Dissertation msc midp cristina insuratelu frankenthal

EU Structural Funds in Romania: Factors of Success and Failure

in

Tourism Projects

A dissertation submitted to the

University of Manchester for the degree of Master of Science MSc in the

Faculty of Humanities

2012

By

Cristina Insuratelu

The Institute for Development Policy and Management (IDPM)

School of Environment and Development

The University of Manchester

2

TABLE OF CONTENTS

TABLE OF CONTENTS .......................................................................................................... 2

LIST OF ILLUSTRATIONS ...................................................................................................... 4

LIST OF ABBREVIATIONS ..................................................................................................... 5

ACKNOWLEDGEMENTS ....................................................................................................... 7

DECLARATION .................................................................................................................... 8

INTELLECTUAL PROPERTY STATEMENT ............................................................................... 9

ABSTRACT ......................................................................................................................... 10

1. INTRODUCTION ............................................................................................................ 11

1.1 Tourism in Romania. Background ............................................................................ 11

1.2 Brief Theoretical Overview ...................................................................................... 14

1.3 Research Problem ................................................................................................... 15

1.4 Aims, Objectives and Research Questions ............................................................... 15

1.5 Scope of the study ................................................................................................... 16

1.6 Limitations of the Study .......................................................................................... 17

1.7 Structure of the Dissertation ................................................................................... 18

2. LITERATURE REVIEW ..................................................................................................... 19

2.1 Introduction ............................................................................................................ 19

2.2 Structural Funds, Tourism and Development: Theoretical Review ........................... 19

2.3 SFs, Tourism Projects and Development .................................................................. 21

2.3.1 Role of Tourism in Development ....................................................................... 22

2.3.2 Role of SFs in the promotion of Tourism ........................................................... 25

2.4 Summary ................................................................................................................. 26

3. METHODOLOGY AND RESEARCH DESIGN ...................................................................... 27

3.1 Study background ................................................................................................... 27

3.2 Research Problem ................................................................................................... 28

3.3 Aims ........................................................................................................................ 28

3.4 Objectives ............................................................................................................... 29

3.5 Research Questions ................................................................................................. 29

3.6 Methodology ........................................................................................................... 30

3

3.7 Research Design ...................................................................................................... 30

4. ROMANIA: CONTEXTUAL DESCRIPTION ........................................................................ 33

4.1 Economic Profile. Challenges and Opportunities ..................................................... 33

4.2 Regional development in Romania .......................................................................... 35

4.3 Scope of Tourism in Romania .................................................................................. 37

4.4 The Structural and Cohesion Funds aimed at enhancing Romanian Tourism ........... 42

5. CRITICAL EXAMINATION WITHIN THE CONTEXT OF TOURISM AND DEVELOPMENT ...... 45

5.1 Perspectives from two Case Studies ........................................................................ 50

5.2 Identification of factors of success and failure in Tourism Projects .......................... 53

6. MAIN RESEARCH FINDINGS AND ANALYSIS ................................................................... 57

7. CONCLUDING REMARKS ............................................................................................... 63

REFERENCES ..................................................................................................................... 67

APPENDIX I: STRUCTURED QUESTIONNAIRE SURVEY - RESULTS OVERVIEW ..................... 74

APPENDIX II: COMMUNICATION FROM THE ROMANIAN GOVERNMENT .......................... 78

Word count text 16, 049 Word count references and appendices 2, 679

4

LIST OF ILLUSTRATIONS

Figure 1: Financial allocations for Romania for the period 2007-2013 ......................................... 36

Figure 2: Tourism Contribution to GDP and employment, 2011 .................................................. 40

Figure 3: Estimates and Forecasts for Romania ............................................................................. 40

Figure 4: Romania’s eight Regions of Development ..................................................................... 45

Figure 5: Absorption rates in Romania: 16, 23% in 29th February 2012 ...................................... 47

Figure 6: Number of contracted projects by the regions in the field of tourism ............................ 48

Figure 7: Priority Axis 5, major intervention field 5.2: Creation, development and upgrade of the

tourism infrastructure in order to capitalize on the natural resources and to improve the quality of

tourism services ............................................................................................................................. 49

Figure 8: Romania’s Development Region North-East ................................................................. 50

Figure 9: Financial assistance - grant value by sector in the North-East Development Region .... 51

Figure 10: Romania’s Development Region South-East ............................................................... 52

Figure 11: Romania between Western Europe and Asia ............................................................... 63

Table 1: Evolution of tourist arrivals in Romania in the period 2006-2010 (thousand persons) ... 13

Table 2: Diversification of Destinations ........................................................................................ 13

Table 3: Structural funds absorption level within Operational Programmes in Romania ............. 21

Table 4: Regional Development Programmes 2007-2013 ............................................................. 25

Table 5: Lisbon priority themes related to beneficiaries and forms of finance ............................. 32

Table 6: Financial allocations for Romania for the period 2007-2013 .......................................... 34

Table 7: Tourism intensity, 2010 ................................................................................................... 38

Table 8: Tourism receipts and expenditure, 2000-2010 ................................................................ 39

Table 9: Regional Operational Programme’ priority axes ............................................................. 47

5

LIST OF ABBREVIATIONS

ANAT National Association of Travel Agencies in Romania

CBC Cross-Border Co-operation

CF Cohesion Fund

DG Directorate General

DG REGIO Directorate General for Regional Policy

ERDF European Regional Development Fund

ESF European Social Fund

EU European Union

EUROSTAT Statistical Office of the European Union

EU SF ROP European Union Structural Fund Regional Operational

Programme

IB Intermediate Bodies

JEREMIE Joint European Resources for Micro to Medium Enterprises

Initiative

JESSICA Joint European Support for Sustainable Investment in City

Areas

MA Managing Authority

MICE Meetings, Incentives, Conferences and Exhibition

MRDT Ministry of Regional Development and Tourism

NBR National Bank of Romania

NSRF National Strategic Reference Framework

OP Operational Programme

6

RDA Regional Development Agency

RON Romanian New Leu (Currency in Romania)

ROP Regional Operational Programme

SF Structural Funds

SME Small and medium-sized enterprises

UNWTO World Tourism Organization, specialized agency of the United

Nations

USP Unique Selling Proposition

7

ACKNOWLEDGEMENTS

I gratefully thank my supervisor Professor Dr Farhad Hossain for his guidance and

persistence throughout the academic year of 2011-2012. Special thanks are also due to Dr.

D.C. Iancu - National School of Political Studies and Public Administration, in Bucharest,

Romania, Mrs Iulia Dangulea - Counsellor in the Ministry of Regional Development and

Tourism, Tourism Development Department, Professor Dr Gheorghe Zaman - Director of the

Institute of National Economy of the Romanian Academy, Viorel Vulturescu - Counsellor in

the Department for European Integration and International Cooperation at the National

Authority for Scientific Research in Bucharest, Mrs Corina Berica - “Alexandru Ioan Cuza”

University of Iaşi, North-Eastern Romania, Victor Nicolaescu - University of Bucharest,

Romania, Mrs Aleksandra Deletić - Danube Competence Centre in Belgrade, Serbia, Dr.

Esther Kramer and Mrs Ivana Katsarova from the European Parliament, Mrs Francesca

Tudini, Mrs Angela Martinez Sarasola and Dr. Astrid Brandt-Grau from the European

Commission in Brussels. They have made my research journey a rewarding experience.

Finally, I am endlessly indebted to my mother, Tatiana for her faith and encouragement, for

her love, support and patience during my fieldwork experience.

8

DECLARATION

No portion of the work referred to in the dissertation has been submitted in support of an

application for another degree or qualification of this or any other university or other institute

of learning.

9

INTELLECTUAL PROPERTY STATEMENT

i. The author of this dissertation (including any appendices and/or schedules to this

dissertation) owns certain copyright or related rights in it (the “Copyright”) and s/he has

given The University of Manchester certain rights to use such Copyright, including for

administrative purposes.

ii. Copies of this dissertation, either in full or in extracts and whether in hard or electronic

copy, may be made only in accordance with the Copyright, Designs and Patents Act 1988 (as

amended) and regulations issued under it or, where appropriate, in accordance with licensing

agreements which the University has entered into. This page must form part of any such

copies made.

iii. The ownership of certain Copyright, patents, designs, trademarks and other intellectual

property (the “Intellectual Property”) and any reproductions of copyright works in the

dissertation, for example graphs and tables (“Reproductions”), which may be described in

this dissertation, may not be owned by the author and may be owned by third parties. Such

Intellectual Property and Reproductions cannot and must not be made available for use

without the prior written permission of the owner(s) of the relevant Intellectual Property

and/or Reproductions.

iv. Further information on the conditions under which disclosure, publication and

commercialisation of this dissertation, the Copyright and any Intellectual Property and/or

Reproductions described in it may take place is available in the University IP Policy (see

http://documents.manchester.ac.uk/display.aspx?DocID=487), in any relevant Dissertation

restriction declarations deposited in the University Library, The University Library’s

regulations (see http://www.manchester.ac.uk/library/aboutus/regulations) and in The

University’s Guidance for the Presentation of Dissertations.

10

ABSTRACT

This study analysed the factors which facilitated or discouraged potential beneficiaries, e.g.

tourism organizations and tourism SMEs, local stakeholders and businesses to apply for

support from the European Union Structural Funds for tourism development at local and

regional level. In the current recession it was important to attract as many applicants as

possible. Through a wide-ranging literature review, case studies, questionnaires and

interviews, the research study tried to answer questions about Romania’s modest success in

attracting funds from the European Union structural funds to sustain its declining tourism

sector. It was important to assess as well if the accession to EU structural funds represented a

feasible way of recovering the tourism affected by the global economic crisis. Another

question addressed the impact of structural funds implementation in the considered two

development regions of the country: North-east and South-East: Bucovina, Moldova and

Dobrogea. The research study introduced a number of specific recommendations for policy

makers at local, regional and national levels. Finally, the implementation of EU Regional

Policy through structural funding in Romania to improve tourism infrastructure and promote

the country’s image internationally would positively impact tourism demand for Romania, as

destination in Europe and globally.

11

1. INTRODUCTION

Over the last years the European Commission has taken action to enhance growth through the

use of structural funds, to counter the crisis and ensure the delivery of EU funding. Particular

attention has been given to Member States receiving special macro-economic assistance, the

programme countries such as Romania. The country could have its projects co-financed up to

95%, for the period that it was a programme country. Accordingly, Member States involved

in the implementation of Structural Funds (SFs) would need to pay more attention to project

preparation. The research was committed to identifying the difficulties applicants in Romania

faced when trying to access SFs for financing their tourism projects: the possibilities and

limitations for applicants in accessing Structural Funds.

1.1 Tourism in Romania. Background

The second largest consumer market in Central and Eastern Europe, Romania was a country

of great economic potential: richly endowed with agricultural lands, with an important

engineering tradition, various energy sources, a well-trained work force and low labour costs,

opportunities for expanded development in tourism and a prime strategic location on the

Black Sea and Danube.

The tourism industry played a significant role in the world economy, and was generally

acknowledged to represent an important source of economic growth for the European Union

(EU) and for Romania. The “natural strengths” of the Romanian tourism destinations

provided the basis for diversification and differentiation of the tourism offer in order to

satisfy the various requirements of the tourists and to compete successfully in the different

segments of the international tourism market. Due to the variety of its tourism potential,

Romania might be situated between the most attractive tourist destinations in Europe.

Favourable climate for tourism, diversified flora and fauna, inestimable cultural – historical

and architectural patrimony represented the unique selling proposition of the destination

country Romania. These characteristics of the national potential provided the basis for

elaborating and applying both diversification and differentiation strategies related to the offer

and the possibilities to enter all segments of the tourism market.

12

The most important tourist areas with great attraction of the natural landscape were the

seaside of Black Sea, the Danube Delta (south-east), the Carpathian Mountains (covering

35% of the country area) and the hills and planes areas with rich balneal resources. In

Romania tourism areas with cultural – historical value were Moldova, Bucovina (northeast),

Transylvania (centre), Banat, Crishana (west and north-west), Muntenia (south) and Oltenia

(south-west). The delimitation reflected the traditional vision in relation to the tourism areas

in Romania.

In the last years, the necessity to align to the EU norms and regulations, including in the area

of tourism statistics, led to an alternative that defined six main tourist destinations: seaside,

Danube Delta, mountain resorts, spas, Bucharest and county residence towns, and other

localities and tourism routes. Two major categories of destinations could be distinguished:

one with dominant natural potential (the first four areas), the other one with dominant

cultural-historical potential (the last two within the cultural-historical tourism areas). In terms

of tourism potential the political-territorial Romanian system could be appreciated for being

composed of complex elements, with unique and undiscovered attributes. From this point of

view, Romania could have a remarkable potential, not enough capitalized, with a living rural

world, anchored in many places in an archaic way of life, traditionalist and of priceless value.

Romania's international tourist movement was characterized by a contradictory trend, which

confirmed its sensitivity to changes in economic, social and political plan of the

contemporary world. Thus, a series of global events, specific to the world economy such as:

the intensification of integration and international cooperation process, globalization and

internationalization of economic life, penetration of ICTs in all sectors of the economy,

industrialization, but also crises and economic recession, poverty and unemployment,

impacted on the dynamics and structure of tourism demand. Along with these, the

development of the Romanian economy played an important role on the configuration of

international tourist arrivals.

13

Table 1: Evolution of tourist arrivals in Romania in the period 2006-2010 (thousand

persons)

Source: National Institute of Statistics Romania, 2010.

According to the UNWTO and the concept of Diversification of Destinations, in the 70’s

Romania had a considerable share of the international tourism market, with a potential

increase of 10%, as shown below:

Table 2: Diversification of Destinations

Source: UNWTO, 2011.

However, at present Romania occupied the 63rd

position out of 139 countries in the Travel &

Tourism Competitiveness Index 2011 of the World Economic Forum, and a regional rank in

Europe of 34, position coming after the Slovak Republic, Lithuania and the Russian

14

Federation. The current position could be compared against the previous year’s rank of 66th

out of 133 countries globally.

1.2 Brief Theoretical Overview

In recent years many tourism programmes of national and international interest have been

initiated, developed and promoted in Romania. These had been funded from internal and

international sources, i.e. European funds. An important part of finance for the Romanian

tourism programmes was represented by the EU funds, namely the Structural Funds. At

present, the EU structural funds represented: the European Regional Development Fund

(ERDF), the European Social Fund (ESF) and the Cohesion Fund, which contributed to the

fulfilment of the following three objectives: “Convergence”, “Regional Competitiveness and

Employment” and “European territorial cooperation”.

