Romania, a country famed for its Olympic gymnasts, has often required its citizens, investors, and business community to perform some economic gymnastics of their own. After the hyperinflation crises that accompanied the transition to capitalism in the 1990s, Romanian equities vaulted upward between 2003 and 2007. However, those jumping into Romania’s stock market after mid-2007 may have felt as though they have had their own personal encounter with Vlad the Impaler, another famous Romanian.
Located at the mouth of the Danube on the Black Sea, Romania is one of Eastern Europe’s dozen or so emerging and frontier markets. Along with Russia, these Eastern European emerging markets are in a special class, distinct from the world’s core developed markets and from the emerging markets of the developing world. Eastern European emerging markets tend to be relatively industrialized, with highly literate, educated, and technically skilled populations. They have moderate standards of living, and while poverty is a significant issue, it is not generally as acute and pervasive as in much of Africa, Asia, the Middle East, and Latin America. Table 1 compares Romania with its regional peers, industrialized countries, and some other emerging markets.