The intervention of local public authorities and the impact of the COVID-19 pandemic in Romania: a subnational analysis

Abstract

The COVID-19 pandemic had a strong territorial dimension, with a highly asymmetric impact among Romanian counties, depending on pre-existing vulnerabilities, regions’ economic structure, exposure to global value chains, specialization, and overall ability to shift a large share of employees to remote working. The aim of this paper is to assess the role of Romanian local authorities during this unprecedented global medical emergency by capturing the changes of public spending at the local level between 2010 and 2021 and amid the COVID-19 pandemic, and to identify clusters of Romanian counties that shared similar characteristics in this period, using a panel data quantitative model and hierarchical cluster analysis. Our empirical analysis shows that between 2010-2021, the impact of social assistance expenditures was higher than public investment (capital spending and EU funds) on the GDP per capita at county level. Additionally, based on various macroeconomic and structural indicators (health, labour market performance, economic development, entrepreneurship, and both local public revenues and several types of expenditures), we determined seven clusters of counties. The research contributes to the discussion regarding the increase of economic resilience but also to the evidence-based public policies implementation at local level.