<abstract xmlns="http://www.w3.org/1999/xhtml"><p>Social market economy (SME) is a socio-economic model which attempts to unite the freedom of a competitive market economy with social equilibrium and progress. It is seen as a “third path” besides a purely liberal market economy and an economy which is heavily regulated by the state – in the SME there is an intermediate degree of regulation. Historically, the model corresponds to the real economic policy of the German Federal Republic after the 1950s, thus it is sometimes called Rhine capitalism. According to the Treaty of Lisbon from 2007, the European Union pursues a competitive social market economy with full employment and social progress. On one hand, this model wishes to exploit the advantages of a free market economy, especially its high efficiency in the production of goods, while on the other hand it uses state intervention to correct for potential negative outcomes from market processes. Further characteristics of this model are: ensuring competition, free price formation, private property, motivating performance through profit aspirations as well as guarding personal freedoms. Last but not least, this model encompasses a strong structural policy by encouraging weaker geographical regions or industries. Therefore, it is highly probable that such a socio-economic model might be the appropriate alternative to fuel a sustainable growth of the Romanian economy. Using county level data, from the National Institute of Statistics and from the National Office of the Trade Register, for the year 2015 we show that the Romanian economy is highly polarized with a few growth poles (islands) and a large number of underdeveloped units. Thus, it becomes obvious that these important disparities will hinder a future sustainable development and by consequence a clear “road-map” represented by this economic model might prove to be a viable solution for the Romanian economy.</p></abstract>

Social market economy (SME) is a socio-economic model which attempts to unite the freedom of a competitive market economy with social equilibrium and progress. It is seen as a “third path” besides a purely liberal market economy and an economy which is heavily regulated by the state – in the SME there is an intermediate degree of regulation. Historically, the model corresponds to the real economic policy of the German Federal Republic after the 1950s, thus it is sometimes called Rhine capitalism. According to the Treaty of Lisbon from 2007, the European Union pursues a competitive social market economy with full employment and social progress. On one hand, this model wishes to exploit the advantages of a free market economy, especially its high efficiency in the production of goods, while on the other hand it uses state intervention to correct for potential negative outcomes from market processes. Further characteristics of this model are: ensuring competition, free price formation, private property, motivating performance through profit aspirations as well as guarding personal freedoms. Last but not least, this model encompasses a strong structural policy by encouraging weaker geographical regions or industries. Therefore, it is highly probable that such a socio-economic model might be the appropriate alternative to fuel a sustainable growth of the Romanian economy. Using county level data, from the National Institute of Statistics and from the National Office of the Trade Register, for the year 2015 we show that the Romanian economy is highly polarized with a few growth poles (islands) and a large number of underdeveloped units. Thus, it becomes obvious that these important disparities will hinder a future sustainable development and by consequence a clear “road-map” represented by this economic model might prove to be a viable solution for the Romanian economy.

Can the social market economy be a viable solution for a future sustainable development of the Romanian economy?

The Bucharest University of economic Studies

Proceedings of the International Conference on Business Excellence

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

-Quantitative evidence-

Social market economy (SME) is a socio-economic model which attempts to unite the freedom of a competitive market economy with social equilibrium and progress....

Can the social market economy be a viable solution for a future sustainable development of the Romanian economy?

Published Online: Aug 26, 2017

Page range: 970 - 981

DOI: https://doi.org/10.1515/picbe-2017-0102

Keywords
Social market economy, regional development, regional disparities, economic development trends

© 2017 Vasile Alecsandru Strat et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Can the social market economy be a viable solution for a future sustainable development of the Romanian economy?

Published Online: Aug 26, 2017

Page range: 970 - 981

DOI: https://doi.org/10.1515/picbe-2017-0102

KeywordsSocial market economy, regional development, regional disparities, economic development trends

© 2017 Vasile Alecsandru Strat et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Social market economy, regional development, regional disparities, economic development trends