Increase public R&I expenditure and the allocation of Structural Funds for R&D
The Romanian R&I system is heavily underfinanced. In 2014 gross domestic expenditure on R&D (GERD) was the lowest among all the EU Member States (0.38% of GDP compared to an EU average of 2.03% of GDP). A target of 1% public R&D expenditure was first set in 2006 and used as basis for the programming period 2007-2013, but the average annual allocation was three times smaller. Romania has reaffirmed this target for 2020, which also forms the basis for the National RDI Strategy 2014-2020 and its instruments. However, several months after the adoption of this strategy, the 2015 budgetary allocation is 2.17 times lower than this objective for the year.
The allocation of structural funds for R&D is also surprisingly low, in light of the 1% target. For the period 2007-2013 structural funds provided 20% of public R&D expenditures, while for the period 2014-2020, the allocation has not increased significantly (€1 billion, representing 15% of the R&D required to reach the target in 2020). The low allocation of structural funds for R&D displays the low political interest in this field, even if the absorption rate for R&D was 100%, particularly high compared to less than 40% in some other fields.
Between 2000, when Romania started the negotiations for the accession to the EU, and until the economic crisis struck, the Romanian Government gave a high priority to R&I as a driver of competitiveness and sustainability. Since 2001, policy objectives were derived mostly from the Lisbon Strategy and the European Research Area targets. This new direction was reflected, particularly starting in 2006, in policy documents as a justification for channelling resources to R&I. However, the noticeable hikes in expenditures lasted only a few years, until the beginning of the economic crisis. The National Development Plans and the National Reforms Programmes and two of its Operational Programmes (OPs) provide strong arguments for increasing R&D resources; the R&I-oriented Plans and OPs also contain objectives and special instruments to achieve them.
The government has made progress in identifying the causes of structural weaknesses of the R&I system, but the implementation of the solutions is delayed and/or absent. Given the drastic reduction in funding for most research programmes, recent infrastructures are underused, while the research career prospects of the new PhD graduates look grim. The long-term underfinancing has been translated into a substantial brain-drain. Romania has one of the largest scientific diaspora among the EU countries, with an estimated 15,000 researchers working abroad. While the new doctoral schools funded by Structural Funds provided students with generous financial support, they experience difficulties in finding jobs in Romania and become contenders to enlarge the diaspora.
Romania has the second lowest rate of Structural Funds (SF) absorption in the EU (62.2%), although it has managed great improvements since 2012, when the rate was below 10%. The implementation of the SF Sector Operation Programmes is significantly affected by the quality of governance which is determined by the administrative capacity, still weak in comparison to other European countries, by poor institutional coordination and fragmentation, frequent legislative and institutional changes, and by insufficient policy capacity. The European Semester Country Report for Romania shows that the weak administrative capacity is causing delays in reforms and in the absorption of Structural Funds (SF).
Between March and October 2010, the World Bank undertook six sectorial reviews on behalf of the Romanian Government. They disclose public administration is characterised by a focus on compliance with norms rather than performance, while budget resources are spread thinly across policy areas without prioritisation. The reviews indicate that Romania has a poor institutional capacity at the central structure of the government to coordinate policies and resource commitments across sectors that would better align and achieve medium-term budgets and strategies.