In 2007, the European Commission approved a Romanian Government proposal for a

Sectorial Operational Programme “Increase of Economic Competitiveness”. The objective of

it was to increase the productivity of Romanian companies in line with the principle of

sustainable development. The intention was to meet this objective through consolidation in

the productive sector and to create a business environment supportive of sustainable

development of SMEs. At the same time, the Regional Operational Programme was allocated

€ 1 billion from the European Regional Development Fund to support:

the setting up of business structures,

rehabilitation of industrial sites,

microenterprises,

Tourism infrastructure.

These operations have been run under the supervision of the Ministry of Regional

Development and Tourism acting as Managing Authority for the programme. Looking to

the period 2007-2013, studies estimated that cohesion policy would add 5.5% to 6% to GDP

in Romania on top of baseline scenarios. The Cohesion Fund operating in Romania was the

major source of finance for environment-related infrastructure projects (especially in energy

efficiency, renewable energy, rail transport and intermodal or public transport systems). It

15

provided funding for investment-intensive projects and indirectly helped develop the

infrastructure for tourism.

1.3 Research Problem

Romania has been awarded a number of structural funds for tourism development, as shown

in the brief theoretical overview above. In order to use them, projects must be developed that

required support from the private sector for their financing. The development and relaunch of

Romanian tourism and the creation of tourism products for the competitive tourist market

could be financed from European funds. Both structural and cohesion funds could be

accessed to implement tourism projects. These would be allocated to national and community

programmes for selection at European level. Successful SF programmes encouraged the

generation of projects that had the capacity to deliver smart, sustainable und inclusive

growth. The research addressed the specific context of the tourism industry under programme

management in Romania.

However, Romania had modest success in attracting funds from the European Union

structural fund to support its declining tourism sector. The question “Why” constituted the

research core and problem to be addressed in the study.

1.4 Aims, Objectives and Research Questions

For the purpose of analysis, the study sought to identify the main factors that applicants found

encouraging or discouraging when they considered applying for EU Structural Funds. One

theme was that of procedures being too complex. Romania and its regional and local

authorities involved in the implementation of Structural Funds would have to pay more

attention to project preparation and offer better services to potential applicants. The study was

committed to identifying the difficulties applicants faced when trying to access SFs for

financing their tourism projects: the possibilities and limitations for applicants in accessing

Structural Funds.

16

The main questions/issues addressed in this research study were:

a) Romania had modest success in attracting funds from the European Union structural

fund to sustain its declining tourism sector. Why?

b) Is accessing structural funds a feasible way of recovering the tourism affected by the

global economic crisis?

c) What is the impact of structural funds implementation in the considered two

development regions of the country?

The methodology of research made use of case studies in order to yield rich contextual data,

i.e. North-east and South-East Development Regions: Bucovina, Moldova and Dobrogea.

1.5 Scope of the study

The implementation of the Regional Policy of the European Union through Structural Funds

represented one of the main pillars of European Union action. These funds would offer

significant possibilities for job creation and investment in terms of supporting business

development and entrepreneurship. In the last three years, the EU has been devoted to

analysing the performance of the funds and to identifying and implementing the required

modifications. The most significant outcome of late analysis was the low absorption rates of

Structural Funds in the period 2007-2013. However, the accessibility of Structural Funds for

applicants has not been analysed yet. Little research has been carried out on the question of

stimulating and attracting potential applicants for funding.

In this context, the 2009 Barca Report drew attention to the performance of the Cohesion

Policy in the European Union. A considerable number of studies and reports about physical

infrastructure, businesses and jobs created have been produced. Most of these studies and

reports focused on the assessment of quantitative figures on output and absorption rates.

However, the findings rarely included the perceptions of target groups and beneficiaries.

In particular, figures showed that the take-up of funding opportunities was lower in Romania

than in other EU member states. This could partly explain why many Romanian citizens

remained sceptical of European Union performance. Shortcomings in administrative services

at local, regional or national level contributed to lower take-up rates. The question arising

17

would be why were businesses, local agencies and other bodies in Romania more reluctant to

apply for European funding? Against this background, the study tried to offer an informative

insight into the barriers the applicants faced when applying for ERDF-Funding in two

Development Regions in Romania.

Three main research approaches have been employed for this research study. The first

approach was a literature review, the second - case studies of two Development Regions in

Romania and the third - a series of on-line interviews, followed by a questionnaire. Several

interviews have been carried out and questionnaires have been widely circulated to

beneficiaries in the tourism industry. The research analysed the factors which facilitated or

discouraged local stakeholders and businesses to apply for support from Structural Funds

(SFs). Through a wide-ranging literature review, case studies, questionnaires and interviews,

this study tried to answer questions about what could be done to attract more applications,

and how the participation of successful applicants could be made more effective. It also put

forward a number of specific recommendations for policy makers at local, regional and

national levels. Based on these sources, focused research and considered analysis, the study

concluded with a number of specific recommendations for actions at local, regional and

national levels. The research and survey were based on the information and data from field

trips and from official statistical sources. Throughout the research there has been a consistent

focus on identifying “best practice” examples from different initiatives in the country’s

Development Regions. What worked well in one situation or Development Region context

could be adapted to work equally well in another.

1.6 Limitations of the Study

Romania had a short implementation period for the Regional Operational Programme.

Management bodies in the country had difficulties in handling the appropriate procedures.

This included a lack of administrative capacities and corruption. Within this context, the two

case studies might have failed to detect good or bad practice regarding successful or

unsuccessful applications for EU funding.

18

Finally, as Westwood (2007) suggested, among the weaknesses of qualitative research studies

time-consumption and researcher bias were both included. It was essential for the reader to be

aware of these factors which may have influenced the outcome of the research study.

1.7 Structure of the Dissertation

Chapter one in the dissertation offered an introduction to the Cohesion Policy and the

Structural Funds. Chapter two presented the literature review, followed by chapter three

which explored the Methodology and Research Design employed, the case studies selected

and the interviews; chapter four explored the perspectives for tourism development in

Romania under the current economic context with consideration for the economic profile of

the country. With chapter five, the reader would be introduced perspectives from two case

studies with the identification of factors of success and failure of tourism projects in the

North-East and South-East Development Regions of Romania.

Chapter six provided a critical analysis of the field work results. It covered a wide range of

elements relevant for the accessibility of Structural Funds for applicants through field work

research and concluding results. This chapter was devoted to factors relevant for applicants

at operational level through the provision of case studies. It would draw also on the

information gathered from the case studies and questionnaires. The case studies selected

involved organisations and businesses which have successfully applied for funding.

There was no European wide systematic analytical research related to the issue of barriers for

applicants. Accordingly clear cut figures for applicants’ appreciations of the 2000 - 2006 or

2007 - 2013 programming periods would not be provided in the study. The existing research

focused on specific thematic fields, in particular the Operational Programme and parts of the

programme life cycle. Chapter seven was the last chapter in the dissertation providing

conclusions and recommendations for policy-making in the area of project management for

tourism in the context of EU funding for local development.

19

2. LITERATURE REVIEW

2.1 Introduction

Based on the necessities of Romania, the European funds were destined in different

proportions to the economic and social sectors which needed to be developed. Thus,

according to the individual requests from Romania, the funds could be allocated to the

development of SMEs, agriculture, social sector and any other strategic domain for the

recipient economy, in the case of this research study Romanian Tourism.

Tourism was one of the areas of activity that would fully enjoy the favourable effects of

structural and cohesion funds usage. By accessing them, Romania would obtain the

stimulation of both components that made up the tourism phenomenon, i.e. the tourism offer

and tourism demand.

2.2 Structural Funds, Tourism and Development: Theoretical Review

According to the Official Journal of the European Union, the EU Funds providing assistance

under the Cohesion Policy were limited to the European Regional Development Fund

(ERDF), the European Social Fund (ESF) and the Cohesion Fund. The rules applicable to

each Fund have been specified in implementing regulations adopted under Articles 148, 161

and 162 of the Treaty (Council Regulation (EC) No 1083/2006).

Regional Operational Programme 2007-2013 (REGIO) was one of the Romanian Operational

Programmes in agreement with the EU, being a very important instrument for implementing

the National Development Strategy and the policies for regional development. The

programme was available to all eight regions of development in Romania. REGIO was

funded by the European Regional Development Fund (ERDF). It supported EU regions that

had a GDP per inhabitant of less than 90% of the European average (Scutariu, 2009).

Recent evidence suggested that the procedures of structural funds accession from the EU

budget were very rigid. According to the "n +3" rule, the projects would require to be

20

contracted, completed, implemented and disbursed within a maximum of 3 years after the

funding approval.

It was important to note that during the phase of projects implementation, the absorption of

structural funds may be subject to being influenced by the vulnerabilities of the

macroeconomic framework of Romania. Like other countries, Romania was affected by the

international financial crisis. After several years of economic growth, in 2009 Romania was

strongly affected by the global economic downturn. Given its effects on economic growth, a

possible straightforward adjustment of exchange rates and maintaining a high rate of inflation

for 2009-2012 were expected to create pressure on the contracts deployment, concluded in

local currency (Constantinescu, Badea, Dragoi, 2011).

A major vulnerability affecting the absorption rate of European funds was the rigidity of the

banking system, i.e. loans for the co-financing of projects. In the context of strengthening the

lending conditions imposed by the NBR National Bank of Romania, including mitigating the

effects of international financial crisis, interests and commissions charged by commercial

banks rose. Furthermore, applicants were asked to deposit a percentage of the amount

financed (up to 20-25%), as collateral. This cash remained locked until the loan had the bank

approval, which meant a delay of several months. This view was supported by the fact that

Romania occupied the last positions in terms of structural funds absorption level. In

comparison with other EU member countries, this had a negative impact upon the

performance indicator of sustainable development (Zaman, Cristea, 2011).

As shown in the table below, the Regional Operational Programme ROP registered the

highest degree of absorption, from almost 13% in the last month of 2009 to a level of almost

22% in the month of May 2011.

21

Table 3: Structural funds absorption level within Operational Programmes in Romania

Source: Calculated using data from the Ministry of Public Finance, 2009 and 2011; primary data:

http://www.eu.finan_are.info/documente/cit_pr_semnate_contractate.

It has conclusively been shown that debating the issue of European funds absorption in

Romania was confusing. The main reason was linked to the lack of transparency at the central

government, at the level of operational programmes management, i.e. the line ministries.

These were less disposed to admit vulnerabilities and to identify possible remedies. Instead of

an analytical image, an incomplete picture of European funds absorption had been presented.

This was used to report exclusively positive aspects, which made a purely scientific approach

difficult.

2.3 SFs, Tourism Projects and Development

Preliminary work on the influence of the funding from the European Union on the tourism

offer was undertaken by Jiletcovici (2012). This influence on the tourism offer would

manifest itself indirectly, by creating new jobs. This would further encourage professional

development and improve the living conditions of tourists. All these might be accomplished

by stimulating the economic activity of tourism SMEs in order to improve their efficiency.

Considering that exceeding incomes were the premise for engaging in tourism activities, the

higher these incomes were, the higher the probability of asking for tourism services.

http://www.eu.finan_are.info/documente/cit_pr_semnate_contractate

22

2.3.1 Role of Tourism in Development

In the 1970s and 1980s tourism researchers began to focus considerable attention on the

outcomes of tourism for development. The two approaches dominating much of the discourse

on tourism and development during this period were the dependency perspective (Britton

1982) and the life-cycle model (Butler 1980). These approaches emerged from different

theoretical lineages, i.e. Neo-Marxism in the case of dependency, and modernization theory

in the case of the lifecycle approach.

They were based on the shared premise that the industry’s mass

variant represented its crowning height. Companies minimized

unit costs by generating economies of scale, destinations

received increased visitor numbers, and tourists fulfilled their

wanderlust cheaply and efficiently (Milne and Ateljevic, 2001).

The modernization theory argued that societies developed in fairly predictable stages though

which they became increasingly complex. Development depended primarily on the

importation of technology and a number of other political and social changes that came about

as a result. The dependency theory in Neo-Marxism (late 1960's, early 1970's) suggested that

capitalist penetration led to and reproduced a combined and unequal development of its

constitutive parts. Accordingly, indigenous economic and social development should be

fundamentally predicted upon the removal of industrial capitalist penetration and dominance.

Both dependency and life-cycle approaches have been criticized. The Dependency Theory

was accused of being “obsessed by the global level and the world system” (Corbridge, 1986).

The theory ignored the possibility that what occurred within a nation or region may be just as

important as those influences originating outside its boundaries (Storper 1990; Lipietz 1993;

Peet and Hartwick 1999). There was also a failure in the case of both approaches. The

possibility that local government, industries and individuals could exert control over their

own destinies was not acknowledged. Preister (1989: 20) also noted that: “locally-affected

people are not shaped passively by outside forces but react as well, at times even changing

the conditions of the larger system”. Preister argued that the development outcome was a

“negotiated process” between local groups/individuals and structural forces. However, both

frameworks failed to consider the possibility that by empowering locals to have input into

23

development plans, the deteriorating cycle of evolution might be minimized or avoided

(Drake 1991; Priestly and Mundet, 1998).

Another approach emerged in the 1980s emphasized local agency, seeing communities and

their constituent members playing an active role in determining tourism’s outcomes (Murphy

1985; Taylor 1995). In contrast to the models discussed above, the community approach

viewed locals as being capable of planning and participating in tourism development and of

having the capability to control the outcomes of the industry. Murphy (1994: 284) argued that

if host communities could define the types of tourism they wished to attract, they would

manage to shape the type of industry most appropriate to their needs.

Furthermore, in 1993 Poon suggested the emergence of a “new tourism best practice” that

would offer an opportunity for less developed regions and small firms to achieve a greater

degree of self-determination:

The economics of new tourism is very different from the old –

profitability no longer rests solely on economies of scale and

the exploitation of mass undifferentiated markets. Economies of

scope, systems gains, segmented markets, designed and

customized holidays are becoming more and more important for

profitability and competitiveness in tourism.

