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The paper focuses on the issue of regional resilience against the recent financial and economic crisis in the case of Romania, taking the county as territorial unit of observation. Based on the idea that the shock of a crisis impact spreads asymmetrically in the territory, with different contagion effects, the study advance a new approach of the speed and duration of GDP decline recovering. Data analysis showed that, at macroeconomic level, Romania has not proved resilient to the crisis impact, after two years of recession and a recovery period of 4 years succeeding barely in 2014 to return to the GDP level achieved in 2008. The research highlighted the differentiated recovery duration of the economic decline in territory, in 2014 many counties having to recover in the coming years remained GDP gaps, up to 10 pp or even more. The study paid a specific attention to the crisis impact on employment, focusing on R&D sector as revealing the endogenous growth generating potential at county level.

In the case of Romania, a sharp deterioration of the fiscal framework strength has been observed during post-crisis period, the public debt-to-GDP ratio currently reaching around 40%, thus doubling as compared to 2008. The structural analysis of government debt portfolio highlighted the main drivers of excessive public indebtedness and the increase in refinancing (rollover) risk on short term, which is supposed to overlap with the exchange rate and interest rate risks on medium and long term. Several indicators of Romania’s debt sustainability are already on the warning levels edge which requires appropriate policies focusing on economic growth recovery, fiscal consolidation ongoing, increasing capacity of generating budgetary revenues, public debt management improvement.

Caused by the lack of an international financial regulations framework and under the circumstances of markets volatility persistence, the global financial balances deteriorated during the postcrisis period. The bail-out of the banking system by public or multilateral intervention instead of leading to the financial re-balancing has transferred a systemic risk to the sovereign level, mainly in the case of advanced countries. Addressing high public debts toward sustainable levels by the budgetary constraints of austerity programs has proved to hamper the economic growth, increasing, in fact, the sovereign risk.

Under the circumstances of the global crisis effects on risk appetite of international investors, the net FDI flows in Romania registered a sharp fall in post-crisis period to levels of 1/5 as compared to 2008. Even if the current account deficits of Romania have significantly decreased in the post-crisis years, their coverage by FDI has been reduced below 1/3. The financial performances of foreign companies operating in Romania have worsened, which, besides the erosion of comparative advantages, is increasing the risk of closing businesses and of capital outflows. Taking into account also the major contribution of companies with foreign capital to Romania’s exports (about 70%) the recovery of FDI inflows, helped by adequate measures in order to regain the investor’s confidence and to improve the business environment has become of crucial importance for the perspectives of the country’s external financial stability on medium and long run.

Over time, foreign investments were the decisive factor contributing to the development of nations, but were the hardest hit during economic recessions. Under the circumstances of the world economy globalization and of the quasi-liberalization of international capital movements, leading to a high degree of financial markets interdependence, the impact of the crisis triggered in 2008 on FDI has been severe: decreased investment ability of companies, both on account of restricting access to financial resources and declining corporate profits; increased costs of financing on volatile international capital markets; reduced risk appetite of investors; deteriorated business climate; re-location of investments portfolio and the pressure of sovereign debts.

Under the global crisis impact the structure of international trade flows witnessed significant changes. In the case of Romania, paradoxically for an emerging country, in terms of product composition during 2007-2010, the share of capital goods decreased in total imports and increased in total exports, while the share of intermediate goods recorded an opposite development. In terms of competitiveness, no evidence of significant changes has been found, the most important export chapters having comparative advantages connected with the processing trade operations. Obviously, Romania lacks an export strategy able to sustain the national exporters on new foreign markets and reducing the trade balance deficits.

Despite the governments took rescue and/or stimulus packages, signs of recovery occurring in 2009 and 2010, the global growth sustainability seems uncertain. Romania was hit hard by the crisis, suffering a severe contraction of the economy, estimated at 7.1 percent in 2009. The worsening of the external and internal financial framework of Romania and the danger of a currency market crisis urged the need for a financing agreement with IMF. The study shows that an excessive burden of external debt compared with financing resources needed to comply with the external payments obligations would maintain Romania on the brink of default risk. Collateral risks associated with unfavorable developments of Eurozone and also with pressures coming from a non-restructured public debt could make the default situation even unavoidable.

It became clear, sometimes in a dramatic way that the world is going through the most difficult economic and financial crisis in history, which may affect its long-term stability. Because of multiple interferences in the context of the globalization of markets, the financial crisis triggered in the United States has spread to other countries, its reverberations in the real economy resulting in a downturn in the global economy. The study pays a special attention to the impact of the crisis on Romania, which is affected by the decline of the economy. Thus sustainable development of Romania will confront new challenges arisen both from the international financial crisis and the internal structural changes inherent in the transition and the European integration.

The paper is focusing on the world financial framework deterioration, as an adverse cost of the accelerated globalization of international goods & capital flows. The inclining of world monetary axis towards East by the accumulation of huge international reserves (in a few Asian countries) in contrast with the fast increase in Western twin deficits (mainly in the USA and more recently in the EU) is likely to become irreversible. The current discussion around the roots of financial global imbalances rather seems a war of words instead of a responsible debate trying to find the appropriate correction. If the world does not prove resiliency counteracting this major threat, sooner or later will face the risk of entering a financial turmoil, with rapid contagion effects at the global scale, including Romania.

One of the roots of the current global imbalances resides in the asymmetry of the international trade flows under the constraints of maintaining non-tariff barriers and of protectionism revival. Trade liberalization is critical for restoring the financial global equilibrium. The study is emphasizing the importance of finding compromise solutions for finalizing the negotiations under the Doha Round multilateral agreement, otherwise increasing the risk of global imbalances deepening to unsustainable levels.

The international organizations acting at world-wide scale seems unable to manage the multitude of rising problems due to the accelerated globalization and of the fast geopolitics’ shift. The world is facing growing imbalances in international trade and financial flows, deepening of social inequalities and people’s poverty, increasing international conflicts and insecurity, widening of terror threats and religion fundamentalism. The article points out some weaknesses of the international organizations framework highlighting the tendency of power dispersion from global to regional levels towards a multi-polar world.

The world is passing through the most difficult economic and financial crisis inthe history, which severely affects its stability in the long term, risking an uncontrolled slideinto chaos and uncertainty. The housing market crisis emerged in the United States in July2007, due to multiple interferences generated by the globalization, has spread to otherregions, triggering the world economy into recession. The study is trying to present the maincauses and characteristics of the crisis, with special attention to its impact on Romania, whichhas witnessed a severe economic downturn in the first half of 2009, registering a sharpdecline in industrial production, construction sector, exports and also in the lending activity.To deal with high budget deficit and liquidity pressures in the short term a financingagreement with international organizations has been concluded. But, in the long term, theexternal debt burden is increasing, the sustainable development of Romania facing new risksarising from both the global crisis and the internal vulnerabilities.