CONSIDERATIONS ON THE QUALITY OF INFORMATION IN PROFESSIONAL ACCOUNTANT’S ACTIVITY

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I SSN- L 2285 – 3332

Revistă ştiinţifică indexată în baze

de date internaţionale

The USV Annals

of Economics and

Public Administration

VOLUME 13, ISSUE 1(17), 2013

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The USV Annals of Economics and Public Administration Volume 13, Issue 1(17), 2013

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EDITORIAL BOARD:

Editor‐in‐chief: Carmen NĂSTASE

General editorial secretary: Adrian Liviu SCUTARIU

Editors: Elena HLACIUC, Carmen CHAŞOVSCHI, Florin BOGHEAN, Mariana LUPAN,

Ovidiu Florin HURJUI, Simona BUTA

SCIENTIFIC COMMITTEE:

Angela ALBU, „Ştefan cel Mare” University of Suceava, Romania Paolo ANDREI, University of Studies in Parma, Italy

Stefano AZZALI, University of Studies in Parma, Italiy George P. BABU, University of Southern Mississippi, USA

Christian BAUMGARTNER, International Friends of Nature, Austria Grigore BELOSTECINIC, ASEM, Chi şinău, Republic of Moldova Ionel BOSTAN, „Alexandru Ioan Cuza” University of Iaşi, Romania Aurel BURCIU, „Ştefan cel Mare” University of Suceava, Romania

Gheorghe CÂRSTEA, Academy of Economic Studies, Bucharest , Romania Slobodan CEROVIC, Singidunum University, Belgrade, Serbia

Simion CERTAN, State University of Chişinău, Republic of Moldova Carmen CHAŞOVSCHI, „Ştefan cel Mare” University of Suceava, Romania Liliana ELMAZI, Tirana University, Albania

Cristian Valentin HAPENCIUC, „Ştefan cel Mare” University of Suceava, Romania Elena HLACIUC, „Ştefan cel Mare” University of Suceava, Romania

Elena IFTIME, „Ştefan cel Mare” University of Suceava, Romania Marian JALENCU, State University of Chişinău, Republic of Moldova Miika KAJANUS, Savonia University of Applied Sciences, Iisalmi, Finland Alunica MORARIU, „Ştefan cel Mare” University of Suceava, Romania Maria MUREŞAN, Academy of Economic Studies, Bucuresti, Romania Carmen NĂSTASE, „Ştefan cel Mare” University of Suceava, Roman ia Alexandru NEDELEA, „Ştefan cel Mare” University of Suceava, Romania Ion PÂRŢACHI, ASEM, Chişinău, Republic of Moldova

Rusalim PETRIŞ, „Ştefan cel Mare” University of Suceava, Romania Abraham PIZAM, University of Central Florida, Orlando, Florida Ion POHOAŢĂ, „Alexandru Ioan Cuza” University of Iaşi, Romania Gabriela PRELIPCEAN, „Ştefan cel Mare” University of Suceava, Romania Gheorghe SANDU, „Ştefan cel Mare” University of Suceava, Romania Petru SANDU, Elizabethtown College, Pennsylvania, USA

Doru TILIUŢE, „Ştefan cel Mare” University of Suceava, Romania Viorel ŢURCANU, ASEM, Chişinău, Republic of Moldova

Diego VARELA PEDREIRA, University of A Coruna, Spain

Răzvan VIORESCU, „Ştefan cel Mare” University of Suceava, Romania

Cover design & graphic layout: Adrian Liviu SCUTARIU

Contact:

Faculty of Economics and Public Administration „Ştefan cel Mare” University of Suceava

Str. Universităţii nr. 13, Corp H, Birou H105, 720229 SUCEAVA, ROMANIA

Phone: (+40) 230 216147 int. 297 E-mail: cercetare@seap.usv.ro

Journal web site: http://annals.seap.usv.ro Faculty web site: www.seap.usv.ro University web site: www.usv.ro

Întreaga răspundere asupra conţinutului articolelor publicate revine autorilor.

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of Economics and Public Administration

Issue 1(17), 2013

SECTION 1

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Issue 1(17), 2013

SOCIAL-ECONOMIC INEQUALITIES EXISTING AT RURAL LEVEL

–SOUTH WEST OLTENIA REGION

Ţrofessor Ţh.D.EmiliaUNGUREANU

University of Ţitesti, Romania emiliaungureanu@yahoo.com

Lecturer Ţh.D.CristinaFlorentinaBÂLDAN

University of Ţitesti, Romania baldan.cristina@gmail.com Lecturer Ţh.D. Ramona Florina POPESCU

University of Ţitesti, Romania rf.popescu@yahoo.com

Abstract:

The article includes a part of a complex research concluded under a larger project and refers to the social – economic inequalities found at South West Oltenia region level, in rural areas. The basic unit of research was the commune and it was used a set of five criteria. The results of the study indicate a large degree of inequality, due to economic and territorial infrastructure criteria. Depending on the importance of the indicators included in each criterion and on the importance of the criterion itself upon the total degree of inequality at rural level, there were proposed measures of reducing those inequalities. The study was finalized by developing complex scenarios for inequality attenuation, depending on the determined situation.

If we look at this region’s situation in a larger context, at national level, we can observe a relatively high inequality degree, with high intervals between minimum and maximum levels which lead us to the conclusion that this region needs more than others firm, rapid and radical measures on all levels of social and economic life, so that development discrepancies do not amplify, but even diminish. This paper was elaborated under the MESAIR Project - Contract no. 92072.3/01.10.2008. Program no. 4 – Partnership in priority domains.

Key words: economic development, socio-economic inequality, inequality attenuation, social infrastructure, economic dimension

JEL classification: R11, R13, R58

INTRODUCTION

The analysis presented by this article refers to the inequalities that can be noticed at rural level in South West Oltenia region. The data that could be obtained entirely are from 2008 and take part from a larger study conducted during a complex research project. The socio-economic particularities were divided into five categories, playing the role of relying criteria for the study.

The criteria were the following:

‐ Territory equipment. This criterion offers information on the comfort of living, technical-urban infrastructure as support of rural development - including business environment.

‐ Socio-demographic dimension. The criterion gives information on the local demographical perspectives, disintegration degree of family values, and attractiveness degree for living and presumed socio-economic opportunities of the region.

‐ Social infrastructure. The information regards educational and health infrastructure and their degree of adaptation to community needs such as potential accessibility to TIC.

‐ Economic dimension. The criterion offers information about the chances to acces a working place and the dependency degree of rural population to social transfers from agriculture, intensification degree of land exploitation, development degree of economic activities complementary to agriculture, capacity to promote rural services complementary to agriculture.

‐ Investments. The criterion reveals the projection upon the development potential of rural communities.

