Social Inclusion through Microenterprise Development
Elgar original reference
Maria Doiciu and Diana Bialus 1 National context After the fall of Communism, the Romanian economy went through a transition period from a centralized system to an open market economy and started to grow, increasing business opportunities for entrepreneurs of all sizes. Macroeconomic summary Disciplined monetary and fiscal policies pursued over recent years have improved the macroeconomic picture considerably. During this period, domestic consumption has taken the lead role in the growth of the economy. Household consumption has continued to grow strongly, partly driven by the effects of 2005 income tax1 cuts and largely driven by the boom of household loans for current consumption (they recorded a 89.4 per cent increase in 2006 compared to 2005).2 However, structural constraints on the domestic production side of goods and services continue to co-exist with exchange rate pressures (the Romanian leu, RON had the largest appreciation against the euro and US dollar in 2006 compared to any other emerging markets’ currencies). As a consequence, the persistence of excess demand has fuelled import growth, widening the current account gap further (see Table 16.1). The fastest growth has been among the expansion in numbers of microbusinesses. As can be seen from Table 16.2, microenterprises represent almost 90 per cent of the total number of Romanian enterprises.3 Commercial banks traditionally operate on a walk-in client basis. If they seek direct contact with enterprises, it is those having fixed locations, buildings and equipment. This is not the case for the Romanian MSMEs market segment, and those...
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