There can be no denying that tourism has become a major global economic force. At the

global scale, tourism development has been influenced by broad-based economic change and

evolutionary pressures of demographics and technological change (Milne and Ateljevic,

2001). Global institutions, such as the IMF and World Bank, played a vital role in shaping the

economic environment for tourism investment and development in the world (Mowforth and

Munt, 1998). Multinational Corporations have driven the increases in business and leisure

travel, while restrictions to trade and human movements had been relaxed.

At the national scale macro-economic policy frameworks, infrastructure provision and issues

of socio-cultural cohesion played a vital role in influencing tourism’s development outcomes

(Milne and Ateljevic, 2001). Previous studies have found that the role of the nation state has

diminished as the stateless multinational corporation had come to dominate global economic

affairs and neo-liberal policies have led to a retreat of the welfare state (Hirst and Thompson,

1999). It has been argued however that the national scale remained significant to any

understanding of tourism’s development outcomes.

24

From a tourism perspective, national governments often appear

to be playing a more active role in coordinating the tourism

marketing campaigns and broad-based product development

that play such an important role in shaping tourism demand and

behaviour. Notions of regions stimulating economic growth

through a mixture of inter-firm networks, and cultural/political

attributes have dominated much of the social science discourse

on economic development since the early 1980s (Amin 1989;

Sayer 1995; Milne and Ateljevic, 2001).

As Scutariu (2009) reminded us, tourism became one of the most important industries in the

world, with a significant role for economic growth and regional development. The new

economic theory of tourism recognized the link between tourism and economic development

of a country such as Romania. Tourism has become an important element of the tertiary

sector and one industry with exceptional potential for the economy. One of the main reasons

why governments supported and promoted tourism throughout the world was that it had a

positive impact upon economic growth and development. "Economic growth" would mean a

complex process involving the entire economic system, determined by the results of

economic activity and considered the only factor ensuring the sustainable economic success

of a country.

If Romania used the opportunities with the EU SFs, the tourism industry in the country could

become an engine of regional development (Romanian Ministry of Development, Public

Works and Housing). The investments in tourism would allow the development regions to

use the advantages offered by their tourism potential in the consolidation of their identity.

This would further improve the competitive advantages in sectors with high added value and

high qualitative and cognitive content, and on traditional and new markets.

The capitalization of the tourist attractions of the country would contribute to the economic

growth of urban centres in decline, by favouring the development of local SMEs. This would

then transform areas with low economic competitiveness into attractive opportunities for

investors. The implementation of this Priority Axis of REGIO (EU Regional Policy), by

improving tourism infrastructure and by a sustained promotion of Romania’s image

nationally and internationally of the ensemble of the tourism practicing conditions, would

positively impact tourism demand for Romania, as destination in Europe and globally.

25

Furthermore, Tourism could contribute to achieving larger objectives, established by

governments as priorities in the general interest of citizens: fighting against poverty, living

conditions improvement, and intensification of international cooperation strengthening the

links between countries. The general objective of the Regional Development Programme was

to reduce existing regional imbalances, with emphasis on balanced growth and revitalization

of disadvantaged areas. This could be reached by stimulating the areas with tourism potential,

e.g. rural areas. The development of tourism by the capitalization of the existing potential

may also lead to the achievement of one of the ERDF objectives, i.e. the promotion of the

development and structural adjusting in the regions with difficulties, with GDP/inhabitant

less than 90% of EU average.

2.3.2 Role of SFs in the promotion of Tourism

In the tourism industry, the European financial instruments were acting mainly on the tourism

offer. This influence could be direct, i.e. on the tourism infrastructure, for developing new

accommodation facilities, or upgrading the existing ones, and indirect, i.e. by financially

sustaining the access infrastructure to tourism destinations. The latter category included

upgrading the national road, the marking of touristic paths, renewal of bridges and tunnels,

replacing damaged sewage systems, introducing or upgrading the existing energy, fresh water

or heating facilities in potentially touristic areas. Moreover, by using the structural funds,

commercial campaigns for the promotion of tourism at local, regional and national level

could be initiated and sustained.

In the field of tourism, Romania benefited of grants from the European Union in two

programmes: the Regional Operational Programme and the National Programme for Rural

Development. Within the Regional Operational Programme, infrastructure for tourism was

financed on Axis 5 – Durable development and tourism promotion, the major intervention

field was at 5.2 Creation, development, upgrading the tourism infrastructure in order to

better use the natural resources and increasing the quality of the touristic services.

Table 4: Regional Development Programmes 2007-2013

I. National programmes

Tourism and Culture

Romania

Operational Programme 'Regional Operational Programme'

http://ec.europa.eu/regional_policy/country/prordn/details_new.cfm?gv_PAY=RO&gv_reg=ALL&gv_PGM=1041&LAN=7&gv_per=2&gv_defL=7

26

II. Cross-border, transnational and interregional co-operation

Tourism and Culture

Romania

'Romania-Serbia' IPA Cross-border Co-operation Programme 2007-2013

Focus of programmes:

I. Developing basic infrastructure according to European standards;

II. Increasing long-term competitiveness;

III. Developing and using human capital more efficiently;

IV. Building administrative capacity;

V. Promoting balanced territorial development.

Targets

I. Contribute to 15-20% growth in GDP by 2015;

II. Increase the employment rate from 57.4 to 64%;

III. Invest in 1,400 km of new or renovated roads.

Source: EU DG REGIO, 2012.

With the effects of the worldwide crisis on tourism demand and supply, and banks reluctant

to finance new projects, the EU structural and cohesion funds made available would be a

source of funds, with positive impact at local and regional level (Jiletcovici, 2012).

2.4 Summary

Data from several sources have identified the positive effects of the attraction of EU

Structural Funds and the impacts for tourism development and economic growth in Romania

(Balogh, Coros, Negrea, 2010). The country was awarded a number of structural funds for

tourism development, but in order to use them, projects must be developed with support from

the private sector for their financing. Development and relaunch of Romanian Tourism with

the creation of tourism products for the international market can be achieved through finance

from European Funds. Structural and Cohesion Funds could be accessed for the

implementation of tourism projects after being previously selected at European level. In this

perspective, the question remained: Romania had modest success in attracting funds from the

European Union structural funds to sustain its declining tourism sector. Why?

http://ec.europa.eu/regional_policy/country/prordn/details_new.cfm?gv_PAY=RO&gv_reg=ALL&gv_PGM=1352&LAN=7&gv_per=2&gv_defL=7

27

3. METHODOLOGY AND RESEARCH DESIGN

3.1 Study background

In Romania, the modernization and development of Romanian Tourism, together with the

creation of competitive tourist products for the international market could be financed

through European funds. In order to implement a specific project in the tourism field,

structural and cohesion funds may be accessed, being allocated at national level. Community

programmes may become available also, where projects were selected at European level.

In the 2007 – 2013 timeframe, Romania would be receiving 19,667 billion EUR, in the form

of three Structural Funds:

I. ERDF - European Regional Development Fund: investments in the transportation

sector, generating new employment opportunities, rural development projects,

entrepreneurship;

II. ESF - European Social Fund: support for integrating disadvantaged groups and the

unemployed into the market of labour, through financing of measures and systems for

labour recruitment and assistance;

III. CF - Cohesion Fund: assistance for the newest member states of the European Union

with a GDP per capita smaller than 90% of the community average.

Structural funds could be accessed via operational programmes, documents by which

strategic actions were prefigured in the National Strategic Reference Framework (NSRF).

Structural funds contributed to the fulfilment of the EU Cohesion Policy objectives through

the implementation of Operational Programmes. This policy became applicable to all member

states including Romania (Gruescu, Pirvu, Nanu, 2010).

Existing operational programmes were comprised by the following categories:

I. The Sectorial Operational Programme Technical Assistance,

II. The Operational Programme Administrative Capacity Development,

III. The Regional Operational Programme,

IV. The Sectorial Operational Programme Human Resources Development, and

V. The Sectorial Operational Programme Transport.

28

From the two Regional Development Programmes 2007-2013, the Romania-Serbia IPA

Cross-border Co-operation Programme 2007-2013 will not be discussed in the study. The

programme which has been broken down into specific objectives by the participating

countries, i.e. Romania and Serbia, aimed to increase overall economic competitiveness in the

border area. In the case of Romania, the programme addressed the West Development Region

of the country, which was not in the research area of this study.

3.2 Research Problem

The EU fund covered by this research was ERDF - European Regional Development Fund,

with the Regional Operational Programme - ROP. Applicants who considered participation in

SF programmes, prepared projects and submitted them for funding, without any guarantee of

success. Successful applications would be the key to the rise of absorption rates. However,

evaluation reports seldom focused on the project level. The reason why evaluation reports

rarely included this topic may lay in the complexity and multitude of a Europe wide

comparable analysis of applicants and their success or failure in applying for SF support.

Programme management institutions have developed measures to improve the accessibility of

funds, to target and attract appropriate projects. Low absorption rates in Romania suggested

that obstacles to attracting sufficient valid projects still existed. Potential applicants and

beneficiaries complained about complicated procedures coming from Brussels.

3.3 Aims

The aim of the exploratory and analytical research was to identify the main factors that

applicants found encouraging or discouraging when they considered applying for EU

Structural Funds. One theme was that of procedures being too complex. The analysis helped

identify where such problems originated, if at national or regional level. Romania and its

regional and local authorities involved in the implementation of SFs may need to pay more

attention to project preparation. The research was committed to identifying the difficulties

applicants faced when trying to access SFs for financing their tourism projects: the

possibilities and limitations for applicants in accessing Structural Funds for local or regional

development.

29

3.4 Objectives

The research explored the difficulties encountered by applicants to EU Regional

Development Programmes 2007-2013, such as the Operational Programme “Regional

Operational Programme”.

In summary the dissertation would address the following objectives:

identify factors that encourage or discourage applicants to EU SF ROP;

highlight the level of responsibility for the origin of problems and for finding

solutions (national, regional or local);

identify and describe factors contributing to success of applicants/beneficiaries of

Structural Funds;

identify "good practices" under respective administrative set-up;

propose measures for policy makers at national and regional levels.

3.5 Research Questions

The research question addressed was the following: “Romania has modest success in

attracting funds from the European Union structural fund to remedy its declining tourism

sector. Why?” This represented the research core and problem to be addressed in the study.

Success would be defined in terms of the extent to which the programmes have enabled the

local tourism industry to overcome obstacles to its development.

Other sub questions that followed were: “Was accessing structural funds the feasible way of

recovering the tourism industry affected by the crisis?”; “What was the impact of structural

funds implementation in the two considered development regions of the country?” Case

studies complimented and have been integrated with the survey method in an integrated

research design. The emphasis was on the qualitative case study method and how it can

complement more quantitative survey research. The research followed the Case Study

Methodology where North-East, South-East Development Regions in Romania: Bucovina,

Moldova and Dobrogea have been discussed and analysed. The two development regions

represented together Macro region of Development Two, in line with the EU SFs ROP

focusing on local development.

30

3.6 Methodology

The methodology used in the research was based on a literature review complemented by

case studies including interviews with implementing institutions and an online questionnaire.

The literature review provided the framework for the analysis of encouraging factors and

potential barriers to SFs, together with the case study analysis. The literature review

concentrated on the national level of ERDF implementation. However, there was little

information on these applications, resulting in a fragmented picture about the effectiveness

and efficiency of the application process. The case studies dealt mainly with the operational

level to fill the gaps and complement the published research. The objective of the case studies

in chapter five was to explore factors that encouraged or discouraged applicants at

operational level from the two development regions of the country.

The desk research was based on the following sources:

Academic literature on the topics of Cohesion Policy, Regional Policy in Romania;

Policy literature on the management and implementation of Cohesion Policy;

Evaluation reports and other analytical studies on the impacts, effectiveness and

efficiency of Cohesion Policy;

Results of recent research undertaken on the success factors and barriers at national

level.

3.7 Research Design

The dissertation employed the qualitative research methodology. The objective was to assess

in-depth perceptions of tourism beneficiaries in relation to EU SFs for the development of

tourism through specific projects. The direction of this research made it appropriate to apply

an intrinsic case study approach, where the interest was in understanding the particulars of

the case (Johnson, 2007). For the purpose of analysis, a questionnaire was generated

composing of 16 key questions, as shown in Appendix I. This questionnaire was developed

under consultation with tourism stakeholders. Five key areas have been examined:

1) Economic situation and tourism;

2) Project generation;

3) Project development;

4) Project implementation; and

31

5) Government Programme and initiatives.

The interviews were executed in a semi-structured manner allowing the interviewees to freely

express their point of view (Westwood, 2007). Structured interviews resembled

questionnaires or surveys. Semi-structured interviews used an interview guide with some

questions developed in advance, allowing the interviewer to go beyond the interview

guide. The semi-structured approach was chosen because the interviewee's responses to

prepared questions may raise issues the interviewer wished to explore further. Data were

gathered from multiple sources at various time points during the 2012 academic year. In

order to understand the poor accessing of structural funds in the field of tourism, a structured

questionnaire survey for the beneficiaries of this method of financing has been designed.

It was considered that case studies would usefully supplement and extend the qualitative

analysis. The case study approach would be used to support and analyse policy development:

it could generate information for policy (Rolfe et al., 2008) and be used to analyse past policy

experiences in detail (Shiffman, Stanton & Salazar, 2004). A case study approach was chosen

to allow an analytic generalization on issues (Russell & Gilson, 2006) and to complement the

literature review. Case study analysis from the EU SFs Regional Operational Programme has

been carried out. Each case study involved a mix of primary and secondary research and

focused on assessing the current situation, i.e. the barriers and problems faced by potential

beneficiaries in the context of the current Cohesion Policy programmes and the measures

adopted and planned to improve potential applicants’ interest.

The case studies began with a review of the programme documents and programme

evaluation reports in order to identify:

Different types of potential beneficiaries (linked to the different forms of support

provided by the programme), as shown in the table below;

The barriers/difficulties faced by the beneficiaries/applicants;

An assessment of whether certain types of beneficiaries faced more barriers and, if so,

why;

Significant measures for in depth appraisal through further research, i.e. calls for

projects; publicity and communication material disseminated by the Managing

Authority (MA) and Intermediate Bodies (IB) responsible for the

32

programme/measure. It also covered briefings and promotional materials from

organisations representing target groups.

Table 5: Lisbon priority themes related to beneficiaries and forms of finance

Source: 2012 Policy Department Structural and Cohesion Policies, European Parliament, Brussels.

