely with quadruple helix players;
  • Encouraging the development of networks and associations;
  • Increasing the region’s attractiveness to investors and tourists.

The North-East Region is composed of the following counties: Bacău, Botoșani, Iași, Neamț, Suceava, and Vaslui. TeRRItoria will realise two pilot experiments in the territories of Bazinul Dornelor Local Action Group/LAG + Vatra Dornei Municipality (the only urban centre in the area, which is not included in the LAG) and Ceahlau LAG. There are neither clusters nor incubators in the two pilot areas, only Ce-MONT, the Centre for Mountain Economy. Ce-MONT is the only piece of research infrastructure in the pilot area. It deals primarily with fundamental scientific research – both theoretical and practical, with a multi, inter, and trans-disciplinary approach – in the economic areas specific to mountains. Its main research activities are rural mountain agriculture and small-scale and family farming, since these are most common in the mountains, especially in the Romanian Carpathians.

Organisational role in R&I system

The expertise of North-East RDA will be used in order to establish a consultative instrument at pilot level to support Responsible Research and Innovation (RRI). Through inclusive debates, dialogue, and one-on-one interviews with key actors, they will be in the position to bring together local efforts and to foster on-the-spot innovation. This is done whilst keeping public engagement in mind at every step of the way. North-East RDA will use and adapt its prior experience in Smart Specialisation Strategies for Research & Innovation (RIS3s) to help the communities in the pilot scheme to accept and embrace change and to benefit from the quadruple helix engagement. Based on the result of the 5 planned meetings (3 Entrepreneurial Discovery Processes, 1 writeshop, and 1 larger public event), North-East RDA will coordinate the design of the brokerage platform for innovation in the pilot area.

Inward and outward migration

Tacit knowledge and various mountain research papers show that the phenomena of aging, migration, and depopulation are more pronounced in mountain areas than in lowlands. This is especially true for the Carpathians, including for the two territories chosen here. Throughout the late 20th century there was a tendency to leave rural areas for proximity to urban centres (jobs in industry), and the four urban areas in the pilot (Vatra Dornei, Brosteni, Bicaz) benefited from this population inflow. Now, the tendency is to leave the whole area (not just the rural parts) for bigger cities in the NE Region (i.e. Iași) or even beyond region’s borders. This is mostly applicable to those in the age bracket of 25 – 49. Those aged 20-24 are leaving the area for studies and most of them will not return, principally because of the lack of career opportunities.

Economy, Sectorial Structure and Enterprise characteristics

The analysis of the main sectors of activity in the Dornelor Basin highlight that the majority of firms are concentrated in the municipality of Vatra Dornei. This fact strengthens the position of Vatra Dornei in the micro-region, as well as its role as an attractor of growth within the territory. Around 70% of its local workers are employed in the trade sub-sector. The service sector engages the highest share of employees; it was among the most accessible alternatives for local inhabitants during the transition to a market economy when layoffs from the mining sector were experienced . The service sector is represented by 765 of the enterprises there, in 2012, the largest share being held by companies in the wholesale and retail trade (58%). Other important subsectors of activity are hotels and restaurants (15%) In 2014, in the municipality of Vatra Dornei there was a slight increase in the turnover of the tertiary sector. As regards the secondary sector (industry and construction), in the municipality of Vatra Dornei in 2012, there was a concentration of 78 companies of which 59% were active in the field of manufacturing. Within the processing industry (46 companies), the wood and furniture industry (a traditional industry) and the food industry are dominant. In 2014 the number of the municipality’s enterprises in the agriculture, forestry, and fisheries sector represented 3.46% of total economic activity, so the number of employees in those sectors is also limited. At the level of Vatra Dornei, the total number of enterprises at the end of 2014 was 434. Economic activity there is mostly concentrated in the tertiary sector (services) comprising 72.42% of the local economy and the secondary sector (industry and construction), with a share of 22.12 %. Governance system North-East RDA is the coordinator of smart specialisation in the region, initiating the process, developing a regional strategy, facilitating dialogue between stakeholders, implementing and promoting the strategy, monitoring and evaluating the whole process, collecting information, and coordinating the strategy review and its adaptation according to socio-economic developments and in accordance with national/European policies. The main actors involved (designated structures) are as follows: The Regional Innovation Consortium (RIC) – the governance body of the North-Eastern RIS3 – consists of representatives of the regional quadruple helix; its main role is endorsement of the RIS3 and the prioritisation of smart specialisation projects’ portfolios. The Academic Consultative Commission (ACC) supports the RIC in the elaboration and operationalisation of RIS3. The Centre for Mountain Economy (CE-MONT) is also represented in the ACC. North-East RDA – coordinator of the RIS3’s elaboration and the implementation of the regional Entrepreneurial Discovery Process (EDP) – ensures the Chairmanship of RIC, as well as the Technical Secretariat of the RIC & ACC. Other institutional players In Trøndelag, an important part of the innovation system consists of so-called business gardens. These organisations are financed by national funding programs through SIVA (The Industrial Development Corporation of Norway): Rørosregionen Næringshage (Holtålen, Røros, Tydal, Selbu); iNam: Innovation in Namdalen (Namsos, Overhalla, Grong, Flatanger, Fosnes, Nærøy, Vikna, Leka, Høylandet, Namsskogan, Røyrvik, Lierne); Nasjonalparken Næringshage (Oppdal, Rennebu); Næringshagen i Orkdalsregionen (Meldal, Orkdal, Skaun, Snillfjord, Agdenes, Hemne, Rindal); FI: Fosen Innovasjon (Rissa, Ørland, Bjugn, Åfjord, Roan, Osen, Leksvik). In TeRRItoria, iNam and Røroshagen Business Garden were selected as main local partners since they represent different local contexts within the region. Receiving basic financial funding from national funding sources, they promote local and regional growth, cooperation, and development while providing access to expertise and networks.

