Agriculture Biomaterial Industry in Romania: Economic and Poverty Alleviation Implications

Agriculture Biomaterial Industry in Romania: Economic and Poverty Alleviation Implications

Irina Bancescu
Copyright: © 2021 |Pages: 13
DOI: 10.4018/IJSEM.2021010103
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Rural areas in Romania are underdeveloped, with the main economic activity being agriculture. Urban-rural income gap and poverty levels are indicative of an underdeveloped rural area. Urban-rural absolute income gap for average monthly income increased from 352 RON in 2007 to 663 RON in 2017. Moreover, the work poverty rate is higher in rural areas than in urban areas. Economic rural development can be achieved by improvements of the labour market and introduction of new value-added products. Agricultural and non-agricultural activities are dependent on each other for a successful rural development leading to poverty alleviation. An industry that combines the two types of economic activities is agriculture biomaterial industry. In this paper, the authos investigates the factors influencing rural poverty and analyses the current stage of the bioplastics market in Romania and its economic implications. Bioplastics industry can reduce urban-rural income gaps and poverty in rural areas.
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Rural labour market in Romania is underdeveloped despite the increasing agriculture production of the country. Lack of jobs in Romania is well documented, especially skilled demanding jobs, and these economic inadequacies are accentuated in rural areas (Tilea et al., 2013; Boboc et al., 2014; Chivu et al., 2020).

Rural labour market dynamics is characterized by a low number of employees (29.66% in 2017) and a large number of self-employed (Băncescu, 2021), while the dominant field of economic activity is agriculture (43.20% of employed population in 2019 with over half being self-employed). In 2017, the share of employed population in rural areas in respect to the total employed population was 34.77% (Băncescu, 2021).

Another problem faced by rural areas is poverty. Romania has reduced its poverty level in recent years, but not enough. The share of at-risk-of-poverty or social exclusion people was 47% in 2007 which dropped to 31.2% in 2019. Factors that can reduce poverty include economic growth, financial inclusion, and agriculture growth. Various papers have studied the connection between economic growth and poverty reduction, and while the latter cannot happen without the former, economic growth is not a sufficient condition to alleviate poverty, just a necessary condition. A first approach to assess the relationship between economic growth and poverty is the “trickle-down” approach which states that growth will automatically reduce poverty (Kaldor, 1956; Rostow, 1960). However, due to the increasing income gap between the poor and the rich, scholars are having doubts about this theory. Another approach is the Kuznets’s inverted U hypothesis (Kuznets, 1955). The Kuznets’s curve states that at the beginning of economic growth, income inequality will grow until it reaches a turning point, after which the income inequality will start to decrease and as such poverty would rapidly disappear due to a fairer distribution of income. Other tools for poverty reduction and decrease income inequality are financial development (Rewilak, 2017; Donou-Adonsou & Sylwester, 2016) and foreign remittances (Liu et al., 2020). Various studies showed that agriculture growth can lead to reduce poverty (Cervantes-Godoy & Dewbre, 2010; Chrishaensen et al., 2011; Loayza & Raddatz, 2010; Varga, 2020). Rural poverty alleviation is often studied in the framework of agriculture vs non-agriculture activities (Dorosh & Thurlow, 2018). Some studies suggest that agriculture growth has a better impact on reducing rural poverty, while others suggest the opposite (Edwards, 2019; Diao et al., 2010; Salasan & Fritzsch, 2009; Țăra, 2018). Romania’s rural poverty has as cause non-agricultural low employment opportunities and low agricultural productivity (Raicov et al., 2018). Rural areas are characterized by absence of tertiary and industrial economic development, low education level of rural population and fragmented agricultural holdings (Țăra, 2018).

One way to increase and develop rural labour market, along with rural development, is to use the natural resources of agriculture production and to add value to it. In the past years, a new economic activity domain has emerged, namely agricultural biomaterial industry and its applications. Biomaterials can be used as biomass for energy production, in packaging industry or tissue engineering industry (Chaparro-Garnica et al., 2021; Bilgili et al., 2017; Qamar et al., 2020; Marichelvam et al., 2019; Sahana et al., 2018; Cojocaru et al., 2019). Biomaterials (or natural polymers) can be classified into bioplastics and biopolymers, biorubbers, biofoams, biocomposites and fibreboards (Oo et al., 2016). This paper mainly investigates the potential used of bioplastics in the packaging industry and its potential on the Romanian market along with its economic implications. Another goal of the paper is analyzing the factors that influence rural poverty.

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