Finally, an online questionnaire was elaborated and published via different management

bodies to cover the Operational Programme and the beneficiaries. The return rate registered

was low due to MAs and IBs bring reluctant to publicise the survey.

33

4. ROMANIA: CONTEXTUAL DESCRIPTION

With almost 22 million inhabitants, Romania was the seventh largest among the EU

countries, and the second largest in the Eastern part of the EU. Although the

country experienced strong economic growth in the period 2003-2006

(6.4% annually), it remained among the poorest of the EU. Romania had a

particular situation among the Central-Eastern European countries because it was not part of

the first wave of Eastern enlargement of the EU (May 2004). The request to join the

European Union was made in June 1995, but the accession was delayed for January 2007

(Horváth, 2008).

4.1 Economic Profile. Challenges and Opportunities

After the Communist regime was overthrown in 1989, the country experienced a decade of

economic instability and decline. From 2000 onwards however, the Romanian economy was

transformed into one of relative macroeconomic stability, with high growth, low

unemployment and declining inflation. The country’s economy was predominantly based on

services, which accounted for 55% of GDP. Industry and agriculture also had significant

contributions, making up 35% and 10% of GDP, respectively. Additionally, 32% of the

Romanian population was employed in agriculture and primary production, one of the highest

rates in Europe. However, in February 2010 the Romanian unemployment rate stood at 8.3%,

the highest rate since 2003. It was expected to rise further in 2011, particularly in light of the

government's planned cuts in the public sector.

In 2009 the Romanian economy contracted as a result of the global economic downturn. GDP

shrank by 7.2% in the fourth quarter of 2009 from the same period in 2008 (Romanian

Government). According to The Global Competitiveness Index 2011–2012 rankings

developed by the World Economic Forum, Romania occupied the 74th

position out of 142

countries globally, with a score of 4.08, its position coming after its neighbour Bulgaria 74th

position, Philippines 75th

and Croatia, 76th

position respectively.

The current economic difficulties had an impact for all tourism destinations in the different

countries. Tourism destinations in countries of all levels of development would suffer from

the current crises (Keller, 2009). Like all industries, tourism was strongly influenced by the

34

crisis. Along with other economic or financial measures, a way of enhancing the investments

in the sectors most affected became the process of accessing the no reimbursable financing

granted to Romania from the European Union’s budget (Jiletcovici, 2012).

Table 6: Financial allocations for Romania for the period 2007-2013

Source: Government of Romania (2007); EC documents; Benedek J., Horváth R. (2008).

An important role in the absorption capacity was played by the public institutions involved in

the management of European funds. For Romania to meet the objective of economic and

social convergence, strategies and policies must be implemented correctly and resulting in an

increased rate of absorption (Ranf, Dumitrascu, 2012). The main financing programmes of

projects from structural and cohesion funds were:

- Regional Operational Programme (ROP);

- Sectorial Operational Programme “Increase of Economic Competitiveness” (SOP-IEC);

- Sectorial Operational Programme Human Resources Development (SOP-HRD);

- Operational Programme Administrative Capacity Development (OPACD);

- Sectorial Operational Programme Transport;

- National Programme for Rural Development and European Cooperation Programmes

(cross-border, transnational and interregional).

A study by Zaman and Cristea (2011) on the obstacles of using Structural Funds in Romania

provided a good insight into problems in implementation, especially if the public

35

administration was weak and difficulties in the management systems of Structural Funds

occurred. Furthermore, the relationship between the absorption capacity of EU SFs and the

regional economic situation was a paradoxical one. Practice demonstrated that the most

disadvantaged regions were experiencing also the greatest difficulties in the absorption of

these funds. These were the regions that needed the largest financial support for restructuring

their economies (Zaman and Georgescu, 2009a).

4.2 Regional development in Romania

Regional development was a new concept that aimed at boosting and diversifying economic

activities, by stimulating investment in the private sector, bringing contribution to

unemployment cut-down and leading to an improvement of the living standards. In order to

apply the regional development policy, eight development regions had been established,

which included the entire territory of Romania.

The regional development policy was a series of measures planned and promoted by the

local government and central authorities. This came in partnership with different entities

(private, public, volunteers) that aimed at ensuring a dynamic and sustainable economic

growth in order to enjoy the benefits of an effective regional and local potential. The main

areas targeted by the regional policies were the following: employment, investment,

technology transfer, development of SMEs, improving infrastructure, quality of environment,

rural development, health, education and culture.

The implementation and evaluation framework of the Regional Development Policy was

represented by the development region, set up as a voluntary association of neighbouring

counties. The development region was not an administrative and territorial unit and had no

legal personality (Framework Document for the implementation of the ROP 2007-2013,

2008). The main objectives of the regional development policies were as follows:

to reduce the existing regional disparities, especially by stimulating the well-balanced

development and the revitalization of the disadvantaged areas;

to prepare the institutional framework in order to comply with the integration criteria

into the EU structures and to ensure access to the financial assistance instruments (the

Structural Funds and the Cohesion Fund of the EU);

36

to correlate the governmental sector development policies and activities at the level of

regions by stimulating the inter-regional, internal and international, cross-border

cooperation. This would contribute to economic development and was in accordance with the

legal provisions and the international agreements to which Romania was a party (Scutariu,

Nedelea, 2012).

Figure 1: Financial allocations for Romania for the period 2007-2013

Source: Romania Tourism Office, 2012.

In Romania, Regional Policy would bring the expected benefits in combination with a

comprehensive national policy development and a coherent policy direction. Regional

development policy could not be the main and only pillar for the general development of a

state. Regional development should be a partnership between administration, economy and

community. Tourism can be a significant sector for regional development particularly in the

creation of economic agglomerations, e.g. tourism industry in Bucovina, North-East

Development Region of Romania.

Thus, tourism was a highpoint industry and a crucial public policy area for Development

Regions in Romania through the EU SF ROP (European Union Structural Fund Regional

Operational Programme). A long term national policy would be necessary for sustainable

public and private investment in tourism and regional development initiatives. As tourism

and regional development were closely linked, regions and local authorities would play a key

role in the formulation of policy and the organization and development of tourism

(Constantin, 2000). Coordination between local authorities would increase the benefits of

policies such as large scale infrastructure projects as part of the regional development

initiatives.

http://mpra.ub.uni-muenchen.de/25358/1/MPRA_paper_25358.pdf

37

4.3 Scope of Tourism in Romania

Tourism industry was recognized by specialists as a sector which supported and sustained

economic growth globally. It has proven its effectiveness as an agent for sustainable growth

in developed and developing countries. As a distinct component of the tertiary sector, tourism

was closely correlated with the level and pace of growth of the economy in general and with

trade, transport, construction, agriculture in particular. Researchers, academics and tourism

operators supported the idea that tourism was a tool for economic growth. Backward and

forward linkages were used to describe how the increase in the production of tourism

generated an increase in the demand for inputs from other sectors and respectively in the

supply to other economic sectors. These linkages provided a general image of how tourism

might sustain the economic growth in Romania (Surugiu, 2009).

In 2011 international tourist arrivals data showed growth of +13% for Romania (UNWTO).

More foreign visitors arrived in Romania in the first nine months of 2011, compared to the

same period of 2010. The number of international arrivals increased by 12.6% during this

period (National Association of Travel Agencies in Romania (ANAT)). However, “statistics

showed that the share of foreign tourists of the total tourists in Romania was the lowest in the

entire European community,” according to the ANAT report. International tourists preferred

cultural tours, health tourism – where the number of international tourists increased by

16.5%, the Danube Delta – with 45% more tourists in 2011, Black Sea cruises – 20% more

international tourists than in 2010, travel city break – Bucharest preferred by young people,

and the seaside.

Generally, demand followed the same line as GDP (estimated at 1.8% in 2012) and airport

passenger movements (estimated at 8%). Accordingly, it has been estimated that tourism

demand also would increase in 2012. Even if Romania had an important tourism potential, in

the last twenty years tourism didn’t contribute more than 2-3% to the national GDP. In

correlation with the whole national economy, tourism acted as a factor that stimulated the

global economic system. The sector can be an engine of economic growth, not only as creator

of GDP, but with an important contribution to value added (Minciu, 2000). Tourism value

added was significantly and positively related with nominal GDP per capita and public

investment in tourism.

38

Among tourism indicators, Tourism Intensity, also called carrying capacity, represented the

ratio of nights spent in hotels and similar establishments relative to the total permanent

resident population of the area (EUROSTAT, 2011). Tourism Intensity in Romania would be

the lowest in all the 27 EU member countries and Norway, Switzerland and Iceland, if

Republic of Macedonia did not come last with a ratio of 0.6%.

Industry and services Tourism

Table 7: Tourism intensity,

2010

(nights spent by residents and non-residents in collective tourist accommodation per inhabitant)

2010 EU-27 (1)

4.5

Euro area (1) 5.8 Malta 18.4

Cyprus 17.2

Austria 11.7 Spain 7.9 Ireland (2)(4) 6.8 Italy (3) 6.3 Greece (4) 5.7 Sweden 5.1 Netherlands 5.1 Denmark 4.9 Luxembourg (2) 4.5 France 4.4 Portugal 4.2 Slovenia 4.1 United Kingdom (4) 4.1 Germany 4.0 Finland 3.6 Czech Republic 3.5 Estonia 3.5 Belgium 2.8 Bulgaria 2.1 Hungary (3) 1.9 Slovakia 1.9 Poland 1.5 Latvia 1.3 Lithuania 0.8 Romania 0.7 Iceland 9.2 Croatia 8.4

Norway 5.9

Switzerland 4.7 Liechtenstein 4.6 FYR of Macedonia 0.6

(1) Estimate made for the purpose of this publication, based on annual and quarterly data.

(2) 2009. (3) Provisional. (4) Estimate based on monthly data.

Source: EUROSTAT, 2012.

0

5

10

15

20

EU

-27

(1

)

Eu

ro a

rea

(1

)

Ma

lta

Cyp

rus

Au

str

ia

Spain

Ire

lan

d (

2)(

4)

Ita

ly (

3)

Gre

ece

(4

)

Sw

ed

en

Ne

therla

nd

s

De

nm

ark

Lu

xe

mb

ou

rg (

2)

Fra

nce

Po

rtu

ga

l

Slo

ve

nia

Un

ited

Kin

gd

om

(4

)

Ge

rma

ny

Fin

lan

d

Cze

ch

Re

pu

blic

Esto

nia

Be

lgiu

m

Bu

lga

ria

Hu

ng

ary

(3

)

Slo

va

kia

Pola

nd

La

tvia

Lith

ua

nia

Ro

ma

nia

Ice

land

Cro

atia

No

rwa

y

Sw

itze

rla

nd

Lie

ch

ten

ste

in

FY

R o

f M

ace

do

nia

39

Industry and services Tourism

Table 8: Tourism receipts and expenditure, 2000-2010

Receipts Expenditure

(EUR million) Relative

to GDP, 2010 (%)

(EUR million) Relative to GDP, 2010 (%)

2000 2005 2010 (1) 2000 2005 2010 (1)

EU-27 (2) : 65,737 73,028 0.6 : 84,943 87,737 0.7

Belgium : 7,934 7,761 2.2 : 12,047 14,151 4.0

Bulgaria 1,163 1,956 2,747 7.6 582 1,053 931 2.6

Czech Republic 3,232 3,769 5,043 3.4 1,387 1,940 3,074 2.1

Denmark 4,008 4,248 4,135 1.8 5,076 5,526 6,532 2.8

Germany 20,007 23,449 26,156 1.1 57,427 59,766 58,596 2.4

Estonia 549 784 815 5.7 221 353 460 3.2

Ireland 2,886 3,863 3,075 2.0 2,858 4,898 5,826 3.7

Greece 10,068 11,037 9,611 4.2 4,947 2,446 2,156 0.9

Spain 32,446 38,558 39,621 3.8 6,454 12,125 12,664 1.2

France 33,301 35,385 34,939 1.8 19,227 25,582 29,686 1.5

Italy 29,905 28,400 29,244 1.9 17,010 17,960 20,490 1.3

Cyprus 2,101 1,875 1,655 9.5 448 750 873 5.0

Latvia 143 279 480 2.7 268 475 485 2.7

Lithuania 424 742 778 2.8 274 599 594 2.2

Luxembourg : 2,904 3,109 7.7 : 2,398 2,698 6.7

Hungary 3,758 3,300 4,049 4.2 1,508 1,908 2,241 2.3

Malta 640 611 813 13.2 218 216 348 5.6

Netherlands (3) 7,813 8,421 9,718 1.7 13,241 12,996 14,807 2.5

Austria 10,593 12,904 14,078 4.9 6,767 7,506 7,717 2.7

Poland 6,183 5,056 7,157 2.0 3,606 4,485 6,181 1.7

Portugal 5,720 6,199 7,610 4.4 2,422 2,454 2,953 1.7

Romania 391 849 859 0.7 463 747 1,239 1.0

Slovenia 1,039 1,451 1,743 4.9 554 708 905 2.6

Slovakia 519 972 1,729 2.6 372 680 1,534 2.3

Finland (3) 1,528 1,757 2,189 1.2 2,009 2,461 3,201 1.8

Sweden 4,414 5,970 8,392 2.4 8,718 8,672 10,149 2.9

United Kingdom 23,702 24,672 23,038 1.4 41,650 47,940 36,829 2.2

Iceland (4) 246 332 402 4.6 509 788 383 4.4

Norway (4) 2,110 2,680 2,909 1.1 4,812 8,187 8,871 3.3

Switzerland (4) : 8,105 9,937 2.8 : 7,141 7,619 2.1

Croatia (4) : 5,961 6,367 13.9 : 604 723 1.6

Turkey (3) 8,268 14,591 15,847 2.9 1,855 2,309 3,650 0.7

Japan (4) 3,656 10,018 7,397 0.2 34,548 30,229 18,051 0.5

United States (3)

#########

82,043 101,90

7 0.9 72,589 58,934 62,712 0.6

(1) Provisional data.

(2) Extra EU-27 flows.

(3) 2010 estimated using quarterly data.

(4) 2009 instead of 2010.

Source: EUROSTAT, 2012.

Tourism receipts defined as expenditures of international inbound visitors including their

payments to national carriers for international transport (Community Methodology on

Tourism Statistics, 2010), accounted for EUR million 859 in 2010 on an increasing trend,

based on provisional data from EUROSTAT, as shown above in the table.

