Adjustments of Romania’s Manufacturing Industry to Recent Economic Shocks in the Context of the Transition to a Green Economy

The transition to a green economy can have a considerable negative impact on economies that lack the appropriate economic structure and technological characteristics to effectively manage this transformation process. The analysis of the structure of the manufacturing industry in Romania reveals that the top five activities with low energy efficiency consume approximately 83% of the total energy at the branch level. These activities are particularly vulnerable to possible energy price shocks. In this context, this paper analyzes the role that energy efficiency plays in the ability of manufacturing activities to respond to significant changes in energy prices. The paper estimates an autoregressive vector model that groups these top five activities to identify their ability to respond to energy price shocks and support a successful transition to a green economy. The econometric analysis highlights the negative impact of energy price surges on manufacturing branches characterized by low energy efficiency and high consumption. The major impact of energy price shocks is felt, depending on the sector, in the first 8 to 14 years, reflecting the development of a Juglar-type of economic cycle, a fixed investment cycle. This dynamic underscores the need for significant investment to support the transition to a green and sustainable economy.