Country Profile and PESTEL Analysis Political Factors Romania is an independent parliamentary republic with judicial, executive and legislative branches of government. the president serves as Romania’s chief of state. the prime minister serves as the head of the government and is appointed by the president with the consent of the parliament. the capital city is Bucharest. in accordance to risk assessment, Romania has low political risk. fter the falling of communist regime, Romania has been gradually liberalizing its trade regulations and incentive and now follows the guidelines set by the EU. the ruling government is constantly updating the laws and financial conditions for doing business in Romania in order to maintain the positive growth of the economy. on june 27, 2008 the Romanian government approved the latest investment law, the aim of which is to provide and umbrella framework in which processes of application and allocation of state aids will be made more consistent and transparent. ther business incentives that the country offers are no limits of foreign participation in commercial companies (a foreign investor may establish a 100% owned enterprise in Romania ), full repatriation of capital and profits, and equal treatment of residents and non-residents investors. the two main trade partners of Romania are Italy and Germany. Economics Factors the sectors for the highest contribution to the GDP in Romania are industry (36,7%), services (37, 7%) and agriculture (8,6%). capital inflows have nourished a constantly increasing domestic spending boom. lthough, current account deficits are normal during the phase at which the Romanian economy is going though, Romania’s gap is above what could be considered a “normal” level and raises concerns over medium and long-term sustainability. inc case of recession on the global markets, foreign investors may suddenly draw their investments out of Romania, which can cause a huge collapse in the country’s economy. over the past five years, Romania has experienced a steady increase in FDI flows. the quality of the business has improved significantly. s a relatively new member of the EU, Romania shows a strong integration into the European economic life. more than 80% of the total invested capital in 2009 came from the European countries. according to the rating agency Fitch, Romania is in the low-risk countries in terms of investments. Social Factors the Romanians dominate in by far the ethnic composition of the country. the second largest group is Hungarians with near 7 % of the population and the rest are German and Ukrainian. the official language in Romania is Romanian, an eastern Romance language.
Hungarian and German are also widely spread. nearly 87% of the population belongs to the Romanian Orthodox Church. it is estimated that Romania has a population of 22246862 in 2008 with an average population density of 94 per sq. km. the age structure is a s follows: 0-14 years: 15,6%, 15-64 years: 69,7%, 65 years and over: 14,7%. Romania has extremely high proportions of young adults in the population. household expenditures on food, beverages and tobacco amount to 50% of the total household expenditures in Romania. he average size of a Romanian household in 2009 was 2,92 people. Technological Factors recent statistics show, that 50% of the Romanians do not have basic computer skills and 43,5% of the urban inhabitants in the country own a company. however, the nationwide number drops to 24,6%. computers are still not very popular at the working place with only 9,8% penetration. closely related with its excellent economic growth, Romania’s R&D system is currently recovering after the decline in the transition years when the number of R&D employees recorded a loss of about 10,000 researchers.