40

Figure 2: Tourism Contribution to GDP and employment, 2011

Source: World Travel & Tourism Council (WTTC), 2012.

The direct contribution of Travel & Tourism to GDP in 2011 was RON 7.7 billion (1.4% of

GDP). This was forecast to rise by 14.8% to RON 8.8 billion in 2012. This primarily

reflected the economic activity generated by industries such as hotels, travel agents, airlines

and other passenger transportation services. It also included the activities of the restaurant

and leisure industries directly supported by tourists. The direct contribution of Travel &

Tourism to GDP was expected to grow by 6.9% per year to RON 17.2 billion (1.8% of GDP)

by 2022 as shown in the table below (WTTC, 2012).

Figure 3: Estimates and Forecasts for Romania

Source: World Travel & Tourism Council (WTTC), 2012.

41

The indirect contribution included the GDP and jobs supported by:

Travel & Tourism investment spending – an important aspect of current and future

activity that included investment activity such as the purchase of new aircraft and

construction of new hotels;

Government 'collective' spending, e.g. tourism marketing and promotion, aviation,

administration, security services, resort area security services, resort area sanitation

services;

Domestic purchases of goods and services by the sectors dealing directly with

tourists, e.g. purchases of fuel by airlines, or IT services by travel agents.

The induced contribution measures the GDP and jobs supported by the spending of those who

were directly or indirectly employed by the Travel & Tourism industry. Travel & Tourism

generated 184,500 jobs directly in 2011 (2.2% of total employment). This was forecast to

grow by 7.5% in 2012 to 198,000 (2.3% of total employment). It included employment by

hotels, travel agents, airlines and other passenger transportation services. It also included the

activities of the restaurant and leisure industries directly supported by tourists. By 2022,

Travel & Tourism would account for 233,000 jobs directly, an increase of 1.6% per year over

the next ten years. According to the WTTC, the Travel & Tourism industry related to the

activity of travellers on trips outside their usual environment with duration of less than one

year.

Additionally, a study by Eugenio-Martín (2004) explored the relationships arising between

economic growth and tourism. The research considered the relationship between tourism and

economic growth for Latin American countries for the period 1985-1998 (21 Latin American

countries) and conducted an analysis based on a panel data approach. The author considered

two models:

I. one model tried to explain economic growth depending on the number of tourists;

II. the second one attempted to understand how much tourism growth depended on the

rate of growth of GDP per capita and other potential determinants of tourism.

The observation made was that tourism growth was associated with economic growth only in

low and medium income countries, but not in high income countries. Also, for all countries,

tourist arrivals were positively related with GDP per capita and international trade.

42

Through its characteristics, i.e. service activity, high consumption of labour, intelligence and

creativity, tourism participated in the creation of value added in a higher proportion than the

related industries in terms of the level of development (Minciu, 2000). Tourism created

demand in destinations for other economic sectors; it created a market for them, and

employment opportunities in hotels and tourism agencies, in the food industry and other

commercial activities. Furthermore, tourism created reasons to improve the infrastructure,

bringing revenues to destinations. Finally, Tourism would contribute to the economy in terms

of foreign currency volume, the tax revenue generated and the generation of new employment

and business opportunities (Surugiu, 2009).

The Romanian Tourism Offer would need to be adjusted to the international tourism market,

especially the international tourism market demand for each of the ten segments considered

by the UNWTO to be the most important and dynamic: seaside, sports, adventure, cultural,

urban, rural, cruises, theme, MICE (Meetings, Incentives, Conferences and Exhibition) and

ecotourism’ segments (Băleanu, Irimie, Ionicã, 2008). In order to capitalize on the

opportunity with the EU SFs ROP, issues of the Romanian Tourism should be addressed

through:

- Improvement of the tourism product/services quality, and the regional infrastructure;

- Construction of the image identity (branding) for the tourism destination and promotion on

the international market;

- Diversification of the market segments aimed to be reached, including neighbouring

regions.

This would require substantial investment efforts in “hard” components of the tourism

industry related to infrastructure and in the “soft” ones such as personnel training,

management and marketing, in order to attain the quality level needed for successfully

competing on the international market.

4.4 The Structural and Cohesion Funds aimed at enhancing Romanian

Tourism

After joining the European Union in 2007, Romania has become contributor and beneficiary

of the structural funds. The verdict of this would need to be given by the country’s capacity

of using the post-accession funds in value of 29, 2 billion euro (12 billion euro for the

43

Common Agriculture Policy and 17, 2 billion euro for the Structural and Cohesion Fund) for

the period 2007-2013.

In relation to Tourism, Romania benefited of grants, i.e. no reimbursable funding, from the

European Union in two programmes: the Regional Operational Programme and the

National Programme for Rural Development. Within the first programme, the touristic

infrastructure was financed on Axis 5 – Durable development and tourism promotion, the

major intervention field 5.2 Creation, development and upgrade of the tourism infrastructure

in order to capitalize on the natural resources and to improve the quality of tourism services.

The eligible recipients for the financing were the territorial administrative units, the

partnerships between local public administration authorities and NGOs, inter-communities

development associations and the SMEs in the field of tourism. The general conditions for

the applicants stipulated that they should not be in a state of insolvency, with no debts to the

state/local budget, should not be the object of a res judicata lawsuit and should not be in any

difficulties. The maximum intensity of the grant (i.e. the maximum percentage computed on

the eligible value of the project) was differentiated according to the type of the recipient:

I. Public authorities, their partners, partnerships between public authorities and NGOs,

inter-communities development associations: 40% for the Bucharest – Ilfov area and

50% for the rest of the country;

II. Medium companies: 50% for the Bucharest – Ilfov region and 60% for the rest of the

country;

III. Small companies, micro-companies: 60% for the Bucharest – Ilfov region and 70%

for the rest of the country.

The eligible projects may target:

To create infrastructure for visiting natural objectives with tourism potential;

To valorise the mountains tourism potential;

To develop the balneal-climatic tourism;

To modernize and extend accommodation structures and the related units;

To create, rehabilitate and extend tourism infrastructure.

Within the National Programme for Rural Development, the investments in the field of

tourism would be financed through the measure 313 “Encouraging the tourism activities”.

44

Projects aiming at developing new accommodation facilities in the rural areas, extending or

modernizing the existing ones would be financed through the National Programme. Other

conditions besides the general ones concerned the solvency of the company, i.e. the tourism

SME. The beneficiaries should also observe certain rules regarding the quality standards and

need to develop their project in the rural area (Jiletcovici, 2012).

Perspectives from two different cases, i.e. two Romanian Development Regions, the North-

East and the South-East: Bucovina, Moldova and Dobrogea would be addressed and analysed

in chapter five that followed in the dissertation. The two case studies were meant to identify

factors of success and failure in tourism projects through the experience of the fieldwork in

the regions considered for analysis and discussion.

45

5. CRITICAL EXAMINATION WITHIN THE CONTEXT OF TOURISM AND

DEVELOPMENT

In 2012, Romania continued to fail with the absorption of EU funds, according to The

Economist. At around 7.4%, Romania was the state with the lowest absorption rate in the

EU. Absorption capacity was the extent to which a state was able to spend financial help

from the EU in an effective and efficient way. In this perspective, the Ministry of European

Affairs has been created since September 2011 to address all issues in relation to European

Funds absorption.

In the given context, activities for tourism were financed via specific axes within the

Regional Operational Programme (ROP). The Programme was managed by the Ministry of

Regional Development and Tourism (MRDT). It addressed the eight Romanian Development

Regions, assessed in compliance with EC Ruling No. 1059/2003 concerning the creation of a

common statistical classification system for territorial units. In accordance with the

aforementioned classification, eight Development Regions have been created in Romania:

1. Development Region North – East,

2. Development Region South – East,

3. Development Region South – Muntenia,

4. Development Region South – West Oltenia,

5. Development Region West,

6. Development Region North – West,

7. Central Development Region,

8. Development Region Bucharest – Ilfov.

Figure 4: Romania’s eight Regions of Development

Source: Transylvanian Review of Administrative

Sciences, 2010.

46

The case study research design considered the first two development regions, North – East

and South – East. Beneficiary surveys (structured questionnaire surveys) on main barriers

for funding have been carried out in the months of July and August 2012. The literature

review showed that barriers for applicants, especially at project level, have rarely been

analysed. National and regional assessments had been carried out with the aim of examining

the reasons for the low absorption rates. These assessments reported that barriers for

applicants were pervasive through the whole delivery process. Some examples of the most

critical factors in the process were described below.

The study by Zaman and Cristea (2011) on the obstacles of using Structural Funds in

Romania provided a good insight into problems of project implementation under EU SF

ROP.

At present, absorption rates for Structural Funds are very low in

Romania. Problems in the implementation of the OPs involve

many different aspects during the delivery process starting off

with a lack of a national and regional development planning.

The legal framework for financial management of Structural

Funds shows weaknesses, so do public procurement procedures

and the availability of appropriate funding lines in the national

budget…The guidelines sometimes did not reflect modifications

in national legislation, leading to complications in the

application process.

Furthermore, the circumstances of the international financial crisis have become a new

challenge for Romania. In this perspective, the EU structural funds absorption represented an

opportunity to sustain economic growth and reduce the development gap. Operational

programmes were designed to improve the economic and social conditions in Romania.

During the crisis period, the use of European funds could become an important source of

financing for the Romanian economy. Romania’s rate of absorption of structural funds for the

period 2007-2010 was of 13.48%, according to data released by the Ministry of Public

Finance in September 2010.

47

Figure 5: Absorption rates in Romania: 16, 23% in 29th February 2012

Source: Romanian Ministry of European Affairs, 2012.

New data from the Romanian Ministry of European Affairs reported absorption rates of

16, 23% in 29th

February 2012. The Regional Operational Programme registered the second

highest degree of absorption at around 27% (Romanian Ministry of European Affairs).

Table 9: Regional Operational Programme’ priority axes

Priority axis 5: Sustainable development and promotion of tourism

5.1 Restoration and sustainable valorisation of cultural heritage, setting up and modernization

of related infrastructure

5.2 Creation, development, modernization of the tourism infrastructure for sustainable

valorisation of natural resources and for increasing the quality of tourism services

5.3 Promoting the tourism potential and setting-up the needed infrastructure in order to

increase Romania’s attractiveness as tourism destination

Source: Romanian Ministry of Development, Public Works and Housing, Regional Operational Programme

2007-2013.

Tourism Development, the fifth axis of the Regional Operational Programme, has been

identified as a priority for regional development and part of the Regional Development

National Strategy. The tourism potential specific to all regions justified the financial support

offered for infrastructural rehabilitation and exploitation of national, historical and cultural

48

patrimony. Tourism projects would tend to be public sector-led and the project was part of

the tourism strategy for the local area (Cooper, Fletcher, Fyall, Gilbert and Wanhll, 2008).

The Regional Operational Programme would finance the high-potential tourism objectives

included in the UNESCO patrimony, from urban and rural environments, national cultural

patrimony of urban and rural provenience, and local cultural patrimony from the urban

environment (Gruescu, 2009).

Figure 6: Number of contracted projects by the regions in the field of tourism

Source: Ministry of Regional Development and Tourism (MRDT), 2010.

By analysing the graph above, significant differences emerged between the eight regions of

the country. The Northern-East Region has profited from the majority of projects together

with the central area, rising to a total of seven out of 29 projects contracted at the national

level. These two areas were immediately followed by the South-East region with 5 winning

projects. The Regional Development Agencies in all development regions had an important

role in the implementation of the Regional Operational Programme 2007 -2013 (REGIO).

This was one of the Romanian Operational Programmes agreed with the EU and financed by

The European Regional Development Found (ERDF). It represented an important instrument

to implement The National Development Strategy and the policies for regional development.

49

Figure 7: Priority Axis 5, major intervention field 5.2: Creation, development and

upgrade of the tourism infrastructure in order to capitalize on the natural resources

and to improve the quality of tourism services

Source: Romanian Ministry of European Affairs, July 2012.

Legend from Romanian to English

FEDR – EU SF ROP, European Union Structural Fund Regional Operational

Programme

nord est - North-East

sud est - South-East

alocat – assigned projects for EU SFs ROP

contractat – contracted projects

platit - approved reimbursements from the EU SFs ROP

According to the graph above, the North-East and South-East Development Regions have

been awarded a large number of contracted projects, i.e. North-East – 99% compared to the

South-East with 66% of the total projects. The value of the approved reimbursements from

the EU SFs ROP has been significantly higher for the South-East (35%) in comparison to the

North-East with the corresponding 19%. The North-East had a larger number of contracted

projects, but it was the South-East that was approved reimbursements at a higher value. It can

50

be observed that structural funds were used as an instrument for development and

modernization, and investments rose to very high values. The contribution of structural funds

was significant, exceeding 60% of the total value in all cases.

5.1 Perspectives from two Case Studies

North-East Development Region

Figure 8: Romania’s Development Region North-East

(Source: 2012, DG REGIO)

The North-East Development Region was situated at the border with

Ukraine and The Republic of Moldavia. Part of the historical

province of Moldova, the North-Eastern Region of Romania was an

area where history, culture and traditions completed the natural

environment. It included six counties: Bacau, Botosani, Iasi, Neamt, Suceava and Vaslui. The

analysis of available data revealed that the GDP/inhabitant in North East Region had the

lowest level comparatively to the other regions in Romania. At the same time, the region

contributed to the national GDP in value of 11% in 2006, percentage close to the national

level (European Commission, 2012).The North-East Regional Development Agency (RDA)

had the responsibility for the process of implementation of the EU Regional Operational

Programme. During the 10 years of activity the North-East RDA succeeded in achieving a

high funds absorption rate (85%) with around 400 projects submitted for being funded under

the Regional Operational Programme 2007-2013. The North-East RDA considered that

tourism services were not capitalised at the level of the existing potential.

In particular, the region hosted many monasteries founded by Moldavian voivodes (former

Moldavian rulers) and boyars: Voroneţ Monastery often called “the Sistine Chapel of the

East”, Humor, Suceviţa, Moldoviţa and Arbore Monasteries. The North-East Development

Region was home to one of the world’s greatest art treasures: the UNESCO World heritage

sites of the Painted Monasteries of Bucovina. Built in the 15th and 16th centuries and

featuring exterior frescoes depicting religious scenes, these richly decorated houses of

worships have been unique in the world (Romanian Tourist Office, 2012). The Painted

Monasteries of Bucovina could become the Unique Selling Proposition (USP) of Romania for

the international tourism market. The project that followed in the analysis would give insights

into the positive factors leading successfully to the development of initiatives for the region.