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‐ territory equipment: habitable area/inhabitant, quantity of distributed potable water to households (cubic meters/inhabitant), simple length of potable water network (km), simple length of sewage network (km), simple length of the natural gas distribution network (km). ‐ socio-demographic dimension: natural population increase/1000 inhabitants, divorces/1000 inhabitants, sold of domicile changing/1000 inhabitants, sold of residence changing/1000 inhabitants, sold of external migration/1000 inhabitants.

‐ social infrastructure: number of pupils/teacher, number of inhabitants/physician, number of PCs/1000 inhabitants.

‐ economic dimension: number of employees/1000 inhabitants, percent of arable area in total agricultural area, percent of vineyards and orchards in total agricultural area, average number of accommodation places/accommodation unit, number of overnights/accommodation.

‐ investments: finished homes in 2008/1000 existing homes.

The analysis of those indicators led to the establishment of some inequality levels for each criterion and those, in their turn, led to conclusions regarding each ones importance to the region’s inequalities at rural level. The resulting sizes were compared to the national average, the minimum level and the maximum one calculated for all the Romanian development regions.

As a consequence, for each criterion was established measures that could lead to the reduction of the induced inequality degree and therefore, to a much more equilibrated development at all levels.

GENERAL INFORMATION REGARDING SOUTH WEST OLTENIA REGION

South West Oltenia region is placed in the south west part of Romania and includes five counties: Dolj, Olt, Valcea, Mehedinti and Gorj. Mostly, it is the Olt historical region named Oltenia, into its natural borders: Danube at south, Olt River at east, the Carpathians at north and west. Having 29.212 square km it is the 7th among Romanian regions and represents 12.25% in the total area of the country.

The network of localities is composed of 40 cities and 408 communes. The most important cities are Craiova, Ramnicu Valcea, Drobeta Turnu Severin (over 100000 inhabitants each one), Targu Jiu and Slatina (over 80000 inhabitants each one). Most of the small towns (under 20000 inhabitants) don’t have an appropriate structure and level of development. Regarding the distribution of communes, most of them are in Dolj (104) and Olt (104) Counties, and fewer in Gorj (61) and Mehedinti (61) counties.

From the geographical point of view, the region is equilibrated, including mountains, planes, hills and plateaus. The north of the region is dominated by forests and pastures and the south is specialized in cereal cultures.

The hydrographic network gives the region the main role in the production of hydroelectric energy.

THE ANALYSIS OF THE INEQUALITY CRITERIA AND THE INDICATORS’ IMPORTANCE FOR EACH ONE AT REGIONAL AND NATIONAL LEVEL

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Table 1. The importance of the socio-economic inequalities for the justification of the general variation of the inequality degree – comparative situation (%)

Maximum level

Minimum level

National level

Regional level (South West) Territory equipment

48.06 18.72 24.76 22.73

Socio-demographic

dimension 31.38 9.63 31.38 17.35

Social infrastructure

21.99 13.32 17.12 19.25

Economic dimension

41.89 13.44 23.11 38.07

Investments

12.70 1.61 3.63 2.61

Source: processing made under the project PNII partnerships, no. 92072/2008, based on statistical information from Communes Sheets.

As shown above, the criterion with the greatest influence on the inequalities at South West region level is the economic dimension (38.07%), followed by the territory equipment (22.73%). These two criteria will be analyzed in a following section of this article in order to establish necessary measures to attenuate the inequalities.

Table 2 reflects the importance of the socio-economic inequality indicators for the justification of the general variation of the inequality degree of the South West region (rural level), also analyzed in a following section of this article.

If we look at the level of importance of the indicators, it can be noticed that the first most important indicators are (by decreasing importance):

‐ average number of accommodation places/accommodation unit (13,26%) ‐ number of overnights/accommodation (11,56%)

‐ number of pupils/teacher (9,47%)

‐ percent of vineyards and orchards in total agricultural area (8,02%)

‐ quantity of distributed potable water to households (cubic meters/inhabitant) (6,71%) ‐ simple length of the natural gas distribution network (km) (5,72%)

‐ sold of domicile changing/1000 inhabitants (5,40%)

Table 2. The importance of the socio-economic inequality indicators for the justification of the general variation of the inequality degree of the South West Region (rural level)

Criteria Indicators

% in the total variation of cumulated variation

South West

Habitable area / inhabitant (square meters / inhabitant) 2.99

quantity of distributed potable water to households

(cubic meters/inhabitant) 6,71

simple length of potable water network (km) 2.15

simple length of sewage network (km) 5.17

Territory equipment

simple length of the natural gas distribution network

(km) 5.72

natural population increase/1000 inhabitants 0.46

divorces/1000 inhabitants 2.80

sold of domicile changing/1000 inhabitants 5.40

sold of residence changing/1000 inhabitants 4.11

Socio-demographic

dimension

sold of external migration/1000 inhabitants 4.58

number of pupils/teacher 9.47

number of inhabitants/physician 4.72

Social

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number of employees/1000 inhabitants 3.78

percent of arable area in total agricultural area 1.44

percent of vineyards and orchards in total agricultural

area 8.02

average number of accommodation

places/accommodation unit 13.26

Economic dimension

number of overnights/accommodation 11.56

Investments finished homes in 2008/1000 existing homes 2.61

Compared to the national situation, there can be noticed resemblances and some differences. The factors on which the rural socio-economic inequality level mostly depends are those regarding the demo-social dimension, the indicators attached to this criterion explaining 31.4% of the total variation of the inequality level. Under this dimension, the most relevant aspects are related to: sold of residence changing/1000 inhabitants which reflects the demographic desertification risk of rural communities that are economically and socially isolated and are no longer attractive for living; the second demo-social aspect relevant to socio-economic inequality is the natural increase, which reflects the demographic ageing risk, labor force ageing and depopulation of rural communities.

The territory equipment of the rural communities is the second predictor of inequality, as this explains 24.8% of the total variation of rural inequality. The most important aspect from the territory equipment point of view, relevant for socio-economic inequality, is the dwelling comfort (expressed by the quantity of distributed potable water to households and the habitable area/inhabitant. Equipment of the communes with technical infrastructure elements (water supply networks, natural gas supply networks and sewerage systems) which, in its turn, has a significant contribution to the explanation of the general socio-economic inequality, as the indicators that measure the simple length of natural gas supply pipelines of the are the most relevant for the general inequality, as compared to the indicators related to other technical infrastructure networks.

The indicators related to the economic dimension of rural communities represent the third stage in the order of importance of factors determining the socio-economic inequality level. Overall, the economic dimension explains 23.1% of the total variation of the inequality level.

