Romania: Poverty Assessment

This poverty assessment for Romania covers the period from 1995 to 2002, since the last World Bank poverty analysis reviewed the evolution of poverty from 1989 to 1994, the early years of transition from a socialist to a market economy.

This assessment has been carried out at the request of the government, mainly in order that the government may better understand how poverty has evolved during this period and, in particular, how economic growth and social protection programs, which are equivalent to some 10 percent of GDP, have affected poverty, as it prepares for accession to the European Union.

This paper focuses mainly on monetary dimensions of well-being, or consumption, to inform the policy dialogue in Romania on the extent and dynamics of poverty, as well as the main factors associated with poverty. The results are based on two comparable, nationally representative surveys:

1. the Romanian Household Budget Survey (ABF, upon its Romanian acronym) for the period 2001- 2002; and
2. the Integrated Household Survey (AIG) for the period 1995-2000.

Other dimensions of deprivations have been captured for 2002 using the Living Conditions Survey (ACOVI). While it concentrates on monetary poverty, the paper captures other dimensions of material poverty such as caloric intake; crowding and living conditions, ownership of essential durables. In addition, it assesses poverty defined as capability to function in society, or adequate level of investments in health or education, or the lack of unemployment. Finally, the report reviews community poverty and perceptions of poverty.

The report first briefly describes the changing economic structure  and the evolution of macroeconomic management. Next, the assessment is fitted into the context of the broader Bank program of analysis and lending. The rest of the paper is arranged as follows: In addition to a poverty profile (Chapter 2), the assessment thus includes an analysis of the impact of growth on poverty (Chapter 3), o f labor force participation, unemployment and poverty (Chapter 4) and o f social protection and poverty (Chapter 5). Detailed background papers are provided in Volume 2.