51

According to the graph below, Tourism (in Romanian: Turism) had a share of 4% in terms of

the awarded funding for local and regional development in the North-East Development

Region.

Figure 9: Financial assistance - grant value by sector in the North-East Development

Region

Source: Romania’s Development Region North-East, 2012.

Tourism Project “Pilgrim in Bucovina” had been financed through EU SF ROP in 2011.

The tourism project has been initiated by the Suceava County Council. “Pilgrim in Bucovina”

was an international ecumenical project that promoted especially Bucovina monasteries. The

project aim was to raise awareness about tourism attractions in the area, such as the Medieval

Festival of Suceava, the International Trout Festival in Ciocanesti, nature reserves and parks,

and scenic train rides.

According to Suceava County Council in north-eastern Romania, Bucovina will be highly

promoted as tourism destination. Tourism offers would be launched at the tourism fairs in

Vienna, Turin, Munich, Paris and New York, where the projects “Easter in Bucovina”,

“Bucovina’s Round Dance” and “Pilgrim in Bucovina” would be presented. Furthermore,

the resort Gura Humorului will host a “pilgrimage centre” for tourists wanting to visit

Bucovina. The Suceava County Council took over the administration of the railway line

52

linking Vama to Moldovita to complete and upgrade the infrastructure for tourism. A vintage

train with the oldest functional steam locomotive in Romania built around 1900 would travel

to monasteries Moldavita, Cacica and Putna during the “Pilgrim in Bucovina” project.

South East Development Region

Figure 10: Romania’s Development Region South-East

(Source: 2012, DG REGIO)

Geographically and historically, the South East Region was the mix of

Moldova, Muntenia and Dobrogea. The administrative structure of the

region included six counties: Braila, Buzau, Constanta, Galati, Tulcea and

Vrancea. Constanta was located between the Danube River and the Black Sea, and was

Romania’s largest port. The analysis of available data revealed that Regional GDP accounted

for 9.1% of the average national GDP and for 0.06% of the EU27 average over the period

2000-2008 (EUROSTAT).

The South-East Regional Development Agency was in charge of regional planning (i.e.

Regional Development Plan), management of the EU Structural Funds (Intermediate Body

for the Regional Operational Programme) and development of regional projects. As an

Intermediate Body for the Ministry of Regional Development and Tourism, the agency

managed the funds allocated for the region, particularly in the fields of transport

infrastructures, tourism and business support. It has been considered that the region held over

47% of Romania's touristic potential, due to the Black Sea coast, the Danube Delta and its

Biosphere Reservation, and unique touristic areas. The project discussed below provided

insights into the positive factors leading to the development of successful initiatives for the

region.

The South-East Regional Development Agency did not publish statistics on the latest

situation of the awarded financial assistance for projects in the field of tourism in the South-

East Development Region of the country.

Tourism Project entitled Tourism 365 days per year (2008) or “re-launching the tourism

at the seaside” had as primary objective the identification of alternative solutions for

addressing seasonality in tourism in the cross border regions of Romania and Bulgaria. Its

general objective was to contribute to the promotion of sustainable economic development of

53

the border region Romania-Bulgaria. The total budget of the project was in the value of

53.580 euro, with the duration of 12 months, i.e. August 2008 – July 2009. Constanta

Chamber of Commerce, Industry, Shipping and Agriculture, in partnership with Dobrich

Chamber of Commerce and Industry in Bulgaria, intended to assist tourism entrepreneurs

interested in cross border (CBC) business and take advantage of cross border cooperation

opportunities. According to Euro Dobrogea Centre for Business and Innovation in the

region, the local economic development would reduce disparities between border regions and

more developed central regions in Romania and Bulgaria. About the tourism project output,

specific tools have been created to contribute to the economic development of border regions

and extension of the seaside summer season:

two information points have been created in Constanta and Dobrich,

a guide “Tourism 365 days per year” has been produced, and

an on-line database with activities and events promoting local tourism offers in

Romania and Bulgaria. It was concluded that promotional actions, support and

development of cross border cooperation between private and public sectors and

between individuals should continue in Romania and Bulgaria.

5.2 Identification of factors of success and failure in Tourism Projects

A high efficiency of structural funds was conditioned by the quality of governance in general

and of public administration institutions in particular. However, their inability to remove or

minimize corruption has made that economic and social benefits coming from structural

funds absorption to be rather modest (Zaman, 2009). Previous studies identified the causes

for which structural funds could not be effectively utilized by the beneficiary countries such

as Romania in order to reduce disparities between the regions. One of them represented the

failures of government policies that led to improper spending of funds.

According to the latest EU technical and financial reports on the absorption of SFs, two types

of factors influencing the Structural Funds absorption in Romania have been identified:

1) Internal factors - related to the beneficiary, i.e. the legal entity or person in receipt of

an EU project grant for implementing projects;

2) External factors - related to the institutions, which monitored the implementation of

the projects, e.g. in the case of this study, the Ministry of Regional Development and

Tourism and Romania’s Development Regions.

54

One important factor was related to the project portfolio preparation. Local and Central

Public Authorities had limited capacity to establish priorities and prepare projects of

significance in terms of their impact and quality for tourism development at local/regional

level. This factor has been designated as “in-house expertise” in the conducted survey and

interview. The Managing Authority, i.e. Ministry of Regional Development and Tourism and

Intermediate Bodies, i.e. Romania’s Development Regions, may not have the necessary

expertise readily available. This would potentially lead to failure of tourism projects locally

or at the level of the region.

The internal factors contributing to the low absorption rate of funds were connected to the

two stages of the management cycle of a project: in writing the financing requests and in

implementation. The most important factor was represented by the applicant’s own financial

contribution. For the majority of projects, the beneficiary had to own funds for developing the

activities until the eligible expenses would be reimbursed. When sending the reimbursement

requests, the money would arrive effectively to the beneficiary after several months. From the

submission of a project to its approval, signing of financing contracts and the effective

absorption of structural funds, the process of assessment (compliance, eligibility, technical

and financial), including strategic assessment could take more than a year.

Furthermore, the role of applicants in the preparation and programming of Structural Funds

has not been analysed at the European level. One key element of the success of any

programme would involve identifying and approaching its potential target group. One of the

categories of applicants who would benefit from Structural Funds would be tourism SMEs.

Thus, the research study analysed the position of applicants such as tourism SMEs in the

Structural Funds implementation process. It also traced the different phases of the application

process, with emphasis on the roles and possibilities for potential applicants:

Information operations constituted the first phase where potential applicants were

made aware of the programmes they may apply to for funding.

In the second phase, potential applicants decided to prepare an application. The

information and support services available would play a central role as did the

capacity of the applicant to develop their application. Public bodies, universities and

larger businesses could be better equipped to prepare and submit application than

small or even single-person (tourism) businesses.

55

The third phase involved the selection process, while the fourth was the actual

awarding of funding. The last two phases were within the remit of the implementing

bodies (i.e. Managing Authorities, Intermediary Bodies). Their activities influenced

the award and the way potential applicants viewed the process as a whole.

The research approached the different barriers for applicants by focusing on the operational

level of tourism projects in two Development Regions:

The operational level denoted the interface between programme and project level, i.e.

EU SF ROP and tourism projects in general. The operational level included activities

linked to project generation, approval and implementation. In this respect the degree

to which national funding existed (the role of banks!) and the degree to which it was

integrated into EU funding could be a crucial factor for determining the success of the

operational level in tourism projects. The arrival of the financial engineering elements

of JEREMIE (Joint European Resources for Micro to Medium Enterprises) and

JESSICA (Joint European Support for Sustainable Investment in City Areas)

added a degree of sophistication and complication to the operational funding.

According to KPMG in Central and Eastern Europe, consultations and meetings between the

Ministry of Regional Development and Tourism and DG REGIO have confirmed the

significant interest towards JESSICA. However, authorities had reservations in committing

themselves until further progress would be achieved regarding the JEREMIE initiative.

In relation to the operational level, information and support services would become of

critical importance for potential applicants who may be confused by the variety of

opportunities offered. Previous experience and research showed that when programme

management developed “one-stop shops” where applicants could view the range of

possibilities open to them, this had been highly positive.

The use of external consultants may become necessary, in particular for first time applicants

and micro enterprises (tourism SMEs). In the latter case, in-house expertise would be lacking

or highly engaged in running the tourism business. External services could be offered by

agencies or public bodies such as Chambers of Commerce or private consultants. In this latter

56

case, the access to pre-project support would be highly welcomed. This first phase of

attracting and assisting applications was followed by the phase during which applications

were evaluated. This evaluation process may challenge Managing Authorities and

Intermediate Bodies and their expertise. One issue of concern for applicants had been high

rejection rates for proposals. This may discourage tourism SMEs or any organisation in

tourism from making future applications. This may also discourage other potential applicants

who became aware of these rejections.

57

6. MAIN RESEARCH FINDINGS AND ANALYSIS

The methodology used in the study was based on a literature review complemented by case

studies with interviews of implementing bodies and an online beneficiary questionnaire. The

contacts established through the online interviews were outlined below:

- Ms Loredana Tifiniuc Vasiliu, Director, Ministry of Regional Development and Tourism;

- Ms Ivana Katsarova, Policy Department Structural and Cohesion Policies, European

Parliament;

- Dr. D.C. Iancu, National School of Political Studies and Public Administration, Bucharest,

Romania;

- Constantin Apostol, General Manager, North-East Regional Development Agency;

- Ciprian Popescu, Administrator, Constanta Chamber of Commerce, South East Romania.

Their insights have been presented also in the discussion from the previous chapter and will

be outlined below. The South-East Regional Development Agency did not respond to e-mail

requests for interview, but Constanta Chamber of Commerce provided inputs in relation to

EU SFs in the South-East Development Region. Dr. D.C. Iancu completed the online

interview, Ms Loredana Tifiniuc Vasiliu and Ms Katsarova participated in the online survey

and they all provided inputs on the matter of EU SFs in North Eastern and South Eastern

Romania.

Among the factors that had an influence on project development in the regions, the

interviewees mentioned:

1) Positive (stimulating) factors: existence of previous networks with people

experiencing European funding; clear-cut guidelines for application;

2) Negative (inhibiting) factors: poor advisory capacity of public organizations; poor

motivated civil servants;

3) Other factors: political instability, lack of interest from the media for European

subjects.

The participants expressed their beliefs that:

1) Developing a scheme for motivating civil servants engaged in European funding (e.g.

a raise in their salaries);

58

2) Increasing the visibility of European projects by promoting networks between

beneficiaries (not only on formal level); and

3) Involving universities in developing projects for third parties, - would potentially

improve project development in the regions.

In particular, Tourism projects that have worked particularly well presented the following

identified elements (positive internal factors) which made them successful:

1) High quality of political leadership of the project;

2) Good network with all partners (for communication and dissemination purposes);

3) Well trained human resources.

However, the biggest obstacle to project development for tourism at present in the regions

was “the political agenda of elected officials that do not concentrate on tourism

development”. “A combination between low motivated in-house capacities to develop projects

and a lack of communication on funding opportunities and results of successful/failed

projects” had determined and accentuated this low rate of absorption of EU funds in the two

regions.

In addition, the field work study was mainly based on interviews with programme

beneficiaries, during which details of their operational practice have been discussed. The

factors of success or failure in tourism projects have been designated as shown below:

1) Communication and dissemination of information;

2) Provision of advisory services to applicants;

3) Capacity and skills at local / regional level (i.e. in-house capacities);

4) Capacity for project development at local / regional level;

5) Finance available from different sources.

The general trend apparent through the analysis of the results was that managing authorities

generally focused on primary mechanisms. They did not have the formal capacity to provide

support which would be ideal in all respects, i.e. comprehensive, localised, geographically

consistent, fully informed, interactive, timely and on-going. This negative outcome was due

to low levels of capacity building measures for training programme managers. Long delays

between programme approval, the opening of financing lines and the publication of guidance

documents discouraged applicants. The provision of support from the managing authorities

59

was not designed to develop the capacity of applicants. Tourism small firms and micro-

enterprises have found the application workload more demanding than larger organisations,

and therefore required more support. The use of consultants would be problematic for these

applicants as it would entail costs diminishing the potential financial support received.

The study identified a number of specific difficulties for applicants:

1) The application process had a long duration, i.e. 5 to 10 months from project

submission to the actual contracting of projects;

2) The quality of the documents was low; beneficiaries faced significant problems when

preparing the necessary documents (e.g. financing application files for SMEs);

3) If awarded a project, payment delays caused by the Managing Authority forced

companies/SMEs to terminate their projects in the early stages;

4) Another reason for early termination was that potential beneficiaries lacked business

management capacities;

5) With the financial crisis, financial resources became limited. This was also partly due

to depreciation rates between the EUR/RON.

Furthermore, the economic and financial crisis in the period 2009-2011 affected many

beneficiaries, especially from the private sector, which had used a certain EUR/RON foreign

exchange rate within the projects submitted, a rate which subsequently depreciated. This has

generated significant modifications to the estimated economic and financial parameters. It has

been suggested that this negative factor led to either:

giving up the implementation of projects in progress,

giving up the submission of new projects,

difficulties in fulfilling the project activities initially established and agreed with the

financers.

In order to illustrate the factors influencing the absorption rate of EU funds for tourism

development in the regions, a structured questionnaire survey has also been carried out. The

questionnaire directly addressed the research aims and objectives. It also assessed the degree

of information of persons eligible and able to access European funds through the Regional

Operational Programme. The intention was to identify the positive (stimulating) factors, the

negative (inhibiting) and other factors influencing the absorption rate of EU SFs for tourism

projects in the regions. The eligible recipients for the financing were the territorial

60

administrative units, the partnerships between local public administration authorities and

NGOs, inter communities’ development associations and tourism SMEs.

