The industrial revolution 4.0 in Romania, a challenge of the next decade

By Jerom Bolt
The discrepancy between the favorable evolution of the IT&C sector in Romania and the low level of digitization represents a challenge for the new development cycle of Romania, an analysis of the Transylvania Bank shows.
The main cause of the gap is the fact that most of the gross added value from IT&C is exported and not incorporated into the domestic economy.
In this context, for the continuity of the processes of economic growth, development and European convergence Romania (both the public sector and the private sector) will have to incorporate more and more the fruits of the Digital Revolution.
Losing the digitalization trend in a context in which Romania has a globally competitive IT&C sector will have an unfavorable impact on the productivity dynamics and the potential for medium-term economic growth.
Digitalization (Revolution 4.0) has dominated the post-crisis economic cycle, having a significant impact on both the real economy and the financial economy.
Similar to the previous industrial revolutions, digitization generates productivity shocks and a more optimal allocation of resources.
The incorporation of the digitization transforms the production flows, as well as the attitudes of consumption and investments, contributing to the increase of the degree of connectivity, to the immediate propagation of the information, with implications including at the level of economic policy decisions.
At the same time, digitization has a significant impact on the processes of economic growth, development and convergence between countries.
Last but not least, the stronger incorporation of the Digital Revolution helps reduce financing costs.
The analysis highlights the important differences between countries in the world in terms of digitization processes, the most advanced being those in Asia and North America. On the other hand, European countries are less advanced in terms of digitization.
In Romania, IT&C has positioned itself in the leading post-crisis cycle among the sectors of the economy, its share in the total gross value added being around 6% at present (above the levels registered in Germany (the first economy of the European Union)). (4.6%) and the countries of the Visegrad Group (4.3% in Poland, 4.7% in Slovakia, 5% in Hungary and 5.5% in the Czech Republic).
Between 2011-2018 the gross value added in IT&C increased at an average annual rate of about 10% in Romania, the dynamics higher than those registered in Slovakia (3%), Germany (4.7%), Czech Republic (5.1%), Hungary (5.3 %), Bulgaria (5.9%) and Poland (8.3%).
However, Romania continues to position itself at the bottom, at the level of the European Union, regarding the digital economy index, according to the data published by the European Commission.