The Transformation of the Romanian Economy Through Privatization and Internationalization

In the late 1980s, Central and Eastern European nations (CEE) rejected communism and embarked on a journey towards free-market democracy. As part of this transformation, the Romanian economy transitioned from communism to capitalism. The purpose for our paper is to suggest insight from the Romanian experience that may be useful for nations in Asia, Africa, Middle East or South America that maybe be undergoing a similar transition. The main results of our paper is to substantiate the precepts of institutional theory, that a system is best transformed through external, international pressures. Our contribution illustrates this transformation through the case studies of Romtelecom, Dacia, and Petrom, Romanian state-owned enterprises (SOE) privatized by foreign multinational corporation (MNC). We distinguish between formal and informal institutions with the latter tending to be overlooked by traditional researchers. Through these longitudinal surveys we argue that multinational corporations are possibly the best generators of informal institutions.