In order to complete this survey, the data collected from the beneficiaries of funds for tourism

development have been used. Of the study population, 30 subjects completed and returned

the questionnaire. The results of this study showed that at the level of the two Regions around

28% of respondents considered that they were very well informed about the Regional

Operational Programme, while 33% asserted they were not at all informed about it. More

than a third of respondents refused to answer this item. The results for this question were

consistent with the one in relation to how familiar the respondents were with the ERDF -

European Regional Development Fund. The majority of respondents felt that the main cause

for the poor accessing of structural funds was due to the lack of “Finance available from

different sources” and the lack of “Capacity and skills at local / regional level (i.e. in-

house capacities)”. A general trend in this study was that smaller organisations with lower

in-house capacities expressed greater dissatisfaction at the requirements of Structural Funds.

Smaller organisations had lower levels of disposable resources and proportionally higher

costs in preparing and submitting Structural Funds applications.

One third of those surveyed reported that the relationship and communication between the

institution responsible of project implementation and the beneficiaries was very

important. Over one third of those who were interviewed indicated that the language to be

used in the application procedure was the National language, i.e. Romanian. Less than a third

of the participants said that they knew which documents were required for submitting

applications to European financing through the EU Regional Operational Programme. Over

two thirds of the respondents refused to answer this item. No respondent was aware of what

documents were needed in detail for the application procedure.

Over half of those surveyed did not comment on the question why “Romania had modest

success in attracting funds from the European Union Structural Funds to support its

declining tourism sector.” A small number of those interviewed suggested that “Capacity for

project development at local / regional level” was good in their region, as opposed to the

factors “Finance available from different sources” and “Capacity and skills at local /

regional level (i.e. in-house capacities)” which scored very low (fair poor). Only a small

61

number of respondents indicated that “Communication and dissemination of information”

was excellent.

More than a half of the respondents that completed the questionnaire indicated that they did

not have concrete ideas for improving project development in the field of tourism in their

region. A minority of participants (20%) indicated and outlined factors of success for known

cases where project development for tourism had worked particularly well. Among the

success factors mentioned, it was mentioned:

- “activities with a perfect matching results and proposed budget estimated”;

- “regular payments from management authority”;

- “cross border cooperation programs, because proper function of the specific

authorities, methods application for growing the peoples interests from borders` parts

etc.”;

- “good necessity arguments, respect of procedure”;

- “well-informed, professionalism”; “persuasion and endless patience”;

- “qualified staff and quality services”.

In response to Question 15, i.e. “Which are at present the biggest obstacles to project

development in the area of tourism in your region?”, most of those surveyed indicated the

following:

- “lack of financial resources” ;

- “bureaucracy, people’s cooperation etc.”;

- “lack of funding and credits; lack of qualified people”;

- “lack of co-finance and people are low motivated to apply because of the high

number of particularities they have to meet to be successful, difficult procedures”;

- “lack of interest for developing the tourism sector”;

- “bureaucracy and communication with the central authority”;

- “political climate, which led to loss of our credibility”.

At the level of perceptions and impressions gathered, applicants assessed EU programmes to

be bureaucratic and beyond their reach. The answers to the final questions in the survey

addressing the factors of success or failure in tourism projects were consistent with and

supported the research findings and outcomes of the interviews.

62

Among the measures suggested for a better accession of funds, the following have been

highly mentioned:

1) the promotion of Tourism as National Priority,

2) a greater support on behalf of the government,

3) sharing a common interest in promoting tourism at the level of tourism SME’s,

4) information through mass media coverage,

5) the reduction of the number of documents to be drafted.

All respondents considered that the Romanian Tourism was in great need of promotion and

was lacking a positive image of its tourism offer. In consequence, these issues represented a

major cause for the poor development of Romanian Tourism. Romanian experts in EU SFs

have made recommendations for a better absorption of European funds for the next period,

namely the period 2014 - 2020:

1) reducing the number of documents required for preparing the application file;

2) improving procedures for accessing funds;

3) improving projects’ evaluation, public acquisition procedures;

4) increasing the level of professional training;

5) using the commercial banks’ expertise for accessing funds;

6) partnerships between public administration and consulting companies and generally

increasing the number of public-private partnerships.

In September 2011, Romania had a rate of absorption of European funds of approximately

17%. These results may indicate the existence of an imperfect practice of project

management in Romania. Identifying the causes of the low degree of sophistication in project

management could become a priority for the Romanian society in order to turn EU structural

funding into opportunity, also in relation to Priority axis 5: Sustainable development and

promotion of tourism.

Finally, in August 2012 a number of 690 projects have been assigned from all regions in

value of RON 1, 02 billion, out of which 344 have been contracted, in value of RON 684, 5

million. At the same date, the value of the reimbursements to the beneficiaries was of RON

34, 7 million which represented 5, 4% of financial allocation to this high Priority axis

(Ministry of Regional Development and Tourism).

63

7. CONCLUDING REMARKS

Through the geopolitical position held within the European continent, Romania could enjoy a

great advantage over competing countries in the region and globally. The country was located

at the crossroads of the most important trade routes of the continent: midway between

northern and southern Europe, and on the road that linked Western Europe to Asia.

Figure 11: Romania between Western Europe and Asia

Source: Romania Tourist Office, 2012.

Countries rarely visited in the past, especially from Central and Eastern Europe, among

which Romania, have become more and more attractive, due to their economic transition and

transformation, offering a significant potential for tourist development. Among those

countries, Romania was gifted with the wealthiest and most varied tourism resources,

conferring it great opportunities for tourism.

64

The valuable tourist potential was materialised in spectacular

landforms and picturesque landscapes, harmoniously joining

across the whole country, mineral waters, a climate favouring

the practice of tourism all year long, an abundant flora, animal

species rising the hunters’ interest, peerless historical, artistic

and architectural monuments, folklore traditions, etc., and can

satisfy, through a multitude of tourism forms, various impulses

of Romanian and foreign tourists (Butnaru, Timu, 2011, p. 4).

This was the result of a diverse configuration of its ancient land and several millennia history,

enabling Romania to have a tourism potential of great complexity and distinct value. The

geographical position offered Romania the status of a Carpathian-Danubian-Pontic country,

due to the presence of the three natural elements defining the landscape structure of

Romanian territory and tourism: the Carpathian Mountains, the Danube River, and the Black

Sea. Romania’s tourist vocation was supported by the network and multitude of natural and

artificial lakes generating diverse landscapes, offering a large area for varied tourism

activities. The country was considered by Romanian and international specialists a

destination with tourism potential, which could compete with any other country in the world

concerning the wealth of its tourism resources. According to the tourism development

strategy developed by the Government, a quarter of Romania’s surface was considered a

tourists’ heaven. A study realised by the Tourism Research Institute showed that more than

half of Romania’s surface had high and great value tourism potential.

Methodologically, this dissertation has sought to highlight and reflect upon various aspects of

the funding opportunities from the EU and the stimulating and inhibiting factors that

impacted on the success or failure of tourism projects in the North-East and South-East

Development Regions of Romania. An interesting aspect of researching on EU SF ROP has

been the relation between the presented opportunities in connection to the international

financial crisis. The research questions addressed the matter upon which these funds might

become the financial instruments for recovering the Romanian tourism industry. Returning to

the question posed at the beginning of this study, it is now possible to state that the accession

to EU Structural Funds might grant the recovery of Romanian Tourism affected by the crisis.

The question “Why did Romania have modest success in attracting funds from the European

65

Union structural fund to sustain its declining tourism sector?” has been addressed and the

responses to it have been outlined below.

A final consideration would relate to the generalizability of the findings of the research.

Thinking more broadly, it was important to assess if the findings presented would be seen as

unique and general at the same time in order to address the research core in the study. The

research outlined the positive effects of the attraction of EU Structural Funds for Romania in

the field of tourism for local and regional development. However at present, absorption rates

for Structural Funds in Romania were considered to be very low. This was due to issues in

the implementation of the Regional Operational Programme and its delivery process. The

lack of a National and Regional Development Planning, especially in relation to the

availability of appropriate funding lines in the national budget, were important factors in the

failure of tourism projects regionally and nationally. Managing Authorities and Intermediate

Bodies lacked experience and expertise in dealing with Structural Funds. At the local level,

public authorities had limited capacity to identify and prepare projects relevant for the

programme.

Furthermore, the discussion and analysis aimed to emphasize through case studies the

potential of the tourism industry for regional development in order to identify current

challenges and opportunities for sound public policies. Tourism created regional and local

economic growth opportunities and contributed to the creation of new jobs by capitalizing the

cultural and natural patrimony specific to all eight Romanian development regions. The funds

had specific objectives and the support for tourism development manifested itself in regions

that already had an established tourism industry (North-East Development Region) and in

cross-border cooperation (South-East Development Region). The Romanian government

declared that the EU Structural Funds were a priority on its agenda and represented the

solution for handling the crisis. One of the more significant findings to emerge from this

study was that Romania did not succeed to be at the medium level of EU funds absorption.

The absorption of these funds would represent a feasible source of economic growth in

overcoming the negative effects of the international financial crisis.

An issue that was not addressed in this study was the detailed procedures of the application

process. The study placed no emphasis on the detailed application processes and procedures

requested from Brussels. These regulations especially in terms of EU legislation, would

66

surely impact on the success factors and barriers for project development at national and

regional level. This issue was an intriguing one which could be usefully explored in further

research. An implication of the presented findings was that application process procedures

and both factors, internal and external to project development should be taken into account in

a comprehensive manner when trying to identify and assess best practices in managing

tourism projects under structural funds funding. Increasing the competitiveness of Romanian

tourism could be achieved or at least partly sustained through the integration of EU SFs to

complement private investment and public money at local, regional and national level in the

field of tourism and for its comprehensive and planned development.

In particular, the implementation of the high priority ROP axis number 5 on tourism

development and promotion was expected to determine the qualitative growth to European

standard levels of all conditions for the tourism practice. This would have a direct impact on

tourism demand in Romania, also by improving tourism infrastructure and by sustainably

promoting Romania at national and international levels. The country enjoyed a historic-

cultural and ethno-folkloric patrimony of great value for tourism. In this perspective, the

restoration and long-term capitalization of cultural patrimony, the creation and modernization

of infrastructure would stand out as “must – do’s”.

In general, Romania's international tourist arrivals were characterized by an evolution

reflecting the changes and transformations at the political, economic, and social level

internationally. The economic crisis might be a chance for Romanian Tourism to raise the

bid, as within this context, the tourist eye would look for closer destinations and Romania

might become a “must see” destination after all!

67

REFERENCES Amin, A. (1989) Flexible specialisation and small firms in Italy: myths and realities,

Antipode, vol. 21, no. 1, pp. 13–34.

Balogh, M., Coroş, M., Negrea, N., Coroş, M.E. (2010) The impact of European Funds upon

the tourism development in Macro region One from Romania, Transylvanian Review of

Administrative Sciences, no. 31E, pp. 5-27.

Barca, F. (2009) An Agenda for a Reformed Cohesion Policy. A place based approach to

meeting European Union challenges and expectations, Independent report prepared at the

request of Danuta Hübner, Commissioner for Regional Policy, Eurada.

Băleanu, V., Irimie, S. & Ionicã, A. (2008) About the Romanian tourism potential: the

natural strengths of the main tourist destinations, Petrosani, Focus Press.

Benedek, J., Horváth, R. (2008) Chapter 12, Romania, in EU regional policy after

enlargment, M. Baun & D. Marek (Eds), Palgrave Macmillan, Basingstoke, pp. 226 – 247.

Berica, C. (2010) Factors that influence the low rate of structural funds absorption in

Romania, The Centre for European Studies, CES Working Papers, II, no. 4, pp. 111-116.

Bomher, I. (2011) The impact of the EU Regional Policy in Romania, The Centre for

European Studies, CES Working Papers, III, no. 2, pp. 162-169.

Britton, S. G. (1982) The political economy of tourism in the Third World, Annals of Tourism

Research, vol. 9, no. 3, pp. 331–58.

Butler, R. W. (1980) The concept of a tourist area cycle of evolution and implications for

management of resources, The Canadian Geographer, vol. 24, no. 1, pp. 5–12.

Butnaru, G-I., Timu, F-I. (2011) European Union and Development of Romanian Tourism,

The Centre for European Studies, CES Working Papers, III, no. 3, pp. 371-389.

68

Cace, C., Cace, S., Nicolăescu, V. (2010) Management of the Structural Funds within the

Context of the Global Economic Crisis, Review of International Comparative Management

vol. 11, no. 1, pp. 87-101.

Constantin, D.L., Goschin, Z. & Dragan, G. (2008) Implications of the EU Structural

Assistance to the New Member States on Regional Disparities. The Question of Absorption

Capacity, paper presented at the Lecture at the Scientific Seminar of the Institute for

Economic Geography and GIScience, Wirtschaftsuniversität Wien, Vienna.

Constantin, D.L. (2007) Economic and Social Cohesion and Regional Policy, AES

Publishing House, Bucharest.

Constantin, D.L. (2000) Tourism and Environmentally Sustainable Regional Development:

The Case of Romania, 40th

Congress of the European Regional Science Association, 29

August-1 September 2000.

Constantin, D.L. (2000) Regional Competition in Romania from the perspective of

integration in the EU’s Structures, in Competition and coexistence in the process of the

European integration, E. Bojar, Polish Scientific Publishers PWN, Warszawa, pp. 63-99.

Constantinescu, L., Badea, L., Dragoi, V. (2011) Structural reforms proposed by the

International Monetary Fund and their impact on Romanian economy during the last financial

crisis, Review of Applied Socio-Economic Research, vol. 2, no. 2, p. 44.

Cooper, C., Fletcher, J., Fyall, A., Gilbert, D., & Wanhll, S. (2008) Tourism principles and

practice, 4th ed. Harlow: Pearson Education Limited, p.139.

Corbridge, S. (1986) Capitalist World Development: A Critique of Radical Development

Geography, London, MacMillan.

Drake, S. (ed.) (1991) Local participation in ecotourism projects. In Nature Tourism:

Managing for the Environment, ed. T. Whelan, Washington DC, Island Press, pp.132–63.

69

EU Commission Regulation (EC) No 1828/2006 of 8 December 2006, setting out rules for

the implementation of Council Regulation (EC) No 1083/2006 laying down general

provisions on the European Regional Development Fund, the European Social Fund and the

Cohesion Fund and of Regulation (EC) No 1080/2006 of the European Parliament and of the

Council on the European Regional Development Fund.