Among the indicators composing this dimension, the most relevant in the differentiation of communes is average number of accommodation places/accommodation unit due to the poor development of tourism infrastructure and weak tourism potential promotion. The second aspect, economically important, is the incidence of contractual relations on the labor market (measured by the indicator number of employees/1000 inhabitants), which reflects the access opportunity to a paid job and the diminution of the risk of dependence on own agricultural holding.

Social infrastructure is on the fourth position in the hierarchy of criteria conditioning the distribution of communes on the socio-economic inequality scale, this criterion explaining 17.1% of the total variation of the inequality level. The indicators that measure the social infrastructure development level (number of pupils/ teacher, number of inhabitants/physician) have a narrow variation range, the most part of the communes from Romania being characterized by the poor development of these infrastructure elements which make them have a low incidence on the inequality level.

The number of computers/ 1000 inhabitants reflects the risk of not having access to electronic information resources. This indicator is the third indicator that explains the total variation of cumulated socio-economic inequality.

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structuring in rural Romania at present.

The relevant two indicators are socio-economic dimension (31.38%) and economic dimension (23.11%) – criterion situated on the first position in the case of South West Region (see Table 1).

Table 3. The importance of the socio-economic inequality indicators for the justification of the general variation of the inequality degree at national level (rural level)

Criteria Indicators

% in the total variation of cumulated variation

National

Habitable area / inhabitant (square meters/inhabitant) 1.86

quantity of distributed potable water to households

(cubic meters/inhabitant) 10.65

simple length of potable water network (km) 2.64

simple length of sewage network (km) 3.01

TERRITORY EQUIPMENT

simple length of the natural gas distribution network (km)

6.59

natural population increase/1000 inhabitants 5.67

divorces/1000 inhabitants 3.70

sold of domicile changing/1000 inhabitants 2.64

sold of residence changing/1000 inhabitants 14.00 DEMO-SOCIAL

DIMENSION

sold of external migration/1000 inhabitants 5.37

number of pupils/teacher 5.21

number of inhabitants/physician 3.81

SOCIAL INFRASTRUCTURE

number of PCs/1000 inhabitants 8.10

number of employees/1000 inhabitants 4.80

percent of arable area in total agricultural area 4.22 percent of vineyards and orchards in total agricultural

area

4.36

average number of accommodation

places/accommodation unit 6.46

ECONOMIC DIMENSION

number of overnights/accommodation 3.28

INVESTMENTS finished homes in 2008/1000 existing homes 3.63

As for the indicators, the seven most important ones are (see Table 3): ‐ sold of residence changing/1000 inhabitants (14.00%);

‐ quantity of distributed potable water to households (cubic meters/inhabitant) (10.65%); ‐ number of PCs/1000 inhabitants (8.10%);

‐ simple length of the natural gas distribution network (km) (6.59%); ‐ average number of accommodation places/accommodation unit (6.46%) ‐ natural population increase/1000 inhabitants (5.67%);

‐ sold of external migration/1000 inhabitants (5.37%).

Only three of the indicators selected at national level are relevant for the inequalities manifested at South West region level: average number of accommodation places/accommodation unit, quantity of distributed potable water to households (cubic meters/inhabitant), simple length of the natural gas distribution network (km).Based on the figures characterizing the indicators and the criteria presented above for the South West Region, a SWOT analysis was sketched:

Table 4. SWOT analysis for South West Oltenia Region

Strengths Weaknesses

 High comfort of living in communes from Dolj and Mehedinti Counties;

 Quality technical infrastructure in some communes;

Low comfort of living in communes from Olt, Gorj and Valcea Counties;

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 Tendency to preserve traditional values (such as family);

 Weak migratory flows abroad;

 Premises for a good quality of social services (education, sanitary);

 High share of arable land in the whole agricultural land;

 High fertility of arable land;

 Experience and tradition of communes from hilly zone in vineyards and related activities;

 High touristic potential of communes of mountain zones or of balnear resorts;

 Existence of mining areas in Gorj department.

 Tendency of population reduction and ageing;  Weak tendency of social emancipation;  Relative instability of habitation;  Low access to information;  Poor accommodation capacity;  Lack of employment opportunities;

 Low capacity to promote rural services complementary to agriculture (agro-tourism);

 Low interest for property investments in communes outside the influence area of urban centers.

Opportunities Threats

 Development of the comfort of living in order to increase the quality of life of rural population;

 Development of the rural technical infrastructure in order to develop business environment;

 Increase of active population by attracting the urban population affected by the precarious economic situation;

 Keeping teachers and physicians by rising the quality of endowments;

 Increasing agricultural and touristic investments;  Economic development of communes nearby Danube while intensifying the efforts to better exploit it;

 Development of social infrastructure and services;  Increasing the attractiveness degree of rural environment.

Insufficient funds on short and medium term to develop rural infrastructure;

Deepening the discrepancies between rural and urban;

The fast population decline;

Teachers and physicians leaving in the context of the demographic reduction;

The impossibility of a real competition between rural inhabitants and urban ones (mostly on the labor market) and deepening of social and professional training discrepancies;

Increase of the rural population dependency on social transfers and agriculture;

Migration of young rural population towards urban zones;

Loss of capitalization opportunities for the touristic potential of the region;

 Insufficient funds for infrastructure and social services development as a base for the increase of the rural attractiveness;

Slow development of rural economy;

Increase of economic disparities between north and south of the region;

Deepening of the imbalance inside rural communities.

ECONOMIC POLICY MEASURES THAT CAN ATTENUATE THE INEQUALITIES MANIFESTING AT RURAL LEVEL IN SOUTH WEST OLTENIA REGION, CONSIDERING THE TWO SELECTED CRITERIA

The two relevant criteria and the seven indicators resulting from the analysis of the South West region make the object of proposals for the reduction of the inequalities, as follows.

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high degree of pollution of streams and the insufficient number of garbage dumps negatively affect environment.

Further we will present measures regarding the two relevant indicators selected in the table above as the most important for the territory equipment:

‐ attraction of investments in infrastructure by accessing European funds;

‐ finding funding sources at local level, possibly by uniting the efforts of several neighboring communes which can beneficiate of mutual utility networks; another possibility are private-public partnerships in order to realize such works;

‐ a better informing of the population about the benefits of using sewage and drinking water networks, while maintaining low costs for those services;

‐ encouraging the establishment of bank branches and other credit institutions at rural level for a better access to funding;

The economic situation of South West region is rather precarious, the low level of development of the region being due to the low level of directs foreign investments. Economic restructuration made a part of the aged unemployed population from urban centers to head to rural zones where they practice subsistence agriculture. The large share of rural population and the large area of arable lands, mostly in the south, make from agriculture the most important sector of the region’s economy.

