Measures to exempt Romania from the restrictions directed against trade with communist countries have been taken in the United States. In November 1971 exports to Romania were made eligible for Export-Import Bank financing. With support from the administration, legislation has been introduced in both houses of the Congress of the United States to accord Romania most-favored-nation treatment. Sources in the United States, however, believe that Romania will not be able to balance its trade with that country even in the event that the proposed legislation is enacted into law.
Imports have been overwhelmingly weighted in favor of capital goods. Machinery and equipment, fuels, and raw and processed materials constituted about 90 percent of all imports in the 1960s. Manufactured consumer goods accounted for from 5 to 7 percent of imports. Raw and processed food products made up the small balance. Machinery and equipment, including plant installations, were the major single import category; the share of machinery and equipment in total imports rose from about 33 percent in 1960 to 49 percent in 1967 but declined to 44 percent in 1969 because of payments difficulties. Imported machinery and equipment covered about 30 percent of requirements in 1970.
Exports in the 1960s consisted mainly of raw and processed materials and foodstuffs, about equally divided between products of agricultural and industrial origin. As a result of progressive industrialization, the proportion of these products in total exports declined from about 78 percent in 1960 to 63 percent in 1969. During the same period the share of machinery and equipment rose from about 17 to 22 percent, and that of manufactured consumer goods increased from about 6 to 16 percent. Official foreign trade policy is directed toward increasing the proportion of processed goods in total exports.
In the 1960-70 period the annual balance of trade was negative, with the exception of the years 1960 and 1965. The cumulative trade deficit at the end of 1970 amounted to about 5.1 billion lei—the equivalent of about US$850 million. The overall deficit, however, obscured the severity of the foreign exchange problem facing the country. Trade with the communist and developing countries during the period produced an export surplus that offset, in part, the deficit with Western trading partners. This surplus, however, could not be used to reduce foreign indebtedness because it did not generate hard currency earnings. The cumulative hard currency trade deficit with the West reached US$1.2 billion in 1969 and an estimated US$1.5 billion in 1970.
Information on the country's balance of payments has been kept secret, so that it is impossible to know how the trade deficit has been financed. Hard currency receipts from tourism, which could be applied toward repayment of the debt, equaled only a fraction of the annual trade deficit. Western sources estimated Romania's indebtedness to her Western industrial trading partners to have risen from about US$300 million in 1966 to US$800 million in 1968 and to have increased further by 1970.
CHAPTER 15
AGRICULTURE
As a result of the government's industrialization policy, the relative importance of agriculture in the economy has declined. During the decade of the 1960s the contribution of agriculture to national income, in terms of arbitrarily established official prices, dropped from about 30 to 20 percent, even though half the working population continued to be employed on farms and farm output was gradually rising. The growth in output, however, did not keep pace with official plans, mainly because of a lack of income incentives for farmers under the government's low farm-price policy and because of inadequate investment and fertilizer inputs. The farm problem has been exacerbated by the generally low qualifications of the farm labor force and by the prevalence of widespread underemployment.