Monitoring and evaluation system

The North-Eastern RIS3’s monitoring and evaluation systems have recently been revised in collaboration with the European Commission’s Joint Research Centre (JRC), paying additional attention to the monitoring evaluation procedures already in place at regional level (e.g. the Regional Development Plan) and national level (e.g. national programmes and strategies related to innovation).

The resulting monitoring report will provide information on the status of the RIS3’s implementation, together with recommendations for how to implement it more efficiently. The monitoring report will be presented to the Regional Innovation Consortium (the quadruple helix governance structure of the RIS3) for analysis, discussion, and recommendations for improvement.

SWOT Analysis of the Region

Strengths:

  • Forestry, healthy agricultural products, mineral waters in Vatra Dornei area; 
  • The activity of CE-Mont; 
  • The presence of the National Mountain Area Agency in the pilot region; 
  • The partnership between CE-Mont and other research entities form all over the country; 
  • Facilities created in the pilot area by the University of Agricultural Sciences and Veterinary Medicine and  University of Suceava; 
  • Local Action Groups (LAGs) with a bottom up approach towards the development and allocation of funds; 
  • The presence of NGOs and other civil society organisations in the LAGs; 
  • An unpolluted mountain climate; 
  • High Nature Value pastures and protected areas; 
  • Rich cultural heritage; 
  • Natural landscape favourable to active tourism development all through the year; 
  • Long period of snowy days during the winter season (100 days), favouring winter sports; 
  • The average length of stay of tourists in the resort of Vatra Dornei is above the average at national level; 
  • Good water quality in the area; 
  • Lakes within the territory of LAG Ceahlau (Pîngărați, Vaduri, Bicaz Izvorul Muntelui și Cuejdel); 
  • The local food industry is well developed, a fact demonstrated by the existence of well-known national brands (Dorna, LaDorna, Bucovina, Aqua Carpatica); 
  • Small livestock farms with growth potential ; 
  • The presence of associations of animal breeders; 
  • The Dornelor Basin is one of the 5 eco-tourism destinations in Romania, officially recognised and certified by the Ministry of Tourism. 

Weaknesses:

  • Common floods caused by torrents of water in the territory of LAG Ceahlau; 
  • Massive deforestation over time; 
  • A high prevalence of small-scale and family farms; 
  • Lack of information for farmers about European norms regarding direct payments and access to European funds; 
  • Lack of knowledge in farm management, financial management, technical specializations in the field of animal husbandry; 
  • High fragmentation of agricultural land, leading to the practice of traditional agriculture only with low economic competitiveness; 
  • Low to medium fertility of soils 
  • The territory is considered to be within the underprivileged mountain area; 
  • Low Gross Domestic Product; 
  • Low salary levels; 
  • Limited diversification of the local economy; 
  • Poor tourism services for leisure compared to the potential of the territory, poor tourism PR regarding cultural and historical points of interest; 
  • Most localities in the area do not have a well-developed waste management system; 
  • The absence of professional training programs and exchanges of experience for the local population; 
  • Internal efficiency in administration is quite low and its ICT infrastructure is insufficient; 
  • Poor development of tourism-related infrastructure, a lack of shops aimed at tourists; 
  • The region occupies only the 6th place out of 8 national regions in terms of innovation costs; 
  • Reduced collaboration between the business environment and universities/research institutes, resulting in a low rate of technology transfer; 
  • Insufficient financial tools to support innovation among entrepreneurs; 
  • Lack of technological solutions for establishing and following quality standards for organic products; 
  • Lack of technological solutions for recovering waste and secondary materials for reintegration into local value chains; 
  • Lack of intermediate structures between agricultural producers and processors.

Opportunities:

  • Wind potential in the Dornelor Basin and potential for biomass-based energy production; 
  • High potential for cultivation of berries, mushrooms, and medicinal plants; 
  • The existence of financing programs for young farmers and investors in non-agricultural activities; 
  • Development of organic farming and advanced agriculture;  
  • Increasing the number of jobs for agricultural business development; 
  • Harnessing and promoting mineral water sources; 
  • Involving the population in ecological education activities; 
  • Funding programs for tourism activities and investments in tourism; 
  • Encouraging the development of new forms of tourism such as scientific tourism; 
  • Interest expressed by foreign tourists in Romanian folk customs and cuisine; 
  • Very good prospects for exploring mountain areas throughout the year by means of hiking, horse riding, mountaineering, extreme sports and skiing; 
  • Existence and implementation of Tourism Action Plans at regional and county level; 
  • Harnessing the nautical potential of Lake Bicaz in recreational structures; 
  • Exploiting synergies: between the agricultural and energy sectors, between health and tourism, and between tourism and agriculture; 
  • Increasing the regional and national interest in stimulating the interaction of companies with RDI institutes; 
  • European and national funding for public administration in order to make public utility investments. 

Threats:

  • Legislative, political, economic, and institutional instability; 
  • Low co-financing capacity; 
  • An aging population; 
  • Emigration of young people; 
  • The emigration of qualified personnel, especially from high intelligence sectors; 
  • Reluctance of companies to invest in R&D activities; 
  • Lack of coordination between different sectoral policies; 
  • A limited number of public-private partnerships; 
  • Lack of short supply chains, local markets for capitalizing on the products made / obtained in the territory, local brand, “local basket”; 
  • A declining amount of livestock; 
  • Lack of a specialised associative framework (in local food marketing issues) that can act to the benefit of farmers; 
  • Lack of financial support and market for traditional products; 
  • Uncontrolled deforestation with the result of generating landslides. 

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