About the reduction of economic discrepancies of the region, measures can be conducted for:

‐ accessing European funds in order to develop mountain and health tourism;

‐ supporting the local business (from agriculture but also from industrial manufacturing of agricultural products), in their efforts to obtain funds (national or European ones) in order to conduct their activity and also to find new markets;

‐ Transforming the Danube from a natural barrier to economic changes into a favorable factor by putting into place custom checkpoints to Bulgaria and ex-Yugoslavia countries. In this manner, Danube can be used as a faster transportation route.

‐ Establishing free zones along the Danube;

‐ Developing the transportation infrastructure at rural level (mostly railways and routes); ‐ Reviving the former industrial zones by putting into place industrial parks in communes situated nearby big cities.

ECONOMIC POLICY MEASURES THAT CAN ATTENUATE THE INEQUALITIES MANIFESTING AT RURAL LEVEL IN SOUTH WEST OLTENIA REGION, CONSIDERING THE SEVEN SELECTED INDICATORS

The analysis of the seven indicators selected above need correction measures of inequalities, such as:

‐ The indicator average number of accommodation places/accommodation unit (13.26%)

and number of overnights/accommodation (11.56%) are deeply connected and, in order to attenuate the inequalities, we propose the following measures:

o Attracting European funds in order to develop rural tourism activities;

o Establishing information and counseling points about European funds attraction in zones with unexploited touristic potential;

o Exploitation of local specificity for touristic development even in less attracting zones from natural point of view (in the neighborhood of European and national routes, organizing local celebrations and festivals, organizing events with local specificity – wine testing, thematic agricultural exhibitions, religious touristic circuits);

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‐ The indicator number of pupils/teacher (9.47%) may lead to inequalities either because of a reduction of the number of teachers working at rural level, or because of a depopulation of communes, of their ageing, having as a consequence the reduction of the number of pupils. The measures must be oriented in two directions:

o The restoration of the teachers’ number by:

 Encouraging the teachers to activate at the country by facilitating their transportation, accommodation or meals and encouraging the young university graduates to return into the community;

 Rehabilitating the educational spaces and their endowment with modern teaching means – computers, labs;

o Increasing the number of pupils in communes by:

 Increasing natality by ensuring better means of living;

 Reducing migratory flows towards urban centers or abroad by ensuring jobs at local level.

‐ Inequalities induced by the indicator percent of vineyards and orchards in total agricultural area (8.02%) can be explained by the heterogeneity of landforms at regional level, only a part of those being appropriate for orchards or vineyards. Still, even in communes where the necessary conditions are fulfilled it can be noticed a trend of reduction of such areas. Therefore, measures can target:

o Reestablishment of vineyards and orchards where they existed before and where, by retrocession, they were dissolved or abandoned, using fiscal facilities (at local level) or supporting funds accession;

o Encouraging the establishment of agricultural associations;

o Supporting local producers in their efforts to find business opportunities in order to sell the production, by organizing local or regional fairs, informing media and tourists about local or regional industries.

‐ The indicator quantity of distributed potable water to households (cubic meters/inhabitant) (6.71%) explains inequalities because in more than half of the region’s communes drinking water networks are missing, therefore there is no distributed water. For the regions beneficiating of drinking water networks, the discrepancies among used quantities of water are explained by various factors: some communes don’t have alternative sources of drinking water, others use water for agricultural purposes – watering gardens, feeding animals, in other communes with relatively large networks distributed quantities are small because many households chose not to use those networks. Inequalities reduction measures may be:

o Accessing European funds in order to develop water networks;

o Encouraging branching to water networks, some arguments being water quality and its high degree of accessibility;

o Maintaining reduced prices for the distributed water by using local sources of potable water and reducing distribution lengths.

‐ In the case of simple length of the natural gas distribution network (km) (5.72%) it can be noticed that the region has 90% of the communes not branched to gas networks (in Mehedinti county, the proportion is 100%), therefore the measures may be:

o Higher accession of European funds for gas networks development;

o Attracting investors in industry, mostly for communes nearby cities, interested to develop gas networks that can be expanded afterwards;

‐ About the indicator sold of domicile changing/1000 inhabitants (5.40%), its high influence upon inequality degree can be attenuated using the following measures:

o Reducing migratory flows, both internal and abroad, by rising living standards and assuring a good insertion on local labor market for active population;

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o Developing community cohesion through a bigger attention paid to social and cultural activities taking place at local level.

CONCLUSIONS

This analysis was completed under the frame of the project by a cluster-type analysis, the region’s communes being divided into three clusters, depending on the degree of social and economic inequality, making possible the extraction of other types of conclusions.

The results of cluster analysis and data series on rural economic and social inequalities led to the partitioning of the communes in the South West region into three clusters. Thus, communes can be divided into:

‐ rural communities characterized by a lower level of rural socio-economic inequalities (cluster I) – 11.3%; those communes are situated nearby big cities, nearby important transportation routes, in hilly and mountain zones, the main activities being tourism, orchard and vineyard culture and they also have a good access to technology and information ; ‐ rural communities characterized by a medium level of socio-economic inequalities (cluster

II) – 42.1%;

‐ rural communities characterized by a higher level of rural socio-economic inequalities (cluster III) – 46.6%; communes included into this category are situated in plains and the main occupation is agriculture.

The study was finalized by developing complex scenarios for inequality attenuation, depending on the determined situation.

If we look at this region’s situation in a larger context, at national level, we can observe a relatively high inequality degree, with high intervals between minimum and maximum levels which lead us to the conclusion that this region needs more than others firm, rapid and radical measures on all levels of social and economic life, so that development discrepancies do not amplify, but even diminish.

REFERENCES

1. Popescu Ramona Florina, Ungureanu, Emilia, (2012), Attenuation Scenarios of Socio-Economical Inequalities at Rural Level - South-West Oltenia Region, The USV Annals of Economics and Public Administration, vol.12, issue 1(15), pp. 46.

2. Rusu Marioara, Florian Violeta., Tudor Monica (coordinators), (2011), Socio-economic inequalities in rural space, Regional profile analysis, Terra Nostra Publishing House, Iasi. 3. Tudor Monica, Rusu Marioara, (2011), Romanian rural area typology by the inequality

level - A multicriterial approach, Scientific papers, Series I, Volume XIII, USAMVBT – Faculty of Agricol Management, Agroprint Publishing House, Timişoara, pp. 116.

4. ***, Project PN II, Partnership, no. 92072/2008 ”Economic-social models to attenuate the inequalities in the rural areas by regions” (2008-2011).

