THE CHASM BETWEEN EXPECTED AND REAL PERFORMANCES OF ROMANIA– A PATH DEPENDENCE OUTCOME.

After more than eight years of European Union membership and twenty five years of capitalism, Romania remains bounded at an unsatisfactory and worrying level of economic development. In such a context, some innate questions emerge: is the soviet past a reason for the poor economic performances, and if so, how was possible for other ex-soviet nations to overcome this obstacle and to acquire development under European guidance, but not for Romania? Why, here, the European “vaccine” was not able to generate positive outcomes? The purpose of this paper is to provide a pertinent answer to these questions using the institutionalist theory of path dependence. In order to pursue our endeavour of validating the nexus between the quality of formal and informal institutions and economic evolution, we employ econometric analyses such as Granger causality and Vector Error Correction Model, using time series data ranging from 1995 to 2014 on quality institutional and economic development indicators for Romania. As results point out, unlike other CEE nations, Romania continued all these years under a low institutional effectiveness, by prevailing corruption, bureaucracy, changeable and inefficient laws, aspect that has had a long term influence on its economic development results.