EU Council Regulation (EC) No 1083/2006, of 11 July 2006 laying down general provisions

on the European Regional Development Fund, the European Social Fund and the Cohesion

Fund and repealing Regulation (EC) No 1260/1999.

EU Regulation (EC) No 1080/2006 of the European Parliament and of the Council of 5 July

2006, on the European Regional Development Fund and repealing Regulation (EC) No

1783/1999.

EU Directorate General for Internal Policies (2012) Barriers for applicants to structural

funding, European Parliament, Brussels.

EU Directorate General for Internal Policies (2010) Economic, social and territorial situation

of Romania, prepared for the Committee on Regional Development's delegation to Romania,

3 - 5 November.

EU Directorate-General for Regional Policy (2008) Working for the Regions. EU Regional

Policy 2007-2013, European Commission, Brussels.

Eugenio-Martín, J.-L. (2004) Tourism and Economic Growth in Latin American Countries: A

Panel Data Approach, Christel DeHaan Tourism and Travel Research Institute, University of

Nottingham, pp. 28.

European Commission (2010) Citizens’ awareness and perceptions of EU Regional Policy.

Analytical Report, Flash Eurobarometer 298.

Gardiner, B. (2004) Competitiveness, productivity and economic growth across the European

regions, Regional Studies, University of Cambridge, Cambridge.

70

Gruescu, R. (2009) Tourism and Development in Romania, Publishing House Academica

Greifswald, Germany.

Gruescu, R., Nanu R., Pirvu, Gh. (2010) Ways of raising finance for the improvement of

tourism potential and tourism services, Proceedings of the 5th WSEAS International

Conference on Economy and Management Transformation (Volume I), 24-26 October.

Hirst, P. & Thompson, G. (1999) Globalization in Question, 2nd edn, Cambridge, Policy

Press.

Jiletcovici, A. (2012) Accessing structural funds - way of recovering the tourism affected by

the global economic crisis, Romanian Economic and Business Review, vol. 5, no. 1, pp. 214-

223.

Johnson, R. B. & Christensen, L. (2007) Chapter 12: Qualitative research, In R. B. Johnson &

L. Christensen, Educational Research Quantitative, Qualitative, and Mixed Approaches,

Upper Saddle River, NJ: Pearson Education, Inc., pp. 358-389.

Keller, P. (2009) Global Financial and Economic Crisis: what are the Implications for World

Tourism?, paper presented at the UNWTO Tourism Recovery Committee, Madrid, Spain, 31

October.

Keller, P. (2008a) Global economic uncertainties and risks imbalances and tourism growth:

How can tourism face the new uncertainties and risks?, paper presented at the UNWTO

Minister’s Summit World Travel Market, London, United Kingdom, 11 November.

Keller, P. (2008b) Current Realities: How Can International Tourism Face the World

Economic Crisis?, paper presented at the UNWTO Conference Tourism – Responding to a

turbulent economy and a changing climate, A Conference for the Middle East and

Mediterranean Region, Sharm el Sheikh, Egypt, 23-24 November.

Keller, P. (2008c) Study on Global Imbalances and Tourism Growth: How can Tourism Face

Uncertainties and New Risks, study presented at the UNWTO Meeting of the Strategic Group

the Secretary General, Aldea Santillana, Madrid, Spain, 6-8 November.

71

Lipietz, A. (1993) The local and the global: regional individuality or interregionalism?,

Transactions of the Institute of British Geographers, vol. 18, no. 1, pp. 8–18.

Mazilu, M. (2011) Romania - an Attractive Tourist Market after the World Economic Crisis,

International Journal of Energy and Environment, vol. 5, pp. 212-221.

Milne, S. & Ateljevic, I. (2001) Tourism, economic development and the global–local nexus:

theory embracing complexity, Tourism Geographies, vol. 3, no. 4, pp. 369–393.

Minciu, R. (ed.) (2000) Economia turismului/The Economy of Tourism, Uranus, Bucharest,

Romania.

Ministry of Development, Public Works and Housing (2007) Regional Operational

Programme 2007-2013, Government of Romania, Bucharest, Romania.

Mitrut, C. & Constantin, D.L. (2006) Current Issues Concerning Regional Policy and SMEs

in Romania”, South-Eastern Journal of Economics, vol. 4, no.2, pp. 209-222.

Mowforth, M. & Munt, I. (1998) Tourism and Sustainability: New Tourism in the Third

World, London, Routledge.

Murphy, P. E. (1985) Tourism: A Community Approach, New York, Methuen.

Murphy, P. E. (1994) Tourism and sustainable development, in Global Tourism: The Next

Decade, ed. W.F. Theobald, Oxford, Butterworth-Heinemann, pp. 274–90.

Peet, R. & Hartwick, E. (1999) Theories of Development, New York, Guilford Press.

Poon, A. (1993) Tourism, Technology and Competitive Strategies, Wallingford, C.A.B.

International.

Preister, K. (1989) The theory and management of tourism impacts, Tourism Recreation


72

Priestly, G. & Mundet, L. (1998) The Post-stagnation phase of the resort cycle, Annals of

Tourism Research, vol. 25, no. 1, pp. 85–111.

Ranf, D. & Dumitrascu, D. (2012) The current stage of EU funds absorption by financing

programmes - as Romania's performance in project management practice, Studies in Business

and Economics, no. 3, pp. 153-163.

Rolfe B et al. (2008) The crisis in human resources for health care and the potential of a

retired workforce: case study of the independent midwifery sector in Tanzania, Health Policy

and Planning, vol. 23, no. 2, pp. 137–149.

Russell, S. & Gilson, L. (2006) Are health services protecting the livelihoods of the urban

poor in Sri Lanka? Findings from two low-income areas of Colombo, Social Science &

Medicine, vol. 63, no. 7, pp. 1732–1744.

Sayer, A. (1995) Radical Political Economy: A Critique, Oxford, Blackwell.

Scutariu, A., Năstase, C. & Popescu, M. (2009) Tourist Activity in North-Eastern Romania

from the Regional Development Perspective, “Ştefan cel Mare” University of Suceava,

Faculty of Economics and Public Administration, vol. LXI, pp. 90 - 99.

Shiffman J et al. (2004) The emergence of political priority for safe motherhood in Honduras.

Health Policy and Planning, vol. 19, no. 6, pp. 380–390.

Storper, M. 1990. Industrialization and the regional question in the Third World: lessons of

post imperialism; prospects of post–Fordism, International Journal of Urban and Regional


Surugiu, C., Frenţ, C. & Surugiu, M. (2009) Tourism and its Impact upon the Romanian

Economy: an Input-Output Approach, Analele Ştiinţifice ale Universităţii /University

"Alexandru Ioan Cuza" Iaşi, vol. 56, pp. 355-376.

Surugiu, C. (2009) The Economic Impact of Tourism. An Input-Output Analysis, Romanian

Journal of Economics, vol. 29, no. 2, pp. 142-161.

73

Taylor, G. (1995) The community approach: does it really work?, Tourism Management,

vol. 16, no. 7, pp. 487–89.

WEF (2011) The Global Competitiveness Report 2011–2012, World Economic Forum,

Geneva.

WEF (2011) The Travel & Tourism Competitiveness Report 2011. Beyond the Downturn,

World Economic Forum, Geneva.

Westwood, S. (2007) What lies beneath? In The Critical Turn in Tourism Studies: Innovative

Research Methodologies, I. Ateljevic, A. Pritchard and N. Morgan (Eds.), Oxford, United

Kingdom: Elsevier Ltd, pp. 292-316.

WTTC (2012) The Economic Impact of Travel & Tourism 2012. Romania, World Travel &

Tourism Council, London.

Zaman, Gh. (2011) Theoretical and Practical Challenges Applied to the Economic Crisis In

Romania, Scientific Society of Management from Romania, vol. 2, no. 8, pp. 17-52.

Zaman G. & Cristea, A. (2011) EU Structural Funds absorption in Romania: Obstacles and

issues, Revecon, Romania.

Zaman, Gh., Vasile, V., Surugiu, M. & Surugiu, C. (2010) Tourism and Economic

Development in Romania: Input-Output Analysis Perspective, Romanian Journal of

Economics, vol. 31, no. 2, pp. 5-37.

Zaman, Gh. & Georgescu, G. (2009a) Structural Fund Absorption: A New Challenge for

Romania?, Romanian Journal of Economic Forecasting, vol. 1, pp. 136-154.

Zaman, Gh. & Georgescu, G. (2009b) The Impact of Global Crisis on Romania’s Economic

Development, Annales Universitatis Apulensis Series Oeconomica, "1 Decembrie 1918"

University, Alba Iulia, vol. 2, no. 11, p. 1.

74

APPENDIX I: STRUCTURED QUESTIONNAIRE SURVEY - RESULTS

OVERVIEW

EU Structural Funds in Romania: Factors of Success and Failure in Tourism Projects

Respondents: 30 displayed, 30 total

Launched Date: 10/08/2012 Closed Date: 09/09/2012

1. The accession of EU Structural Funds can grant the recovery of Romanian Tourism affected by the crisis. Do you agree?

Response

Total Response Per cent

Points Avg

Yes

12 67% n/a n/a

No

6 33% n/a n/a

Total Respondents 18

(skipped this question) 12

2. Romania has modest success in attracting funds from the European Union Structural Funds to support its declining tourism sector. Why?



3. How informed are you about the EU Regional Operational Programme?

1 2 3 4 5 Response

Total Response Average

1-not informed;5-very well informed

33.33% (6) 16.67% (3) 11.11% (2) 11.11% (2) 27.78% (5) 18 2.83



4. How familiar are you with ERDF - European Regional Development Fund?

1 2 3 4 5 Response


1-not familiar;5-very familiar

33.33% (6) 16.67% (3) 11.11% (2) 11.11% (2) 27.78% (5) 18 2.83



5. Banks offer support to people who want to appeal to European financing through the EU Regional Operational Programme. Are you informed about it?

Response

Total Response per cent

Points Avg

Yes

9 50% n/a n/a

No

9 50% n/a n/a


75


6. Did you receive support from the EU Regional Operational Programme for developing your project idea on tourism?

Response


Points Avg

Yes

1 7% n/a n/a

No

14 93% n/a n/a



7. Which documents are required for submitting applications to European financing through the EU Regional Operational Programme?

Total Respondents 8


8. Which language must be used in the application procedure?

Response


Points Avg

English

3 20% n/a n/a

National Language

11 73% n/a n/a

Other

1 7% n/a n/a

Total Respondents 15 100%


9. How important is the relationship and communication between the institution responsible of project implementation and the beneficiaries?

1 2 3 4 5 Response


1-not important;5-very important

20% (3) 13.33% (2) 0% (0) 0% (0) 66.67% (10) 15 3.8



10. How would you rate the present situation in your region with regard to the following factors?

Excellent Good Neutral Fair Poor Response

Total Points Avg

Communication and dissemination of information

20% (3) 26.67% (4) 6.67% (1) 33.33% (5) 13.33% (2) 15 n/a n/a

Provision of advisory services to applicants

15.38% (2) 23.08% (3) 23.08% (3) 15.38% (2) 23.08% (3) 13 n/a n/a

Capacity and skills at local / regional level (i.e. in-house capacities)

7.14% (1) 21.43% (3) 14.29% (2) 28.57% (4) 28.57% (4) 14 n/a n/a

Capacity for project 14.29% (2) 42.86% (6) 14.29% (2) 14.29% (2) 14.29% (2) 14 n/a n/a

76

development at local / regional level

Finance available from different sources

7.14% (1) 7.14% (1) 28.57% (4) 21.43% (3) 35.71% (5) 14 n/a n/a



11. Which of the below factors are the ones that accentuate this low rate? Please assess the level of importance for project development in tourism.

Very

Important Important Neutral Unimportant

Very Unimportant

Response Total

Points Avg

- Communication and dissemination of information

46.67% (7) 46.67% (7) 0% (0) 6.67% (1) 0% (0) 15 n/a n/a

- Provision of advisory services to applicants

46.67% (7) 40% (6) 6.67% (1) 6.67% (1) 0% (0) 15 n/a n/a

- Capacity and skills at local / regional level (i.e. in-house capacities)

53.33% (8) 26.67% (4) 13.33% (2) 6.67% (1) 0% (0) 15 n/a n/a

- Capacity for project development at local / regional level

46.67% (7) 33.33% (5) 13.33% (2) 0% (0) 6.67% (1) 15 n/a n/a

- Finance available from different sources

66.67% (10) 13.33% (2) 6.67% (1) 6.67% (1) 6.67% (1) 15 n/a n/a



12. Are there other factors that have an influence on project development for tourism in your case? If so, which ones? Please give examples. A. Negative (inhibiting) factors: B. Positive (stimulating) factors:



13. Do you have concrete ideas for improving project development in the field of tourism? Which ones?

Response


No

7 24%

Yes

6 21%

Please mention

3 10%



14. Were measures undertaken by the Regional Development Agency to raise the capacity at

https://selectsurveys.humanities.manchester.ac.uk/ResultsText.aspx?ItemID=16344&SubItemID=SID25599&ItemNumber=13&SurveyID=l2535m2&Type=Text&ItemTypeID=20&SubItemText=No

https://selectsurveys.humanities.manchester.ac.uk/ResultsText.aspx?ItemID=16344&SubItemID=SID25601&ItemNumber=13&SurveyID=l2535m2&Type=Text&ItemTypeID=20&SubItemText=Yes

https://selectsurveys.humanities.manchester.ac.uk/ResultsText.aspx?ItemID=16344&SubItemID=SID25603&ItemNumber=13&SurveyID=l2535m2&Type=Text&ItemTypeID=20&SubItemText=Please mention

77

local/regional level?

Response


Points Avg

Yes

5 50% n/a n/a

No

5 50% n/a n/a



15. Which are at present the biggest obstacles to project development in the area of tourism in your region?



16. When you consider cases where project development for tourism has worked particularly well, what were the success factors?



Excerpt Q2: Romania has modest success in attracting funds from the European Union Structural

Funds to support its declining tourism sector. Why?

78

APPENDIX II: COMMUNICATION FROM THE ROMANIAN GOVERNMENT

Source: excerpt from the Official Communication received from the MRDT, 2012.

Note: Original document in Romanian, the statistical data have been included throughout the

main text.

Dissertation msc midp cristina insuratelu frankenthal

Travel

Transcript of Dissertation msc midp cristina insuratelu frankenthal