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The USV Annals of Economics and Public Administration

Volume 13, Issue 1(17),

2013

16

SOME ASPECTS REGARDING THE PREDICTABILITY OR

NON-PREDICTABILITY OF THE GREAT DEPRESSION. CASE OF

ROMANIA

Lecturer Ţh.D. MarianaLUPAN

„Stefan cel Mare University of Suceava, Romania marianal@seap.usv.ro

Abstract:

Analysis of the crisis, particularly financial ones, the generating factors and the applicable patterns to return to normality is a consistent and timely concern of researchers in economics. After the advent of the global crisis in mid-2007, many researchers recognized internationally and nationally formulated theories about the causes, effects and intensity of the current crisis, providing reference works in the field.

The starting point of the research puts in the spotlight the fact that the deepest crises have their "origins" in developed countries, but are funded by the emerging countries. In the context of this "reality" the economy seeks to predict the possible behaviours in configuration of a context to return to normality, where unexpected trends and consequences of unintended effects require completion of the theory deficit in Romanian economic literature regarding the economic effects caused by subjective decision, especially political decisions.

Carrying out research with a high degree of completeness, necessarily requires knowledge and understanding of the history of financial crises, starting with the Great Depression, focusing on the implications on the Romanian economy, and in particular, on the intervention models commonly used in order to identify "optimal model" that allows escalation of the current crisis, but also a more accurate predictability of future adverse events.

Key words: financial crisis, economic crisis, economic growth, banking, globalization

JEL classification: F61, F62, G01, O10

THE GLOBAL ECONOMY AND THE GREAT RECESSION OF 2007

Since the beginning of the current crisis, theorists, economists, but also major economic actors and governments have sought to identify similarities with the Great Depression in the years 1929-1933, and with the crisis that followed the Second World War. There are also many questions about the ability of models and quantitative analysis to signalise or not the onset of such a deep crisis.

On September 7, 2006, being present at a conference organized by the International Monetary Fund in Washington DC, Nouriel Roubini issued a warning hard to be accepted at that moment by the U.S. economy: "the nation's economy will soon suffer a dramatic fall, that you only assist once in a lifetime, of the housing market; a brutal shock oil; a steep decline in consumer confidence and, inevitably, a deep recession". The end of that speech was quite clear "housing market collapse could lead to a systematic problem for the financial system", and unfortunately only a few months after this warning the events precipitated, and this scenario has become a cruel reality.

It is widely accepted that the Great Recession that began in 2007, which had its epicentre in the U.S. was caused by speculative bubbles in the housing market due to unprecedented growth and no correlation with price reality on the housing. But this was not the only trigger, we can talk about a number of factors, namely: trade record deficit and current account deficit, which attracted cheap foreign capital inflows and permissive regulatory policy. Profound effects manifested on financial markets and also at the level of global economy emphasize that we are dealing with "the most serious global financial crisis since the Great Depression" (Reinhart and Rogoff, 2009).

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Refusal reactions Alarmist reactions Dooley, Folkerts-Landau and Garber from Deutsche

Bank (2004):

„[…] U.S. current account deficit is only a natural consequence of the emerging states efforts to engage in export-based economic growth and their need to diversify investments in safe assets.”

Obsfeld and Rogoff (2005):

„[…] c The U.S. current account was unsustainable oversized.”

Ben Bernanke (2005), referring to the over-indebtedness of USA:

„[…] Middle East countries are looking for ways to use their earnings from oil, and countries with underdeveloped systems as China, are seeking to diversify their investment portfolio with safer assets. The low rates of return on investment from the rest of the world simply make our country to be particularly attractive for investment.”

Roubini and Setser (2005)

„[…] U.S. loan problem will worsen even more, reaching 10% of GDP before the dramatic collapse.”

Alan Greenspan (2006)

„[…] the growing deficit (of the U.S.A) reached over 6.5% of GDP in 2006, is merely a reflection of the more general trend towards global financial development, which allows countries to sustain current account deficits and surpluses more higher than in the past.”

Paul Krugman (2007)

„[…] will inevitably occur a Wile E. Coyote moment when the unsustainability of the U.S. current account will become clear as day to everyone, and the dollar will fall sharply.”

If we review the events that occurred after the Second World War, I think the situation would become slightly clearer especially in terms of forecasting ability or non-predictability of the current financial and economic crisis. The period after the Second World War was characterized by a multitude of turbulence situations that have caused systemic crisis: the first oil shock of the mid-1970s has been accompanied by episodes of severe inflation; the banking crisis in Spain 1977; recessions caused by measures to combat inflation that occurred in the early 1980s; banking crises in the Nordic countries (Norway in 1987, Sweden and Finland in 1991) and the crisis in Japan in the early 1990s (lost decade); exchange crisis called "Black Monday" of 19 October 1987, when stock markets around the world have lost large sums of money (e.g. Hong Kong stock exchange recorded a loss of 45.8% of its value, market London has lost 26.4%, while the New Zealand stock exchange recorded a loss of 60%) dot-com crisis in 2001.

Each of these crises have affected equally both developed and emerging countries, however some authors believe that after the mid-1980s the world economy was characterized by a "decline in macroeconomic volatility" (McConnell and Perez-Quiros, 2000; Blanchard and Giavazzi, 2001). But would things have been like?

The debt crisis of the 1980s that manifested as tough as the Great Depression of the 1930s, affected the Asia, Africa, Latin America and some countries in Eastern Europe (the former Soviet Union and Romania) and culminated with the insolvency of Argentina from 2001-2002. Therefore, I consider that period between the early 1980s and until 2003 was characterized by a high degree of macroeconomic volatility.

The period 2003 - 2007 was characterized by global economic growth, the increase in the price of goods due to lower interest rates, lower unemployment, and these positive developments have led many scholars to believe that the global economy has entered an uptrend. However, although the "positive aspects" are undeniable, my first warning sign that comes to contradict the optimism of that period appeared in September 2001, when the United States suffered the worst terrorist attack in history. I think that was the start of the global economic decline that culminated in September 2007 with the outbreak of the current crisis.

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it is necessary to adopt measures to limit their adverse impact. Also, as Reinhart and Rogoff (2009) but also Krugman (2007) and Minsky (2008) argue that liberalization and poor regulation played a major role in triggering the global financial crisis.

We must not lose sight of the fact that liquidity shortages cause problems for the banking system, in particular, and the reduction of cash flow is the initial stage for the emergence of a crisis. In this situation, banks are forced to put up for sale assets, causing a domino effect that leads to lower the bank's assets and ultimately to the crisis of solvency (Lybeck, 2011). Referring to the instability that can be caused by the banking system, Keynes (1936) stated that "the alarm associated with the rapid growth of debt is the fragility of many of our financial institutions." Also Keynes is one that draws attention to the economic boom that we associate with "optimistic expectations of future yield of capital-assets ratio," but he further states that "when disillusionment is installed in a too optimistic market with excess demand” the market collapse is imminent.

