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Comparative Study On The Balance Of Payments Evolution And Its Sustainability At Regional Level

Author

Listed:
  • Negrea Adrian

    (Department of International Business, Faculty of Economic Sciences, University of Oradea, Oradea, Romania, Department of International Business, Faculty of Economic Sciences, University of Oradea, Oradea, Romania)

  • Giurgiu Adriana

    (Department of International Business, Faculty of Economic Sciences, University of Oradea, Oradea, Romania, Department of International Business, Faculty of Economic Sciences, University of Oradea, Oradea, Romania)

Abstract

The balance of payments stands for both good and bad impact on the economy as a whole. If the country registers a current account deficit, than the result will highlight more imports than exports. If the country runs a current account surplus, than it exports more than it imports. Both cases are unfavourable for that countries economy, because it creates headaches for all the decision makers. This current paper analyses only the first part of the balance of payments, and that is the problem of a current account deficit. For a better understanding of the analyzed phenomenon, the paper will carry out a comparative analysis of the results achieved by Romania and other member countries of the European Union. For this analysis the next countries were chosen: Bulgaria, Poland and Hungary. This was done for a parallel analysis of data recorded in the current account. Representative data was taken from the Eurostat and the annual reports of the central banks of each analyzed country. After this, based on the data above, the paper highlights Roubini (1998) elements in calculating the current account sustainability. It takes into account several elements that lead to a sustainable balance of the current account deficit. Among them the author lists: foreign reserves calculated in months of imports; the share of exports in GDP, expressed as a percentage; openness degree of the economy expressed as a percentage; public external debt relative to exports; the ability to attract foreign direct investment. All this research is needed in order to express as accurately as it can be done, the sustainability degree of current account deficit. Based on this, the paper will asses which country has the most sustainable current account, and what measures are suited if not. The conclusions will be made strictly regarding sustainability points, and some potential future measures will be highlighted in order to improve the current status.

Suggested Citation

  • Negrea Adrian & Giurgiu Adriana, 2015. "Comparative Study On The Balance Of Payments Evolution And Its Sustainability At Regional Level," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 106-112, July.
  • Handle: RePEc:ora:journl:v:1:y:2015:i:1:p:106-112
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    More about this item

    Keywords

    current account; sustainability; exports; imports; Romania;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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