Another way to estimate the crisis is highlighted by Minsky (2008). He states that "financial panic is possible because of changes in financial structure that occur during the long expansion of optimism." Typically, during periods of economic expansion, both investors and financial institutions consider that they are safe and will focus on investments with high risk and most relevant example of this is the large number of securitized products traded in the period before the crisis in 2007, which led to the development of a "shadow banking system". Also, Minsky believes that the gap between the financial economy and the real economy will lead to future instability. In this respect, the most relevant examples are Ireland, Iceland, the UK and U.S.A, where oversized financial components of the economy is evident in relation to the real economy (Lybeck, 2011).

The empirical analysis conducted so far allows synthesizing crisis warning signals (Lybeck, 2011):

- unrealistic increase in the value of assets, shares and house prices; - current account growth deficit;

- lowering the household savings; - increasing indebtedness;

- large volume of short-term loans of corporations, banks and households; - investing with a high degree of risk;

- excessive liberalization of the capital market and its poor regulation.

KEYNES’S INTERVENTIONISM VS. SCHUMPETER'S CREATIVE DESTRUCTION

The devastating effects of the financial crisis require the implementation of recovery measures which have to be more easy to apply by all governments of the affected countries, and the results of these measures should focus primarily on economic growth, financial stability, decreasing unemployment, and diminishing and stabilization of government debts, in a word, going beyond the highest rate of growth.

Measures to overcome the crisis are addressed differently from country to country and in the USA, but also most representatives of the G20 agreed that the measures J.K. Keynes found to be optimal for the Great Depression of the 1930s are to be applied to the current crisis. Thus, Keynes argued that the deficit should be increased to stimulate the economy, i.e. states must intervene to make the economic system work, but the intervention must be limited meaning that "will leave untouched the private property and the right to make decisions" (Krugman, 2008).

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structure from inside" after which will survive the economic agents that have a high capacity for innovation and succeed in creating a new economic order (Schumpeter, 2006).

Keynes' interventionist effects are concretized in fixing of prices for the capital assets and for the special economic properties of financial institutions capitalist economy. The focus is on performance capitalist system which emphasizes investment, the way in which investments are funded and the effects of financial commitments. The author points out that the market mechanism is not necessarily a system capable of self-regulation which pursues and sustains for itself the full employment of labour, therefore capitalism is a system that occasionally unbalances, but can be stabilized by state intervention. (Keynes, 1936)

Contrary to these arguments Schumpeter believes that the state should not intervene in the economy even when it is facing a situation of crisis because instability is the consequence of innovation, and this is the essence of capitalism. Therefore both businesses and nonperforming financial institutions should be left to self-destruct so that in the end only the strong to hold (Schumpeter, 2006).

I appreciate that the effects of "creative destruction" can be harmful to the global economy, particular in the situation of devastating crisis, as the current one, if we consider interconnections that actually enable the economy to function as a whole.

Considering sustainable the Keynes's approach regarding to measures to stimulate the economy, Stiglitz (2010) consider that a well-found incentive scheme is based on the following principles:

a) must be fast, i.e. it is absolutely necessary the supply of money in the economy;

b) must be effective, in the sense that each monetary unit spent should generate increased employment and production growth;

c) must address long-term problems of the country, which means that an effective system of measures to consider raising national saving, reduction of trade deficits, rehabilitation and development of infrastructure, provision of long-term financial programs for social assistance, etc.;

d) must concentrate on investments: investments are envisaged investments in assets that lead to long-term productivity of the country, which will positively affect the standard of living;

e) must be equitable, i.e. do not undertake measures that will be advantageous only for certain category of the population (this refers to the top class of society);

f) must deal with pressing short-term needs that would be created by crisis in the sense that a well-designed set of measures should assist countries which, due to the lack of money, they cut jobs;

g) stimulation should be directed to areas where there are layoffs in the sense of allocating financial resources to personnel retraining.

SOLUTIONS FOR ROMANIA: LIMITED INTERVENTIONISM OR DISRUPTIVE ACTION

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It is generally accepted that programs of severe cost reduction and increase taxes as well as growing in rates of interest lead to reduction of economic activity, also causing decreasing of budget revenues The austerity measures that the Romanian government has taken in May 2010 such as cutting wages, social insurances and pensions, are consistent with those the executive in the period 1930-1933 has considered optimal for reducing the government expenditures are known as "curves of sacrifice".

On the other hand, we can identify as being of nature of "limited interventionism" the measures Romanian government envisaged, and these measures are consistent with measures taken at EU level, namely:

1. the ratification of Fiscal Stability Treaty which provides common budgetary rules entitling control over national budgets to the European Commission. Treaty establishes as threshold limit for structural budget deficit up to 0.5% of GDP, which implies maintaining public debt below 60% of GDP. The "Golden rule" of the treaty refers to the fact that the budgetary deficit plus the structural one will be within the limit of 3% of GDP. Failure to comply with these terms will trigger an automatic correction mechanism which shall be provided in national law. Therefore, the aim of this treaty is to strengthen the fiscal discipline.

2. the establishment of the Financial Supervisory Authority (FSA) which merges the National Securities Commission (NSC), the Insurance Supervisory Commission (ISC) and the Commission for the Supervision of the Private Pension System (CSPPS) and is responsible for the prudential supervision of the capital market, insurance sector and system of private pensions funding.

A highly debated and analysed issue regarding measures and solutions to revive the economy, is the financial stability and economic growth. Analysing this issue Krugman says that "you cannot have prosperity without a functioning financial system but financial system not necessarily leads to prosperity." Also, NRB governor Mugur Is rescu pays particular attention to financial stability, but it is an interesting approach that he had it before the crisis, and then, after its effects have been felt plentiful in the Romanian economy

Before the crisis After the crisis

The main source of financial instability is inflation therefore the condition "(almost) sufficient" to promote financial stability is to ensure price stability.

The global financial crisis that broke out in 2007, in the conditions of an economic environment characterized by low inflation, shows that price stability does not guarantee financial stability. To simplify the design and implementation of

monetary policy and to avoid conflicts at the level of proposed objectives it is necessary the clear separation of function of price stability assurance from function of financial stability assurance.

Mitigating the consequences of the financial crisis is proving much more expensive than authorities’ intervention to limit or correcting imbalances in an early stage of their manifestation.

Markets always have the ability to self-regulate and therefore it is not required extensive intervention in the financial markets from the monetary authorities.

"The costs associated with distortions a relatively high level of inflation generates may be less important than the losses caused by distortions in the financial sector" (Stiglitz 2010)

Therefore, the crisis revealed on the one hand, that globalization involves a high degree of difficulty to macroeconomic governance; on the other hand, the relationship between financial system and the unpredictable effects of external events is a major obstacle to the implementation of internal policies.

CONCLUSIONS

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the same time, increased economic difficulties faced both by the United States and by the European Union are signals showing that the Western powers have reached a critical point that will have systemic effects in the new global economic order.

As a result of economic indicators impairment in Western countries, we can identify the signals of global order rearrangement which are given by the rise emerging economies and the possible effects of consolidation of political and economic alliances mainly "South-South". Thus, recognition the necessity for collaboration with representatives of emerging countries in order to find solutions to the problems mankind is facing with since the crisis triggered in 2007 was the formation of G20 group, when foundations of new global governance were established. Due to this decision, the participants in G20 debates represents 90% of global GDP, two thirds of the world population and 80% of world trade (Stiglitz, 2010).

Analysis undertaken in the last part of this paper highlights the fact that Romania, like other countries, has been and still is affected by the financial crisis of 2008. With regard to measures escalating recession that our country faces, we find that they can be considered as consistent with the measures taken by other European countries.

It is generally accepted that programs of severe cost reduction and increase taxes as well as growing in rates of interest lead to reduction of economic activity, also causing decreasing of budget revenues The austerity measures that the Romanian government has taken in May 2010 such as cutting wages, social insurances and pensions, are consistent with those the executive in the period 1930-1933 has considered optimal for reducing the government expenditures are known as "curves of sacrifice". However, all these measures have not generated the expected economic growth and, unfortunately, increasing unemployment, especially among young people, along with falling industrial production, facts that entitle me to appreciate that the Schumpeter's "creative destruction" was the choice for our country, although none of the domestic industries make their presence felt through creative innovation.

REFERENCES

1. Akerlof, G. A., Shiller, R.J., Spirite animale. Despre felul în care psihologia umană influențează economia și ce înseamnă asta pentru capitalismul global, Editura Publica, Bucureşti, 2010

2. Baldwin, R., Wyplosz, Ch., The Economics of European Integration, McGraw-Hill, 2009 3. Bayomi, T., Eichengreen, B., European Monetary Unification, Journal of Economic Literature,

1993

4. Blanchard, O.L., Giavazzi, F., Macroeconomic Effects of Regulation and deregulation in Goods and Labour Markets, NBER Working Paper, 2001

5. Dinu, M., Economia de dicționar. Exerciții de îndemânare epistemică, Editura Economic , 2010

6. Dornbusch, R., Mexico: Stabilization, Reform, and no Growth, Brookings Papers on Economic Activity, 1993

7. Friedman, M., Friedman, R., Libertatea de a alege. O declaraţie peersonală, Ed. Publica, Bucureşti, 2009

8. Goldstein, J. Hillard, M., Heterodox Macroeconomics: Keynes, Marx and globalization, Routledge, New York, 2009

9. Grevilles, S., The Asia Crisis, Capital Flows and the International Finance Architecture, University Law School Foundation Melbourne, 1998

10. Is rescu, M., Finanţarea dezechilibrului extern şi ajustarea macroeconomică în condiţiile crizei financiare. Cazul României, Bucureşti, 2009

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12. Kaminsky, S.B., Wood, P.R., Capital Inflows, Financial Intermediation and Aggregate Demand: Empirical Evidence from Mexico and other Pacific Basin Countries, International Finance Discussion Papers, 1998

13. Krugman, P., Conştiinţa unui liberal, Ed. Publica, Bucureşti, 2007

14. Krugman, P., Întoarcerea economiei declinului şi criza din 2008, Ed. Publica, Bucureşti, 2009 15. Krugman, P., Opriţi această depresiune – acum!, Ed. Publica, Bucureşti, 2012

16. Lybeck, J.A., Istori globală a crizei financiare (2007-2010), Ed. Polirom, Iaşi, 2011

17. McConnell, M.M., Perez-Quiros, G., Output fluctuation in the United State: what has change since the early 1980s?, Research Paper, Federal Reserve bank of New Yortk, 1997

18. Minski, H.P., Cum stabilizăm o economie instabilă, Ed. Publica, Bucureşti, 2011

19. Nagy, A., Criza globală şi problema guvernanţei economice. Provocări la nivelul politicilor macroeconomice, Constan a, 2012

20. Obstfed Mourices, Taylor M. Alan, Global Capital Markets. Integration, Crisis, and Growth, Cambridge University Press, 2004

21. Prelipcean, G., Metode cantitative avansate în managementul crizelor economico-financiare, Ed. Didactic şi Pedagogic , Bucureşti, 2006

22. Reihart Carmen, Kenneth Rogoff, This Time is Different: Eight Centuris of Financial Folly, Princeton University Press, 2009

23. Rottman, D., „Aspecte generale ale crizei româneşti în cadrul crizei mondiale”, în vol. „Comunicări făcute de asociaţia generală a economiştilor din România în anii 1936-1937”, Tipografia Bucovina, I.E. Torou i, Bucureşti, 1937

24. Schumpeter, J.A., Poate supravieţui capitalismul? Distrugerea creatoare şi viitorul economiei globale, Ed. Publica, Bucureşti, 2011

25. Stiglitz, J., În cădere liberă. America, piața liberă și prăbușirea economiei mondiale, Editura Publica, Bucureşti, 2010

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Issue 1(17), 2013

GRANT SCHEMES FOR SME’S - AN OPPORTUNITY FOR

EASTERN CROSSBORDER AREAS IN THE ACTUAL ECONOMIC

LANDSCAPE

Ţh.D. Student Marcela SLUSARCIUC

"Ştefan cel Mare" University of Suceava, Romania, Faculty of Economics and Ţublic Administration slusarciuc.marcela@usv.ro

Ţrofessor Ţh.D. Gabriela PRELIPCEAN

"Ştefan cel Mare" University of Suceava, Romania, Faculty of Economics and Ţublic Administration gabrielap@seap.usv.ro

Abstract:

The objective of this paper is to set up the main features of a possible grant sub-scheme designed for the small and medium enterprises (SMEs) located in the crossborder area Romania-Ukraine-Republic of Moldova. The research is focusing on four main aspects: the actual European economic framework with target on the legal European frame concerning the SMEs, the economic background of the target area, existing cross border cooperation grant schemes for the target area designed for different beneficiaries and the specificity of the financial instruments dedicated to SME’s. The analyze of the mentioned aspects shows the the most important features that should be included in a grant sub-scheme proposal and the necessary steps for action.

Key words: crossborder cooperation, Romania-Ukraine-Republic of Moldova, SME’s, grant scheme

JEL classification: H81

INTRODUCTION

In the light of recent political and economic events the crossborder areas are for the most interest, framed in the Neighbourhood Policy of the European Union. The economic development of these areas should be based on the small and medium enterprises that are influenced by the contemporary general recession. Moreover, the level of economy and the functionality of the settlements from the crossborder area placed at the Eastern border of the European Union have an important role in promoting the Neighbourhood Policy and in the national and local security. From these rises the importance of encouraging and sustaining the small and medium enterprises through programmes financed by the European Union and by the local authorities where there is possible, mainly the development in the trade and crossborder cooperation fields. The actual grant schemes offered for SME’s from European Union budget are targeting the Member States and not the Partner Countries.

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Union aims to support economic changes, democratic reforms, good governance and the rule of laws in the third countries that would transform the neighbours in reliable and stable partners.

Ukraine and Republic of Moldova, in the middle of the two big poles – EU and Russia, form together the main field for the battle of the influences while the process of implementing EU standards is slower. The proximity of Russia lead to a gradual economic integration, starting with a Partnership and Cooperation Agreement from 1998 to 2008, to which was added later the Action Plans for Ukraine and Republic of Moldova as part of European Neighbourhood Policy, adopted in 2005 and characterized by economic incentives. EU and Ukraine and Republic of Moldova started a series of negotiation of a new frame called New Enhanced Agreement in parallel with a deeper discussion on a free trade agreement (FTA) as a component of the agreement.

The Russia’s approach on the relations with Ukraine is pragmatic. The first factor out of four that links Russia and Ukraine is the economy and from this point of view Russia tried to attract Ukraine in the economic union of former soviet countries by a free trade area. The Ukraine preference was toward West, joining the World Trade Organization (WTO) being as a commitment to the Western economic model. The second factor that is used by Russia as leverage in the relation is the gas and energy geopolitics that are influencing in a major way the economic development of both countries and that constitutes a break in the reform for EU integration of Ukraine. The remained two factors are the security and the autonomy of Crimea region that give the shape of a battlefield to Ukraine. The position of Ukraine can put it in the role of a mediator between the EU and Russia but at least by now the leaders of this country did not explored the potential of such a role (Giusti, Penkova, 2010). In what supposes the Ukraine position between the two, EU and Russia it can be done a comparison (Shumylo-Tapiola, 2012). The costs and benefits of the EU-Ukraine Deep and Comprehensive Free Trade Agreement have been calculated and are publicly discussed and more than that the negotiation of the DCFTA are finished, but on the other side the estimates are lacking concerning the Customs Union. A deeper integration, even if it will cost more for Ukraine will be a positive signal for foreign investments and will large the access of Ukrainian goods and services on EU market. On the other side there are just few evidences that comparable benefits will come from the membership to the Custom Union that Russia proposes. Moreover the Russian side has promises and not a negotiated agreement.

For this workpaper we consider a cross-border area because the economic development and the functionality of the settlements are influenced by a complex of social-cultural, technological, economic and political-legal factors that derives from the specific characteristics of each component countries. The considered crossborder area covers: Romania counties Suceava, Iaşi, Botoşani, Vaslui, Gala i and Tulcea, Ukrainian oblasts Odesska and Chernivetska and the entire territory of Republic of Moldova. This area is for interest due to the placement to the external borders of the European Union and it is included in the European Neighbourhood Policy and more specific in the Joint Operational Programme Romania-Ukraine-Republic of Moldova as practical way of implementing the named policy.

EUROPEAN FRAMEWORK – SMALL BUSINESS ACT - ”THINK SMALL FIRST”

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terms of impact on society will be very important in sustaining the momentum for reforms. In this context the European Commission considers that the efforts should concentrate on five new priorities: pursuing differentiated, growth-friendly fiscal consolidation, restoring normal lending to the economy, promoting growth and competitiveness for today and tomorrow, tackling unemployment and the social consequences of the crisis and modernising public administration. (European Commission, 2012d).

In the above mentioned document there are recommended various measures for the national and European level, addressed directly or indirectly to SMEs. At the national level, it is considered that Member States can do more to promote alternative sources of financing, increase liquidity and reduce companies' traditional dependence on bank financing, for instance by:

 Promoting new sources of capital, including business-to-business lending, providing more possibilities to issue corporate bonds and facilitating access to venture capital.

 Reducing late payments by public authorities, since their average duration has further deteriorated in the crisis and this creates particular burdens for SMEs in an already difficult business environment. The EU late payment directive which must be transposed by March 2013 will reduce delay to 30 days and improve compensation in case of late payment.

 Developing the role of public banks and guarantee institutions in the financing of SMEs. This can cover some of the risks taken by private investors and can compensate for the lack of equity or for the small size of the company to be financed, including through new forms of securisation.

 Supporting innovative schemes such as public schemes, which allow banks to borrow at a lower rate if they increase their long-term lending to businesses or provide cheaper and more accessible loans to SMEs.

 Ensuring a balanced approach to foreclosures in case of mortgage lending, protecting vulnerable households while avoiding banks' balance sheets from becoming overburdened. This includes measures to introduce personal insolvency regimes allowing modifications of the terms of mortgages to avoid foreclosures.

At the European level, it is important to make full use of existing or new EU financial instruments to act as a catalyst for targeted investment, in particular for key infrastructures:

 The provision of an extra EUR 10 billion to the European Investment Bank (EIB) will enable it to provide EUR 60 billion of additional financing over the next three to four years and will unlock up to three times this amount from other providers of finance.

 The deployment of project bonds represents an important new risk-sharing instrument to unlock private funding, for example from insurance companies and pension funds, thus complementing traditional bank lending. Several projects are now at an advanced stage of preparation by the EIB.

 As part of the Compact for Growth and Jobs, the Commission continues to work with Member States to re-programme and accelerate the use of EU structural funds to support growth, notably for SMEs. Moreover, Member States are invited to indicate in their National Reform Programmes how they intend to use Structural Funds to promote growth enhancing priorities for the next round of programmes (2014-2020). Full use should also be made of the Competitiveness and Innovation Programme facilities which have already mobilized EUR 2.1 billion in venture capital funds and provided EUR 11.6 billion of loans to SMEs.

CONSIDERATIONS ON THE QUALITY OF INFORMATION IN PROFESSIONAL ACCOUNTANT’S ACTIVITY

The USV Annals

of Economics and

Public Administration

VOLUME 13, ISSUE 1(17), 2013

CONTENTS

SECTION 1

SOCIAL-ECONOMIC INEQUALITIES EXISTING AT RURAL LEVEL

–SOUTH WEST OLTENIA REGION

SOME ASPECTS REGARDING THE PREDICTABILITY OR

NON-PREDICTABILITY OF THE GREAT DEPRESSION. CASE OF

ROMANIA

GRANT SCHEMES FOR SME’S - AN OPPORTUNITY FOR

EASTERN CROSSBORDER AREAS IN THE ACTUAL ECONOMIC

LANDSCAPE